Information Required In Proxy
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PROXY STATEMENT PURSUANT TO
SECTION 14(a) OF THE SECURITIES
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the Registrant [x]
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Form,
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_____________________
NOTICE
OF
ANNUAL
MEETING OF STOCKHOLDERS
To
be held on Tuesday, April 28, 2009
_____________________
To the
Stockholders of BioScrip, Inc.:
Notice is
hereby given that the 2009 Annual Meeting of Stockholders (the “Annual Meeting”)
of BioScrip, Inc., a Delaware corporation (the “Company”), will be held at the
Sheraton Tarrytown Hotel, 600 White Plains Road, Tarrytown, New York 10591 on
Tuesday, April 28, 2009 at 9:00 a.m., local time, for the following
purposes:
1.
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To
elect eight directors to the Board of Directors of the Company, each to
hold office for a term of one year or until their respective successors
shall have been duly elected and shall have qualified.
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2.
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To
ratify the appointment of Ernst & Young LLP as the Company’s
independent auditors for the year ending December 31,
2009.
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3.
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To
transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements
thereof.
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The
foregoing items of business, including information regarding the Company’s
current directors and those persons nominated for election as directors of the
Company, are more fully described in the Proxy Statement which is attached to
and made a part of this notice.
The Board
of Directors has fixed the close of business on March 9, 2009 as the record date
for determining stockholders of the Company entitled to notice of and to vote at
the Annual Meeting and any adjournments or postponements thereof.
All
stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you plan to attend the Annual Meeting
in person,
please mark, sign,
date and mail the enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope to ensure your representation and the presence of a
quorum at the Annual Meeting
. Alternatively, you may vote by
toll-free telephone call or electronically via the Internet by following the
instructions on the enclosed proxy card. If you send in your proxy
card or vote by telephone or via the Internet and then decide to attend the
Annual Meeting to vote your shares in person, you may still do
so. Your proxy is revocable as set forth in the Proxy
Statement.
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By
order of the Board of Directors,
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Elmsford,
New York
March
27, 2009
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Barry
A. Posner,
Executive
Vice President, Secretary
and
General Counsel
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Important
notice regarding availability of proxy materials for the Annual Meeting of
Stockholders to be held on April 28, 2009:
This Proxy
Statement, Proxy Card and the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008 are also available for viewing on the
Company’s website located at www.bioscrip.com.
BIOSCRIP,
INC.
100
Clearbrook Road
Elmsford,
New York 10523
(914)
460 -1600
_____________________
PROXY
STATEMENT
_____________________
Meeting
Time and Date
This
Proxy Statement is being furnished to the stockholders of BioScrip, Inc., a
Delaware corporation (“BioScrip” or the “Company”), in connection with the
solicitation by the Board of Directors of the Company (the “Board” or the “Board
of Directors”) of proxies in the enclosed form for use in voting at the
Company’s 2009 Annual Meeting of Stockholders (the “Annual Meeting”) to be held
on Tuesday, April 28, 2009 at 9:00 a.m., local time, at the Sheraton Tarrytown
Hotel, 600 White Plains Road, Tarrytown, New York 10591 and at any adjournments
or postponements thereof. The shares of BioScrip’s common stock, par
value $.0001 per share (the “Common Stock”), represented by the proxies
received, properly marked, dated, executed and not revoked will be voted at the
Annual Meeting.
These
proxy solicitation materials are being mailed to stockholders on or about March
27, 2009.
Instead
of submitting your proxy with the paper proxy card, you may vote by telephone or
electronically via the Internet. If you vote by telephone or via the
Internet it is not necessary to return your proxy card. Please note
that there are separate telephone and Internet voting arrangements depending
upon whether your shares of Common Stock are registered in your name or in the
name of a broker or bank.
Record
Date and Shares Outstanding
The close
of business on March 9, 2009 has been fixed by the Board of Directors as the
record date (the “Record Date”) for determining stockholders of the Company
entitled to notice of and to vote at the Annual Meeting. The only
outstanding voting securities of the Company are shares of Common
Stock. As of the close of business on the Record Date, the Company
had 39,385,149 shares of Common Stock issued and outstanding and held of record
by approximately 289 holders (in addition to approximately 6,330 stockholders
whose shares were held in nominee name).
Voting
and Solicitation
Each
stockholder entitled to vote at the Annual Meeting may cast one vote in person
or by proxy for each share of Common Stock held by such
stockholder. To vote in person, a stockholder should attend the
Annual Meeting with a completed proxy or, alternatively, the Company will give
you a ballot to complete upon arrival at the Annual Meeting. To vote
by mail using a proxy card, a stockholder should mark, sign, date and mail the
enclosed proxy card as promptly as possible in the enclosed postage-prepaid
envelope. To vote by telephone, a stockholder must dial toll-free
(800) 776-9437 using a touch-tone phone and follow the recorded
instructions. To vote via the Internet, a stockholder must go to
http://www.voteproxy.com
and
complete an electronic proxy card. When voting over the telephone or
via the Internet, a stockholder will be asked to provide the company number and
account number contained on the enclosed proxy card.
If on the
Record Date a stockholder’s shares of Common Stock were held in an account at a
brokerage firm, bank, dealer, or other similar organization, then that
stockholder is considered the beneficial owner of shares held in "street name"
and these proxy materials are being forwarded by that organization, which is
considered the stockholder of record for purposes of voting at the Annual
Meeting. A stockholder who is a beneficial owner has the right to
direct his or her broker or other agent on how to vote the shares of Common
Stock in his or her account. Beneficial owners of the Company’s
Common Stock are also invited to attend the Annual Meeting. However,
since a beneficial owner is not the stockholder of record, he or she may not
vote in person at the Annual Meeting unless he or she requests and obtains a
valid proxy from his or her broker or other agent.
Votes
cast by proxy or in person at the Annual Meeting will be tabulated by the
Inspector of Elections at the Annual Meeting. The Inspector of
Elections will also determine whether or not a quorum is present. The
presence, in person or by proxy, of the holders of a majority of the shares of
Common Stock issued and outstanding as of the Record Date for
the
Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. Shares of Common Stock represented at the Annual Meeting in
person or by proxy but not voted will
be
counted for purposes of determining a quorum. Accordingly,
abstentions and broker “non-votes” (shares as to which a broker or nominee has
indicated that it does not have discretionary authority to vote) on a particular
matter, including the election of directors, will be treated as shares that are
present and entitled to vote at the Annual Meeting for purposes of determining
the presence of a quorum.
Proxies
in the accompanying form that are properly executed, duly returned to the
Company and not revoked, or proxies that are submitted by telephone or via the
Internet and not revoked, will be voted in accordance with the instructions
contained therein. In the absence of specific instructions with
respect to any or all of the proposals to be acted upon, proxies will be voted
for the election of all of the nominees for director named in this Proxy
Statement and in favor of Proposal 2. No proposal currently is
expected to be considered at the Annual Meeting other than the proposals set
forth in the accompanying Notice of Annual Meeting. If any other
proposals are properly brought before the Annual Meeting for action it is
intended that the persons named in the proxy and acting thereunder will vote in
accordance with their discretion on such proposals.
The
presence of a stockholder at the Annual Meeting will not revoke such
stockholder’s proxy. However, a proxy may be revoked at any time
before it is voted by delivering to the Secretary of the Company (at the
principal executive offices of the Company) a written notice of revocation, by
executing and delivering a proxy bearing a later date or by attending the Annual
Meeting and voting in person. Stockholders voting by telephone or via
the Internet may also revoke their proxy by attending the Annual Meeting and
voting in person, by submitting the proxy in accordance with the instructions
thereon or by voting again, at a later time, by telephone or via the Internet (a
stockholder’s latest telephone or Internet vote, as applicable, will be counted
and all earlier votes will be disregarded). However, once voting on a
particular proposal is completed at the Annual Meeting, a stockholder will not
be able to revoke his or her proxy or change his or her vote as to any proposal
or proposals on which voting has been completed.
The
solicitation of proxies will be conducted by mail and the Company will bear all
associated costs of the solicitation process. These costs include the
expenses of preparing and mailing proxy solicitation materials for the Annual
Meeting and reimbursements paid to brokerage firms and others for their expenses
incurred in forwarding such materials to beneficial owners of shares of Common
Stock. The Company may conduct further solicitations personally,
telephonically or by facsimile through its officers, directors and employees,
none of whom will receive additional compensation for assisting with any such
solicitations.
Adjournments
and Postponements
Adjournments
or postponements of the Annual Meeting may be made for the purpose of, among
other things, soliciting additional proxies. Any adjournment or postponement may
be made from time to time by approval of the holders of a majority of the shares
of Common Stock present in person or by proxy at the Annual Meeting (whether or
not a quorum exists) without further notice other than by an announcement made
at the Annual Meeting. The Company does not currently intend to seek
an adjournment or postponement of the Annual Meeting, but no assurance can be
given that one will not be sought.
COMMON
STOCK OWNERSHIP BY CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of the Company’s Common Stock as of March 9, 2009 by: (i) each person
who is a director of the Company and each director nominee; (ii) each of the
Company’s executive officers named in the Summary Compensation Table set forth
below; (iii) all directors and executive officers of the Company as a group; and
(iv) each person who is known by the Company to beneficially own more than five
percent of the Company’s Common Stock.
Except as
otherwise indicated, each person listed below has sole voting and investment
power with respect to the shares set forth opposite such person’s
name. Percentage ownership is based on an aggregate of 39,385,149
shares outstanding on March 9, 2009.
Name
and Address
of Beneficial Owner (1)
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Number of
Shares
Beneficially Owned
(2)(3)
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Percent of Class (3)
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Heartland
Advisors, Inc.
789
North Water Street
Milwaukee,
WI 53202-3508
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7,292,522
(4)
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18.52%
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Dimensional
Fund Advisors LP
1299
Ocean Avenue, 11th Floor
Santa
Monica, CA 90401
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3,059,177
(5)
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7.77%
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Signia
Capital Management, LLC
108
N. Washington Street, Suite 305
Spokane,
WA 99201
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2,578,724
(6)
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6.55%
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Essex
Investment Management Company, LLC
125
High Street, 29th Floor
Boston,
MA 02110
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2,506,944
(7)
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6.37%
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Richard
H. Friedman
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2,939,913
(8)
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7.13%
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Barry
A. Posner
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381,526
(9)
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*
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Stanley
G. Rosenbaum
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330,327
(10)
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*
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Scott
W. Friedman
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163,859
(11)
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*
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Russel
J. Corvese
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233,533
(12)
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*
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Charlotte
W. Collins
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42,134
(13)
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*
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Louis
T. DiFazio
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34,334
(14)
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*
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Myron
Z. Holubiak
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59,934
(15)
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*
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David
R. Hubers
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190,034
(16)
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*
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Richard
L. Robbins
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81,834
(17)
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*
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Stuart
A. Samuels
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102,034
(18)
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*
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Steven
K. Schelhammer
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19,834
(19)
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*
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All
Directors and Executive Officers as a group (17 persons)
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4,947,648
(20)
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11.69%
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_________________
* Less than 1%.
(1)
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Except
as otherwise indicated, all addresses are c/o BioScrip, Inc., 100
Clearbrook Road, Elmsford, NY
10523.
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(2)
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The
inclusion in this table of any shares of Common Stock as beneficially
owned does not constitute an admission of beneficial ownership of those
shares. Except as otherwise indicated, each person has sole
voting power and sole investment power with respect to all such shares
beneficially owned by such person.
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(3)
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Shares
deemed beneficially owned by virtue of the right of an individual to
acquire them within 60 days after March 9, 2009 upon the exercise of an
option to purchase shares of Common Stock are treated as outstanding for
purposes of determining beneficial ownership and the percentage
beneficially owned by such
individual.
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(4)
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Based
on information contained in Schedule 13G filed with the Securities and
Exchange Commission (the “Commission”) on February 11, 2009 by Heartland
Advisors, Inc., referred to herein as “Heartland.” Heartland
advises that it is an investment advisor registered with the
Commission. Heartland, by virtue of its investment discretion
and voting authority granted by certain clients, which may be revoked at
any time; and William J. Nasgovitz, President and principal shareholder of
Heartland, share dispositive and voting power with respect to the shares
held by Heartland’s clients and managed by Heartland. Heartland
and Mr. Nasgovitz each specifically disclaim beneficial ownership of these
shares and disclaim the existence of a
group.
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(5)
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Based
on information contained in Schedule 13G filed with the Commission on
February 9, 2009 by Dimensional Fund Advisors LP, referred to as
“Dimensional.” Dimensional advises that it is an investment
advisor registered with the Commission, furnishes investment advice to
four investment companies registered under the Investment Company Act of
1940, and serves as investment manager to certain other commingled group
trusts and separate accounts, collectively referred to as
“Funds.” In its role as investment advisor or manager,
Dimensional possesses investment and/or voting power over the securities
of the Company that are owned by the Funds, and may be deemed to be the
beneficial owner of the shares of the Company held by the Funds. However,
all securities reported in the Schedule 13G are owned by the Funds.
Dimensional disclaims beneficial ownership of such
securities. All securities reported in this schedule are owned
by advisory clients of Dimensional, no one of which, to the knowledge of
Dimensional, owns more than 5% of the class. Dimensional
disclaims beneficial ownership of all such
securities.
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(6)
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Based
on information contained in Schedule 13G filed with the Commission on
February 13, 2009 by Signia Capital Management, LLC, referred to herein as
“Signia.” Signia advises that it is an investment advisor
registered with the Commission.
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(7)
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Based
on information contained in Schedule 13G filed with the Commission on
February 13, 2009 by Essex Investment Management Company, LLC, referred to
herein as “Essex.” Essex is an investment advisor registered
with the Commission.
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(8)
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Includes
1,820,834 shares issuable upon exercise of the vested portion of options
held by Mr. Friedman. Excludes 141,666 shares subject to the
unvested portion of options held by Mr. Friedman. Includes
10,000 shares of Common Stock owned by the Richard Friedman Family Limited
Partnership, of which Mr. Friedman is a general and limited
partner. Mr. Friedman has shared voting and dispositive power
with respect to these shares of Common
Stock.
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(9)
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Includes
281,400 shares issuable upon exercise of the vested portion of options
held by Mr. Posner. Excludes 86,612 shares subject
to the unvested portion of options held by Mr.
Posner.
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(10)
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Includes
136,753 shares issuable upon exercise of the vested portion of options
held by Mr. Rosenbaum. Excludes 103,531 shares subject to the
unvested portion of options held by Mr.
Rosenbaum.
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(11)
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Includes
108,590 shares issuable upon exercise of the vested portion of options to
purchase Common Stock held by Mr. Friedman. Excludes 77,168
shares subject to the unvested portion of options held by Mr.
Friedman.
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(12)
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Includes
162,856 shares issuable upon exercise of the vested portion of options to
purchase Common Stock held by Mr. Corvese. Excludes 72,452
shares subject to the unvested portion of options held by Mr.
Corvese. Does not include 239,460 shares of Common Stock held
in the Corvese Irrevocable Trust – 1992, of which Mr. Corvese is a
trustee. Mr. Corvese disclaims beneficial ownership of such
shares of Common Stock.
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(13)
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Includes
33,334 shares issuable upon exercise of the vested portion of options to
purchase Common Stock held by Ms. Collins. Excludes 1,666
shares subject to the unvested portion of options held by Ms.
Collins.
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(14)
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Includes
23,334 shares issuable upon exercise of the vested portion of options held
by Dr. DiFazio. Excludes 1,666 shares subject to the unvested
portion of options held by Dr.
DiFazio.
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(15)
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Includes
50,934 shares issuable upon exercise of the vested portion of options held
by Mr. Holubiak. Excludes 1,666 shares subject to the unvested
portion of options held by Mr.
Holubiak.
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(16)
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Includes
90,534 shares issuable upon exercise of the vested portion of options held
by Mr. Hubers. Excludes 1,666 shares subject to the unvested
portion of options held by Mr. Hubers. Also
includes 16,000 shares of Common Stock held by the David R.
Hubers Grantor Retained Annuity Trust and 25,000 shares of Common Stock
held by the David R. Hubers Revocable Trust. Mr. Hubers is a
trustee of both trusts.
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(17)
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Includes
21,167 shares subject to the vested portion of options held by Mr.
Robbins. Excludes 3,333 shares subject to the unvested portion
of options held by Mr. Robbins.
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(18)
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Includes
90,534 shares issuable upon exercise of the vested portion of options held
by Mr. Samuels. Excludes 1,666 shares subject to the unvested
portion of options held by Mr.
Samuels.
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(19)
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Includes
4,334 shares subject to the vested portion of options held by Mr.
Schelhammer. Excludes 8,666 shares subject to the unvested
portion of options held by Mr.
Schelhammer.
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(20)
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Includes
2,933,023 shares issuable upon exercise of the vested portion of
options. Excludes 877,588 shares subject to the unvested
portion of options.
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Equity
Compensation Plan Information
The
following table sets forth information relating to equity securities authorized
for issuance under the Company's equity compensation plans as of December 31,
2008.
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Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
(a)
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Weighted-average
exercise price of outstanding options, warrants and rights
(b)
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Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
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Equity
compensation plans approved by security holders
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5,784,371
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6.53
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1,987,532
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Equity
compensation plans not approved by security holders
|
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-
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-
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-
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Total
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5,784,371
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6.53
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1,987,532
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The
following table set forth information relating to the number of stock options
and shares of restricted stock granted by the company in fiscal years 2008,
2007, and 2006.
|
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Stock
Options
Granted
(#)
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Restricted
Stock
Granted
(#)
|
2008
|
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1,099,522
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645,625
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2007
|
|
586,986
|
|
271,493
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2006
|
|
1,569,401
|
|
1,055,326
|
PROPOSAL
1.
ELECTION
OF DIRECTORS
General
In
accordance with the Company’s By-Laws, the Board of Directors shall be comprised
of such number of directors as is designated from time to time by resolution of
the Board of Directors. Directors shall hold office until the next
annual meeting of stockholders or until their respective successors are duly
elected and qualified, or until any such director’s earlier death, resignation
or removal. Vacancies on the Board of Directors and newly created
directorships will generally be filled by the vote of a majority of the
directors then in office, and any directors so chosen will hold office until the
next annual meeting of stockholders. The Board of Directors has no
reason to believe that any of its nominees will be unable or unwilling to serve
as a director if elected and, to the knowledge of the Board of Directors, each
of its nominees intends to serve in such capacity for the entire term for which
election is sought. However, should any nominee become unwilling or
unable to accept nomination or election as a director of the Company, the
proxies solicited by management will be voted (unless marked to the contrary)
for such person or persons, if any, as shall be recommended by the Board of
Directors. However, proxies will not be voted for the election of more than
eight directors.
Based on
the recommendation of the Governance and Nominating Committee, the following
eight persons have been nominated for election to the Board of
Directors at this Annual Meeting: Charlotte W. Collins, Louis T. DiFazio,
Richard H. Friedman, Myron Z. Holubiak, David R. Hubers, Richard L. Robbins,
Stuart A. Samuels and Steven K. Schelhammer. All of the nominees for
election to the Board of Directors currently serve as directors of the
Company.
In voting
for directors, each stockholder is entitled to cast one vote for each
nominee. Stockholders are not entitled to cumulative voting in
the election of directors. The eight nominees who receive the
greatest number of votes will be elected to the Board of Directors.
Current
Directors and Nominees for Director
The
following biographies set forth certain information with respect to each current
director and each nominee for election as a director, including biographical
data for at least the last five years:
Richard H. Friedman, 58
, is
currently the Chief Executive Officer and Chairman of the Board of Directors of
the Company. He joined the Company in April 1996. From May
1996 through March 1998 he served as a director of the Company as well as its
Chief Financial Officer and Chief Operating Officer. Mr. Friedman
also served as the Company’s Treasurer from April 1996 until February
1998. From April 1998 until March 2005 he served as the Company’s
Chief Executive Officer and Chairman of the Board, at which time he was
appointed Executive Chairman of the Board following the Company’s merger with
Chronimed, Inc. (“Chronimed”). In June 2006, Mr. Friedman reassumed
the role of Chief Executive Officer of the Company.
Charlotte W. Collins, Esq.,
56
, has been a director of the Company since April 2003. Since
January 2008 she has been Director of Public Policy and Advocacy for the Asthma
and Allergy Foundation of America. From July 2003 to January 2008 she
was an Associate Professor at the George Washington University School of Public
Health and Health Services. From January 2002 to June 2003 Ms.
Collins was an Associate Research Professor, Director of Minority Health Policy
Program, at the George Washington University School of Public Health and Health
Services. From September 1996 to November 2004 Ms. Collins was
associated with the law firm of Powell, Goldstein, Frazer & Murphy, LLP in
Washington, DC. During 1998, she held the position of Interim General
Counsel for the District of Columbia Health and Hospitals Public Benefit
Corporation.
Louis T. DiFazio, Ph.D., 71
,
has been a director of the Company since May 1998. From March 1997
until his retirement in June 1998, Dr. DiFazio served as Group Senior Vice
President of the Pharmaceutical Group of Bristol-Myers Squibb. From
1991 to March 1997, Dr. DiFazio was President of Worldwide Technical Operations
for the Pharmaceutical Group and also served on the Executive Operating
Committee from 1995 until his retirement. Dr. DiFazio recently
completed 12 years of service as a member of the Board of Trustees of Rutgers
University. Dr. DiFazio received his B.S. in Pharmacy from Rutgers
University in 1959 and his Ph.D. in Pharmaceutical Chemistry from the University
of Rhode Island in 1964 where he also received an Honorary Doctor of Science
Degree in 1997.
Myron Z. Holubiak, 62
, has
been a director of the Company since March 2005. Prior to being
appointed a director of the Company he had served as a director of Chronimed
since September 2002. Mr. Holubiak is the former President of Roche
Laboratories, Inc. He held this position from December 1998 to August
2001. From August 2001 to June 2002, Mr. Holubiak was President,
Chief Operating Officer and member of the Board of Directors of iPhysicianNet,
Inc., a video detailing company. From July 2002 to April 2007 Mr.
Holubiak was President and Chief Operating Officer of HealthSTAR Communications,
Inc., a health care marketing communications network of 16
companies. He currently serves on the Board of Directors of the
Children of Chernobyl Relief and Development Fund. Currently, Mr.
Holubiak is the President and a member of the board of directors of
1-800-Doctors, Inc., a medical referral company that provides consumers access
to physicians and hospitals.
David R. Hubers, 66
, has been
a director of the Company since March 2005. Prior to being appointed
a director of the Company he had served as a director of Chronimed since
November 2000. Mr. Hubers was Chairman of American Express Financial
Advisors Inc. prior to his retirement. He joined American Express
Financial Advisors Inc. in 1965 and held various positions, including Senior
Vice President of Finance and Chief Financial Officer until being appointed
President and Chief Executive Officer in August 1993. He served in
that capacity until June 2001. Mr. Hubers serves on the boards of
directors of the Carlson School of Management at the University of Minnesota and
Lawson Software, a publicly held software company. He is also
Chairman of the Compensation Committee at Lawson Software.
Richard L. Robbins, 68
, has
been a director of the Company since March 2005. From October 2003
through March 2006, Mr. Robbins was Senior Vice President, Financial Reporting
and Control and Principal Financial Officer of Footstar, Inc., a nationwide
retailer of footwear. Footstar, Inc. filed for bankruptcy protection
in March 2004 and emerged from bankruptcy in February
2006. From July 2002 to October 2003, Mr. Robbins was a partner in
Robbins Consulting LLP, a financial, strategic and management consulting
firm. From 1978 to 2002, Mr. Robbins was a partner of Arthur Andersen
LLP.
Stuart A. Samuels, 67
, has
been a director of the Company since March 2005. Prior to being
appointed a director of the Company he had served as a director of Chronimed
since November 2000. Since 1990, Mr. Samuels has been a management
consultant, specializing in business management, strategic sales and marketing
and business development for several companies, specifically in the
pharmaceutical and healthcare industries. He currently serves on the
boards of directors of Infomedics, Inc. and Target Rx, Inc.
Steven K. Schelhammer, 54
,
has been a director of the Company since May 2007. Mr. Schelhammer
founded Accordant Health Services, a disease management company, and served as
its Chief Executive Officer and Chairman from 1994 through
2002. After its sale in November 2002, Mr. Schelhammer served as
Accordant Health’s President until 2004. From 2004 until August 2008
Mr. Schelhammer was self-employed. Since August 2008 Mr. Shelhammer
has been the Chief Executive Officer of Phytel, Inc., a healthcare technology
company. Mr. Schelhammer has also been a member of the board of
directors of Phytel since February 2008.
Vote
Required and Recommendation of the Board of Directors
If a
quorum is present and voting, the eight nominees receiving the highest number of
votes duly cast at the Annual Meeting will be elected to the Board of
Directors.
THE
BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS
A VOTE “FOR” EACH OF THE ABOVE-NAMED NOMINEES.
PROPOSAL
2.
RATIFICATION
OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 2009.
Ernst
& Young LLP served as the Company's independent auditors for the year ended
December 31, 2008 and the Audit Committee has appointed Ernst & Young LLP as
the Company’s independent auditors for the year ending December 31,
2009. The Board of Directors is asking that stockholders ratify the
appointment of Ernst & Young LLP as the Company’s independent
auditors. While the Company’s By-Laws do not require stockholder
ratification, the Company is asking its stockholders to ratify this appointment
because it believes such a proposal is a matter of good corporate
practice. If the stockholders do not ratify the appointment of Ernst
& Young LLP, the Audit Committee will reconsider whether or not to retain
Ernst & Young LLP as the Company’s independent auditors, but may determine
to do so nonetheless. Even if the appointment of Ernst & Young
LLP is ratified by the stockholders, the Audit Committee may change the
appointment at any time during the year if it determines that a change would be
in the best interests of the Company and its stockholders.
A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement, if he or she desires
to do so, and to be available to respond to appropriate questions from
stockholders.
Independent
Auditors Fees
The
following table shows the aggregate fees billed to the Company by Ernst &
Young LLP for services rendered during the years ended December 31, 2007 and
2008:
|
|
Years
Ended December 31,
|
Description
of Fees
|
|
2007
|
|
2008
|
Audit
Fees
|
|
1,575,000
|
|
1,331,000
|
Audit
Related Fees
|
|
-
|
|
-
|
Tax
Fees
(1)
|
|
-
|
|
-
|
All
Other Fees
|
|
-
|
|
-
|
Total
Fees
|
|
1,575,000
|
|
1,331,000
|
_____________________________
(1)
|
In
2007and 2008 Ernst & Young LLP did not provide any tax compliance, tax
advice, or tax planning services, all of which services were provided by
PriceWaterhouseCoopers LLP. Fees billed by
PriceWaterhouseCoopers LLP in 2007 and 2008 for tax compliance, tax
advice, and tax planning services were $355,100 and $286,340,
respectively. Fees billed by PriceWaterhouseCoopers, LLP in
2008 included FIN 48 and state tax planning
expenses.
|
Audit
Fees
Audit
fees consist of the aggregate fees billed by Ernst & Young LLP for
professional services rendered for the audit of the Company’s financial
statements as of and for the years ended December 31, 2007 and 2008, its
reviews of the financial statements included in the Company’s Quarterly Reports
on Form 10-Q for 2007 and 2008 as well as significant additional work relating
to the performance of Sarbanes-Oxley Section 404 attest services in 2007 and
2008.
Tax
Fees
Tax fees
consist of the aggregate fees billed for professional services rendered for tax
compliance, tax advice, and tax planning.
All
Other Fees
All other
fees consist of the aggregate fees for professional services rendered by Ernst
& Young LLP other than those described above.
Pre-Approval
of Audit and Non-Audit Services
In
accordance with the provisions of the Audit Committee charter, the Audit
Committee must pre-approve all audit and non-audit services, and the related
fees, provided to the Company by its independent auditors, or subsequently
approve non-audit services in those circumstances where a subsequent approval is
necessary and permissible under the Exchange Act or the rules of the
Commission. Accordingly, the Audit Committee pre-approved all
services and fees provided by Ernst & Young LLP during the year ended
December 31, 2008 and has concluded that the provision of these services is
compatible with the accountant’s independence.
During
the year ended December 31, 2008, none of the total hours expended on the audit
of the Company’s financial statements by Ernst & Young LLP were provided by
persons other than full time employees of Ernst & Young LLP.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE YEAR ENDING DECEMBER 31, 2009.
*
* * * *
CORPORATE
GOVERNANCE AND BOARD MATTERS
Director
Independence
The Board
of Directors has determined that, except for Richard H. Friedman, each of its
current directors is independent within the meaning of Rule 4200(a)(15) of the
NASDAQ listing standards.
Board
Meetings; Annual Meeting Attendance
The Board
of Directors held a total of six meetings during 2008. During such
period, each director attended at least 75% of the meetings of the Board of
Directors and the committees of the Board of Directors on which the director
served that were held during the applicable period of service. The
Company expects each member of the Board of Directors to attend its annual
meetings absent a valid reason, such as a schedule conflict. Last
year, seven of the Company’s eight Board members attended the 2008 annual
meeting of stockholders.
Executive
Sessions
Non-management
directors meet regularly in executive sessions. “Non-management”
directors are all those directors who are not employees of the
Company. The Company’s non-management directors consist of all of its
current directors other than Richard H. Friedman. An executive
session of the Company’s non-management directors is generally held in
conjunction with each regularly scheduled Board of Directors
meeting. Additional executive sessions may be called at the request
of the Board of Directors or the non-management directors.
Board
Committees
The
Company has standing Audit, Governance and Nominating, Management Development
and Compensation, and Corporate Strategy Committees. Each committee,
other than the Corporate Strategy Committee, is comprised solely of independent
directors. Membership of each committee is as follows:
Audit
Committee
|
|
Governance
and
Nominating
Committee
|
|
Management
Development and Compensation Committee
and
Compensation Committee
|
|
Corporate
Strategy
Committee
|
Myron
Z. Holubiak
|
|
Charlotte
W. Collins*
|
|
Charlotte
W. Collins
|
|
Richard
H. Friedman*
|
David
R. Hubers
|
|
Louis
T. DiFazio
|
|
Myron
Z. Holubiak
|
|
David
R. Hubers
|
Richard
L. Robbins*
|
|
David
R. Hubers
|
|
Stuart
A. Samuels*
|
|
Myron
Z. Holubiak
|
Steven
K. Schelhammer
|
|
Stuart
A. Samuels
|
|
Steven
K. Schelhammer
|
|
|
___________
*designates
committee chairperson.
The
Company has adopted a written charter for each of the committees, other than the
Corporate Strategy Committee. Stockholders may access a copy of each
committee’s charter on the Company’s website at
www.bioscrip.com
under the heading “About Us – Investors – Corporate Governance.”
Audit
Committee
Each
member of the Audit Committee satisfies the independence requirements of Rule
4200(a)(15) of the National Association of Securities Dealers listing standards
and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934 (the "Exchange
Act"). The Company’s Board of Directors has determined that Richard
L. Robbins is an “audit committee financial expert” as that term is defined in
Item 407(d)(5)(ii) of Regulation S-K of the Exchange Act. The Audit
Committee is responsible, among its other duties, for overseeing the process of
accounting and financial reporting of the Company and the audits of the
financial statements of the Company; appointing, retaining and compensating the
Company’s independent auditors; pre-approving all audit and non-audit services
by the Company’s independent auditors; reviewing the scope of the audit plan and
the results of each audit with management and the Company’s independent
accountants; reviewing the internal audit function; reviewing the adequacy of
the Company’s system of internal accounting controls and disclosure controls and
procedures; and reviewing the financial statements and other financial
information included in the Company’s annual and quarterly reports filed with
the Commission. During 2008, the Audit Committee held four
meetings.
Governance
and Nominating Committee
Each
member of the Governance and Nominating Committee is “independent” as set forth
in Rule 4200(a)(15) of the NASDAQ listing standards. The Governance
and Nominating Committee’s functions include recommending to the Board of
Directors the number and names of proposed nominees for election to the Board of
Directors at the Company’s Annual Meeting of Stockholders; identifying and
recommending nominees to fill expiring and vacant seats on the Board of
Directors; reviewing on an annual basis committee and Board of Directors
performance and recommending changes to the Board of
Directors. Except as may be required by rules promulgated by the
NASDAQ Stock Market or the Commission, it is the current sense of the Governance
and Nominating Committee that there are no specific, minimum qualifications that
must be met by each candidate for the Board of Directors, nor are there specific
qualities or skills that are necessary for one or more of the members of the
Board of Directors to possess. In evaluating the suitability of
potential nominees for election as members of the Board of Directors, the
Governance and Nominating Committee will take into consideration the current
composition of the Board of Directors, including expertise, diversity, and
balance of inside, outside and independent directors, as well as the general
qualifications of the potential nominees, including personal and professional
integrity, ability and judgment and such other factors deemed
appropriate. The Governance and Nominating Committee will evaluate
such factors, among others, and will not assign any particular weighting or
priority to any of these factors. While the Governance and Nominating
Committee has not established specific minimum qualifications for director
candidates, the Committee believes that candidates and nominees must reflect a
Board of Directors that is predominantly independent and is comprised of
directors who (i) are of high integrity, (ii) have qualifications that will
increase the overall effectiveness of the Board of Directors, including
expertise and knowledge in various disciplines relevant to the Company’s
business and/or operations, and (iii) meet other requirements as may be required
by applicable rules, such as financial literacy or financial expertise with
respect to Audit Committee members. The Governance and Nominating
Committee will consider recommendations for nominations from any reasonable
source, including officers and directors as well as from stockholders of the
Company who comply with the procedures set forth in the Company’s
By-Laws. See the section below entitled “Stockholder
Proposals.” The Governance and Nominating Committee will evaluate all
stockholder recommended candidates on the same basis as any other
candidate. When appropriate, the Governance and Nominating Committee
may retain executive recruitment firms to assist in identifying suitable
candidates. The Governance and Nominating Committee also reviews
corporate governance, compliance and ethics guidelines, and oversees the annual
evaluation of the Board of Directors and management of the
Company. The Governance and Nominating Committee held four meetings
during 2008.
Management
Development and Compensation Committee
The
Management Development and Compensation Committee (the “Compensation Committee”)
reviews and approves the overall compensation strategy and policies for the
Company. Each member of the Compensation Committee is “independent”
as set forth in Rule 4200(a)(15) of the NASDAQ listing standards. In
addition, the Compensation Committee reviews and approves corporate performance
goals and objectives relevant to the compensation of the Company's executive
officers and other senior management; reviews and approves the compensation and
other terms of employment of the Company's Chief Executive Officer; and oversees
the Company’s 2008 Equity Incentive Plan (the “2008 Plan”), the 2001 Incentive
Stock Plan (the “2001 Plan”), the 1996 Incentive Stock Plan (the “1996 Plan”)
and the 1996 Non-Employee Directors Stock Incentive Plan (the “Directors
Plan”). The 1996 Plan and the Directors Plan both terminated in
2006. Upon stockholder approval of the 2008 Plan no further grants
were made under the 2001 Plan; provided, that if any shares of Common Stock
subject to an award under the 2001 Plan are forfeited or expire or are settled
for cash (in whole or in part), the shares of Common Stock subject to such award
will, to the extent of the forfeiture, expiration or cash settlement, again be
available for issuance under the 2008 Plan, subject to certain limitations as
described in the 2008 Plan. The Compensation Committee also
administers the Chronimed Stock Options Plans, which were assumed by the Company
in connection with its merger with Chronimed Inc. in 2005. The
Compensation Committee is also responsible for ensuring that adequate management
development programs and activities are created and implemented in order to
provide a succession plan for executive officers and other significant positions
within the Company. During 2008, the Compensation Committee held four
meetings.
Corporate
Strategy Committee
The
Company also has a Corporate Strategy Committee. The Corporate
Strategy Committee consists of the Company’s Chief Executive Officer plus two or
more directors of the Company, currently Messrs. Holubiak and Hubers. Members of
the Corporate Strategy Committee do not need to be independent
directors. The purpose of the Corporate Strategy Committee is to
oversee the development and implementation of the Company’s’ corporate strategy
and to assess strategic opportunities in the event they arise. During
2008 the Corporate Strategy Committee held two meetings.
Code
of Ethics
The
Company is committed to having sound corporate governance principles and has
adopted a Code of Business Conduct and Ethics for its directors, officers and
employees. The Code of Business Conduct and Ethics covers topics including, but
not limited to, financial reporting, conflicts of interest, confidentiality of
information, and compliance with laws and regulations. The Company’s
Code of Business Conduct and Ethics, is available on the Company’s website at
www.bioscrip.com
under the heading “About Us – Investors – Corporate Governance.” The
information contained in or connected to the Company’s website is not
incorporated by reference to or considered a part of this proxy
statement. If any waivers of the Code of Business Conduct and Ethics
are granted, such waivers will be disclosed on a Form 8-K.
Stockholder
Communications with the Board of Directors
Historically,
the Company has not adopted a formal process for stockholder communications with
the Board of Directors. Nevertheless, every effort has been made to
ensure that the views of stockholders are heard by the Board of Directors or
individual directors, as applicable, and that appropriate responses are provided
to stockholders in a timely manner. We believe our responsiveness to
stockholder communications to the Board of Directors has been
excellent.
Review,
Approval or Ratification of Transactions With Related Persons
In
accordance with the terms of the Company’s Audit Committee Charter, the Audit
Committee is required to review and approve all related person transactions on
an ongoing basis. A related person transaction, as defined in Item
404(a) of Regulation S-K, is any transaction, arrangement or relationship
in which the Company is a participant, the amount involved exceeds $120,000, and
one of the Company’s executive officers, directors, director nominees, or 5%
stockholders (or their immediate family members) has a direct or indirect
material interest. During 2008 there were no related person
transactions.
Compensation
of Directors
The table
below sets forth all compensation earned by the Company’s non-employee directors
in 2008.
Director
Compensation Table
|
|
Fees
Earned or Paid in Cash
($)(1)
|
|
Stock
Awards
($)(2)(3)
|
|
Option
Awards
($)(2)(3)
|
|
Total
($)
|
Charlotte
W. Collins
|
|
63,000
|
|
44,792
|
|
8,361
|
|
116,153
|
Louis
T. DiFazio
|
|
63,000
|
|
44,792
|
|
8,576
|
|
116,368
|
Myron
Z. Holubiak
|
|
59,500
|
|
44,792
|
|
18,120
|
|
122,412
|
David
R. Hubers
|
|
60,500
|
|
44,792
|
|
18,120
|
|
123,412
|
Michael
Kooper
|
|
18,833
|
|
-
|
|
-
|
|
18,833
|
Richard
L. Robbins
|
|
70,500
|
|
44,792
|
|
18,120
|
|
133,412
|
Stuart
A. Samuels
|
|
73,000
|
|
44,792
|
|
18,120
|
|
135,912
|
Steven
K. Shelhammer
|
|
58,000
|
|
90,432
|
|
7,236
|
|
155,668
|
____________
(1)
|
The
fees shown include the annual retainer fee paid to each non-employee
director, committee chairmanship fees and attendance fees for both board
and committee meetings.
|
(2)
|
Value
of stock and option awards determined in accordance with the provisions of
Statement of Financial Accounting Standards No. 123 (Revised 2004) (“FAS
123R”).
|
(3)
|
The
following stock and option awards were outstanding at fiscal year end for
each non-employee director:
|
|
|
Stock
Awards
Outstanding
at
Fiscal Year End
|
|
Option
Awards
Outstanding
at Fiscal Year End
|
Charlotte
W. Collins
|
|
8,500
|
|
35,000
|
Louis
T. DiFazio
|
|
8,500
|
|
25,000
|
Myron
Z. Holubiak
|
|
8,500
|
|
52,600
|
David
R. Hubers
|
|
8,500
|
|
92,200
|
Richard
L. Robbins
|
|
8,500
|
|
25,000
|
Stuart
A. Samuels
|
|
8,500
|
|
92,200
|
Steven
K. Shelhammer
|
|
15,500
|
|
13,000
|
During
2008, each non-management director received an annual director fee of $50,000
plus an annual fee of $5,000 for each Board committee on which the
non-management director serves. In addition, the chairman of each
Board committee received an additional fee for their added responsibilities as
follows: (i) the chairman of the Audit Committee received an additional $15,000
fee, and (ii) the chairmen of the Governance and Nominating Committee and the
Compensation Committee each received an additional $10,000
fee. All of the above fees are paid quarterly. All
Board members are also reimbursed for expenses incurred in connection with
attending such meetings.
In
addition to the above fees, on April 29, 2008 each non-management director,
other than Mr. Schelhammer, was granted 8,500 shares of restricted common stock
of the Company, of which shares 3,500 vested immediately and the remaining 5,000
shares vest on the one year anniversary of the grant date. In order
to make up for Mr. Shelhammer not receiving an option grant upon his appointment
to the Board of Directors in 2007, he was granted an additional 7,000 shares of
restricted common stock (all of which vested immediately) and an option to
purchase 13,000 shares of Common Stock at an exercise price of $6.52 per
share. The option granted to Mr. Shelhammer vests in three equal
annual installments commencing on the first anniversary of the grant
date.
REPORT
OF THE AUDIT COMMITTEE
The Audit
Committee is responsible for overseeing the process of accounting and financial
reporting of the Company and the audits and financial statements of the
Company. The Audit Committee operates pursuant to a written charter
which is reviewed annually by the Audit Committee. As set forth in
the Audit Committee charter, management of the Company is responsible for the
preparation, presentation and integrity of the Company’s financial statements
and for the appropriateness of the accounting principles and reporting policies
that are used by the Company. The independent auditors are responsible for
auditing the Company’s financial statements and expressing an opinion on the
conformity of those audited financial statements with accounting principles
generally accepted in the United States.
In the
performance of its oversight function, the Company’s Audit Committee reviewed
and discussed with the Company's management and the Company’s independent
auditors the audited consolidated financial statements of the Company contained
in the Company’s Annual Report on Form 10-K for the year ended December 31,
2008. The Audit Committee also discussed with our independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61,
Communications with
Audit Committees
, as amended (AICPA, Professional Standards,
Vol. 1 AU Section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T. In addition, the Audit
Committee has received and discussed with the Company’s independent registered
public accounting firm the written disclosures and the letter from the Company’s
independent registered public accounting firm required by applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent registered public accounting firm’s communications with the audit
committee concerning independence and have discussed with the independent
registered public accounting firm its independence.
Based on
the review and discussions described in the preceding paragraph above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements referred to above be included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008 filed with the
Commission.
Submitted
by the Audit Committee:
Richard
L. Robbins, Chairman
|
Myron
Z. Holubiak
|
David
R. Hubers
|
Steven
K. Schelhammer
|
EXECUTIVE
OFFICERS
The
following sets forth certain information with respect each executive officer of
the Company who is not also a director of the Company:
Russel J. Corvese, 47, Executive
Vice President, Mail and Managed Care Operations
. Mr. Corvese
joined the Company in May 1994 and has held various positions including Vice
President of Operations of the Company’s subsidiary, BioScrip PBM Services, LLC,
and Chief Information Officer of the Company.
Stephen B. Cichy, 38, Executive Vice
President, Managed Care and Marketing and Product
Development
. Mr. Cichy joined the Company as Executive Vice
President, Managed Care and Marketing and Product Development in March
2009. Prior to joining the Company, from August 2007 until March
2009, Mr. Cichy was Vice President of Product Development for Walgreens, Inc., a
prescription drug retailer. From April, 2005 until September, 2007 he
held various positions with Option Care, Inc., a specialty pharmacy provider,
including Senior Director of Product Development and Vice President of Business
Development and Commercial Operations. Option Care was acquired by
Walgreens in September 2007. Prior to joining Option Care, from March
2003 to April 2005, Mr. Cichy was Director of New Product Planning for Caremark,
Inc., a pharmacy benefit management and specialty pharmacy company.
Scott W. Friedman, 34, Executive
Vice President, Sales and Marketing
. Mr. Friedman joined the
Company in 1998 as an employee in the Marketing Department. In
February 2002 he was appointed Vice President of Marketing and in January 2003
he was appointed Vice President of Pharmaceutical Relations. In
August 2006 he was appointed Executive Vice President of Sales and
Marketing. Mr. Friedman is the son of Richard H. Friedman, the Chief
Executive Officer and Chairman of the Board of the Company.
Douglas A. Lee, 42, Chief
Information Officer
. Mr. Lee joined the Company as its Chief
Information Officer in February 2007. Prior to joining the Company
Mr. Lee was a principal in Resultares Consulting Inc., an executive information
technology consulting firm, from November 2006 to February 2007. From
August 2004 to November 2006 he was the Chief Information Officer of Option
Care, Inc. From January 1998 to August 2004 he was a partner and
Chief Information Officer of Technology Extension Consulting, Inc.
Thomas Ordemann, 56, Executive Vice
President, Community Pharmacy.
Mr. Ordemann joined the Company
as Vice President, Community Pharmacy in July 2007. In April 2008 Mr.
Ordemann was appointed Executive Vice President, Community
Pharmacy. Prior to joining the Company, from February 2006 to July
2007 he was President of JTO Consulting, a company which specialized in
consulting for pharmacies. From May 2002 to February 2006 Mr.
Ordemann was Vice President of Store Operations for Duane Reade, Inc. a retail
pharmacy chain.
Barry A. Posner, 45, Executive Vice
President, General Counsel and Secretary
. Mr. Posner joined
the Company in March 1997 as General Counsel and was appointed Secretary of the
Company at that time. In April 1998, Mr. Posner was appointed Vice
President of the Company. In November 2001, he was appointed to the
position of Executive Vice President of the Company.
Stanley G. Rosenbaum, 60, Executive
Vice President, Chief Financial Officer and Treasurer
. Mr.
Rosenbaum joined the Company as its Executive Vice President, Chief Financial
Officer and Treasurer in June 2006. From October 2003 to June 2005 he
was a consultant for the Kerr Group, Inc. From October 2000 to April,
2003 he was Chief Financial Officer of Petropac Solutions, Inc., a private
company servicing the petroleum industry.
Joseph Smith, 50, Executive Vice
President Infusion and AIC Services.
Mr. Smith joined the
Company as Executive Vice President, Infusion and AIC Services in February
2009. Prior to joining the Company, from March 2006 to June 2008 Mr.
Smith was Chief Operating Officer and a director of ActiveCare Network, LLC, a
network of clinics that provide infusion, injection and vaccine services for
payors, pharmaceutical manufacturers and specialty pharmacy
clients. From July 2001 to August 2005 Mr. Smith was Executive Vice
President of Hemophilia Resources of America, Inc., a distributor of blood
products to hemophilia patients. From March 1993 to June 2001 Mr.
Smith held various positions with Coram Healthcare, Inc., a national provider of
home infusion services and specialty pharmacy distribution, including Chief
Operating Officer from December 1998 to July 2000.
Richard M. Smith, 49, President and
Chief Operating Officer.
Mr. Smith joined the Company as its
President and Chief Operating Officer in January 2009. Prior to
joining the Company, from June 2006 to November 2008 Mr. Smith was Chief
Executive Officer and a director of Byram Healthcare Centers, Inc. a provider of
medical supplies and pharmacy items to long term chronic patients. From May 2003
to May 2006 Mr. Smith was the President and Chief Operating Officer of Option
Care, Inc., a home infusion and specialty pharmaceutical company.
Executive
officers are appointed by and serve at the pleasure of the Board, subject to the
terms of their respective employment and/or severance agreements with the
Company. See “Employment and Severance Agreements”
below.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
The
Compensation Committee is comprised of all independent directors and is
responsible for, among other things, overseeing and approving compensation
levels for the Company’s Chief Executive Officer and other executive management,
including the individuals named in the Summary Compensation Table below (the
“named executives”). The Compensation Committee is also responsible
for the development and administration of management compensation policies and
programs that are consistent with, linked to and supportive of the basic
strategic objectives of creating stockholder value and paying for quality
performance while taking into consideration the activities, roles and
responsibilities of the Company’s management.
The
Compensation Committee, from time to time, utilizes compensation consultants to
assist the Committee with:
·
|
compensation
benchmarking;
|
·
|
incentive
plan design and grant levels;
|
·
|
current
and anticipated trends in executive compensation; and
|
·
|
compliance
with executive compensation
regulations.
|
In 2008,
the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”)
to assist the Company in its negotiation of a new employment agreement with the
Company’s Chairman and Chief Executive Officer as well as with the design of the
Company’s 2008 Plan (which was approved and adopted at the 2008 annual meeting
of stockholders) and the 2008 short-term cash bonus plan. At the
request of the Compensation Committee, FW Cook also reevaluated and adjusted the
peer group to be used by the Company in making future compensation decisions and
prepared a compensation analysis based on this peer group, reevaluated the
Company’s director compensation program and provided the Compensation Committee
with advice concerning director and executive officer stock ownership
guidelines.
Objectives
of the Company’s Compensation Program
The
Compensation Committee adheres to the following three principles in discharging
its responsibilities:
·
|
Overall
compensation programs should be structured to ensure the Company’s ability
to attract, retain, motivate and reward those individuals who are best
suited to achieving the desired performance results, both long-term and
short-term, while taking into account the roles, duties and
responsibilities of individuals and their respective departments
|
·
|
There
should be a strong link between executive officer compensation and the
Company’s short-term and long-term financial performance.
|
·
|
Annual
bonuses and long-term incentive compensation for senior management and key
employees should be “at risk,” or based upon the satisfactory achievement
of pre-established financial or other performance related goals and
objectives.
|
In
determining compensation, the Compensation Committee considers the compensation
levels, programs and practices of certain companies in the healthcare industry
to assure that its programs are market competitive. The Compensation
Committee reviews and periodically adjusts the peer group used by it in making
compensation decisions. No peer group review was conducted in 2007
for 2008 compensation. In the second half of 2008, a peer group
review was undertaken with the assistance of FW Cook, which also used national
surveys to provide the Compensation Committee with additional benchmark
information. The 2008 peer group review was used as a basis for
determining 2009 compensation. The peer group companies, which the
Compensation Committee believed to be an appropriate peer group, had 2007 median
revenues of $1.6 billion (as compared to the Company’s $1.1 billion of revenue
for 2007) and included the following:
Apria
Healthcare Group Inc.
|
Healthextras,
Inc.
|
Pharmerica
Corporation
|
Centene
Corporation
|
Lincare
Holdings, Inc.
|
PSS
World Medical, Inc.
|
DaVita
Inc.
|
Omnicare,
Inc.
|
Rotech
Healthcare Inc.
|
Gentiva
Health Services, Inc.
|
Option
Care, Inc.
|
|
Management’s
Role in Compensation Practices
While the
Compensation Committee does not delegate any of its authority to determine
executive compensation, it considers recommendations from the Company’s Chief
Executive Officer in making its compensation decisions for executive officers,
other than the Chief Executive Officer. In making compensation
recommendations to the Compensation Committee, the Chief Executive Officer
generally considers individual, business unit, division and Company performance
and comparable compensation for a similar position at other competitive
companies. Compensation levels and targets, as well as performance targets and
compensation ranges, are then proposed by management to the Compensation
Committee which reviews the proposals, discusses them with management and the
Compensation Committee’s outside consultant, taking into account the benchmark
data, and the Compensation Committee will approve what it deems appropriate
compensation levels. The Chairman of the Compensation Committee will
advise the Company’s Chief Executive Officer of all Compensation Committee
approved recommendations. The Chief Executive Officer will then
inform senior management of such approved compensation levels.
Chief
Executive Officer Compensation
In
setting compensation for the Company’s Chief Executive Officer, the Compensation
Committee consults with its outside compensation consultant. In May
2008, the Company entered into a new employment agreement with its Chief
Executive Officer. The Chief Executive Officer’s new employment
agreement is described below in the section titled “Employment and Severance
Arrangements.” The Compensation Committee believes the structure of
the employment agreement, as well as the targeted and potential value of the
compensation to be earned thereunder, is in the best interest of stockholders,
provides a competitive opportunity that is strongly aligned with stockholder
interests, and provides for management continuity.
Elements
of the Company’s Executive Compensation Program
With the
above principles and benchmarking data as a guide, the Compensation Committee
embraces a “pay-for-performance” philosophy and has adopted compensation
programs that it believes are competitive relative to compensation paid to
executives in similar businesses with persons holding similar positions and
having similar duties and responsibilities. The Company’s compensation program
for executive officers consists of base salary, annual cash incentive
compensation, and long-term incentive compensation.
Base Salary.
Base
salary is the fixed component of the Company’s executive compensation program
and is the only element of executive annual cash compensation not based on
Company performance. The Compensation Committee reviews base salaries
for executives other than the Chief Executive Officer from time to time and
approves salary levels after assessing a number of factors including the
Company’s and the executive’s performance for the previous year, the executive’s
scope of responsibilities, competitive compensation levels coupled with the
reasonableness within the Company, and the Company’s ability to
pay. The base salary of the Company’s Chief Executive Officer is
fixed pursuant to the terms of his employment agreement. Base
salaries allow the Company to provide a competitive level of compensation in
order to attract and retain superior employees. On an overall basis,
base salary is targeted at the 50th percentile of the competitive market (as
discussed above) for the Chief Executive Officer and his direct
reports. None of the named executives received salary increases for
2009, while the average base salary increase for all salaried employees was
3%.
Annual Cash Incentive
Compensation
. The Company does not pay contractual annual
bonuses to its executives or to employees at any level. A broad group
of approximately 245 management employees, including the named executives, are
eligible to participate in a pay-for-performance annual cash incentive
plan. The cash incentive plan is designed to motivate employees to
continuously improve the Company’s business performance and to promote a
results-oriented business culture by rewarding an executive officer’s individual
performance as well as the overall performance of the Company for a given
year. Annual cash incentive compensation is generally targeted at the
median of the companies included within its selected peer
group. Executive officers have an opportunity to receive annual
incentive compensation under the cash incentive plan if individual, corporate
and departmental or business unit goals and objectives are
achieved. On an overall basis annual cash incentive compensation is
targeted at the 50th percentile of the competitive market.
Company-wide
cash incentive awards, including those for executives, are recommended to the
Compensation Committee for approval based on an assessment by the Company’s
Chief Executive Officer. If minimum financial performance thresholds,
typically budgeted net income thresholds, are not met, no annual bonus is paid
for that year. In 2008, the Compensation Committee approved the
following bonus program for the Company’s named executives:
·
|
The
annual incentive for the Chief Executive Officer was tied to net
income, revenue, implementation of Chief Executive Officer
succession planning and development, achievement of threshold results of
employee cultural and job satisfaction surveys, achievement of threshold
customer retention percentage goals at the Company’s community
pharmacies. His target bonus for 2008 was 60% of base
salary.
|
·
|
The
annual incentive for the Chief Financial Officer was tied to net
income, revenue, implementation of the Company’s information
technology plan, improvement in liquidity, days sales outstanding and
purchasing acquisition costs, curing significant Sarbanes-Oxley
deficiencies. His target for 2008 was 55% of base
salary.
|
·
|
The
annual incentive for the Executive Vice President and General Counsel was
tied to net income, revenue, timely completion of contracts,
achievement of threshold results of internal management survey of General
Counsel performance, satisfactory management of legal department, and
possession by the Company’s pharmacies of all required
licenses. His target for 2008 was 40% of base
salary.
|
·
|
The
annual incentive for the Executive Vice President of Mail Operations was
tied to: net income, reduction in labor and dispensing costs,
implementation of the Company’s bioscripcare™ program, improvement in
customer satisfaction & retention. His target for 2008 was
50% of base salary.
|
·
|
The
annual incentive for the Executive Vice President of Sales and Marketing
was tied to net income, consolidated revenues, new product
expansion, increase in managed care contracts, achievement of threshold
customer retention goals and satisfactory customer
relations. His target for 2008 was 50% of base
salary.
|
Based on
the Company’s failure to achieve its performance threshold of budgeted net
income, no executive officer received any cash incentive compensation for
2008.
Long-Term Incentive
Compensation
. The Company provides long-term incentives to its
executive officers through the 2008 Plan, which permits the grant of various
equity based awards including stock options, stock appreciation rights,
restricted stock units, stock grants, and performance units. The 2008
Plan does not allow the grant of “reload” options or the repricing of stock
options.
The
purpose of the 2008 Plan is to promote the interests of the Company by granting
equity awards to key employees in order to (i) attract and retain key
employees, (ii) provide an additional incentive to each key employee to
work to increase the value of the Company’s common stock, and (iii) provide
each key employee with a stake in the future of the Company which corresponds to
the stake of each of the Company’s stockholders. Historically stock
options were the only form of long-term incentive utilized by Company as the
Compensation Committee believed that stock options were the strongest tie to
stock price performance and that the interests of the Company’s executives would
have the greatest alignment with stockholder interests through the granting of
stock options. Since the Company’s merger with Chronimed in March
2005, the Company’s stock price has declined, causing most of the outstanding
stock option grants to be substantially out of the money. To address
concerns of the Compensation Committee related to retention of the management
team, in 2006 the Board approved the Compensation Committee’s directive to issue
long-term incentive grants to key executives and employees consisting of 50% of
long-term incentive value in stock options and 50% of long-term incentive value
in performance based restricted stock. Long-term incentive
compensation is generally targeted at the median of the companies included
within its selected peer group.
On April
29, 2008 the Compensation Committee approved the grant of stock options and
performance-based restricted stock to, among other employees, each of the named
executive officers. The number of stock options and shares of
restricted stock granted to each named executive was as follows: (i) 112,500
options and 45,000 shares of restricted stock to Richard Friedman, (ii) 70,312
options and 28,125 shares of restricted stock to Stanley G. Rosenbaum, (iii)
50,625 options and 20,250 shares of restricted stock to Barry A. Posner, (iv)
56,250 options and 22,500 shares of restricted stock to Russel J. Corvese and
(v) 56,250 options and 22,500 shares of restricted stock to Scott
Friedman.
Each
stock option had a strike price of $6.52 per share, the fair market value on the
date of grant. One third of the options vest on the first, second and third
anniversaries of the grant. Executives have 10 years from the date of the grant
to exercise their options.
The
restricted stock vests based on Company financial and stock price performance as
follows:
·
|
20%
will vest on the later to occur of the satisfaction of: (i) (A) the
closing price of the Company’s common stock as reported by NASDAQ equaling
or exceeding $9.00 per share for twenty (20) consecutive trading days or
(B) the Company achieving Earnings Before Interest, Taxes, Depreciation
Amortization and Option Expense (“EBITDAO”) of at least $32,852,000 for
any of the fiscal years ending December 31, 2008 through December 31,
2013, whichever occurs first; and (ii) the first anniversary of the grant
date; and
|
·
|
30%
will vest on the later to occur of the satisfaction of: (i): (A) the
closing price of the Company’s Common Stock as reported by NASDAQ equaling
or exceeding $11.00 per share for twenty (20) consecutive trading days or
(B) the Company achieving EBITDAO of at least $40,152,000 for any of the
fiscal years ending December 31, 2008 through December 31, 2013, whichever
occurs first; and (ii) the first anniversary of the grant date;
and
|
·
|
50%
will vest on the later to occur of the satisfaction of: (i) (A) the
closing price of the Company’s common stock as reported by NASDAQ equaling
or exceeding $14.00 per share for twenty (20) consecutive trading days, or
(B) the Company achieving EBITDAO of at least $51,103,000 for any of the
fiscal years ending December 31, 2008 through December 31, 2013, whichever
occurs first; and (ii) the second anniversary of the grant
date.
|
Any
restricted shares not vested on or before the date which is ninety days
following the end of the Company’s fiscal year ending December 31, 2013 shall be
forfeited by the Employee and ownership transferred back to the
Company. These grants were made to incent all long term incentive
participants to attain Company financial and specific stock price goals over the
next five years.
In
determining the stock price thresholds for vesting of the restricted stock, the
Compensation Committee determined that the target price should be sufficiently
in excess of the Company’s then current share price so as to adequately drive
performance by the long term incentive participants but not too much in excess
of the current price to be perceived by the long term incentive participants as
unattainable or unlikely to be achieved, thereby not achieving the goal of
driving performance.
The
EBITDAO thresholds were established by calculating the ratio of the Company’s
then current stock price ($6.52 on April 29, 2008) to its market capitalization
and then applying that multiple to drive EBITDAO at the various stock price
thresholds established by the Compensation Committee.
Long-term
incentive compensation is generally granted on an annual basis at the first
meeting of the Compensation Committee following the Company’s annual stockholder
meeting. No long term incentive compensation is granted immediately
prior to, coincident with or immediately after the announcement of Company
results. Generally, executives receive only one grant per
cycle. However, on February 28, 2008, the Compensation Committee
approved the grant to Scott Friedman of an option to purchase 10,000 shares of
Common Stock at an exercise of $7.16 per share. The option vests in
three equal annual installments commencing on the first anniversary of the grant
date. The option was granted in recognition of, among other things,
his efforts and success in securing a contract with a major national health
insurer.
Deductibility
of Compensation
In
establishing pay levels for our named executives, the Compensation Committee
considers the impact of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”) on the amount of compensation deductible by the
Company. Under current tax law, Section 162(m) imposes a $1.0 million
limit that a publicly traded company can deduct for compensation paid to its
chief executive officer and its next four most highly compensated
executives. This limitation does not apply to pay that qualifies as
“performance-based compensation”. In order to qualify as
performance-based, compensation must, among other things, be based solely on the
attainment of pre-established objective goals under a stockholder approved plan
with no discretion permitted in determining award payouts.
While the
Company’s annual cash incentive compensation program is discretionary and
therefore does not qualify as “performance-based compensation.” under Section
162(m), the Compensation Committee generally seeks to structure long-term
incentive compensation for the named executives so as to qualify for full tax
deductibility under Section 162(m). Our current restricted stock
grants are based on, and any future grants are generally also expected to be
based on, the Company’s achievement of pre-established performance
goals. In addition, options granted under the 2008 Plan will be
exempt from the deduction limit of 162(m). The Compensation Committee
intends to continue to pursue a strategy of maximizing the deductibility of the
compensation paid to the Company’s executives when
appropriate. However, the Committee reserves the right to make awards
outside of these plans or to provide compensation that does not qualify for full
tax deductibility under Section 162(m) when deemed appropriate.
Retirement
The
Company maintains a qualified 401(k) plan in which all employees (including the
named executives) may participate. There are no special executive retirement
benefits other than for the Chief Executive Officer. The retirement
benefit for the Chief Executive Officer is discussed below in the section titled
“Employment and Severance Arrangements.”
Perquisites
The
Company did not provide perquisites to any of its named executives in
2008.
Stock
Ownership Guidelines
The
Company encourages executive stock ownership but does not currently have any
formal stock ownership guidelines in place. The Compensation
Committee has determined it advisable to adopt stock ownership guidelines for
directors and executives and such guidelines are currently being
prepared.
Compensation
Committee Report
Management
of the Company has prepared the Compensation Discussion and Analysis as required
by Item 402(b) of Regulation S-K, and the Management Development and
Compensation Committee of the Board of Directors has reviewed and discussed it
with management. Based on this review and discussion, the Management
Development and Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the proxy statement
for the Company’s 2009 Annual Meeting of Stockholders.
Submitted
by the Management Development and Compensation Committee:
Stuart
A. Samuels, Chairman
|
Charlotte
W. Collins
|
Myron
Z. Holubiak
|
Steven
K. Schelhammer
|
Compensation
Committee Interlocks and Insider Participation
No member
of the Management Development and Compensation Committee is or has been one of
our officers or employees or has had any relationship with us requiring
disclosure under the Commission’s rules and regulations. During the
year ended December 31, 2008 none of the Company’s executive officers served on
the board of directors, or on the compensation committee of the board of
directors, of any entity whose executive officers serve on our
Board.
Summary
Compensation Table
The table
below summarizes the total compensation earned by each of the Company’s named
executive officers in 2008 and 2007.
|
|
Year
|
|
Salary
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(1)
|
|
Non-Equity
Incentive
Plan
Compensation
($)(2)
|
|
All
Other
Compensation
($)(3)
|
|
Total
($)
|
Richard
H. Friedman, Chairman & Chief Executive Officer (4)
|
|
2008
|
|
802,536
|
|
328,817
|
|
834,601
|
|
-
|
|
21,338
|
|
1,987,292
|
|
2007
|
|
737,812
|
|
297,820
|
|
1,102,478
|
|
819,611
|
|
8,073
|
|
2,965,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
G. Rosenbaum, EVP, Chief Financial Officer and Treasurer
|
|
2008
|
|
440,000
|
|
216,074
|
|
141,178
|
|
-
|
|
8,138
|
|
805,390
|
|
2007
|
|
400,000
|
|
411,955
|
|
62,168
|
|
400,000
|
|
5,928
|
|
1,280,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
A. Posner, EVP, Secretary & General Counsel
|
|
2008
|
|
390,209
|
|
51,036
|
|
133,366
|
|
-
|
|
7,283
|
|
581,894
|
|
2007
|
|
380,401
|
|
45,491
|
|
65,441
|
|
234,126
|
|
5,127
|
|
730,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
W. Friedman, EVP, Sales and Marketing
|
|
2008
|
|
290,000
|
|
51,467
|
|
113,001
|
|
-
|
|
6,480
|
|
460,948
|
|
2007
|
|
245,808
|
|
28,401
|
|
42,724
|
|
103,993
|
|
7,385
|
|
428,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russel
J. Corvese, EVP Mail and Managed Care Operations
|
|
2008
|
|
290,000
|
|
51,864
|
|
106,467
|
|
-
|
|
7,283
|
|
455,614
|
|
2007
|
|
265,273
|
|
30,079
|
|
44,311
|
|
104,110
|
|
7,385
|
|
451,158
|
______________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Values
reflect the dollar amounts recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008 in accordance with
FAS 123R. Assumptions used in the calculation of these amounts
are included in the footnotes to the Company's audited financial
statements for the fiscal year ended December 31, 2008 included in the
Company's Annual Report on Form 10-K filed with the Commission on March 5,
2009.
|
(2)
|
Amounts
for 2007 include bonus awards under the Company’s Short-term Incentive
Plan.
|
(3)
|
Details
regarding the amounts shown for each named executive officer can be found
in the footnotes of the "All Other Compensation" table
below.
|
(4)
|
The
Company accelerated the expense realized for Mr. Friedman’s Stock and
Option Awards in order to reflect the terms of Mr. Friedman’s employment
contract.
|
All
Other Compensation
The table
below and related footnote disclosure describe each component of compensation
included under the column heading “All Other Compensation” in the Summary
Compensation Table above.
|
|
Year
|
|
Life
& Disability Insurance Premiums ($)
|
|
Registrant
Contributions
to
Defined
Contribution
Plans($)(1)
|
|
Other
Compensation
($)
|
|
Total
($)
|
Richard
H. Friedman (2)
|
|
2008
|
|
1,238
|
|
6,900
|
|
13,200
|
|
21,338
|
|
2007
|
|
1,323
|
|
6,750
|
|
-
|
|
8,073
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
G. Rosenbaum
|
|
2008
|
|
1,238
|
|
6,900
|
|
-
|
|
8,138
|
|
2007
|
|
1,323
|
|
4,605
|
|
-
|
|
5,928
|
|
|
|
|
|
|
|
|
|
|
|
Barry
A. Posner
|
|
2008
|
|
1,238
|
|
6,045
|
|
-
|
|
7,283
|
|
2007
|
|
1,323
|
|
3,804
|
|
-
|
|
5,127
|
|
|
|
|
|
|
|
|
|
|
|
Scott
W. Friedman
|
|
2008
|
|
1,238
|
|
5,242
|
|
-
|
|
6,480
|
|
2007
|
|
1,323
|
|
6,062
|
|
-
|
|
7,385
|
|
|
|
|
|
|
|
|
|
|
|
Russel
J. Corvese
|
|
2008
|
|
1,238
|
|
6,045
|
|
-
|
|
7,283
|
|
2007
|
|
1,323
|
|
6,062
|
|
-
|
|
7,385
|
__________
(1)
|
Value
of matching contributions allocated by the Company to each of the named
executive officers pursuant to the Company’s 401(k)
Plan.
|
(2)
|
Represents
legal fees paid on behalf of Mr. Friedman in connection with the
negotiation of his employment agreement executed in May
2008.
|
Grant
of Plan Based Awards
|
|
|
|
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)(6)
|
Grant
Date
Fair
Value
of
Stock
& Option
Awards
($)(7)
|
|
|
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
(1)
|
Name
|
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Richard
H. Friedman
|
|
|
-
|
850,000
|
1,275,000
|
-
|
-
|
-
|
-
|
|
|
April
29, 2008(2)
|
-
|
-
|
-
|
45,000
|
-
|
-
|
221,805
|
|
|
May
30, 2008 (3)
|
-
|
-
|
-
|
200,000
|
-
|
-
|
517,000
|
|
|
January
2, 2008 (4)
|
-
|
-
|
-
|
-
|
200,000
|
7.70
|
776,644
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
-
|
112,500
|
6.52
|
392,456
|
|
|
|
|
|
|
|
|
|
|
Stanley
G. Rosenbaum
|
|
|
-
|
242,000
|
363,000
|
-
|
-
|
-
|
-
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
28,125
|
-
|
-
|
138,628
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
-
|
70,312
|
6.52
|
245,283
|
|
|
|
|
|
|
|
|
|
|
Barry
A. Posner
|
|
|
-
|
156,083
|
234,125
|
-
|
-
|
-
|
-
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
20,250
|
-
|
-
|
99,812
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
-
|
50,625
|
6.52
|
171,998
|
|
|
|
|
|
|
|
|
|
|
Scott
W. Friedman
|
|
|
-
|
145,000
|
217,500
|
-
|
-
|
-
|
-
|
|
|
April
29, 2008(2)
|
-
|
-
|
-
|
22,500
|
-
|
-
|
110,903
|
|
|
February
28, 2008 (5)
|
-
|
-
|
-
|
-
|
10,000
|
7.16
|
37,666
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
-
|
56,250
|
6.52
|
191,109
|
|
|
|
|
|
|
|
|
|
|
Russel
J. Corvese
|
|
|
-
|
145,000
|
217,500
|
-
|
-
|
-
|
-
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
22,500
|
-
|
-
|
110,903
|
|
|
April
29, 2008 (2)
|
-
|
-
|
-
|
-
|
56,250
|
6.52
|
196,228
|
____________________________
(1)
|
The
Company’s Short-term Incentive Plan; threshold represents 0% of target and
maximum represents 150% of target.
|
(2)
|
Represents
restricted stock units and stock options. With respect to
restricted stock awards, vesting occurs with the attainment of certain
corporate financial and stock price performance goals. With
respect to option awards, vesting occurs in one-third increments on the
first, second and third anniversary of the grant
date.
|
(3)
|
Mr.
R. Friedman received performance based restricted stock awards in
accordance with the terms of his employment
agreement.
|
(4)
|
In
accordance with the terms of his employment agreement, Mr. R. Friedman
received options to purchase 200,000 shares of common
stock.
|
(5)
|
Mr.
S. Friedman received options to purchase 10,000 shares of common
stock. See “Executive Compensation – Compensation Discussion
and Analysis – Elements of the Company’s Executive Compensation
Program”
|
(6)
|
Options
are granted with an exercise price equal to the closing price per share of
common stock on the date of grant.
|
(7)
|
Represents
the total fair value, estimated as per FAS
123R.
|
Outstanding
Equity Awards At Fiscal Year End
The
following table provides information on the holdings of stock options and
restricted stock by the named executive officers at December 31,
2008.
|
|
Option
Awards
|
|
Stock
Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
Richard
H. Friedman
|
|
207,806
|
|
|
2.16
|
10/8/09
|
|
|
|
|
|
|
|
42,194
|
|
|
2.37
|
10/8/09
|
|
|
|
|
|
|
|
200,000
|
|
|
12.20
|
11/28/11
|
|
|
|
|
|
|
|
200,000
|
|
|
17.80
|
1/2/12
|
|
|
|
|
|
|
|
200,000
|
|
|
5.80
|
1/2/13
|
|
|
|
|
|
|
|
200,000
|
|
|
7.03
|
1/2/14
|
|
|
|
|
|
|
|
200,000
|
|
|
6.36
|
1/3/15
|
|
|
|
|
|
|
|
133,334
|
66,666
(1)
|
|
7.54
|
1/3/16
|
|
|
|
|
|
|
|
66,667
|
133,333
(2)
|
|
3.46
|
1/2/17
|
|
|
|
|
|
|
|
|
200,000
(3)
|
|
7.70
|
1/2/18
|
|
|
|
|
|
|
|
|
112,500
(4)
|
|
6.52
|
4/29/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,000(9)
|
543,900
|
Stanley
G. Rosenbaum
|
|
113,315
|
56,657
(5)
|
|
2.47
|
11/1/16
|
|
|
|
|
|
|
|
|
70,312
(4)
|
|
6.52
|
4/29/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,334
(8)
|
74,001
|
28,125
(9)
|
62,438
|
Barry
A. Posner
|
|
70,000
|
|
|
12.20
|
11/28/11
|
|
|
|
|
|
|
|
75,000
|
|
|
7.95
|
9/24/13
|
|
|
|
|
|
|
|
9,200
|
4,600
(6)
|
|
6.00
|
7/1/15
|
|
|
|
|
|
|
|
105,725
|
52,862
(5)
|
|
2.47
|
11/1/16
|
|
|
|
|
|
|
|
|
50,625
(4)
|
|
6.52
|
4/29/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,250
(9)
|
44,955
|
Scott
W. Friedman
|
|
14,000
|
|
|
12.20
|
11/28/11
|
|
|
|
|
|
|
|
20,000
|
|
|
7.95
|
9/24/13
|
|
|
|
|
|
|
|
7,667
|
3,833
(6)
|
|
6.00
|
7/1/15
|
|
|
|
|
|
|
|
41,006
|
33,002
(5)
|
|
2.47
|
11/1/16
|
|
|
|
|
|
|
|
|
10,000
(7)
|
|
7.16
|
2/28/18
|
|
|
|
|
|
|
|
|
56,250
(4)
|
|
6.52
|
4/29/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
(9)
|
49,950
|
Russel
J. Corvese
|
|
20,000
|
|
|
4.50
|
6/1/09
|
|
|
|
|
|
|
|
10,000
|
|
|
12.20
|
11/28/11
|
|
|
|
|
|
|
|
35,000
|
|
|
7.95
|
9/24/13
|
|
|
|
|
|
|
|
6,134
|
3,066
(6)
|
|
6.00
|
7/1/15
|
|
|
|
|
|
|
|
69,906
|
34,952
(5)
|
|
2.47
|
11/1/16
|
|
|
|
|
|
|
|
-
|
56,250
(4)
|
|
6.52
|
4/29/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
(9)
|
49,950
|
_________________
(1)
|
Vesting
schedule is one-third vesting on January 3, 2007, one-third vesting on
January 3, 2008, one-third vesting on January 3,
2009.
|
(2)
|
Vesting
schedule is one-third vesting on January 2, 2008, one-third vesting on
January 2, 2009, one-third vesting on January 2,
2010.
|
(3)
|
Vesting
schedule is one-third vesting on January 2, 2009, one-third vesting on
January 2, 2010, one-third vesting on January 2,
2011.
|
(4)
|
Vesting
schedule is one-third vesting on April 29, 2009, one-third vesting on
April 29, 2010, one-third vesting on April 29,
2011.
|
(5)
|
Vesting
schedule is one-third vesting on November 1, 2007, one-third vesting on
November 1, 2008, one-third vesting on November 1,
2009.
|
(6)
|
Vesting
schedule is one-third vesting on March 1, 2007, one-third vesting on March
1, 2008, one-third vesting on March 1,
2009.
|
(7)
|
Vesting
schedule is one-third vesting on February 28, 2009, one-third vesting on
February 28, 2010, one-third vesting on February 28,
2011.
|
(8)
|
Vesting
schedule is one-third vesting on June 21, 2007, one-third vesting on June
21, 2008, one-third vesting on June 21,
2009.
|
(9) Vesting
based on achievement of corporate financial and stock price performance
goals.
Option
Exercises and Stock Vested
The
following table sets forth certain information with respect to stock options
exercised and vested stock awards by the Company’s executive officers during the
year ended December 31, 2008.
|
|
Option
Awards
|
|
Stock
Awards
|
Name
|
|
Number
of Shares Acquired on Exercise (#)
|
|
Value
Realized on
Exercise
($)
|
|
Number
of Shares Acquired on Vesting (#)
|
|
Value
Realized on Vesting ($)(1)
|
Richard
H. Friedman
|
|
-
|
|
-
|
|
200,000
|
|
600,000
|
Stanley
G. Rosenbaum (2)
|
|
-
|
|
-
|
|
75,826
|
|
235,478
|
Barry
A. Posner
|
|
-
|
|
-
|
|
39,647
|
|
118,941
|
Scott
W. Friedman
|
|
-
|
|
-
|
|
24,752
|
|
74,256
|
Russel
J. Corvese
|
|
-
|
|
-
|
|
26,214
|
|
78,642
|
_______________________
(1)
|
Value
represents the dollar amount realized upon vesting of reported shares at
$3.00.
|
(2)
|
Mr.
Rosenbaum had 33,333 shares vest at $3.24 on June 21, 2008 and 42,493
shares vest at $3.00 on November 1,
2008.
|
Employment
and Severance Agreements
On May
30, 2008, the Company entered into a new Employment Agreement (the “Employment
Agreement”) with Richard H. Friedman, the Company’s Chairman and Chief Executive
Officer. Mr. Friedman’s previous employment agreement with the Company was set
to expire by its terms on May 31, 2008. Pursuant to the terms of the Employment
Agreement, the Company agreed to employ Mr. Friedman as the Company’s Chief
Executive Officer, President and Chairman for the period commencing June 1, 2008
and continuing through and including May 31, 2011; provided that the agreement
shall be extended for up to four additional one year periods unless either party
provides written notice of termination to the other not less than ninety days
prior to the expiration of the then current term. During the term of the
Employment Agreement Mr. Friedman will be paid a base salary of $850,000 per
annum. In addition, Mr. Friedman is eligible (i) to participate in the Company’s
benefit programs, (ii) to receive a bonus each calendar year under the Company’s
then applicable short- and long-term bonus or other incentive plans (with a
maximum target payment equal to 100% of his annual salary) upon the achievement
of pre-established performance goals; and (iii) to participate in the Company’s
long term incentive equity plans and programs in a manner commensurate with his
offices and positions. As a signing bonus, Mr. Friedman received a one-time
special performance share award of 200,000 shares of restricted common stock,
subject to the achievement of certain performance and time measures as set forth
in the Employment Agreement (the “Special Equity Award”).
If Mr.
Friedman’s employment is terminated early due to his death: (i) he is entitled
to receive his salary and other benefits earned and prior to the date of
termination and reimbursement for expenses incurred prior to the date of
termination, (ii) with the exception of the Special Equity Award, all unvested
options and restricted stock shall immediately vest and (together with all fully
vested and exercisable options held by him) may be exercisable by his estate for
the earlier to occur of one year following his date of death or the original
expiration date of the option, (iii) his estate shall be entitled to receive a
pro rata bonus for the year in which such death occurred, (iv) any and all
deferred compensation shall be paid to Mr. Friedman’s estate, and (v) the
Special Equity Award shall vest on a pro rata basis, subject to achievement of
the agreed upon performance criteria.
If Mr.
Friedman’s employment is terminated early due to his disability (as defined in
the Employment Agreement): (i) he is entitled to receive his salary and other
benefits earned and accrued prior to the date of termination and reimbursement
for expenses incurred prior to the date of termination, (ii) he shall be
entitled to receive a pro rata bonus for the year in which termination occurred,
(iii) with the exception of the Special Equity Award, all unvested options and
restricted stock shall immediately vest and (together with all fully vested and
exercisable options held by him) may be exercisable by him for the earlier to
occur of one year following his date of death or the original expiration date of
the option, (iv) he shall receive for a period of two years following
termination, his annual salary at the time of termination (less any proceeds
received by him on account of Social Security payments or similar benefits and
the proceeds of any Company provided long-term disability insurance), continuing
coverage under all benefit plans and programs to which he was previously
entitled, (v) he shall become vested in and paid any pension or other deferred
compensation other than pension or deferred compensation under a plan intended
to be qualified under Section 401(a) or 403(a) of the Internal Revenue Code of
1986, as amended (the “Code”), and (vi) the Special Equity Award shall vest on a
pro rata basis, subject to achievement of the agreed upon performance
criteria.
If the
Company terminates Mr. Friedman for “Cause” (as defined in the Employment
Agreement): (i) he shall be entitled to receive his salary and other benefits
earned and accrued prior to the date of termination and reimbursement for
expenses incurred prior to the date of termination, (ii) all vested and unvested
stock options shall lapse and terminate immediately, (iii) all unvested
restricted stock shall be forfeited, and (iv) all earned and unearned
performance shares (including performance shares granted as part of the Special
Equity Award) shall lapse and terminate immediately.
If Mr.
Friedman terminates his employment during the term and it is other than as a
result of his death or disability or without Good Reason (as defined in the
Employment Agreement): (i) he shall be entitled to receive his salary and other
benefits earned and accrued prior to the date of termination and reimbursement
of expenses incurred prior to the date of termination, (ii) all fully vested and
exercisable stock options may be exercised by him for the earlier to occur of
one year following his date of termination or the original expiration date of
the option, (iii) all unvested restricted stock shall be forfeited, and (iv) all
unearned performance shares (including performance shares granted as part of the
Special Equity Award) shall lapse and terminate immediately.
If the
Company terminates Mr. Friedman’s employment without Cause or Mr. Friedman
terminates his employment for Good Reason: (i) he shall be entitled to receive
his salary and other benefits earned and accrued prior to the date of
termination and reimbursement of expenses incurred prior to the date of
termination, (ii) he shall be entitled to receive a pro rata bonus for the year
in which termination occurred, (iii) all unvested options and restricted stock
shall immediately vest and (together with any other vested and exercisable
options then held by Mr. Friedman) may be exercised by him for the earlier to
occur of one year following his date of termination or the original expiration
date of the option, (iv) he will be entitled to receive for a period of two
years following termination his annual salary at the time of termination and
continuing coverage under all benefit plans and programs to which he was
previously entitled, (v) he shall become vested in and immediately paid any
pension or other deferred compensation other than pension or deferred
compensation under a plan intended to be qualified under Section 401(a) or
403(a) of the Code, and (vi) the Special Equity Award shall vest on a pro rata
basis, subject to achievement of the agreed upon performance
criteria.
If within
one year following a “Change of Control” (as defined in the Employment
Agreement) Mr. Friedman is terminated by the Company or any successor, or within
such one year period he elects to terminate his employment for Good Reason: (i)
he shall be entitled to receive his salary and other benefits earned and accrued
through the date of termination, (ii) he shall be entitled to receive a pro rata
bonus for the year in which termination occurred, (iii) all unvested options
shall fully vest and (together with any other vested options then held by Mr.
Friedman) may be exercised by him for the earlier to occur of one year following
his date of termination or the original expiration date of the option, (iv) all
unvested shares of restricted stock shall fully vest, (v) he will be entitled to
receive for a period of three years following his date of termination his annual
salary at the time of termination and continuing coverage under all benefits
plans and programs to which he was previously entitled; (vi) he shall become
vested in and immediately paid any pension or other deferred compensation other
than pension or deferred compensation under a plan intended to be qualified
under Section 401(a) or 403(a) of the Code; and (vii) the Special Equity Award
shall vest on a pro rata basis, subject to achievement of the agreed upon
performance criteria.
If either
party elects not to renew the Employment Agreement at the end of the initial or
any renewal term thereof, then Mr. Friedman shall be entitled to receive a
retirement payment in the amount of $1,700,000.00 (the equivalent of two years
salary), which shall increase by 25% for each year (or part thereof) that Mr.
Friedman remains employed with the Company following the initial three year term
of the Employment Agreement. In addition, if Mr. Friedman’s employment with the
Company is terminated without Cause or he terminates his employment for Good
Reason, then he is entitled to receive, in addition to any other amounts
provided for as a result of such termination, an amount equal to the incremental
retirement benefit for each year (or portion thereof he remains employed after
the initial three year term). The retirement benefit shall be paid to Mr.
Friedman in equal monthly installments over a five year period beginning on the
first day of the month following his termination. In the event of his death
prior to payment in full of the retirement benefit, the remainder shall be paid
to a beneficiary designated by Mr. Friedman, or if no beneficiary is named to
his estate.
Mr.
Friedman may not directly or indirectly (other than with the Company)
participate in the United States in any business competitive with the business
of the Company during the term of employment and for one year following the
later of his termination or his receipt of severance payments. Similarly, during
the term and for a period of two years following termination, Mr. Friedman may
not solicit or otherwise interfere with the Company’s relationship with any
present or former Company employee or customer. Mr. Friedman has also agreed to
keep confidential during the term of employment and thereafter all information
concerning the Company and its business.
The
Company and Mr. Smith are parties to a severance agreement under which he is
entitled to receive severance payment protection in the event of the termination
of his employment under certain circumstances.
If Mr.
Smith’s employment is terminated due to his death or disability, (i) he is
entitled to receive his salary, bonus and other benefits earned and accrued
through the date of termination, (ii) all fully vested and exercisable options
may be exercised by his estate for one year following termination, and (iii) any
stock grants that are subject to forfeiture shall become non-forfeitable and
shall fully vest. In addition, if Mr. Smith should remain disabled for six
months following his termination for disability, he shall also be entitled to
receive for a period of two years following termination, his annual salary at
the time of termination (less any proceeds received by him on account of Social
Security payments or similar benefits and the proceeds of any Company provided
long-term disability insurance) and continuing coverage under all benefit plans
and programs to which he was previously entitled.
If the
Company terminates Mr. Smith for “Cause” or if Mr. Smith terminates his
employment without “Good Reason” (each as defined in the severance agreement),
(i) he shall be entitled to receive his salary, bonus and other benefits earned
and accrued through the date of termination, (ii) all vested and unvested stock
options shall lapse and terminate (except that in the event of termination
without Good Reason he shall have 30 days from the date of termination to
exercise any vested options), and (iii) any stock grants made to him that are
subject to forfeiture shall be immediately forfeited.
If the
Company terminates Mr. Smith’s employment without Cause or Mr. Smith terminates
his employment for Good Reason, (i) he is entitled to receive his salary, bonus
and other benefits earned and accrued through the date of termination, (ii) for
a period of two years following termination he shall be entitled to receive his
annual salary at the time of termination and continuing coverage under all
benefit plans and programs to which he was previously entitled, (iii) all
unvested options shall become vested and immediately exercisable in accordance
with the terms of the options and he shall become vested in any other pension or
deferred compensation plan, and (iv) any stock grants that are subject to
forfeiture shall become non-forfeitable and shall fully vest.
If within
one year following a “Change of Control” (as defined in the severance agreement)
Mr. Smith is terminated by the Company or any successor, or within such one year
period he elects to terminate his employment due to a material reduction in his
duties or a relocation, (i) he will be entitled to receive his salary and other
benefits earned and accrued through the date of termination, (ii) he will be
entitled to receive for two years following termination his annual salary at the
time of termination and continuing coverage under all benefits plans and
programs to which he was previously entitled to the extent eligible under such
plans or programs, (iii) all unvested options will fully vest and (together with
any other vested options then held by Mr. Smith) may be exercised in accordance
with their terms, (iv) he will become vested in any pension or other deferred
compensation other than pension or deferred compensation under a plan intended
to be qualified under Section 401(a) or 403(a) of the Code, (v) all unvested
shares of restricted stock will fully vest and be free from restriction on
transferability (other than restrictions imposed under Federal and state
securities laws), and (vi) any stock grants previously made that are subject to
forfeiture shall become non-forfeitable.
The
severance agreement is intended to comply with the provisions of 409A of the
Internal Revenue Code, to the extent applicable
On
August 24, 2006, the Company entered into a severance agreement with Mr.
Posner. Under the terms of the agreement Mr. Posner is entitled to receive
severance payment protection in the event of the termination of his employment
under certain circumstances. The severance protections provided to
Mr. Posner under this severance agreement replace and modify the severance
provisions contained in his employment agreement with the Company which expired
in March 2006. There are no other agreements in effect between
the Company and Mr. Posner other than the severance agreement.
If
Mr. Posner’s employment is terminated early due to his death or disability,
(i) he is entitled to receive his salary, bonus and other benefits earned
and accrued through the date of termination, (ii) all fully vested and
exercisable options may be exercised by his estate for one year following
termination, (iii) all performance shares granted under any bonus program
will fully vest, and (iv) any stock grants that are subject to forfeiture
will become non-forfeitable and will fully vest. Notwithstanding the foregoing,
if Mr. Posner should remain disabled for six months following his
termination for disability, he will also be entitled to receive for a period of
two years following termination, his annual salary at the time of termination
(less any proceeds received by him on account of Social Security payments or
similar benefits and the proceeds of any Company provided long-term disability
insurance) and continuing coverage under all benefit plans and programs to which
he was previously entitled.
If the
Company terminates Mr. Posner for “Cause” (as defined in the agreement) or
if Mr. Posner terminates his employment without “Good Reason” (as defined
in the agreement), (i) he will be entitled to receive his salary, bonus and
other benefits earned and accrued through the date of termination, (ii) he
will be entitled to retain only those performance shares which shall have vested
as of the date of termination, (iii) all vested and unvested stock options
will lapse and terminate (except that in the event of termination without Good
Reason he shall have 30 days from the date of termination to exercise any
vested options) , (iv) any stock grants made to him that are subject to
forfeiture will be immediately forfeited, and (v) all performance units
shall immediately terminate.
If the
Company terminates Mr. Posner’s employment without “Cause” or
Mr. Posner terminates his employment for “Good Reason”, (i) he is
entitled to receive his salary, bonus and other benefits earned and accrued
through the date of termination, (ii) for a period of two years following
termination he will be entitled to receive his annual salary at the time of
termination and continuing coverage under all benefit plans and programs to
which he was previously entitled, (iii) all unvested options will become
vested and become immediately exercisable in accordance with the terms of the
options and he will become vested in any other pension or deferred compensation
plan, (iv) all performance shares granted under any bonus program will
fully vest, and (v) any stock grants that are subject to forfeiture will
become non-forfeitable and shall fully vest.
On
August 2, 2007, the Company entered into a severance agreement with Stanley
G. Rosenbaum, BioScrip’s Executive Vice President, Chief Financial Officer and
Treasurer. Under the terms of the agreement Mr. Rosenbaum is entitled to
receive severance payment protection in the event of the termination of his
employment under certain circumstances.
If
Mr. Rosenbaum’s employment is terminated due to his death or disability,
(i) he is entitled to receive his salary, bonus and other benefits earned
and accrued through the date of termination, (ii) all fully vested and
exercisable options may be exercised by his estate for one year following
termination, and (iii) any stock grants that are subject to forfeiture
shall become non-forfeitable and shall fully vest. In addition, if
Mr. Rosenbaum should remain disabled for six months following his
termination for disability, he shall also be entitled to receive for a period of
two years following termination, his annual salary at the time of termination
(less any proceeds received by him on account of Social Security payments or
similar benefits and the proceeds of any Company provided long-term disability
insurance) and continuing coverage under all benefit plans and programs to which
he was previously entitled.
If the
Company terminates Mr. Rosenbaum for “Cause” or if Mr. Rosenbaum
terminates his employment without “Good Reason” (each as defined in the
agreement), (i) he shall be entitled to receive his salary, bonus and other
benefits earned and accrued through the date of termination, (ii) all
vested and unvested stock options shall lapse and terminate (except that in the
event of termination without Good Reason he shall have 30 days from the
date of termination to exercise any vested options), and (iii) any stock
grants made to him that are subject to forfeiture shall be immediately
forfeited.
If the
Company terminates Mr. Rosenbaum’s employment without Cause or
Mr. Rosenbaum terminates his employment for Good Reason, (i) he is
entitled to receive his salary, bonus and other benefits earned and accrued
through the date of termination, (ii) for a period of two years following
termination he shall be entitled to receive his annual salary at the time of
termination and continuing coverage under all benefit plans and programs to
which he was previously entitled, (iii) all unvested options shall become
vested and immediately exercisable in accordance with the terms of the options
and he shall become vested in any other pension or deferred compensation plan,
and (iv) any stock grants that are subject to forfeiture shall become
non-forfeitable and shall fully vest.
The
Company entered into amendments to the severance agreements for Messrs. Posner
and Rosenbaum. Each of the severance agreements was amended to
provide that any payments, benefits and vesting to which an executive may be
entitled would be provided without regard to the deductibility of such payments,
benefits and vesting under Section 280G of the Internal Revenue Code (the
“Code”) and without regard to whether such payments would subject the executive
to the federal excise tax levied on certain “excess parachute payments” under
Code Section 4999 (the “Excise Tax”). If any portion of the payments, benefits
and vesting to or for the executive’s benefit constitutes an “excess parachute
payment” within the meaning of Code Section 280G, we would pay to the executive
an additional amount that after reduction for all taxes (including the Excise
Tax) with respect to such gross-up payment equals the Excise Tax on such
payment; provided, that to the extent any gross-up payment would be considered
deferred compensation for purposes of Code Section 409A, the manner and time of
payment and the affected provisions of the severance agreement would be adjusted
to the extent necessary (but only to the extent necessary) to comply with the
requirements of Code Section 409A so that the payment does not give rise to the
interest or additional tax amounts to the executive as described at Code Section
409A(a)(1)(B) or Code Section 409A(b)(4). Each of the severance
agreements was also amended to provide that it, to the extent applicable, comply
with Code Section 409A in accordance with the provisions set forth the severance
agreement, as amended.
In August
2003, Mr. Scott W. Friedman entered into an employment letter agreement with the
Company which provides for his employment until terminated by the Company or
Scott Friedman. In October 2004, the Company and Scott Friedman entered into a
letter agreement amending certain provisions of the 2003 employment letter
agreement. Under the agreement, as amended, in the event Scott
Friedman is terminated by the Company or any successor without cause or he
terminates his employment at any time for good reason, he is entitled to receive
an amount equal to one year of salary and all outstanding unvested options
granted to him and held by him vest and become immediately exercisable and are
otherwise exercisable in accordance with their terms.
In June
2001, Mr. Corvese entered into an employment letter agreement with the Company
which provides for his employment until his employment is terminated. In
September 2003 and December 2004, the Company and Mr. Corvese entered into
amendments to that letter agreement. Under the letter agreement, as
amended, in the event that Mr. Corvese is terminated by the Company or any
successor without cause or he terminates his employment at any time for good
reason, he is entitled to receive an amount equal to one year of
salary.
The
following tables summarize potential change in control and severance payments to
each named executive officer. The columns describe the payments that would apply
in different termination scenarios— a termination of employment as a result of
the named executive officer’s voluntary resignation without good reason, his
termination by us for cause, death, disability, termination of employment
without cause, termination of employment as a result of the named executive
officer’s resignation for good reason or termination of employment as a result
of a change in control. The table assumes that the termination or change in
control occurred on December 31, 2008. For purposes of estimating the value of
amounts of equity compensation to be received in the event of a termination of
employment or change in control, we have assumed a price per share of our common
stock of $2.22, which represents the closing market price of our common stock as
reported on the NASDAQ Global Market on December 31, 2008. All
amounts are expressed in dollars.
|
Benefit
|
|
Voluntary
/ For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause / Good Reason
|
|
Change
in Control
|
Cash
Severance
|
|
-
|
|
-
|
|
1,700,000
|
|
1,700,000
|
|
2,550,000
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
-
|
|
99,900
|
|
99,900
|
|
99,900
|
|
99,900
|
Unexercisable
Options
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
-
|
|
99,900
|
|
99,900
|
|
99,900
|
|
99,900
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Benefit
|
|
|
|
|
|
|
|
|
|
|
DB
Plan
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
DC
Plan
|
|
-
|
|
-
|
|
13,800
|
|
13,800
|
|
20,700
|
Total
|
|
-
|
|
-
|
|
13,800
|
|
1,713,800
|
|
1,720,700
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
-
|
|
-
|
|
38,142
|
|
38,142
|
|
57,213
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
-
|
|
99,900
|
|
1,851,842
|
|
1,851,842
|
|
2,727,813
|
Cash
Severance: Current bonus in the event of voluntary termination, for cause or
upon death; 2 times base salary and current bonus in the event of termination as
a result of disability, without cause, or for good reason; 3 times base salary
and current bonus in the event of termination as a result of a change in
control.
Restricted
Stock: Intrinsic value of accelerated vesting of restricted stock
based on December 31, 2008 closing price of $2.22.
Unexercisable
Options: Intrinsic value of accelerated vesting of stock options which carry a
positive return upon exercise based on December 31, 2008 closing price of
$2.22.
DC Plan:
2 additional years of employer contributions in the event of termination as a
result of disability, without cause, or for good reason; 3 additional years of
employer contributions in the event of termination as a result of a change in
control.
Health
& Welfare: 2 additional years of health and welfare benefits as a result of
disability, without cause, or for good reason; 3 additional years of health and
welfare benefits in the event of termination as a result of a change in
control.
Upon a
change in control, based upon the assumptions set forth herein, an excise tax of
$512,000 would be imposed upon Mr. R. Friedman due to regulations under Code
Section 280g. This $512,000 is not deductible by the Company.
Rosenbaum,
Stanley G.
|
Benefit
|
|
Voluntary
/ For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause / Good Reason
|
|
Change
in Control
|
Cash
Severance
|
|
-
|
|
-
|
|
880,000
|
|
880,000
|
|
880,000
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
-
|
|
136,439
|
|
136,439
|
|
136,439
|
|
136,439
|
Unexercisable
Options
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
-
|
|
136,439
|
|
136,439
|
|
136,439
|
|
136,439
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Benefit
|
|
|
|
|
|
|
|
|
|
|
DB
Plan
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
DC
Plan
|
|
-
|
|
-
|
|
13,800
|
|
13,800
|
|
13,800
|
Total
|
|
-
|
|
-
|
|
13,800
|
|
13,800
|
|
13,800
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
-
|
|
-
|
|
38,142
|
|
38,142
|
|
38,142
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
-
|
|
136,439
|
|
1,068,381
|
|
1,068,381
|
|
1,068,381
|
Cash
Severance: Current bonus in the event of voluntary termination, for cause or
upon death; 2 times base salary and current bonus in the event of termination as
a result of disability, without cause, for good reason, or change in
control.
Restricted
Stock: Intrinsic value of accelerated vesting of restricted stock
based on December 31, 2008 closing price of $2.22.
Unexercisable
Options: Intrinsic value of accelerated vesting of stock options which carry a
positive return upon exercise based on December 31, 2008 closing price of
$2.22.
DC Plan:
2 additional years of employer contributions in the event of termination as a
result of disability, without cause, for good reason, or change in
control.
Health
& Welfare: 2 additional years of health and welfare benefits as a result of
disability, without cause, for good reason, or change in control.
Posner,
Barry A.
|
Benefit
|
|
Voluntary
/ For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause / Good Reason
|
|
Change
in Control
|
Cash
Severance
|
|
-
|
|
-
|
|
780,418
|
|
780,418
|
|
780,418
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
-
|
|
44,955
|
|
44,955
|
|
44,955
|
|
44,955
|
Unexercisable
Options
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
-
|
|
44,955
|
|
44,955
|
|
44,955
|
|
44,955
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Benefit
|
|
|
|
|
|
|
|
|
|
|
DB
Plan
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
DC
Plan
|
|
-
|
|
-
|
|
13,800
|
|
13,800
|
|
13,800
|
Total
|
|
-
|
|
-
|
|
13,800
|
|
13,800
|
|
13,800
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
-
|
|
-
|
|
54,270
|
|
54,270
|
|
54,270
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
-
|
|
44,955
|
|
893,443
|
|
893,443
|
|
893,443
|
Cash
Severance: Current bonus in the event of voluntary termination, for cause or
upon death; 2 times base salary and current bonus in the event of termination as
a result of disability, without cause, for good reason, or change in
control.
Restricted
Stock: Intrinsic value of accelerated vesting of restricted stock
based on December 31, 2008 closing price of $2.22.
Unexercisable
Options: Intrinsic value of accelerated vesting of stock options which carry a
positive return upon exercise based on December 31, 2008 closing price of
$2.22.
DC Plan:
2 additional years of employer contributions in the event of termination as a
result of disability, without cause, for good reason, or change in
control.
Health
& Welfare: 2 additional years of health and welfare benefits as a result of
disability, without cause, for good reason, or change in control.
Corvese,
Russel J.
|
Benefit
|
|
Voluntary
/ For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause / Good Reason
|
|
Change
in Control
|
Cash
Severance
|
|
-
|
|
-
|
|
-
|
|
290,000
|
|
290,000
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
-
|
|
-
|
|
-
|
|
49,950
|
|
49,950
|
Unexercisable
Options
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
-
|
|
-
|
|
-
|
|
49,950
|
|
49,950
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Benefit
|
|
|
|
|
|
|
|
|
|
|
DB
Plan
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
DC
Plan
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Health
and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
-
|
|
-
|
|
-
|
|
339,950
|
|
339,950
|
Cash
Severance: 1 times base salary and current bonus.
Restricted
Stock: Intrinsic value of accelerated vesting of restricted stock
based on December 31, 2008 closing price of $2.22.
Unexercisable
Options: Intrinsic value of accelerated vesting of stock options which carry a
positive return upon exercise based on December 31, 2008 closing price of
$2.22.
Friedman,
Scott W.
|
Benefit
|
|
Voluntary
/ For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause / Good Reason
|
|
Change
in Control
|
Cash
Severance
|
|
-
|
|
-
|
|
-
|
|
290,000
|
|
290,000
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Unexercisable
Options
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Benefit
|
|
|
|
|
|
|
|
|
|
|
DB
Plan
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
DC
Plan
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
-
|
|
-
|
|
-
|
|
290,000
|
|
290,000
|
Cash
Severance: 1 times base salary and current bonus.
Unexercisable
Options: Intrinsic value of accelerated vesting of stock options which carry a
positive return upon exercise based on December 31, 2008 closing price of
$2.22.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of
the Exchange Act requires our directors, officers and beneficial owners of more
than 10% of the Company’s Common Stock to file with the Commission initial
reports of ownership and reports of changes in beneficial ownership of the
Company’s Common Stock and other equity securities. Based solely on our review
of the copies of such reports received by the Company or written representations
from reporting persons, the Company believes that during the fiscal year ended
December 31, 2008, the Company’s officers, directors and holders of more
than 10% of its common stock complied with all Section 16(a) filing
requirements.
STOCKHOLDER
PROPOSALS
The
Company’s By-Laws require timely advance written notice of stockholder
nominations of director candidates and of any other proposals to be presented at
an annual meeting of stockholders. Notice will be considered timely
for the Annual Meeting of Stockholders to be held in 2010 if it is received not
later than the close of business on February 27, 2010, and not earlier than the
close of business on January 28, 2010. In addition, the
By-Laws require that such written notice set forth: (a) for each person whom the
stockholder proposes to nominate for election, all information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors, or as otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act, including, without limitation, such person’s written
consent to be named in the proxy statement as a nominee and to serve as a
director if elected; and (b) as to such stockholder: (i) the name and address of
such stockholder as they appear on the Company’s books and records; (ii) the
class and number of shares of the Company’s capital stock that are beneficially
owned by such stockholder; and (iii) a description of all agreements,
arrangements or understandings between such stockholder and each such person
that such stockholder proposes to nominate as a director and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by such stockholder.
In the
case of other proposals by stockholders at an annual meeting, the By-Laws
require that such written notice set forth as to each matter such stockholder
proposes to bring before the annual meeting: (a) a brief description of the
business desired to be brought before the annual meeting; (b) the reasons for
conducting such business at the annual meeting; (c) the name and address, as
they appear on the Company’s books, of such stockholder; (d) the class and
number of shares of the Company’s stock that is beneficially owned by such
stockholder; and (e) any material interest of such stockholder in such
business.
Stockholder
proposals intended to be presented at the 2010 annual meeting must be received
by the Company at its principal executive offices at 100 Clearbrook Road,
Elmsford, NY 10523, Attention: Secretary, no later than November 27, 2009, in
order to be eligible for inclusion in the Company's proxy statement and proxy
card relating to that meeting. Upon receipt of any proposal, the Company will
determine whether to include such proposal in accordance with regulations
governing the solicitation of proxies.
MISCELLANEOUS
A copy of
the Company’s 2008 Annual Report on Form 10-K, including the financial
statements and financial statement schedules, as filed with the Commission, is
enclosed but is not to be regarded as proxy solicitation materials.
HOUSEHOLDING
If you
and other residents with the same last name at your mailing address own shares
of Common Stock in street name, your broker or bank may have sent you a notice
that your household will receive only one annual report and proxy statement for
each company in which you hold stock through that broker or bank. This practice
of sending only one copy of proxy materials is known as "householding." If you
received a householding communication, your broker will send one copy of this
Proxy Statement and one copy of the Company’s 2008 Annual Report to Stockholders
to your address unless contrary instructions were given by any stockholder at
that address. If you received more than one copy of the proxy materials this
year and you wish to reduce the number of reports you receive in the future and
save the Company the cost of printing and mailing these reports, your broker
will discontinue the mailing of reports on the accounts you select if you mark
the designated box on your proxy card, or follow the instructions provided when
you vote over the Internet.
You may
revoke your consent to householding at any time by calling 800-542-1061. The
revocation of your consent to householding will be effective 30 days
following its receipt. In any event, if your household received a single set of
proxy materials for this year, but you would prefer to receive your own copy, we
will send a copy to you if you address your written request to BioScrip, Inc.,
Investor Relations, 100 Clearbrook Road, Elmsford, NY 10523 or contact BioScrip,
Inc. Investor Relations at 914-460-1600.
2009
ANNUAL MEETING OF STOCKHOLDERS OF
BIOSCRIP,
INC.
To
be held on
April
28, 2009
NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIAL
:
The
Proxy Statement, Proxy Card and 2008 Annual Report on Form 10-K
are
available at www.bioscrip.com
Please
sign, date and mail
your
proxy card in the
envelope
provided as soon
as
possible
†
Please detach
along perforated line and mail in the envelope provided
†
20830000000000000000
4
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042809
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
ý
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PROPOSAL
1. Election of Directors
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PROPOSAL
2. Proposal to ratify the appointment of
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FOR
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AGAINST
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ABSTAIN
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Ernst
& Young LLP as the Company’s independent
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[ ]
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[ ]
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[ ]
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[
]
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FOR
ALL NOMINEES
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¡
Charlotte W.
Collins
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auditors
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¡
Louis T.
DiFazio
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[
]
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WITHHOLD
AUTHORITY
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¡
Richard H.
Friedman
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THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF
NO
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FOR
ALL NOMINEES
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¡
Myron Z.
Holubiak
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CONTRARY
DIRECTION IS INDICATED WILL BE VOTED FOR PROPOSALS 1 AND 2
ABOVE
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¡
David
R. Hubers
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AND
IN THE DISCRETION OF THE PROXIES UPON SUCH OTHER MATTERS WHICH
MAY
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[
]
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FOR
ALL EXCEPT
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¡
Richard L.
Robbins
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PROPERLY
COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
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(See
instructions below)
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¡
Stuart A.
Samuels
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POSTPONEMENTS
THEREOF.
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¡
Steven K.
Schelhammer
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INSTRUCTIONS:
To withhold authority for any
individual
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nominee(s),
mark “FOR ALL EXCEPT” and fill in the circle
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Next
to each nominee you wish to withhold as shown here:
l
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To
change the name on your account, please check the box at
the
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Right
and indicate your new address in the address space
above. [ ]
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Please
note that changes to the registered name(s) on the account
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May
not be submitted via this method
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Signature
of Stockholder:
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Date:
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Signature
of Stockholder:
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Date:
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Please
sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership
name by authorized
person.
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PROXY
CARD
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
BIOSCRIP,
INC.
2009
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD APRIL 28, 2009
The undersigned stockholder of
BIOSCRIP, INC., a Delaware corporation (the “Company”), hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement
dated March 27, 2009, and hereby revokes all prior proxies and appoints Richard
H. Friedman and Barry A. Posner, or any one of them, proxies and
attorneys-in-fact, with full powers to each of substitution and resubstitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 2009 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) to
be held on April 28, 2009, at 9:00 a.m., local time, at the Sheraton Tarrytown
Hotel, 600 White Plains Road, Tarrytown, New York 10591, and at any adjournments
or postponements thereof, and to vote all shares of Common Stock of the Company
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse side and upon such other
matters as may properly come before the Annual Meeting or any adjournments or
postponements thereof, hereby revoking any proxies heretofore
given.
THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED AS DIRECTED OR IF NO CONTRARY DIRECTION IS INDICATED, WILL BE
VOTED "FOR" PROPOSALS 1 AND 2 ON THE REVERSE SIDE HEREOF IN FAVOR OF
MANAGEMENT’S RECOMMENDATIONS AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING AS SAID PROXIES DEEM ADVISABLE AND IN THE BEST INTEREST OF
THE COMPANY.
(IMPORTANT
– TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
2009
ANNUAL MEETING OF STOCKHOLDERS OF
BIOSCRIP,
INC.
To
be held on
April
28, 2009
PROXY
VOTING
INSTRUCTIONS
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INTERNET
-
Access “
www.voteproxy.com
” and follow the on-screen
instructions. Have your proxy card available when you access the web page,
and use the Company Number and Account Number shown on your proxy
card
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TELEPHONE
-
Call
toll-free
1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from
foreign countries from any touch-tone telephone and follow the
instructions. Have your proxy card available when you call and use the
Company Number and Account Number shown on your proxy card.
Vote
online/phone until 11:59 PM EST the day before the meeting
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COMPANY NUMBER
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ACCOUNT
NUMBER
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MAIL
-
Sign, date and mail your proxy
card in the envelope provided as soon as possible.
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IN PERSON
-
You may vote your shares in
person by attending the Annual Meeting.
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NOTICE OF INTERNET AVAILABILITY OF PROXY
MATERIAL
:
The
Proxy Statement, Proxy Card and 2008 Annual Report on Form 10-K are
available at www.bioscrip.com
|
†
Please detach
along perforated line and mail in the envelope provided
†
20830000000000000000
4
|
042809
|
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
ý
|
PROPOSAL
1. Election of Directors
|
PROPOSAL
2. Proposal to ratify the appointment of
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
|
Ernst
& Young LLP as the Company’s independent
|
[ ]
|
[ ]
|
[ ]
|
[
]
|
FOR
ALL NOMINEES
|
¡
Charlotte W.
Collins
|
auditors
|
|
|
|
|
|
|
¡
Louis T.
DiFazio
|
|
|
|
|
|
[
]
|
WITHHOLD
AUTHORITY
|
¡
Richard H.
Friedman
|
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF
NO
|
|
FOR
ALL NOMINEES
|
¡
Myron Z.
Holubiak
|
CONTRARY
DIRECTION IS INDICATED WILL BE VOTED FOR PROPOSALS 1 AND 2
ABOVE
|
|
|
¡
David
R. Hubers
|
AND
IN THE DISCRETION OF THE PROXIES UPON SUCH OTHER MATTERS WHICH
MAY
|
[
]
|
FOR
ALL EXCEPT
|
¡
Richard L.
Robbins
|
PROPERLY
COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
|
|
(See
instructions below)
|
¡
Stuart A.
Samuels
|
POSTPONEMENTS
THEREOF.
|
|
|
¡
Steven K.
Schelhammer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTIONS:
To withhold authority for any
individual
|
|
|
|
|
|
nominee(s),
mark “FOR ALL EXCEPT” and fill in the circle
|
|
|
|
|
|
Next
to each nominee you wish to withhold as shown here:
l
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To
change the name on your account, please check the box at
the
|
|
|
|
|
|
Right
and indicate your new address in the address space
above. [ ]
|
|
|
|
|
|
Please
note that changes to the registered name(s) on the account
|
|
|
|
|
|
May
not be submitted via this method
|
|
|
|
|
|
Signature
of Stockholder:
|
|
Date:
|
|
|
Signature
of Stockholder:
|
|
Date:
|
|
Please
sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership
name by authorized
person.
|