Hythiam, Inc.
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Hythiam, Inc.
11150 Santa Monica Blvd., Suite 1500
Los Angeles, California 90025
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 2008SEPTEMBER 18, 2009
Dear fellow stockholders:
Our 20082009 annual meeting of stockholders will be held at 11150 Santa Monica Blvd., Los Angeles, California, on Friday, June 20, 2008,September 18, 2009, beginning at 10:00 a.m. local time. At the meeting, stockholders will vote on the following matters:
| 1. | Election of directors to hold office until our 20092010 annual meeting of stockholders or until their successors are duly elected and qualified. |
| 2. | Any other matters that properly come before the meeting. |
Stockholders of record as of the close of business on May 2, 2008July 31, 2009 are entitled to vote their shares by proxy or at the meeting or any postponement or adjournment thereof.
The enclosed proxy statement is issued in connection with the solicitation of a proxy on the enclosed form by our board of directors for use at our annual meeting. The proxy statement not only describes the items that our stockholders are being asked to consider and vote on at the annual meeting, but also provides you with important information about us. Financial and other important information concerning us is also contained in our annual report for the year ended December 31, 2008, and any amendments thereto, filed by us with the U.S. Securities and Exchange Commission (SEC).
Pursuant to rules promulgated by the SEC, we have elected to provide access to our proxy materials both by sending you this full set of proxy materials, including a proxy card, and by notifying you of the availability of our proxy materials on the Internet. The enclosed proxy statement and our 2008 annual report are available under the “Investor Relations,” sub-category “SEC Filings” section of our web site at http://www.hythiam.com. We began distributing this proxy statement, a form of proxy and the 2008 annual report on Form 10-K/A on or about August 7, 2009.
| By order of the board of directors, |
| |
| /s/ TERREN S. PEIZER |
| Terren S. Peizer |
| Chairman of the Board and Chief Executive Officer |
Los Angeles, California
May __, 2008July 31, 2009
Whether or not you expect to be present at the annual meeting, please complete, sign and date the enclosed proxy card and return it promptly in the enclosed return envelope. No postage is required if mailed in the United States. Stockholders who execute a proxy card may nevertheless attend the meeting, revoke their proxy and vote their shares in person.
Important Notice Regarding the Availability of Proxy Materials for Our
Annual Meeting of Stockholders to be Held on September 18, 2009
The proxy statement and 2008 annual report on Form 10-K/A are available at
http://www.proxyvote.com.
Information on our website does not constitute a part of this proxy statement.
| Stockholders of the Record Date are encouraged and cordially invited to attend the 2009 Annual Meeting of Stockholders. | |
20082009 ANNUAL MEETING OF STOCKHOLDERS
OF
HYTHIAM, INC.
PROXY STATEMENT
The enclosed proxy is solicited on behalf of Hythiam, Inc., a Delaware corporation, for use at our annual meeting of stockholders to be held on Friday, June 20, 2008,September 18, 2009, beginning at 10:00 a.m. local time, at 11150 Santa Monica Blvd., Los Angeles, California 90025.
The approximate date that this proxy statement, the accompanying notice of annual meeting and the enclosed form of proxy are being sent to stockholders is May __, 2008.August 7, 2009. You should review this information in conjunction with our 20072008 Annual Report on Form 10-K/A to Stockholders, which accompanies this proxy statement.
WhatWhat is the purpose of the annual meeting?meeting?
At the annual meeting, stockholders will vote on the election of directors and any other matters that properly come before the meeting. In addition, our management will report on our performance during 20072008 and respond to questions from our stockholders.
WhoWho is entitled to vote?vote?
Only stockholders of record at the close of business on the record date, May 2, 2008,July 31, 2009, are entitled to receive notice of the annual meeting and vote the shares of common stock that they held on the record date at the meeting, or any postponement or adjournment of the meeting. Each outstanding share of common stock entitles its holder to cast one vote on each matter to be voted upon.
All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Please note that if you hold shares in "street name" (that is, through a broker or other nominee), you will need to bring evidence of your share ownership, such as a copy of a brokerage statement, reflecting your stock ownership as of the record date and valid picture identification.
WhatWhat is the difference between holding shares as a stockholder of record and as a beneficial owner?owner?
Most of our stockholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those beneficially owned.
If our shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with regard to those shares. As the stockholder of record, you have the right to grant your proxy directly to us to vote your shares on your behalf at the meeting or the right to vote in person at the meeting.
If you hold our shares in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of the shares held in street name, and these materials have been forwarded to you by your broker or nominee, which is considered the stockholder of record with regard to those shares. As the beneficial owner, you have the right to direct your broker or nominee how to vote and are also invited to attend the annual meeting so long as you bring a copy of a brokerage statement reflecting your ownership as of the record date. However, since you are not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a signed proxy from your broker or nominee giving you the right to vote the shares.
The presence at the meeting, in person or by proxy, of the holders of a majority of the votes entitled to be cast at the meeting will constitute a quorum, permitting the meeting to conduct its business. As of May 2, 2008,July 31, 2009, there were approximately ___________55,163,616 shares of our common stock issued and outstanding, held by approximately 100110 stockholders of record representing approximately __________4,000 beneficial owners. Proxies received, but marked as abstentions, as well as broker non-votes will be included in calculating the number of shares considered present at the meeting for purposes of determining a quorum, but will not be counted as votes cast "for" or "against" any given matter.
If less than a majority of outstanding shares entitled to vote are represented at the meeting, a majority of the shares present at the meeting may adjourn the meeting without further notice.
If you complete and properly sign the accompanying proxy card and return it to us, it will be voted as you direct. If you are a registered stockholder and you attend the meeting, you may deliver your completed proxy card in person. "Street name" stockholders who wish to vote at the meeting will need to obtain a proxy from the institution that holds their shares.
HowHow can I change my vote after I submit my proxy?
You may change your vote at any time prior to the vote at the annual meeting. If you are a stockholder of record, you may change your vote by granting a new proxy bearing a later date (which automatically revokes any earlier proxy), by providing a written notice of revocation to our corporate secretary prior to the time your shares are voted, or by attending the Annual Meting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank or nominee, or, if you have obtained a legal proxy card from your broker, bank or nominee giving you the right to vote your shares, by attending the meeting and voting in person.
Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our board of directors. The board recommends a vote FOR the electionreelection of each of the nominated slate ofour directors. See "Election“Election of Directors"Directors” below.
The board does not know of any other matters that may be brought before the meeting nor does it foresee or have reason to believe that the proxy holders will have to vote for substitute or alternate board nominees. In the event that any other matter should properly come before the meeting or any nominee is not available for election, the proxy holders will vote as recommended by the board of directors or, if no recommendation is given, in accordance with their best judgment.
WhatWhat vote is required to approve each item?
Election of directors. The affirmative vote of aA plurality of the votes cast either in person or by proxy, at the annual meeting by the holders of common stock is required to elect each nominee. Accordingly, abstentions and broker non-votes will have no effect on the election of directors, however, brokers will have authority to vote shares they hold on behalf of beneficial holders in favor of the nominees if they have not been instructed otherwise. Shares represented by proxies will be voted for the election of directors. Broker non-votes will not be counted for purposes of the vote.nominees named below unless authority to do so is specifically withheld.
Other items. For each other item, the affirmative vote of a majority of the votes cast, either in person or by proxy, at the annual meeting by the holders of common stock is required for approval. A properly executed proxy marked "ABSTAIN"“ABSTAIN” with respect to any such matter will not be voted, although it will be counted for purposes of determining whether there is a quorum. Accordingly, an abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval. Shares represented by such "broker non-votes" will, however, be counted in determining whether there is a quorum. Broker non-votes will not be counted for purposes of the vote.
WhoWho pays for the preparation of the proxy?proxy?
We will pay the cost of preparing, assembling and mailing the notice of meeting, proxy statement and enclosed proxy card. In addition to the use of mail, our employees may solicit proxies personally and by telephone. Our employees will receive no compensation for soliciting proxies other than their regular salaries. We may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of the proxy materials to their principals and to request authority for the execution of proxies. We may reimburse such persons for their expenses incurred in connection with these activities.
Our principal executive offices are located at 11150 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025, and our telephone number is (310) 444-4300. A list of stockholders entitled to vote at the annual meeting will be available at our offices, during normal business hours, for a period of ten days prior to the meeting and at the meeting itself for examination by any stockholder.
HowHow can I obtain additional copies?
If you need additional copies of this proxy statement or the enclosed proxy card, you should contact:
| | |
Hythiam, Inc. | or | American Stock Transfer & Trust CompanyBroadridge Financial Solutions, Inc. |
11150 Santa Monica Blvd., Suite 1500 | | 59 Maiden LaneBY INTERNET: www.proxyvote.com |
Los Angeles, California 90025 | | New York, New York 10038BY E-MAIL: sendmaterial@proxyvote.com |
Telephone: (310) 444-4300 | | Telephone: (212) 936-5100BY TELEPHONE: 800-579-1639 |
We will provide to those persons that make a request in writing (Attn: Investor Relations) or by e-mail (investor@hythiam.com) free of charge our (i) Annual Report on Form 10-K,10-K/A, any amendments thereto and the financial statements and any financial statement schedules filed by us with the Securities and Exchange Commission, or SEC, under Section 16(a) of the Securities Exchange Act of 1934, as amended, (ii) Audit Committee Charter, and (iii) Codes of Ethics. Our annual report and other periodic reports and any amendments thereto are also available on the SEC website at www.sec.gov by searching the EDGAR database for our filings.
Our 20072008 Annual Report on Form 10-K,10-K/A, which was mailed to stockholders with or preceding this proxy statement, contains financial and other information about us, but is not incorporated into this proxy statement and is not to be considered a part of these proxy soliciting materials or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act. The information contained in the "Audit Committee Report," and the "Compensation Committee Report" below shall not be deemed filed with the SEC, or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act.
CORPORATE CORPORATE GOVERNANCE
Our current directors who are nominated for reelection, and their ages as of May 2, 2008,July 31, 2009, are as follows:
| | | | | | |
| | | | | | Director |
Name | | Age | | Position | | Since |
Terren S. Peizer | | 48 | | Director, Chairman of the Board and Chief Executive Officer | | 2003 |
Richard A. Anderson | | 38 | | Director, Senior Executive Vice President | | 2003 |
Andrea Grubb Barthwell, M.D. | | 53 | | Director | | 2005 |
Leslie F. Bell | | 68 | | Director, Chair of Audit Committee, Member of Compensation Committee | | 2003 |
Marc G. Cummins | | 48 | | Director, Chair of Nominations and Governance Committee, Member of Audit Committee | | 2004 |
Honorable Karen Freeman-Wilson | | 47 | | Director, Member of Audit Committee | | 2007 |
Christopher S. Hassan | | 47 | | Director, Senior Executive Vice President | | 2007 |
Ivan M. Lieberburg, Ph.D., M.D. | | 58 | | Director, Chair of Compensation Committee | | 2003 |
| | | |
Terren S. Peizer | 50 | Director, Chairman of the Board and Chief Executive Officer | 2003 |
| | | |
Richard A. Anderson | 39 | Director, President and Chief Operating Officer | 2003 |
| | | |
Andrea Grubb Barthwell, M.D. | 54 | Director, Chair of Compensation Committee, Member of the Audit Committee | 2005 |
| | | |
Marc G. Cummins | 49 | Director, Chair of Nominations and Governance Committee, Member of the Audit Committee | 2004 |
| | | |
Jay A. Wolf | 35 | Director | 2008 |
Terren S. Peizer is our founder and has served as our chief executive officer and chairman of the board of directors since our inception in February, 2003. Mr. Peizer served as chief executive officer of Clearant, Inc. until October 2003, a company which he founded in April 1999 to develop and commercialize a universal pathogen inactivation technology. He served as chairman of its board of directors from April 1999 to October 2004 and as director until February 2005. From February 1997 to February 1999, Mr. Peizer served as president and vice chairman of Hollis-Eden Pharmaceuticals, Inc., a Nasdaq Global Market listed company. In addition, from June 1999 through May 2003 he was a director, and from June 1999 through December 2000 he was chairman of the board, of supercomputer designer and builder Cray Inc., a Nasdaq Global Market listed company, and remains its largest beneficial stockholder. Since August 2006, he has served as chairman of the board of Xcorporeal, Inc. Mr. Peizer has been the largest beneficial stockholder and has held various senior executive positions with several technology and biotech companies. In these capacities, he has assisted these companies with assembling management teams, boards of directors and scientific advisory boards, formulating business and financial strategies, investor and public relations and capital formation. Mr. Peizer has a background in venture capital, investing, mergers and acquisitions, corporate finance, and previously held senior executive positions with the investment banking firms Goldman Sachs, First Boston and Drexel Burnham Lambert. He received his B.S.E. in Finance from The Wharton School of Finance and Commerce.
Richard A. Anderson has more than fifteen years of experience in business development, strategic planning and financial management. He has served as a director since July 2003 and an officer since April 2005. He was the chief financial officer of Clearant, Inc. from November 1999 until March 2005, and served as a director from November 1999 to March 2006. Mr. Anderson was previously with PriceWaterhouseCoopers, LLP, for seven years and was most recently a director and founding member of PriceWaterhouseCoopers Los Angeles Office Transaction Support Group, where he was involved in operational and financial due diligence, valuations and structuring for high technology companies. He received a B.A. in Business Economics from University of California, Santa Barbara.
Andrea Grubb Barthwell, M.D. has served as the founder and chief executive officer of the global health care and policy-consulting firm EMGlobal, LLC since February 2005. From January 2002 through July 2004, she served as deputy director for demand reduction in the Office of National Drug Control Policy with the title of deputy drug czar, was a principal advisor in the executive office of the president on policies aimed at reducing the demand for illicit drugs, and was an active member of the White House Task Force on Disadvantaged Youth and the White House Domestic Violence Working Group, working closely with the National Institute on Drug Abuse to define the scope of its Health Services Research portfolio. From June 2000 through January 2002, Dr. Barthwell served as executive vice president and chief clinical officer of Human Resources Development Institute drug treatment center, where she served as deputy executive director and medical director from 1985 through 1987. From 1999 through January 2002, she served as president and chief executive officer of BRASS Foundation drug treatment center, where she was medical director since 1995. From 1996 through January 2002, Dr. Barthwell served as president of
Encounter Medical Group (an affiliate of EMGlobal). From 1987 through 1996 she served as medical director of Interventions in Chicago, Illinois. She was a founding member of the Chicago Area AIDS Task Force, hosted a weekly local cable show on AIDS, and is a past president of the American Society of Addiction Medicine. In 2003, Dr. Barthwell received the Betty Ford Award, given by the Association for Medical Education and Research in Substance Abuse. In 1997, Dr. Barthwell's peers named her one of the "Best Doctors in America" in addiction medicine. Dr. Barthwell received a B.A. in Psychology from Wesleyan University, an M.D. from University of Michigan Medical School, and post-graduate training at University of Chicago and Northwestern University.
Leslie F. Bell has more than 35 years of experience in business and the practice of corporate and healthcare law. He is a senior executive of Salick Cardiovascular Centers, LLC. From late 1997 until 2004, he was a director and senior executive of Bentley Health Care, Inc. and certain of its subsidiaries, each of which was a developer and provider of disease-state outpatient health care facilities and services. Mr. Bell was co-chairman and co-chief executive officer of Tractus Medical, Inc., a provider of patented relocatable ambulatory surgical center/operating rooms, which he co-founded in January 2002 until its sale in October 2004. From its inception in 1983 through several public offerings and until its sale completed in 1997 for a total of approximately $480 million, he served as a director, executive vice president and chief financial officer and from 1996 to 1997 was president of Salick Health Care, Inc. Mr. Bell has also served as a director of YES Clothing Co. from 1990 to 1995. He was previously a deputy attorney general of the State of California, and managing partner of the law firm Katz, Hoyt & Bell. Mr. Bell attended the University of Illinois, received a J.D. (with honors) from University of Arizona College of Law, and is a member of the University of Arizona College of Law Board of Visitors and Dean's Economic Council. Mr. Bell is licensed to practice law and is the sole director and president of Leslie F. Bell, Inc., a professional law corporation. He is also a director of various tax-exempt organizations principally formed to support research and education for specified health problems.
Marc G. Cummins is a managing partner of Prime Capital, LLC, a private investment firm focused on consumer companies. Prior to founding Prime Capital, Mr. Cummins was managing partner of Catterton Partners, a private equity investor in consumer products and service companies with over $1 billion of assets under management. Prior to joining Catterton in 1998, Mr. Cummins spent fourteen years at Donaldson, Lufkin & Jenrette Securities Corporation where he was managing director of the consumer productsConsumer Products and specialty distribution group,Specialty Distribution Group, and was also involved in leveraged buyouts, private equity and high yield financings. He has been a director of Xcorporeal, Inc. since November 2006. Mr. Cummins received a B.A. in Economics, magna cum laude, from Middlebury College, where he was honored as a Middlebury College Scholar and is a member of Phi Beta Kappa. He also received an M.B.A. in Finance with honors from The Wharton School at University of Pennsylvania.
Christopher S. Hassan Jay A. Wolfis a partner and co-founder of Trinad Capital, an activist hedge fund focused on micro-cap public companies. Mr. Wolf has a broad range of investment and operations experience that includes senior healthcare executive who, priorand subordinated debt lending, private equity and venture capital investments, mergers & acquisitions and public equity investments. Prior to joining ushis work at Trinad Capital which commenced in July 2006,2003, Mr. Wolf served as executive vice president salesof Corporate Development for Reckitt Benckiser Pharmaceuticals since October 2003. From 2000 to October 2002,Wolf Group Integrated Communications Ltd. where he servedwas responsible for the company’s acquisition program. Mr. Wolf worked at Canadian Corporate Funding, Ltd., a Toronto-based merchant bank as directoran analyst in the firm’s senior debt department and subsequently for Trillium Growth Capital, the firm’s venture capital fund. Mr. Wolf currently sits on the boards of sales, North America for Drugabuse Sciences,Mandalay Media, Inc. (MNDL), Optio Software, Inc. (OPTO), Prolink Holdings Corporation (PLKH), Shells Seafood Restaurants (SHLL), Xcorporeal, Inc. (XCR) and NorthStar Systems, Inc. Mr. Wolf is also a bio-pharmaceutical company. From 1996 to 2000,member of the board of Governors at Cedars-Sinai Hospital. Mr. Hassan served as area business manager for Parke-Davis/Pfizer. From 1989 to 1996 he served as district sales manager for Bayer Pharmaceuticals. Mr. HassanWolf received a B.B.A. in AccountingBA from Dalhousie University of Texas, Austin.
Honorable Karen Freeman-Wilson has previously served as chief executive officer of the National Association of Drug Court Professionals (NADCP) and executive director of the National Drug Court Institute. Prior to joining the NADCP, Judge Freeman-Wilson served as attorney general for the State of Indiana, where she served as the first vice chair of the Indiana Tobacco Control Board. Prior to that, she served as presiding judge of Gary, Indiana's Municipal Court and initiated the first drug treatment court in the State of Indiana. Before her recent government positions, she was director of the Indiana Civil Rights Commission. Judge Freeman-Wilson received her Bachelor of Arts degree from Harvard College and her Juris Doctorate from Harvard Law School.
Ivan M. Lieberburg, Ph.D., M.D. is currently executive vice president and chief medical officer at Elan Company, plc, a worldwide biopharmaceutical company listed on the NYSE, where he has held a number of positions over the last 20 years, most recently senior vice president of research. Dr. Lieberburg is a director of Neuromolecular Pharmaceuticals, and he sits on the scientific advisory boards of Health Care Ventures, Flagship Ventures, NewcoGen, Neuromolecular, CovX, and the Keystone Symposium. Prior to joining Elan in 1987, he performed his postdoctoral research at The Rockefeller University and his medical residency and postdoctoral fellowship at University of California, San Francisco, where he is presently a clinical professor of medicine. He previously held faculty positions at Albert Einstein School of Medicine and Mt. Sinai School of Medicine. Dr. Lieberburg has authored over 100 scientific publications, and has been named to a number of honors including Rockefeller University Fellow, Public Health Corps Scholar, National Research Service Award, Hartford Foundation Scholar and McKnight Foundation Fellow in Neuroscience. He is board certified in internal medicine and endocrinology/metabolism. Dr. Lieberburg received an A.B. in biology from Cornell University, a Ph.D. in Neurobiology from The Rockefeller University and an M.D. from University of Miami School of Medicine.
Compensation. Prior to July 1, 2007, non-affiliated directors did not receive any cash compensation for attendance at meetings of the board of directors or its committees. Commencing July 1, 2007, non-employee directors receive an annual fee of $15,000, plus $2,500 for meetings in excess of four meetings per year, and $1,500 per committee meeting attended. In addition, the audit committee chair receives an annual fee of $10,000 and the compensation committee chair and the nominations and governance committee chair each receive an annual fee of $2,500. Directors who are also employed by us do not receive any fee or compensation for their services as directors. All members of the board of directors receive reimbursement for actual travel-related expenses incurred in connection with their attendance at meetings of the board or committees.
Options. Directors are eligible to receive options under our 2007 Stock Incentive Plan. However, except for an initial grant on August 2, 2007 of 100,000 options to Judge Freeman-Wilson, no options were granted to any directors in 2007.2008.
HowHow often did the board meet during 2007?2008?
The board of directors held fiveseven meetings during 2007.2008. All of our incumbent directors attended at least 80% of the meetings of the board and 100% of the meetings held by each committee on which he or she served, except MarcMr. Cummins who attended 50% of the audit committee meetings.
After review of all of the relevant transactions or relationships of each director (and his family members), our board of directors has determined that Drs.Dr. Barthwell and Lieberburg, Messrs. Bell and Cummins and Judge Freeman-WilsonWolf are independent as defined by the applicable Nasdaq rules. There are no family relationships among any of our directors, executive officers or key employees.
integrity, have demonstrated exceptional ability and judgment, and, together with other director nominees and members, are expected to serve the long term interest of our stockholders and contribute to our overall corporate goals.
Our board of directors believes that it is important for our stockholders to have a process to send communications to the board. Accordingly, stockholders desiring to send a communication to the board or a specific director may do so by sending a letter addressed to the board of directors or any individual director at the address listed in this proxy statement. All such letters must identify the author as a stockholder. Our corporate secretary will open the communications, make copies and circulate them to the appropriate director or directors.
Our bylaws provide that the number of members on the board of directors shall be determined from time to time by resolution of the board. At present, our board of directors consists of eight members. Nominees are elected for a one-year term expiring at the next annual meeting of stockholders or until their successors are duly elected and qualified.
The nomineescurrent members of our board of directors, all of whom are nominated for election to the boardreelection, are Terren S. Peizer, Richard A. Anderson, Andrea Grubb Barthwell, Leslie F. Bell, Marc G. Cummins Christopher S. Hassan, Ivan M. Lieberburg, Ph.D., M.D., and Honorable Karen Freeman-Wilson. If elected, allJay A. Wolf. All of the directors'directors’ terms will expire at the 20092010 annual meeting or until their successors are duly elected and qualified. The board of directors has no reason to believe that any nominee will refuse to act or be unable to accept election. However, if any of the nominees for director is unable to accept election or if any other unforeseen contingencies should arise, the board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the board.
RecommendationRecommendation of the board
The board of directors unanimously recommends that you vote "FOR" the election as directors of each of the nominees named above.
The following report of the audit committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The audit committee has the sole authority to select, evaluate and, if appropriate, replace our independent registered public accounting firm, and to pre-approve all auditing and permitted non-auditing services performed by them for the Company including their fees and other terms. BDO Seidman, LLP was engaged as the independent registered public accounting firm for the Company in September 2003. On June 10, 2009, the audit committee approved the engagement of Rose, Snyder & Jacobs, a Corporation of Certified Public Accountants as the Company’s new independent registered public accounting firm, dismissing BDO Seidman, LLP as of the same date. Since our last meeting in June 2007,2008, the audit committee has consisted of Messrs. Bell Marc G. Cummins, Andrea Grubb Barthwell, M.D. and Cummins and Honorable Karen Freeman-Wilson. Steven A. Kriegsman, until he resigned on June 30, 2009. Jay A. Wolf was appointed as chairman of the committee on July 17, 2009. The board of directors has determined that all members of the audit committee are financially literate and independent within the requirements of Nasdaq, the Securities and Exchange Commission and the Company's audit committee charter.
Management, not the audit committee, is responsible for the preparation, presentation, accuracy and integrity of the Company's financial statements, establishing, maintaining and evaluating the effectiveness of internal controls and disclosure controls and procedures; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect internal control over financial reporting. The Company's independent registered public accounting firm is responsible for performing an independent audit of the Company's consolidated financial statements, expressing an opinion as to their conformity with U.S. generally accepted accounting principles and reporting on management's assessment of the effectiveness of the Company's internal controls over financial reporting. The audit committee's responsibility is to oversee these processes. Members of the committee rely on the information provided to them and on the representations made by management and the independent registered public accounting firm.
In fulfilling its responsibilities, the audit committee met with management and BDO Seidman, including sessions at which management was not present, and reviewed and discussed the unaudited financial statements contained in the Company's quarterly reports on Form 10-Q for each of the quarters ended in 2007,2008, and the audited financial statements contained in the 20072008 Annual Report on Form 10-K,10-K/A, prior to their filing with the Securities and Exchange Commission. The audit committee discussed with BDO Seidman the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees, as currently in effect, including the independent registered public accounting firm's overall evaluations of the quality, not just the acceptability, of the Company's accounting principles, the critical accounting policies and practices used in the preparation of the financial statements, the reasonableness of significant judgments, and such other matters as are required to be discussed with the committee under generally accepted auditingPublic Company Accounting Oversight Board (PCAOB) standards. The audit committee also received the written disclosures and the letter from BDO Seidman required by Independence Standardsthe applicable requirements of the Public Company Accounting Oversight Board Standard No. 1, Independence Discussionregarding the independent auditor’s communications with Audit Committees,the audit committee concerning independence, and reviewed with BDO Seidman its independence.
Based on the review and discussions with management and the independent accountants, and subject to the limitations on its role and responsibilities described above and in its Charter, the audit committee recommended to the board of directors that the audited financial statements be included in the Company's Annual Report on Form 10-K10-K/A for the year ended December 31, 20072008 that was filed with the SEC.
Submitted by the audit committee:
Leslie F. Bell,Jay A. Wolf, Chairman
Marc G. Cummins
Honorable Karen Freeman-Wilson
Dated: May __, 2008Andrea Grubb Barthwell, M.D.
Dated: July 31, 2009
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
WhoWho are the largest owners of our stock and how many shares do our directors and executive officers own?
The following table sets forth certain information regarding the shares of common stock beneficially owned as of April 24, 200828, 2009 by: (i) each person known to us to be the beneficial owner of more than 5% of our common stock, (ii) each of our directors, (iii) each executive officer named in the Summary Compensation Table set forth in the Executive Compensation section, and (iv) all such directors and officers as a group:
| | | | | | | | | | | | |
| | | | | | | | Total | | | | |
| | Common | | | Options & Warrants | | | Common | | | | |
| | Stock | | | Exercisable | | | Stock | | | Percent | |
| | Beneficially | | | on or before | | | Beneficially | | | of | |
Name of Beneficial Owner (1) | | Owned(2) | | | June 23, 2008 | | | Owned | | | Class(3) | |
Terren S. Peizer(4) | | | 13,800,000 | | | | 1,067,499 | | | | 14,867,499 | | | | 22.53 | % |
Fred Knoll(5) | | | 3,811,372 | | | | 208,768 | | | | 4,020,140 | | | | 6.09 | % |
Aberdeen Asset Management PLC(6) | | | 3,697,728 | | | | 125,000 | | | | 3,822,728 | | | | 5.79 | % |
Marc G. Cummins(7) | | | 1,583,111 | | | | 360,960 | | | | 1,944,071 | | | | * | |
Anthony M. LaMacchia | | | - | | | | 365,458 | | | | 365,458 | | | | * | |
Ivan M. Lieberburg | | | 44,444 | | | | 237,500 | | | | 281,944 | | | | * | |
Chuck Timpe | | | 28,020 | | | | 342,124 | | | | 370,144 | | | | * | |
Richard A. Anderson | | | - | | | | 448,511 | | | | 448,511 | | | | * | |
Christopher S. Hassan | | | - | | | | 193,645 | | | | 193,645 | | | | * | |
Leslie F. Bell | | | - | | | | 137,500 | | | | 137,500 | | | | * | |
Andrea Grubb Barthwell, M.D. | | | - | | | | 50,000 | | | | 50,000 | | | | * | |
Honorable Karen Freeman-Wilson | | | - | | | | - | | | | - | | | | * | |
All directors and named executive officers as a group (10 persons) | | | 15,455,575 | | | | 3,203,197 | | | | 18,658,772 | | | | 28.28 | % |
Notes to Beneficial Ownership Table: | | | | | Options & | | | Total | | | |
| | Common | | | Warrants | | | Common | | | |
| | Stock | | | Exercisable | | | Stock | | | Percent |
| | Beneficially | | | on or before | | | Beneficially | | | of |
Name of Beneficial Owner (1) | | Owned(2) | | | July 7, 2009 | | | Owned | | | Class (3) |
Terren S. Peizer (4) | | | 13,600,000 | | | | 1,519,161 | | | | 15,119,161 | | | | 21.8% |
Knoll Capital Management, LP (5) | | | 4,001,040 | | | | 208,768 | | | | 4,209,808 | | | | 6.1% |
NorthPointe Capital, LLC (6) | | | 3,627,295 | | | | 54,750 | | | | 3,682,045 | | | | 5.3% |
Marc G. Cummins (7) | | | 1,583,111 | | | | 482,751 | | | | 2,065,862 | | | | * |
Richard A. Anderson | | | - | | | | 664,939 | | | | 664,939 | | | | * |
Christopher S. Hassan | | | - | | | | 380,587 | | | | 380,587 | | | | * |
Andrea Grubb Barthwell, M.D. | | | - | | | | 131,194 | | | | 131,194 | | | | * |
Maurice S. Hebert | | | - | | | | 125,494 | | | | 125,494 | | | | * |
Steven A. Kriegsman (8) | | | - | | | | 45,004 | | | | 45,004 | | | | * |
Jay A. Wolf | | | - | | | | 45,004 | | | | 45,004 | | | | * |
All directors and named executive officers as a group (8 persons) | | | 15,183,111 | | | | 3,394,134 | | | | 18,577,245 | | | | 26.8% |
| (1) | The mailing address of all individuals listed is c/o Hythiam, Inc., 11150 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025, unless otherwise indicated. |
| (2) | The number of shares beneficially owned includes shares of common stock in which a person has sole or shared voting power and/or sole or shared investment power. Except as noted below, each person named reportedly has sole voting and investment powers with respect to the common stock beneficially owned by that person, subject to applicable community property and similar laws. |
| (3) | On April 24, 2008,28, 2009, there were 54,387,60455,154,688 shares of common stock outstanding. Common stock not outstanding but which underlies options and rights (including warrants) vested as of or vesting within 60 days after April 24, 200828, 2009 is deemed to be outstanding for the purpose of computing the percentage of the common stock beneficially owned by each named person (and the directors and executive officers as a group), but is not deemed to be outstanding for any other purpose. |
| (4) | 13,800,00013,600,000 shares are held of record by Bonmore, LLC and Reserva Capital, LLC, which is owned and controlled by Mr. Peizer. |
| (5) | Based on information provided on Schedule 13G filed with the SEC on February 8, 2008,10, 2009, by Fred Knoll, individually and as president of Knoll Capital Management LP and Europa International, Inc., 237 Park Avenue, 9th Floor, New York, New York 10166. |
| (6) | Based on information provided on Schedule 13G filed with the SEC on JanuaryFebruary 10, 20082009, by Aberdeen Asset Management PLC, 10 Queens Terrace, Aberdeen, Scotland.NorthPointe Capital,LLC, 101 W. Big Beaver, Suite 745, Troy, Michigan 48084. |
| (7) | Includes 751,566 shares and 187,892 warrants held by CPS Opportunities, LLC, 167,015 shares and 41,754 warrants held by GPC LX1 LLC, 73,069 shares and 18,267 warrants held by Prime Logic 1 LLC, 52,192 shares and 13,048 warrants held by GPC 78 LLC, for which Mr. Cummins serves as investment manager and 317,047 shares held by Prime Logic Capital LLC, for which Mr. Cummins serves as managing partner. Additionally, 100,000 shares are held of record by Bexley Partners, L.P., 23,000 by Cummins Children's Trust, 22,000 by C.F. Partners, L.P., and 35,000 by Mr. Cummins' wife Lisa Cummins. Mr. Cummins disclaims beneficial ownership of such shares. |
(8) | Steven A. Kriegsman resigned as a member of our board of directors on June 30, 2009. |
Equity Compensation Plan
The information relating to our equity compensation plan required to be filed hereunder is included in "Compensation Discussion and Analysis."
Section Section 16(a) beneficial ownership reporting compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than 10% of our outstanding common stock, to file with the SEC, initial reports of ownership and reports of changes in ownership of our equity securities. Such persons are required by SEC regulations to furnish us with copies of all such reports they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written or oral representations that no other reports were required for such persons, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners have been complied with.
Code of Ethics
Our Board of Directors has adopted a Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer and persons performing similar functions. Our Code of Ethics can be found on our website at http://www.hythiam.com.
Procedures by which Stockholders may Nominate Directors
There have been no material changes in the procedures by which stockholders may nominate directors since our last definitive Proxy Statement.