SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
UNIVERSAL HEALTH SERVICES, INC.
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fees 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
UHS LOGO
UNIVERSAL HEALTH SERVICES, INC.
April 20, 200112, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Universal Health Services, Inc. to be held at the offices of the Company,
Universal Corporate Center, 367 South Gulph Road, King of Prussia,
Pennsylvania, on May 23, 2001,15, 2002, at 10:00 a.m., Eastern Daylight Time, for the
following purposes:
(1) the election of two directorsa director by the holders of Class A and Class C
Common Stock;
(2) the election of a director by the holders of Class B and Class D
Common Stock; and
(3) the adoption of the Amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares of
Class B Common Stock;
(4) the adoption of the Amendment to the Amended and Restated 1992
Stock Option Plan, and
(5) the adoption of the 2001 Employees' Restricted Stock PurchaseUniversal Health Services, Inc. Executive
Incentive Plan.
Detailed information concerning these matters is set forth in the attached
Notice of Annual Meeting of Stockholders and Proxy Statement.
Your Board of Directors recommends that you vote your shares FOR the
election of directors, FOR the adoption of the Amendment to the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Class B Common Stock, FOR the adoption of the Amendment to the
Amended and Restated 1992 Stock Option Plan, and FOR the adoption of the 2001
Employees' Restricted Stock Purchase Plan.
Whether or not you plan to attend the meeting, please either vote by
telephone, internet, or promptly sign and return your proxy card in the
enclosed envelope. If you then attend and wish to vote your shares in person,
you still may do so. In addition to the matters noted above, we will discuss
the business of the Company and be available for Stockholders' comments and
discussion relating to the Company.
I look forward to seeing you at the meeting.
Sincerely,
/s/ Alan B. Miller
Alan B. Miller
Chairman, President and
Chief Executive Officer
UHS LOGO
UNIVERSAL HEALTH SERVICES, INC.
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 23, 200115, 2002
Notice is hereby given that the Annual Meeting of Stockholders of Universal
Health Services, Inc. (the "Company") will be held on Wednesday, May 23, 200115, 2002
at 10:00 a.m., at the offices of the Company, Universal Corporate Center, 367
South Gulph Road.Road, King of Prussia, Pennsylvania for the following purposes:
(1) To have the holders of Class A and Class C Common Stock elect twoone Class
II directors, all directorsIII director, to serve for a term of three years until the annual
election of directors in the year 20042005 and election and qualification
of their respective successors.
(2) To have the holders of Class B and Class D Common Stock elect one Class
II direcor,III director, to serve for a term of three years until the annual
election of directors in the year 20042005 and the election and
qualification of his successor.
(3) To have the holders of Class A, B, C and D Common Stock vote upon the
proposal to adopt the Amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares of Class B
Common Stock.Universal Health Services, Inc. Executive
Incentive Plan.
(4) To have the holders of Class A, B, C and D Common Stock vote upon the
proposal to adopt the Amendment to the Amended and Restated 1992 Stock
Option Plan, adopted by the Board of Directors of the Company.
(5) To have the holders of Class A, B, C and D Common Stock vote upon the
proposal to adopt the 2001 Employees' Restricted Stock Purchase Plan.
(6) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on April 12, 2001,4, 2002, are
entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person. IN
ANY EVENT, PLEASE VOTE BY TELEPHONE, INTERNET OR MARK YOUR VOTES, THEN DATE
AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL
MEETING. YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL MEETING
AND WISH TO VOTE YOUR SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Steve G. Filton
STEVE G. FILTON, Secretary
King of Prussia, Pennsylvania
April 20, 200112, 2002
UNIVERSAL HEALTH SERVICES, INC.
Universal Corporate Center
367 South Gulph Road
King of Prussia, PA 19406
PROXY STATEMENT
GENERAL
This Proxy Statement and enclosed forms of Proxy (first mailed to
stockholders on or about April 20,
2001) is12, 2002) are furnished in connection with the
solicitation by the Board of Directors of Universal Health Services, Inc. (the
"Company") of proxies for use at the Annual Meeting of Stockholders, or at any
adjournment thereof. The meeting will be held on Wednesday, May 23, 200115, 2002 at
10:00 a.m., at the offices of the Company, Universal Corporate Center, 367
South Gulph Road, King of Prussia, Pennsylvania. The Annual Meeting is being
held (1) to have the holders of Class A and C Common Stock elect twoone Class II directorsIII
director of the Company, all of whom willto serve for termsa term of three years until the annual
election of directors in 20042005 and the election and qualification of their
respective successors;his
successor; (2) to have the holders of Class B and D Common Stock elect one
Class IIIII director, to serve for a term of three years until the annual
election of directors in 20042005 and the election and qualification of his
successor; (3) to have the holders of Class A, B, C and D Common Stock vote
upon the proposal to adopt the Amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares of Class B Common
Stock; (4) to have the holders of Class A, B, C and D Common Stock vote upon
the proposal to adopt the Amendment to the Amended and Restated 1992 Stock
Option Plan, which was adopted by the Board of Directorsadoption of the Company; (5)
to have the holders of Class A, B, CUniversal Health Services, Inc. Executive Incentive
Plan; and D Common Stock vote upon the proposal
to adopt the 2001 Employees' Restricted Stock Purchase Plan, and (6)(4) to transact such other business as may properly be brought
before the meeting or any adjournment thereof.
A copy of the Company's Annual Report to Stockholders, including financial
statements for the year ended December 31, 20002001 is enclosed herewith.
A separate form of Proxy applies to the Company's Class A and Class C Common
Stock and a separate form of Proxy applies to the Company's Class B and Class
D Common Stock. Enclosed is a Proxy for the shares of stock held by you on the
record date. Unless otherwise indicated on the Proxy, shares represented by
any Proxy will, if the Proxy is properly executed and received by the Company
prior to the Annual Meeting, be voted FOR each of the nominees for directors,
FOR the approval of the adoption of the Amendment to the Company's Restated
Certificate of Incorporation to increase the number of authorized shares of
Class B Common Stock, and FOR the approval of the Amendment to the Amended and
Restated 1992 Stock Option Plan and FOR the approval of the adoption of the
2001 Employees' Restricted Stock Purchase Plan.directors.
Any Proxy executed and returned to the Company is revocable by delivering a
later signed and dated Proxy or other written notice to the Secretary of the
Company at any time prior to its exercise. A Proxy is also subject to
revocation if the person executing the Proxy is present at the meeting and
chooses to vote in person.
VOTING
Only stockholders of record as of the close of business on April 12, 20014, 2002 are
entitled to vote at the Annual Meeting. On that date, 1,924,4433,848,886 shares of
Class A Common Stock, par value $.0l per share, 193,924387,848 shares of Class C
Common Stock, par value $.0l per share, 27,832,06055,678,643 shares of Class B Common
Stock, par value $.0l per share, and 20,93038,533 shares of Class D Common Stock,
par value $.0l per share, were outstanding.
The Company's Restated Certificate of Incorporation provides that, with
respect to the election of directors, holders of Class A Common Stock vote as
a class with the holders of Class C Common Stock, and holders of
Class B Common Stock vote as a class with holders of Class D Common Stock,
with holders of all classes of Common Stock entitled to one vote per share.
Each holder of Class A Common Stock may cumulate his votes for directors
giving one candidate a number of votes equal to the number of directors to be
elected, multiplied by the number of shares of Class A Common Stock, or he may
distribute his votes on the same principle among as many candidates as he
shall see fit. For a holder of Class A Common Stock to exercise his cumulative
voting rights, the stockholder must give notice at the meeting of his
intention to cumulate his votes.
As to matters other than the election of directors, including the approvaladoption
of the Amendment to the Restated Certificate of Incorporation, Amendment to
the Amended and Restated 1992 Stock Option Plan, the Adoption of the 2001
Employees' Restricted Stock PurchaseUniversal Health Services, Inc. Executive Incentive Plan, the Company's
Restated Certificate of Incorporation provides that holders of Class A, Class
B, Class C and Class D Common Stock all vote together as a single class,
except as otherwise provided by law. Each share of Class A Common Stock
entitles the holder thereof to one vote; each share of Class B Common Stock
entitles the holder thereof to one-tenth of a vote; each share of Class C
Common Stock entitles the holder thereof to 100 votes (provided the holder of
Class C Common Stock holds a number of shares of Class A Common Stock equal to
ten times the number of shares of Class C Common Stock that holder holds); and
each share of Class D Common Stock entitles the holder thereof to ten votes
(provided the holder of Class D Common Stock holds a number of shares of Class
B Common Stock equal to ten times the number of shares of Class D Common Stock
that holder holds). In the event a holder of Class C or Class D Common Stock
holds a number of shares of Class A or Class B Common Stock, respectively,
less than ten times the number of shares of Class C or Class D Common Stock
that holder holds, then that holder will be entitled to only one vote for
every share of Class C, or one-tenth of a vote for every share of Class D
Common Stock, which that holder holds in excess of one-tenth the number of
shares of Class A or Class B Common Stock, respectively, held by that holder.
The Board of Directors, in their discretion, may require beneficial owners to
provide satisfactory evidence that such owner holds ten times as many shares
of Class A or Class B Common Stock as Class C or Class D Common Stock,
respectively, if such facts are not apparent from the stock records of the
Company.
Stockholders entitled to vote for the election of directors can withhold the
authority to vote for any one or more nominees.
Nominees receiving a plurality
of the votes cast will be elected. Abstention from the vote to consider the
adoption of the Amendment to the Restated Certificate of Incorporation,
Amendment to the Amended and Restated 1992 Stock Option Plan, the Adoption of
the 2001 Employees' Restricted Stock Purchase Plan, or the approval of such
other matters as may properly come before the meeting, or any adjournment
thereof, are treated as votes against the proposal. Broker non-votes are
treated as shares as to which the beneficial owners have withheld voting
authority and therefore as shares not entitled to vote on the matter, thereby
making it easier to obtain the approval of holders of a majority of the
aggregate voting power of the shares present entitled to vote as is required
for approval of the proposal. A majority of holders of the outstanding common
stock votes and of the outstanding Class B Common Stock is required to approve
the Amendment to the Restated Certificate of Incorporation. Therefore,
abstentions or broker non-votes have the effect of a vote against the
proposal, making it more difficult to obtain the required vote.
2
As of April 12, 2001,4, 2002, the shares of Class A and Class C Common Stock
constituted 7.1% of the aggregate outstanding shares of the Company's Common
Stock, had the right to elect six members of the Board of Directors and
constituted 87.7%82.2% of the general voting power of the Company; and as of that
date the shares of Class B and Class D Common Stock (excluding shares issuable
upon exercise of options), constituted 92.9% of the outstanding shares of the
Company's Common Stock, had the right to elect two members of the Board of
Directors and constituted 12.3%17.8% of the general voting power of the Company.
As of February 28, 2001,March 31, 2002, the Company's current directors and officers as a
group owned of record or beneficially 1,920,7433,841,486 shares of Class A Common
Stock, 627,1161,202,178 shares of Class B Common Stock (excluding shares issuable
upon exercise of options), 193,544387,088 shares of Class C Common Stock and 6301,260
shares of Class D Common Stock, representing 99.8%, 2.3%2.2%, 99.8% and 2.9%3.3%
respectively, of the outstanding shares of each class and constituting 87.8%82.4%
of the general voting power of the Company on that date.
32
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 28, 2001,March 31, 2002, the number of shares of
equity securities of the Company and the percentage of each class owned
beneficially, within the meaning of Securities and Exchange Commission Rule
13d-3, and the percentage of the general voting power of the Company currently
held, by (i) all stockholders known by the Company to own more than 5% of any
class of the Company's equity securities, (ii) all directors and nominees of
the Company who are stockholders, (iii) the executive officers named in the
Summary Compensation Table and (iv) all directors and executive officers as a
group. Except as otherwise specified, the named beneficial owner has sole
voting and investment power.
Percentage
Class A Class B Class C Class D of General
Name and Address of Common Common Common Common Voting
Beneficial Owner(1) Stock(2) Stock(2) Stock(2) Stock(2) Power(3)
------------------- --------- ------------- -------- -------- ----------
Leatrice Ducat 3,625(5)(12)14,500(5)(9) (5)
National Disease
Research Interchange
645 N. Michigan Avenue
Ste. 800
Chicago, IL 60611
John H. Herrell 9,400(5)(12)24,300(5)(9) (5)
Mayo Clinic
200 First1021 10th Street, SWS.W.
Rochester, MN 5590555902
Robert H. Hotz 20,000(5)(12)47,500(5)(9) (5)
UBS Warburg LLC
299 Park Avenue, 39th
Fl.
New York, NY 10171
Alan B. Miller 1,903,891(6) 2,729,201(4)3,807,782(6) 5,915,702(4)(6)(12) 191,446 86.6%(9) 382,892 81.1%
(98.9%) (9.8%(10.6%) (98.7%)
Anthony Pantaleoni 4,452(5) 19,948(4)8,904(5) 39,396(4)(5)(7)(12) 548(5) 280(5)(8)(9) 1,096(5) 560(5) (5)
Fulbright & Jaworski
L.L.P.
666 Fifth Avenue
New York, NY 10103
-
Debra K. Osteen 34,999(5) (5)
Joseph T. Sebastianelli 625(5)(12)
onehealthbank.com
379 Princeton-Hightstown
Road
Building 2
Cranbury, NJ 08512
John F. Williams, Jr., 150(5)2,800(5) (5)
M.D.
George Washington
University
2300 Eye Street, N.W.
Suite 713E
Washington, DC 20037
43
Percentage
Class A Class B Class C Class D of General
Name and Address of Common Common Common Common Voting
Beneficial Owner(1) Stock(2) Stock(2) Stock(2) Stock(2) Power(3)
------------------- --------- --------- -------- -------- ----------
Debra K. Osteen 88,940(5)(9) (5)
Kirk E. Gorman 50,542(5)(12)117,850(5)(9) (5)
Steve G. Filton 67,926(5)(12)125,144(5)(9) (5)
Richard C. Wright 12,400(5) 24,992(4)24,800(5) 66,880(4)(5)(12) 1,550(5) 350(5)(9) 3,100(5) 700(5) (5)
FMR Corp. 1,640,097(8) (5)
82 Devonshire Street (5.92%)
Boston, MA 02109
Capital Research 2,000,000(9) (5)
and Management Company (7.2%)
333 South Hope St.
Los Angeles, CA 90071
Morgan Stanley Dean 1,796,844(10) (5)
Witter & Co.
1585 Broadway (6.45%)
New York, NY 10036
Westport Asset 1,368,690(11)3,283,550(8) (5)
Management, Inc.
253 Riverside Avenue (5.9%)
Westport, CT 06880
All directors & 1,920,743 2,961,408(4)(12) 193,544 630 87.8%3,841,486 6,443,012(4)(9) 387,088 1,260 82.4%
executive officers
as a group (11(10 persons) (99.8%) (10.6%) (99.8%) (2.9%(3.2%)
- ----------
(1) Unless otherwise shown, the address of each beneficial owner is c/o
Universal Health Services, Inc., Universal Corporate Center, 367 South
Gulph Road, King of Prussia, PA 19406.
(2) Each share of Class A, Class C and Class D Common Stock is convertible
at any time into one share of Class B Common Stock.
(3) As to matters other than the election of directors, holders of Class A,
Class B, Class C and Class D Common Stock vote together as a single
class. Each share of Class A Common Stock entitles the holder thereof to
one vote; each share of Class B Common Stock entitles the holder thereof
to one-tenth of a vote; each share of Class C Common Stock entitles the
holder thereof to 100 votes (provided the holder of Class C Common Stock
holds a number of shares of Class A Common Stock equal to ten times the
number of shares of Class C Common Stock that holder holds); and each
share of Class D Common Stock entitles the holder thereof to ten votes
(provided the holder of Class D Common Stock holds a number of shares of
Class B Common Stock equal to ten times the number of shares of Class D
Common Stock that holder holds).
(4) Includes shares issuable upon the conversion of Classes A, C and/or D
Common Stock.
(5) Less than 1%.
(6) Includes 100,000200,000 shares of Class A Common Stock which are beneficially
owned by Mr. Miller and are held by Mr. Miller in trust for the benefit
of his spouse.spouse; and 1,500,000 shares which are held by A. Miller Family,
LLC whose members are three trusts of which Mr. Miller and Mr.
Pantaleoni are trustees, for the benefit of Mr. Miller's family. The
trustees have appointed Marc Miller (who is the son of Alan B. Miller)
as the manager of the A. Miller Family, LLC. During the tenure of such
appointment (which is at the discretion of the trustees), Marc Miller
has voting and disputive power with respect to the Class A Common Stock
held by the A. Miller Family, LLC.
(7) Includes 2,8905,780 shares of Class B Common Stock and 280560 shares of Class D
Common Stock which are beneficially owned by Mr. Pantaleoni and are held
by Mr. Pantaleoni in trust for the benefit of certain members of his
family.
(8) These securities are held by FMR Corp., a parent holding company.
Information is based on Amendment No. II to Schedule l3G dated February
14, 2001.
(9) These securities are held by Capital Research and Management Company.
Information is based on Schedule l3G dated February 12, 2001.
(10) These securities are held by Morgan Stanley Dean Witter & Co., a
registered investment advisor. Information is based on Schedule 13G
dated February 12, 2001.
(11) These securities are held by Westport Asset Management, Inc., a
registered investment advisor. Information is based on Amendment No. 2
to Schedule 13G dated February 14, 2001.
(12)15, 2002.
(9) Includes 219,3751,011,000 shares issuable pursuant to stock options to purchase
Class B Common Stock held by directors and officers of the Company and
exercisable within 60 days of February 28, 2001March 31, 2002 as follows: Leatrice Ducat
(3,125);(12,500), John H. Herrell (5,000);(17,500), Robert H. Hotz (5,000)(17,500); Alan B.
Miller (177,500)(832,500); Anthony Pantaleoni (5,000)(17,500); Joseph T. Sebastianelli
(625)John F. Williams, Jr.,
M.D. (2,500); Kirk E. Gorman (7,500)(35,000); Steve G. Filton (9,375)(25,000); Richard
C. Wright (3,750)(27,500) and Debra K. Osteen (2,500)(23,500).
54
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for a Board of
Directors of not fewer than three members nor more than nine members. The
Board of Directors is currently fixed at sevensix members, and is divided into
three classes, with members of each class serving for a three-year term. At
each Annual Meeting of Stockholders, directors are chosen to succeed those in
the class whose term expires at such Annual Meeting. Under the Company's
Restated Certificate of Incorporation, holders of shares of the Company's
outstanding Class B and Class D Common Stock are entitled to elect 20% (but
not less than one) of the directors, currently two directors, one in each of
Class II and Class III, and the holders of Class A and Class C Common Stock
are entitled to elect the remaining directors, currently fivefour directors, two
in Class I, twoone in Class II, and one in Class III.
The persons listed below currently constitute the Company's Board of
Directors. The term of the Class IIIII directors, Mr. Anthony Pantaleoni, Mr.
Robert H. HotzAlan B. Miller and Mr. Joseph T. Sebastianelli,Dr.
John F. Williams, Jr., expires at the 20012002 Annual Meeting. Mr. Anthony Pantaleoni, and Mr. Robert H. Hotz haveAlan B. Miller
has been nominated to be elected by the holders of Class A and Class C Common
Stock and Mr. Joseph
T. SebastianelliDr. John F. Williams, Jr. has been nominated to be elected by the
holders of Class B and Class D Common Stock. The Company has no reason to
believe that any of the nominees will be unavailable for election; however, if
any nominee becomes unavailable for any reason, the shares represented by the
Proxy will be voted for the person, if any, who is designated by the Board of
Directors to replace the nominee. All nominees have consented to be named and
have indicated their intent to serve if elected.
The following information is furnished with respect to each of the nominees
for election as a director and each member of the Board of Directors whose
term of office will continue after the meeting.
Class of Principal Occupation
Class of Stockholders During the Last Director
Name Director Entitled to Vote Age Five Years Since
---- -------- ---------------- --- -------------------- --------
NOMINEES WHOSE TERMS
EXPIRE IN 20012002
- --------------------
Anthony Pantaleoni...... II A Common 61 Of Counsel to the law firm of 1982
C Common Fulbright & Jaworski L.L.P., New
York, New York. Director of AAON,
Inc. and Westwood Corporation.
The Company utilized during the
year ended December 31, 2000 and
currently utilizes the services
of Fulbright & Jaworski L.L.P. as
counsel.
Robert H. Hotz.......... II B Common 56 Managing Director and Co-Head of 1991
D Common Corporate Finance in the Americas
for USB Warburg LLC.
Joseph T. II A Common 54 Currently, Chairman, Chief 2000
Sebastianelli.......... C Common Executive Officer and President
of onehealthbank.com, a
technology company in Cranbury,
New Jersey since May 2000.
Formerly Executive Vice President
of Scripps Health. Formerly,
President of Aetna, Inc. and
prior to its merger with Aetna in
1996, Co-President and Principal
Medical Administrative Officer of
U.S. Healthcare, Inc.
6
Class of Principal Occupation
Class of Stockholders During the Last Director
Name Director Entitled to Vote Age Five Years Since
---- -------- ---------------- --- -------------------- --------
DIRECTORS WHOSE TERMS
EXPIRE IN 2002
- ---------------------
Alan B. Miller.......... III A Common 6364 Chairman of the Board, President 1978
C Common and Chief Executive Officer of
the Company since 1978. Prior
thereto, President, Chairman of
the Board and Chief Executive
Officer of American Medicorp,
Inc. Trustee of Universal Health
Realty Income Trust. Director of
Penn Mutual Life Insurance
Company, CDI (NYSE) Corp. and
Broadlane, Inc.
John F. Williams, Jr., III B Common 5253 Vice President for Health Affairs 1999
M.D., Ed.D............. D Common and Dean of George Washington
University since 1997; Prior
thereto, Medical Director of The
George Washington University
Hospital, and Associate Vice
President for Health Affairs 1999
M.D., Ed.D............. D Common and Dean of George Washington
University since 1997; Prior
thereto, Medical Director of The
George Washington University
Hospital, and Associate Vice
President for Graduate Medical
Education at the School of
Medicine and Health Sciences;
Member of the American Public
Health Association, the American
Medical Association, the New York
Academy of Sciences, the American
Society of Anesthesiologists and
the Society of Critical Care
Medicine.
5
Class of Principal Occupation
Class of Stockholders During the Last Director
Name Director Entitled to Vote Age Five Years Since
---- -------- ---------------- --- -------------------- --------
DIRECTORS WHOSE TERMS
EXPIRINGEXPIRE IN 2003
- ---------------------
John H. Herrell......... I A Common 6061 Chairman of Mayo Foundation 1993
C Common Investment Committee; President
of Mayo Foundation for Medical
Education and Research; former
Vice President of Mayo Foundation
from January through mid-February
2002 and Chief 1993
C Commonformer Vice President
and Administrative Officer of
Mayo Foundation since 1993. Prior
thereto,from 1993 through
2001; Chief Financial Officer of
Mayo Foundation sincefrom 1984 until
1993 and various other capacities
since 1968.
Leatrice Ducat.......... I A Common 6869 President and Founder, National 1997
C Common Disease Research Interchange
since 1980; President and
Founder, Human Biological Data
Interchange since 1988; Founder,
Juvenile Diabetes Foundation,
National and International
Organization of the Juvenile
Diabetes Foundation; PastFoundation.
DIRECTORS WHOSE TERMS
EXPIRE IN 2004
- ---------------------
Anthony Pantaleoni...... II A Common 62 Of Counsel to the law firm of 1982
C Common Fulbright & Jaworski L.L.P., New
York, New York. Director of AAON,
Inc. and Westwood Corporation.
The Company utilized during the
year ended December 31, 2001 and
currently utilizes the services
of Fulbright & Jaworski L.L.P. as
outside counsel.
Robert H. Hotz.......... II B Common 57 Senior Vice Chairman and Founder, National
Diabetes Research Coalition.Managing 1991
D Common Director of Corporate Finance in
the Americas for UBS Warburg LLC.
Vote Required
The nominee receiving the highest number of affirmative votes of the shares
of Class A and Class C Common Stock, voting as a class and Class B and Class D
Common Stock, voting as a class, respectively, present in person or
represented by proxy and entitled to vote, a quorum being present shall be
elected as the Class III Directors. Only votes cast for a nominee will be
counted, except that the accompanying proxy will be voted for all nominees in
the absence of instruction to the contrary. Abstentions, broker non-votes and
instructions on the accompany proxy card to withhold authority to vote for one
or more nominees will result in the respective nominees receiving few votes.
However, the number of votes otherwise received by the nominee will not be
reduced by such action.
The Board of Directors recommends a vote FOR the election of these nominees
as Directors
6
PROPOSAL NO. 2
ADOPTION OF THE UNIVERSAL HEALTH SERVICES, INC.
EXECUTIVE INCENTIVE PLAN
Section 162(m) of the Internal Revenue Code imposes an annual $1,000,000
limitation on the amount of compensation the Company may deduct with respect
to each of its five most highly paid executives. It is intended that the
Universal Health Services, Inc. Executive Incentive Plan, if approved by the
stockholders of the Company, will enable the Company to avoid the deduction
limitation with respect to annual incentive compensation awards pursuant to a
performance-based compensation exception afforded by the Internal Revenue
Code. The proposed Executive Incentive Plan is substantially similar to and
updates and replaces an existing executive incentive plan.
Executive Incentive Plan
The following summary describes the principal features of the proposed
Executive Incentive Plan and is qualified in its entirety by reference to the
plan document, a copy of which is attached hereto as Exhibit A.
The purpose of the Executive Incentive Plan is to provide annual
performance-based incentive compensation to senior management and other
executive officers that is exempt from the deduction limitation under Section
162(m) of the Internal Revenue Code.
Annual incentive compensation may be awarded under the Executive Incentive
Plan to members of senior management and other executive officers of the
Company and its affiliates. The Executive Incentive Plan will be administered
by a committee of two or more directors appointed by the Board of Directors,
all of whom will qualify as "non-employee directors" under SEC Rule 16b-3 and
as "outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code. The Board of Directors has appointed a subcommittee of the Stock
Option and Compensation Committee comprised of Mr. Herrell and Ms. Ducat to
administer the Executive Incentive Plan.
For each calendar year, the Committee will establish annual performance
targets based upon an increase in "net income" from the preceding calendar
year and/or "return on capital," as determined by the Committee. For this
purpose, "net income" means the net income of the Company or of an affiliate,
division, hospital or other unit and "return on capital" means net income
divided by the quarterly average net capital of the Company or of an
affiliate, division, hospital or other unit. For each calendar year, the
Committee will also establish potential bonus amounts, expressed as a
percentage of each participant's base salary, which will be payable to a
participant if the performance targets are met. The performance targets and
potential bonus amounts may vary from year to year and from participant to
participant, all as determined by the Committee.
If a participant's performance targets for a calendar year are achieved,
then the participant will be entitled to receive an incentive payment equal to
100% of the participant's potential bonus amount for the year. No incentive
compensation will be payable for a year if neither performance target is
achieved, and a performance bonus (which may be greater than 100% of a
participant's base bonus amount) may be payable if either or both performance
targets are exceeded for a calendar year.
7
After the end of each calendar year, the Committee, based upon the Company's
financial statements for the year, will determine the amount, if any, of the
incentive compensation payable to each participant for the calendar year. A
participant's incentive award for a calendar year will be paid to the
Participant at such time as the Committee determines after written
certification by the Committee that the performance goals were in fact
satisfied. The Committee may also establish a procedure pursuant to which
payment of all or a portion of a participant's incentive award for a calendar
year will be deferred. Unless the Committee determines otherwise, no incentive
award will be payable to a participant with respect to a calendar year if the
participant's employment with the Company and its affiliates terminates at any
time prior to the payment thereof. In no event may a participant receive an
incentive award under the Executive Incentive Plan in excess of $5,000,000 for
any year.
The Board may amend or terminate the Executive Incentive Plan at any time.
Unless sooner terminated by the Board, the Executive Incentive Plan will
continue through the date of the first meeting of stockholders of the Company
(or any adjournment thereof) in 2007.
The awards that would be received by participants in the proposed Executive
Incentive Plan are not determinable at this time. Pursuant to the terms of
this Plan, executive officers would have received the same annual incentive
awards they received under the prior executive incentive plan, as follows:
Amount of Incentive
Compensation
Name and Position Awarded($)
- ----------------- -------------------
Alan B. Miller, Chairman of the Board, President and Chief
Executive Officer........................................ $1,200,000
Kirk E. Gorman, Senior Vice President, Treasurer and Chief
Financial Officer........................................ 248,000
Debra K. Osteen, Vice President........................... 42,000
Steve G. Filton, Vice President, Controller and
Secretary................................................ 158,000
Richard C. Wright, Vice President......................... 35,000
All other current Executives as a group................... 0
Non-Executive Director Group.............................. 0
Non-Executive Officer Employee Group...................... 0
Vote Required.
The affirmative vote of the holders of a majority of the shares of the
common stock votes present in person or represented by proxy is required for
the adoption of the proposal set forth above. Broker non-votes with respect to
this matter will be treated as neither a vote "for" nor a vote "against" the
matter, although they will be counted for determining whether there is a
quorum. Abstentions will not be voted, although they will be counted for
purposes of determining whether there is a quorum. Therefore, an abstention
will have the same legal effect as a vote "against" the matter because it
represents a share present or represented at the meeting and entitled to vote,
and thereby increases the number of affirmative votes required to approve this
proposal.
The Board of Directors recommends a vote FOR the adoption of the Universal
Health Services, Inc. Executive Incentive Plan.
8
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. BasedA Form 4 was not filed on reports filed with the
Company, the Company believes all required reports of executive officers and
directors were filed in a timely
manner.
7
PROPOSAL NO. 2
ADOPTION OF THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF CLASS B COMMON STOCK
The Board of Directors has unanimously adopted and submits to stockholdersbasis for their approval an amendment to Article Fourth of the Company's Restated
Certificate of Incorporation which would increase the number of shares of
Class B Common Stock that the Company is authorized to issue from 75,000,000
shares to 150,000,000 shares. The full text of the proposed amendment to
Article Fourth is set forth in Exhibit A hereto and the foregoing discussion
is qualified by reference thereto.
As of March 21, 2001, 1,924,443 shares of Class A Common Stock, 27,807,575
shares of Class B Common Stock, 193,924 shares of Class C Common Stock and
21,766 shares of Class D Common Stock were issued and outstanding. In
addition, as of March 21, 2001,Mr. Richard C. Wright regarding a total of 5,683,319 shares of Class B Common
Stock were reserved for issuance under the various employee benefit plans of
the Company, and a total of 3,750,000 shares of Class B Common Stock were
reserved for issuance upon conversion of outstanding convertible securities,
leaving 28,325,787 shares of Class B Common Stock unreserved and available for
issuance.
The Board of Directors has proposed this increase in the authorized number
of shares of Class B Common Stock and recommends its adoption in order to
provide the Company with greater flexibility to issue Class B Common Stock for
appropriate corporate purposes. Among the purposes for which such additional
authorized stock could be issued include funding its capital needs and
corporate growth, for the acquisition of desirable business, for stock options
to attract and retain employees and for stock splits and stock dividends. The
Board of Directors has declared, subject to approval of this Proposal, a 2 for
1 stock split in the form of a 100% stock dividend on all classes of its
Common Stock payable on June 1, 2001 to stockholders of record on May 16,
2001. If the Proposal is not adopted, the stock split will not be effected.
The Board of Directors has no current plans or intentions with respect to the
issuance of additional shares of Class B Common Stock other than for use in
connection with possible stock splits and for use in connection with the
Company's employee benefit plans.
Approval of the proposed amendment to the Restated Certificate of
Incorporation will allow the Board to effect the stock split described above
and move promptly to issue additional shares, if appropriate opportunities
should arise, without the delay and expense of calling a special stockholders'
meeting. The Board of Directors will determine whether, when and on what terms
the issuance of shares of Class B Common Stock may be warranted. Like the
presently authorized but unissued shares of Class B Common Stock, the
additional shares will be available without further action by the stockholders
unless such action is required by applicable law or regulations or stock
exchange rules. Stockholders do not presently have preemptive rights with
respect to the current authorized Class B Common Stock. Except in certain
cases such as a stock dividend, the issuance of additional shares of Class B
Common Stock would have the effect of diluting the voting powers of existing
stockholders.
8
Vote Required
The affirmative vote of the holders of a majority of the shares of Class B
Common Stock and a majority of the Common Stock votes of the Company
outstanding is required for the adoption of the proposal set forth above.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 2--THE ADOPTION OF THE AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF CLASS B COMMON STOCK" TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
9
PROPOSAL NO. 3
ADOPTION OF THE AMENDMENT TO THE
AMENDED AND RESTATED UNIVERSAL HEALTH SERVICES, INC.
1992 STOCK OPTION PLAN
On January 17, 2001, the Board of Directors of the Company adopted an
amendment to the Amended and Restated 1992 Stock Option Plan (the "1992
Plan"), subject to stockholder approval. The Amendment to the 1992 Plan will
increase the aggregate number of shares of Class B Common Stock which may be
issued pursuant to the exercise of options under the Plan from 4,000,000 to
5,500,000 shares, will increase the number of options any individual may
receive during any calendar year from 200,000 to 500,000 and will extend the
expiration date of the 1992 Plan from July 15, 2002 to July 15, 2005 (the
"Amendment"). The 1992 Plan will become effective only if approved by
stockholders representing a majority of the aggregate voting power of the
shares of outstanding Common Stock present and entitled to vote at the
meeting. The essential features of the 1992 Plan (including the Amendment) are
summarized below. The full text of the Amended and Restated 1992 Stock Option
Plan is set forth in Exhibit B to this Proxy Statement, and the following
discussion is qualified in its entirety by reference thereto.
The 1992 Plan is intended to aid the Company in attracting and retaining
officers, directors and employees who are in a position to contribute
materially to the successful conduct of the Company's business and affairs.
The Amendment is intended to furnish additional incentives whereby present and
future officers, directors and employees may be encouraged to acquire, or to
increase their holdings of, the Company's Class B Common Stock. The Company
had utilized virtually all options available for grant under the Plan and
therefore adopted the Amendment and Restatement to the 1992 Plan in January
2001.
On January 17, 2001, a total of 965,850 options were granted under the 1992
Plan, subject to stockholder approval of the Amendment to the 1992 Plan.
Options for approximately 1,170,000 shares will remain available for grant if
the proposal is adopted. The table below indicates options which have been
granted, subject to stockholder approval, to the named persons and to the
indicated groups of persons. Other awards under the 1992 Plan, as amended, are
not yet determinable. The closing price of the Company's Class B Common Stock
on the New York Stock Exchange on April 12, 2001 was $90.41. The dollar value
listed below is the excess of the closing price of the Company's Class B
Common Stock on April 12, 2001 over the exercise price of the total options
granted under the 1992 Plan. For a description of options granted in the last
fiscal year to certain executives of the Company, see "Executive
Compensation--Option Grants in Last Fiscal Year."
10
PLAN BENEFITS GRANTED TO DATE
1992 PLAN, AS AMENDED
Dollar Number of
Name and Position Value(1) Options(2)
- ----------------- ---------- ----------
Alan B. Miller............................................ $2,798,750 500,000
Kirk E. Gorman............................................ $335,850 60,000
Thomas J. Bender(3)....................................... $335,850 60,000
Debra K. Osteen........................................... $223,900 40,000
Richard C. Wright......................................... $223,900 40,000
All current executives as a Group......................... $223,900 40,000
Non-Executive Directors as a Group........................ $167,925 30,000
Non-Executive Officers, Employees as a Group.............. $1,096,270 195,850
- ----------
(1) Based on the difference between the exercise price and the closing sale
price of the Class B Common Stock on the New York Stock Exchange on April
12, 2001 of $90.41 per share.
(2) The table shown above contains the options granted in 2001 pursuant to the
1992 Plan, as Amended, which are subject to stockholder approval of the
Amendment to the 1992 Plan. For options granted to the five named
executives shown above during the last fiscal year, pursuant to the 1992
Plan, including options granted prior to the amendment, see "Executive
Compensation--Option Grants in Last Fiscal Year."
(3) Mr. Bender's employment with the Company was terminated during the first
quarter of 2001. The options granted, shown on the table above, were
cancelled upon his termination.
Description of the Amended and Restated 1992 Stock Option Plan
The 1992 Plan permits the granting of options to purchase an aggregate of
5,500,000 shares of the Company's Class B Common Stock (prior to the
Amendment, the limit was 4,000,000 shares) to certain key employees, directors
of and consultants to the Company or any of its subsidiaries. Directors are
eligible to receive options under the Plan, regardless of whether they are
otherwise employed by the Company. Approximately 300 persons are eligible to
participate in the Plan.
The 1992 Plan will be administered by the Board of Directors; however, the
Board of Directors may appoint a committee (the "Committee") of the Board
whose members shall satisfy the requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the requirements of Rule
16b-3(a)(3)(i) under the Securities and Exchange Act of 1934, as amended (or
any further successor laws or regulations), to grant options to executive
officers of the Company. The Board of Directors currently administers the 1992
Plan.
11
Subject to the provisions of the 1992 Plan, the Board of Directors has the
authority to determine the individuals to whom stock options will be granted,
the number of shares to be covered by each option, the option price, the terms
for the payment of the option price and other terms and conditions. In the
case of options granted by the Committee, the exercise price shall not be less
than the fair market value of the Class B Common Stock. Payment for shares
acquired upon exercise of an option may be made in cash, by promissory note or
by shares of Class B Common Stock. The Company provides a three-year loan for
participants in the 1992 Plan, to cover the tax liability incurred by
optionees upon exercise of the option ("Option Loan"). The loan will be
forgiven on the maturity date if the optionee is employed by the Company on
that date. No person may receive grants of options to purchase more than
500,000 shares in any one calendar year (prior to the Amendment, the limit was
200,000 shares).
All options must expire no later than ten years from the date of grant. In
general, except as otherwise provided by the Board of Directors or the
Committee, no option may be exercised after the termination of the optionee's
service with the Company and subsidiaries. However, the option exercise is
extended to twelve months after termination if the optionee's service is
terminated by reason of disability or death.
Options may be transferred to members of the immediate family of an optionee
or to trusts for the benefit of immediate family members unless otherwise
prohibited. The Board of Directors may amend or terminate the 1992 Plan, at
any time, without the consent of the Company's stockholders. In any event, no
options may be granted under the 1992 Plan after July 15, 2005 (prior to the
Amendment the expiration date was July 15, 2002).
Federal Income Tax Consequences
The following is a summary of the salient federal income tax consequences
associated with awards made under the 1992 Plan.
The grant of an option under the 1992 Plan is not a taxable event. In
general, if and when a non-qualified option is exercised, the optionee will
recognize ordinary income equal to the excess of the value of the Common Stock
acquired upon the exercise over the exercise price (i.e., the option spread),
and the Company will generally be entitled to a corresponding deduction. If
shares of Common Stock acquired upon the exercise of an option are subject to
the six-month sale restriction under Section 16(b) of the Securities Exchange
Act of 1934, then the optionee will recognize ordinary income attributable to
the exercise on the date the restriction lapses unless an early income
recognition election is made. Upon a later sale of the shares, the optionee
will realize capital gain or loss equal to the difference between the selling
price and the value of the shares at the time ordinary income is recognized.
The Company has not, and does not intend to, grant incentive stock options
under the 1992 Plan.
Vote Required
The affirmative vote of the holders of a majority of the shares of the
Common Stock votes of the Company present and entitled to vote at the 2001
Annual Meeting of Stockholders is required for the adoption of the proposal
set forth above.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 3--ADOPTION OF THE AMENDMENT TO
THE AMENDED AND RESTATED 1992 STOCK OPTION PLAN," TO BE IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL
THEREOF.
12
PROPOSAL NO. 4
ADOPTION OF THE 2001 EMPLOYEES' RESTRICTED STOCK
PURCHASE PLAN
On March 7, 2001, the Board of Directors adopted the 2001 Employees'
Restricted Stock Purchase Plan (the "Restricted Stock Plan"), subject to
stockholder approval. The Restricted Stock Plan provides for the purchase by
certain employees of, and consultants to, the Company of shares of Class B
Common Stock of the Company at a price equal to the par value of such shares
at the time of such sale. The Restricted Stock Plan is administered by a
committee (the "Committee") which consists of not less than two "non-employee
directors", as that term is defined in Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. Currently, the Stock Option and Compensation
Committee has been appointed as the Committee under the Plan. The Committee
has full authority under the Restricted Stock Plan to select the employees to
whom shares shall be sold, to determine the number of shares to be sold, the
times at which shares shall be sold, the time at which the restrictions on the
shares shall lapse and the terms and conditions of the Restricted Stock
Purchase Agreement (the "Agreement") pursuant to which the shares are sold.
The Company may grant restricted shares to a person in lieu of other
compensation earned under incentive plans of the Company. The Agreement gives
the Company the right to repurchase all of the shares sold to an employee, for
an amount equal to the price paid by the employee, in the event his employment
terminates for any reason during the periods set forth in the Agreement.
The Restricted Stock Plan authorizes the issuance of up to 300,000 shares of
the Company's Class B Common Stock prior to its expiration on March 7, 2010.
The closing price of the Company's Class B Common Stock on the New York Stock
Exchange on April 12, 2001 was $90.41. The Restricted Stock Plan was adopted
for the purposes of encouraging key employees and consultants, who are
expected to make continued substantial contributions to the development of the
Company, to increase their personal and proprietary interesttransaction in the Company's growth and success. A person granted shares under the Restricted Stock
Plan
will realize ordinary income when the shares granted become transferable or
are no longer subject to the risk of forfeiture in an amount equal to the
excess of the fair market value of the shares at that time over the purchase
price. The Company will be able to claim a business expense deduction in an
equal amount. The Board of Directors may amend or terminate the Restricted
Stock Plan at any time, provided that, no amendment which would increase the
number of shares which may be issued under the Plan without approval of the
Company's stockholders if and to the extent such approval is necessary or
desirable to comply with applicable law or exchange requirements. In addition,
no amendment or termination shall affect the rights of any employee with
respect to shares previously sold under the Restricted Stock Plan.
The full text of the Restricted Stock Plan is set forth in Exhibit C, andMarch 2001 but this summary is qualified in its entirety by reference thereto.
In lieu of a portion of the cash bonus earned by Mr. Alan B. Miller under
the Executive Incentive Plan, on March 7, 2001, the Committee granted Mr.
Miller 5,800 shares of Restricted Stock which are subject to the approval of
the Restricted Stock Plan at the next meeting of the stockholders. The rights
to these shares will vest in one year from the date of grant, provided Mr.
Miller remains employed by the Company on such date. Under the terms of the
grant, Alan B. Miller paid cash in an amount equal to the aggregate par value
of the shares granted. The market price on the date of the grant to Alan B.
Miller was $86.45. Other awards under the Restricted Stock Plan are not yet
determinable.
13
PLAN BENEFITS GRANTED TO DATE
RESTRICTED STOCK PLAN
Dollar Number of
Name and Position Value(1) Shares
- ----------------- -------- ---------
Alan B. Miller............................................... $501,410 5,800
Kirk E. Gorman............................................... 0 0
Thomas J. Bender(2).......................................... 0 0
Debra K. Osteen.............................................. 0 0
Richard C. Wright............................................ 0 0
All current executives as a Group............................ 0 0
Non-Executive Directors as a Group........................... 0 0
Non-Executive Officers, Employees as a Group................. 0 0
- ----------
(1) Based on the closing sale price of the Class B Common Stock on the New
York Stock Exchange on March 7, 2001 of $86.45 per share.
(2) Mr. Bender's employment with the Company was terminated during the first
quarter of 2001.
Approximately 300 employees are eligible to participate in the Plan.
Vote Required
The affirmative vote of a majority of the shares of the Common Stock votes
of the Company present and entitled to vote at the 2001 Annual Meeting of
Stockholders is required for the adoption of the proposal set forth above.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 4--ADOPTION OF THE 2001 EMPLOYEES'
RESTRICTED STOCK PURCHASE PLAN," TO BE IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
14transaction has subsequently been reported.
9
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid or to be paid by
the Company as well as certain other compensation paid or accrued, during the
fiscal years indicated, to the Chairman of the Board, President, and Chief
Executive Officer and the four highest paid executive officers of the Company
for such period in all capacities in which they served.
In April, 2001, the Company declared a two-for-one stock split in the form
of a 100% stock dividend which was paid on June 1, 2001 to stockholders of
record as of May 16, 2001. All classes of common stock participated on a pro
rata basis and all references to share quantities for all periods presented
have been adjusted to reflect the two-for-one stock split.
SUMMARY COMPENSATION TABLE
Long-term
Annual compensation compensation awards
All
------------------------------------------------------------------------ --------------------- other
Restricted Securities compen-All other
Other Annual stock Underlying sationcompen-
Name and principal Fiscal Bonus Compensation ($) awards ($) Options sation ($)
position Year Salary ($) Bonus ($) (a) (b) (#) (c)
------------------ ------ -------- ------------------ ---------- ---------------- ---------- ---------- -----------------
Alan B. Miller, Chairman
of the Board,
President, and Chief
Executive Officer...... 2001 $1,000,000 $1,200,000 $ 0 $ 31,390 1,000,000 $92,924
2000 $947,600 $507,590 $947,600 507,590 819,548 $1,004,667 45,000 $12,9721,004,667 90,000 80,280
1999 920,000 0 1,996,327 24,342 220,000 11,172
1998 884,000 593,406 4,556 196,930 150,000 12,772440,000 56,139
Kirk E. Gorman, Senior
Vice President,
Treasurer and Chief
Financial Officer.... . 2001 $ 310,375 $ 248,000 $ 498,727 $ 6,224 120,000 $ 3,400
2000 $293,906 $209,000 $293,906 209,000 325,186 $ 111,616 20,000 $40,000 3,400
1999 282,719 0 160,025 5,684 30,00060,000 1,600
1998 267,975 118,981 0 40,873 22,000 3,200
Thomas J. Bender, Senior
Vice President(d)...... 2000 $275,000 $190,000 $ 0 $ 5,208 20,000 $ 3,400
1999 225,750 148,148 248,694 6,096 33,500 1,600
1998 207,500 127,364 0 43,023 15,000 3,200
Debra K. Osteen, Vice
President ............. 2001 $ 265,000 $ 241,000 $ 174,622 $ 2,977 80,000 $ 3,400
2000 $222,000 $206,000 $222,000 206,000 96,975 $ 3,205 17,000 $34,000 3,400
1999 186,000 195,300 100,516 2,760 6,00012,000 1,600
1998 174,000 57,420 15,786 20,187 5,000 3,200Steve G. Filton, Vice
President, Controller
and Secretary.......... 2001 $ 247,650 $ 208,000 $ 351,298 $ 3,698 80,000 $ 3,400
2000 226,950 129,000 186,948 62,168 25,000 3,400
1999 213,450 0 133,670 3,542 42,000 1,600
Richard C. Wright, Vice
President ............. 2001 $ 218,525 $ 165,000 $ 521,277 $ 812 80,000 $ 3,400
2000 $210,125 $195,000 $210,125 195,000 160,228 $ 2,564 12,500 $25,000 3,400
1999 203,333 15,000 104,233 8,526 15,00030,000 1,600
1998 193,333 30,022 0 22,640 15,000 3,200
10
- ----------
(a) Other annual compensation for Mr. Alan B. Miller includes: (i) $0 in 2001,
$814,992 in 2000 and $1,991,771 in 1999 which represents forgiveness of
principal under Option Loans, and; (ii) $4,556 in 2000 $4,556 in 1999 and $4,556 in 19981999
for other compensation. Other annual compensation for Messrs. Gorman,
Bender,Filton, Wright and Ms. Osteen in 2001, 2000 1999 and 19981999 represents
forgiveness of principal under Option Loans.
15
(b) Restricted stock awards represent (i) the value of Class B Common Shares
received by those executives in lieu of cash payments pursuant to the
Company's 1992 Stock Bonus Plan ("Bonus Shares") for 1998 only; (ii) the portion of additional restricted
shares ("Premium Shares") equal to 20% of the Bonus Shares issued in prior
years which vested in 2001, 2000 1999 and 1998;1999; and (iii)(ii) the value of the Class
B Common Shares issued in connection with the 1990 Employees' Restricted
Stock Purchase Plan (the "1990 Plan") and the 2001 Employees' Restricted
Stock Purchase Plan (the "2001 Plan"). Restrictions on one-half of the
Bonus Shares and the Premium Shares lapse after one year from date of
grant and restrictions on the remaining Bonus Shares and Premium Shares
lapse two years after the date of grant.
Restricted stock awards for Mr. Alan B. Miller include: (i) $148,352$31,390 in
1998 only, representing the value of the Bonus Shares, and; (ii)2001, $20,632 in 2000 and $24,342 in 1999 and $48,578 in 1998 representing the value of the
vested portion of the Premium Shares. In May of 2000, Mr. Alan B. Miller
was granted an award of 9,00018,000 shares of the Company's Class B Common Stock
(market value of $482,625 on the date of grant), under the 1990 Plan, on
which restrictions will lapse on May 17, 2002. Additionally, included as
part of his compensation in 2000, in March of 2001, Mr. Alan B. Miller was
granted an award of 5,80011,600 shares of the Company's Class B Common Stock
(market value of $501,410 on the date of grant), under the 2001 Plan, on
which restrictions will lapselapsed on March 7, 2002. The shares granted to Mr. Alan B. Miller in 2001 pursuant to the
terms of the 2001 Plan, were granted subject to shareholder approval, as
mentioned above.
Restricted stock awards for Mr. Kirk E. Gorman include: (i) $29,745$6,224 in 1998
only, representing the value of the Bonus Shares, and; (ii)2001,
$4,366 in 2000 and $5,684 in 1999 and $11,128 in 1998 representing the value of the vested
portion of the Premium Shares. In May of 2000, Mr. Kirk E. Gorman was
granted an award of 2,0004,000 shares of the Company's Class B Common Stock
(market value of $107,250 on the date of grant), under the 1990 Plan, on
which restrictions will lapse on May 17, 2002. Restricted stock awards for
Mr. Thomas J. Bender include: (i) $31,841 in 1998 only, representing the
value of the Bonus Shares, and; (ii) $5,208 in 2000, $6,096 in 1999 and
$11,182 in 1998 representing the value of the vested portion of the Premium
Shares. Restricted stock awards for Ms. Debra K. Osteen include: (i) $14,355$2,977 in 1998 only, representing the value of the Bonus Shares, and; (ii)2001, $3,205 in 2000 and $2,760
in 1999 and $5,832 in 1998 representing the value of the vested portion of the Premium Shares.
Restricted stock awards for Mr. Steve G. Filton include: (i) $3,698 in
2001, $2,644 in 2000 and $3,542 in 1999 representing the value of the
vested portion of the Premium Shares. In May of 2000, Mr. Steve G. Filton
was granted an award of 2,220 shares of the Company's Class B Common Stock
(market value of $59,524 on the date of grant), under the 1990 Plan, on
which restrictions will lapse on May 17, 2002. Restricted stock awards for
Mr. Richard C. Wright include: (i) $3,755$812 in 1998 only, representing the value
of the Bonus Shares, and; (ii)2001, $2,564 in 2000 and $8,526
in 1999 and $18,885
in 1998 representing the value of the vested portion of the Premium Shares.
There were no Bonus Shares issued in 2001, 2000 or 1999.
At December 31, 2000, Messrs. Miller, Gorman, Bender, Wright and Ms. Osteen
held 2,088, 418, 447, 53, and 201 shares, respectively, of restricted Bonus
Shares and Premium Shares, with a value based on the closing price of the
shares on that date of $233,334, $46,712, $49,952, $5,923, and $22,462,
respectively.
(c) All other compensation includes the Company's match of officers'each officer's
contributions to the Company's 401(k) plan of $3,400 in 2001, $3,400 in
2000 and $1,600 in 1999, and, for Mr. Alan B. Miller, the total includes
$9,572 in each year2000 and 1999 related to term life insurance premiums paid for
by the Company.
(d)Company and $89,524 in 2001, $67,308 in 2000 and $44,967 in 1999
related to imputed interest income to Mr. Thomas J. Bender's employmentMiller resulting from a split
dollar, second to die insurance agreement covering two policies with a
combined $16.0 million face value entered into in October of 1998. In
January of 2002, the Company was terminated during
the first quarterentered into two additional split dollar life
insurance agreements covering policies with a combined face value of 2001.
As part of the Company's Executive Incentive Plan, target levels of net
income and return on assets$30.5
million (see Split Dollar Life Insurance Agreements for the Company as a whole are recommended on
an annual basis by senior management of the Company and approved by the
Committee of the Board of Directors which administers the Plan.
16additional
disclosure).
11
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
--------------------------------------------
Potential Realizable
Value at Assumed
Number of Percentage of Annual Rates of
Securities Total Exercise Stock Price
Underlying Options Price Appreciation for
Options Granted to Per Option Term
Granted Employees in Share Expiration ------------------------------------------
Name (#) (a) Fiscal Year ($/SH) Date 5%($) 10%($)
---- ---------- ------------- -------- ---------- -------- --------------------- -----------
Alan B. Miller........ 45,000 17.4% $44.56251,000,000 50.7% $42.4063 1/19/05 $554,028 $1,224,26317/06 $11,716,013 $25,889,470
Kirk E. Gorman........ 20,000 7.8% $44.5625120,000 6.1% $42.4063 1/19/05 $246,23517/06 $ 544,117
Thomas J. Bender (b).. 20,000 7.8% $44.5625 1/19/05 $246,2351,405,922 $ 544,1173,106,736
Debra K. Osteen....... 10,000 3.9% $44.562580,000 4.1% $42.4063 1/19/05 $123,11717/06 $ 272,059
7,000 2.7% $67.4375 7/19/05 $130,421937,281 $ 288,1992,071,158
Steve G. Filton....... 80,000 4.1% $42.4063 1/17/06 $ 937,281 $ 2,071,158
Richard C. Wright..... 12,500 4.8% $44.562580,000 4.1% $42.4063 1/19/05 $153,89717/06 $ 340,073937,281 $ 2,071,158
- ----------
(a) Options are exercisable as follows: 25% one year after date of grant and an
additional 25% in each of the second, third and fourth years after date of
grant. The options expire five years after the date of grant.
(b) Mr. Bender's employment with the Company was terminated during the first
quarter of 2001. The options granted, shown on the above table, were
cancelled upon his termination.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Unexercised Options at in-the-Money Options at
Shares Value Fiscal Year-End (#) Fiscal Year-End ($) (2)
Acquired on Realized ------------------------- -------------------------
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------------- ----------- ------------- ----------- -------------
Alan B. Miller.......... 300,000 $17,125,000 160,000 295,000 $11,346,328 $22,422,4220 $ 0 547,500 1,362,500 $12,618,992 $9,606,984
Kirk E. Gorman.......... 55,00047,000 $1,121,587 0 191,000 $ 2,412,094 0 59,000$1,682,784
Debra K. Osteen......... 4,500 $ 161,313 14,500 114,000 $ 280,044 $ 660,086
Steve G. Filton......... 39,250 $ 900,160 0 127,250 $ 0 $1,100,070
Richard C. Wright....... 28,750 $ 596,636 0 121,250 $ 0 $ 4,235,625
Thomas J. Bender (3).... 45,125 $ 1,932,625 0 56,375 $ 0 $ 3,948,313
Debra K. Osteen......... 7,500 $ 319,313 2,250 24,250 $ 161,313 $ 1,545,344
Richard C. Wright....... 18,750 $ 640,781 0 35,000 $ 0 $ 2,341,250869,609
- ----------
(1) Based on the difference between the exercise price and the closing sale
price of the Class B Common Stock on the New York Stock Exchange on the
date of exercise.
(2) Based on the difference between the exercise price and the closing sale
price of the Class B Common Stock on the New York Stock Exchange on
December 29, 200031, 2001 of $111.75$42.78 per share.
(3) Mr. Bender's employment with the Company was terminated during the first
quarter of 2001 and his outstanding options with vesting dates after April
1, 2001 were cancelled.
1712
EMPLOYMENT CONTRACTEmployment Agreement
The Company and Alan B. Miller have entered into an amended and restated
employment contractagreement as of November 14, 2001 (the "Employment Agreement")
pursuant to which Mr. Miller will act as President and Chief Executive Officer
of the Company until December 31, 2002.2007 or, if the Company or Mr. Miller so
elects, until December 31, 2012. In addition, the Employment Agreement
provides for a five-year consulting arrangement commencing upon terminationthe expiration
of the term of Mr. Miller's active employment, during which period he will be
paid an annual fee equal to one-half of his base salary in effect at the date of
expiration of the term of active employment. During the period of his active
employment, Mr. Miller wasis entitled to a salary of $675,000$1,000,000 for the year
ended December 31, 1992,2001, to be increased in each year thereafter by an amount
equal to not less than the percentage increase in the consumer price index
over the previous year. Mr. Miller is also entitled to an annual bonus of at
least $100,000, and payment of insurance premiums, including income tax reimbursements, of $13,674 per annum,other fringe benefits
previously enjoyed in accordance with past practice, as well as such other
compensation as the Board of Directors may determine in its discretion. Mr.
Miller may be discharged only for cause or permanent disability. In connection
with the Employment Agreement, Mr. Miller has agreed not to compete with the
Company during the term of the Employment Agreement and for a period of one
year after termination if he is terminated for cause.
Executive Retirement Income Plan
In October, 1993, the Board of Directors adopted the Executive Retirement
Income Plan pursuant to which certain management or other highly compensated
employees designated by the Board of Directors who have completed at least 10
years of active employment with the Company may receive retirement income
benefits. The monthly benefit is payable to a participant who retires after he
or she reaches age 62 and is equal to 3% of the employee's average monthly
base salary over the three years preceding retirement multiplied by the number
of full years (not to exceed 10) of the participant's active employment with
the Company. Payment of the benefit will be made in 60 monthly installments
following the participant's retirement date. Under certain circumstances, the
participant may be entitled to elect to receive the present value of the
payments in one lump sum or receive payments over a period of 10 years. The
estimated annual benefits payable (for the 60 months in which the participant
receives benefits) upon retirement at age 65 for each of Alan B. Miller, Kirk
E. Gorman, Thomas J. Bender,Steve G. Filton, Richard C. Wright and Ms. Debra K. Osteen assuming
their annual compensation increases by 4% annually, would be $296,000, $147,000,$312,000,
$149,000, $94,000$157,000, $93,000 and $167,000$155,000 respectively. If an employee ceases
employment with the Company prior to age 62, no retirement income will be
payable to the participant unless the Board of Directors determines otherwise.
Split Dollar Life Insurance Agreements
In October 1998, UHS entered into split dollar life insurance agreements,
with a combined face value of $16.0 million, in connection with second to die
insurance policies issued on the lives of Alan B. Miller and his wife and
owned by the Alan B. Miller 1998 Dual Life Insurance Trust (the "1998 Trust").
This agreement and the related collateral assignment were assumed by and
assigned to the Company in October 1998. As currently in force, this agreement
requires the Company to make annual premium payments on the policies and gives
the Company an economic interest in the policies. In 2002, the Company will
make premium payments pursuant to this agreement of $270,500, and the 1998
Trust will reimburse the Company the one-year term cost of the insurance
protection to which the 1998 Trust is entitled under the insurance policies
pursuant to the terms of such split dollar life insurance agreement as such
cost is determined under the principles established by
13
applicable U.S. Treasury Department pronouncements, rulings and regulations
which shall be the lesser of an amount determined in accordance with
applicable U.S. Treasury Department pronouncements, rulings and regulations in
effect for such insurance protection; or the current published one-year term
rates available to all standard risks of the insurance company issuing such
insurance. The Company is entitled to receive a portion of the death proceeds
equal to its share of the aggregate premium payments. The Company's interest
in each policy is secured by a collateral assignment of the policy.
UHS entered into two additional split dollar life insurance agreements, with
a combined face value of $30.5 million, in connection with life insurance
policies issued on the life of Alan B. Miller and owned by the Alan B. Miller
2002 Trust (the "2002 Trust") in January 2002. These agreements and the
related collateral assignments were assumed by and assigned to the Company in
January 2002. As currently in force, these agreements require the Company to
make annual premium payments on the policies and give the Company an economic
interest in the policies. In 2002, the Company will make premium payments
pursuant to these agreements of $942,274, and the 2002 Trust will reimburse
the Company the one-year term cost of the insurance protection to which the
2002 Trust is entitled under the insurance policies pursuant these split
dollar life insurance agreements, as such cost is determined under the
principles established by applicable U.S. Treasury Department pronouncements,
notices, rulings and regulations in effect for determining such costs for
insurance protection, which, subject to and until changed, shall be the lesser
of the current published one-year term rates of the issuing insurance company
pursuant to the guidelines set forth in Rev. Rul. 66-110 and Rev. Rul. 67-154
or the Table 2001 set forth in IRS Notice 2002-8. The Company is entitled to
receive a portion of the death proceeds equal to its share of the aggregate
premium payments. The Company's interest in each policy is secured by a
collateral assignment of the policy.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Stock Option and Compensation Committee Interlocks and Insider Participation
The Committee of the Board of Directors was comprised during 2000 of four
non-employee directors, Anthony Pantaleoni, Robert H. Hotz, John H. Herrell
and Leatrice Ducat.
Anthony Pantaleoni is Of Counsel to Fulbright & Jaworski L.L.P., which servesthe law
firm used by the Company as the Company'sits principal outside counsel. This law firm also
provides personal legal services to the Company's Chief Executive Officer. Mr.
Pantaleoni is also the trustee of certain trusts for the benefit of the Chief
Executive Officer and his family. Robert H.
Hotz, serves asis Senior Vice Chairman and
Managing Director and Co-Head of Corporate Finance in the Americas atof UBS Warburg LLC, the
investment banking firm which provided consulting services and brokerage
services for the Company's share buy-back program and acted as one of the
Company's principal underwritersinitial purchasers for the discounted Convertible Debentures
that wereconvertible debentures issued by the Company duringin 2000.
18
COMMITTEE REPORT TO SHAREHOLDERS
The report of the Stock Option and Compensation Committee shall not be
deemed incorporated by reference by any general statement incorporating by
reference to this proxy statement into any filing under the Securities Act of
1933, as amended, or under the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
14
Compensation Philosophy
The Committee regularly reviews and, with any changes it believes
appropriate, approves the Company's compensation program. The Company believes
that executive compensation should be closely related to the value delivered
to stockholders. This belief has been adhered to by developing incentive pay
programs which provide competitive compensation and reflect Company
performance. Both short-term and long-term incentive compensation are based on
Company performance and the value received by stockholders.
In designing its compensation programs, the Company follows its belief that
compensation should reflect the value created for stockholders while
supporting the Company's strategic business goals. In doing so, the
compensation programs reflect the following themes:
. Compensation should encourage increased stockholder value.
. Compensation programs should support the short-term and long-term
strategic business goals and objectives of the Company.
. Compensation programs should reflect and promote the Company's values,
and reward individuals for outstanding contributions toward business
goals.
. Compensation programs should enable the Company to attract and retain
highly qualified professionals.
Pay Mix and Measurement
The Company's executive compensation is based on three components, each of
which is intended to serve the overall compensation philosophy.
Base Salary
The Company's salary levels are intended to be consistent with competitive
pay practices and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance of the Company, the
performance of the individual executive and general economic conditions.
Short-Term Incentives
OnIn May 18, 1994, the Company's stockholders approved the adoption of the
Company's Executive Incentive Plan. At this year's Annual Meeting of
Stockholders, the Stockholders are being asked to approve a replacement
Executive Incentive Plan. See "Proposal No. 2--Adoption of the Universal
Health Services, Inc. Executive Incentive Plan." Pursuant to that Plan, at the
start of each fiscal year, target levels of net income and return on assets
for the Company as a whole ("Company Targets") and target levels of net income
for each of the Company's individual divisions and facilities ("Division
Targets") are recommended by senior management of the Company and approved by
the Committee of the Board of Directors which administers the Plan. In
accordance with the Plan, a subcommittee consisting of Mr. Herrell and Ms.
Ducat established salary and bonus targets in March 20002001 for the 20002001 calendar
year. Similarly, a subcommittee will establish salary and bonus targets for
future years in accordance with tax law
19
requirements. The Committee expects to
continue the basic policies outlined below. All senior executives of the
Company, including heads of divisions and facilities, have the opportunity to
earn as a bonus for a fiscal year an amount equal to a portion of their base
salary for that fiscal year, depending on whether and to what extent the
Company Targets and/or the Division Targets are achieved. For fiscal 2000,2001, (i)
Alan B. Miller, the Company's
15
Chairman and President, was entitled to a bonus of 106%120% of his base salary
based on the achievement of Company Targets, (one-half of the bonus was paid in cash and
one-half was awarded with a grant of 5,800 shares of restricted stock issued
pursuant to the terms of the 2001 Employee's Restricted Stock Purchase Plan), (ii) Kirk E. Gorman, a Senior
Vice President of the Company, was entitled to a bonus of 71%80% of his base
salary based on the achievement of Company Targets, (iii) Thomas J. Bender,Steve Filton, a Senior Vice
President ofat the Company (his employment
with the Company was terminated during the first quarter of 2001) was entitled to a bonus of 69%64% of his base salary
based on the achievement of Company Targets and, separately, Mr. Filton received
a $50,000 bonus for heading the Acute Care Division, Targets,on an interim basis
during 2001, (iv) Debra K. Osteen, a Vice President of the Company, was
entitled to a bonus of 93%91% of her base salary based on the achievement of
Company Targets and the Division Targets, and; (v) Richard C. Wright, Vice
President of the Company, was entitled to a bonus of 64%16% of his base salary
based on the achievement of Company Targets, plus $60,000$130,000 related to
completed hospital acquisitions. Seventy-five percent (75%) of the respective bonusesbonus of Mr. Bender and
Ms. Osteen werewas determined based on the achievement of the Division Targets and
the remaining 25% of such bonuses were determined based on the achievement of
Company Targets. Depending upon the actual performance of the Company and the
Divisions compared to Company Targets and/or the Division Targets, the senior
executives can receive bonuses up to 150% of their base salaries.
Long-Term Incentives
Stock options are granted from time to time to reward key employees'
contributions. The grant of options is based primarily on a key employee's
potential contribution to the Company's growth and profitability. Options are
granted at the prevailing market value of the Company's Common Stock and will
only have value if the Company's stock price increases. Generally, grants of
options vest in equal amounts over four years and executives must be employed
by the Company for such options to vest.
20002001 Compensation
The base salary for the Chairman and President was increased during 20002001 to
$947,600.$1,000,000. This represents a 3%5.5% increase over 1999.2000.
The Stock Option and Compensation Committee believes that linking executive
compensation to corporate performance results in a better alignment of
compensation with corporate business goals and stockholder value. As
performance goals are met or exceeded, resulting in increased value to
stockholders, executives are rewarded commensurately. The Stock Option and
Compensation Committee believes that compensation levels during 20002001
adequately reflect the Company's compensation goals and policies.
The Committee intends that compensation awarded to individuals will be to
the extent practicable eligible for deduction under Section 162(m) of the
Internal Revenue Code but will in certain circumstances award compensation not
eligible for such deductions.
STOCK OPTION AND COMPENSATION COMMITTEE
John H. Herrell Robert H. Hotz
Leatrice Ducat Anthony Pantaleoni
2016
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(The Company, S&P 500 Peer Group and Old Peer Group)
[GRAPH]
1995
1996 1997 1998 1999 2000 2001
------- ------- ------- ------- ------ -------------
- -
Universal Health Services-
CLB $100.00 $129.01 $227.04 $233.80 $162.25 $503.65$175.98 $181.22 $125.76 $390.39 $298.90
S & P 500 Index $100.00 $122.96 $163.98 $210.85 $255.21 $231.98$133.36 $171.48 $207.56 $188.66 $166.24
Peer Group $100.00 $118.53 $110.06 $94.23 $94.02 $155.66
Old Peer Group $100.00 $119.22 $109.68 $94.11 $96.80 $156.49$92.85 $79.50 $79.32 $131.33 $130.36
The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the Company, the
peer group, the old peer group and the S&P 500 Composite is based on the stock
price or composite index at the end of fiscal 1995.1996.
The above graph compares the performance of the Company with that of the S&P
500 Composite a group of peer companies, and a group of old peer companies, where performance has been
weighted based on market capitalization. Companies in the peer group, which
consist of companies in the S&P Health Care Hospital Management Index (in
which the Company is also included), are as follows: Tenet Healthcare
Corporation, 21
HCA-Healthcare Corporation, Health Management Associates,
Province Healthcare Company, and Quorum Health Group. Companies in the old peer group are as
follows: HCA-Healthcare Corporation, Community Health Systems, Inc.,
TransitionalTriad Hospitals, Corporation (acquired by Vencor, Inc. in 1997), Health
Management Associates, Inc., OrNda HealthCorp. (acquired by Tenet Healthcare
Corporation in 1997), Quorum Health Group, Inc., Ramsay Youth Services, Inc. and Tenet Healthcare Corporation. During 1996, Community Health Systems,Lifepoint Hospitals,
Inc.
became a privately held company and is no longer publicly traded. Stock price
information is included for Community Health Systems, Inc. through the period
ended July 1996. OrNda HealthCorp. merged with Tenet Healthcare Corporation on
January 31, 1997. Transitional Hospitals Corporation was acquired by Vencor,
Inc. on September 15, 1997.17
COMPENSATION OF DIRECTORS
The non-employee directors are compensated for their service on the Board of
Directors and Committees of the Board on an annual basis at $20,000 each.
During 1998, the Company adopted the Deferred Compensation Plan for UHS Board
of Directors (the "Plan"). The Plan allows the Company's Board of Directors to
elect: (i) the amount of their compensation to be deferred; (ii) the future
date when the deferred amounts should be paid; (iii) the method of
distribution to be used when the deferred amounts are paid, and; (iv) the
investment measure to be used for crediting earnings on deferred amounts
during the period held pursuant to the Plan. As of December 31, 2000,2001, three
members of the Company's Board of Directors are participating in this Plan.
On January 21, 1998, pursuant to the Amendment and Restatement of the 1992
Stock Option Plan,17, 2001, all non-employee directors of the Company who have served
for more than eighteen months received an
option to purchase 5,00010,000 shares of the Company's Class B Common Stock at an
exercise price of $47.8125 per share.
On November 11, 1999 all non-employee directors of the Company received an
option to purchase 5,000 shares of the Company's Class B Common Stock at an
exercise price of $33.75 per share. On January 19, 2000, Mr. Joseph T.
Sebastianelli received an option to purchase 2,500 shares of the Class B
Common Stock of the Company at an exercise price of $44.56 per share. On
January 17, 2001, all non-employee directors of the Company received an option
to purchase 5,000 shares of the Company's Class B Common Stock at an exercise
price of $84.8125$42.4063 per share. All the above options are exercisable as
follows: 25% one year after date of grant and an additional 25% in each of the
second, third and fourth years after date of grant. The options expire five
years after the date of grant.
BOARD OF DIRECTORS
Meetings of the Board. Regular meetings of the Board are generally held
every other month, while special meetings are called when necessary. Before
each Board or Committee meeting, directors are furnished with an agenda and
background materials relating to matters to be discussed. During 2000,2001, there
were eightsix Board meetings. All current directors attended more than 75% of the
meetings of the Board and of committees of the Board on which they served.
The Executive Committee, the Stock Option and Compensation Committee, the
Audit Committee, and the Finance Committee are the standing committees of the
Board of Directors, and may meet concurrently with the Board of Directors'
meetings.
22
Executive Committee. The Executive Committee has the responsibility, between
meetings of the Board of Directors of the Company, to advise and aid the
officers of the Company in all matters concerning the management of the
business and, while the Board is not in session, has the power and authority
of the Board to the fullest extent permitted under law. The Executive
Committee met twicethree times in 2000.2001. Members of the Committee are Alan B.
Miller, Robert H. Hotz, and Anthony Pantaleoni.
Stock Option and Compensation Committee. The Stock Option and Compensation
Committee has responsibility for reviewing and recommending to the Board of
Directors the compensation levels of officers and directors of the Company and
its subsidiaries and the administration of the 1990 Employees' Restricted
Stock Purchase Plan, the 1992 Corporate Ownership
Program, As Amended, the Amended and Restated 1992 Stock Bonus Plan, the Stock
Purchase Plan, the Amended and Restated 1992 Stock Option Plan, the Stock
Compensation Plan and if approved, the 2001 Employees' Restricted Stock Purchase Plan. This
Committee either met or took action through unanimous written consent threefour
times in 2000.2001. The members of this Committee are Anthony Pantaleoni, Robert H.
Hotz, John H. Herrell and Leatrice Ducat. A subcommittee of the Stock Option
and Compensation Committee, comprised of Mr. Herrell and Ms. Ducat, will
administer the 1994 Executive Incentive Plan and the various stock plans.
18
Audit Committee. The Audit Committee is responsible for providing assistance
to the Board of Directors in fulfilling its responsibilities relating to
corporate accounting and reporting practices and to maintain a direct line of
communication between the directors and the independent accountants. It
recommends the firm to be appointed independent auditor, reviews the scope and
results of the audit with the independent auditors and considers the adequacy
of the internal accounting and control procedures of the Company. The Audit
Committee met twice in 2000.2001. Members of this Committee are John H. Herrell,
Joseph T. Sebastianelli,
Leatrice Ducat and John F. Williams, Jr., M.D.
Finance Committee. The Finance Committee is responsible for reviewing the
Company's cash flow and capital commitments and is charged with overseeing its
long-term financial planning. The Finance Committee met oncedid not meet in 2000.2001.
Members of this Committee are Alan B. Miller Joseph T. Sebastianelli and Robert H. Hotz.
AUDIT COMMITTEE REPORT
The Board of Directors of the Company is committed to the accuracy and
integrity of its financial reporting. The Audit Committee takes an involved
and active role in delivering on this commitment.
The Audit Committee provides independent, objective oversight of the
Company's accounting functions and internal controls. The Committee is
composed solely of independent directors who are qualified for service under
the New York Stock Exchange listing standards. It acts under a written charter
first adopted and approved by the Board of Directors in 2000, which is
attached to this Proxy Statement as Appendix D.2000.
The Audit Committee evaluates and recommends to the Board an accounting firm
to be engaged as the Company's independent auditors. Additionally, and as
appropriate, the Committee reviews and evaluates, and discusses and consults
with the Company's management, internal audit personnel and the independent
auditors about the following:
. the plan for, and the independent auditors' report on, each audit of the
Company's financial statements;
23
. the Company's financial disclosure documents, including all financial
statements and reports filed with the SEC or sent to shareholders;
. changes in the Company's accounting practices, principles, controls or
methodologies, or in the Company's financial statements;
. significant developments in accounting rules;
. the adequacy of the Company's internal accounting controls, and
accounting, financial and auditing personnel; and
. the establishment and maintenance of an environment at the Company that
promotes ethical behavior.
The Audit Committee recommends to the Board that the Company's financial
statements be included in the Company's annual report. The Committee took a
number of steps in making this recommendation for 2000:2001:
. First, the Committee discussed with the Company's independent auditors
the overall scope and plans for their audits.
19
. Second, the Committee met with the independent auditors, without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls and the overall quality
of the Company's financial reporting.
. Third, the Committee reviewed the audited financial statements in the
Annual Report with management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness
of significant judgments, and the clarity of disclosures in the
financial statements.
. Fourth, the Committee reviewed with the independent auditors their
judgments as to the quality, not just the acceptability, of the
Company's accounting principles and such other matters as are required
to be discussed with the Committee under auditing standards generally
accepted in the United States.
. Finally, the Committee discussed with the independent auditors the
auditors' independence from management and the Company, including the
matters in the written disclosures required by the Independence
Standards Board, and considered the compatibility of non-audit services
with the auditors' independence.
The Audit Committee reviewed the Company's financial statements with the
Board and discussed with Arthur Andersen LLP during the 2001 fiscal year, the
matters required to be discussed by Statement of Auditing Standard No. 61. The
Audit Committee received from Arthur Andersen LLP, the written disclosures
required by Independence Standards Board Standard No. 1 and discussed with
them their independence. Based on thethese discussions with Arthur Andersen LLP concerning the audit, the
independence discussions,
and the financial statement review, and such other matters deemed relevant and
appropriate by the Audit Committee, the Audit Committee recommended to the
Board that the financial statements be included in the Company's 20002001 Annual
Report on Form 10-K.
Audit Committee
John H. Herrell
Joseph T. Sebastianelli
Leatrice Ducat
John F. Williams, Jr., M.D.
2420
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP has been retained by the Board of Directors, on the
recommendation of the Audit Committee, to perform all accounting and audit
services during the 20012002 fiscal year. The Audit Committee is continuing to
evaluate the Company's engagement of Arthur Andersen, LLP. It is anticipated
that representatives of Arthur Andersen LLPthe Company's independent public accountants will be
present at the Annual Meeting and will have an opportunity to make a
statement, if they desire to do so, and to respond to any appropriate
inquiries of the stockholders or their representatives.
During 2000,2001, the Company retained Arthur Andersen LLP, to provide services
in the following categories and amounts:
Audit fees $ 529,000579,500
Financial information,
system design &
implementation fees 0
All other fees 643,0001,797,490
----------
$1,172,000Total Fees $2,376,990
==========
The Audit Committee has considered whetherand determined that the provision of non-auditnon-
audit services by the Company's principal auditor is compatible with
maintaining auditor independence.
EXPENSES FOR PROXY SOLICITATION
The principal solicitation of proxies is being made by mail; however,
certain officers, directors and employees of the Company, none of whom will
receive additional compensation therefor, may solicit proxies by telegram,
telephone or other personal contact. The Company will bear the cost of the
solicitation of the proxies, including postage, printing and handling and will
reimburse the reasonable expenses of brokerage firms and others for forwarding
material to beneficial owners of shares.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
FOR PRESENTATION AT THE 2002 ANNUAL MEETING
Any proposal that a stockholder wishes to present for consideration at the
20022003 Annual Meeting must be received by the Company no later than December 21,
2001.13,
2002. This date provides sufficient time for inclusion of the proposal in the
20022003 proxy materials.
2521
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action at the Annual Meeting. As for any
business that may properly come before the Annual Meeting, the Proxies confer
discretionary authority in the persons named therein. Those persons will vote
or act in accordance with their best judgment with respect thereto.
YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE YOUR PROXY BY TELEPHONE OR INTERNET AT
YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE
ANNUAL MEETING IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Steve G. Filton
STEVE G. FILTON, Secretary
King of Prussia, Pennsylvania
April 20, 200112, 2002
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: INVESTOR RELATIONS,
UNIVERSAL HEALTH SERVICES, INC., UNIVERSAL CORPORATE CENTER, 367 SOUTH GULPH
ROAD, P.O. BOX 61558, KING OF PRUSSIA, PENNSYLVANIA 19406-0958.
2622
EXHIBIT A
The Restated Certificate of Incorporation of the Company is to be amended by
replacing the present first sentence of Article FOURTH with a new first
sentence to read as follows:
FOURTH: The total number of shares of all classes of common stock which the
Company shall have authority to issue is 168,200,000 shares, consisting of
12,000,000 shares of Class A Common Stock, par value of $.01 per share (the
"Class A Common Stock"), 150,000,000 shares of Class B Common Stock, par value
of $.01 per share (the "Class B Common Stock"), 1,200,000 shares of Class C
Common Stock, par value of $.01 per share (the "Class C Common Stock") and
5,000,000 shares of Class D Common Stock, par value of $.01 per share (the
"Class D Common Stock").
A-1
EXHIBIT B
UNIVERSAL HEALTH SERVICES, INC.
AMENDED AND RESTATED 1992 STOCK OPTIONEXECUTIVE INCENTIVE PLAN
1. Purpose. The purpose of the Universal Health Services, Inc. 1992 Stock
Option Plan (the "Plan") is to enable Universal Health Services, Inc. (the
"Company") and its stockholders to securefoster the benefits of common stock
ownership by personnelability of the Company
and its subsidiaries. TheAffiliates to attract, retain and motivate highly qualified senior
management and other executive officers of the Company and its Affiliates
through the payment of performance-based incentive compensation.
2. Definitions. Wherever used herein, the masculine includes the feminine,
the singular includes the plural, and the following terms have the following
meanings unless a different meaning is clearly required by the context.
(a) "Affiliate" means any entity (whether or not incorporated) which is
required to be aggregated with the Company under Section 414(b) or 414(c)
of the Internal Revenue Code of 1986, as amended (the "Code").
(b) "Board" means the Board of Directors of the Company (the "Board") believes thatCompany.
(c) "Committee" means the grantingadministrative committee appointed by the Board
in accordance with the provisions hereof.
(d) "Company" means Universal Health Services, Inc.
(e) "Compensation" means the base salary of options
under the Plan will foster the Company's ability to attract, retain and
motivate those individuals who will be largely responsiblea Participant for the continued
profitability and long-term future growtha calendar
year, determined as of the Company.
2. Stock Subjectbeginning of the calendar year and without
regard to increases, if any, made during the Plan. Thecalendar year.
(f) "Net Income" means the net income of the Company may issue and sell a totalor of 5,500,000 shares of its Class B Common Stock, $.0l par value (the "Common
Stock"), pursuant to the Plan. Such shares may be either authorized and
unissuedan Affiliate,
division, hospital or heldother unit, as determined by the Company in its treasury. New options may be granted
under the PlanCommittee.
(g) "Participant" means, with respect to shares of Common Stock which are coveredany calendar year, an individual
who is designated by the unexercised portionCommittee as eligible to receive an incentive
award for the year upon achievement of the applicable performance
conditions.
(h) "Plan" means the incentive compensation plan as set forth herein and
any amendments thereto.
(i) "Return on Capital" means Net Income divided by the quarterly average
net capital of the Company or of an option which has terminatedAffiliate, division, hospital or expiredother
unit, as determined by its terms,
by cancellation or otherwise.the Committee.
3. Administration. The Plan will be administered by a committee consisting
of at least two directors appointed by and serving at the pleasure of the
Board. Each member of the Committee will be a "non-employee director" within
the meaning and for the purposes of Rule 16b-3 issued by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, and an "outside
director" within the meaning of Section 162(m) of the Code. Subject to the
provisions of the Plan, the Board,Committee, acting in its sole and absolute
discretion, will have full power and authority to grant options under the
Plan. to interpret, construe and
apply the provisions of the Plan and option agreements made under
the Plan, to supervise the administration of the Plan, and to take such other action as may be necessary
or desirable in order to carry out the provisions of the Plan. A majority of
the members of the Committee will constitute a quorum. The BoardCommittee may act
by the vote of a majority of its members present at a meeting at which there
is a quorum or by unanimous written consent. The decision of the Board as to any disputed question, including
questions of construction, interpretation and administration,Committee will
be final
and conclusive on all persons. The Board willA-1
keep a record of its proceedings and acts and will keep or causedcause to be kept
such books and records as may be necessary in connection with the proper
administration of the Plan. Notwithstanding the foregoing, the BoardThe Company shall have the authority to appoint a
committee (the "Committee")indemnify and hold harmless each
member of the Board whose members shall satisfy the
requirements of Section 162(m)Committee and any employee or director of the Internal Revenue CodeCompany or an
Affiliate to whom any duty or power relating to the administration or
interpretation of 1986 (the
"Code")the Plan is delegated from and against any loss, cost,
liability (including any sum paid in settlement of a claim with the approval
of the Board), damage and expense (including legal and other expenses incident
thereto) arising out of or incurred in connection with the requirements of Rule 16b-3(b) (3) (i)Plan, unless and
except to the extent attributable to such person's fraud or wilful misconduct.
4. Eligibility. Annual incentive compensation may be awarded under the Securities
Exchange ActPlan
to any person who is a member of 1934, as amended (or any successor laws or regulations),the senior management of the Company and to
grant options toother executive officers of the Company and, all references to "the
Board" hereunder with respect to the grant of such options shall be deemed to
refer to such Committee.
4. Eligibility. Options may be granted under the Plan to present or future
employees of the Company or a subsidiary of the Company (a "Subsidiary")
within the meaning of Section 424(f) of the Code, consultants to the Company
or a Subsidiary who are not employees, and to directors of the Company or a
Subsidiary whether or not they are employees of or consultants to the Company
and/or a Subsidiary.an Affiliate. Subject to the
provisions ofhereof, the Plan, the Board may from
time to timeCommittee will select the persons to whom options willincentive
compensation may be granted,awarded for any calendar year and will fix the number of shares covered by each such option and establish the terms and
conditions thereof (including, without limitation, exercise price,of each such award.
5. Annual Performance Bonus. The amount of a Participant's incentive award
for a year will be equal to the Participant's base bonus amount (described in
(a) below) multiplied by the applicable performance factor (described in (b)
below).
(a) Base Bonus Amount. For each calendar year, the Committee will
establish the amount of bonus ("base bonus amount") which will be payable
to a Participant if the performance goals for the year are met. A
Participants' base bonus amount will be expressed as a percentage of the
Participant's Compensation, which percentage may vary from year to year and
may be different for each Participant or class of Participants, all as
determined by the Committee.
(b) Applicable Performance Factor. For each calendar year, the Committee
will establish performance targets based upon the following business
criteria: increase in Net Income from the casepreceding calendar year, and
Return on Capital. As to any Participant or class of grantsParticipants, the
performance targets may be based upon either or both of such criteria and
on company-wide figures, local or divisional figures, or a combination
thereof. If a Participant's performance targets for a calendar year are
achieved, then the Participant will be entitled to receive an incentive
payment equal to 100% of the Participant's base bonus amount for the year.
No incentive compensation will be payable for a year if neither performance
target is achieved, and a performance bonus (which may be greater than 100%
of a Participant's base bonus amount) may be payable if either or both
performance targets are exceeded for a calendar year, all in accordance
with the Company performance matrix established by the Committee.
(c) Performance Conditions to be Pre-Established. Performance targets, as
well as percentage factors used to determine base bonus amounts and
performance percentages with respect to any calendar year will be
established in writing by the Committee shall not be less than fair market valuebefore the beginning of that
calendar year; provided, however, that the Committee may establish any one
or more of said factors during the calendar year if and to the extent
permitted by the Treasury Department pursuant to Section 162(m) of the
Common StockCode.
(d) Limitation on the dateAmount of grant, and restrictions on exercisability
of the option or on the shares of Common Stock issued upon exercise thereof).Incentive Awards. Notwithstanding anything to
the contrary contained herein, no personthe maximum incentive award which any
Participant may receive grants of options to purchase more than 500,000 shares inearn hereunder for any one
calendar year.
B-1
5. Terms and Conditions of Options. Each option granted under the Plan will
be evidenced by a written agreement in a form approved by the Board. Each such
option will be subject to the terms and conditions set forth in this paragraph
and such additional terms and conditions not inconsistent with the Plan as the
Board deems appropriate.
(a) Option Period. The period during which an option may be exercised
will be fixed by the Board and willyear shall not exceed 10 years from$5
million.
6. Calculation and Payment of Performance Bonus. As soon as practicable
after the dateend of each calendar year, the option is granted.
(b) Exercise of Options. An option may be exercised by transmitting toCommittee, based upon the Company (1) a written notice specifyingCompany's
financial statements for the number of shares to be
purchased, and (2) payment of the exercise price (or, if applicable,
delivery of a secured obligation therefor), together withyear, will determine the amount, if
A-2
any, deemed necessary byof the Companyincentive compensation payable to enable it to satisfy its income tax
withholding obligations with respect to such exercise (unless other
arrangements acceptableeach Participant for that
calendar year. A Participant's incentive award for a calendar year will be
paid to the Company are made with respectParticipant at such time as the Committee determines; provided,
however, that the Committee certifies in writing prior to payment that the
satisfaction of such withholding obligations).
(c) Payment of Exercise Price. The purchase price of shares of Common
Stock acquiredperformance goals were in fact satisified, and provided further that the
Committee may establish a procedure pursuant to the exercise of an option granted under the Plan
may be paid in cash and/or such other form of payment as may be permitted
under the option agreement, including, without limitation, previously-owned
shares of Common Stock. The Board may permit thewhich payment of all or a
portion of the purchase price in installments (together with interest) over
a period of not more than 5 years. The Board may permit the Company to lend
money to employeesParticipant's incentive award for purposes of exercising options and paying any income
tax due upon exercise. The Board may, in its sole discretion, forgive any
amounts due under the loans made hereunder under such conditions as it
deems appropriate.
(d) Rights as a Stockholder. No shares of Common Stockcalendar year will be
issued in
respect ofdeferred. Unless the exercise of an option granted under the Plan until full
payment therefor has been made (and/or provided for where all orCommittee determines otherwise, no incentive award will
be payable to a portion
of the purchase price is being paid in installments). The holder of an
option will have no rights as a stockholderParticipant with respect to a calendar year if the
Participant's employment with the Company and its Affiliates terminates at any
shares
covered by an option until the date a stock certificate for such shares is
issued to him or her. Except as otherwise provided herein, no adjustments
shall be made for dividends or distributions of other rights for which the
record date istime prior to the date such stock certificate is issued.
(e) Nontransferability of Options. Options granted under the Plan may be
assigned or transferred to members of the immediate family of optionee or
trusts for the benefit of immediate family members, unless otherwise
prohibited by the Option Agreement, by will or by the applicable laws of
descent and distribution or dissemination.
(f) Termination of Employment or Other Service. Unless otherwise provided
by the Board in its sole discretion, if an optionee ceases to be employed
by or to perform services for the Company and any Subsidiary for any reason
other than death or disability (defined below), then each outstanding
option granted to him or her under the Plan will terminate on the date of
termination of employment or service (or, if earlier, the date specified in
the option agreement). Unless otherwise provided by the Board in its sole
discretion, if an optionee's employment or service is terminated by reason
of the optionee's death or disability (or if the optionee's employment or
service is terminated by reason of his or her disability and the optionee
dies within one year after such termination of employment or service), then
each outstanding option granted to the optionee under the Plan will
terminate on the date one year after the date of such
B-2
termination of employment or service (or one year after the later death of
a disabled optionee) or, if earlier, the date specified in the option
agreement. For purposes hereof, the term "disability" means the inability
of an optionee to perform the customary duties of his or her employment or
other service for the Company or a Subsidiary by reason of a physical or
mental incapacity which is expected to result in death or be of indefinite
duration.
(g) Other Provisions. The Board may impose such other conditions with
respect to the exercise of options, including, without limitation, any
conditions relating to the application of federal or state securities laws,
as it may deem necessary or advisable.
6. Capital Changes, Reorganization, Sale.
(a) Adjustments Upon Changes in Capitalization. The aggregate number and
class of shares for which options may be granted under the Plan, the
maximum number of shares for which options may be granted to any person in
any one calendar year, the number and class of shares covered by each
outstanding option and the exercise price per share shall all be adjusted
proportionately for any increase or decrease in the number of issued shares
of Common Stock resulting from a split-up or consolidation of shares or any
like capital adjustment, or the payment of any stock dividend.
(b) Cash, Stock or Other Property for Stock. Except as provided in
subparagraph (c) below, upon a merger (other than a merger of the Company
in which the holders of Common Stock immediately prior to the merger have
the same proportionate ownership of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the Stockholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares
of Common Stock, any option granted hereunder shall terminate, but the
optionee shall have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation, reorganization
or liquidation to exercise his or her option in whole or in part to the
extent permitted by the option agreement, and, if the Board in its sole
discretion shall determine, at the time of grant or otherwise, may exercise
the option whether or not the vesting requirements set forth in the option
agreement have been satisfied.
(c) Conversion of Options on Stock for Stock Exchange. If the
Stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or
stock, separation or reorganization (other than a mere reincorporation or
the creation of a holding company), all options granted hereunder shall be
converted into options to purchase shares of Exchange Stock unless the
Company and the corporation issuing the Exchange Stock, in their sole
discretion, determine that any or all such options granted hereunder shall
not be converted into options to purchase shares of Exchange Stock but
instead shall terminate in accordance with the provisions of subparagraph
(b) above. The amount and price of converted options shall be determined by
adjusting the amount and price of the options granted hereunder in the same
proportion as used for determining the number of shares of Exchange Stock
the holders of the Common Stock receive in such merger, consolidation,
acquisition of property or stock,
B-3
separation or reorganization. The Board shall determine in its sole
discretion if the converted options shall be fully vested whether or not
the vesting requirements set forth in the option agreement have been
satisfied.
(d) Fractional Shares. In the event of any adjustment in the number of
shares covered by any option pursuant to the provisions hereof, any
fractional shares resulting from such adjustment will be disregarded and
each such option will cover only the number of full shares resulting from
the adjustment.
(e) Determination of Board to be Final. All adjustments under this
paragraph 6 shall be made by the Board, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.thereof.
7. Amendment and Termination of the Plan.or Termination. The Board may amend or terminate the Plan at
any time. No amendment or termination may affect adversely any
outstanding option withoutThe Plan supersedes the written consentexecutive incentive plan heretofore
maintained by the Company.
8. Term of the optionee.
8.Plan. The Plan will become effective as of January 1, 2002,
subject to approval by the stockholders of the Company. Unless sooner
terminated by the Board, the Plan will continue through the date of the first
meeting of stockholders of the Company (or any adjournment thereof) in 2007.
9. Governing Law. The Plan and each award made under the Plan shall be
governed by the laws of the State of Delaware, without regard to its
principles of conflicts of law, it being understood, however, that annual
incentive compensation awarded and paid under the Plan are intended to
constitute "performance-based compensation" within the meaning of Section
162(m) of the Code, and the provisions of the Plan and any award made
hereunder will be interpreted and construed accordingly.
10. No Rights Conferred. Nothing contained herein will be deemed to give any
individualperson any right to receive an optionincentive compensation award under the Plan or
to be retained in the employ or service of the Company or any Subsidiary.
9. Governing Law. The Plan and each option agreement shall be governed byAffiliate or
interfere with the lawsright of the StateCompany or any Affiliate to terminate the
employment or other service of Delaware.
10. Stockholder Approval; Termany person for any reason.
11. Decisions of the Plan. The Plan was adoptedBoard or Committee to be Final. Any decision or
determination made by the Board on July 15, 1992 and amended on January 17, 2001, subjectpursuant to the approval ofprovisions hereof and, except
to the Amendment by the Stockholders of the Company at the next
Annual Meeting of Stockholders. The Plan will terminate on July 15, 2005,
unless sooner terminated by the Board. Theextent rights of optioneesor powers under options
outstanding at the time of the termination of the Plan shall not be affected
solely by reason of the termination and shall continue in accordance with the
terms of the option (as then in effect or thereafter amended).
B-4
EXHIBIT C
2001 EMPLOYEES' RESTRICTED STOCK PURCHASE PLAN
1. Purpose. The purpose of this 2001 Employees' Restricted Stock Purchase
Plan (the "Plan"), is to secure for Universal Health Services, Inc. (the
"Company") the benefits of the additional incentive resulting from the
ownership of its Shares of Class B Common Stock, par value $.01 per share (the
"Shares"), by selected employees of, and consultantsare reserved specifically to the
Company or its
subsidiaries (for convenience such persons are hereinafter collectively
referred to as "employees") who are important to the success and the growth of
the business of the Company and its subsidiaries, and to help the Company and
its subsidiaries secure and retain the services of such persons.
2. Restricted Stock Committee. The Plan shall be administered by the entire
Board of Directors or if established by the Board, a committeediscretion of the Board, of
Directors which shall consist of not less than two "non-employee directors",
as defined in Rule 16b-3, under the Securities Exchange Act of 1934, as
amended (the "Committee"). The Committee shall have full authority in its
discretion from time to time,all decisions and at any time, to select the employees to whom
Shares shall be sold, to determine the number of Shares to be sold, the times
at which Shares shall be sold, the times at which the restrictions on the
Shares shall lapse and the terms and conditions of the Restricted Stock
Purchase Agreement. The Committee may issue shares in lieu of cash bonuses for
which an employee may be eligible under any other employee incentive plan of
the Company.
The Board of Directors may at any time appoint or remove membersdeterminations of the Committee
and may fill vacancies, however caused, in the Committee. The
Committee shall select one of its members as its Chairman, and shall hold its
meetings at such time and place as it shall deem advisable. A majority of its
members shall constitute a quorum. All actions of the Committee shall be taken
by a majority of its members, and can be taken by written consent in lieu of a
meeting. The Committee shall make such rules and regulations for the conduct
of its business as it shall deem advisable.
The interpretation, construction or determination of any provisions of the
Plan by the Committeehereunder, shall be final and conclusive.
3. Shares Subjectbinding.
A-3
PROXY CLASS B
COMMON STOCK
CLASS D
COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC.
This Proxy Solicited By The Board Of
Directors For The Annual Meeting Of
Stockholders To Be Held On May 15, 2002
Alan B. Miller and Steve Filton and each of them, as the true and lawful
attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to Plan. Subjectrepresent and to the adjustment provisions of paragraph
9, the number ofvote, as designated
below, all shares of Class B Common Stock which may be issued or sold
under the Plan shall not exceed 300,000.
Shares sold under the Plan may be Shares of the Company's authorized and unissued Shares of Class BD Common Stock Shares of the Company's issued Shares
of Class B Common Stock held in the Company's treasury, or both. Should any
Shares sold pursuant to the Plan be repurchased by the Company, such Shares
shall again become available for sale hereunder.
4. Employees Eligible. Shares may be sold pursuant to the Plan to employees
and consultants of the Company and its subsidiaries (including officers of the
Company or any of its subsidiaries whether or not they are also directors of
the Company or any of its subsidiaries). For purposes of the Plan,
"subsidiary" shall mean a "subsidiary corporation" as defined in Section 424
of the Internal Revenue Code of 1986, as amended or any other affiliate of the
Company. In making determinations as to whom Shares should be sold, the
Committee shall take into consideration an employee's present and potential
contribution to the success of the Company and its subsidiaries and such other
factors as the Committee may deem proper and relevant.
C-1
5. Purchase of Shares, Price and Delivery of Payment. Subsequent to a
determination by the Committee that Shares shall be sold pursuant to the Plan,
the Company or a subsidiary shall deliver to the employee a letter advising
him of such determination. Within 30 days of the date of such letter, the
employee must complete the Restricted Stock Purchase Agreement enclosed
therewith and return it to the Company along with payment in full by cash or
check. The price of each Share sold pursuant to the Plan shall be the par
value thereof at the time of sale. Prior delivery by an employee to the
Company of a completed Restricted Stock Purchase Agreement and payment in full
for the Shares, the Committee may, at its discretion, revoke its decision to
sell Shares to an employee.
6. Restrictions. All Shares sold pursuant to the Plan shall be sold subject
to a Restricted Stock Purchase Agreement which gives the Company the right to
repurchase all or a portion of such Shares, for an amount equal to the price
paid by the employee, in the event that his employment terminates for any
reason during the period set forth in such Restricted Stock Purchase
Agreement. Each employee shall also be required to agree that all Shares
purchased by him pursuant to the Plan are purchased for investment purposes
and not for the purpose of resale or other distribution thereof.
Notwithstanding the foregoing, in the event that an employee of the Company
or one of its subsidiaries who has purchased Shares under the plan terminates
his employment with such employer and immediately commences employment with
the Company or a different subsidiary thereof, such event shall not be treated
as a termination of employment under the Plan, and the Company's repurchase
rights with respect to such Shares shall not be affected. Upon the termination
of employment in such cases, the Restricted Stock Purchase Agreement entered
into between such employee and his employer shall be cancelled and, upon the
commencement of employment with his new employer, the employee and his new
employer shall enter into a new Restricted Stock Purchase Agreement.
7. Transferability. No Shares subject to repurchase by the Company may be
sold, assigned, transferred, disposed of, pledged or otherwise hypothecated,
by the purchase of such Shares. Any attempt to do any of the foregoing shall
cause the immediate forfeiture of such Shares.
8. Right to Terminate Employment or Service. Nothing in the Plan or in any
Restricted Stock Purchase Agreement shall confer upon any employee the right
to continue in the employment of the Company or affect the right of the
Company to terminate the employee's employment at any time, subject, however,
to the provisions of any agreement of employment between the Company and the
employee.
9. Adjustment Upon Changes in Capitalization, etc. In the event of one or
more stock splits, stock dividends, reclassifications, recapitalizations or
any other change in the character or amount of the Company's Shares, the
number, kind and purchase price of shares which may thereafter be sold under
the Plan shall be adjusted to give effect thereto, and all new, substituted or
additional securities to which any employee may become entitled by reason of
his ownership of Shares previously purchased pursuant to the Plan shall be
subject to the terms of the Plan and the Restricted Stock Purchase Agreement
under which such Shares were purchased.
10. Amendment or Termination of Plan. The Board of Directors shall have the
authority to amend or terminate the Plan at any time; provided, however, that
no such amendment or termination shall adversely affect the rights of any
employee with respect to Shares previously sold hereunder. Notwithstanding the
above, no
C-2
amendment to the Plan will become effective without the approval of the
company's stockholders which would increase the number of shares which may be
issued under the Plan if and to the extent such approval is necessary or
desirable to comply with applicable law or exchange requirements.
11. Expiration of the Plan. Unless sooner terminated by the Board of
Directors, shares may be sold under the Plan at any time and from time to
time, prior to March 7, 2010 on which date the Plan shall expire. Any Shares
sold under the Plan that remain outstanding on or after such expiration date
shall remain subject to the terms of the Plan until any restrictions thereon
have lapsed or they have been repurchased by the Company.
12. Effective Date of Plan. The Plan shall become effective on March 7,
2001, subject, nevertheless, to (1) approval by the Stockholders representing
at least a majority of the Common Stock votes of the Company present or
represented at the 2001 Annual Meeting of Stockholders.
C-3
EXHIBIT D
UNIVERSAL HEALTH SERVICES, INC.
AUDIT COMMITTEE CHARTER
MAY 17, 2000
The Audit Committee (the "Committee") of Universal
Health Services, Inc. (the "Corporation") is established, pursuantheld of record by the undersigned on April 4, 2002, at the
Annual Meeting of Stockholders to Section 11be held at 10:00 a.m. on Wednesday, May 15,
2002 at the offices of the By-lawsCompany, Universal Corporate Center, 367 South Gulph
Road, King of Prussia, Pennsylvania and at any adjournment thereof. Any and all
proxies heretofore given are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY,
OR VOTE BY TELEPHONE USING THE INSTRUCTIONS ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Annual Meeting
of
Universal Health Services, Inc. Stockholders
Wednesday, May 15, 2002
10:00 a.m.
Universal Corporate Center
367 South Gulph Road
King of Prussia, PA.
================================================================================
| |
| Agenda |
| ------ |
| |
| * Election of a Director by the holders of Class A and Class C Common Stock |
| |
| * Election of a Director by the holders of Class B and Class D Common Stock |
| |
| * Adoption of the Corporation, to assist the BoardUniversal Health Services, Inc. Executive Incentive Plan |
| |
| * Discussion on matters of Directorscurrent interest |
| |
================================================================================
Please mark your ----
vote as indicated | X |
in fulfilling its oversight
responsibility by monitoring and reviewing the effectivenessthis example ----
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BELOW. IF NO
CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF JOHN F.
WILLIAMS, JR., M.D. AND THE ADOPTION OF THE UNIVERSAL HEALTH SERVICES, INC.
EXECUTIVE INCENTIVE PLAN
FOR WITHHELD
Election of John F. Williams, Jr., M.D. as a Director [ ] [ ]
Adoption of the Corporation's: (1) financial reporting process; (2) systemUniversal Health Services, Inc. FOR WITHHELD ABSTAIN
Executive Incentive Plan [ ] [ ] [ ]
Discretionary authority is hereby granted with respect to such other
matters as may properly come before the meeting.
Signature____________________ Signature ____________________ Date _________
IMPORTANT: Please sign exactly as name appears at the left. Each joint owner
shall sign. Executors, administrators, trustees, etc. should give full title.
The above-signed acknowledges receipt of internal
controls over financial operations; and (3) audit process.
In carrying out its responsibilities, the Committee shall report directly to
the BoardNotice of Directors, and shall provide an open avenueAnnual Meeting of
communication
between and among the internal auditors, the independent accountants,Stockholders and the Board of Directors. Some specific activities consistent withProxy Statement furnished therewith.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the Committee's
role as stated above include:
1. Recommendingnamed proxies to the Board of Directors the nomination of a firm of
independent accountants to audit the accounts of the Corporation, and
reviewing and approving the discharge of the independent accountants, if
necessary.
2. Meeting with the independent accountants without management present and
also, if necessary, with management present and monitoring the external
financial audit coverage including reviewing the:
.scope and fee of the engagement
.auditor's proposed audit approach
.results of the audit
.Corporation's annual financial statements and related footnotes
.auditor's opinions, reports, management letters and management's reply
.appropriateness of any corrective actions recommended
.independence of the auditors, including review of proposed and current
non-audit services provided and their related fees
.coordination of the audit effort to assure completeness of coverage,
reduction of redundant efforts, and the effective use of audit
resources
3. Monitoring the effectiveness of the Corporation's internal controls,
including considering and reviewing with the independent accountants and
the director of internal auditing:
(a) the Corporation's accounting policies and procedures;
(b) the Corporation's policies and procedures for assuring compliance
with laws and regulations that could have a material effect on the
Corporation's financial statements; and
D-1
(c) related party transactions
4. Reviewing with outside counsel, as the Committee deems appropriate,
legal matters that could have a material impact on the Corporation's
financial statements.
5. Inquiring of management, the director of internal auditing, and the
independent accountants about significant risks or exposures and
assessing the steps management has taken to minimize such risk to the
Corporation.
6. Offering advice and guidance on the handling of unusual or significant
findings related to the financial operations of the Corporation;
instituting special reviews of allegations of questionable conduct in
any aspect of the Corporation's activities, operations or finance,
including regulatory matters; making recommendations to the Board of
Directors for any special studies of significant matters coming to the
Committee's attention within the scope of its duties, with emphasis on
measures which might be needed to strengthen the Corporation's financial
operations. The Committee shall have the authority to select and retain
its own counsel, consultants, accountants and other experts to assist in
conducting special reviews.
7. Reviewing the findings of all examinations, inspections and reports of
regulatory agencies and management responses.
8. Reviewing this charter annually and proposing any recommended changes.
9. At the request of the Board of Directors, the Committee will be
available to offer advice and guidance on the handling of items that
might be considered sensitive in nature.
COMMITTEE POLICIES AND PROCEDURES
Membership
The Committee shall consist of three (3) members. The Board of Directors
shall select each member and designate the Committee's chairperson. The
Committee shall be composed solely of the Board of Directors independent of
management and free from any relationship that,vote
your shares in the opinion of the Board of
Directors, would interfere with the exercise of independent judgmentsame manner as a
Committee member. Directors who are affiliates of the Corporationif you marked, signed and
returned your proxy card.
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Internet | | Telephone | | Mail |
http://www.eproxy.com/UHS | | 1-800-435-6710 | | |
Use the Internet to vote your | | Use any touch-tone telephone to | | Mark, sign and date |
proxy. Have your proxy card in | | vote your proxy. Have your proxy | | your proxy card |
hand when you access the web | OR | card in hand when you call. You will | OR | and |
site. You will be prompted to enter | | be prompted to enter your control | | return it in the |
your control number, located in | | number, located in the box below, | | enclosed postage-paid |
the box below, to create and sub- | | and then follow the directions given. | | envelope. |
mit an electronic ballot. | | | | |
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If you vote your proxy by Internet or officers
or employees of the Corporation or its subsidiaries would not be qualified for
Committee membership.
Committee Meetings
The Committee shall meet at least quarterly and at the discretion of the
chairperson. The Committee shall establish an agenda and a record of each
meeting.
Meetings with the Board of Directors
The Committee shall meet with the Board of Directors at each regularly
scheduled Board meeting, or such additional times as the Committee deems
appropriate,by telephone,
you do NOT need to discuss the status of its work. The Committee will provide the
Board of Directors with a report of its activities.
D-2
Access to the Corporation
The Committee shall have access to all corporate personnel and records needed
to perform its responsibilities, including meetings with the outside
accountants, the director of internal auditing and any other personnel deemed
necessary. The Committee will be provided the resources necessary to discharge
its responsibilities.
D-3mail back your proxy card.
PROXY CLASS A
COMMON STOCK
CLASS C
COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC.
This Proxy Solicited By The Board Of
Directors For The Annual Meeting Of
Stockholders To Be Held On May 23, 200115, 2002
Alan B. Miller and Steve FittonFilton and each of them, as the true and lawful
attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote, as designated
below, all shares of Class A Common Stock and Class C Common Stock of Universal
Health Services, Inc. held of record by the undersigned on April 12, 20014, 2002 at the
Annual Meeting of Stockholders to be held aat 10:00 a.m. on Wednesday, May 23, 2001,15,
2002, at the offices of the Company, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania and at any adjournment thereof. Any
and all proxies heretofore given are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PR0MPTLY.
PLEASE MARK YOUR CHOICE LIKE THIS IN BLUE OR BLACK INK
[_]_______________ ______________ ______________
ACCOUNT NUMBER CLASS A COMMON CLASS C COMMON
- --------------------------------------------------------------------------------
I. The Election of Directors. Nominees 5.Alan B. Miller as a Discretionary authority is hereby
are: Anthony Pantaleoni and JosephDirector. granted with respect to such T. Sebastianello other
[_] For [_] Withheld matters as may properly [_] For both Nominees come before
the meeting.
[_] Withheld from both Nominees
[_] _________________________________
For, except vote withheld from the above nominee:
DATED: ____________________________
- -----------------------------------------
2.II. The Adoption of the Amendment to theUniversal
Health Services, Inc. Executive DATED: ____________________________
Incentive Plan
[_] For [_] Against [_] Abstain
SIGNATURE: ________________________
Company's Restated Certificate of
Incorporation to increase the SIGNATURE: ________________________
number of authorized shares of
Class B Common Stock- -----------------------------------------
IMPORTANT: Please sign exactly as
FOR AGAINST ABSTAIN
name appears at the left. Each
[_] [_] [_] joint owner shall sign. Executors,
- ----------------------------------------- administrators, trustees, etc.
3. Adoption of the Amendment to the
should give full title.
Amended and Restated 1992 Stock
Option Plan. The above-signed acknowledges
FOR AGAINST ABSTAIN receipt of the Notice of Annual
[_] [_] [_] Meeting of Stockholders and the
- ----------------------------------------- Proxy Statement furnished
4. Adoption of the 2001 Employees' therewith.
Restricted Stock Purchase Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
- -----------------------------------------
- --------------------------------------------------------------------------------
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE ABOVE, IF
NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR ELECTION OF THE NOMINEESALAN B. MILLER
AS A DIRECTOR, AND FOR DIRECTORS, THE ADOPTION OF THE AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
CLASS B COMMON STOCK, THE ADOPTION OF THE AMENDMENT TO THE AMENDED AND RESTATED
1992 STOCK OPTION PLAN AND THE ADOPTION OF THE 2001 EMPLOYEES' RESTRICTED STOCK
PURCHASEUNIVERSAL HEALTH SERVICES, INC.
EXECUTIVE INCENTIVE PLAN.
- --------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example [X]
FOR AGAINST ABSTAIN
1. Election of Robert H. Hotz as a Director. [_] [_] [_]
2. Adoption of the Amendment to the Company's
Restated Certificate of Incorporation to
increase the number of authorized
shares of Class B Common Stock. [_] [_] [_]
3. Adoption of the Amendment to the Amended and
Restated 1992 Stock Option Plan. [_] [_] [_]
4. Adoption of the 2001 Employees' Restricted
Stock Purchase Plan. [_] [_] [_]
5. Discretionary authority is hereby granted
with respect to such other matters as may
properly come before the meeting.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED
AS DESIGNATED BY THE ABOVE. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED FOR THE ELECTION OF
ROBERT H. HOTZ, THE ADOPTION OF THE AMENDMENT TO
THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF CLASS B COMMON STOCK, THE ADOPTION OF THE
AMENDMENT TO THE AMENDED AND RESTATED 1992 STOCK
OPTION PLAN AND THE ADOPTION OF THE 2001 EMPLOYEES'
RESTRICTED STOCK PURCHASE PLAN.
Signature____________________Signature____________________Date______________
IMPORTANT: Please sign exactly as name appears at the left. Each joint owner
shall sign. Executors, administrators, trustees, etc. should give full title.
The above-signed acknowledges
receipt of the Notice of Annual
Meeting of Stockholders and the
Proxy Statement furnished
therewith.
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/\ FOLD AND DETACH HERE /\
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
Internet Telephone
http://www.proxyvoting.com/UHS 1-800-840-1208 Mail
OR OR
Use the Internet to vote your / Use any touch-tone telephone / Mark, sign and
proxy. Have your proxy card in / to vote your proxy. Have your / date your
hand when you access the web / proxy card in hand when you / proxy card and
site. You will be prompted to / call. You will be prompted to / return it in
enter your control number, / enter your control number, / the enclosed
located in the box below, to / located in the box below, / postage-paid
create and submit an / and then follow the / envelope.
electronic ballot. / directions given. /
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
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PROXY CLASS B
COMMON STOCK
CLASS D
COMMON STOCK
UNIVERSAL HEALTH SERVICES, INC.
This Proxy Solicited By The Board Of
Directors For The Annual Meeting Of
Stockholders To Be Held On May 23, 2001
Alan B. Miller and Steve Filton and each of them, as the true and lawful
attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote, as designated
below, all shares of Class B Common Stock and Class D Common Stock of Universal
Health Services, Inc. held of record by the undersigned on April 12, 2001, at
the Annual Meeting of Stockholders to be held at 10:00 a.m. on Wednesday, May
23, 2001 at the offices of the Company, Universal Corporate Center, 367 South
Gulph Road, King of Prussia, Pennsylvania and at any adjournment thereof. Any
and all proxies heretofore given are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY,
OR VOTE BY TELEPHONE USING THE INSTRUCTIONS ON THE REVERSE SIDE.
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/\ FOLD AND DETACH HERE /\
Annual Meeting
of
Universal Health Services, Inc. Stockholders
Wednesday, May 23, 2001
10:00 a.m.
Universal Corporate Center
367 South Gulph Road
King of Prussia, PA.
Agenda
* Election of two Directors by the holders of Class A and Class C Common Stock
* Election of a Director by the holders of Class B and Class D Common Stock
* Adoption of the Amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Class B Common
Stock
* Adoption of the Amendment to the Amended and Restated 1992 Stock Option Plan
* Adoption of the 2001 Employees' Restricted Stock Purchase Plan
* Discussion on matters of current interest