VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Birner Dental Management Services, Inc. (the "Company")
Definitive Proxy Materials for 2001 Annual Meeting
Ladies and Gentlemen:
On behalf of the Company, and pursuant to Rule 14a-6, the following materials
are transmitted with this letter:
1. the definitive Notice and Proxy Statement for the annual meeting of
shareholders of the Company to be held on June 7, 2001;
2. as an appendix, the form of proxy card; and
3. a cover sheet and cover letter for the definitive proxy materials.
The proxy materials and the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 are being mailed to the Company's shareholders on
or about April 26, 2001.
Please contact the undersigned at (303) 295-8000 if you have any questions or
comments. Thank you.
Very truly yours,
/s/ Dennis M. Jackson
For Holland & Hart LLP
Enclosures
cc: Frederick W.J. Birner
Dennis N. Genty
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
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BIRNER DENTAL MANAGEMENT SERVICES, INC.
- --------------------------------------------------------------------------------
(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) 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:
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
April 26, 2001
TO THE SHAREHOLDERS OF BIRNER
DENTAL MANAGEMENT SERVICES, INC.:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders (the
"Meeting") of Birner Dental Management Services, Inc. (the "Company"), to be
held on Thursday, June 7, 2001, at 10:00 a.m., Mountain Time, at the Company's
offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210.
Please read the enclosed Annual Report to Shareholders on Form 10-K and Proxy
Statement for the Meeting. Whether or not you plan to attend the Meeting, please
sign, date and return the proxy card in the enclosed envelope to Computershare
Trust Company, Inc. as soon as possible so that your vote will be recorded. If
you attend the Meeting, you may withdraw your proxy and vote your shares in
person.
Very truly yours,
BIRNER DENTAL MANAGEMENT SERVICES, INC.
By: /s/ Frederic W.J. Birner
-----------------------------------
Name: Frederic W.J. Birner
Title: Chairman of the Board and Chief Executive Officer
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
---------------------------
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD JUNE 7, 2001
---------------------------
TO OUR SHAREHOLDERS:
The 2001 Annual Meeting of Shareholders (the "Meeting") of Birner Dental
Management Services, Inc., a Colorado corporation (the "Company"), will be held
on Thursday, June 7, 2001, at 10:00 a.m., Mountain Time, at the Company's
offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210, for the
following purposes:
(1) to elect two Class I directors to serve for a term of three
years or until their successors are duly elected and qualified;
(2) to consider and vote upon a proposal to approve and ratify the
appointment of Arthur Andersen LLP as the Company's independent public
accountants for 2001; and
(3) to consider such other matters as may properly come before the Meeting
and at any and all adjournments thereof.
Only shareholders of record at the close of business on April 16, 2001 are
entitled to notice of and to vote at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dennis N. Genty
------------------------------
Name: Dennis N. Genty
Title: Chief Financial Officer,
Secretary and Treasurer
Denver, Colorado
April 26, 2001
A PROXY CARD IS ENCLOSED. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU
OWN. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE
PREPAID, ADDRESSED ENVELOPE TO COMPUTRESHARE TRUST COMPANY, INC. NO ADDITIONAL
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
Proxy Statement
Annual Meeting of Shareholders
To be Held June 7, 2001
---------------------------
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors of
Birner Dental Management Services, Inc., a Colorado corporation (the "Company"),
for use at the Company's 2001 Annual Meeting of Shareholders (the "Meeting") to
be held at 10:00 a.m., Mountain Time, on Thursday, June 7, 2001, at the
Company's offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210,
and at any and all adjournments thereof. This Proxy Statement and the
accompanying form of proxy are first being mailed or given to the shareholders
of the Company on or about April 26, 2001.
The Company's Annual Report on Form 10-K (the "Annual Report"), which includes
audited financial statements for the fiscal year ended December 31, 2000, is
being mailed to shareholders of the Company simultaneously with this Proxy
Statement.
INFORMATION CONCERNING SOLICITATION AND VOTING
All voting rights are vested exclusively in the holders of the Company's common
stock, without par value. Each share of the Company's common stock is entitled
to one vote. Cumulative voting in the election of directors is not permitted.
Holders of a majority of shares entitled to vote at the Meeting, when present in
person or by proxy, constitute a quorum. On April 16, 2001, the record date for
shareholders entitled to vote at the Meeting, 1,506,705 shares of the Company's
common stock, without par value, were issued and outstanding.
Proxies in the enclosed form will be effective if properly executed and returned
prior to the Meeting in the enclosed envelope to Computershare Trust Company,
Inc., Proxy Department, P.O. Box 1596, Denver, Colorado 80201-1596. The common
stock represented by each effective proxy will be voted at the Meeting in
accordance with the instructions on the proxy. If no instructions are indicated
on a proxy, all common stock represented by such proxy will be voted FOR
election of the nominees named in the proxy as Class I directors, FOR the
approval and ratification of the appointment of Arthur Andersen LLP as the
Company's independent public accountants, and, as to any other matters of
business which properly come before the Meeting, by the named proxies at their
discretion.
Any shareholder signing and mailing the enclosed proxy may revoke it at any time
before it is voted by giving written notice of the revocation to the Company, by
voting in person at the Meeting or by filing at the Meeting a later executed
proxy.
1
When a quorum is present, in the election of directors, the nominees having the
highest number of votes cast in favor of their election will be elected to the
Company's Board of Directors. With respect to any other matter which may
properly come before the Meeting, unless a greater number of votes is required
by law or by the Company's Amended and Restated Articles of Incorporation, a
matter will be approved by the shareholders if the votes cast in favor of the
matter exceed the votes cast in opposition.
Abstentions, broker non-votes (i.e., shares held by brokers or nominees as to
which the broker or nominee indicates on a proxy that it does not have
discretionary authority to vote) and any other shares not voted will be treated
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of the
election of Class I directors, the approval and ratification of Arthur Andersen
LLP as the Company's independent public accountants, or of any other matter
which properly may come before the Meeting, abstentions, broker non-votes and
any other shares not voted will not be considered as votes cast. Thus,
abstentions, broker non-votes and any other shares not voted will have no impact
in the election of Class I directors, the approval and ratification of Arthur
Andersen LLP as the Company's independent public accountants, or any other
matter which properly may come before the Meeting so long as a quorum is
present.
The Company will pay the cost of soliciting proxies in the accompanying form.
The Company has retained the services of Computershare Trust Company, Inc. to
assist in distributing proxy materials to brokerage houses, banks, custodians
and other nominee holders. The estimated cost of such services is approximately
$1,400 plus out-of-pocket expenses. Although there are no formal agreements to
do so, proxies may be solicited by officers and other regular employees of the
Company by telephone or by personal interview for which employees will not
receive additional compensation. Arrangements also may be made with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to beneficial owners of the shares held of record by such persons, and
the Company may reimburse such persons for reasonable out-of-pocket expenses
incurred by them in so doing.
PROPOSAL ONE: ELECTION OF CLASS I DIRECTORS
General
The Company's Amended and Restated Articles of Incorporation provide for the
classification of the Company's Board of Directors. The Board of Directors is
divided into three classes. One class stands for re-election at each annual
meeting of shareholders. The Board of Directors has set the size of the Board at
six members. The Board of Directors currently is classified into two Class I
directors: one whose term will expire upon the election and qualification of
directors at the annual meeting of shareholders held in 2001 (James M.
Ciccarelli), and one newly created director position to be voted upon at the
annual meeting of shareholders held in 2001; two Class II directors whose terms
will expire upon the election and qualification of directors at the annual
meeting of shareholders held in 2002 (Dennis N. Genty and Steven M. Bathgate);
and two Class III directors whose terms will expire upon the election and
qualification of directors at the annual meeting of shareholders held in 2003
(Frederic W.J. Birner and Mark A. Birner, D.D.S.). At each annual meeting of
shareholders, directors will be elected by the shareholders of the Company for a
full term of three years to succeed those directors whose terms are expiring.
The powers and responsibilities of each class of directors are identical. All
directors shall serve until their successors are duly elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office.
Proxies cannot be voted for a greater number of persons than the number of
nominees named therein. Unless authority to vote is withheld, the persons named
in the enclosed form of proxy will vote the shares represented by such proxy for
the election of the nominees for director named below. If, at the time of the
Meeting, the nominees shall have become unavailable for any reason for election
as a director, the persons entitled to vote the proxy will vote for such
substitute nominee, if any, as they determine in their discretion. If elected,
the nominees will hold office until the year 2004 annual meeting of shareholders
or until their successors are elected and qualified.
2
Class I Director Nominees
The Board of Directors unanimously recommends that the shareholders vote FOR
election of the following nominees as Class I directors of the Company.
Name Age Position Director Since
- ---- --- -------- --------------
James M. Ciccarelli 48 Director 1996
Paul E. Valuck, D.D.S. 44 Nominee for Director --
Continuing Directors
The persons named below will continue to serve as directors of the Company until
the annual meeting of shareholders in the year indicated below and until their
successors are elected and take office. Shareholders are not voting on the
election of the Class II and Class III directors. The following table shows the
names, ages and positions of each continuing director.
Class II - Term Expires in 2002
Name Age Position Director Since
- ---- --- -------- --------------
Dennis N. Genty 43 Chief Financial Officer, 1995
Secretary,Treasurer
and Director
Steven M. Bathgate 46 Director 1998
Class III - Term Expires in 2003
Name Age Position Director Since
- ---- --- -------- --------------
Frederic W.J. Birner 43 Chairman of the Board, 1995
Chief Executive Officer
and Director
Mark A. Birner, D.D.S. 41 President and Director 1995
PROPOSAL TWO: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected the firm of Arthur
Andersen LLP as independent public accountants of the Company for the fiscal
year ended December 31, 2001, subject to the approval and ratification of
shareholders. The Board of Directors unanimously recommends that shareholders
vote to approve and ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for 2001. Arthur Andersen LLP has
served as the independent public accountants of the Company since the Company's
formation in May 1995. Representatives of Arthur Andersen LLP are expected to be
present at the Meeting, will have an opportunity to make a statement if they
desire, and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares present or
represented at the Meeting and entitled to vote is needed to ratify the
appointment of Arthur Andersen LLP as independent public accountants of the
Company for 2001. If the appointment is not approved, the matter will be
referred to the Audit Committee for further review.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 16, 2001, by (i)
all persons known by the Company to be the beneficial owners of 5% or more of
the Common Stock, (ii) each director, (iii) each director nominee, (iv) each of
the executive officers, and (v) all executive officers, directors and director
nominee as a group. Unless otherwise indicated, the address of each of the
persons named below is in care of the Company, 3801 East Florida Avenue, Suite
508, Denver, Colorado 80210.
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class (1)(2)
------------------------ ----------------- -----------------------
Mark A. Birner, D.D.S. (3)........... 204,368 13.6%
Frederic W.J. Birner (4)............. 169,312 11.2%
Dennis N. Genty (5).................. 141,822 9.4%
Lee Schlessman (6)................... 131,785 8.7%
Steven M. Bathgate (7)............... 77,719 5.2%
James M. Ciccarelli (8).............. 14,526 1.0%
Paul E. Valuck, D.D.S................ 5,273 *
All executive officers, directors
and director nominee as a group
(six persons) (9)..... 613,020 40.7%
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options, warrants and convertible debentures currently
exercisable or convertible, or exercisable or convertible within 60
days of April 16, 2001, are deemed outstanding for computing the
percentage of the person or entity holding such securities but are not
outstanding for computing the percentage of any other person or entity.
Except as indicated by footnote, and subject to community property laws
where applicable, the persons named in the table above have sole voting
and investment power with respect to all shares of Common Stock shown
as beneficially owned by them.
(2) Percentage of ownership is based on 1,506,705 shares of Common Stock
outstanding at April 16, 2001.
(3) Includes 14,525 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable and 9,171 shares of
Common Stock that are issuable upon the exercise of warrants that are
currently exercisable.
(4) Includes 14,878 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable and 9,171 shares of
Common Stock that are issuable upon the exercise of warrants that are
currently exercisable. Includes 2,125 shares of Common Stock owned by
his wife. Mr. Birner disclaims beneficial ownership of all shares held
by his wife.
(5) Includes 12,233 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable and 9,171 shares of
Common Stock that are issuable upon the exercise of warrants that are
currently exercisable. Includes 118,442 shares of Common Stock owned by
his wife. Mr. Genty disclaims beneficial ownership of all shares held
by his wife.
(6) Includes 61,753 shares of Common Stock over which Mr. Schlessman has
sole voting power pursuant to certain powers of attorney, but for which
he disclaims beneficial ownership. The address for Mr. Schlessman is
1301 Pennsylvania Street, Suite 800, Denver, CO 80203.
(7) Includes 6,250 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable. Includes 31,925
shares of Common Stock owned by his wife. Mr. Bathgate disclaims
beneficial ownership of all shares held by his wife. Includes 18,500
shares of Common Stock owned by Bathgate Family Partnership Ltd.. Mr.
Bathgate disclaims beneficial ownership of these securities except to
the extent of his pecuniary interest therein.
(8) Includes 3,750 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable and 10,776 shares of
Common Stock that are issuable upon the exercise of warrants that are
currently exercisable.
4
(9) Includes 89,925 shares of Common Stock issuable upon the exercise of
options and warrants held by all executive officers, directors and
director nominee as a group that are currently exercisable or are
exercisable within 60 days.
There has been no change in control of the Company since the beginning of its
last fiscal year, and there are no arrangements known to the Company, including
any pledge of securities of the Company, the operation of which may at a
subsequent date result in a change in control of the Company.
DIRECTORS, DIRECTOR NOMINEE AND EXECUTIVE OFFICERS
The following table sets forth information concerning each of the directors, the
nominee for director and executive officers of the Company. All directors shall
serve until their successors are duly elected and qualified, subject, however,
to prior death, resignation, retirement, disqualification or removal from
office. Officers are appointed by and serve at the discretion of the Board of
Directors.
Name Age Position
Frederic W.J. Birner 43 Chairman of the Board, Chief Executive Officer
and Director
Mark A. Birner, D.D.S. 41 President and Director
Dennis N. Genty 43 Chief Financial Officer, Secretary, Treasurer
and Director
James M. Ciccarelli 48 Director
Steven M. Bathgate 46 Director
Paul E. Valuck, D.D.S. 44 Nominee for Director
Business Biographies
Frederic W.J. Birner is a founder of the Company and has served as Chairman of
the Board and Chief Executive Officer since the Company's inception in May 1995.
From May 1992 to September 1995, he was employed as a Senior Vice President in
the Corporate Finance Department at Cohig & Associates, Inc., an investment
banking firm. From 1983 to February 1992, Mr. Birner held various positions with
Hanifen, Imhoff, Inc., an investment banking firm, most recently as Senior Vice
President in the Corporate Finance Department. Mr. Birner received his M.S.
degree from Columbia University and his B.A. degree from The Colorado College.
Mr. Birner is the brother of Mark A. Birner, D.D.S.
Mark A. Birner, D.D.S. is a founder of the Company and has served as President,
and as a director, since the Company's inception in May 1995. From February 1994
to October 1995, Dr. Birner was the owner and operator of three individual
dental practices. From 1986 to February 1994, he was an associate dentist with
the Family Dental Group. Dr. Birner received his D.D.S. and B.A. degrees from
the University of Colorado and completed his general practice residency at the
University of Minnesota in Minneapolis. Dr. Birner is the brother of Frederic
W.J. Birner.
Dennis N. Genty is a founder of the Company and has served as Secretary since
May 1995, and as Chief Financial Officer, Treasurer, and as a director, since
September 1995. From October 1992 to September 1995, he was employed as a Vice
President in the Corporate Finance Department at Cohig & Associates, Inc., an
investment banking firm. From May 1990 to October 1992, he was a Vice President
in the Corporate Finance Department at Hanifen, Imhoff, Inc., an investment
banking firm. Mr. Genty received his M.B.A. degree from Columbia University and
his B.S. degree from the Colorado School of Mines.
5
James M. Ciccarelli joined the Company as a consultant in August 1996 and has
served as a director since November 1996. Mr. Ciccarelli has been Chairman of
the Board of ActiveLink Communications (formerly CommWorld International) since
October 1998. Mr. Ciccarelli served as Chairman of the Board of Wireless
Telecom, Inc., a wireless data and network service provider from March 1993 to
January 2000. In addition Mr. Ciccarelli served as their Chief Executive Officer
from March 1993 to October 1998. From September 1990 to March 1993, Mr.
Ciccarelli was a Vice President of Intelligent Electronics, a high technology
distribution and services company, and the President and CEO of its Reseller
Network Division. From November 1988 to September 1990, Mr. Ciccarelli was the
President of Connecting Point of America, a franchisor of retail computer
stores.
Steven M. Bathgate became a director of the Company effective upon consummation
of the Company's initial public offering in February 1998. Mr. Bathgate has
served as a principal of Bathgate McColley Capital Corp. LLC, an investment
banking firm, since its formation in January 1996. Mr. Bathgate held a number of
positions from 1985 to 1996 at Cohig & Associates, Inc., an investment banking
firm, including Chairman and Chief Executive Officer.
Paul E. Valuck, D.D.S. was in private dental practice in Denver from September
1985 until September 1995. From October 1995 until December 1997, Dr. Valuck
practiced as an affiliated dentist with Perfect Teeth. Since January 1998 Dr.
Valuck has been in private dental practice in Denver. Dr. Valuck received his
D.D.S. and his B.S. Pharmacy degree from the University of Colorado.
CERTAIN TRANSACTIONS
The Company's Chief Executive Officer, Frederic W.J. Birner, is indebted to the
Company on an unsecured basis in the amount of $100,115. Principal and interest
(at 7% per annum) are due December 31, 2001.
Directors' Meetings and Committees
The entire Board of Directors met 11 times during the year ended December 31,
2000, including nine actions by unanimous consent. Each incumbent director
attended 100% of the board meetings. The Company's Board of Directors has
appointed an Audit Committee and the full Board of Directors acts as the
Company's Compensation Committee.
Audit Committee
The Audit Committee has as its primary responsibilities the recommendation of an
independent public accountant to audit the annual financial statements of the
Company, the review of internal and external audit functions, the review of
internal accounting controls, the review of annual financial statements, and a
review at its discretion of compliance with corporate policies and codes of
conduct. The Audit Committee is comprised of outside directors. The current
members of the Audit Committee are Steven M. Bathgate and James M. Ciccarelli
(Chairman). Paul E. Valuck, D.D.S. will become a member of this committee upon
his election to the Board of Directors. The Board of Directors has reviewed Rule
4200(a)(14) of the National Association of Securities Dealers and has determined
that Messrs. Ciccarelli and Bathgate, the current members of the Audit
Committee, and Dr. Valuck, who will become a member of the committee if he is
elected as a director, are independent directors as defined in that Rule. The
audit committee has adopted a written charter, a copy of which is attached as
Appendix A to this Proxy Statement. The Audit Committee met one time in 2000 at
which both members were present.
Compensation Committee
Currently, the full Board of Directors is acting as the Compensation Committee.
The Compensation Committee determines officers' salaries and bonuses and
administers the grant of stock options and other awards pursuant to the Birner
Dental Management Services, Inc. 1995 Employee Plan (the "Employee Plan") and
the Birner Dental Management Services, Inc. 1995 Stock Option Plan for Managed
Dental Centers. The Compensation Committee met seven times in 2000.
6
DIRECTOR AND EXECUTIVE COMPENSATION
Director Compensation
Directors currently do not receive any cash compensation from the Company for
their services as directors and are not presently reimbursed for expenses in
connection with attendance at Board of Directors and committee meetings.
Executive Compensation
Summary Compensation
The following table sets forth the compensation paid by the Company to the Chief
Executive Officer and each of the executive officers of the Company who were
paid total salary and bonus exceeding $100,000 during the fiscal year ended
December 31, 2000 (the "Named Executive Officers").
Summary Compensation Table
Long-Term
Annual Compensation Compensation
Securities
Underlying All Other
Name and Principal Position Fiscal Year Salary Bonus Options/Warrants Compensation
Frederic W.J. Birner 2000 $223,413 $ -- $2,006 (2)
Chairman of the Board and 1999 $210,691 $ -- $2,528 (2)
Chief Executive Officer 1998 $128,280 $ -- 5,000 (1) $ --
Mark A. Birner, D.D.S. 2000 $148,942 $ -- $1,893 (2)
President and Director 1999 $140,897 $ -- $2,536 (2)
1998 $128,280 $ -- 5,000 (1) $ --
Dennis N. Genty 2000 $148,942 $ -- $2,681 (2)
Chief Financial Officer 1999 $141,382 $ -- $2,121 (2)
Treasurer, Secretary and 1998 $108,123 $ -- 5,000 (1) $ --
Director
(1) Represents shares of Common Stock issuable upon (i) exercise of an
option to purchase 2,500 shares of Common Stock granted on April 30,
1998 pursuant to the Employee Plan, with an exercise price of $34.12
per share and (ii) exercise of an option to purchase 2,500 shares of
Common Stock granted on October 7, 1998 pursuant to the Employee Plan,
with an exercise price of $21.45 per share.
(2) 401(k) contributions paid for by the Company on behalf of each named
executive officer.
7
Option Grants
No stock options were granted during the fiscal year ended December 31, 2000 to
any Named Executive Officer.
Option Exercises and Holdings
The following table sets forth for the Named Executive Officers the number and
value of securities underlying unexercised in-the-money options held as of
December 31, 2000. None of the Named Executive Officers exercised any options
during the fiscal year ended December 31, 2000.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised,
Options Held at In-the-Money Options at
December 31, 2000 December 31, 2000 (1)
--------------------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------- ----------- -------------
Frederic W.J. Birner 14,878 -- $ -- $ --
Mark A. Birner, D.D.S. 14,525 -- $ -- $ --
Dennis N. Genty 12,233 -- $ -- $ --
(1) Value is based on the difference between the stock option exercise
price and the closing price of the Common Stock on the Nasdaq National
Market on December 29, 2000 of $1.88 per share. The stock price on
December 29, 2000 was less than the exercise price of all outstanding
options. The number of securities at December 31, 2000 and the stock
price at December 29, 2000 has been restated to reflect a one-for-four
reverse stock split of the Company's stock which became effective as of
February 26, 2001.
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company currently serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Board of Directors or as an executive
officer of the Company. See "Director and Executive Compensation" and "Certain
Transactions" for a description of transactions between the Company and members
of the Board of Directors.
Compensation Committee Report on Executive Compensation
Currently, the entire Board of Directors makes all determinations with respect
to executive officer compensation. The following report is submitted by the
Board of Directors of the Company, in its capacity as Compensation Committee,
pursuant to rules established by the Securities and Exchange Commission, and
provides certain information regarding compensation of the Company's executive
officers.
The Compensation Committee is responsible for establishing and administering a
general compensation policy and program for the Company. The Compensation
Committee also possesses all of the powers of administration under the Company's
employee benefit plans, including all stock option plans and other employee
benefit plans. Subject to the provisions of those plans, the Compensation
Committee must determine the individuals eligible to participate in the plans,
the extent of such participation and the terms and conditions under which
benefits may be vested, received or exercised.
8
Compensation Policies. The Company's executive compensation policies are
designed to complement the Company's business objectives by motivating and
retaining quality members of senior management, by aligning management's
interests with those of the Company's shareholders and by linking total
compensation to the performance of the Company. The Company's executive
compensation policies generally consist of equity-based long-term incentives,
short-term incentives and competitive base salaries. The Compensation Committee
will continue to monitor the performance of the Company and its executive
officers in reassessing executive compensation.
Base Salary. The Compensation Committee reviews the base salaries of the
Company's executive officers on an annual basis. Base salaries are determined
based upon a subjective assessment of the nature and responsibilities of the
position involved, the performance of the particular officer and of the Company,
the officer's experience and tenure with the Company and base salaries paid to
persons in similar positions with companies comparable to the Company.
Annual Bonus. Annual bonuses may be paid to the Company's executive officers at
the discretion of the Compensation Committee. The Compensation Committee did not
grant any such bonuses to executive officers during 2000.
Long-Term Incentives. The Company's long-term compensation strategy is focused
on the grant of stock options under the stock option plans and warrants, which
the Compensation Committee believes rewards executive officers for their efforts
in improving long-term performance of the Common Stock and creating value for
the Company's shareholders, and which the Compensation Committee believes aligns
the financial interests of management with those of the Company's shareholders.
During 2000, the Compensation Committee did not grant stock options to the
executive officers.
Chief Executive Officer Compensation for Fiscal Year 2000. The compensation for
Frederic W.J. Birner during 2000 consisted solely of his base salary, the rate
of which was established in 1999. Mr. Birner did not receive a cash bonus during
2000 nor was his base salary increased in 2000.
COMPENSATION COMMITTEE
Frederic W.J. Birner
Mark A. Birner, D.D.S.
Dennis N. Genty
James M. Ciccarelli
Steven M. Bathgate
Audit Committee Report
The audit committee has reviewed and discussed the audited financial statements
of the Company with management and has discussed with Arthur Andersen LLP, the
Company's independent public accountants, the matters required to be discussed
under Statements on Auditing Standards No. 61 ("SAS 61"). In addition, the audit
committee has received from Arthur Andersen LLP the written disclosures and the
letter required to be delivered by Arthur Andersen LLP under Independence
Standards Board Standard No. 1 ("ISB Standard No. 1") addressing all
relationships between the independent public accountants and the Company that
might bear on their independence. The audit committee has reviewed the materials
to be received from Arthur Andersen LLP and has met with representatives of
Arthur Andersen LLP to discuss the independence of their firm.
In connection with the new standards for independence of the Company's
independent public accountants promulgated by the Securities and Exchange
Commission, the audit committee has reviewed the non-audit services currently
provided by the Company's independent public accountants and has considered
whether the provision of such services is compatible with maintaining the
independence of the Company's independent public accountants.
9
Based on the audit committee's review of the financial statements, its
discussion with Arthur Andersen LLP regarding SAS 61, and the written materials
provided by Arthur Andersen LLP under ISB Standard No. 1 and the related
discussion with Arthur Andersen LLP of their independence, the audit committee
has recommended to the Board of Directors that the audited financial statements
of the Company be included in its Annual Report 10-K for the fiscal year ended
December 31, 2000, for filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Steven M. Bathgate
James M. Ciccarelli (Chairman)
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Independent Public Accountants
During 2000, the Company engaged Arthur Andersen LLP as its independent public
accountants. Representatives of Arthur Andersen LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire. These representatives will be available to respond to appropriate
questions from shareholders at the meeting.
Audit Fees
During the fiscal year ended December 31, 2000, the aggregate fees billed for
professional services rendered for the audit of the Company's annual financial
statements and the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q filed during the fiscal year ended December 31,
2000 were $75,000.
All Other Fees
For the fiscal year ended December 31, 2000, the aggregate fees paid by the
Company to Arthur Andersen LLP for the audit of the 401(k) retirement savings
plan were $7,500.
10
PERFORMANCE GRAPH
The following line graph compares the percentage change from date of public
offering (February 11, 1998) through December 31, 2000 for (i) the Common Stock,
(ii) a peer group (the "Peer Group") of companies selected by the Company that
are predominantly dental management companies located in the United States,
(iii) Nasdaq Composite Index and (iv) S&P 500 Composite Index. The companies in
the Peer Group are American Dental Partners, Inc., Castle Dental Centers, Inc.,
Coast Dental Services, Inc., Interdent, Inc. and Monarch Dental Corporation.
[THE FOLLOWING TABLE WAS REPRESENTED BY
A LINE GRAPH IN THE PRINTED MATERIAL]
Comparison of Total Returns*
2/11/98 12/31/98 12/31/99 12/31/00
Description
Birner Dental Management $100.00 $ 50.00 $ 19.64 $ 6.70
Services, Inc.
Peer Group 100.00 57.57 32.58 11.16
Nasdaq Composite Index 100.00 136.69 254.02 152.85
S&P 500 Composite Index 100.00 127.17 153.93 139.92
..................
- -----------------------------------------------------------------------------------------------------------
*Total return based on $100 initial investment and reinvestment of dividends
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and beneficial owners of more than 10% of the
outstanding shares of the Company to file with the Securities and Exchange
Commission reports regarding changes in their beneficial ownership of shares in
the Company. To the Company's knowledge and based solely on a review of the
Section 16(a) reports furnished to the Company, Mr. Ciccarelli was late in
filing his Statement of Changes in Beneficial Ownership on Form 4 for the month
of December 1999, Mr. Fred Birner was late in filing his Statement of Changes in
Beneficial Ownership on Form 4 for the month of April 2000 and Mr. Genty was
late in filing his Annual Statement of Changes in Beneficial Ownership on Form 5
for 1999. All other Section 16(a) reports were filed on a timely basis.
11
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Company's proxy materials relating to
the next annual meeting of shareholders must be received by the Company on or
before January 7, 2002.
2000 ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000
ACCOMPANIES THIS PROXY STATEMENT AND WAS FILED ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION. SHAREHOLDERS WHO WISH TO OBTAIN, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT (WITHOUT EXHIBITS) ON FORM 10-K
SHOULD ADDRESS A WRITTEN REQUEST TO DENNIS N. GENTY, CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER, BIRNER DENTAL MANAGEMENT SERVICES, INC., 3801 EAST
FLORIDA AVENUE, SUITE 508, DENVER, COLORADO 80210. THE COMPANY WILL PROVIDE
COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A REASONABLE FEE.
OTHER BUSINESS
As of the date of this Proxy Statement, management was not aware of any business
not described above would be presented for consideration at the Meeting. If any
other business properly comes before the Meeting, it is intended that the shares
represented by proxies will be voted in respect thereto in accordance with the
judgment of the persons voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
/s/ Dennis N. Genty
---------------------------
DENNIS N. GENTY
Chief Financial Officer, Secretary
and Treasurer
Denver, Colorado
April 26, 2001
12
Appendix A
BIRNER DENTAL MANAGEMENT SERVICES, INC.
AUDIT COMMITTEE CHARTER
I. MISSION
The Audit Committee (the "Committee") of the Board of Directors (the "Board") of
Birner Dental Management Services, Inc. (the "Company") will assist the Board in
fulfilling its responsibility to the Company's shareholders and the investment
community regarding internal controls, corporate accounting, the financial
reporting practices of the Company and the quality and integrity of the
financial reports of the Company. The Committee maintains free and open
communications between the Board, the independent public accountants and the
financial management of the Company. The Committee evaluates any material
concern or matter that may arise which has not been promptly or appropriately
addressed by the management of the Company.
The Committee's policies and procedures should remain flexible, in order to
address changing conditions and to ensure the Board and shareholders that the
corporate accounting and financial reporting practices of the Company are in
compliance with all applicable laws, regulations and Company policies.
II. ORGANIZATION
1. All members of the Committee shall be financially literate and
independent of management, free from any relationship that, in the
opinion of the Board, would interfere with the exercise of independent
judgement as a Committee member, and not employees of the Company or
any of its subsidiaries or affiliates. Vacancies on the Committee shall
be filled by the Board. The Board shall designate one member of the
Committee to be Chair.
2. The Committee shall meet regularly, with such additional meetings as
the Chair of the Committee deems necessary. Appropriate management
representatives shall attend as necessary.
3. The Committee shall report to the Board following regular meetings, and
at such other times as circumstances warrant.
4. The Corporate Secretary, or a delegate shall record and keep minutes of
all Committee meetings.
III. DUTIES AND RESPONSIBILITIES
1. Review annually the qualifications, independence, fees and
other terms of engagement of the independent public
accountants recommended by management and recommend to the
Board the firm to be selected to audit the financial
statements of the Company for the next fiscal year.
2. Meet with the independent public accountants and financial
management of the Company to review the scope of the audit of
the books of account of the Company and other operations and
controls and the procedures to be utilized. At the conclusion
of the audits, the Committee shall review the results of such
audits, including any qualifications in the independent public
accountants' opinion, any related management letter and
management's responses to recommendations made by the
independent public accountants in connection with the audit.
A-1
3. Oversee the Company's financial reporting process, internal accounting
controls, and compliance with relevant corporate policies and
procedures. Review the procedures employed by the Company in preparing
published financial statements and related management commentaries.
4. After the close of each fiscal year, review the financial statements of
the Company certified by the independent public accountants. Also
review any significant disputes between management and the independent
public accountants that arose in connection with the preparation of
those financial statements.
5. Provide the independent public accountants and the Company's financial
management full and free access to the Committee to meet privately
whenever appropriate.
6. Review litigation and contingent liabilities of the Company, including
a periodic report concerning the effectiveness of the Company's
policies, procedures and control systems in preventing illegal and
improper acts and the effectiveness and timeliness of management's
response in the event any instances of illegal or improper acts are
discovered.
A-2
PROXY PROXY
Proxy Solicited by the Board of Directors for the
Annual Meeting of Shareholders To be held June 7, 2001
The undersigned hereby appoints Frederic W.J. Birner, Mark A. Birner, D.D.S. and
Dennis N. Genty, and each of them, proxies of the undersigned, with full power
of substitution, to vote all shares of Common Stock of Birner Dental Management
Services, Inc., which the undersigned is entitled to vote, at the Annual Meeting
of Shareholders (the "Meeting") to be held on Thursday, June 7, 2001, at 10:00
a.m., Mountain Time, at the Company's offices, 3801 East Florida Avenue, Suite
508, Denver, Colorado, and at any and all adjournments thereof for the following
purposes:
(1) Election of Class I Directors:
[ ] FOR the nominees listed below (except as marked to the contrary below)
- ------
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below
- ------
James M. Ciccarelli
Paul E. Valuck, D.D.S.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME ON THE LINE IMMEDIATELY BELOW.)
(2) Approval and Ratification of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year Ending December 31,
2001:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Meeting.
(back of card)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER (S). IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEE FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS AND "FOR" APPROVAL
AND RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement furnished therewith. The undersigned hereby
revokes any proxies given prior to the date reflected below.
Dated
--------------------------- , 2001
-----------------------------------
-----------------------------------
SIGNATURE (S) OF SHAREHOLDER (S)
Please complete, date and sign exactly as your name
appears hereon. If shares are held jointly, each
holder should sign. When signing as attorney,
executor, administrator, trustee, guardian or
corporate official, please add your title.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE TO COMPUTERSHARE
TRUST COMPANY, INC., AS AGENT FOR THE COMPANY. THE GIVING OF A PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.