Table of Contents
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
Filed by a Party other than the Registrant o
Check the appropriate box:
| o | Preliminary Proxy Statement | |
| o | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2) | |
| þ | Definitive Proxy Statement | |
| o | Definitive Additional Materials | |
| o | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
American Shared Hospital Services
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required | |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
| (1) | Title of each class of securities to which transaction applies: | |
| (2) | Aggregate number of securities to which transactions applies: | |
| (3) | Per unit price or other underlying value of transaction computed to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
| (4) | Proposed maximum aggregate value of transaction: | |
| (5) | Total fee paid: | |
| o | Fee paid previously with preliminary materials: | |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
| (1) | Amount previously paid: | |
| (2) | Form, Schedule or Registration Statement no.: | |
| (3) | Filing Party: | |
| (4) | Date Filed: | |
AMERICAN SHARED HOSPITAL
SERVICES
Four Embarcadero Center, Suite 3700
San Francisco, California 94111
TABLE OF CONTENTS
Table of Contents
To be held on June 20,
2008
TO THE SHAREHOLDERS OF
AMERICAN SHARED HOSPITAL SERVICES:
NOTICE IS HEREBY GIVEN that, pursuant to a call of the Board of
Directors, the 2008 Annual Meeting of Shareholders (the
“Meeting”) of American Shared Hospital Services, a
California corporation (the “Company”), will be held
at the Conference Center, Four Embarcadero Center,
San Francisco, California 94111 at 9:00 am (Pacific time),
on Friday, June 20, 2008 to consider and to act upon the
following matters, all as set forth in the Proxy Statement.
1. ELECTION OF DIRECTORS. To elect the
following four nominees to the Board of Directors to serve until
the next Annual Meeting of Shareholders and until their
successors are elected and have qualified:
|
Ernest A. Bates, M.D.
|
John F. Ruffle | |||
|
Olin C. Robison
|
Stanley S. Trotman, Jr. |
2. RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM. To ratify the appointment of
Moss Adams LLP as the Company’s Independent Registered
Public Accounting Firm for the year ending December 31,
2008.
3. OTHER BUSINESS. To transact such other
business and to consider and take action upon any and all
matters that may properly come before the Annual Meeting and any
and all adjournments thereof.
The Board of Directors knows of no matters, other than those set
forth in paragraphs (1) and (2) above, that will be
presented for consideration at the Meeting.
The Board of Directors has fixed the close of business on
May 8, 2008 as the Record Date for the determination of
shareholders entitled to vote at the Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON,
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED AS PROMPTLY AS POSSIBLE. THE PROXY IS REVOCABLE AND
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING. IN ORDER TO FACILITATE THE PROVISION OF ADEQUATE
ACCOMMODATIONS, PLEASE INDICATE ON THE PROXY WHETHER YOU PLAN TO
ATTEND THE MEETING IN PERSON.
By Order of the Board of Directors
Willie R. Barnes
Corporate Secretary
San Francisco, California
Dated: April 29, 2008
Table of Contents
AMERICAN SHARED HOSPITAL
SERVICES
Four Embarcadero Center, Suite 3700
San Francisco, California 94111
2008 ANNUAL MEETING OF
SHAREHOLDERS
June 20, 2008
INTRODUCTION
This Proxy Statement is being furnished to shareholders of
American Shared Hospital Services, a California corporation (the
“Company”), in connection with the solicitation of
proxies by the Company’s Board of Directors for use at the
2008 Annual Meeting of Shareholders scheduled to be held at the
Conference Center, Four Embarcadero Center, San Francisco,
California 94111 at 9:00 am (Pacific time) on Friday,
June 20, 2008 and at any adjournment or adjournments
thereof (the “Meeting”). It is anticipated that this
Proxy Statement and the Proxy will first be sent to shareholders
on or about May 15, 2008.
The matters to be considered and voted upon at the Meeting will
be:
1. To elect four persons to the Board of Directors to serve
until the next Annual Meeting of Shareholders and until their
successors are elected and have qualified.
2. To ratify the appointment of Moss Adams LLP as the
Company’s Independent Registered Public Accounting Firm for
the year ending December 31, 2008.
3. To transact such other business as may properly be
brought before the Meeting and any and all adjournments thereof.
Only shareholders of record at the close of business on
May 8, 2008 (the “Record Date”) are entitled to
notice of and to vote at the Meeting.
Revocability
of Proxies
A proxy for use at the Meeting is enclosed. Any shareholder who
executes and delivers such proxy may revoke it at any time prior
to its use by filing with the Secretary of the Company either
written instructions revoking such proxy or a duly executed
proxy bearing a later date. Written notice of the death of the
person executing a proxy, before the vote is counted, is
tantamount to revocation of such proxy. A proxy may also be
revoked by attending the Meeting and voting in person.
Solicitation
of Proxies
This proxy solicitation is being made by the Board of Directors
of the Company. The expense of the solicitation will be paid by
the Company. To the extent necessary to assure sufficient
representation at the Meeting, proxies may be solicited by any
appropriate means by directors, officers, regular employees of
the Company and the stock transfer agent for the Common Shares,
who will not receive any additional compensation therefor. The
Company will request that banks, brokers and other fiduciaries
solicit their customers who own beneficially the Common Shares
listed of record in names of nominees and, although there is no
formal arrangement to do so, the Company will reimburse such
persons the reasonable expenses of such solicitation. In
addition, the Company may pay for and utilize the services of
individuals or companies not regularly employed by the Company
in connection with the solicitation of proxies, if the Board of
Directors of the Company determines that this is advisable.
Outstanding
Securities
The Board of Directors has fixed May 8, 2008 as the Record
Date for the determination of shareholders entitled to notice
of, and to vote at, the Meeting. At the close of business on the
Record Date, there were estimated to be outstanding and entitled
to vote 5,026,587 Common Shares. The Common Shares are the only
class of securities entitled to vote at the Meeting.
Table of Contents
Vote
Required and Voting Procedures
Each holder of Common Shares will be entitled to one vote, in
person or by proxy, for each share standing in its name on the
books of the Company as of the Record Date for the Meeting on
each of the matters duly presented for vote at the Meeting,
except as indicated below in connection with the election of
directors.
In connection with the election of directors, shares are
permitted to be voted cumulatively, if (i) a shareholder
present at the Meeting has given notice at the Meeting, prior to
the voting, of such shareholder’s intention to vote its
shares cumulatively and (ii) the names of the candidates
for whom such shareholder desires to cumulate votes have been
placed in nomination prior to the voting. If a shareholder has
given such notice, all shareholders may cumulate their votes for
candidates in nomination. Cumulative voting allows a shareholder
to give one nominee as many votes as is equal to the number of
directors to be elected, multiplied by the number of shares
owned by such shareholder or to distribute votes on the same
principle between two or more nominees. Discretionary authority
to cumulate votes is hereby solicited by the Board of Directors.
In connection with the solicitation by the Board of Directors of
proxies for use at the Meeting, the Board of Directors has
designated Ernest A. Bates, M.D. and Craig K. Tagawa as
proxies. Common Shares represented by properly executed proxies
will be voted at the Meeting in accordance with the instructions
specified thereon. If no instructions are specified, the Common
Shares represented by any properly executed proxy will be voted
FOR the (1) election of the four nominees for the Board of
Directors named herein and (2) ratification of the
appointment of the Company’s Independent Registered Public
Accounting Firm.
The Board of Directors is not aware of any matters that will
come before the Meeting other than as described above. However,
if such matters are presented, the named proxies will, in the
absence of instructions to the contrary, vote such proxies in
accordance with the judgment of such named proxies with respect
to any such other matter properly coming before the Meeting.
All outstanding shares of the Company’s Common Stock
represented by properly executed and unrevoked proxies received
in time for the Meeting will be voted. A shareholder may, with
respect to the election of directors, (i) vote for the
election of all four nominees named herein as directors,
(ii) withhold authority to vote for all such director
nominees or (iii) vote for the election of all such
director nominees other than any nominee(s) with respect to whom
the shareholder withholds authority to vote by so indicating in
the appropriate space on the proxy. Withholding authority to
vote for a director nominee will not prevent such director
nominee from being elected. A shareholder may, with respect to
the proposal to ratify the appointment of the Company’s
Independent Registered Public Accounting Firm, (i) vote for
the ratification, (ii) vote against the ratification, or
(iii) abstain.
A proxy submitted by a shareholder may indicate that all or a
portion of the shares represented by such proxy are not being
voted by such shareholder with respect to a particular matter.
This could occur, for example, when a broker is not permitted to
vote stock held in street name on certain matters in the absence
of instructions from the beneficial owner of the stock. The
shares subject to any such proxy which are not being voted with
respect to a particular matter (the “non-voted
shares”) will be considered shares not present and entitled
to vote on such matter, although such shares may be considered
present and entitled to vote for other purposes and will count
for purposes of determining the presence of a quorum.
A majority of the Common Shares outstanding on the Record Date
must be represented in person or by proxy at the Annual Meeting
in order to constitute a quorum for the transaction of business.
In the election of directors, the four candidates receiving the
highest number of votes will be elected directors of the
Company. The proposal to ratify the appointment of the
Company’s Independent Registered Public Accounting Firm
requires that a majority of those voting in person or by proxy
to vote FOR this proposal, in order for this proposal to be
approved.
The Board of Directors has appointed Geraldine Zarbo of American
Stock Transfer & Trust Company, the registrar and
transfer agent for the Common Shares, or her designee, as the
Inspector of Elections for the Annual Meeting. The Inspector of
Elections will determine the number of Common Shares represented
in person or by proxy at the Annual Meeting, whether a quorum
exists, the authenticity, validity and effect of proxies and
will receive and count the votes. The election of directors will
not be by ballot unless a shareholder demands election by ballot
at the Annual Meeting before the voting begins.
2
Table of Contents
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
Board of
Directors
The Company’s Bylaws provide that there shall be no fewer
than five nor more than nine directors and that the exact number
shall be fixed from time to time by a Resolution of the Board of
Directors. The number of directors currently is fixed at five.
There is currently one vacancy on the Board of Directors,
following the resignation of Mr. Ernest R. Bates as a
director in February 2007 to accept a position as Vice President
of Sales and Business Development with the Company. The Board of
Directors is conducting a search for a qualified candidate to
fill such vacancy and intends to exercise its authority under
the bylaws to fill the vacancy when a candidate is found and
agrees to serve.
The Board of Directors is proposing the persons named below for
election to the Board of Directors. Each of the persons
identified below will be nominated for election to serve until
the next Annual Meeting of Shareholders and until their
successors shall be elected and qualified. Votes will be cast
pursuant to the enclosed proxy in such a way as to effect the
election of each of the persons named below or as many of them
as possible under applicable voting rules. If a nominee shall be
unable or unwilling to accept nomination for election as a
director, it is intended that the proxy holders will vote for
the election of such substitute nominee, if any, as shall be
designated by the Board of Directors. Each of the nominees named
below has notified the Board of Directors that, if elected, he
is willing to serve as a director.
Set forth below is certain information regarding each of the
nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
ELECTION OF THE NOMINEES NAMED BELOW. PROPERLY EXECUTED PROXIES
RETURNED TO THE COMPANY WILL BE VOTED “FOR” THE
NOMINEES NAMED BELOW UNLESS OTHERWISE INSTRUCTED.
Nominees
ERNEST A. BATES, M.D., founder of the Company, has
served as Chairman of the Board of Directors and Chief Executive
Officer since the incorporation of the Company. He is Emeritus
Vice Chairman of the Board of Trustees of The Johns Hopkins
University, a member of the Board of Trustees at the University
of Rochester, a member of the Board of Overseers of the
University of California at San Francisco School of
Nursing, a member of the Board of Directors of Copia and the
Capital Campaign Chairman and a Board Member of the Museum of
African Diaspora. Dr. Bates is also a member of the State
of California Commission for Jobs and Economic Growth, a member
of the Board of Directors of Salzburg Seminar, a board member of
the Center for Fastercures-Milken Institute and a member of the
Brookings Institution. Dr. Bates is a graduate of The Johns
Hopkins University and the University of Rochester School of
Medicine. Dr. Bates is 71 years old. Dr. Bates is
the father of former Board Member and current Company Vice
President of Sales and Business Development, Ernest R. Bates.
OLIN C. ROBISON has been a director of the Company since
2003. He is currently President Emeritus of Middlebury College.
Mr. Robison was President and Chief Executive Officer of
the Salzburg Seminar from 1991 to 2005. He was President of
Middlebury College from 1975 to 1990. He is a Director of The
Investment Company of America, American Mutual Fund and AMCAP
(all of the American Funds Group) and has served on the Council
(Board) of the Royal Institute of International Affairs in
London. He received his undergraduate degree from Baylor
University and holds the Doctor of Philosophy degree from Oxford
University. Mr. Robison is 71 years old.
JOHN F. RUFFLE has been a director of the Company since
1995. He retired in 1993 as Vice-Chairman of the Board and a
Director of J.P. Morgan & Co. Incorporated and
Morgan Guaranty Trust Co. of New York. He is a member of
the Board of Trustees of certain mutual funds in the J.P Morgan
family of mutual funds and certain investment funds managed by
J.P Morgan Investment Management, Inc. and a Trustee Emeritus of
The Johns Hopkins University. He is a graduate of The Johns
Hopkins University, with an MBA in finance from Rutgers
University, and is a Certified Public Accountant.
Mr. Ruffle is 71 years old.
3
Table of Contents
STANLEY S. TROTMAN, Jr., has been a director of the
Company since 1996. He retired in 2001 as a Managing Director
with the Health Care Group of UBS Securities, and formerly with
Paine Webber Incorporated, which had acquired PaineWebber, an
investment banking firm in 2000. Mr. Trotman had been with
PaineWebber Incorporated since 1995 following the consolidation
of Kidder, Peabody, also an investment banking firm, with
PaineWebber. He had previously co-directed Kidder,
Peabody’s Health Care Group since April 1990. Formerly he
had been head of the Health Care Group at Drexel Burnham
Lambert, Inc. where he had been employed for approximately
22 years. He is also a Director of Web MD Health Corp. He
received his undergraduate degree from Yale University in 1965
and holds an MBA from Columbia Business School in 1967.
Mr. Trotman is 64 years old.
Meetings
of the Board of Directors
The Board of Directors of the Company held four regular meetings
and two special meetings during 2007. All directors attended at
least 75% of the aggregate number of meetings of both the Board
of Directors and of the Committees of the Board on which such
director served during the year.
Shareholders may communicate with the Board by writing to: Four
Embarcadero Center, Suite 3700; San Francisco, CA
94111-4107,
Attention: Ernest A. Bates. We encourage directors to attend our
annual meeting and all directors attended the 2008 Annual
Meeting in person. All shareholder communications to directors
are forwarded to them.
Committees
of the Board of Directors
The Company has standing Compensation, Nominating and Corporate
Governance and Audit Committees, each of which is described
below. The Company is in compliance with The American Stock
Exchange (“AMEX”) enhanced board and board committee
independence requirements that became fully applicable to the
Company effective July 31, 2005. Thus, a majority of our
directors (Messrs. Robison, Ruffle and Trotman) are
independent under the AMEX rules and
Rule 10A-3
under the Securities Exchange Act and each of the Committees
described above is comprised of these three independent
directors. Each of the Audit, Compensation and Nominating and
Corporate Governance Committees has adopted a formal written
charter. These, as well as our Code of Professional Conduct and
Ethics, are available on our website at www.ashs.com. You
may also request a copy of these documents free of charge by
writing our Corporate Secretary. We intend to post on our
website any amendments to our Code of Professional Conduct and
Ethics, as well as any waivers for directors or executive
officers (including our chief accounting officer and controller
and anyone else performing similar functions) within five
business days after the date of any amendment or waiver. The
information on our website is not part of this proxy statement.
The Company’s independent directors meet at least annually
without management and the non-independent directors, as
required by the AMEX rules.
The Compensation Committee’s functions are to
(i) establish compensation arrangements and incentive goals
for executive officers, (ii) administer compensation plans,
(iii) evaluate the performance of executive officers and
award incentive compensation, (iv) adjust compensation
arrangements as appropriate based upon performance, and
(v) review and monitor management development and
succession plans and activities. The Compensation Committee met
twice during 2007. The Compensation Committee consists of
Mr. Robison, Mr. Ruffle, and Mr. Trotman.
Mr. Robison is Chair of the Compensation Committee.
The Compensation Committee is authorized to delegate its
authority to a subcommittee when appropriate. It is authorized
to hire independent compensation consultants and other
professionals to assist in the design, formulation, analysis and
implementation of compensation programs for the Company’s
executive officers and other key employees. In determining or
recommending the amount or form of executive officer
compensation, the Compensation Committee also takes into
consideration information received from the Company’s Chief
Executive Officer. In doing so, however, the Compensation
Committee customarily considers the comparative relationship of
the recommended compensation to the compensation paid by other
similarly situated companies, individual performance, tenure,
internal comparability and the achievement of certain other
operational and qualitative goals identified in the
Company’s strategic plan.
The purpose of the Nominating and Corporate Governance Committee
is to recommend candidates for election to the Board of
Directors. The Company adopted a Nominating and Corporate
Governance Committee
4
Table of Contents
Charter in 2006 which is available on our website. The
Nominating and Corporate Governance Committee did not meet
during 2007. In 2008, the Nominating and Corporate Governance
Committee by unanimous written consent nominated Dr. Bates,
Mr. Robison, Mr. Ruffle and Mr. Trotman for
election to the Board. Mr. Robison, Mr. Ruffle and
Mr. Trotman serve on the Nominating and Corporate
Governance Committee. Mr. Trotman is Chair of the
Nominating and Corporate Governance Committee.
The purpose of the Audit Committee is to review the financial
reporting and internal controls of the Company, to appoint the
independent auditors, and to review the reports of such
auditors. The Audit Committee consists of Mr. Robison,
Mr. Ruffle, and Mr. Trotman. Mr. Ruffle is Chair
of the Audit Committee. During the year 2007 the Audit Committee
held three regular meetings and five telephonic meetings. For
further information concerning the Audit Committee, refer to the
“Audit Committee Report.” Mr. Ruffle is a
“financial expert” and meets the applicable
independence requirements of AMEX and
Rule 10-A-3
under the Securities Exchange Act.
Identifying
and Evaluating Director Nominees
The Nominating and Corporate Governance Committee uses various
methods to identify director nominees. The Nominating and
Corporate Governance Committee assesses the appropriate size and
composition of the Board and the particular needs of the Board
based on whether any vacancies are expected due to retirement or
otherwise. Candidates may come to the attention of the
Nominating and Corporate Governance Committee through current
board members, shareholders, or other sources. All candidates
are evaluated based on a review of the individual’s
qualifications, skills, independence and expertise.
The Nominating and Corporate Governance Committee will consider
director candidates submitted by shareholders to: Four
Embarcadero Center, Suite 3700, San Francisco, CA
94111-4107,
Attention: Nominating and Corporate Governance Committee. Such
recommendations should be accompanied by (i) evidence of
the shareholder’s stock ownership over the last year,
(ii) a statement that the shareholder is not a competitor
of the Company, (iii) a resume and contact information for
the director candidate, as well as a description of the
candidate’s qualifications and (iv) a statement
whether the candidate has expressed interest in serving as a
director. The Nominating and Corporate Governance Committee
follows the same process and uses the same criteria for
evaluating candidates proposed by shareholders as it does for
candidates proposed by other parties. The Nominating and
Corporate Governance Committee will consider such candidacy and
will advise the recommending shareholder of its final decision.
A shareholder who wishes to nominate a person for director must
provide the nomination in writing to the Secretary at the
Company’s principal offices pursuant to the notice
provisions in the By-laws. Such notice must be received not less
than 60 nor more than 90 days prior to the Annual Meeting
or, if less than 70 days’ notice of the date of such
meeting has been given, then within 10 business days following
the first public disclosure of the meeting date or the mailing
of the Company’s notice. Any such notice must contain
information regarding the nominee and the proponent. Details
concerning the nature of such information are available without
charge from the Company.
Director
Compensation
The following table sets forth certain information regarding the
compensation earned by or awarded to each non-employee director
during the 2007 Fiscal Year who served on our Board of Directors
in the 2007 Fiscal Year.
|
Fees Earned or |
||||||||||||||||||||
|
Paid in Cash |
Stock Awards |
Option Awards |
All Other |
|||||||||||||||||
|
Name |
($)(1) |
($)(2)(3) |
($)(4)(5) |
Compensation ($) |
Total ($) |
|||||||||||||||
|
(a)
|
(b) | (c) | (d) | (e) | (f) | |||||||||||||||
|
Olin C. Robison
|
20,000 | 3,055 | 4,338 | 0 | 27,393 | |||||||||||||||
|
John F. Ruffle
|
20,000 | 3,055 | 4,338 | 0 | 27,393 | |||||||||||||||
|
Stanley S. Trotman
|
20,000 | 3,055 | 4,338 | 0 | 27,393 | |||||||||||||||
| (1) | Consists of the annual retainer fees for service as members of the Company’s board of directors. | |
| (2) | The amounts in column (c) reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123(R) of stock awards granted to each non-employee director and thus include amounts from awards granted in and prior to the 2007 year. Assumptions |
5
Table of Contents
| used in the calculation of this amount are included in footnote 9 to the Company’s audited financial statements for the fiscal year ended December 31, 2007 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008. The grant date fair value of each 500 share restricted stock unit award automatically granted during the 2007 fiscal year under the Company’s 2006 Stock Incentive Plan, computed in accordance with FAS 123(R), was $3,025. For further information concerning the restricted stock unit awards granted under the 2006 Stock Incentive Plan, see the section below entitled “2006 Stock Incentive Plan.” | ||
| (3) | As of December 31, 2007, the following non-employee directors each held stock awards granted during 2007 covering 500 shares of the Company’s Common Stock: Mr. Robison, Mr. Ruffle, Mr. Trotman. | |
| (4) | The amounts in column (d) reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123(R) of stock options granted to each non-employee director and thus include amounts from awards granted in and prior to the 2007 year. Assumptions used in the calculation of this amount are included in footnote 9 to the Company’s audited financial statements for the fiscal year ended December 31, 2007 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008. The grant date fair value of each 2,000 share annual stock option award granted during the 2007 fiscal year at an exercise price per share of $6.14 under the Company’s 2006 Stock Incentive Plan, computed in accordance with FAS 123(R), was $3,112. For further information concerning the stock option awards granted under the 2006 Stock Incentive Plan, see the section below entitled “2006 Stock Incentive Plan.” | |
| (5) | As of December 31, 2007 the following non-employee directors held options to purchase the following number of shares of the Company’s common stock: Mr. Robison, 25,000 shares; Mr. Ruffle, 13,000 shares; and Mr. Trotman, 13,000 shares. The options were granted under the Company’s 2006 Stock Incentive Plan. For further information concerning the grant of options to non-employee directors under such plan, see the section below entitled “2006 Stock Incentive Plan”. |
Directors
Annual Retainer Fees
In 2007, non-employee directors were paid an annual retainer of
$20,000, payable quarterly. Non-employee directors also received
reimbursement of expenses incurred in attending meetings. No
payment is made for attendance at meetings by any director who
is a full time employee of the Company.
2006
Stock Incentive Plan.
Under the 2006 Stock Incentive Plan (the “2006 Plan”),
each individual who first becomes a non-employee director on or
after the date of the 2006 Annual Meeting will, at the time of
his or her election to the board, receive an option grant to
purchase a specified number of shares of our common stock and a
restricted stock unit award covering an additional number of
shares of our common stock, provided that such individual has
not previously been in the employ of the Company or any of its
parents or subsidiaries. The specific number of shares subject
to the initial award will be determined by the Compensation
Committee of our Board of Directors, but will not exceed
10,000 shares for the option component or more than
3,000 shares for the restricted stock unit component. In
addition, on the date of each Annual Shareholders Meeting, each
individual who will continue to serve as a non-employee director
will automatically be granted an option to purchase a specified
number of shares of our common stock and a restricted stock unit
award covering an additional number of shares of our common
stock, provided such individual has served as a non-employee
director for at least six (6) months. The specific number
of shares subject to the initial award will be determined by the
Compensation Committee of our Board of Directors, but will not
exceed 3,000 shares for the option component or more than
750 shares for the restricted stock unit component. There
will be no limit on the number of such annual awards any one
eligible non-employee director may receive over his or her
period of continued service on the Board of Directors, and
non-employee directors who have previously been in the
Company’s employ will be eligible to receive one or more
such annual awards over their period of service on the Board of
Directors. Each initial stock option and restricted stock unit
award will vest in 4 equal annual installments upon the
individual’s completion of each year of service. Each
annual stock option and restricted stock award will vest in one
installment upon the individual’s completion of one year of
board service.
6
Table of Contents
At the 2007 Annual Meeting non-employee Board members,
Mr. Robison, Mr. Ruffle and Mr. Trotman each
received an option to purchase 2,000 shares of the
Company’s common stock at an exercise price of $6.05 per
share, the fair market value of the Company’s common stock
on that date, and a grant of 500 restricted stock units pursuant
to the terms of the 2006 Plan.
At the December 2007 Board of Directors meeting, non-employee
Board members, Mr. Robison, Mr. Ruffle and
Mr. Trotman each received discretionary option awards to
purchase 5,000 shares of the Company’s common stock at
an exercise price of $2.76 per share, the fair market value of
the Company’s common stock on that date. These
discretionary awards will vest in 5 equal annual installments
upon the anniversary of the award date, contingent upon the
director’s continued service to the Company.
At the 2008 Annual Meeting, upon re-election to the Board,
non-employee Board members Mr. Robison, Mr. Ruffle and
Mr. Trotman will each receive an option to purchase
2,000 shares of the Company’s common stock at an
exercise price per share equal to the fair market value of the
Company’s common stock on the date of the Annual Meeting,
and grant of 500 restricted stock units pursuant to the terms of
the 2006 Plan.
CERTAIN
ADDITIONAL INFORMATION
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of the Company’s Common Shares as of
April 1, 2008, of (i) each person known to the Company
to own beneficially 5% or more of the Common Shares,
(ii) each nominee for director of the Company,
(iii) each executive officer named in the Summary
Compensation Table, and (iv) all directors and executive
officers as a group. Except as otherwise indicated in the
footnotes to the table or for shares of common stock held in
brokerage accounts, which may from time to time, together with
other securities held in those accounts, serve as collateral for
margin loans made from such accounts, none of the shares
reported as beneficially owned are currently pledged as security
for any outstanding loan or indebtedness.
| Common Shares Owned Beneficially | ||||||||
|
Amount and Nature of |
||||||||
|
Name and Address of Beneficial Owner
|
Beneficial Ownership(2) | Percent of Class(3) | ||||||
|
Directors and Named Officers
|
||||||||
|
Ernest A. Bates, M.D.(1)
|
849,370 | 16.9 | % | |||||
|
Chairman of the Board and Chief Executive Officer
|
||||||||
|
Ernest R. Bates(1)(4)
Vice President of Sales and Business Development |
28,429 | * | ||||||
|
(resigned as a director on February 8, 2007)
|
||||||||
|
Olin C. Robison(1)(4)
|
16,600 | * | ||||||
|
John F. Ruffle(1)(4)
|
205,011 | 4.1 | % | |||||
|
Stanley S. Trotman, Jr.(1)(4)
|
147,362 | 2.9 | % | |||||
|
Craig K. Tagawa(1)(4)
|
89,432 | 1.8 | % | |||||
|
Senior Vice President, Chief Operating and Financial Officer
|
||||||||
|
All Current Directors & Executive Officers as a Group
(6 people)(4)
|
1,336,204 | 26.3 | % | |||||
|
5% or More Shareholders
|
||||||||
|
Banque Carnegie Luxembourg S.A.; Carnegie Fund
|
309,204 | 6.2 | % | |||||
|
Management Company S.A.; D Carnegie & Co. AB;
|
||||||||
|
Carnegie Investment Bank AB(5)
|
||||||||
|
Al Frank Asset Management, Inc.(6)
|
298,194 | 5.9 | % | |||||
| * | Less than 1% | |
| (1) | The address of each such individual is c/o American Shared Hospital Services, Four Embarcadero Center, Suite 3700, San Francisco, California 94111. |
7
Table of Contents
| (2) | Each person directly or indirectly has sole voting and investment power with respect to the shares listed under this column as being owned by such person. | |
| (3) | Shares that any person or group of persons is entitled to acquire upon the exercise of options or warrants within 60 days after April 1, 2008, are treated as issued and outstanding for the purpose of computing the percent of the class owned by such person or group of persons but not for the purpose of computing the percent of the class owned by any other person. | |
| (4) | Includes shares underlying options that are currently exercisable or which will become exercisable within 60 days following April 1, 2008: Mr. Bates, 8,800 shares; Mr. Robison, 12,800 shares; Mr. Ruffle, 800 shares; Mr. Trotman, 800 shares; Mr. Tagawa, 22,900 shares; and Directors and Executive Officers as a group, 46,100 shares. | |
| (5) | Based solely on information contained in a Schedule 13G filed on February 14, 2007 by Carnegie Fund Management Company S.A. — Luxembourg; Banque Carnegie Luxembourg S.A. — Luxembourg; D Carnegie & Co. AB — Sweden; and Carnegie Investment Bank AB — Denmark. | |
| (6) | Based solely on information contained in a Schedule 13G filed on February 13, 2008 by Al Frank Asset Management, Inc., 32392 Coast Hwy, Suite 260, Laguna Beach, CA 92651. |
COMPENSATION
OF EXECUTIVE OFFICERS
Compensation
Discussion and Analysis
Introduction. It is our intent in this
Compensation Discussion and Analysis to inform our shareholders
of the policies and objectives underlying the compensation
programs for our three executive officers, Dr. Ernest A.
Bates, Chairman of our Board and our Chief Executive Officer,
Craig Tagawa, our Chief Financial Officer and Chief Operating
Officer, and Ernest R. Bates, our Vice President of Sales and
Business Development. The Compensation Committee of our Board of
Directors administers the compensation programs for our
executive officers with the objective of providing a competitive
compensation package. However, we believe that the compensation
paid to our executive officers should also be substantially
dependent on our financial performance and the value created for
our shareholders. For this reason, the Compensation Committee
also utilizes our compensation programs to provide meaningful
incentives for the attainment of our short-term and long-term
strategic objectives and thereby reward those executive officers
who make a substantial contribution to the attainment of those
objectives.
Compensation Policy for Executive Officers. We
have designed the various elements comprising the compensation
packages of our executive officers to achieve the following
objectives:
| • | attract, retain, motivate and engage executives with superior leadership and management capabilities, | |
| • | provide an overall level of compensation to each executive officer which is externally competitive, internally equitable and performance-driven, and | |
| • | ensure that total compensation levels are reflective of our financial performance and provide the executive officer with the opportunity to earn above-market total compensation for exceptional business performance. |
Each executive officer’s compensation package typically
consists of three elements: (i) a base salary, (ii) a
cash bonus tied to our attainment of financial objectives or the
individual officer’s personal performance, and
(iii) long-term, stock-based incentive awards designed to
align and strengthen the mutuality of interests between our
executive officers and our shareholders. In determining the
appropriate level for each element of such compensation, the
Compensation Committee has generally reviewed relevant market
data, but does not seek to set compensation levels at any
particular percentile when compared to such data. The
Compensation Committee also subjectively reviews and evaluates
the level of performance of the Company and the executive’s
level of individual performance and potential to contribute to
the Company’s future growth, and seeks to set compensation
at a level that is both reasonable and equitable based on that
assessment. Consistent with our philosophy of emphasizing pay
for performance, the total compensation packages are designed to
pay above the target when the Company exceeds its goals and
below the target when the Company does not achieve its goals.
8
Table of Contents
Elements of Compensation. Each of the three
major elements comprising the compensation package for our
executive officers (salary, bonus and equity) is designed to
achieve one or more of our overall objectives in fashioning a
competitive level of compensation, tying compensation to the
attainment of one or more of our strategic business objectives
and subjecting a substantial portion of the executive
officer’s compensation to our financial success as measured
in terms of our stock price performance. The manner in which the
Compensation Committee has so structured each element of
compensation may be explained as follows.
Base Salary. The Compensation
Committee reviews the base salary level of each executive
officer each year. The base salary for the executive officers is
determined on the basis of their level of responsibility,
experience and individual performance. In July 2006 the
Compensation Committee increased Dr. Bates’ salary by
10% effective July 1, 2006, representing his first salary
increase since the 2001 year. In 2005 the Compensation
Committee approved a 4% increase to Mr. Tagawa’s base
salary from the level in effect for the 2005 year,
effective January 1, 2006. In December 2006, the
Compensation Committee approved a 15% increase to
Mr. Tagawa’s base salary effective January 1,
2007.
Cash Incentive Compensation. Because
the Compensation Committee believes that the significant
interests which Dr. Bates, Mr. Tagawa and
Mr. Bates have in our common stock provide them with a
substantial incentive to contribute to our financial success and
the attainment of our financial goals, the Compensation
Committee does not typically implement annual incentive
compensation programs for them, except in extraordinary
circumstances. However from time to time, the Compensation
Committee has awarded cash bonuses in recognition of their
personal performance. For the 2007 fiscal year, the Compensation
Committee approved a cash bonus to Dr. Bates of $47,500, a
cash bonus of $30,000 to Mr. Tagawa and a cash bonus of
$25,000 to Mr. Bates.
In 2006 the Board approved the Company’s Long Term
Incentive Compensation Plan (the “Incentive Plan”),
which was subsequently approved by the Company’s
shareholders at the 2006 Annual Meeting. The Incentive Plan is
designed to advance our pay for performance policy by creating a
substantial bonus potential for each participant tied solely to
our achievement of financial objectives designed to expand our
business operations and create shareholder value. We believe
that the Incentive Plan will help us attain such goals and also
provide us with an important compensation vehicle to attract and
retain high performing executives on a competitive basis. The
Compensation Committee will have the discretion under the
Incentive Plan to implement one or more performance periods
beginning with the 2009 fiscal year, each consisting of one or
more calendar years up to a maximum of five years. The
Compensation Committee will establish the specific performance
goals for each performance period and the specific formula for
calculating the bonus to which the executive may become entitled
within the first ninety days of that performance period, and
will establish threshold, target and maximum levels of
attainment. The maximum bonus payable per participant will be
determined by multiplying the number of calendar years in the
performance period by $250,000. A participant will not become
entitled to a bonus for a particular performance period unless
he or she continues in our employ through the completion of that
performance period or ceases employment by reason of retirement,
death, disability or an involuntary termination (other than for
cause).
Equity Compensation. In 2006 the Board
approved the 2006 Stock Incentive Plan (the “2006
Plan”) to replace the Company’s 2001 Stock Option
Plan, and the 2006 Plan was approved by our stockholders at the
2006 Annual Meeting. For many years stock option grants were the
sole form of equity award granted to our executive officers, and
we continue to use stock option grants to provide long-term
incentives to our executive officers. However, we structured the
2006 Plan to provide us with more flexibility in designing
equity incentives in an environment where a number of companies
have moved from traditional option grants to other stock or
stock-based awards, such as stock appreciation rights,
restricted stock and restricted stock units. Accordingly, with
the 2006 Plan, we will have a broader array of equity incentives
to utilize for purposes of attracting and retaining the services
of key individuals, including stock options, stock appreciation
rights, restricted stock, restricted stock units, and other
stock-based awards. We will continue to rely on equity
incentives because we believe that such incentives are necessary
for us to remain competitive in the marketplace for executive
talent and other key employees.
The Compensation Committee reviews and considers equity awards
in connection with the annual review of the performance of our
executive officers and other key employees. However, there may
be variance from this practice when warranted by special
circumstances. Each grant is designed to align the interests of
the executive officer with those of the shareholders and to
provide each individual with a significant incentive to manage
the
9
Table of Contents
company from the perspective of an owner with an equity stake in
the business. In past years, the equity awards have been in the
form of stock options which generally vest and become
exercisable in a series of installments over a five year service
period, contingent upon the officer’s continued employment
with us. Accordingly, each such option will provide a return to
the executive officer only to the extent he remains employed
with us during the vesting period, and then only if the fair
market value of the underlying shares appreciates over the
period between grant and exercise of the option. In the
2007 year options were awarded to executive officers as
follows: 150,000 to Dr. Bates, 100,000 to Mr. Tagawa
and 75,000 to Mr. Bates.
Market Timing of Equity Awards. The
Compensation Committee does not engage in any market timing of
the equity awards made to the executive officers or other award
recipients. As indicated above, awards for existing executive
officers and employees are considered in connection with the
annual review process which typically occurs in the fourth
quarter each year. Awards are made at regularly scheduled
meetings of the Compensation Committee. Accordingly, there is no
established practice of timing our awards in advance of the
release of favorable financial results or adjusting the award
date in connection with the release of unfavorable financial
developments affecting our business. Equity awards for new hires
other than executive officers are typically made at the next
scheduled Compensation Committee meeting following the
employee’s hire date. All stock option grants issued under
our 2006 Plan have an exercise price per share equal to the
closing selling price per share on the grant date, except that
incentive options granted to a 10% shareholder have an exercise
price equal to 110% of the closing selling price per share on
the grant date.
Executive Officer Perquisites. It is not our
practice to provide our executive officers with any meaningful
perquisites.
Other Programs. Our executive officers are
eligible to participate in our 401(k) plan and our flexible
benefit plan on the same basis as all other regular
U.S. employees.
Deferred Compensation Programs. We have not
implemented any non-qualified deferred compensation programs for
our executive officers or any supplemental executive retirement
plans.
Compliance with Internal Revenue Code
Section 162(m). Section 162(m) of the
Internal Revenue Code disallows a tax deduction to publicly held
companies for compensation paid to certain of their executive
officers to the extent such compensation exceeds
$1.0 million per covered officer in any year. The
limitation applies only to compensation that is not considered
to be performance-based under the terms of Section 162(m).
The stock options which have been granted to date to our
executive officers have been structured so as to qualify as
performance based compensation. Non-performance-based
compensation paid to such officers for 2007 did not exceed the
$1.0 million limit per officer. However, we believe that in
establishing the cash and equity incentive compensation programs
for our executive officers, the potential deductibility of the
compensation payable under those programs should be only one of
a number of relevant factors taken into consideration, and not
the sole governing factor. For that reason, we may deem it
appropriate to provide one or more executive officers with the
opportunity to earn incentive compensation, whether through cash
bonuses or through equity awards under the new 2006 Incentive
Plan, which together with base salary in the aggregate may be in
excess of the amount deductible by reason of Section 162(m)
or other provisions of the Internal Revenue Code. We believe it
is important to maintain cash and equity incentive compensation
at the levels needed to attract and retain the executive
officers essential to our success, even if all or part of that
compensation may not be deductible by reason of the
Section 162(m) limitation.
10
Table of Contents
Summary
Compensation Information
The following table provides certain summary information
concerning the compensation earned for services rendered in all
capacities to the Company and its subsidiaries for the year
ended December 31, 2007 by the Company’s Chief
Executive Officer, Chief Financial Officer and Vice President of
Business Development. No other executive officers who would have
otherwise been includable in such table on the basis of total
compensation for the 2007 Fiscal Year have been included by
reason of their termination of employment or change in executive
status during that year. The listed individuals shall be
hereinafter referred to as the “named executive
officers.”
|
All |
||||||||||||||||||||||||
|
Option |
Other |
|||||||||||||||||||||||
|
Salary |
Bonus |
Awards |
Compensation |
Total |
||||||||||||||||||||
|
Name and Principal Position |
Year |
($)(1) |
($)(1) |
($)(2) |
($)(3) |
($) |
||||||||||||||||||
|
(a)
|
(b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||
|
Ernest A. Bates, M.D.
|
2007 | 475,000 | 47,500 | 0 | 29,026 | 551,526 | ||||||||||||||||||
|
Chairman of the Board and
|
2006 | 455,833 | 165,000 | 0 | 32,469 | 653,302 | ||||||||||||||||||
|
Chief Executive Officer
|
||||||||||||||||||||||||
|
Craig K. Tagawa,
|
2007 | 299,231 | 30,000 | 4,380 | 15,768 | 349,379 | ||||||||||||||||||
|
Chief Operating Officer
|
2006 | 259,808 | 100,000 | 4,379 | 16,768 | 380,955 | ||||||||||||||||||
|
and Chief Financial Officer
|
||||||||||||||||||||||||
|
Ernest R. Bates,
|
2007 | 240,385 | 25,000 | 21,726 | 14,887 | 301,998 | ||||||||||||||||||
|
Vice President of
|
2006 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
|
Business Development
|
||||||||||||||||||||||||
| (1) | Includes amounts deferred under the Company’s Retirement Plan for Employees of American Shared Hospital Services, a qualified deferred compensation plan under section 401(k) of the Internal Revenue Code. | |
| (2) | The amounts in column (e) reflect the dollar amount recognized for financial statement reporting purposes for the fiscal years ended December 31, 2007 and 2006, in accordance with FAS 123(R) of stock options granted to each named executive officer and thus include amounts from awards granted in and prior to the 2006 year. Assumptions used in the calculation of this amount are included in footnote 9 to the Company’s audited financial statements for the fiscal year ended December 31, 2007 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008. | |
| (3) | The amounts in column (f) include matching contributions under the Company’s 401K plan, automobile and parking allowance, income attributable to life insurance coverage paid by us, and premiums paid by the Company for long term disability coverage. |
Outstanding
Equity Awards at Fiscal Year-End
The following table provides certain summary information
concerning outstanding equity awards held by the named executive
officers as of December 31, 2007.
| Option Awards | ||||||||||||||||
|
Number of |
||||||||||||||||
|
Securities |
Number of Securities |
|||||||||||||||
|
Underlying |
Underlying |
|||||||||||||||
|
Unexercised |
Unexercised Options |
|||||||||||||||
|
Options |
(#) |
Option Exercise |
||||||||||||||
|
(#) |
Unexercisable |
Price |
Option Expiration |
|||||||||||||
|
Name
|
Exercisable | (1) | ($) | Date | ||||||||||||
|
Ernest A. Bates, M.D.
|
150,000 | 150,000 | $ | 3.036 | December 5, 2014 | |||||||||||
|
Craig K. Tagawa
|
20,000 | 0 | $ | 3.00 | May 20, 2009 | |||||||||||
| 5,800 | 8,700 | $ | 6.16 | June 15, 2015 | ||||||||||||
| 0 | 100,000 | $ | 2.76 | December 5, 2014 | ||||||||||||
|
Ernest R. Bates
|
0 | 50,000 | $ | 6.50 | February 7, 2014 | |||||||||||
| 0 | 25,000 | $ | 2.76 | December 5, 2014 | ||||||||||||
| (1) | The option shares vest in five equal annual installments over the five year period measured from their issue date, provided each employee continues to provide services to the Company through each applicable vesting date. None of the option shares authorized under these awards had been exercised as of December 31, 2007. |
11
Table of Contents
Option
Exercises and Stock Vested
The Option Exercises and Stock Vested table has been omitted by
the Company because no options were exercised in 2007 by the
named executive officers and no stock-based awards other than
stock options were outstanding during the 2007 year.
Pension
Benefits
The Pension Benefits table has been omitted by the Company
because the Company does not sponsor a pension plan.
Nonqualified
Deferred Compensation
The Nonqualified Deferred Compensation table has been omitted by
the Company because the Company does not sponsor a nonqualified
deferred compensation plan.
Grants of
Plan-Based Awards
The following table sets forth stock options granted in 2007 to
each of the Company’s executive officers named in the
Summary Compensation Table. The table also sets forth the
hypothetical grant date present value, assuming the weighted
average assumptions noted below. The actual future value of the
options will depend on the market value of the Company’s
Common Stock.
| Individual Grants | ||||||||||||||||||||
|
Exercise or |
||||||||||||||||||||
|
Percent of Total |
Base Price |
|||||||||||||||||||
|
Options Granted |
Market Price |
Grant Date Present |
||||||||||||||||||
|
Options |
to Employees in |
on Grant |
Expiration |
Value ($) |
||||||||||||||||
|
Name
|
Granted | Fiscal Year 2007 | Date | Date | (1) | |||||||||||||||
|
Ernest A. Bates, M.D.
|
150,000 | 37.0 | % | $ | 3.036/share(2 | ) | 12/6/2014 | $ | 128,190 | |||||||||||
|
Craig K. Tagawa
|
14,500 | 24.7 | % | $ | 2.76/share(3 | ) | 12/6/2014 | $ | 74,740 | |||||||||||
|
Ernest R. Bates
|
50,000 | 12.3 | % | $ | 6.50/share(3 | ) | 2/8/2014 | $ | 144,844 | |||||||||||
| 25,000 | 6.2 | % | $ | 2.76/share(3 | ) | 12/6/2014 | $ | 18,685 | ||||||||||||
| (1) | The Grant Date Present Value of the Company’s stock-based awards to employees was calculated using the Black-Scholes valuation model. The Company’s stock-based awards have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the present value estimates. The grant date present value of the Company’s option grants above was estimated assuming the following weighted-average assumptions: seven year expected life, 25-72.5% expected volatility, 0-8.5% expected forfeiture rate, 3.4% dividend yield, and 4.9-5.4% risk-free interest rate. | |
| (2) | Options are incentive options granted to a 10% Shareholder granted pursuant to the Company’s 2006 Stock Incentive Plan, and accordingly have an exercise price equal to 110% of the closing market price per share of the Company’s Common Stock on the American Stock Exchange on the grant date. | |
| (3) | All such options were granted pursuant to the Company’s 2006 Stock Incentive Plan and have an exercise price equal to the closing market price per share of the Company’s Common Stock on the American Stock Exchange on the respective grant date. |
Payments
upon Termination or Change in Control
Under our 2006 Plan, in the event a change in control occurs,
each outstanding equity award under the Discretionary Grant
Program will automatically accelerate in full, unless
(i) that award is assumed by the successor corporation or
otherwise continued in effect or (ii) the award is replaced
with a cash retention program that preserves the spread existing
on the unvested shares subject to that equity award (the excess
of the fair market value of those shares over the exercise or
base price in effect for the shares) and provides for subsequent
payout of that spread in accordance with the same vesting
schedule in effect for those shares. In addition, all unvested
shares outstanding under the Discretionary Grant and Stock
Issuance Programs will immediately vest upon the change in
control, except to the extent our repurchase rights with
12
Table of Contents
respect to those shares are to be assigned to the successor
corporation or otherwise continued in effect. Each outstanding
equity award under the Stock Issuance Program, including RSUs,
will vest as to the number of shares of common stock subject to
that award immediately prior to the change in control and the
underlying shares will become immediately issuable, unless that
equity award is assumed by the successor corporation or
otherwise continued in effect or replaced with a cash retention
program similar to the program described in clause (ii)
above.
The plan administrator has the discretion to structure one or
more equity awards under the 2006 Plan so that those equity
awards will vest in full either immediately upon a change in
control or in the event the individual’s service with us or
the successor entity is terminated (actually or constructively)
within a designated period following a change in control
transaction, whether or not those equity awards are to be
assumed or otherwise continued in effect or replaced with a cash
retention program.
Options granted under our 1995 and 2001 Stock Option Plans have
been transferred to our 2006 Plan, however, such options retain
their original terms. Those options provide that in the event of
(i) a change in control of the company in which the holders
of the Company’s common stock receive consideration other
than shares of common stock registered under Section 12 of
the Securities Exchange Act of 1934, (ii) any person
acquires beneficial ownership of 25% or more of either the
corporation’s outstanding common stock or the
company’s outstanding voting securities, or (iii) in
the event of a hostile take-over of the Company’s board,
options will be cancelled in exchange for a cash payment from
the Company in an amount equal to the number of shares of common
stock at that time subject to such option, multiplied by the
excess, if any, of the greater of (A) the highest per share
price offered to the stockholders of the Company in any
transaction whereby the change in control takes place or
(B) the fair market value of a share of common stock on the
date of occurrence of the change in control over the exercise
price per share of common stock in effect under that option.
Upon a qualifying change in control of the Company, executive
officers would potentially receive compensation pursuant to
unvested option grants originally awarded under the 1995 plan.
For purposes of quantifying this payment, the change in control
is assumed to have occurred on December 31, 2007 and the
change in control consideration paid per share of outstanding
common stock is assumed to be equal to the closing selling price
of our common stock on December 31, 2007, which was $2.06
per share. Since the option strike price is greater than the
closing selling price on that date, no compensation would be
calculated under a qualifying change in control.
Shares
Authorized for Issuance Under Equity Compensation
Plans
The following table provides information as of December 31,
2007 with respect to shares of our common stock that may be
issued under our existing equity compensation plan.
|
Number of Shares to |
||||||||||||
|
be Issued Upon |
Weighted Average |
|||||||||||
|
Exercise of |
Exercise Price of |
Number of Shares |
||||||||||
|
Outstanding Options, |
Outstanding Options, |
Remaining Available for |
||||||||||
|
Plan Category
|
Warrants and Rights | Warrants and Rights | Future Issuance | |||||||||
|
Equity compensation plans approved by security holders(1)
|
568,180 | (2) | $ | 3.82 | (3) | 176,320 | (4) | |||||
|
Equity compensation plans not approved by security holders
|
N/A | N/A | N/A | |||||||||
|
Total
|
568,180 | $ | 3.82 | 176,320 | ||||||||
| (1) | Consists of our 2006 Plan. | |
| (2) | Includes 2,000 shares of our common stock subject to restricted stock unit awards that will entitle each holder to one share of our common stock for each such unit that vests over the holder’s period of continued service. | |
| (3) | Calculated without taking into account 2,000 shares of common stock subject to outstanding restricted stock unit awards that will become issuable, as those units vest, without any cash consideration or other payment required for such shares. | |
| (4) | Shares reserved for issuance under the 2006 Plan may be issued upon the exercise of stock options or stock appreciation rights, through direct stock issuances or pursuant to restricted stock units or other stock based awards that vest upon the attainment of prescribed performance milestones or the completion of designated service periods. |
13
Table of Contents
Compliance
with Section 16(a) under the Securities Exchange Act of
1934
Reports filed under the Exchange Act and received by the Company
on or after January 1, 2007, indicate that during
2007 directors, officers and 10% shareholders of the
Company filed all required reports within the periods
established by applicable rules, with the following exceptions:
(1) On February 8, 2007, Ernest R. Bates was awarded
50,000 options to purchase the Company’s stock, which was
not reported to the Securities and Exchange Commission until
June 20, 2007; (2) On December 6, 2007,
Dr. Ernest A. Bates, Craig K. Tagawa and Ernest R. Bates,
were awarded options to purchase 150,000 shares,
100,000 shares, 25,000 shares of the Company’s
stock, respectively, and Olin C. Robison, John F. Ruffle and
Stanley S. Trotman were each awarded options to purchase
5,000 shares of the Company’s stock. The acquisition
of these options was not reported to the Securities and Exchange
Commission until December 14, 2007.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Compensation
Committee Interlocks and Insider Participation
Willie R. Barnes, the Secretary of the Company, is a partner in
the law firm of Musick, Peeler & Garrett LLP. That law
firm performed legal services for the Company in 2007. The
management of the Company is of the opinion that the fees paid
to Mr. Barnes’ law firm are comparable to those fees
that would have been paid for comparable legal services from a
law firm not affiliated with the Company. Mr. Barnes served
during 2004 on the Compensation, Stock Option and Nominating
Committees of the Board of Directors until his term expired on
June 17, 2004.
Policies
and Procedures
The Audit Committee of the Board of Directors is responsible for
reviewing and approving all related party transactions as
defined under Securities and Exchange Commission rules and
regulations. While we do not have a formal written policy or
procedure for the review, approval or ratification of related
party transactions, the audit committee must review the
materials facts of any such transaction and approve that
transaction.
To identify related party transactions, each year we submit and
require our directors and officers to complete director and
officer questionnaires identifying transactions with the Company
in which the director or officer or their family members have a
conflict of interest. The Company reviews the questionnaire for
potential related party transactions. In addition, at any
scheduled meeting of the audit committee, management may
recommend related party transactions to the committee, including
the material terms of the proposed transactions, for its
consideration.
In making its decision to approve or ratify a related party
transaction, the audit committee will consider all relevant
facts and circumstances available to the committee, including
factors such as the aggregate value of the transaction, whether
the terms of the related party transaction are no less favorable
than terms generally available in an arms’ length
transaction and the benefit of such transaction to us.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis contained in this proxy
statement with management, and based on such review and such
discussions, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis, as
contained herein, be included in this proxy statement.
Submitted by the Compensation Committee of the Board of
Directors:
Olin C. Robison (Chairman)
John F. Ruffle
Stanley S. Trotman, Jr.
14
Table of Contents
AUDIT
COMMITTEE REPORT
The following Report of the Audit Committee does not constitute
soliciting material and should not be deemed filed or
incorporated by reference into any other filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent the Company specifically
incorporates the Report by reference therein.
The Audit Committee of the Board of Directors consists of three
directors, all of whom are ‘independent’ as defined in
the listing standards of the American Stock Exchange. The
primary purpose of the Audit Committee is to review the
financial reporting and internal controls of the Company, to
appoint independent auditors, to review the reports of such
auditors, and to review annually the Audit Committee charter.
During 2007, the Audit Committee held eight meetings, five of
which were held telephonically. Mr. Ruffle is Chair of the
Audit Committee.
The Audit Committee reviewed and held discussions with
management and the independent auditors regarding the financial
statements of the Company for the fiscal year ended
December 31, 2007. These discussions included the quality
of the Company’s internal controls, the audit plans, audit
scope and identification of audit risks. In addition, the
Committee assured that the independent auditors reviewed and
discussed with management the interim financial reports prior to
each quarterly earnings announcement.
The Company’s independent auditors provided a formal
written statement that described all relationships between the
auditors and the Company with respect to the auditors’
independence as required by Independence Standards Board
Standard No. 1, “Independence Discussions with Audit
Committees,” and the Audit Committee satisfied itself as to
the auditors’ independence.
The Audit Committee discussed with the Independent Registered
Public Accounting Firm all matters required to be discussed by
Statement on Auditing Standards No. 61, as amended,
“Communication with Audit Committees” and, with and
without the presence of management, reviewed and discussed the
results of the independent auditors’ examination of the
Company’s financial statements. Management, being
responsible for the Company’s financial statements,
represented that the Company’s consolidated financial
statements were prepared in accordance with generally accepted
accounting principles. The independent auditors are responsible
for the examination of those statements.
Based on the Audit Committee’s discussions with management
and the independent auditors, and the Audit Committee’s
review as described previously, the Audit Committee recommended
to the Board of Directors that the Company’s audited
financial statements be included in its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, as filed with
the Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:
John F. Ruffle (chairman)
Olin C. Robison
Stanley S. Trotman, Jr.
15
Table of Contents
PROPOSAL NO. 2
RATIFICATION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Company’s consolidated financial statements for the
years ended December 31, 2007, 2006 and 2005 have been
audited by Moss Adams LLP. The Audit Committee has appointed
Moss Adams LLP to be the Company’s Independent Registered
Public Accounting Firm for the fiscal year ending
December 31, 2008, subject to Shareholder ratification at
the Meeting (see Proposal No. 2).
Representatives of Moss Adams LLP are expected to be present at
the Annual Meeting to respond to appropriate questions and will
be given an opportunity to make a statement if they so desire.
The aggregate fees billed by Moss Adams LLP and their respective
affiliates for professional services performed for 2007 and 2006
are as follows:
|
Audit- |
||||||||||||||||||||
|
Audit |
Related |
All Other |
Total |
|||||||||||||||||
| Fees(1) | Fees(2) | Tax Fees(3) | Fees(4) | Fees | ||||||||||||||||
|
2007
|
$ | 146,000 | $ | 41,000 | $ | 90,000 | $ | 0 | $ | 277,000 | ||||||||||
|
2006
|
$ | 109,000 | $ | 10,000 | $ | 58,000 | $ | 0 | $ | 177,000 | ||||||||||
| (1) | Consists of fees billed for professional services rendered in connection with the audit of our consolidated financial statements and review of interim condensed consolidated financial statements included in our quarterly reports and services normally provided in connection with statutory and regulatory filings or engagements. | |
| (2) | Audit related fees were primarily related to meetings with the audit committee, attendance at the annual stockholder meeting, accounting advice, review of comment letter received from the SEC and advice related to Section 404 of the Sarbanes-Oxley Act. | |
| (3) | Consists of tax compliance and preparation and other tax services. | |
| (4) | Consists of fees for all other services other than those reported above. |
All of the above services were approved by the Audit Committee.
The Audit Committee pre-approves all audit and permissible
non-audit services provided by the independent auditors.
Policy on Audit Committee Pre-Approval of Audit and
Permissible Non-Audit Services of the Independent Registered
Public Accounting Firm
The Audit Committee pre-approves services performed by the
Company’s independent registered public accounting firm in
order to assure that the provision of such services and related
fees do not impair the independent registered public accounting
firm’s independence. The independent registered public
accounting firm must provide the Audit Committee with an
engagement letter outlining the scope of the audit services
proposed to be performed during the applicable calendar year and
the proposed fees for such audit services. If agreed to by the
Audit Committee, the engagement letter will be formally accepted
by the Audit Committee as evidenced by the execution of the
engagement letter by the Chair of the Audit Committee. The Audit
Committee approves, if necessary, any changes in terms,
conditions and fees resulting from changes in audit scope,
Company structure or other matters. The Audit Committee may
grant pre-approval for those permissible non-audit services that
it believes are services that would not impair the independence
of the independent registered public accounting firm. The Audit
Committee may not grant approval for any services categorized as
“Prohibited Non-Audit Services” by the Securities and
Exchange Commission. Certain non-audit services have been
pre-approved by the Audit Committee, and all other non-audit
services must be separately approved by the Audit Committee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR
OF PROPOSAL NO. 2. PROPERLY EXECUTED PROXIES RETURNED
TO THE COMPANY WILL BE VOTED “FOR” THE RATIFICATION OF
THE APPOINTMENT OF MOSS ADAMS LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR
ENDING DECEMBER 31, 2008.
16
Table of Contents
SHAREHOLDER
PROPOSALS
Under certain circumstances, shareholders are entitled to
present proposals at shareholders’ meetings. To be eligible
for inclusion in the Proxy Statement for the Company’s next
Annual Meeting of Shareholders, a shareholder proposal must be
received at the Company’s principal executive offices prior
to February 1, 2009. A Shareholder’s notice should
list each proposal and contain a brief description of the
business to be brought before the meeting; the name and address
of the shareholder proposing such business; the number of shares
held by the shareholder; and any material interest of the
shareholder in the business.
ANNUAL
REPORT
The Company’s 2007 Annual Report, which includes financial
statements, but which does not constitute a part of the proxy
solicitation material, accompanies this proxy statement.
By Order of the Board of Directors
Willie R. Barnes
Corporate Secretary
San Francisco, California
Dated: April 29, 2008
17
Table of Contents
AMERICAN SHARED HOSPITAL SERVICES
For the Annual Meeting of Shareholders to be held June 20, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY NOMINATE(S), CONSTITUTE(S) AND APPOINT(S) ERNEST A. BATES, M.D. AND CRAIG K.
TAGAWA, AND EACH OF THEM, ATTORNEYS, AGENTS, AND PROXIES OF THE UNDERSIGNED, WITH FULL POWERS OF
SUBSTITUTION TO EACH, TO ATTEND AND TO ACT AS PROXY OR PROXIES OF THE UNDERSIGNED AT THE ANNUAL
MEETING OF SHAREHOLDERS OF AMERICAN SHARED HOSPITAL SERVICES TO BE HELD ON JUNE 20, 2008 AT 9:00 AM
PACIFIC TIME AT THE CONFERENCE CENTER, 4 EMBARCADERO CENTER, SAN FRANCISCO, CALIFORNIA, OR ANY
ADJOURNMENTS THEREOF, AND TO VOTE AS SPECIFIED HEREIN THE NUMBER OF SHARES THAT THE UNDERSIGNED, IF
PERSONALLY PRESENT, WOULD BE ENTITLED TO VOTE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE FOUR PERSONS NOMINATED FOR
ELECTION TO THE BOARD OF DIRECTORS AND “FOR” THE RATIFICATION OF MOSS ADAMS LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2008. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
BY MARKING THE APPROPRIATE BOXES. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF
NO DIRECTION IS MADE, IT WILL BE VOTED, SUBJECT TO THE PROXYHOLDER’S DISCRETIONARY AUTHORITY TO
CUMULATE VOTES, “FOR” THE ELECTION OF THE PERSONS NOMINATED ON THE REVERSE SIDE, AND WILL HAVE THE
EFFECT OF WITHHOLDING DISCRETIONARY AUTHORITY TO CUMULATE VOTES AND “FOR” THE RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. THE BOARD OF DIRECTORS IS NOT AWARE OF ANY OTHER
MATTERS THAT WILL COME BEFORE THE ANNUAL MEETING, OTHER THAN THOSE DESCRIBED IN THIS PROXY.
HOWEVER, IF SUCH MATTERS ARE PRESENTED, THE NAMED PROXIES WILL, IN THE ABSENCE OF INSTRUCTIONS TO
THE CONTRARY, VOTE SUCH PROXIES IN ACCORDANCE WITH THE JUDGMENT OF SUCH NAMED PROXIES WITH RESPECT
TO ANY SUCH OTHER MATTER PROPERLY COMING BEFORE THE MEETING. THIS PROXY MAY BE REVOKED PRIOR TO
ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN INSTRUMENT IN WRITING REVOKING THIS
PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE. THIS PROXY ALSO MAY BE REVOKED BY ATTENDANCE
AT THE MEETING AND ELECTION TO VOTE IN PERSON.
(continued, and to be signed on the other side)
1
Table of Contents
þ PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
This proxy when properly executed will be voted in the manner directed herein and in the
discretion of the proxy holders and all other matters coming before the meeting. If no direction is
made, this proxy will be voted FOR the election of directors recommended herein, and FOR Proposal
No. 2.
The Board of Directors recommends a vote FOR election of the directors nominated herein and
FOR the ratification of independent registered public accounting firm.
1.
|
ELECTION OF DIRECTORS. To elect four of the persons named below to the Board of Directors to serve until the 2008 Annual Meeting of Shareholders and until their successors are elected and have qualified. |
| o | FOR all nominees (except as indicated to the contrary below). | |||
| o | WITHHOLD AUTHORITY to vote for all nominees. |
| (Instruction: | To withhold authority for any individual nominee(s), write that nominee’s name(s) in the space below.) | |||
| NOMINEES: | Ernest A. Bates, M.D. | |||
| Olin C. Robison | ||||
| John F. Ruffle | ||||
| Stanley S. Trotman, Jr. |
2.
|
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. To ratify the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2008. |
| o | FOR | o | AGAINST | o | ABSTAIN |
The undersigned hereby ratifies and confirms all that said attorneys and proxies, or any of
them, or their substitutes, shall lawfully do or cause to be done by virtue hereof, and hereby
revokes any and all proxies heretofore given by the undersigned to vote at the Meeting. The
undersigned acknowledges receipt of the Notice of the Annual Meeting and the Proxy Statement
accompanying such Notice.
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE ENCLOSED ENVELOPE.
I plan to attend the meeting in person o
Signature
|
Date | |||||
Signature
|
Date | |||||
| Signature, if held jointly |
NOTE: Please date this proxy and sign as your name(s) appear(s) on this document. Joint owners
should each sign personally. Corporate proxies should be signed by an authorized officer.
Executors, administrators, trustees, etc. should give their full titles.