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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Preliminary Proxy Statement
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Definitive Proxy Statement
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Soliciting Material Pursuant to
Section 240.14a-12
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VISTACARE, INC.
(Name of Registrant as Specified in
its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
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Dear Stockholder:
We cordially invite you to attend our 2007 Annual Meeting of
Stockholders, to be held on Thursday, February 1, 2007 at
the Chaparral Suites Resort, located at 5001 North Scottsdale
Road, Scottsdale, Arizona 85250, commencing at 2:00 p.m.
local time. We look forward to greeting those of you who are
able to attend.
Our 2006 Annual Report is enclosed. Also enclosed is our notice
of the annual meeting, proxy statement and proxy card. We
encourage you to read carefully all of the enclosed information.
At the annual meeting, we will be asking you to vote for three
Class II directors and to ratify the selection of our
independent registered public accounting firm, as described more
fully in the enclosed proxy statement. Our Board of Directors
recommends that you vote FOR each of the proposals
described above.
Whether or not you plan to attend the annual meeting, it is
important that your shares be represented and voted.
Accordingly, please read the enclosed material and mark, date,
sign and return the enclosed proxy card at your earliest
convenience. If you attend the annual meeting, you may revoke
your proxy by requesting the right to vote in person.
Sincerely,
Richard R. Slager
Chairman of the Board of Directors,
President and Chief Executive Officer
January 3, 2007
TABLE OF CONTENTS
VISTACARE, INC.
4800 North Scottsdale Road, Suite 5000
Scottsdale, Arizona 85251
NOTICE OF 2007 ANNUAL MEETING
OF STOCKHOLDERS
The 2007 Annual Meeting of Stockholders of VistaCare, Inc. will
be held at 2:00 p.m. local time on Thursday,
February 1, 2007 at the Chaparral Suites Resort, located at
5001 North Scottsdale Road, Scottsdale, Arizona 85250. The
annual meeting is being held for the following purposes:
1. To elect three Class II directors to the Board of
Directors to serve for a term of three years or until their
respective successors are elected and qualified;
2. To ratify the selection of Ernst & Young LLP as
our independent registered public accounting firm for the year
ending September 30, 2007; and
3. To transact such other business as may properly come
before the annual meeting.
Stockholders of record at the close of business on
December 26, 2006, the record date for the annual meeting,
are entitled to receive notice of and to vote at the annual
meeting. A list of stockholders entitled to vote will be
available for examination at the annual meeting for any purpose
germane to the meeting. The list will also be available for the
same purpose for ten days prior to the annual meeting during
ordinary business hours at our principal executive offices at
4800 North Scottsdale Road, Suite 5000, Scottsdale, Arizona
85251.
The enclosed proxy card, proxy statement and our 2006 Annual
Report to Stockholders are being sent to you along with this
notice.
By order of the Board of Directors,
Stephen Lewis
Senior Vice President,
General Counsel and Secretary
Scottsdale, Arizona
January 3, 2007
VISTACARE, INC.
PROXY STATEMENT FOR
THE
2007 ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On February 1,
2007
INFORMATION ABOUT SOLICITATION AND VOTING
General
This proxy statement is provided in connection with the
solicitation of proxies by the Board of Directors of VistaCare,
Inc. for the 2007 Annual Meeting of Stockholders to be held at
2:00 p.m. local time on Thursday, February 1, 2007 at
the Chaparral Suites Resort, located at 5001 North Scottsdale
Road, Scottsdale, Arizona 85250, and at any adjournment or
postponement of the annual meeting. Our principal executive
offices are located at 4800 North Scottsdale Road,
Suite 5000, Scottsdale, Arizona 85251.
This proxy statement and the accompanying proxy card are
expected to be mailed on or about January 3, 2007 to all
stockholders entitled to vote at the annual meeting. We are
mailing our Annual Report to Stockholders for the fiscal year
ended September 30, 2006 together with these proxy
materials. The Annual Report to Stockholders does not constitute
part of this proxy statement.
What is
the purpose of the annual meeting?
At the annual meeting, our stockholders will consider and vote
on the following matters:
1. The election of three nominees to serve as members of
our Board of Directors for a term of three years or until their
respective successors are elected and qualified.
2. The ratification of the selection of Ernst &
Young LLP as our independent registered public accounting firm
for the year ending September 30, 2007.
3. The consideration of any other business that may
properly come before the meeting.
Who can
vote at the annual meeting?
Only stockholders of record at the close of business on
December 26, 2006 may vote at the annual meeting. This date
is the record date for the annual meeting. On the record date,
there were 16,718,800 outstanding shares of our Class A
Common Stock, $0.01 par value per share, which we refer to
in this proxy statement as our common stock.
How many
votes do I have?
Each share of common stock that you owned on the record date
entitles you to one vote on each matter voted on at the annual
meeting.
Is my
vote important?
Your vote is important regardless of how many shares you own.
Please take the time to vote and to read the instructions below.
How can I
vote?
You can vote by mail or you can vote in person at the annual
meeting. If your shares are held in street name, see
below under the question Can I vote if my shares of common
stock are held in street name? for additional
information as to how you can vote your shares.
You can vote by mail. You can vote by
completing and signing the proxy card that accompanies this
proxy statement and promptly mailing it in the enclosed
postage-prepaid envelope. You do not need to put a stamp on the
enclosed envelope if you mail it in the United States. The
shares you own will be voted according to the instructions on
the proxy card you mail. If you return the proxy card but do not
give any instructions on a particular matter described in this
proxy statement, the shares you own will be voted in accordance
with the recommendations of our Board of Directors. The Board of
Directors recommends that you vote FOR proposals 1 and
2.
You can vote in person. If you attend the
annual meeting, you can vote by delivering your completed proxy
card in person or you can vote by completing a ballot. Ballots
will be available at the meeting.
Can I
change my vote after I have mailed my proxy card?
Yes, you can change your vote and revoke your proxy at any time
before the proxy is exercised at the annual meeting by doing any
one of the following things:
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signing another proxy with a later date;
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giving our corporate secretary a written notice before or at the
meeting prior to the exercise of the proxy that you want to
revoke your proxy; or
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voting in person at the annual meeting.
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Your attendance at the meeting alone will not revoke your proxy.
If the annual meeting is postponed or adjourned, a
stockholders proxy will remain valid and may be voted at
the postponed or adjourned meeting. A stockholder will still be
able to revoke the stockholders proxy until it is voted.
Can I
vote if my shares of common stock are held in street
name?
If the shares you own are held in street name by a
bank or brokerage firm, your bank or brokerage firm, as the
record holder of your shares, is required to vote your shares
according to your instructions. In order to vote your shares,
you will need to follow the directions your bank or brokerage
firm provides you. Many banks and brokerage firms also offer the
option of voting over the Internet or by telephone, instructions
for which would be provided by your bank or brokerage firm on
your vote instruction form.
If your shares are held in street name, you must bring an
account statement or letter from your brokerage firm or bank
showing that you are the beneficial owner of the shares as of
the record date in order to be admitted to the annual meeting.
To be able to vote your shares held in street name at the annual
meeting, you will need to obtain a proxy card from the holder of
record.
What will
happen if I do not give my bank or brokerage firm instructions
on how to vote my shares?
If you do not give your broker instructions as to how to vote on
the two proposals described in this proxy statement, your broker
is entitled to use its discretion in voting your shares.
What
constitutes a quorum for purposes of the annual
meeting?
In order for business to be conducted at the annual meeting, a
quorum must be present. A quorum consists of the presence, in
person or by proxy, of a majority of the shares of common stock
issued, outstanding and entitled to vote at the meeting.
Shares of common stock represented in person or by proxy,
including broker non-votes and shares that abstain from voting
on one or more of the matters to be voted upon, will be counted
as present for purposes of determining whether a quorum exists.
A broker non-vote occurs when a record holder (for
example, a bank or brokerage firm) holding shares for a
beneficial owner does not vote on a particular proposal because
the record holder does not have discretionary voting power for
that particular item and has not received voting instructions
from the beneficial owner. If you are a beneficial owner, your
bank, broker or other holder of record is permitted to vote your
shares on the election of directors and the ratification of the
selection of Ernst & Young LLP as our independent
registered public accounting firm even if the broker does not
receive voting instructions from you.
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If a quorum is not present, the annual meeting will be adjourned
until a quorum is obtained.
What vote
is required for each proposal?
Election of directors. The three nominees
receiving the greatest number of votes cast at the annual
meeting will be elected, regardless of whether that number
represents a majority of the votes cast. Abstentions may not be
specified on this proposal. Broker non-votes will have no effect
on the outcome of this proposal.
Ratification of selection of independent registered public
accounting firm. The affirmative vote of the
holders of a majority of the shares present or represented at
the annual meeting is needed to approve the ratification of the
selection of our independent registered public accounting firm.
Abstentions will have the effect of a negative vote on this
proposal. Because brokers are permitted to vote on this proposal
even in the absence of voting instructions from beneficial
owners, broker non-votes will have the effect of negative votes.
How will
votes be counted?
Each share of common stock will be counted as one vote according
to the instructions contained on a properly completed proxy card
or on a ballot voted in person at the annual meeting.
Who will
count the votes?
The votes will be counted, tabulated and certified by our
transfer agent and registrar, Computershare Trust Company, N.A.
Two of our employees, Merle Lindlar and Janet Wright, will serve
as the inspectors of elections at the annual meeting.
How does
the Board of Directors recommend that I vote on the
proposals?
The Board of Directors recommends that you vote:
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FOR the election of the three nominees to serve as members of
our Board of Directors to hold office for a term of three
years; and
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FOR the ratification of the selection of Ernst & Young
LLP as our independent registered public accounting firm for the
year ending September 30, 2007.
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Will any
other business be conducted at the annual meeting, or will other
matters be voted on?
The Board of Directors does not know of any other matters that
may come before the annual meeting. If any other matter is
properly brought before the meeting, the persons named in the
proxy card that accompanies this proxy statement will exercise
their judgment in deciding how to vote, or otherwise act, at the
meeting with respect to that matter or proposal.
Where can
I find the voting results?
The preliminary voting results will be announced at the annual
meeting. We will report the final voting results in our
quarterly report on
Form 10-Q
for the second quarter of 2007, which we expect to file with the
Securities and Exchange Commission, or the SEC, on or before
May 10, 2007.
How and
when may I submit a stockholder proposal for the 2008 annual
meeting?
To be included in the proxy statement or considered at the
annual meeting, a stockholder must timely submit nominations of
directors or other proposals to our Corporate Secretary in
addition to complying with certain provisions set forth in our
Bylaws and rules and regulations promulgated by the Securities
and Exchange Commission. We intend to hold our 2008 annual
meeting during February 2008. We must receive proposals for our
2008 annual meeting no later than September 3, 2007 for
possible inclusion in the proxy statement, or between
November 5, 2007 and December 5, 2007 for possible
consideration at the meeting. SEC rules permit
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management to vote proxies in its discretion with respect to
such matters if the Company advises stockholders how management
intends to vote.
Any proposals or notices should be sent to:
VistaCare, Inc.
4800 North Scottsdale Road, Suite 5000
Scottsdale, Arizona 85251
Attention: Corporate Secretary
Who will
bear the costs of soliciting these proxies?
We will bear the costs of solicitation of proxies. Copies of
solicitation material may be furnished to brokers, custodians,
nominees and other fiduciaries for forwarding to beneficial
owners of shares of the common stock. We will reimburse such
fiduciaries for their reasonable
out-of-pocket
expenses incurred in connection with the distribution of proxy
materials. Solicitation of proxies may be made by the Company by
mail or by personal interview, telephone and other electronic
communication by our officers and other management employees,
who will receive no additional compensation for their services.
How can I
obtain a copy of VistaCares 2006 Annual Report on
Form 10-K?
Our Annual Report on
Form 10-K
is a part of our 2006 Annual Report to Stockholders and it is
being mailed to you together with this proxy statement. However,
you may also receive a copy of our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2006 by visiting
our website (www.vistacare.com) and clicking on Investor
Relations, or we will send you a paper copy without charge
upon request. For a paper copy, please contact:
Investor Relations
VistaCare, Inc.
4800 North Scottsdale Road, Suite 5000
Scottsdale, Arizona 85251
Telephone:
(480) 648-8778
Whom
should I contact if I have any questions?
If you have any questions about the annual meeting or your
ownership of our common stock, please contact Investor Relations
at the address or telephone number listed above.
Householding
of Annual Meeting Materials
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
our proxy statement and annual report to stockholders may have
been sent to multiple stockholders in your household. We will
promptly deliver a separate copy of either document to you if
you contact us at the Investor Relations address and telephone
number listed above. If you want to receive separate copies of
the proxy statement or annual report to stockholders in the
future, or if you are receiving multiple copies and would like
to receive only one copy per household, you should contact your
bank, broker or other nominee record holder, or you may contact
us at the above address or telephone number.
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PROPOSAL 1
ELECTION OF DIRECTORS
(Item 1 of Notice)
General
The Board of Directors, acting on the recommendation of the
Nominating and Corporate Governance Committee, has nominated Jon
M. Donnell, Perry G. Fine, M.D. and Jack A. Henry for
re-election as Class II directors at the 2007 Annual
Meeting of Stockholders, each to serve a three-year term
expiring at the 2010 Annual Meeting of Stockholders or until
their respective successors have been elected and duly
qualified. Unless instructed otherwise, the proxy holders will
vote the proxies received by them for the election of
Messrs. Donnell, Fine and Henry. If any nominee is unable
or declines to serve as a director at the time of the annual
meeting, the proxies may be voted for a substitute nominee
designated by the present Board of Directors (unless another
nominee is indicated in any particular proxy), or the Board of
Directors may reduce the number of directors.
Messrs. Donnell, Fine and Henry have consented to serve as
directors, and our Board of Directors has no reason to believe
that they will be unavailable for service.
The Board
of Directors recommends a vote FOR the proposed
nominees.
Composition
of the Board of Directors
Our Certificate of Incorporation divides the Board of Directors
into three classes. Directors in each class serve for a
three-year term or until their respective successors are elected
and qualified or until their earlier resignation, death or
removal. One class of directors is elected at each annual
meeting. Currently, James C. Crews, Geneva B. Johnson and Brian
S. Tyler serve as Class I directors (whose terms expire in
2009), Messrs. Donnell, Fine and Henry serve as
Class II directors (whose terms expire in 2007), and
Messrs. Klisares and Slager serve as Class III
directors (whose terms expire in 2008). There are no family
relationships among any of our directors or executive officers.
Effective May 13, 2006, Ronald A. Matricaria resigned from
the Board of Directors. On May 16, 2006, acting on the
recommendation of the Nominating and Corporate Governance
Committee, the Board of Directors fixed the number of directors
at eight (8) to eliminate the vacancy on the board created
by Mr. Matricarias resignation. As a result, the
Board of Directors is composed of eight members, with three
(3) directors in each of Classes I and II and two
(2) directors in Class III.
Effective September 26, 2006, a vacancy on the Board of
Directors was created by the resignation of David W.
Elliot, Jr. Effective December 6, 2006, the Board of
Directors, acting on the recommendation of the Nominating and
Corporate Governance Committee, appointed Brian S.
Tyler, Ph.D. to serve the remainder of
Mr. Elliots term ending in 2009.
Set forth below is information concerning the persons nominated
for election at the 2007 Annual Meeting of Stockholders and the
directors whose terms do not expire at the 2007 Annual Meeting.
Information regarding their compensation is presented in the
section of this proxy statement entitled Compensation of
Non-Employee Directors, and information regarding their
beneficial ownership of shares of our common stock is presented
in the section of this proxy statement entitled Security
Ownership of Certain Beneficial Owners and Management.
Nominees
for Class II Director
Jon M. Donnell, 47, has served as a member of our Board
of Directors since July 2005. For over 20 years,
Mr. Donnell has held a variety of leadership roles in
accounting, financial and operating management. Since March
2006, Mr. Donnell has been the principal of J.D. Business
Solutions, LLC, a real estate consulting firm. Prior to that,
Mr. Donnell served as Chief Operating Officer of Levitt and
Sons, a Florida-based homebuilder. Mr. Donnell served as
President of Dominion Homes, Inc. from July 1999 to October 2004
and as Chief Operating Officer from September 1996 to October
2004. From August 1995 to June 1998, he served as Chief
Financial Officer of Dominion Homes. Mr. Donnell has held
operational and financial leadership positions with Del Webb and
was also
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part of the audit team for Peat, Marwick, Mitchell, &
Co., a Phoenix, Arizona-based accounting firm, where he earned
his CPA.
Perry G. Fine, M.D., 54, has served as a member of
our Board of Directors since September 2001. In addition,
Dr. Fine served as our National Medical Director from June
1996 until August 2003. Dr. Fine is currently a Professor
of Anesthesiology in the School of Medicine at the University of
Utah, a post he has held since July 1985. In the fall of 2004,
he assumed the position of Vice President, Medical Affairs of
the National Hospice and Palliative Care Organization,
Alexandria, Virginia. Dr. Fine has extensive clinical,
educational, research and public policy experience dating to the
inception of the Medicare hospice benefit. He is a founding
member of the American Academy of Hospice and Palliative
Medicine. Dr. Fine serves on the Board of Directors of the
American Academy of Pain Medicine and the Society for Arts in
Healthcare.
Jack A. Henry, 63, has served as a member of our Board of
Directors since May 2005. In October 2000, Mr. Henry formed
Sierra Blanca Ventures LLC, a private advisory and investment
firm of which he is the Managing Director. Mr. Henry was
employed with Arthur Andersen LLP from 1966 to 2000 and served
for 18 years as the Managing Partner of Andersens
Phoenix office. Mr. Henry currently serves on the Board of
Directors of White Electronic Designs Corporation, DHB
Industries, Inc. and a private company. Additionally, he
continues his active involvement in community initiatives and as
a board member for multiple business enterprises. Mr. Henry
received his BA and MBA from the University of Michigan.
Directors
Whose Terms Expire at the 2008 Annual Meeting (Class III
Directors)
Pete A. Klisares, 71, has served as a member of our Board
of Directors since November 2001. Since November 1999,
Mr. Klisares has been a principal of MiGG Capital
Investment Company, a private capital investment fund, and a
business consultant. From August 1997 until June 1999, he served
as President and Chief Operating Officer of Karrington Health,
Inc., an assisted living provider. From November 1991 until
August 1997, Mr. Klisares was an Executive Vice President
of Worthington Industries, Inc., a steel processing and
specialty steel product manufacturer. From August 1960 until May
1991, he was employed by AT&T Corp., where he retired as a
Vice President of Manufacturing.
Richard R. Slager, 52, has served as our President since
September 2006 and as our Chief Executive Officer since May
2001. Mr. Slager has also served as a member of our Board
of Directors since May 2001 and as Chairman of our Board of
Directors since August 2003. From May 2001 to January 2005,
Mr. Slager served as our President. From June 1999 until
May 2001, he was Chief Executive Officer of SilverAge LLC, an
entrepreneurial online monitoring and interactive technical
company for seniors. In May 1989, Mr. Slager founded
Karrington Health, Inc., an assisted living provider, and served
as Chairman of the Board of Directors and Chief Executive
Officer of Karrington Health, Inc. until May 1998 when it was
acquired by Sunrise Assisted Living.
Directors
Whose Terms Expire at the 2009 Annual Meeting (Class I
Directors)
James C. Crews, 69, has served as a member of our Board
of Directors since May 2005. Most recently, Mr. Crews
served as the Chief Executive Officer of Banner Health Arizona
from September 1999 to May 2000. From 1991 to 1999, he was the
President and CEO of the Samaritan Health System in Phoenix and
led the merger of that organization with the Lutheran Health
System to create Banner Health, one of the largest
not-for-profit
health systems in the country. In 2000, Mr. Crews retired
from Banner Health after serving in the
not-for-profit
health field for 38 years in hospitals and health systems
in Minnesota, Illinois, West Virginia and Arizona. He achieved
Life Fellow status with the American College of Healthcare
Executives and received his Masters degree in Healthcare
Administration from the University of Iowa. Mr. Crews
continues his community affiliations with organizations
assisting the young, homeless, the medically underserved, and
those working on Alzheimers research.
Geneva B. Johnson, 77, has served as a member of our
Board of Directors since May 2004. Ms. Johnson currently
serves as the Chairman of the Board of Directors of the
Womens Leadership Institute at Mount Mary College, a
position she has held since her appointment in 2005, after
serving as its Executive Director from 2001 until 2005. From
January 1983 to March 1994, Ms. Johnson served as the
President and CEO of Family Service America, Inc., an
organization that serves four million people annually in more
than 1,000 communities through a network of community-based
family counseling and support services. She also serves as a
trustee of Froedtert
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Memorial Lutheran Hospital, is a former trustee of the Medical
College of Wisconsin, and serves on the Advisory Board of the
Harvard Business School initiative on Social Enterprise.
Ms. Johnson earned a bachelors degree from Albright
College, a masters degree from Case Western University,
and a Certificate in Executive Management from the Harvard
Business School. She received an honorary Doctor of Humanities
from Albright College in 1983, and an honorary Doctor of Humane
Letters from Alvernia College in 2002.
Brian S. Tyler, Ph.D., 39, has served as a member of
our Board of Directors since December 2006. Mr. Tyler
currently serves as the President of McKesson Corporations
Medical-Surgical Group. Mr. Tyler has been with McKesson
Corporation since 1997, serving in various senior management
roles, including Vice President of Business Development, Vice
President and subsequently Senior Vice President of Business
Development and Strategy for McKesson Corporations Supply
Management Business, and President of McKesson Specialty.
Mr. Tyler served as a Senior Associate with Integral, Inc.,
a health care consulting company, prior to joining McKesson
Corporation. Mr. Tyler received his BA in Economics from
the University of California Santa Cruz. He earned his MA and
Ph.D. in Economics from the University of Chicago.
CORPORATE
GOVERNANCE
General
We believe that good corporate governance practices provide an
important framework that promotes our long-term strategy of
building value for our stockholders. Accordingly, we review
annually our corporate governance practices and policies to
ensure that they are in line with current best practices and in
compliance with the requirements of the SEC and the Nasdaq Stock
Market.
Information regarding corporate governance at VistaCare can be
found on our website (www.vistacare.com) under the
Investor Relations Corporate Governance
captions. This information includes copies of the charters of
our Audit, Compensation and Nominating and Corporate Governance
Committees, our Code of Business Conduct and Ethics for
officers, employees and directors and our Corporate Governance
Guidelines. Set forth below is a brief description of some of
our most important corporate governance policies and practices.
Independence
of Directors
Independent Directors. We believe
that independent directors play a critical role in company
governance, and we are committed to ensuring that a majority of
our directors are independent. Presently, seven (7) of our
eight (8) directors are independent under the standards
specified by the Nasdaq Stock Market. In particular, our Board
of Directors has determined that none of Messrs. Crews,
Donnell, Fine, Henry, Klisares and Tyler, and Ms. Johnson
has a material relationship with us (either directly or as a
partner, stockholder or officer of an organization that has a
relationship with us) and that each of these directors is
independent within the meaning of Nasdaqs
director independence standards. In addition, our Board of
Directors has determined that all of the members of each of our
Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee have no material relationship
with us (either directly or as a partner, stockholder or officer
of an organization that has a relationship with us) and are
independent within the meaning of Nasdaqs
director independence standards. Mr. Slager is the only
director who is also an employee of VistaCare.
All of our directors during fiscal 2006, other than
Messrs. Slager and Elliot, were non-employee directors. The
Nasdaq independence criteria applicable to directors
includes a requirement that a director not have been employed by
the company or by any parent or subsidiary of the company during
the past three years. From June 1996 to August 2003,
Dr. Fine was employed as our National Medical Director. Our
Board of Directors has determined that as of September 1,
2006, Dr. Fine qualifies as an independent director under
the Nasdaq rules.
The Nasdaq independence criteria also include a
requirement that a director not have received payments from the
company in excess of $60,000 during the current or any of the
past three fiscal years other than: (i) compensation for
board or board committee service; (ii) payments arising
solely from investments in the companys securities;
(iii) compensation paid to a family member of the director
who is a non-executive employee of the company or any parent or
subsidiary of the company; (iv) benefits under a
tax-qualified retirement plan or
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non-discretionary compensation; or (v) certain permitted
loans. Commencing September 1, 2003, Dr. Fine began to
provide consulting services to us under a consulting agreement
described elsewhere in this proxy statement under Certain
Relationships and Related Transactions. In return,
Dr. Fine received an annual retainer of $60,000. Our
consulting agreement with Dr. Fine was terminated in
January 2006. The Board of Directors concluded that
Dr. Fines consulting agreement with the company did
not preclude a determination that Dr. Fine is independent
under the Nasdaq rules.
Independence for Audit Committee Members and
Audit Committee Financial Expert. In addition, as
required by Nasdaq rules, the members of the Audit Committee
each qualify as independent under special standards
established by the SEC for members of audit committees. The
Audit Committee also includes at least one independent member
who is determined by the Board of Directors to meet the
qualifications of an audit committee financial
expert in accordance with SEC rules, including that the
person meets the relevant definition of an independent
director. Jon M. Donnell and Jack A. Henry are the
independent directors who have been determined to be audit
committee financial experts. Stockholders should understand that
this designation is a disclosure requirement of the SEC related
to Messrs. Donnell and Henrys experience and
understanding with respect to certain accounting and auditing
matters. The designation does not impose upon
Messrs. Donnell and Henry any duties, obligations or
liability that are greater than are generally imposed on them as
members of the Audit Committee and the Board of Directors, and
their designation as audit committee financial experts pursuant
to this SEC requirement does not affect the duties, obligations
or liability of any other member of the Audit Committee or the
Board of Directors.
Lead
Director
In order to ensure a balanced relationship between management
and the Board of Directors, in 2003 our Board of Directors
established the role of Lead Director. The Lead Director serves
as the Chair of any meeting at which management directors are
not present and acts as a liaison between management, including
the Chairman/Chief Executive Officer, and the independent
directors. Mr. Klisares served as the Lead Director during
our 2006 fiscal year. In this capacity, Mr. Klisares had
frequent contact with Mr. Slager and other members of
management on a broad range of matters.
Nomination
of Directors
General
The Nominating and Corporate Governance Committee makes
recommendations to the Board of Directors regarding the size and
composition of the Board. The Committee reviews annually with
the Board the composition of the Board as a whole and
recommends, if necessary, measures to be taken so that the Board
reflects the appropriate balance of knowledge, experience,
skills, expertise and diversity required for the Board as a
whole and contains at least the minimum number of independent
directors required by the Nasdaq and other applicable laws and
regulations. The Committee is responsible for ensuring that the
composition of the Board accurately reflects the needs of the
Companys business and, in accordance with the foregoing,
proposing the addition of members and the necessary resignation
of members for purposes of obtaining the appropriate members and
skills.
If the Nominating and Corporate Governance Committee determines
that it is necessary to add a new member to the Board of
Directors or to fill a vacancy, the Committee will identify and
evaluate prospective candidates. In evaluating a director
candidate, including candidates recommended by stockholders, the
Committee will consider, among other things, the
candidates integrity, business acumen, experience, other
commitments, conflicts of interest and the ability to act in the
interest of all of our stockholders. The Committee does not
assign specific weights to particular criteria and no particular
criterion is necessarily applicable to all prospective nominees.
In addition, there are no specific minimum qualifications that
must be met for any nominee. The Committee believes that the
backgrounds and qualifications of the directors, considered as a
group, should provide a significant composite mix of experience,
knowledge and abilities that will allow the Board of Directors
to fulfill its responsibilities.
After seeking input from other Board members and from senior
management, the Chair of the Nominating and Corporate Governance
Committee will compile a list of potential candidates to
recommend for consideration by the full Board. If the Nominating
and Corporate Governance Committee deems appropriate, it may
also engage a
8
professional search firm. The Chair of the Nominating and
Corporate Governance Committee, working with the other members
of the Board and senior management, determines whether any of
the candidates proposed by the Nominating and Corporate
Governance Committee have relationships with any Board members
or management, and oversees the initial contact with candidates.
The Chairman of the Board of Directors, together with at least
one member of the Nominating and Corporate Governance Committee,
interviews prospective candidates. Following such interview, the
Nominating and Corporate Governance Committee deliberates to
consider whether and to what extent prospective candidates
satisfy the criteria for nomination established by the Board of
Directors. Following its evaluation discussion, the Nominating
and Corporate Governance Committee will then recommend to the
Board of Directors the final nominee(s). The Board will then
consider and vote on such recommendations.
To date, we have not paid any third party a fee to assist in
evaluating and identifying nominees. During 2006, no candidate
was recommended to our Nominating and Corporate Governance
Committee by any beneficial owner of more than 5% of our common
stock.
Stockholder
Nominations
Our stockholders may recommend director candidates for inclusion
by the Board of Directors in the slate of nominees which the
Board recommends to our stockholders for election. The
qualifications of recommended candidates will be reviewed by our
Nominating and Corporate Governance Committee in the same
manner, and subject to the same criteria, as nominees proposed
by the Board of Directors, management or other sources.
To propose a nominee, stockholders should submit the name of the
proposed nominee, together with the information required by our
Bylaws, and any other information with respect to the proposed
nominee that will enable the Nominating and Corporate Governance
Committee to make an informed evaluation of the proposed
nominees qualifications. Such proposals should be directed
to:
Nominating and Corporate Governance Committee
c/o General Counsel
VistaCare, Inc.
4800 North Scottsdale Road, Suite 5000
Scottsdale, Arizona 85251
Phone:
(480) 684-4545
The Nominating and Corporate Governance Committee will consider
recommendations that are provided on a timely basis in
accordance with our Bylaws.
Stockholder
Communications with the Board of Directors
The Board of Directors provides a process for stockholders to
send communications to the Board. In particular, stockholders
may send written communications to the Board of Directors at the
following address:
Board of Directors
c/o General Counsel
VistaCare, Inc.
4800 North Scottsdale Road, Suite 5000
Scottsdale, Arizona 85251
Phone:
(480) 684-4545
Upon receipt, the General Counsel will review such
communications to determine whether they relate to matters of
corporate governance or strategy or to matters unrelated to the
responsibilities of the Board of Directors. Communications
relating to matters of corporate governance or strategy will be
forwarded to the Lead Director, who will, in turn, provide
copies or summaries of such communications to the other members
of the Board of Directors for consideration, as appropriate.
9
Board of
Directors Meetings and Committees
The Board of Directors has responsibility for establishing broad
corporate policies and reviewing our overall performance rather
than overseeing
day-to-day
operations. The primary responsibility of the Board of Directors
is to oversee the management of the company and, in so doing, to
serve the best interests of the company and its stockholders.
The Board selects, evaluates and provides for the succession of
executive officers and, subject to stockholder election,
directors. It reviews and approves corporate objectives and
strategies, and evaluates significant policies and proposed
major commitments of corporate resources. It participates in
decisions that may potentially have a major economic impact on
us. Management keeps the directors informed of Company activity
through regular written reports and presentations at Board and
committee meetings.
The Board of Directors and its committees meet throughout the
year on a set schedule, and also hold special meetings and act
by written consent from time to time as appropriate. The Board
has delegated various responsibilities and authority to
different Board committees as described in this section of the
proxy statement. Committees regularly report on their activities
and actions to the full Board. Mr. Slager is the only
director who is also an employee of VistaCare. Mr. Slager
does not serve on any of the Boards committees and does
not participate in any meeting at which his compensation is
evaluated.
The Corporate Governance Guidelines that have been adopted by
the Board call for regularly scheduled meetings at which only
independent directors are present. Executive sessions of
non-management directors are generally held before or after
regular meetings of the Board of Directors. Executive sessions
are either scheduled in advance or called at the request of a
non-management director, and are chaired by the Lead Director.
Our Board of Directors met seven (7) times in fiscal 2006
(of which three (3) were by way of teleconference). Each
director attended 75% or more of the total number of meetings of
the Board of Directors and the committees of which such director
was a member. Six (6) directors attended our 2006 annual
meeting of stockholders. Our Corporate Governance Guidelines
state that directors are not required but are encouraged to
attend the annual meeting of stockholders. To encourage and
facilitate director attendance at the annual meeting, our Board
of Directors attempts to schedule a Board meeting on the same
date as the annual meeting of the stockholders.
Our Board of Directors has a standing Audit Committee, a
standing Compensation Committee, a standing Nominating and
Corporate Governance Committee and a standing Strategic
Initiatives Committee. Each Board committee has a charter that
has been approved by the Board of Directors, and each committee
must review the appropriateness of its charter and perform a
self-evaluation at least annually. All members of all Board
committees are independent, non-employee directors.
In May 2006, the Board of Directors changed the committee
assignments of some of its members to improve the balance of
committee service and better utilize each directors
experience and interests. At the same time, the Board changed
the name of the Investment Committee to the Strategic
Initiatives Committee, effective for its August 2006 meeting.
The duties and authority of the Investment Committee were
reassigned to either the Audit Committee or the Strategic
Initiatives Committee. In December 2006, the Board adopted an
amended and restated Audit Committee charter, a copy of which is
attached as Annex A to this proxy statement.
Audit
Committee
The current members of the Audit Committee are
Messrs. Henry (Chair), Donnell and Klisares. In August
2006, in connection with an adjustment of board committee
assignments, Mr. Crews ceased being a member of the Audit
Committee. Our Board of Directors has determined that
Messrs. Henry and Donnell qualify as audit committee
financial experts under SEC rules; that each member of the
Audit Committee is an independent director under the
Nasdaq rules governing the qualifications of the members of
audit committees; and that each of them has the financial
sophistication to satisfy the requirements of Nasdaq. The Audit
Committee is empowered to retain independent advisers or
consultants as it deems necessary to accomplish its mandates. No
member of our Audit Committee serves on the audit committee of
more than three (3) other public companies. The Audit
Committee met four (4) times during fiscal 2006. The
responsibilities of our Audit Committee and its activities
during fiscal 2006 are described in the Audit Committee
Report for the year ended September 30, 2006 set
forth elsewhere in this proxy statement.
10
Compensation
Committee
The current members of the Compensation Committee are
Messrs. Donnell (Chair), Crews, Klisares and Tyler.
Mr. Tyler was appointed to the Compensation Committee upon
his appointment to the Board in December 2006. Our Board of
Directors has determined that each member of the Compensation
Committee is independent as defined under Nasdaq rules. The
Compensation Committee held six (6) meetings (of which two
(2) were by way of teleconference) during fiscal 2006. The
Compensation Committee evaluates and sets the compensation of
our Chief Executive Officer and makes recommendations to our
Board of Directors regarding the salaries and bonuses of our
other executive officers. Our Chief Executive Officer is not
present during voting or deliberations on the determination of
his salary.
The Compensation Committee also oversees the evaluation of
management by the Board of Directors. In addition, the
Compensation Committee grants stock options and other stock
incentives (within guidelines established by our Board of
Directors) to our officers and employees. The responsibilities
of our Compensation Committee and its activities during fiscal
2006 are described in the Report of the Compensation
Committee on Executive Compensation set forth elsewhere in
this proxy statement.
Nominating
and Corporate Governance Committee
The current members of the Nominating and Corporate Governance
Committee are Ms. Johnson (Chair) and Messrs. Henry
and Klisares. The Board of Directors has determined that each
member of the Nominating and Corporate Governance Committee is
independent as defined under Nasdaq rules. The Nominating and
Corporate Governance Committee is responsible for identifying
and evaluating the qualifications of individuals proposed as
nominees for election to the Board of Directors and for making
recommendations to the Board of Directors based on such
evaluations. In addition, the Nominating and Corporate
Governance Committee is charged with developing and recommending
to the Board of Directors changes to our Corporate Governance
Guidelines and overseeing the periodic evaluation of the Board
of Directors. The Nominating and Corporate Governance Committee
is authorized to retain advisers or consultants as it deems
necessary to accomplish its mandate. For information relating to
nominations of directors by our stockholders, see
Nomination of Directors above. The Nominating and
Corporate Governance Committee held four (4) meetings
during fiscal 2006.
Strategic
Initiatives Committee
In May 2006, our Board of Directors changed the name of the
Investment Committee to the Strategic Initiatives Committee. The
Investment Committee had been established in May 2004 to assist
the Board of Directors by overseeing and making recommendations
regarding financial matters such as financing objectives and
plans, financial strategies and capital structure, and the
implications of major investments, restructurings, joint
ventures, acquisitions and divestitures. The Strategic
Initiatives Committee focuses on matters such as new program and
inpatient unit development, joint ventures, acquisitions and
divestitures. Financial matters formerly considered by the
Investment Committee are now considered by the Audit Committee.
The current members of the Strategic Initiatives Committee are
Messrs. Crews (Chair), Klisares and Tyler, and
Ms. Johnson. Mr. Tyler was appointed to the Strategic
Initiatives Committee upon his appointment to the Board in
December 2006. During fiscal 2006, the Investment Committee met
three (3) times and the Strategic Initiatives Committee met
once.
COMPENSATION
OF NON-EMPLOYEE DIRECTORS
Our non-employee directors receive an annual retainer and
meeting fees, paid in quarterly installments, for their service
as directors and as members of the Boards committees. In
July 2006, our Board of Directors approved a proposal to
eliminate the payment of fees related to Board and committee
meeting attendance and participation in conference calls and
adopted a revised compensation schedule for non-employee
directors, effective for the fourth quarter of fiscal 2006. The
revised compensation schedule provides for annual retainers
based upon Board and Board committee membership and
responsibilities. In addition to annual retainers and fees, our
non-employee directors are reimbursed for their reasonable
out-of-pocket
expenses incurred in connection with their duties.
11
For the first, second and third quarters of fiscal 2006, each
non-employee director, other than the Lead Director and the
Chair of the Audit Committee, received a $20,000 annual
retainer. Our Lead Director, Pete A. Klisares, received a
$40,000 annual retainer. Our current Audit Committee Chair,
Mr. Henry, received a $30,000 annual retainer. Each
non-employee director, other than the Lead Director, received
fees of $1,500 per Board meeting and $750 per Board
conference call attended. Our Lead Director received fees of
$3,000 per Board meeting and $1,500 per Board
conference call attended. Each non-employee director, including
the Lead Director, who served on a Board committee received a
fee of $750 per committee meeting and $375 per
committee conference call attended. Each non-employee director,
including the Lead Director, who served as the chair of a Board
committee received an additional $500 per committee meeting
and an additional $125 per committee conference call
attended.
Beginning with the fourth quarter of fiscal 2006, each
non-employee director receives an annual retainer, payable in
quarterly installments, based upon Board and Board committee
membership and responsibilities. Each non-employee director
receives a $30,000 annual retainer. Our Lead Director,
Mr. Klisares, receives an additional $30,000 annual
retainer. Our Audit Committee Chair, Mr. Henry, receives an
additional $27,500 annual retainer. Our Compensation Committee
Chair, Mr. Donnell, receives an additional $10,000 annual
retainer. Ms. Johnson, Chair of the Nominating and
Corporate Governance Committee, and Mr. Crews, Chair of the
Strategic Initiatives Committee, each receives an additional
$5,000 annual retainer. The non-chair members of our Audit
Committee, Mr. Donnell and Mr. Klisares, each receive
an additional $5,000 annual retainer. All non-chair members of
committees other than the Audit Committee each receive an
additional $2,500 annual retainer.
Non-employee directors are entitled to participate in our 2002
Non-Employee Director Stock Option Plan, or our director plan.
Our director plan authorizes the grant of options to purchase up
to an aggregate of 300,000 shares of our common stock.
Under the director plan, each non-employee director is granted
an option to purchase 20,000 shares of our common stock
promptly following his or her election or appointment to our
Board of Directors. In addition, the director plan provides that
each non-employee director will be granted an option to purchase
10,000 shares of our common stock on November 11 of each
year, provided that he or she attended at least 75% of the
meetings of the Board of Directors, and the meetings of any
Board committee on which he or she served, in the preceding
year. In 2003, our Board of Directors elected to defer such
annual option grants until the first quarter of 2004.
Accordingly, each of our non-employee directors was granted an
option in February 2004 to purchase 10,000 shares of our
common stock under the director plan at an exercise price of
$34.09 per share. Each option granted under the director
plan is immediately exercisable in full and expires on the
earlier of ten years from the date of grant, or on the first
anniversary of the date on which the optionee ceases to be a
director. The Board of Directors elected not to accept the
automatic grant for 2004. On May 5, 2005, the annual grant
was resumed and each of our non-employee directors received an
option grant to purchase 10,000 shares of our common stock
at an exercise price of $17.58 per share. On May 17,
2006, each of our non-employee directors received an option
grant to purchase 10,000 shares of our common stock at an
exercise price of $13.62 per share.
In addition to the foregoing, all of our directors are eligible
to receive option grants under our 1998 Stock Option Plan. In
fiscal 2006, no grants were awarded to any of our directors
pursuant to the 1998 Stock Option Plan, other than an option
grant to purchase 10,000 shares of our common stock awarded
May 17, 2006 to Mr. Klisares as Lead Director, at an
exercise price of $13.62 per share.
12
EXECUTIVE
COMPENSATION
The table below sets forth summary information concerning the
compensation paid to our Chief Executive Officer and our four
other most highly compensated executive officers who served as
executive officers during our fiscal year ended
September 30, 2006. The individuals listed below are
referred to in this proxy statement as our named executive
officers.
Summary
Compensation Table
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Long-Term
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Compensation
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Securities
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All Other
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Restricted
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Underlying
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Compen-
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Annual Compensation
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Other Annual
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Stock
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Options
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sation
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Name and Principal Position
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Year(1)
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Salary
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Bonus
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Compensation
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Awards(2)
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(Shares)
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($)
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Richard R. Slager
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2006
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$
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404,385
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$
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$
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$
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President, Chief Executive
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2005
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$
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401,539
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$
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$
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$
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Officer and Chairman
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2004
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$
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301,539
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$
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$
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$
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Todd R. Coté, M.D.(3)
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2006
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$
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162,769
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$
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$
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$
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127,900
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(4)
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10,000
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Chief Medical Officer
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John Crisci
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2006
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$
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187,019
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$
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$
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$
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259,800
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(5)
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Vice President of People
and
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2005
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$
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155,596
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$
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$
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$
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Education
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2004
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$
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104,769
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$
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$
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$
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45,000
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David Elliot(6)
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2006
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$
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325,000
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$
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$
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85,011
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(7)
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$
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President & Chief
Operating Officer
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2005
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$
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237,500
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$
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|
|
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$
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|
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$
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325,000
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|
|
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Ronald F. Watson(8)
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2006
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$
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169,348
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$
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|
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$
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$
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46,154
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(11)
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Executive Vice President
of
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2005
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$
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200,769
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$
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|
|
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$
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|
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$
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|
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Corporate Development
Services
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2004
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$
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133,538
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$
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$
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$
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240,000
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(9)
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90,000
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(10)
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Stephen Lewis
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2006
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$
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150,000
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$
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$
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$
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Senior Vice President
and
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2005
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$
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150,557
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$
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$
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$
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General Counsel
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2004
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$
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113,078
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$
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|
|
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$
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$
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15,000
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|
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Roseanne Berry
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2006
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$
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149,127
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$
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$
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$
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129,900
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(12)
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Chief Compliance
Officer
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2005
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$
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145,000
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|
|
$
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|
$
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$
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|
|
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2004
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$
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105,000
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$
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|
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$
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$
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25,000
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(1) |
|
On August 18, 2004, our Board of Directors resolved to
change the Companys fiscal year-end from December 31
to September 30, effective immediately. Accordingly, the
compensation information for fiscal 2004 reflects a nine
(9)-month period (January 1 September 30,
2004) rather than a twelve (12)-month period. The
compensation information for fiscal years 2005 and 2006 reflects
a twelve (12)-month period. |
|
(2) |
|
The following table shows the number and market value of
unvested restricted stock holdings with respect to our named
executive officers as of September 30, 2006. The market
value of the holdings in the table below is based on the per
share closing price of our common stock on September 29,
2006 ($10.40), which was the last trading day of our 2006 fiscal
year: |
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Market Value of
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Unvested Shares of
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Unvested
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Restricted
|
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Restricted
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Stock
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Stock Holdings
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Name
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(# of Shares)
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($)
|
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Todd R. Coté
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10,000
|
|
|
$
|
104,000
|
|
John Crisci
|
|
|
20,000
|
|
|
$
|
208,000
|
|
Roseanne Berry
|
|
|
10,000
|
|
|
$
|
104,000
|
|
If we pay a dividend in the future, holders of restricted stock
are entitled to such dividend.
|
|
|
(3) |
|
Dr. Coté was hired in January 2006. |
|
(4) |
|
Reflects the aggregate value of 10,000 shares of common
stock awarded to Dr. Coté, based on the closing price
of $12.79 per share on the date of the award
(January 3, 2006). The restricted stock award vests over
five years |
13
|
|
|
|
|
in equal installments of 2,000 shares on each anniversary
of the award date. The shares remain subject to risk of
forfeiture until they vest, provided Dr. Coté remains
employed with us. |
|
(5) |
|
Reflects the aggregate value of 20,000 shares of common
stock awarded to Mr. Crisci based on the closing price of
$12.99 per share on the date of the award
(December 15, 2005). The restricted stock award vests over
five years in equal installments of 4,000 shares on each
anniversary of the award date. The shares remain subject to risk
of forfeiture until they vest, provided Mr. Crisci remains
employed with us. |
|
(6) |
|
Mr. Elliot was employed from January 2005 until
September 26, 2006. |
|
(7) |
|
Includes $45,011 in relocation expenses and taxes paid in
connection with Mr. Elliots relocation to the Phoenix
metropolitan area, and $40,000 representing the difference
between the price paid by the Company to purchase
Mr. Elliots house in Minnesota in October 2005 and
the price for which the Company sold the house in December 2005. |
|
(8) |
|
Mr. Watson was employed from May 2004 until June 30,
2006. |
|
(9) |
|
Reflects the aggregate value of 15,000 shares of common
stock awarded to Mr. Watson, based on the closing price of
$16 per share on the date of the award (August 24,
2004). The restricted stock award has a
3-year
vesting schedule with one-third vesting on each of
September 30, 2005, 2006 and 2007, if certain performance
objectives are met. In the event such performance objectives are
not met, all of the shares remain subject to risk of forfeiture
until September 30, 2008, provided Mr. Watson is still
employed by us on that date. All 15,000 shares of common
stock were forfeited upon Mr. Watsons departure from
the Company. |
|
(10) |
|
All 90,000 options were forfeited upon Mr. Watsons
departure from the Company. |
|
(11) |
|
Represents severance payments to Mr. Watson in fiscal 2006
pursuant to his Management Agreement with the Company. Such
payments will continue for one year. |
|
(12) |
|
Reflects the aggregate value of 10,000 shares of common
stock awarded to Ms. Berry, based on the closing price of
$12.99 per share on the date of the award
(December 15, 2005). The restricted stock award vests over
five years in equal installments of 2,000 shares on each
anniversary of the award date. The shares remain subject to risk
of forfeiture until they vest, provided Ms. Berry remains
employed with us. |
Stock
Option Grants in Last Fiscal Year
The following table lists the grants during fiscal 2006 of stock
options to the named executive officers listed in the Summary
Compensation Table. Todd R. Coté, M.D., our Chief
Medical Officer, was the only named executive officer to receive
options in the last fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
% of Total
|
|
|
|
|
|
|
|
|
Potential Realizable Value at Assumed Annual Rate of Stock
|
|
|
|
Shares
|
|
|
Options Granted
|
|
|
Exercise or
|
|
|
|
|
|
Price Appreciation for Option Term(1)
|
|
|
|
Underlying
|
|
|
to Employees in
|
|
|
Base Price
|
|
|
Expiration
|
|
|
5%
|
|
|
10%
|
|
Name
|
|
Options Granted
|
|
|
Fiscal Year
|
|
|
($/Sh)
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
Todd R. Coté, M.D.
|
|
|
10,000
|
|
|
|
2.55
|
%
|
|
$
|
12.79
|
|
|
|
1/3/2016
|
|
|
$
|
80,436
|
|
|
$
|
203,840
|
|
|
|
|
(1) |
|
Amounts reported in these columns represent amounts that may be
realized upon exercise of the option immediately prior to the
expiration of its term assuming the specified compound rates of
appreciation (5% and 10%) in the market value of our common
stock over the term of the option. These numbers are calculated
based on rules promulgated by the SEC and do not reflect our
estimate of future stock price growth. The gains shown are net
of the option exercise price, but do not include deductions for
taxes or other expenses associated with the exercise of the
option or the sale of the underlying shares. The actual gains,
if any, on the exercise of this stock option will depend on the
future performance of our common stock, the optionholders
continued employment through the option period, and the date on
which the option is exercised. |
14
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-end Option
Values
The following table sets forth certain information regarding
option exercises in 2006 by the named executive officers listed
in the Summary Compensation Table and the value of all
unexercised stock options held by each of our named executive
officers as of September 30, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
Value of Unexercised
|
|
|
|
|
|
|
|
|
Underlying Unexercised
|
|
In-the-Money
|
|
|
Shares Acquired
|
|
|
Value
|
|
|
Options at Year-End
|
|
Options at Year-End
|
Name
|
|
on Exercise
|
|
|
Realized(1)
|
|
|
Exercisable/Unexercisable
|
|
Exercisable/Unexercisable(2)
|
|
Richard R. Slager
|
|
|
|
|
|
|
|
|
|
|
602,668
|
/
|
|
|
$2,198,942
|
/ $
|
Todd R. Coté, M.D.
|
|
|
|
|
|
|
|
|
|
|
|
/ 10,000
|
|
|
$
|
/ $
|
John Crisci
|
|
|
|
|
|
|
|
|
|
|
45,000
|
/ 20,000
|
|
|
$
|
/$
|
David W. Elliot
|
|
|
|
|
|
|
|
|
|
|
130,000
|
/
|
|
|
$
|
/ $
|
Ronald F. Watson
|
|
|
|
|
|
|
|
|
|
|
40,000
|
/
|
|
|
$
|
/ $
|
Stephen Lewis
|
|
|
|
|
|
|
|
|
|
|
39,000
|
/ 8,000
|
|
|
$159,600
|
/ $53,200
|
Roseanne Berry
|
|
|
|
|
|
|
|
|
|
|
37,800
|
/
|
|
|
$85,120
|
/ $
|
|
|
|
(1) |
|
Represents the difference between the closing price per share of
our common stock on the date(s) of exercise and the exercise
price per share, multiplied by the number of shares acquired on
exercise. |
|
(2) |
|
Represents the difference between the closing price per share
($10.40) of our common stock on the Nasdaq Global Market on
September 29, 2006 and the exercise price per share of the
stock option, multiplied by the number of shares subject to the
option. |
Securities
Authorized for Issuance Under Equity Compensation
Plans
The following table sets forth information as of
September 30, 2006 about our common stock that may be
issued upon the exercise of options and rights under our equity
compensation plans. Our stockholders have previously approved
each of these plans and all amendments that were subject to
stockholder approval. We have no equity compensation plans that
have not been approved by our stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available For
|
|
|
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Number of
|
|
|
Weighted-Average
|
|
|
Equity Compensation
|
|
|
|
Securities to be Issued
|
|
|
Exercise of
|
|
|
Plans (Excluding)
|
|
|
|
Upon Exercise of
|
|
|
Outstanding
|
|
|
Securities Reflected in
|
|
|
|
Outstanding Options,
|
|
|
Options, Warrants
|
|
|
Second Column from
|
|
Plan Name
|
|
Warrants and Rights
|
|
|
and Rights
|
|
|
Left)
|
|
|
1998 Stock Option Plan
|
|
|
2,315,177
|
|
|
$
|
14.12
|
|
|
|
704,111
|
|
2002 Non-Employee Director Stock
Option Plan
|
|
|
210,000
|
|
|
$
|
19.31
|
|
|
|
90,000
|
|
2002 Employee Stock Purchase
Plan(1)
|
|
|
|
|
|
|
|
|
|
|
146,348
|
|
Total
|
|
|
2,525,177
|
|
|
$
|
14.56
|
|
|
|
940,459
|
|
|
|
|
(1) |
|
As of September 30, 2006, an aggregate of
53,652 shares of our common stock have been sold under the
2002 Employee Stock Purchase Plan. |
Management
Agreements with Named Executive Officers
In October 2002, we entered into management agreements with
Richard R. Slager, our Chief Executive Officer, and Stephen
Lewis, our Senior Vice President and General Counsel. In May
2004, we entered into a management agreement with Ronald F.
Watson, who served as our Executive Vice President of Corporate
Development from May 2004 until June 2006. In January 2005, we
entered into a management agreement with David W. Elliot, who
served as our President and Chief Operating Officer from January
2005 until September 2006. In June 2005, we entered into a
management agreement with John Crisci our Vice President of
People. In February
15
2006, we entered into management agreements with Roseanne Berry,
our Chief Compliance Officer, and Todd Coté, our Chief
Medical Officer. In August 2006, we entered into an amended and
restated management agreement with Mr. Slager.
Under these agreements, the named executive officers are
entitled to compensation in the event of their employment
termination or a sale of the Company, as described below.
Compensation
Upon Termination of Employment Prior to Change of
Control
In the event that, prior to a change of control of VistaCare,
the employment of any of the named executive officers is
terminated by (i) us for any reason other than for cause or
the executives death or disability or (ii) the
executive for good reason, we are required to:
|
|
|
|
|
continue to pay the executive his or her then current salary for
twelve months following employment termination; and
|
|
|
|
continue to provide the executive with health and life insurance
benefits for twelve months following employment termination, or
pay the full value of such benefits in cash.
|
Upon Mr. Watsons resignation, he became entitled to
the above severance benefits pursuant to the terms of his
management agreement.
Upon Mr. Elliots resignation, we recorded a charge in
the fourth quarter of 2006 of approximately $400,000 for
severance-related expenses. In addition, we incurred
approximately $150,000 in expenses associated with accelerated
vesting of a portion of Mr. Elliots unvested stock
options.
Compensation
Upon Termination of Employment After a Change of
Control
In the event that, within two years following a change in
control of VistaCare, the employment of Mr. Slager is
terminated for any reason, including Mr. Slagers
death, disability or voluntary resignation, but excluding a
termination by VistaCare for cause, we are required to:
|
|
|
|
|
pay Mr. Slager a lump sum amount equal to three times his
then current annual salary; and
|
|
|
|
continue to provide Mr. Slager with health and life
insurance benefits for three years following employment
termination, or pay the full value of such benefits in cash.
|
In addition, upon a change in control of VistaCare, regardless
of whether Mr. Slagers employment is terminated, the
vesting of all of his options to purchase common stock would be
accelerated in full. Under Mr. Slagers August 2006
amended and restated management agreement, all restricted stock
awarded to Mr. Slager shall also immediately vest in full
upon a change in control of VistaCare regardless of whether
Mr. Slagers employment is terminated following such
change in control.
In the event that, within two years following a change in
control of VistaCare, the employment of Messrs. Lewis,
Crisci or Coté, or Ms. Berry is terminated by
VistaCare for any reason other than cause or the
executives death or disability or is terminated by the
executive for good reason, we are required to:
|
|
|
|
|
pay the executive a lump sum amount equal to two times his or
her then current annual salary;
|
|
|
|
continue to provide the executive with health and life insurance
benefits for two years following employment termination, or pay
the full value of such benefits in cash; and
|
|
|
|
accelerate the vesting of all options to purchase common stock
held by the executive.
|
Compensation
Upon a Sale of the Company
Mr. Slagers October 2002 management agreement
provided that if, before December 31, 2006, there was a
change in control resulting from a sale of the Company in which
the per-share equity value of VistaCare implied by the
transaction is at least $12.50, we are required to pay
Mr. Slager a transaction fee in the amount of
$1 million. Under Mr. Slagers August 2006
amended and restated management agreement, in the event
Mr. Slagers
16
employment is terminated for any reason other than cause within
two years following a change in control of the Company,
Mr. Slager will receive, in addition to the other amounts
provided for under the management agreement, an amount equal to
the greater of the last bonus payment earned by him prior to his
termination or his target bonus payment for the year in which
his employment is terminated if the change in control does not
result from a sale of the Company prior to December 31,
2006.
As used in the management agreements, a sale of the
company means:
|
|
|
|
|
the acquisition of more than 50% of our voting securities by any
person, party or group, other than in connection with a sale of
securities by us; or
|
|
|
|
the acquisition of VistaCare by means of reorganization, merger,
consolidation or asset sale, unless our stockholders prior to
such acquisition hold, in substantially the same proportions as
prior to the acquisition, more than 50% of the voting securities
of the acquiring entity following the acquisition.
|
In exchange for the foregoing rights, each of the executives has
agreed to covenants restricting them from competing with our
business or soliciting our employees or patient referral sources
for two years following their employment termination and from
disclosing or divulging any of our confidential information.
Compensation
Committee Interlocks and Insider Participation
None of our executive officers has served as a director or
member of the compensation committee of any other entity whose
executive officers served as a director or member of our
Compensation Committee.
Report of
the Compensation Committee on Executive Compensation
The Companys executive compensation is supervised by the
Compensation Committee of the Board. The Compensation Committee
seeks to provide executive compensation that will support the
achievement of the Companys financial goals while
attracting and retaining talented executives and rewarding
superior performance. In performing this function, the Committee
reviews executive compensation surveys
and/or other
available information and may from time to time consult with
independent compensation consultants.
Compensation
Philosophy
Our compensation philosophy provides the Board of Directors and
management the framework to make compensation-related decisions
on an ongoing basis. It ensures that compensation is aligned
with key business drivers and that agreement exists with respect
to the key objectives, design parameters and pay levels for the
executive compensation program.
The philosophy is designed for fair pay based on an
employees role in the Company; the market value of their
job; and their performance in that position. Opportunities for
additional compensation rewards are offered when the Company
meets or exceeds its targeted business objectives.
Compensation
Components
There are three compensation components for our executive
officers: base salary, annual incentive compensation and
long-term incentive compensation. Generally, the Compensation
Committee believes both the individual components of
compensation, as well as total compensation, are equitable and
competitive. Each component of the compensation program for
executive officers is further explained below.
Base Salary. Base salary levels for the
Companys executive officers are set generally to be
competitive in relation to the salary levels of executive
officers in other companies within the healthcare industry or
other companies of comparable size, taking into consideration
the positions complexity, responsibility and need for
special expertise. In reviewing salaries in individual cases,
the Company also takes into account individual experience and
performance.
Annual Incentive Compensation. The amount of
incentive compensation awarded to any executive officer is based
on the executives performance in relation to stated goals
and VistaCares overall performance. Results that
17
affect incentive compensation include the executive
officers contribution toward the achievement of revenue
and net income targets as well as key business drivers. The
Compensation Committee establishes the amount of annual
incentive compensation payable to each of the executive officers
in respect of any year following the completion of the audit of
VistaCares financial statements for such year. During
fiscal year 2006, the Compensation Committee did not grant any
bonus pay award to any of the named executive officers.
Long-Term Incentives. The Compensation
Committee uses stock options and restricted stock awards as a
long-term, non-cash incentive and as a means of aligning the
long-term interests of executives and stockholders. The exercise
price of stock options is set at the market price of our common
stock on the date of the grant, thus linking the value of the
options to the holder to the future performance of our stock.
Stock options do not become valuable unless the price of our
stock increases above the price on the date of grant. In the
case of restricted stock awards, the holder of the award does
not realize the value of the stock until the restrictions
imposed on the award expire. The number of stock options or
restricted stock awards granted to an executive as a form of
non-cash compensation is determined by taking into consideration
factors such as the executives performance, the number of
stock options or restricted stock awards previously granted to
the executive, the executives remaining options
exercisable and the value of those stock options or restricted
stock awards, as compared to the anticipated value that an
executive will add to VistaCare in the future. Stock options or
restricted stock awards are not necessarily granted to
executives on an annual basis.
Compensation
of the Chief Executive Officer in fiscal 2006
The Compensation Committee, in determining the salary, incentive
compensation and long term compensation components for our Chief
Executive Officer in fiscal 2006, considered the various factors
described above. During fiscal 2006, we did not grant any stock
options or restricted stock awards to our Chief Executive
Officer.
Deductibility
of Executive Compensation
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public companies for compensation
over $1 million paid to its chief executive and its four
other most highly compensated executives. Performance-based
compensation is excluded from the compensation taken into
account for purposes of the limit if certain requirements are
met. We currently intend to structure our stock options and
restricted stock awards granted to executives in a manner that
complies with the performance-based requirements of the statute.
The Compensation Committee believes that, given the general
range of salaries and bonuses for our executive officers, the
$1 million threshold of Section 162(m) will not be
reached by any of our executive officers in the foreseeable
future.
COMPENSATION COMMITTEE
Jon M. Donnell, Chair
James C. Crews
Pete A. Klisares
18
PROPOSAL 2
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Item 2
of Notice)
Our Audit Committee has selected Ernst & Young LLP, an
independent registered public accounting firm, to audit our
financial statements for the fiscal year ending
September 30, 2007. Ernst & Young LLP audited our
financial statements for the fiscal year ended
September 30, 2006. Although stockholder approval of the
selection of Ernst & Young LLP is not required by law
or by the Nasdaq, our Board of Directors believes that it is
advisable to give stockholders the opportunity to ratify this
selection. We expect that representatives of Ernst &
Young LLP will be present at the 2007 Annual Meeting, with the
opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions from stockholders.
In the event of a negative vote on this proposal by the
stockholders, the Audit Committee will consider whether it is
appropriate in the future to consider the selection of another
independent registered public accounting firm.
The Board of Directors recommends that you vote
FOR the ratification of the selection of
Ernst & Young LLP as our independent registered public
accounting firm, and proxies solicited by the Board will be
voted in favor thereof unless a stockholder has indicated
otherwise on the proxy.
FEES PAID
TO ERNST & YOUNG LLP
In connection with the audit of the 2006 financial statements,
we entered into an engagement agreement with Ernst &
Young LLP which set forth the terms by which Ernst &
Young LLP will perform audit services for us. That agreement is
subject to alternative dispute resolution procedures, a mutual
exclusion of punitive damages and various other provisions.
The following table shows the fees paid or accrued by us for the
audit and other services provided by Ernst & Young LLP
for the fiscal years 2006 and 2005.
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
Audit fees
|
|
$
|
1,362,451
|
|
|
$
|
1,031,865
|
|
Audit-related fees
|
|
$
|
18,457
|
|
|
$
|
116,688
|
|
Tax fees
|
|
$
|
19,993
|
|
|
$
|
93,131
|
|
All other fees
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,400,901
|
|
|
$
|
1,241,684
|
|
Audit fees represent fees for professional services
provided in connection with the audit of our financial
statements for the fiscal years ended September 30, 2006
and September 30, 2005, and reviews of quarterly reports on
Form 10-Q
filed during 2006 and 2005, as well as the specific compliance
requirements of Section 404 of the Sarbanes-Oxley Act of
2002 for the fiscal year ended September 30, 2006.
Audit-related fees represent fees for professional
services provided in connection with an audit of our pension
plans and accounting consultation regarding stock options.
Tax fees consist of fees for tax compliance, tax advice
and tax planning.
All other fees represents an annual subscription we paid
to Ernst & Young LLP for access to its online database
that provides us access to accounting guidance issued by the
Financial Accounting Standards Board and other related
standard-setting bodies.
All audit and non-audit services provided by Ernst &
Young LLP in fiscal years 2005 and 2006 were approved in advance
by the Audit Committee.
Audit
Committee Pre-Approval Policy and Procedures
Our Audit Committee pre-approves all services, including both
audit and non-audit services, provided by our independent
registered public accounting firm for the purpose of maintaining
the independence of such firm. Each
19
year the independent registered public accounting firm provides
the Audit Committee with an engagement letter outlining the
scope of the audit services proposed to be performed during the
year, which must be formally accepted by the Audit Committee
before the audit commences. The independent registered public
accounting firm also submits a fee proposal for audit services,
which must be approved by the Audit Committee before the audit
commences.
Management may periodically submit to the Audit Committee
proposals for non-audit services (together with an estimate of
the associated fees) that it recommends the independent
registered public accounting firm be engaged to provide.
Management and the independent registered public accounting firm
must each confirm to the Audit Committee that the performance of
the proposed non-audit services would not compromise the
independence of the registered independent public accounting
firm and would be permissible under all applicable legal
requirements. The Audit Committee must approve all non-audit
services and the budget for each such service before
commencement of the work. Management and the independent
registered public accounting firm report to the Audit Committee
at each of its regularly scheduled meetings as to the non-audit
services actually provided by the independent registered public
accounting firm and the approximate fees incurred by us for
those services.
During fiscal 2006, no services were provided to us by
Ernst & Young LLP or any other accounting firm other
than in accordance with the pre-approval policy and procedures
described above.
Audit
Committee Report for the Year Ended September 30,
2006
The Audit Committee oversees the companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls. The primary duties and responsibilities of
the Audit Committee are to:
|
|
|
|
|
select and engage VistaCares independent registered public
accounting firm;
|
|
|
|
serve as an independent and objective body to monitor
VistaCares financial reporting process and internal
control systems;
|
|
|
|
review and approve the scope of the annual audit and the
non-audit services to be performed by the independent registered
public accounting firm and that firms audit and non-audit
fees;
|
|
|
|
review and appraise the audit efforts of VistaCares
independent registered public accounting firm and the
companys internal audit function;
|
|
|
|
evaluate VistaCares financial reporting and compliance
with laws and regulations;
|
|
|
|
oversee managements establishment and enforcement of
financial policies;
|
|
|
|
review potential conflict of interest situations and approve any
proposed related party transactions;
|
|
|
|
recommend to the Board of Directors whether the audited
financial statements should be included in the Annual Report on
Form 10-K
for filing with the Securities and Exchange Commission; and
|
|
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provide an open avenue of communication among the independent
registered public accounting firm, financial and senior
management and the Board of Directors.
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The Audit Committee has:
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reviewed and discussed the audited financial statements of
VistaCare for the fiscal year ended September 30, 2006 with
VistaCares management and its independent registered
public accounting firm, including a discussion of the quality
and effect of VistaCares accounting principles, the
reasonableness of significant judgments and the clarity of
disclosures in the financial statements;
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discussed the matters required by Statement on Auditing
Standards No. 61 (Communication with Audit Committees) with
VistaCares independent registered public accounting firm,
including the process used by management in formulating
particularly sensitive accounting estimates and the basis for
the conclusions of the independent registered public accounting
firm regarding the reasonableness of those estimates; and
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20
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met with the independent registered public accounting firm, with
and without management present, to discuss the results of their
examinations, their evaluations of VistaCares internal
controls and the overall quality of VistaCares financial
reporting.
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The Audit Committee has also received the written disclosures
and the letter from VistaCares independent registered
public accounting firm required by Independence Standards Board
Standard No. 1 (entitled Independence Discussions
with Audit Committees), has discussed the independence of
its independent registered public accounting firm and considered
whether the provision of non-audit services by its independent
registered public accounting firm is compatible with maintaining
auditor independence, and has satisfied itself as to the
independent registered public accounting firms
independence.
Based on the review and discussions described above, the Audit
Committee has recommended to the Board of Directors that
VistaCares audited financial statements be included in
VistaCares Annual Report on
Form 10-K
for the fiscal year ended September 30, 2006 for filing
with the Securities and Exchange Commission. The Audit Committee
has also recommended the selection of Ernst & Young LLP
as the Companys independent registered public accounting
firm for the fiscal year ending September 30, 2007.
AUDIT COMMITTEE
Jack A. Henry, Chair
Pete A. Klisares
Jon M. Donnell
21
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of our common stock as of December 15,
2006 by:
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each stockholder we know to beneficially own more than 5% of our
common stock;
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each of our directors, director nominees and named executive
officers; and
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all of our named executive officers and directors as a group.
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For purposes of this table, beneficial ownership is determined
in accordance with
Rule 13d-3
of the Securities Exchange Act of 1934, as amended, and
generally includes voting or investment power over securities.
Under this rule, a person is deemed to be the beneficial owner
of securities that can be acquired by such person within
60 days of December 15, 2006 upon the exercise of
options. Each beneficial owners percentage ownership is
determined by assuming that all options held by such person that
are exercisable within 60 days of December 15, 2006
have been exercised.
Except in cases where community property laws apply or as
indicated in the footnotes to this table, we believe that each
person named in this table possesses sole voting and investment
power over all shares of common stock shown as beneficially
owned by the person. Unless otherwise noted, the address of each
person named in the table is c/o VistaCare, Inc., 4800
North Scottsdale Road, Suite 5000, Scottsdale, Arizona
85251.
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Number of
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Shares
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Shares
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Acquirable
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Total
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Beneficially
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Within 60
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Beneficial
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Name of Beneficial Owner
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Owned
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+
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Days
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=
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Ownership
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Percent
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5% Owners:
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Philip Timon(1)
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3,180,303
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3,180,303
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19.4
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%
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Perry Corp.(2)
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2,151,209
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2,151,209
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12.8
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%
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ICM Asset Management, Inc.(3)
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1,665,424
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1,665,424
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10.1
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%
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FMR Corp.(4)
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1,242,808
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1,242,808
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7.6
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%
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T. Rowe Price Associates, Inc.(5)
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820,750
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820,750
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5.0
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%
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The Bank of New York Company,
Inc.(6)
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817,395
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817,395
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5.0
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%
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Directors and Executive
Officers:
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Richard R. Slager(7)
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103,265
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602,668
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705,933
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4.3
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%
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Todd R. Coté, M.D.(8)
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10,150
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2,000
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12,150
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*
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John Crisci(9)
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20,000
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45,000
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65,000
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*
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David W. Elliot
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2,600
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130,000
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132,600
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*
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Ronald F. Watson(10)
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100
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40,000
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40,100
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*
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Stephen Lewis
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39,000
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39,000
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*
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Roseanne Berry(11)
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10,000
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25,000
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35,000
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*
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James C. Crews
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30,000
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30,000
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*
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Jon M. Donnell
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1,000
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30,000
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31,000
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*
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Perry G. Fine, M.D.
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20,000
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33,333
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53,333
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*
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Jack A. Henry
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1,500
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30,000
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31,500
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*
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Geneva B. Johnson(12)
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100
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40,000
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40,100
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*
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Pete A. Klisares
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2,000
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70,000
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72,000
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*
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Brian S. Tyler
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20,000
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20,000
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*
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All executive officers and
directors as a Group (14 persons)
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134,715
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1,151,801
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1,286,516
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7.8
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%
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22
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* |
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Less than one percent of the outstanding common stock. |
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(1) |
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Based solely on information provided in a Schedule 13D and
Schedule 13G (Amendment No. 5) filed by Philip
Timon with the Securities and Exchange Commission on
May 11, 2006. Endowment Capital, L.P., and Long Drive,
L.P., each a Delaware limited partnership (the Limited
Partnerships), own in the aggregate 3,180,303 shares.
Endowment Capital Group, LLC, a Delaware limited liability
company, is the sole general partner of each of the Limited
Partnerships. Philip Timon is the sole managing member of
Endowment Capital Group, LLC. As a result, Philip Timon has sole
voting power and sole dispositive power over the shares held by
the Limited Partnerships. The principal business address of
Philip Timon is 1105 North Market Street, 15th Floor,
Wilmington, DE 19801. |
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(2) |
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Based solely on information provided in Form 13F filed by
Perry Corp. with the Securities and Exchange Commission on
August 11, 2006. Perry Corp. is an institutional investment
manager and has shared voting and investment authority with
respect to 2,151,209 shares. The principal business address
of Perry Corp. is 599 Lexington Avenue, New York, NY 10022. |
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(3) |
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Based solely on the information provided in a Schedule 13G
jointly filed by ICM Asset Management, Inc. (ICM)
and James M. Simmons (Simmons) with the Securities
and Exchange Commission on October 11, 2006. ICM is a
registered investment adviser. Simmons is the Chief Executive
Officer and controlling stockholder of ICM. Each of ICM and
Simmons has shared voting power with respect to
700,400 shares and shared dispositive power with respect to
1,665,424 shares. Clients of ICM have the right to receive
or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the shares. No individual
clients holdings of the shares are more than five percent
of VistaCares outstanding shares of common stock. The
principal business address of ICM and Simmons is 601 West
Main Avenue, Suite 600, Spokane, WA 99201. |
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(4) |
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Based solely on the information provided in a Schedule 13G
(Amendment No. 3) jointly filed by FMR Corp. and Edward C.
Johnson III (the Reporting Persons) with the
Securities and Exchange Commission on October 10, 2006.
Fidelity Management & Research Company
(Fidelity), a registered investment adviser and a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of
884,308 shares as a result of acting as an investment
adviser to various investment companies. The Reporting Persons,
through their control of Fidelity, each has sole power to
dispose of the 884,308 shares owned by the various
investment companies. Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of
354,000 shares of common stock. The Reporting Persons,
through their control of Fidelity Management Trust Company, each
has sole dispositive power over 354,000 shares of common
stock and sole power to vote or direct the voting of
354,000 shares. In each instance, the clients of the
Reporting Persons have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the
sale of, the shares. No individual clients holdings of the
shares are more than five percent of VistaCares
outstanding shares of common stock. The principal business
address of the Reporting Persons is 82 Devonshire Street,
Boston, MA 02109. |
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(5) |
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Based solely on the information provided in a Schedule 13G
filed by T. Rowe Price Associates, Inc. with the Securities and
Exchange Commission on February 13, 2006. T. Rowe Price
Associates, Inc. is a registered investment adviser, which
reports sole voting power over 131,800 shares and sole
dispositive power over 820,750 shares. The ultimate power
to direct the receipt of dividends paid with respect to, and the
proceeds from the sale of, such securities, is vested in the
individual and institutional clients for which T. Rowe Price
Associates, Inc. serves as investment adviser. The business
address of T. Rowe Price Associates, Inc. is 100 East Pratt
Street, Baltimore, MD 21202. |
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(6) |
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Based solely on the information provided in an Amendment to a
Schedule 13G jointly filed by The Bank of New York Co., Inc. and
The Bank of New York (the Reporting Persons) with
the Securities and Exchange Commission on February 15,
2006. The Reporting Persons have shared voting and shared
dispositive power over 817,395 shares of common stock. The
business address of the Reporting Persons is One Wall Street,
New York, NY 10004. |
23
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(7) |
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Includes 50,000 shares of restricted stock which are
forfeitable until vested (shares of restricted stock vest in
equal annual installments on the anniversary of the award date). |
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(8) |
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Includes 10,000 shares of restricted stock which are
forfeitable until vested (shares of restricted stock vest in
equal annual installments on the anniversary of the award date). |
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(9) |
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Includes 20,000 shares of restricted stock which are
forfeitable until vested (shares of restricted stock vest in
equal annual installments on the anniversary of the award date). |
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(10) |
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Including 100 shares held by Ronald F. Watson
Trust Agency Account, of which Mr. Watson is the
trustee. |
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(11) |
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Includes 10,000 shares of restricted stock which are
forfeitable until vested (shares of restricted stock vest in
equal annual installments on the anniversary of the award date). |
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(12) |
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Including 100 shares held by Geneva B. Johnson Revocable
Trust, of which Ms. Johnson is the trustee. |
24
STOCK
PERFORMANCE GRAPH
The following performance graph illustrates hypothetical
investments of $100 in our common stock in the Russell 2000
Index, a broad market index of which VistaCares common
stock is a component, and in the Standard & Poors
Healthcare Index, a general index of the securities of publicly
traded healthcare companies, on December 18, 2002 (the date
on which our common stock first traded on the Nasdaq National
Market) and compares the change in such investment between such
date and December 31, 2002, between January 1, 2003
and December 31, 2003, between January 1, 2004 and
September 30, 2004, between October 1, 2004 and
September 30, 2005, and between October 1, 2005 and
September 30, 2006. We paid no dividends during the periods
shown, whereas the performance of the indices is shown on a
total return, dividend reinvestment basis. We obtained the graph
and information used on the graph from Research Data Group,
Inc., a source we believe to be reliable.
COMPARISON
OF 45 MONTH CUMULATIVE TOTAL RETURN
Among
VistaCare, Inc., The Russell 2000 Index
And The S & P Health Care Index
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12/18/02
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12/02
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12/03
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9/04
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9/05
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9/06
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VistaCare,
Inc.
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100.00
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106.38
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232.16
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101.73
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96.15
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69.10
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Russell 2000 Index
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100.00
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94.43
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139.05
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144.22
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170.11
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186.99
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S & P Health Care
Index
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100.00
|
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96.49
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111.02
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107.29
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118.47
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127.42
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
VistaCare
Hospice Foundation
The VistaCare Hospice Foundation (formerly, Vista Care
Foundation) is a non-profit corporation established by Barry M.
Smith, the former Chairman of our Board of Directors, in March
1996 for the purpose of soliciting, investing and distributing
funds to advance the cause of
end-of-life
care. The foundation:
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provides grants directly to terminally ill patients to fulfill
basic needs and last wishes;
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funds hospice services for patients who lack the means to pay
for hospice care;
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provides funding for
end-of-life
research and community and professional education; and
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provides grants that help the bereaved overcome their grief of
the loss of a loved one.
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The business and affairs of the foundation are currently
governed by a six (6)-member board of trustees. Geneva B.
Johnson, one of our directors serves as Chair of the board of
trustees. Ms. Johnson receives no compensation for her
service on the board of trustees.
25
Since May 2005, Martin A. Yenawine, an employee of the Company
and former Assistant to the Chairman, has served as President
and Chief Executive Officer of the foundation and as a member of
its board of trustees. We pay Mr. Yenawines
compensation to work with the foundation on a full-time basis,
which, from October 1, 2005 through September 30,
2006, totaled approximately $150,000. At any meeting of the
foundations board of trustees at which at least three, but
fewer than four, trustees are present, it is possible that
Ms. Johnson and Mr. Yenawine could control the outcome
of all actions taken at such meeting.
Consulting
Services Agreement
In September 2003, we entered into a consulting services
agreement with Dr. Perry G. Fine, a member of our Board of
Directors, pursuant to which Dr. Fine provided certain
consulting and other related services to VistaCare as requested
from time to time. In return, Dr. Fine received an annual
retainer of $60,000, paid in equal monthly installments
commencing on September 1, 2003, plus reimbursement by us
in accordance with Company policy of travel and other
business-related expenses. The agreement was terminable by
either Dr. Fine or us upon 30 days written
notice with or without cause, and we could terminate the
agreement immediately under certain circumstances. A copy of the
agreement was filed as Exhibit 10.39 to our 2003 annual
report on
Form 10-K.
In January 2006, the agreement was terminated by mutual consent
and we made the final retainer payment under the agreement.
Since January 2006, Dr. Fine has received no compensation
for services other than fees as a member of our Board of
Directors.
Other
Transaction
On September 27, 2005, in order to aid in the relocation of
Mr. Elliot to the Phoenix, Arizona metropolitan area, the
Board of Directors, at a special meeting and without the
participation of Mr. Elliot, agreed to purchase
Mr. Elliots house in Minnesota for $940,000. The
purchase price was based on two independent real estate
appraisals. An agreement for the sale of the house to the
Company was executed on October 11, 2005. Pursuant to the
terms of this agreement, if the Company was able to sell the
house for more than $940,000, Mr. Elliot would be entitled
to the difference between the sales price and $940,000. If the
house sold for less than $940,000, Mr. Elliot was to pay
the Company the difference between $940,000 and the sales price.
On December 15, 2005, the Company sold the house to an
unrelated third party for $900,000. The sale of the house was
closed on December 15, 2005. The Board of Directors waived
Mr. Elliots obligation to repay the $40,000
difference between the $940,000 purchase price and the $900,000
sales price.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive
officers, directors and persons who own more than ten percent of
a registered class of VistaCares equity securities to file
reports of ownership and changes in ownership on Forms 3, 4
and 5 with the SEC and The Nasdaq National Market. These persons
are required by SEC regulation to furnish us with copies of all
Forms 3, 4 and 5 they file with the SEC and Nasdaq.
Based on a review of reports filed by our directors and
executive officers and based on representations from them, we
believe all stock ownership reports required to be filed by
those reporting persons during 2006 were timely made, except
with regard to the following transactions due to administrative
error: (i) a Form 4 on behalf of Ms. Berry
relating to a stock award on December 15, 2005 and
(ii) a Form 4 on behalf of Mr. Crisci relating to
a stock award on December 15, 2005. The corresponding
Form 4 for each of the persons identified above has since
been filed. In addition, a Form 4 filed on behalf of
Mr. Donnell on May 19, 2006 inadvertently excluded
certain shares of our common stock purchased by
Mr. Donnell. The Form 4 for Mr. Donnell was
amended on May 31, 2006 to include the correct share
ownership information. Further, a Form 4 filed on behalf of
Mr. Hirvela on March 28, 2006 inadvertently excluded a
stock award. The Form 4 for Mr. Hirvela was amended on
March 30, 2006 to include the correct share ownership
information.
OTHER
MATTERS
Our Board of Directors does not know of any matters which will
be brought before the annual meeting other than those matters
specifically set forth in the notice of the 2007 Annual Meeting
of Stockholders. However, if any other matter properly comes
before the annual meeting, it is intended that the persons named
in the enclosed proxy card, or their substitutes acting
thereunder, will vote on such matter in accordance with their
best judgment.
26
Annex A
VistaCare,
Inc.
Audit Committee of the Board of Directors
Amended and Restated Charter
December 6, 2006
The Board of Directors (the Board) of VistaCare,
Inc. (the Company) has established the Audit
Committee of the Board for the purposes and with the authority
and responsibilities described in this Amended and Restated
Audit Committee Charter (the Charter).
Purposes
The purposes of the Audit Committee of the Board (the
Committee) are:
1. To oversee the Companys accounting and financial
reporting processes and the audits of its financial statements;
2. To oversee the quality and integrity of the financial
statements and other financial information the Company provides
to any governmental body or the public;
3. To oversee the Companys systems of internal
controls regarding finance, accounting, legal compliance and
ethics;
4. To select and engage the Companys independent
registered public accounting firm, review and approve the scope
of the annual audit and non-audit services to be performed and
the fees for such services, and receive direct reports from and
evaluate the performance of such firm;
5. To review and make recommendations to the Board on
financial matters, including financing plans and objectives,
financial strategies and capital structure, and the implications
of major investments, restructurings, joint ventures,
acquisitions and divestitures;
6. To establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls, or auditing matters,
and for the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or
auditing matters;
7. To review and reassess the adequacy of the
Committees Charter on an annual basis;
8. To perform such other functions as the Board may assign
to the Committee from time to time.
Authority
and Responsibilities
The Committee shall have the authority to take all actions it
deems advisable to fulfill its responsibilities. The Committee
shall have the authority to engage independent counsel and other
advisers, as it determines necessary to carry out its duties.
The Company will provide for appropriate funding, as determined
by the Committee, for payment of compensation to any registered
public accounting firm engaged to prepare or issue an audit
report or perform other audit, review or attest services for the
Company, for payment of compensation to any advisers employed by
the Committee, and for payment of the ordinary administrative
expenses of the Committee that are necessary or appropriate. The
Committee may request any officer or employee of the Company or
the Companys outside counsel or independent auditor to
attend a meeting of the Committee or to meet with any members
of, or consultants to, the Committee.
The Committee relies on the expertise and knowledge of
management, the internal auditors, and the independent
registered public accounting firm in carrying out its oversight
responsibilities. Management is responsible for determining the
Companys financial statements are complete, accurate, and
in accordance with generally accepted accounting principles. The
public accounting firm is responsible for auditing the
Companys financial statements. It is not the duty of the
Committee to plan or conduct audits, to determine that the
financial
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statements are complete and accurate and are in accordance with
generally accepted accounting principles, to conduct
investigations, or to assure compliance with laws and
regulations or the Companys internal policies, procedures
and controls.
The Committees specific responsibilities in carrying out
its oversight role are delineated in the Audit Committee
Planner. In conjunction with the annual review of the Charter,
the planner will be updated if appropriate to reflect changes in
regulatory requirements, authoritative guidance, and evolving
oversight practices. As the compendium of Committee
responsibilities, the most recently updated planner will be
considered to be an addendum to this Charter.
Composition
1. The Committee shall be comprised of not less than three
directors, each of whom will be independent as
defined from time to time by the listing standards of the Nasdaq
Stock Market, Inc. and by applicable rules and regulations of
the Securities and Exchange Commission.
2. Committee members and its chairperson will be
recommended by the Chairman of the Board and will be designated
by the Board.
3. Each member of the Committee shall be able to read and
understand fundamental financial statements, including the
Companys balance sheet, income statement and cash flow
statement.
4. At least one member of the Committee will have past
employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable
experience or background which results in such members
financial sophistication, including being or having been a chief
executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
5. No member of the Committee may have participated in the
preparation of the financial statements of the Company or any
subsidiary of the Company at any time during the three years
immediately preceding such members appointment to the
Committee. In addition, each member shall be free of any
relationship that, in the opinion of the Board, would interfere
with his or her individual exercise of independent judgment.
Meetings
and Administration
1. The Committee shall meet when scheduled by the Committee
Chairperson
and/or the
Chairman of the Board. The Committee may meet in person, by
telephone conference call, or in any other manner in which the
Board is permitted to meet under law or the Companys
bylaws. The Committee shall keep a written record of its
meetings and actions and shall file a copy of such record in the
corporate minutes of the Company.
2. The Companys Chief Executive Officer shall
designate members of management to attend meetings of the
Committee and otherwise assist the Committee at the request of
the Committee.
3. Each member of the Committee shall be paid the fee, if
any, set by the Board for his or her services as a member of,
and/or
chairperson of, the Committee.
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6 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
Proxy VistaCare, Inc.
4800 North Scottsdale Road, Suite 5000
Scottsdale, Arizona 85251
Proxy Solicited by the Board of Directors of VistaCare, Inc.
for the 2007 Annual Meeting of Stockholders
The undersigned hereby appoints as proxies Richard R. Slager and Stephen Lewis, and each of
them or such other persons as the Board of Directors of VistaCare, Inc. may designate, with full
power of substitution. The undersigned hereby authorizes the above appointed proxies to represent
and to vote, as designated on the reverse side, all shares of common stock of VistaCare, Inc. held
of record by the undersigned on December 26, 2006 at the 2007 Annual Meeting of Stockholders to be
held on February 1, 2007, at 2:00 p.m., Mountain Time, at the Chaparral Suites Resort, 5001 N.
Scottsdale Road, Scottsdale, Arizona 85250 and any adjournments thereof.
This proxy when properly executed will be voted as directed. If no direction is given, the proxy
will be voted FOR the nominees for director, FOR proposal two and in accordance with the proxy
holders discretion respecting any other matters as may properly come before the annual meeting.
Please mark, date, sign and return this proxy card promptly.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
Using a black ink pen, mark your votes with an X as shown in x
this example. Please do not write outside the designated areas.
Annual Meeting Proxy Card
6 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
Proposals The Board of Directors recommends a vote FOR all
the nominees listed and FOR Proposal 2.
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To elect each of the nominees below to serve as Class II directors for a three-year term
ending at the Annual Meeting of Stockholders in 2010 and until their successors are duly
elected and qualified or until the earlier death, resignation or removal from office of such
directors. |
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FOR
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WITHHOLD |
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01 Jon M. Donnell
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02 Perry G. Fine
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03 Jack A. Henry
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2.
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To ratify the selection of Ernst
& Young LLP as
independent registered
public accounting firm for VistaCare,
Inc. for the fiscal year ending
September 30, 2007
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FOR o
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AGAINST o
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Change of Address Please print your new address below.
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Meeting Attendance |
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Mark the box to the right |
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if you plan to attend the |
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Annual
Meeting. |
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate
officer, trustee, guardian, or custodian, please give full title.
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Signature 1 Please keep
signature within the box
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Signature 2 Please keep
signature within
the box
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Date (mm/dd/yyyy) Please print date below. |