About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a 10-K SEC Filing, filed by STAR MULTI CARE SERVICES INC on 10/16/2002.
Next Section Next Section Previous Section Previous Section
STAR MULTI CARE SERVICES INC - 10-K - 20021016 - COMPENSATION

Item 11. Executive Compensation

Summary Compensation Table

                                        Annual Compensation                                   Long Term Compensation
                                        -------------------          --------------------------------------------------------------
                                                            Other                                      Awards
Name and                                                    Annual   Restricted                        ------
Principal                                                   Compen-    Stock          Securities             LTIP       All Other
Position                    Year   Salary($)    Bonus($)    sation     Awards    Underlying Options(#)    Payments($)  Compensation
-----------                 ----   ---------    --------   --------  ----------  ---------------------    -----------  ------------
Stephen Sternbach           2002    $275,529     $     0         --        --        100,000                          $32,660.40(2)
Chief Executive Officer,    2001    $289,956     $     0         --        --              0
President and               2000    $275,917     $25,000         --    67,098                             $27,000(1)
Chairman of the Board

(1) Represents $27,000 credited by the Company to a book reserve account as contingent deferred compensation for the benefit of Mr. Sternbach pursuant to a Non-Qualified Retirement and Death Benefit Agreement between the Company and Mr. Sternbach.

(2) Represents forgiveness of note owed to Company.

Option/SAR Grants in Last Fiscal Year

                                                                                        Potential
                                                                                        Realized Value at
                                                                                        Assumed Annual
                                                                                        Rates of Stock
                                                                                        Price
                                                                                        Appreciation
                                                                                        for Option Term
------------------------------------------------------------------------------------------------------------

(a)                     (b)               (c)              (d)               (e)           (f)      (g)
                    Number of         % of Total
                    Securities        Options/SARs
                    Underlying        Granted to
                    Options/SARs      Employees in     Exercise or Base  Expiration
Name                Granted (#)       Fiscal Year      Price ($/Sh)      Date              5%       10%
------------------------------------------------------------------------------------------------------------
Stephen Sternbach   100,000               71.4%             $.45          02/10/07      $12,433    $27,473

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table contains information concerning the number and value, at May 31, 2000, of the exercised and unexercised options held by Mr. Sternbach.

                                                       Number of Securities
                                                       Underlying Unexercised         Value of Unexercised
                         Shares                        Options Held at Fiscal         In-the-Money Options Held at
                         Acquired on    Value          Year-End                       Fiscal Year-End (1)
Name                     Exercise (#)   Realized ($)   (Exercisable/Unexercisable)    (Exercisable/Unexercisable)
----                     ------------   ------------   ---------------------------    ---------------------------
Stephen Sternbach        0              0              151,112/0                      $0

(1) Fair market value of underlying securities (the closing price of the Company's Common Stock on the Nasdaq National Market) at fiscal year end (May 31, 2000), minus the then effective exercise price.

19

Employment Agreements and Termination of Employment and Change in Control Arrangements.

The Company has an employment agreement with Stephen Sternbach dated as of December 3, 1995 (the "Sternbach Employment Agreement"). The Sternbach Employment Agreement has a term of five years and provides for an initial annual salary of $250,000 (subject to annual increase by the amount of the increase in the Consumer Price Index from the immediate preceding year) plus a bonus of 6% of the Company's net profit before taxes in excess of $1,200,000, not to exceed an aggregate annual bonus of $500,000. The Sternbach Employment Agreement provides that after a Change in Control (as defined in the Sternbach Employment Agreement) of the Company has occurred, if either Mr. Sternbach terminates his employment within six months after he has obtained actual knowledge of the Change in Control or the Company (or any successor thereto) terminates his employment with the Company within one year after the Change in Control, Mr. Sternbach will be entitled to receive (i) his salary, bonuses, awards, perquisites and benefits including, without limitation, benefits and awards under the Company's stock option plans and pension and retirement plans and programs, accrued through the date Mr. Sternbach's employment with the Company is terminated and (ii) a lump-sum payment in cash equal to 2.99 times Mr. Sternbach's base amount.

On June 21, 2000, the Board of Directors of the Company renewed the employment agreement with Stephen Sternbach originally dated as of December 3, 1995, as amended, for an additional five year term (the "Renewed Sternbach Employment Agreement"). The Renewed Sternbach Employment Agreement provides for an annual salary of $280,813.52, his base salary prior to renewal (subject to annual increase by the amount of the increase in the Consumer Price Index from the immediate preceding year) plus a bonus of 6% of the Company's net profit before taxes in excess of $1,200,000. The Renewed Sternbach Employment Agreement provides that after a Change in Control (as defined in the Sternbach Employment Agreement) of the Company has occurred, if either Mr. Sternbach terminates his employment within six months after he has obtained actual knowledge of the Change in Control or the Company (or any successor thereto) terminates his employment with the Company within one year after the Change in Control, Mr. Sternbach will be entitled to receive (i) his salary, bonuses, awards, perquisites and benefits including, without limitation, benefits and awards under the Company's stock option plans and pension and retirement plans and programs, accrued through the date Mr. Sternbach's employment with the Company is terminated and (ii) a lump-sum payment in cash equal to 2.99 times Mr. Sternbach's base amount.

On October 6, 2001, Mr. Sternbach voluntarily waived the cost of living increase that was scheduled to go into affect and further reduced his salary to $275,500 from $290,080. Additionally, in October 2002, he again waived the cost of living increase that was scheduled to go into affect.

In addition, the Renewed Sternbach Employment Agreement terminated the Non-Qualified Retirement and Death Benefit Agreement dated February 1, 1994 Instead, the Renewed Sternbach Employment Agreement provides for an annual contribution by the Company to an investment vehicle of Mr. Sternbach's choice equal to ten percent (10%) of his wages and will no longer be deemed deferred compensation. Additionally, the Company shall continue to pay the premiums of a life insurance policy, owned by Mr. Sternbach, insuring his life for $1.2 million. The cash value of this policy was assigned to Mr. Sternbach.

The Company and Mr. Sternbach are also parties to a Consulting Agreement (the "Sternbach Consulting Agreement") pursuant to which the Company has agreed to retain Mr. Sternbach as a consultant for a period of two years from the time that his employment with the Company terminates. Pursuant to the Sternbach Consulting Agreement, the Company has agreed to pay Mr. Sternbach $150,000 per year and he will be entitled to participate in the health insurance and similar benefits which the Company provides to any of its other consultants.

20

Compensation Committee Report

Overview and Philosophy

The Compensation Committee of the Board of Directors is composed of three directors, Messrs. Berdan, Weinberger and Solof. The Compensation Committee is responsible for developing and making recommendations to the Board of Directors with respect to the Company's executive compensation policies. The Compensation Committee's executive compensation philosophy (which is intended to apply to all members of the Company's management, including its Chief Executive Officer) is to provide competitive levels of compensation, integrate managements' pay with achievement of the Company's performance goals, reward above average corporate performance, recognize individual initiative and achievement and assist the Company in attracting and retaining qualified management.

The objectives of the Company's executive compensation program are to:

` Support the achievement of desired Company performance.
* Provide compensation that will attract and retain superior talent and reward performance.

The executive compensation program provides an overall level of compensation opportunity that is competitive within the health care industry, as well as with a broader group of companies of comparable size and complexity.

21

Executive Officer Compensation

The Company's executive officer compensation is comprised of base salary, annual cash bonus and long-term incentive compensation in the form of stock options and various benefits, including medical plans generally available to employees of the Company.

It is the philosophy of the Compensation Committee that compensation of executive officers should be closely aligned with the financial performance of the Company. Accordingly, benefits are provided through stock option incentives and bonuses which are generally consistent with the goal of coordinating the rewards to management with a maximization of shareholder return. In reviewing Company performance, consideration is given to the Company's earnings. Also taken into account are external economic factors that effect results of operations. An attempt is also made to maintain compensation within the range of that afforded like executive officers at companies whose size and business is comparable to that of the Company.

CEO Compensation

In the case of Stephen Sternbach, the Chief Executive Officer, the Compensation and Stock Option Committee evaluates the Company's mid and long range strategic planning and its implementation as well as the considerations impacting the compensation of executive officers generally which are described above. Mr. Sternbach was awarded a bonus of $25,000 for the year ended May 31, 2000, that will be paid in fiscal 2000-2001.

Benefits

The Compensation Committee endorses the position that equity ownership by management is beneficial in aligning managements' and shareholders' interest in the enhancement of shareholder value. Stock options were granted at exercise prices equal to the market value of the Company's Common Stock on the date of grant.

The Company provides to executive officers medical benefits that generally are available to Company employees. The amount of perquisites, as determined in accordance with the rules of the Securities and Exchange Commission relating to executive compensation, did not exceed 10% of salary for fiscal 2000.

Compensation of Directors

The Company's non-employee directors are paid a fee of $750 for each Board of Directors meeting which they attend. They are not paid any additional fee for serving on any committees of the Board of Directors. However, in September 1998 and May 1999, the outside directors were granted a non-statutory stock option for the right to purchase up to 1,667 and 3,334 shares, respectively, of common stock of the Company.

Performance Graph

Set forth below is a graph comparing the yearly change in the cumulative shareholder return of the Company's Common Stock with the National Association of Securities Dealers Automated Quotation Market Index and a peer group index of five competing companies for the same period. The comparison assumes $100 was invested at the close of business on May 31, 1997 in the Company's Common Stock and in each of the comparison groups, and assumes reinvestment of dividends. The Company paid no cash dividends during the periods.

22

COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS

                              ------------------------ FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET           5/30/1997  5/29/1998  5/28/1999  5/31/2000  5/31/2001  5/31/2002

Star Multi Care Services          100.00      54.17      27.78      13.89       3.43       1.70
Customer Selected Stock List      100.00      68.83      45.37      25.94      51.73      85.18
NASDAQ Market Index               100.00     126.97     174.92     250.00     159.46     122.45

The Customer Selected Stock List is made up of the following securities:

ALLIED HEALTHCARE INTL
GENTIVA HEALTH SVCS
NATIONAL HOME HLTH CARE
NEW YORK HEALTH CARE INC

EDGAR® is a federally registered trademark of the U.S. Securities and Exchange Commission. EDGAR®Online is not affiliated with or approved by the U.S. Securities and Exchange Commission.