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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
COLUMBIA/HCA HEALTHCARE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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COLUMBIA/HCA HEALTHCARE CORPORATION
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1999
To our Stockholders:
The 1999 annual meeting of stockholders of Columbia/HCA Healthcare
Corporation will be held at the executive offices of Columbia/HCA located at One
Park Plaza, Nashville, Tennessee, on Thursday, May 27, 1999 beginning at 1:30
p.m., Central Daylight Time. The meeting will be held for the following
purposes:
(1) To elect four directors to serve until the annual meeting of
stockholders in 2000 and to elect one director to serve until the annual
meeting of stockholders in 2001, or until their respective successors shall
have been duly elected and qualified;
(2) To ratify the appointment of Ernst & Young LLP as our independent
auditors;
(3) To act on one stockholder proposal; and
(4) To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on April 5, 1999, are
entitled to notice of and to vote at the annual meeting. A complete list of the
stockholders entitled to vote at the annual meeting will be available for
examination by any stockholder at our executive offices, during ordinary
business hours, for a period of at least ten days prior to the annual meeting.
IF YOU PLAN TO ATTEND:
We anticipate that a large number of stockholders will attend the annual
meeting. Please note that space limitations make it necessary to limit
attendance to stockholders. Cameras and recording devices will not be permitted
at the meeting. "Street name" holders will need to bring a copy of a brokerage
statement reflecting stock ownership as of the record date.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN THE ACCOMPANYING REPLY
ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE
IN PERSON.
By Order of the Board of Directors,
John M. Franck II
Corporate Secretary
Nashville, Tennessee
April 20, 1999
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COLUMBIA/HCA HEALTHCARE CORPORATION
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1999
---------------------
INTRODUCTION
The accompanying proxy is solicited by our board of directors for use at
the 1999 annual meeting of stockholders to be held at the date, time and place
and for the purposes set forth in the accompanying notice of annual meeting of
stockholders. Our principal executive offices are located at One Park Plaza,
Nashville, Tennessee 37203, and our telephone number is (615) 344-9551.
Stockholders of record at the close of business on the record date, April 5,
1999, are entitled to notice of and to vote at the annual meeting. This proxy
statement and the accompanying proxy are first being mailed to stockholders on
or about April 20, 1999.
THE ANNUAL MEETING
VOTING AT THE ANNUAL MEETING
As of the record date, there were approximately 590,470,000 shares of our
voting common stock, $.01 par value outstanding. The shares were held by
approximately 16,500 holders of record. Each stockholder is entitled to one vote
for each share of common stock held on the record date. The common stock is the
only class of our capital stock having general voting rights.
The presence at the meeting, in person or by proxy, of at least a majority
of the outstanding shares of common stock entitled to vote is necessary to
constitute a quorum to transact business at the annual meeting. The affirmative
vote of a plurality of the shares of common stock represented at the annual
meeting, in person or by proxy, is necessary for the election of directors.
Stockholders will determine any other matters submitted to them by a majority of
the votes present or represented by proxy and entitled to vote.
A stockholder who is present or represented by proxy at the annual meeting
will be counted for purposes of determining if a quorum exists even if the
stockholder abstains from voting. With respect to all matters other than the
election of directors, an abstention has the same effect as a vote against the
proposal. Abstention from voting has no effect on the election of directors
because directors are elected by a plurality of the votes cast at the annual
meeting.
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
regarding the stockholder proposal. Thus, if you do not give your broker or
nominee specific instructions, your shares may not be voted on the stockholder
proposal and will not be counted in determining the number of shares necessary
for approval. Shares represented by any "broker non-votes" will, however, be
counted in determining whether there is a quorum. Broker non-votes, if any, will
be counted as votes against the ratification of our independent auditors.
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PROXIES AND PROXY SOLICITATION
Shares of common stock represented by properly executed proxies will be
voted at the annual meeting according to the directions marked on the proxies,
unless they have previously been revoked. If stockholders do not give directions
on the proxies, the proxy holder will vote them:
- "For" the election of each nominee named under "Election of Directors;"
- "For" the ratification of Ernst & Young LLP as our independent auditors;
and
- "Against" the stockholder proposal.
We do not presently anticipate any other matters being presented for action
at the annual meeting. If any other matters are properly presented at the annual
meeting for action, the proxy holders will vote the proxies (which confer
discretionary authority upon the holders to vote on such matters) according to
their best judgment.
A stockholder may revoke his or her proxy at any time before it is voted by
filing with our Corporate Secretary either a notice of revocation or a duly
executed proxy bearing a later date. The proxy holder's powers will be suspended
if you attend the meeting in person and so request, although attendance at the
meeting will not by itself revoke a previously granted proxy.
We will bear the cost of soliciting proxies. In addition, we have retained
Corporate Investor Communications, Inc., a proxy soliciting firm, to assist in
the solicitation at a cost of approximately $11,500 and out-of-pocket expenses.
Our directors, officers and other employees, not specially employed for this
purpose, may also solicit proxies, without additional remuneration for their
efforts, by personal interview, mail, telephone or facsimile. We will also
request brokers and other fiduciaries to forward proxy soliciting material to
the beneficial owners of shares of the common stock that the brokers and
fiduciaries hold of record and will reimburse them for their reasonable
out-of-pocket expenses.
If you are unable to attend our May 27th annual meeting in person, we
invite you to listen to our annual meeting which will be broadcast live over the
Internet beginning at 1:30 p.m., Central Daylight Time. The Internet Address is:
http://www.videonewswire.com/COLUMBIAHCA/052799/. To listen, simply log on to
the web at the above address. Minimum requirements to listen to the broadcast
are a sound card, the RealPlayer software, downloadable free from
http://www.real.com/products/player/index.html and at least a 14.4 Kbps
connection to the Internet.
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PRINCIPAL STOCKHOLDERS
The following table and footnotes show as of April 5, 1999 (unless
otherwise noted), the number of shares of common stock beneficially owned by (a)
certain benefit plans we sponsor which collectively own at least 5% of the
outstanding common stock, (b) each stockholder owning beneficially at least 5%
of the outstanding common stock, (c) each of our directors and nominees, (d)
each of our executive officers named in the "Summary Compensation Table" and (e)
all our directors and executive officers as a group.
NAME OF INDIVIDUAL OR NUMBER IN GROUP NUMBER OF SHARES(1)(2) PERCENT
- ------------------------------------- ---------------------- -------
The Columbia/HCA Healthcare Corporation Stock Bonus Plan.... 23,596,621(3) 4.0
The Columbia/HCA Healthcare Corporation Salary Deferral
Plan...................................................... 22,325,888(3) 3.8
The San Leandro Retirement and Savings Plan................. 41,106(3) *
FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson...... 47,242,797(4) 8.0
Wellington Management Company, LLP.......................... 56,151,790(5) 9.5
Magdalena H. Averhoff, M.D.................................. 15,996(6) *
J. Michael Cook............................................. -- --
Martin Feldstein............................................ 7,070(7) *
Thomas F. Frist, Jr., M.D................................... 15,173,181(8) 2.6
Frederick W. Gluck.......................................... 7,070(9) *
T. Michael Long............................................. 11,898(10) *
John H. McArthur............................................ 8,070(11) *
R. Clayton McWhorter........................................ 551,731(12) *
Thomas S. Murphy............................................ 7,070(13) *
Kent C. Nelson.............................................. 7,070(14) *
Carl E. Reichardt........................................... 172,794(15) *
Frank S. Royal, M.D......................................... 116,757(16) *
Jack O. Bovender, Jr........................................ 52,131 *
Richard M. Bracken.......................................... 113,499(17) *
Jay F. Grinney.............................................. 103,945(18) *
James D. Shelton............................................ 171,132(19) *
Robert A. Waterman.......................................... 10,937 *
All directors and executive officers as a group (34
persons)............................................... 18,624,341(20) 3.2
- ---------------
* Less than one percent.
(1) Unless otherwise indicated, each stockholder shown on the table has sole
voting and investment power with respect to the shares beneficially owned.
The number of shares shown does not include the interest of certain persons
in shares held by family members in their own right.
(2) Each named person or group is deemed to be the beneficial owner of
securities which may be acquired within 60 days through the exercise or
conversion of options, warrants and rights, if any, and the securities are
deemed to be outstanding for the purpose of computing the percentage
beneficially owned by such person or group.
(3) The address of the Columbia/HCA Healthcare Corporation Stock Bonus Plan,
the Columbia/HCA Healthcare Corporation Salary Deferral Plan and the San
Leandro Retirement and Savings Plan is One Park Plaza, Nashville, Tennessee
37203. The shares are beneficially owned by employees participating in the
benefit plans and voted at the direction of our Retirement Committee which
is composed of certain of our officers.
(4) The ownership given for FMR Corp., Edward C. Johnson 3d and Abigail P.
Johnson is based on information contained in the Schedule 13G/A dated
February 16, 1999, filed by FMR Corp. with the Securities and Exchange
Commission (the "Commission"). The address of FMR Corp. is 82 Devonshire
Street, Boston, Massachusetts 02109.
(5) The ownership given for Wellington Management Company, LLP is based on
information contained in the Schedule 13G (Amendment No. 1) dated February
10, 1999, filed by Wellington Management Company, LLP with the Commission.
The address of Wellington Management Company, LLP is 75 State Street,
Boston, Massachusetts 02109.
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(6) Includes 9,642 shares issuable upon exercise of options.
(7) Includes 5,892 shares issuable upon exercise of options.
(8) Includes 228,750 shares issuable upon exercise of options and 18,925 shares
beneficially owned in employee plans but not voted by participant. Also
includes 3,675,255 shares with respect to which Dr. Frist has sole voting
and investment power and 11,250,251 shares with respect to which Dr. Frist
has shared voting and investment power.
(9) Includes 5,892 shares issuable upon exercise of options.
(10) Includes 9,642 shares issuable upon exercise of options.
(11) Includes 5,892 shares issuable upon exercise of options.
(12) Includes 6,970 shares issuable upon exercise of options.
(13) Includes 5,892 shares issuable upon exercise of options.
(14) Includes 5,892 shares issuable upon exercise of options.
(15) Includes 9,642 shares issuable upon exercise of options.
(16) Includes 9,642 shares issuable upon exercise of options.
(17) Includes 80,750 shares issuable upon exercise of options and 6,127 shares
beneficially owned in employee plans but not voted by participant.
(18) Includes 84,185 shares issuable upon exercise of options and 82 shares
beneficially owned in employee plans but not voted by participant.
(19) Includes 145,000 shares issuable upon exercise of options and 67 shares
beneficially owned in employee plans but not voted by participant.
(20) Includes 1,705,584 shares issuable upon exercise of options. Also includes
55,448 shares beneficially owned in employee plans but not voted by
participants.
ITEM 1 -- ELECTION OF DIRECTORS
Our board of directors is currently divided into three classes. The current
board of directors consists of eleven directors. The board of directors consists
of four Class III directors (Dr. Frist, Mr. McArthur, Mr. Feldstein and Mr.
Murphy) whose term of office expires in 1999, four Class I directors (Dr.
Averhoff, Mr. McWhorter, Mr. Nelson and Dr. Royal) whose term of office expires
in 2000 and three Class II directors (Mr. Gluck, Mr. Long, and Mr. Reichardt)
whose term of office expires in 2001. An additional Class II director will be
added effective June 1, 1999.
At the 1998 annual meeting our stockholders approved an amendment to our
Restated Certificate of Incorporation to declassify our board of directors and
to elect all directors annually at the annual meeting of stockholders. Under the
terms of the amendment, until the annual meeting of stockholders in 2001, the
directors are divided into three classes designated Class I, Class II and Class
III. Each director elected prior to the effective date of the amendment serves
for the full three year term for which he or she was elected. For example:
- The term of each director elected at the 1996 annual meeting (Class III
directors) or appointed to fill a vacancy as a Class III director before
the 1999 annual meeting will end at this year's annual meeting;
- The term of each director elected at the 1997 annual meeting (Class I
directors) or appointed to fill a vacancy as a Class I director before
the 2000 annual meeting will end at the annual meeting in 2000; and
- The term of each director elected at the 1998 annual meeting (Class II
directors) or appointed to fill a vacancy as a Class II director before
the 2001 annual meeting will end at the annual meeting in 2001.
Accordingly, starting with the annual meeting of stockholders in 2001, the
classification of the board of directors will end, and all directors will be of
one class and will hold office for a term expiring at the next annual meeting of
stockholders or until their successors are elected and qualified or until they
resign or are removed. The amendment to our certificate of incorporation did not
shorten the term of any incumbent director.
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The Company proposes that the nominees listed below be elected at the
annual meeting as members of the board of directors. Each of the Class III
nominees shall be elected to serve as a director until the annual meeting of
stockholders in 2000 or until his respective successor is duly elected and
qualified. The Class II nominee shall be elected to serve as a director until
the annual meeting of stockholders in 2001 or until his respective successor is
duly elected and qualified.
INFORMATION CONCERNING DIRECTORS
Information concerning the nominees proposed by the board of directors for
election as members along with information concerning the Class I and Class II
members, whose terms of office will continue after the annual meeting, is set
forth below.
If a nominee becomes unable or unwilling to accept nomination or election,
the person or persons voting the proxy will vote for such other person or
persons as may be designated by the board of directors. Unless otherwise
instructed on the proxy, the proxy holders will vote the proxies received by
them FOR the election of the nominees shown below:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE OFFICES WITH THE COMPANY SINCE
---- --- ------------------------ --------
NOMINEES
CLASS III -- PRESENT TERM EXPIRES 1999
Martin Feldstein..................... 59 Professor of Economics, Harvard University and 1998
President and CEO, National Bureau of Economic
Research
Thomas F. Frist, Jr., M.D............ 60 Chairman and CEO, Columbia/HCA Healthcare 1994
Corporation
John H. McArthur..................... 65 Retired Dean of Harvard University Graduate 1998
School of Business Administration
Thomas S. Murphy..................... 73 Retired Chairman and CEO, Capital Cities/ABC, 1998
Inc.
CLASS II NOMINEE -- TERM WILL EXPIRE IN 2001
J. Michael Cook...................... 56 Chairman and CEO, Deloitte & Touche LLP (retiring --
May 31, 1999)
DIRECTORS CONTINUING IN OFFICE
CLASS I -- PRESENT TERM EXPIRES 2000
Magdalena H. Averhoff, M.D........... 48 Practicing Physician 1992
R. Clayton McWhorter................. 65 Chairman and CEO of Clayton Associates, L.L.C. 1995
Kent C. Nelson....................... 61 Retired Chairman and CEO of United Parcel Service 1998
Frank S. Royal, M.D.................. 59 Practicing Physician 1994
CLASS II -- PRESENT TERM EXPIRES 2001
Frederick W. Gluck................... 63 Senior Counselor, McKinsey & Company, Inc., 1998
Retired Vice Chairman of Bechtel Group, Inc. and
Retired Managing Director of McKinsey & Company,
Inc.
T. Michael Long...................... 55 Partner, Brown Brothers Harriman & Co. 1991
Carl E. Reichardt.................... 67 Retired Chairman and CEO, Wells Fargo & Company 1994
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Magdalena H. Averhoff, M.D. is a physician specializing in gastroenterology
who has been practicing in Miami, Florida since 1982. Dr. Averhoff is past
Chairperson of the Performance Improvement Committee, past Chairperson of the
Credentials Committee and is a member of the Board of Cedars Medical Center. Dr.
Averhoff is past President of Victoria Hospital and past President and Chief of
Staff of Cedars Medical Center.
J. Michael Cook is the Chairman and Chief Executive Officer of Deloitte &
Touche LLP, a professional services firm and also Chairman of the Deloitte &
Touche Foundation. Mr. Cook joined what is now Deloitte & Touche in 1964 and has
been Chairman and Chief Executive Officer of Deloitte & Touche for the past 15
years. Mr. Cook will retire as Chairman and Chief Executive Officer of Deloitte
& Touche LLP effective May 31, 1999. Mr. Cook is currently a member of the
Advisory Council of the International Accounting Standards Committee and is a
member of the Executive Committee of the Securities Regulation Institute. He
also serves as a member of the Boards of Directors of Catalyst and the United
Way of America.
Martin Feldstein has served as President and Chief Executive Officer of the
National Bureau of Economic Research, a non-profit economic research firm, since
1977, except for the period from August 1982 to July 1984 when he served as
Chairman of the Council of Economic Advisers. Mr. Feldstein has also served as a
Professor of Economics at Harvard University since 1967. Mr. Feldstein is
currently a director of American International Group, Inc., J. P. Morgan & Co.
Incorporated and TRW Inc.
Thomas F. Frist, Jr., M.D. has served as our Chairman and Chief Executive
Officer since July 1997. Previously he served as our Vice Chairman of the Board
since April 1995. From February 1994 to April 1995 he served as our Chairman.
Dr. Frist was Chairman, President and Chief Executive Officer of HCA -- Hospital
Corporation of America from 1988 to February 1994. Dr. Frist was Chairman and
Chief Executive Officer of Hospital Corporation of America from August 1985
until September 1987.
Frederick W. Gluck has served as a senior counselor to McKinsey & Company,
Inc., an international consulting firm, since July 1998. Prior to that, he
worked with Bechtel Group, Inc. since February 1995, where he served as Vice
Chairman and Director from January 1996 until July 1997. Mr. Gluck retired from
Bechtel in July 1998. Prior to 1995, Mr. Gluck was with McKinsey & Company, Inc.
for 27 years, ultimately leading that firm as its managing director from 1988
until 1994. Mr. Gluck is currently a director of AMGEN, ACT Networks, New York
Presbyterian Hospital and Thinking Tools.
T. Michael Long is a partner with Brown Brothers Harriman & Co., a private
banking firm, where he has been employed for more than five years and where he
is co-manager of The 1818 Fund II, L.P. and The 1818 Fund III, L.P. Mr. Long is
also a director of Gulf Canada Resources, Ltd., Gulf Indonesia Resources, Ltd.,
Nobel Biocare AB and Vaalco Energy, Inc.
John H. McArthur served as Dean of the Faculty of Harvard University
Graduate School of Business Administration from 1980 to 1995. Mr. McArthur had
been on staff with the Harvard Business School since 1962. Mr. McArthur also
serves as Senior Advisor to the President of the World Bank. Mr. McArthur is
currently a director of AES Corporation, BCE Inc., Cabot Corporation, Glaxo
Wellcome plc, Rohm and Haas Company, Springs Industries, Inc. and The Vincam
Group, Inc.
R. Clayton McWhorter is the Chairman and Chief Executive Officer of Clayton
Associates, L.L.C., a venture capital firm, and is also the Chairman of
LifeTrust America, LLC, an assisted living venture. Mr. McWhorter served as the
Chairman of Columbia/HCA from April 1995 to May 1996. Mr. McWhorter was Chairman
and Chief Executive Officer of Healthtrust, Inc. - The Hospital Company from
1987 to April 1995 and was President of Healthtrust from 1991 to April 1995. Mr.
McWhorter is a director of SunTrust Bank in Nashville and StaffMark, Inc.
Thomas S. Murphy served as Chairman and Chief Executive Officer of Capital
Cities/ABC, Inc. for 24 years from 1966 to 1990 and from February 1994 until his
retirement in February 1996. Mr. Murphy is currently a director of The Walt
Disney Company and Doubleclick Inc. Mr. Murphy is also Chairman of the Board of
Trustees for Save the Children.
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Kent C. Nelson served as Chairman and Chief Executive Officer of United
Parcel Service from November 1989 to December 1996. Mr. Nelson held various
positions with United Parcel Service over a 37 year period. Mr. Nelson currently
serves as a director of United Parcel Service and is a member of the board of
the CDC Foundation and United Way of America. Mr. Nelson also serves on the
Board of Trustees of the Carter Center of Emory University and the Ball State
University Foundation and serves as chairman of the Annie E. Casey Foundation
Board.
Carl E. Reichardt served as the Chairman and Chief Executive Officer of
Wells Fargo & Company, a bank holding company, and of its subsidiary, Wells
Fargo Bank, N.A. from 1983 to December 1994. Mr. Reichardt is currently a
director of ConAgra, Inc., Ford Motor Company, Newhall Management Corporation,
which is the managing general partner of the Newhall Land & Farming Company (a
California limited partnership), PG&E Corporation, Pacific Gas & Electric Co.
and McKesson HBOC, Inc.
Frank S. Royal, M.D. has been a practicing physician in Richmond, Virginia
for over 20 years. He is Past President/Former Board Chairman of the National
Medical Association. He also serves as a member of the Boards of Directors of
Crestar Financial Corporation, Chesapeake Corporation, CSX Corporation, Dominion
Resources and SunTrust Banks, Inc. and is on the Boards of Trustees of Meharry
Medical College (Chairman of the Board), Virginia Union University (Chairman of
the Board) and the Richmond Metropolitan YMCA.
Our board of directors has adopted a retirement policy for its members,
with the policy being effective as of July 1, 1994. Under the policy, no person
may be nominated to a term of office on the board of directors if he or she has
attained the age of 70 before the first day of the proposed term of office. An
exception to the policy was made with respect to one director in light of his
experience and qualifications.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1998, our board of directors held 8 meetings. Also, there are
certain committees of the board of directors which assist the board in
discharging its responsibilities. During 1998, each incumbent director attended
at least 75% of the aggregate of the total number of meetings of the board of
directors and the total number of meetings held by all committees on which the
individual director served. The membership and functions of the committees are
as follows:
Audit Committee -- Members of the audit committee are Carl E. Reichardt
(Chairman), Martin Feldstein, Frederick W. Gluck and Kent C. Nelson, none of
whom are our officers or employees. This committee's functions include review of
the programs of our internal auditors, the results of their audits, and the
adequacy of our system of internal controls and accounting practices. In
addition, the committee reviews the scope of the annual audit by our independent
auditors before its commencement, reviews the results of the audit and reviews
the types of services for which we retain independent auditors. In 1998, this
committee met 6 times.
Compensation Committee -- Members of the compensation committee are Frank
S. Royal, M.D. (Chairman), Frederick W. Gluck, and Thomas S. Murphy, none of
whom are our officers or employees. This committee's functions include approval
of compensation arrangements for executive management, review of compensation
plans relating to officers, grants of options and other benefits under our
employee benefit plans and general review of our employee compensation policies.
In 1998, this committee met 3 times.
Executive Committee -- Members of the executive committee are Thomas F.
Frist, Jr., M.D., R. Clayton McWhorter and Frank S. Royal, M.D. This committee
has the authority to exercise all of the powers of the full board of directors,
with certain exceptions relating to major corporate matters. This committee is
available to review with members of management certain areas of our operations
and to act when it is impractical to assemble the entire board for a meeting. In
1998, this committee did not meet.
Ethics, Compliance and Corporate Responsibility Committee -- Members of the
ethics, compliance and corporate responsibility committee are Martin Feldstein,
R. Clayton McWhorter and Frank S. Royal, M.D., none of whom are our officers or
employees. This committee's functions include review of matters relating to our
ethics, compliance and corporate responsibility functions, procedures and
results. In 1998, this committee met 3 times.
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Finance and Investments Committee -- Members of the finance and investments
committee are John H. McArthur (Chairman), T. Michael Long, Kent C. Nelson, Carl
E. Reichardt and Thomas S. Murphy, none of whom are our officers or employees.
This committee's functions include reviewing, investigating and recommending to
the board of directors our annual finance plan and reviewing the investment of
our corporate and insurance funds and reserves and the investment of the assets
of the retirement plans by the plan managers. In 1998, this committee met 2
times.
Nominating Committee -- Members of the nominating committee are T. Michael
Long (Chairman), Magdalena H. Averhoff, M.D., Frederick W. Gluck, John H.
McArthur, R. Clayton McWhorter and Thomas F. Frist, Jr., M.D. (ex officio). This
committee identifies, investigates and recommends to the board of directors,
qualified candidates for election to the board of directors. In 1998, this
committee met 4 times.
The board of directors will consider nominees for the board of directors
recommended by stockholders, if stockholders comply with the notice provisions
contained in our Restated Certificate of Incorporation. Directors are selected
based on their demonstrated broad knowledge, experience and ability in their
chosen endeavors and, most important, based on their ability to represent the
interests of all the stockholders. Stockholder recommendations for nominees must
include biographical information and the proposed nominee's written consent to
nomination and must be delivered to our Corporate Secretary not less than 60
days nor more than 90 days before the scheduled date of the meeting (or, if less
than 70 days' notice or prior public disclosure of the date of the meeting is
given, the 10th day following the earlier of the day the notice was mailed or
the day the public disclosure was made).
A plurality of the votes cast by the holders of the shares present in
person or represented by proxy at a meeting at which a quorum is present is
required to elect directors. "Plurality" means that the individuals who receive
the largest number of votes cast are elected as directors up to the maximum
number of directors to be chosen at the meeting. Consequently, shares not voted
(whether by withholding authority or broker non-vote) have no impact in the
election of directors, except to the extent the failure to vote for the
individual results in another individual receiving a larger number of votes.
CERTAIN LEGAL PROCEEDINGS
We are currently a party to several stockholder derivative and class action
lawsuits. The plaintiffs have named several of our directors and current and
former executive officers as defendants in the lawsuits. Our Annual Report on
Form 10-K for the year ended December 31, 1998 provides more information with
respect to these and other legal proceedings.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who own more than ten percent of our common
stock, to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and to provide us with copies of these reports. Based
solely on our review of the copies of these forms we received, or written
representations from the reporting persons that no filings were required for
those persons, we believe that, during the past fiscal year, our executive
officers, directors, and greater than ten-percent stockholders were in
compliance with all applicable filing requirements.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows certain information regarding compensation paid
during each of our last three fiscal years to our Chief Executive Officer and
each of our five other most highly compensated executive officers, based on
salary and bonus earned during 1998.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------- -----------------------------------
AWARDS PAYOUTS
--------------------- -----------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSA- AWARDS SARS LTIP COMPENSA-
POSITIONS YEAR ($)(1) ($)(2) TION ($)(3) ($)(4) (#)(5) PAYOUTS ($) TION ($)(6)
------------------ ------ -------- -------- ------------ ---------- -------- ----------- -----------
Thomas F. Frist, Jr., M.D.(7) 1998 $ 2,223 $ -- $21,548 $ -- -- -- $ 1,424
Chairman and Chief 1997 $ 29,000 $ -- $18,800 $ -- -- -- $ 1,969
Executive Officer 1996 $350,000 $ -- $ -- $373,300 75,000 -- $14,927
Jack O. Bovender, Jr. (8) 1998 $791,667 $ -- $ -- $277,764 -- $ 763
President and 1997 $375,000 $ -- $ -- $ -- 500,000 -- $ 400
Chief Operating Officer
Robert A. Waterman (9) 1998 $494,792 $ -- $ -- $173,592 -- -- $ 6,461
Senior Vice President and 1997 $104,167 $ -- $58,610 $ -- 350,000 -- $ --
General Counsel
James D. Shelton 1998 $529,125 $ -- $ -- $124,491 -- $ 9,448
President -- 1997 $415,000 $ 41,500 $ -- $221,400 350,000 -- $ 7,629
Pacific Group 1996 $350,000 $ 35,000 $ -- $187,000 82,500 -- $ 7,214
Jay F. Grinney 1998 $478,958 $ -- $ -- $168,050 -- -- $ 9,448
President -- 1997 $402,500 $100,625 $66,241 $134,200 340,000 -- $ 9,538
Eastern Group 1996 $300,000 $150,000 $ -- $ -- 56,250 -- $ 8,994
Richard M. Bracken 1998 $478,958 $ -- $97,861 $168,050 -- -- $14,261
President -- 1997 $562,500 $ 61,494 $ -- $ 20,480 285,000 -- $14,608
Western Group 1996 $270,250 $104,519 $ -- $ 75,040 37,500 -- $13,740
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(1) 1998 salary amounts do not include the value of restricted stock awards
granted pursuant to the Company's Amended and Restated 1995 Management Stock
Purchase Plan in lieu of a portion of annual salary. Such awards are
included in the restricted stock awards column.
(2) Reflects bonus earned during the fiscal year. In some instances, all or a
portion of the bonus was paid during the following year. Pursuant to the
Company's 1995 Management Stock Purchase Plan, in 1996 and 1997 the
executive officers had the option to take all or part of their bonus in
shares of restricted stock at a 25% discount from the fair market value on
the date of grant, which is reflected in the restricted stock awards column.
The bonus plan was discontinued in August 1997.
(3) Except as noted in the table, perquisites and other personal benefits did
not exceed the lesser of either $50,000 or 10% of the total of annual salary
and bonus for the named executive officer. Other annual compensation
consists principally of transportation and relocation expenses. 1998 other
annual compensation for Dr. Frist related to personal usage of corporate
aircraft. 1998 other annual compensation for Mr. Bracken consisted of
$92,344 in relocation benefits and $5,517 in miscellaneous perquisites.
(4) 1998 amounts represent the average of the closing prices of Columbia/HCA
shares issued pursuant to the Company's Amended and Restated 1995 Management
Stock Purchase Plan in lieu of a portion of annual salary on trading days
during the deferral period. 1997 and 1996 amounts represent the average of
the closing price on the five trading days prior to the grant date of
Columbia/HCA shares granted pursuant to the Company's 1995 Management Stock
Purchase Plan in lieu of all or a portion of a cash bonus. As of January 1,
1999, Messrs. Frist, Bovender, Waterman, Shelton, Grinney and Bracken held
an aggregate of 18,366, 10,482, 6,551, 21,172, 10,942 and 11,295 shares of
restricted stock, respectively. Pursuant to Securities and Exchange
Commission rules, after deducting the consideration paid therefore, the
shares held by Messrs. Frist, Bovender, Waterman, Shelton, Grinney and
Bracken had a net pre-tax value as of December 31, 1998 of ($95,361),
$51,109, $31,945, ($2,056), $48,370 and $16,548, respectively. Dividends
will be payable on shares of restricted stock if and to the extent paid on
Columbia/HCA's
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common stock generally, regardless of whether or not the shares are vested.
Does not include shares awarded in March 1999 pursuant to the Company's
Performance Equity Incentive Plan.
(5) Options to acquire shares of our common stock.
(6) Consists of contributions to our Savings and Investment Plan, Money Purchase
Plan and Stock Bonus Plan.
(7) Dr. Frist was appointed Chairman and Chief Executive Officer effective July
25, 1997. His salary covers the cost of benefits only. Otherwise he elected
to serve without salary and bonus.
(8) On August 4, 1997, the Company named Jack O. Bovender, Jr. as President and
Chief Operating Officer.
(9) On November 1, 1997, the Company named Robert A. Waterman as Senior Vice
President and General Counsel.
OPTION GRANTS DURING 1998
No options were granted to the named executive officers during 1998.
OPTION EXERCISES DURING 1998 AND YEAR END OPTION VALUES
The following table provides information related to options exercised by
the named executive officers during 1998 and the number and value of options
held at year end. We have not issued stock appreciation rights or warrants to
our executive officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS(#) AT YEAR-END($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#)(1) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
Thomas F. Frist, Jr.,
M.D..................... -- $ -- 172,500 131,250 $936,566 --
Jack O. Bovender, Jr...... -- $ -- 0 500,000 $ -- --
Robert A. Waterman........ -- $ -- 0 350,000 $ -- --
James D. Shelton.......... -- $ -- 84,375 453,125 $ -- --
Jay F. Grinney............ -- $ -- 39,560 392,690 $ -- --
Richard M. Bracken........ -- $ -- 54,375 329,250 $295,969 --
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(1) The named executive officers did not exercise any stock options during 1998.
(2) The closing price for the common stock as reported by the New York Stock
Exchange, Inc. on December 31, 1998 was $24.75. Value is calculated on the
basis of the difference between the option exercise price and $24.75
multiplied by the number of shares of common stock underlying the option.
DIRECTORS' COMPENSATION
For 1998, the annual retainer for outside directors who are not our
officers or employees was $40,000 (payable in common stock). Outside directors
have the choice of receiving an annual retainer of $40,000 payable in restricted
stock that vests one year from the date of the grant or receiving, instead of
annual retainers for the next 5 years, $200,000 in restricted stock units that
vest annually over a 5-year period at a rate of 20% per year. The board meeting
fee was $1,200 per meeting. Committee chairpersons received $1,200 per committee
meeting, and other committee members received $1,000 per committee meeting, in
both cases payable only for attendance at committee meetings not held in
conjunction with a meeting of the board of directors. Additionally, we
reimbursed directors for expenses incurred relating to attendance at meetings.
Effective in 1997, we matched charitable contributions by directors up to
$15,000 annually. For directors who were former directors of Galen Health Care,
Inc., we matched, annually, up to $20,000 in charitable contributions, and they
were eligible to participate in our self-funded medical and dental plans. In
1998, we also granted non-employee directors stock options (exercisable at the
shares' fair market value on the date of the grant) having an aggregate exercise
price equal to 12.5 times the annual retainer. This grant vests annually over a
5-year period at a rate of 20% per year, commencing on the date of the grant.
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In accordance with the terms of the HCA Supplemental Executive Retirement
Plan, Mr. McWhorter received a one-time lump sum distribution in the amount of
$227,311.73. This payment fulfilled all of the plan's obligations to Mr.
McWhorter, and the plan has since been canceled.
EMPLOYMENT, SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
To retain key senior officers, we established a severance pay policy in
1997. The policy provided that if a senior officer (senior vice president or
group president) is terminated without cause before December 31, 1998, we will
pay to the senior officer as severance three times the senior officer's salary,
$35,000 for relocation expenses, 18 months of insurance coverage and certain
other expenses and accrued paid time off and benefits. This policy expired on
December 31, 1998. Our employment agreement with Mr. Shelton provides that if he
is terminated without cause, we will pay him severance equal to three times his
annual salary. Our employment agreement with Mr. Waterman provides that if he is
terminated without cause, we will pay him severance equal to one to three years
salary depending upon the date of termination.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION FOR 1998
Decisions on compensation for our executives are made by the compensation
committee of the board of directors. Each member of the compensation committee
is a non-employee director. No member of the compensation committee is a current
or former employee or officer of the Company or any of its affiliates.
Responsibilities of the compensation committee include approval of compensation
arrangements for executive management, review of compensation plans relating to
officers, grants of options and other benefits under employee benefit plans and
general review of employee compensation policy. Pursuant to certain rules of the
Securities and Exchange Commission designed to enhance disclosure of corporate
policies toward executive compensation, set forth below is a report submitted by
the compensation committee.
COMPENSATION PHILOSOPHY AND POLICIES FOR EXECUTIVE OFFICERS
We believe the most effective executive compensation program aligns the
interests of stockholders and executives. The Company's primary objective is to
provide quality health care while enhancing long-term stockholder value. We are
committed to a strong, positive link between strategic business goals and
compensation and benefit goals. Generally, there are no contractual agreements
of employment with executive officers and executive officers receive a minimal
number of perquisites. The executive compensation program is consistent with the
overall compensation philosophy for all management levels.
1998 COMPENSATION PROGRAM
Given the many and significant challenges facing our business, we made
significant changes to the executive compensation program for 1998. We believe
these changes properly align the interests of executives, including the named
executive officers, and stockholders and better enable the Company to meet the
challenges it faces.
Cash Compensation
The base salaries of the named executive officers are listed in the Summary
Compensation Table found under "Executive Compensation" in this Proxy Statement.
These salaries and the salaries of other executive officers are evaluated
annually. In determining appropriate salary levels and salary increases, we
consider level of responsibility, individual performance, internal equity and
external pay practices.
As stated in our report for 1997, we decided to eliminate future annual
cash bonuses. Accordingly, in 1998 the base salary of each employee, including
each named executive officer other than Dr. Frist, was increased by his or her
prior target annual bonus opportunity. We also increased the base salaries of
certain executive officers during 1998 based upon an evaluation of the
executive's performance, market rates and the other factors set forth above.
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For 1998, executive officer base salaries were targeted between the median
cash compensation (i.e., base salary and annual incentive) paid by two groups of
companies. The first group consists of other comparable healthcare companies,
including the companies included in the Standard & Poor's Hospital Management
Composite Index (see the Performance Graph on page 14). The second group
consists of 24 companies widely recognized for excellence with revenues
comparable to our company.
Equity-Based Compensation
Equity-based compensation is provided in the form of non-qualified stock
options and restricted shares of common stock.
Stock option grants provide an incentive that focuses the executive's
attention on managing the business of our company from the perspective of an
owner with an equity stake in the business and helps ensure that operating
decisions are based on long-term results that benefit the business and
ultimately our stockholders. Specifically, the option grants to executive
officers provide the right to purchase shares of common stock at the fair market
value on the date of the grant. Usually, each stock option becomes vested and
exercisable only over a period of time, generally one to five years. The number
of shares covered by each grant reflects the executive's level of responsibility
and past and anticipated contributions.
In our report for 1997, we described a stock option grant to executive
officers and other key management (other than Dr. Frist) to help ensure the
retention and motivation of key executives during this important period. In
recognition of the nature and size of the grant, no stock options were granted
in 1998 to any executive officers, except for new hires. In reviewing equity
incentives in 1999, however, we determined that an additional award of stock
options to executive officers and other key management was appropriate in order
to continue to ensure the retention and motivation of these key executives. A
total of 1,200,000 options to purchase the Company's common stock were granted
in March 1999 to the named executive officers. Dr. Frist did not receive an
option grant in March 1999. These options provide the right to purchase shares
of common stock at the fair market value on the date of grant and become vested
and exercisable over a period of four years.
Executives, including named executive officers other than Dr. Frist, also
have an annual opportunity to earn restricted shares of common stock based on
individual performance and the achievement of annual financial goals. The award
opportunity is approximately 50% of the executive's prior annual bonus
opportunity. To encourage continued focus on the longer term, the award vests
over a two-year period at 50% per year. Based on our assessment of individual
performance and considering that the 1998 financial goals were not met, each
executive officer (other than Dr. Frist) received an award of restricted shares
in March 1999 equal to half of his or her award opportunity under this plan.
Finally, an officer (other than Dr. Frist) may elect to receive up to 25%
of their base salary in restricted shares of common stock. These restricted
shares are granted at a 25% discount from the fair market value of the common
stock on the date of the grant. The restricted period is generally three years
from the date of grant. With certain exceptions, if employment is terminated
during the restricted period, the employee receives a cash payment equal to the
lesser of (a) the then-current fair market value of the restricted shares or (b)
the aggregate salary foregone by the employee as a condition to receiving the
restricted shares. Any additional value is forfeited.
CHIEF EXECUTIVE OFFICER COMPENSATION
Since he assumed the responsibilities of Chairman of the Board and Chief
Executive Officer in July 1997, Dr. Frist has not accepted any salary for his
services as Chief Executive Officer or fees for his services as a director, nor
has he participated in any incentive compensation programs. While we firmly
believe that the value of Dr. Frist's services is extraordinary, we nevertheless
concur with and respect his decision.
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EXECUTIVE COMPENSATION TAX DEDUCTIBILITY
Under Section 162(m) of the Internal Revenue Code, compensation paid by a
publicly-held corporation to the chief executive officer and the four most
highly paid other executive officers in excess of $1 million per year per
executive is deductible only if paid pursuant to qualifying performance-based
compensation plans approved by our stockholders. The determination of which
executives, including the chief executive officer, are subject to this provision
is made as of the last day of the fiscal year. Because we establish individual
compensation based primarily upon company performance and competitive
considerations, executive officer compensation may exceed $1 million in a given
year. No executive officer whose compensation is subject to this limit on
deductibility was considered to receive, for 1998 federal income tax purposes,
base salary and other non performance-based compensation in excess of $1
million.
The foregoing report is submitted by the members of the 1998 compensation
committee of the board of directors whose members were as follows:
Frank S. Royal, M.D. (Chairman)
Frederick W. Gluck
Thomas S. Murphy
Magdalena H. Averhoff, M.D.
The foregoing report of the compensation committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that we specifically
incorporate this information by reference, and shall not otherwise be deemed
filed under such acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committee were responsible for determining
executive compensation and stock option grants to executive officers. During
1998, the following directors served on the compensation committee: Frank S.
Royal, M.D., Magdalena Averhoff, M.D., Frederick W. Gluck and Thomas S. Murphy.
Thomas F. Frist, Jr., M.D., our Chairman and Chief Executive Officer, submitted
recommendations to the compensation committee concerning executive officer
compensation for 1998 and 1999, but did not participate in deliberations
regarding the compensation of such officers.
COMPANY STOCK PERFORMANCE
The following performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference the Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that we specifically incorporate this
information by reference, and shall not otherwise be deemed filed under such
acts.
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The graph below compares the cumulative total stockholder return on our
common stock for the past five years, with the cumulative total return of
companies on the Standard & Poor's 500 Index (S&P 500 Index) and the Standard &
Poor's Hospital Management Index (Hospital Index) over the same period (assuming
the investment of $100 in our common stock, the S&P 500 Index and the Hospital
Index on December 31, 1993 and reinvestment of all dividends).
COLUMBIA/HCA HEALTHCARE CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURNS
MEASUREMENT PERIOD S&P 500 HOSPITAL
(FISCAL YEAR COVERED) COLUMBIA/HCA INDEX INDEX
12/31/93 100 100 100
12/31/94 110.43 101.32 106.25
12/31/95 153.95 139.40 148.45
12/31/96 185.85 171.40 174.47
12/31/97 135.44 228.59 152.43
12/31/98 113.49 293.91 125.34
ITEM 2 -- RATIFICATION OF AUDITORS
The board of directors, upon the recommendation of its audit committee, has
appointed Ernst & Young LLP, as independent auditors to audit our consolidated
financial statements for the fiscal year ending December 31, 1999. Ernst & Young
LLP has served as our independent auditors since 1994. Representatives of Ernst
& Young LLP will be present at the annual meeting and will be afforded the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITORS FOR FISCAL
YEAR 1999. IN THE EVENT STOCKHOLDERS DO NOT RATIFY THE APPOINTMENT, THE
APPOINTMENT WILL BE RECONSIDERED BY OUR AUDIT COMMITTEE AND BOARD OF DIRECTORS.
ITEM 3 -- STOCKHOLDER PROPOSAL
We receive many suggestions from stockholders, some as formal stockholder
proposals. All are given careful attention.
Proponents of one stockholder proposal have stated that they intend to
present the following proposal at the annual meeting. The name, address and
number of shares of the common stock held by the proponents will be furnished to
stockholders, either orally or in writing, as requested, promptly upon receipt
of any oral or written request directed to our Corporate Secretary's office. The
proposal and proponents' statements are quoted below. The board of directors
opposes the following proposal for the reasons stated after the proposal.
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STOCKHOLDER PROPOSAL RELATING TO PHASE OUT OF PVC PURCHASES
WHEREAS:
"Columbia/HCA is one of the top three publicly traded health care companies
in the United States, with ownership of hospitals and acute-care centers;"
"Polyvinyl chloride (PVC) plastic, the primary component in 25 percent of
all medical products, including IV and blood bags, dialysis tubing, surgical
gloves and sterile packaging creates dioxin during the PVC production process;"
"PVC also produces dioxin when burned in a medical or solid waste
incinerator;"
"Dioxin is a known human carcinogen and has been linked to a host of other
human health effects, including endocrine (hormone system) disruption,
reproductive abnormalities, altered glucose tolerance, testicular atrophy,
neurological problems, infertility and other effects in both animals and
humans;"
"The U.S. Environmental Protection Agency (EPA) has determined that more
than 90 percent of human exposure to dioxin is through our food supply, and that
more than 90 percent of the dioxin in our food supply comes from waste
incinerators and other combustion systems;"
"The EPA has further determined that the U.S. population already has dioxin
levels in their bodies at or near the levels which have caused adverse effects
in laboratory animals;"
"Large quantities of chemicals called "phthalates" are used to manufacture
flexible PVC medical products; as a result, a significant percentage of any
flexible PVC product may be comprised of di-ethylhexyl-phthalate (DEHP), a
plasticizer that is a probable human carcinogen and reproductive toxicant;"
"DEHP has been found to leach out of medical devices and into the fluids
they are carrying, thus putting at risk for DEHP exposure, vulnerable
populations such as premature infants, dialysis patients and people with AIDS;"
"The leaching of DEHP into patients has been linked to adverse health
impacts in premature infants;"
"All patients deserve to receive medical treatment using products and
technology which present the least risk to their health;"
"Many non-PVC substitutes for medical devices (e.g., IV bags, gloves,
plasma collection bags, containers) are readily available and others (e.g.,
tubing, film for collection bags, blood bags) are under development;"
"THEREFORE, BE IT RESOLVED that shareholders request the Board of Directors
of Columbia/HCA to adopt a policy of phasing out, at all of its health care
facilities, the use of PVC-containing or phthalate-containing medical products,
where alternatives are available."
SUPPORTING STATEMENT
"The purchase of non-PVC medical products, where alternatives are
available, and expressing a preference for non-PVC products in any contracts
with group purchasing organizations (GPOs), would further environmental safety
and minimize patient risk. All of the Veterans' Administration hospitals
currently use non-PVC intravenous bags manufactured by McGaw. Requiring the
labeling or other identification of any PVC (vinyl) products, by the GPO's would
be another step toward environmental safety. Alternative packaging materials are
widely available and cost-competitive."
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BOARD OF DIRECTORS' RESPONSE TO STOCKHOLDER PROPOSAL
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL
The board of directors opposes the proposal to phase out PVC purchases. The
board of directors believes that, when examined considering the current and best
science and practices available, the proposal is misleading, fails to address
the many practical problems that its implementation would create and is not in
the best interest of our business, patients, employees or stockholders.
We integrate environmental concerns into our purchasing decisions along
with other criteria such as cost, availability and functionality. Currently, the
best science available does not support the proponent's assertions. We believe
that there is no known special link between vinyl and the production of dioxin.
Dioxin is a byproduct of all forms of combustion, whether natural or
manufactured. Contrary to the implication in the proposal, neither vinyl
production nor vinyl disposal contributes significantly to dioxin production. In
addition, we do not believe there is credible evidence demonstrating that
replacing vinyl medical devices would reduce dioxin levels in the environment.
Consequently, we do not believe that substituting alternative materials for
vinyl products would eliminate, or even reduce, the dioxin that waste
incineration produces.
Because of the significant capital costs associated with implementing new
technologies, we have chosen a deliberative approach that helps us to conduct
nearly continuous modernization programs that balance the costs and risks of
change with the benefits of new technologies. Where alternatives are available
for vinyl medical products, they are approximately three to five times as costly
as similar vinyl products. Deciding how and when to change the medical products
that we use involves sophisticated technical, financial and regulatory judgments
that a mechanistic phase-out schedule fails to consider and, accordingly, would
not be consistent with the responsible financial management of our business to
which we are committed.
Of foremost concern to us is the proper care of our patients. We integrate
patient care into every decision we make and at this time the best science and
practices available do not support the proponent's contention that vinyl
production and vinyl medical products are harmful to human health. Vinyl is an
important component of life-saving medical devices for which there is no
substitute currently available. For example, many medical devices, such as blood
oxygenators and dialysis machines, are not manufactured without vinyl. We
currently purchase appropriate products in connection with patient care and will
continue to do so. Deciding how and when to change the medical products that we
use involves sophisticated medical, technical and regulatory judgments that a
mechanistic phase-out schedule fails to consider. Therefore, we believe that our
officers, directors, management and health care professionals are better
positioned and qualified to direct the manner in which patient care decisions
are implemented and managed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "AGAINST" THIS
PROPOSAL FOR THE REASONS STATED ABOVE.
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GENERAL INFORMATION
STOCKHOLDER PROPOSALS
Any proposals that our stockholders desire to have included in our proxy
statement and form of proxy for the 2000 annual meeting of stockholders must be
received by our Corporate Secretary no later than the close of business on
December 22, 1999. Our certificate of incorporation contains an advance notice
provision which requires that a stockholder's notice of a proposal to be brought
before an annual meeting must be timely. In order to be timely, the notice must
be submitted in writing to our Corporate Secretary and delivered to or mailed
and received at our principal executive offices not less than 60 days nor more
than 90 days prior to the scheduled date of the annual meeting.
ANNUAL REPORT
Our 1998 Annual Report to Stockholders is being mailed to stockholders with
this proxy statement. The Annual Report is not part of the proxy solicitation
materials.
ADDITIONAL INFORMATION
A copy of our Annual Report on Form 10-K for the year ended December 31,
1998, excluding certain of the exhibits thereto, may be obtained without charge
by writing to Columbia/HCA Healthcare Corporation, Investor Relations
Department, One Park Plaza, Nashville, Tennessee 37203.
By Order of the Board of Directors,
John M. Franck II
Corporate Secretary
Nashville, Tennessee
April 20, 1999
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APPENDIX A
DETACH CARD
COLUMBIA/HCA HEALTHCARE CORPORATION
ONE PARK PLAZA
NASHVILLE, TENNESSEE 37203
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (1) acknowledges receipt of the Notice of
Annual Meeting of Stockholders of Columbia/HCA Healthcare Corporation to
be held at the executive offices of Columbia/HCA located at One Park
Plaza, Nashville, Tennessee on May 27, 1999 beginning at 1:30 p.m.,
Central Daylight Time, and the Proxy Statement and (2) appoints Thomas F.
Frist, Jr., M.D., Robert A. Waterman and John M. Franck II, and each of
them, attorney, agent and proxy of the undersigned, with full power of
substitution to vote all shares of common stock of the Company that the
undersigned would be entitled to cast if personally present at the
meeting and at any adjournment(s) or postponement(s) thereof. The
undersigned directs that this proxy be voted as follows:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees
(except as marked to the contrary below) listed below
Thomas F. Frist, Jr., M.D., John H. McArthur, Martin Feldstein, Thomas
S. Murphy, J. Michael Cook
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
-------------------------------------------------------------------------
2. RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS, AS
DESCRIBED IN THE PROXY STATEMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. STOCKHOLDER PROPOSAL RELATED TO PHASE OUT OF PVC PURCHASES, AS
DESCRIBED IN THE PROXY STATEMENT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
P
R
O
X
Y
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DETACH CARD
4. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3.
The undersigned hereby revokes any proxy heretofore given to vote or act with
respect to the common stock of the Company and hereby ratifies and confirms all
that the proxies, their substitutes, or any of them may lawfully do by virtue
hereof.
If one or more of the proxies named shall be present in person or by
substitute at the meeting or at any adjournment(s) or postponement(s) thereof,
the proxies so present and voting, either in person or by substitute, shall
exercise all of the powers hereby given.
Please date, sign exactly as your name appears on the form and promptly mail
this proxy in the enclosed envelope. No postage is required.
Dated
, 1999
----------------------------
Signature of Stockholder
----------------------------------
Signature of Stockholder
----------------------------------
Please date this proxy and sign
your name exactly as it appears on
this form. Where there is more
than one owner, each should sign.
When signing as an attorney,
administrator, executor, guardian,
or trustee, please add your title
as such. If executed by a
corporation, the proxy should be
signed by a duly authorized
officer. If a partnership, please
sign in partnership name by an
authorized person.