SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement

(Pursuant to Section 14(a) of the Securities Exchange Act of 1934)

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

 

þ  Definitive Proxy Statement

 

o  Definitive Additional Materials

 

o  Soliciting Material under Rule 14a-12

 

PEDIATRIX MEDICAL GROUP, INC.

(Name of Registrant as specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

þ  No Fee Required.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PEDIATRIX MEDICAL GROUP

1301 Concord Terrace

Sunrise, Florida 33323-2825

(954) 384-0175

 

March 31, 2006

 

Dear Pediatrix Shareholder:

 

You are cordially invited to attend the 2006 Annual Shareholders’ Meeting of Pediatrix Medical Group, Inc. (“Pediatrix”) on Thursday, May 4, 2006, beginning at 10:00 a.m., local time, at the Sheraton Suites Plantation, 311 North University Drive, Plantation, Florida 33324.

 

At the annual meeting, we will ask you to vote on the election of Pediatrix’s Board of Directors and to consider and act upon any other business properly brought before the meeting. Please vote on all the matters described in our proxy statement. Your Board of Directors unanimously recommends a vote “FOR” the election of each of the nine nominees for Director.

 

We encourage you to attend the annual meeting. Whether or not you plan to attend in person, it is important that your shares be represented and voted at the annual meeting. After reading our proxy statement, please submit your proxy by using the enclosed proxy card. If you choose to vote this year by proxy card, please mark, sign, date and promptly return the card in the self-addressed stamped envelope provided. Returning a proxy does not deprive you of your right to attend the annual meeting and vote your shares in person.

 

Our proxy statement and accompanying forms of proxy and voting instructions are first being mailed on or about March 31, 2006 to Pediatrix’s shareholders of record on March 15, 2006.

 

We appreciate your continued support of our Company.

 

Sincerely,

 

Roger J. Medel, M.D.

Chief Executive Officer

 

PEDIATRIX MEDICAL GROUP, INC.

 

 

 

 

NOTICE OF 2006 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 4, 2006

 

 

 

 

To the Shareholders of
Pediatrix Medical Group, Inc.:

 

NOTICE IS HEREBY GIVEN that the 2006 Annual Shareholders’ Meeting of Pediatrix Medical Group, Inc., a Florida corporation (“Pediatrix”), will be held at 10:00 a.m., local time, on Thursday, May 4, 2006, at the Sheraton Suites Plantation, 311 North University Drive, Plantation, Florida 33324, for the following purposes, as more fully described in the enclosed proxy statement:

 

 

The Board of Directors of Pediatrix has fixed the close of business on March 15, 2006 as the record date for determining those shareholders entitled to notice of, to attend and to vote at the meeting and any postponement or adjournment thereof.

 

This is an important meeting. All shareholders are invited and encouraged to attend the meeting in person. Whether or not you plan to attend, please mark, sign, date and promptly return the enclosed proxy card. Shareholders who return proxy cards prior to the meeting may nevertheless attend the meeting, revoke their proxies and vote their shares in person.

 

By Order of the Board of Directors,

 

Thomas W. Hawkins
Senior Vice President,
General Counsel and Secretary

 

Sunrise, Florida

March 31, 2006

 

PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.

 

TABLE OF CONTENTS

 

 

PEDIATRIX MEDICAL GROUP, INC.

1301 Concord Terrace

Sunrise, Florida 33323-2825

 

 

PROXY STATEMENT

 

We are furnishing this proxy statement and related materials to Pediatrix’s shareholders as part of the solicitation of proxies by Pediatrix’s Board of Directors for use at Pediatrix’s 2006 Annual Shareholders’ Meeting and at any postponement or adjournment of the meeting. In this proxy statement, we refer to Pediatrix Medical Group, Inc. as “Pediatrix”, “we”, “our” and the “Company.”

 

Pediatrix’s 2006 Annual Shareholders’ Meeting will be held on Thursday, May 4, 2006, beginning at 10:00 a.m., local time, at the Sheraton Suites Plantation, 311 North University Drive, Plantation, Florida 33324.

 

At the annual meeting, Pediatrix’s shareholders will be asked to:

 

 

Only holders of record of Pediatrix common stock at the close of business on March 15, 2006, the record date for the meeting, are entitled to notice of, to attend and to vote at the annual meeting, or any postponements or adjournments of the meeting. At the close of business on March 15, 2006, 24,196,488 shares of Pediatrix common stock were issued and outstanding and were held by approximately 161 holders of record.

 

Pediatrix’s shareholders have one vote per share of Pediatrix common stock owned on the record date for each matter properly presented at the annual meeting. Therefore, if you owned 100 shares of Pediatrix common stock on the close of business on March 15, 2006, for example, you can cast 100 votes for each matter properly presented at the annual meeting.

 

A quorum will be present at the meeting if holders of a majority of the issued and outstanding shares of Pediatrix common stock on the record date are represented at the meeting in person or by proxy. If a quorum is not present at the meeting, Pediatrix expects to postpone or adjourn the meeting to solicit additional proxies. Abstentions, including broker non-votes (as described below), will be counted as shares present and entitled to vote for the purposes of determining the presence or absence of a quorum.

 

“Broker non-votes” occur when shares held by a brokerage firm are not voted with respect to a proposal because the firm has not received voting instructions from the shareholder and the firm does not have the authority to vote the shares at its discretion. Under the rules of the New York Stock Exchange, brokerage firms may have the authority to vote their customers’ shares on certain routine matters for which they do not receive voting instructions, including the uncontested election of directors. If other matters are properly brought before the meeting and they are

not considered routine under the applicable New York Stock Exchange rules, shares held by brokerage firms will not be voted on such non-routine matters by the brokerage firms unless they have received voting instructions and, accordingly, any such shares will be “broker non-votes” and will not be counted with respect to such matters.

 

If your shares are held in the name of a brokerage firm, they may be voted by the brokerage firm (as described above) even if you do not give the brokerage firm specific voting instructions. If you are a registered shareholder and hold your shares directly in your own name, your shares will not be voted unless you provide a proxy or fill out a written ballot in person at the meeting.

 

You can vote in any of the following ways.

 

To vote by mail:

 

 

To vote in person if you are a registered shareholder:

 

 

To vote in person if you hold in “street name:”

 

 

Assuming that a quorum is present at the annual meeting, Director nominees receiving the greatest number of affirmative votes from holders of Pediatrix common stock will be elected as Directors of Pediatrix.

 

The Board of Directors recommends that you vote “FOR” the election of each of the nominees for Director named in this proxy statement.

 

The enclosed proxy designates Roger J. Medel, M.D., our Chief Executive Officer, Thomas W. Hawkins, our Senior Vice President, General Counsel and Secretary, and Karl B. Wagner, our Chief Financial Officer, each with full power of substitution, to hold your proxy and vote your shares. Dr. Medel and Messrs. Hawkins and Wagner will vote all shares of Pediatrix common stock represented by properly executed proxies received in time for the annual meeting in the manner specified by the holders of those shares. Dr. Medel and Messrs. Hawkins and Wagner intend to vote all shares of Pediatrix common stock that are properly executed by the record holder but otherwise do not contain voting instructions as follows:

 

 

The grant of a proxy on the enclosed proxy card does not preclude a shareholder from voting in person at the meeting. A shareholder may revoke a proxy at any time prior to its exercise by filing with Pediatrix’s corporate secretary a duly executed revocation of proxy, by submitting a duly executed proxy to Pediatrix’s corporate secretary bearing a later date or by appearing at the meeting and voting in person. Attendance at the meeting will not itself constitute revocation of a proxy.

 

Pediatrix will bear the cost of the solicitation of proxies from its shareholders. In addition to solicitations by mail, Pediatrix’s Directors, officers and employees, and those of its subsidiaries and affiliates, may solicit proxies from shareholders by telephone or other electronic means or in person but will receive no additional compensation for soliciting such proxies. Pediatrix will cause banks and brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of Pediatrix common stock held of record by such custodians, nominees and fiduciaries. Pediatrix will reimburse such banks, brokerage firms, custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in doing so.

 

Pediatrix’s Articles of Incorporation and Bylaws, each as amended and restated, provide that the number of directors constituting Pediatrix’s Board of Directors will be determined from time to time by resolution adopted by Pediatrix’s Board of Directors. During 2005, Pediatrix’s Board of Directors consisted of eight members. Effective March 13, 2006, Pediatrix’s Board of Directors increased the size of Pediatrix’s Board of Directors to nine members and appointed Pascal J. Goldschmidt, M.D. to fill the newly created Board of Directors’ seat.

 

All of Pediatrix’s incumbent Directors have been nominated by Pediatrix’s Board of Directors as Directors to be elected at the annual meeting in 2006 by the holders of Pediatrix common stock.

 

The nominees for Director are as follows:

 

 

Please see below under “Directors, Executive Officers and Key Employees” for the biographies of these nominees for Director.

 

Each Director elected will serve for a term expiring at Pediatrix’s 2007 Annual Meeting of Shareholders, which is expected to be held in May 2007, or until his successor has been duly elected and qualified.

 

Pediatrix’s Board of Directors has no reason to believe that any nominee will refuse to act or be unable to accept election; however, in the event that a nominee for a directorship is unable to accept election or if any other unforeseen contingencies should arise, proxies will be voted for the remaining nominees and for such other person as may be designated by Pediatrix’s Board of Directors, unless the proxies provide otherwise.

If a quorum is present and voting at the annual meeting, the nine nominees receiving the highest number of votes “FOR” election will be elected to the Board of Directors of Pediatrix. Proxies will be voted “FOR” all such nominees absent contrary instructions.

 

Pediatrix’s Board of Directors Recommends a Vote “For” the Election of Each of the Nine Nominees For Director.

 

Our business, property and affairs are managed under the direction of our Board of Directors, except with respect to those matters reserved for our shareholders. Our Board of Directors establishes our overall corporate policies, reviews the performance of our senior management in executing our business strategy and managing our day-to-day operations and acts as an advisor to our senior management. Our Board’s mission is to further the long-term interests of our shareholders. Members of the Board of Directors are kept informed of Pediatrix’s business through discussions with Pediatrix’s management, primarily at meetings of the Board of Directors and its committees, and through reports and analyses presented to them. Significant communications between our Directors and senior management occur apart from such meetings.

 

The standing committees of Pediatrix’s Board of Directors are the Executive Committee, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Copies of the charters for the latter three committees are attached to this Proxy Statement and you may also find copies of these committee charters, as well as our corporate governance principles, on our website at www.pediatrix.com. Our Internet Website and the Information Contained Therein, Other Than Material Expressly Referred to in This Proxy Statement, or Connected Thereto Are Not Incorporated into This Proxy Statement. A copy of our committee charters and corporate governance principles are also available upon request from Pediatrix’s Secretary at 1301 Concord Terrace, Sunrise, FL 33323.

 

During 2005, Pediatrix’s Board of Directors held nine meetings and took various actions by unanimous written consent. Committees of the Board held a combined total of twenty-four meetings and also took action by unanimous written consent. Each incumbent Director attended at least 75% of the total number of meetings of Pediatrix’s Board of Directors and its committees held during 2005 during the period he was a member thereof. Although Pediatrix has no formal policy with respect to its Directors’ attendance at Pediatrix annual shareholders’ meetings, in 2005 all of our incumbent Directors attended the annual shareholders’ meeting.

 

Our Board of Directors has recently reviewed information about each of our non-employee Directors and made the determination that we have a majority of independent Directors on our Board. In arriving at this conclusion, our Board of Directors made the affirmative determination that each of Drs. Carlo, Freeman and Goldschmidt and Messrs. Alvarez, Fernandez, Gabos, Mullen and Sosa met the Board of Director’s previously adopted categorical standards for determining independence in accordance with the New York Stock Exchange’s corporate governance rules.

 

Following each annual meeting of the shareholders, Pediatrix’s Board of Directors designates a non-management Director as “Chairman of the Board” or, alternatively, as “Presiding Director.” In addition to other responsibilities, the Chairman of the Board or Presiding Director presides over meetings of our non-management Directors. Following our 2005 annual meeting of the shareholders, our Board of Directors appointed Mr. Alvarez to serve as Chairman of the Board. During 2005, all of our non-management Directors were also independent in

accordance with the Securities and Exchange Commission’s and New York Stock Exchange’s corporate governance rules.

 

Anyone who has a concern about Pediatrix’s conduct, including accounting, internal accounting controls or audit matters, may communicate directly with our Chairman of the Board of Directors (or Presiding Director), our non-management Directors, the Chairman of the Audit Committee or the Audit Committee. Such communications may be confidential or anonymous, and may be submitted in writing to the Chief Compliance Officer, Pediatrix Medical Group, Inc., 1301 Concord Terrace, Sunrise, Florida 33323 or reported by phone at 877-835-5764. All such concerns will be forwarded to the appropriate Directors for their review, and will be simultaneously reviewed and addressed by Pediatrix’s General Counsel or Chief Compliance Officer in the same way that other concerns are addressed by us. Pediatrix’s Code of Conduct, which is discussed below, prohibits any employee from retaliating or taking any adverse action against anyone for raising or helping to resolve an integrity concern.

 

Pediatrix has adopted a Code of Conduct that applies to all Directors, officers, employees and independent contractors of Pediatrix. The text of the Code of Conduct is available at, and Pediatrix intends to disclose any amendments to, or waivers from, any provision of the Code that applies to any of Pediatrix’s executive officers or Directors by posting such information on, our website at www.pediatrix.com.

 

Pediatrix has also adopted a Code of Professional Conduct — Finance that applies to all employees with access to, and responsibility for, matters of finance and financial management, including Pediatrix’s Chief Executive Officer and Chief Financial Officer. The text of the Code of Professional Conduct — Finance is also available on the Pediatrix website. Pediatrix intends to disclose any amendments to, or waivers from, any provision of the Code that applies to any of Pediatrix’s Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller or persons performing similar functions by posting such information on our website at www.pediatrix.com.

 

The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of Pediatrix’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that we specifically incorporate such report by reference.

 

We act under a written charter that has been adopted by Pediatrix’s Board of Directors. While we have the responsibilities set forth in this charter, it is not our duty to plan or conduct audits or to determine that Pediatrix’s financial statements are complete, accurate or in compliance with generally accepted accounting principles. This is the responsibility of Pediatrix’s management and independent auditors.

 

Our primary function is to assist the Board of Directors in their evaluation and oversight of the integrity of Pediatrix’s financial statements, the qualifications and independence of Pediatrix’s independent auditors and the performance of Pediatrix’s audit functions. In addition, while we are also responsible for assisting the Board of Directors in their evaluation and oversight of Pediatrix’s compliance with applicable laws and regulations, it is not our duty to assure compliance with such laws and regulations or Pediatrix’s Compliance Plan and related policies.

 

We also oversee Pediatrix’s auditing, accounting and financial reporting processes generally. Management is responsible for Pediatrix’s financial statements and the financial reporting process, including the system of internal controls. We also review the preparation by management of Pediatrix’s quarterly and annual financial statements. Pediatrix’s independent auditors, who are accountable to us, are responsible for expressing an opinion as to whether the consolidated financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of Pediatrix in conformity with generally accepted accounting principles in the United States. Pediatrix’s independent auditors are also responsible for auditing and reporting on management’s assessment of, and the effective operation of, Pediatrix’s internal control over financial reporting. We are responsible for

retaining Pediatrix’s independent auditors, and maintain sole responsibility for their compensation, oversight and termination. We also are responsible for pre-approving all non-audit services to be provided by the independent auditors, and on an annual basis discussing with the independent auditors all significant relationships they have with Pediatrix to determine their independence.

 

In fulfilling our oversight role, we met and held discussions with Pediatrix’s management and independent auditors. Management advised us that Pediatrix’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and we reviewed and discussed the consolidated financial statements, the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of Pediatrix’s periodic reports, key accounting and reporting issues and the scope, adequacy and assessments of Pediatrix’s internal controls and disclosure controls and procedures with management and Pediatrix’s independent auditors. We discussed privately with the independent auditors matters deemed significant by the independent auditors, including those matters required to be discussed pursuant to Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended.

 

The independent auditors also provided us with the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and we discussed with the independent auditors matters relating to their independence. We also reviewed a report by the independent auditors describing the firm’s internal quality-control procedures and any material issues raised in the most recent internal-quality control review or external peer review or inspection performed by the Public Company Oversight Board.

 

Based on our review with management and the independent auditors of Pediatrix’s audited consolidated financial statements and the independent auditors’ report on such financial statements, and based on the discussions and written disclosures described above and our business judgment, we recommended to the Board of Directors that the audited consolidated financial statements be included in Pediatrix’s Annual Report on Form 10-K for the year ended December 31, 2005 for filing with the Securities and Exchange Commission.

 

Submitted by the Audit Committee of the Board of Directors.

 

Paul G. Gabos

Lawrence M. Mullen

Enrique J. Sosa

 

Pediatrix’s executive officers and Directors are as follows:

 

 

 

 

Roger J. Medel, M.D. has been a Director of Pediatrix since he co-founded the Company in 1979. Dr. Medel served as Pediatrix’s President until May 2000 and as Chief Executive Officer to December 2002. In March 2003, Dr. Medel reassumed the position of President, serving in that position until May 2004 and Chief Executive Officer, a position in which he continues to serve today. Dr. Medel is a member of the Board of Trustees of the University of Miami. In addition, Dr. Medel participates as a member of several medical and professional organizations.

 

Cesar L. Alvarez was elected as Chairman of the Board of Directors in May 2004 and has been a Director since March 1997. Mr. Alvarez has served since 1997 as the President and Chief Executive Officer of the international law firm of Greenberg Traurig, P.A. Mr. Alvarez also serves on the Board of Directors of Atlantis Plastics, Inc., Watsco, Inc. and New River Pharmaceutical Inc.

 

Waldemar A. Carlo, M.D. was elected as a Director in June 1999. Dr. Carlo has served as Professor of Pediatrics and Director of the Division of Neonatology at the University of Alabama at Birmingham Medical School since 1991. Dr. Carlo also has served as Director of Newborn Nurseries at the University of Alabama Medical Center and the Children’s Hospital of Alabama since 1991. Dr. Carlo participates as a member of several medical and professional organizations. He has received numerous research awards and grants and has lectured extensively, both nationally and internationally.

 

Michael B. Fernandez was elected as a Director in October 1995. Mr. Fernandez has served as Chairman of MBF Healthcare Partners, LLC, a private equity firm focused on investing in healthcare service companies, since February 2005. Mr. Fernandez previously served as Chairman and Chief Executive Officer of CarePlus Health Plans Inc., a managed care HMO, from January 2003 until February 2005 and as Chairman and Chief Executive Officer of Physicians Healthcare Plans, Inc., a Florida-based HMO, from 1992 until December 2002. Presently, Mr. Fernandez also serves on the Board of Directors of various private entities, including Healthcare Atlantic, Inc., a holding company that operates various health care entities.

 

Roger K. Freeman, M.D. was elected as a Director in May 2002. Dr. Freeman is a maternal-fetal medicine physician. In 1975, he founded Perinatal Associates of Southern California, a physician practice group that has been affiliated with Pediatrix since we acquired Magella Healthcare Corporation (“Magella”) in May 2001. In September

1999, Dr. Freeman retired from the private practice of medicine. Dr. Freeman has served on many national and local OB/ GYN and maternal-fetal organizations. He is currently Associate Medical Director for Women’s Services of Miller Children’s Hospital at Long Beach Memorial Medical Center and serves on the Board of Directors of Todd Cancer Institute at Long Beach Memorial Hospital. Dr. Freeman has authored numerous articles and three books.

 

Paul G. Gabos was elected as a Director in November 2002. Mr. Gabos has served as Chief Financial Officer of Lincare Holdings Inc. since June 1997 and previously served as Vice President — Administration for Lincare. Prior to joining Lincare in 1993, Mr. Gabos worked for Coopers & Lybrand and for Dean Witter Reynolds, Inc.

 

Pascal J. Goldschmidt, M.D. was elected as a director in March 2006. Dr. Goldschmidt will become the Senior Vice President for Medical Affairs and Dean of the University of Miami Leonard M. Miller School of Medicine in April 2006. Previously Dr. Goldschmidt was a faculty member with the Department of Medicine at Duke University Medical Center where he served as Chairman from 2003 to 2006 and as Chief of the Division of Cardiology from 2000 to 2003.

 

Lawrence M. Mullen was elected as a director in May 2004. Mr. Mullen had served as our Vice President and Chief Operating Officer from August 1998 until May 2000 and then concentrated on special projects, including initiatives relating to our well-baby nursery and hearing screen programs, until his retirement in April 2001. Mr. Mullen was our Vice President and Chief Financial Officer from May 1995 to August 1998. Prior to his tenure at Pediatrix, Mr. Mullen was Senior Vice President and Chief Financial Officer of Medical Care America, Inc. He had also been a partner of KPMG, LLP, where he was employed for nearly 30 years.

 

Enrique J. Sosa, Ph.D. was elected as a director in May 2004. Mr. Sosa is currently a director of FMC Corporation and National Railroad Passenger Corporation (also known as Amtrak). Mr. Sosa, who is presently retired, served as President of BP Amoco Chemicals from January 1999 to April 1999. From 1995 to 1998, he was Executive Vice President of Amoco Corporation. Prior to joining Amoco, Mr. Sosa served as Senior Vice President of The Dow Chemical Company, President of Dow North America and a member of its Board of Directors. Mr. Sosa has previously served on the Board of Directors of Electronic Data Systems Corporation, Dow Corning Corporation and Destec Energy, Inc. He also served as a member of the Executive Committee of the American Plastics Council, a member of the Executive Committee of the American section of the Society of Chemical Industry, and a member of the American Chemical Council.

 

Joseph M. Calabro joined Pediatrix in January 1996 as Chief Information Officer. In January 2000, Mr. Calabro was appointed Executive Vice President, Management, in May 2000, he was appointed Chief Operating Officer and in May 2004, he was appointed President and Chief Operating Officer. Prior to joining Pediatrix, Mr. Calabro served as Director of Information Technology for the Ambulatory Surgery Group of Columbia/ HCA. He served in various operational and technology positions for various healthcare companies from 1987 to 1994.

 

Thomas W. Hawkins joined Pediatrix in May 2003 and became Senior Vice President, General Counsel and Secretary in June 2003. From January 2000 to April 2003, he was a partner with New River Capital Partners, L.P., a private equity firm. Mr. Hawkins previously served as Senior Vice President, Corporate Development at AutoNation, Inc., from June 1996 to December 1999. From 1994 to 1996, Mr. Hawkins was Executive Vice President — Administration of Blockbuster Entertainment Group, a division of Viacom, Inc. He served as General Counsel at Blockbuster Entertainment Corporation prior to its merger with Viacom, Inc. in 1994.

 

Karl B. Wagner joined Pediatrix in May 1997 and was appointed Chief Financial Officer and Treasurer in August 1998. Prior to his appointment, Mr. Wagner served as Pediatrix’s Controller. Prior to joining Pediatrix, Mr. Wagner was Chief Financial Officer for the East Region of Columbia/HCA’s Ambulatory Surgery Group from January 1995 until May 1997. From July 1993 through January 1995, Mr. Wagner was Assistant Controller of Medical Care International, Inc., a subsidiary of Medical Care America, Inc.

 

The following individuals, while not executive officers for purposes of the federal securities laws, are key employees of Pediatrix.

Robert J. Balcom, M.D. joined Pediatrix in 1993 and has been our Regional President, Central Region since January 2002. Dr. Balcom previously served as our Vice President of Medical Operations, Central Region. Dr. Balcom is Board Certified in Pediatrics and Neonatal-Perinatal Medicine.

 

Robert C. Bryant joined Pediatrix in 1996 and has been our Senior Vice President and Chief Information Officer since February 2004. Mr. Bryant previously served as our Vice President, Information Systems from January 2000 to January 2004 and as Director, Information Service from 1997 to January 2000.

 

David A. Clark joined Pediatrix in May 2001 and has been our Senior Vice President, Operations since December 2003. Mr. Clark previously served as Vice President of Operations, South Central Region from November 2001 to November 2003. From June 2000 to October 2001, Mr. Clark was Vice President of Operations for Magella, which we acquired in 2001, and prior thereto he was Vice President of Development for Magella. Mr. Clark is a certified public accountant.

 

Eric H. Kurzweil, M.D. joined Pediatrix in 1996 and has been our Regional President, Mountain Region since January 2002. Dr. Kurzweil previously served as our Vice President of Medical Operations, Mountain Region. Dr. Kurzweil is Board Certified in Pediatrics and Pediatric Critical Care.

 

Frederick V. Miller, M.D. joined Pediatrix in 1991 and has been our Regional President, Atlantic Region since January 2002. Dr. Miller previously served as our Vice President of Medical Operations, Atlantic Region. Dr. Miller is Board Certified in Pediatrics and Neonatal-Perinatal Medicine.

 

Carlos A. Perez, M.D. joined Pediatrix in 1986 and has been our Regional President, Caribbean Region since January 2002. Dr. Perez previously served as our Vice President of Medical Operations, Caribbean Region. Dr. Perez is Board Certified in Pediatrics, Neonatal-Perinatal Medicine and Pediatric Critical Care.

 

Michael V. Pokroy, M.D. joined Pediatrix in 1996 and has been our Regional President, Pacific Region since January 2002. Dr. Pokroy previously served as our Vice President of Medical Operations, Pacific Region. Dr. Pokroy is Board Certified in Pediatrics and Pediatric Nephrology.

 

John F. Rizzo joined Pediatrix in November 2002 as Senior Vice President, Business Development. Prior to joining Pediatrix, Mr. Rizzo served in strategic and financial executive roles with early stage, venture capital-backed companies. From 1996 to 2000, Mr. Rizzo was a senior executive with AutoNation, Inc., where he served as Vice President of Corporate Development and subsequently as Senior Vice President, Industry Relations. From 1985 to 1996, Mr. Rizzo was employed by Arthur Andersen LLP.

 

Alan R. Spitzer, M.D. joined Pediatrix in 2004 as Senior Vice President, Research and Education, following a long career in academic neonatal medicine. Prior to joining Pediatrix, Dr. Spitzer served as Chief of Neonatology at the State University of New York at Stony Brook and before that as Chief of Neonatology and Chair of Pediatrics at Thomas Jefferson University in Philadelphia. Dr. Spitzer has edited two major textbooks, Intensive Care of the Fetus and Neonate, the second edition of which was published in March 2005, and Fetal and Neonatal Secrets, the second edition of which is scheduled for publication in 2006.

 

Michael D. Stanley, M.D. joined Pediatrix in 1997 and has been our Regional President, South Central Region since January 2002. Dr. Stanley previously served as our Vice President of Medical Operations, South Central Region. Dr. Stanley is Board Certified in Pediatrics and Neonatal-Perinatal Medicine.

 

Audit Committee

 

Pediatrix’s Audit Committee held eleven meetings in 2005. Messrs. Gabos, Mullen and Sosa were members of the committee throughout 2005. Mr. Gabos acted as chair of the committee throughout 2005. Pediatrix’s Board of Directors has determined that each of Messrs. Gabos, Mullen and Sosa qualify as “audit committee financial experts” as defined by the rules and regulations of the Securities and Exchange Commission and that each of Messrs. Gabos, Mullen and Sosa meet the independence requirements under such rules and regulations and for a New York Stock Exchange listed company.

Pediatrix’s Board of Directors has adopted a written charter for the Audit Committee setting out the functions that it is to perform and has recently amended the charter. A copy of the Amended and Restated Audit Committee Charter is attached hereto as Appendix A to this proxy statement. The text of the charter is also available on our website at www.pediatrix.com.

 

Please refer to the Audit Committee Report, which is set forth on page 5, for a further description of our Audit Committee’s responsibilities and its recommendation with respect to our audited consolidated financial statements for the year ended December 31, 2005.

 

Compensation Committee

 

Pediatrix’s Compensation Committee held eight meetings in 2005. Drs. Carlo and Freeman and Mr. Fernandez were members of the committee throughout 2005. Dr. Carlo acted as chair of the committee throughout 2005. Pediatrix’s Board of Directors has determined that each of Drs. Carlo and Freeman and Mr. Fernandez meet the independence requirements for a New York Stock Exchange listed company.

 

Pediatrix’s Board of Directors has adopted a written charter for the Compensation Committee setting out the functions that it is to perform and has recently amended the charter. A copy of the Amended and Restated Compensation Committee Charter is attached hereto as Appendix B to this proxy statement. The text of the charter is also available on our website at www.pediatrix.com.

 

Please refer to the Compensation Committee Report, which is set forth on pages 13-14, for a further description of our Compensation Committee’s responsibilities and its compensation philosophy and a description of considerations underlying each component of compensation paid to Pediatrix’s executive officers for 2005.

 

Nominating and Corporate Governance Committee

 

Pediatrix’s Nominating and Corporate Governance Committee held one meeting in 2005. Dr. Freeman and Messrs. Fernandez and Sosa were members of the committee throughout 2005. Dr. Freeman acted as chair of the committee throughout 2005. Pediatrix’s Board of Directors has determined that each of Messrs. Fernandez and Sosa and Dr. Freeman meet the independence requirements for a New York Stock Exchange listed company.

 

Pediatrix’s Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee setting out the functions that it is to perform and has recently amended the charter. A copy of the Amended and Restated Nominating and Corporate Governance Committee Charter is attached hereto as Appendix C to this proxy statement. The text of the charter is also available on our website at www.pediatrix.com.

 

The Nominating and Corporate Governance Committee assists the Board of Directors with respect to nominating new Directors and committee members and taking a leadership role in shaping the corporate governance of Pediatrix. To fulfill its responsibilities and duties, the committee, among other things, reviews the qualifications and independence of existing Directors and new candidates; assesses the contributions of current Directors; identifies and recommends individuals qualified to be appointed to committees of the Board; considers rotation of committee members; reviews the charters of the committees and makes recommendations to the full Board of Directors with respect thereto; develops and recommends to the Board of Directors corporate governance principles, including a code of business conduct; and evaluates and recommends succession plans for Pediatrix’s chief executive officer and other senior executives.

 

Although the Nominating and Corporate Governance Committee does not solicit director nominations, the committee will consider candidates suggested by shareholders in written submissions to Pediatrix’s Secretary in accordance with the procedures described below in the section entitled “Information Concerning Shareholder Proposals.” In evaluating nominees for Director, the committee does not differentiate between nominees recommended by shareholders and others. In identifying and evaluating candidates to be nominated for Director, the committee reviews the desired experience, mix of skills and other qualities required for appropriate Board composition, taking into account the current Board members and the specific needs of Pediatrix and its Board. This process is designed so that the Board of Directors includes members with diverse backgrounds, skills and experience, and represents appropriate financial, clinical and other expertise relevant to the business of Pediatrix. At a minimum, Director candidates must meet the following qualifications: high personal and professional ethics,

integrity and values and a commitment to the representation of the long-term interests of our shareholders. Although the committee’s charter permits the committee to engage a search firm to identify Director candidates, Pediatrix did not pay any third parties a fee to assist in the process of identifying or evaluating Director candidates in 2005.

 

The following is a summary of certain agreements and transactions among related parties and us. It is our policy that any such agreements and transactions must be entered into in good faith and on fair and reasonable terms that are no less favorable to us than those that would be available to us in a comparable transaction in arms-length dealings with an unrelated third party. We believe that all agreements and transactions described below met that standard at the time they were effected.

 

In March 1997, Mr. Alvarez was appointed to Pediatrix’s Board of Directors. Mr. Alvarez is the President and Chief Executive Officer of Greenberg Traurig, P.A., which serves as one of Pediatrix’s outside counsels and receives customary fees for legal services. In 2005, Pediatrix paid Greenberg Traurig, P.A. approximately $475,000 for such services and currently anticipates that this relationship will continue.

 

Deborah Medel-Guerrero, the daughter of Dr. Medel, Pediatrix’s Chief Executive Officer, is employed by Pediatrix as its Director of Practice Integration and is responsible for matters relating to the integration of newly acquired physician practice groups into the operations of Pediatrix. In 2005, Pediatrix paid Ms. Medel-Guerrero $93,355 in salary and bonus, granted her a restricted stock award of 1,167 shares of Pediatrix common stock and provided her certain health and other benefits customarily provided to similarly situated Pediatrix employees.

 

Virginia Turnier, M.D., the wife of Dr. Medel, Pediatrix’s Chief Executive Officer, was our Regional Vice President of Medical Operations until September 30, 1999, and continues to provide certain professional and administrative services to Pediatrix as an employee and as an officer and director for certain of our affiliated professional corporations. As compensation for her continuing services, Dr. Turnier’s options to purchase shares of Pediatrix common stock, which she received when she served as our Regional Vice President of Medical Operations, remain exercisable in accordance with their terms.

 

In 2005, each non-employee Director and Director who is not associated with any of Pediatrix’s principal shareholders received the following: (i) an annual retainer fee of $50,000, payable quarterly, (ii) an annual fee of $7,500 for attendance at meetings, payable quarterly, (iii) an additional retainer fee of $50,000, payable quarterly, for the Chairman of the Board, (iv) an additional retainer of $20,000, payable quarterly, for the chair of the Audit Committee, and (v) an additional retainer of $10,000 per committee, payable quarterly, for the chair of any committee of the Board other than the Audit Committee. In addition, it is Pediatrix’s policy to award annually (on the date of each annual shareholders’ meeting) each non-employee Director immediately vested and exercisable options to purchase 4,000 shares of Pediatrix common stock at an exercise price equal to the market price on the date of grant.

 

It is has also been and continues to be Pediatrix’s policy to award each non-employee Director upon his or her initial appointment to the Board of Directors an option to purchase 10,000 shares of Pediatrix common stock effective on the date of such non-employee Director’s appointment, at an exercise price equal to the market price on the date of the grant with a three year vesting period. We grant stock options to purchase Pediatrix common stock to our Directors because we believe that it helps foster a long-term perspective and aligns our Directors’ interests with that of our shareholders. Pediatrix also reimburses all of its Directors for out-of-pocket expenses incurred in connection with the rendering of services as a Director.

 

See “Executive Compensation — Employment and Other Agreements” for information regarding Dr. Medel’s compensation as Chief Executive Officer of Pediatrix.

 

The following table sets forth certain summary information for the years ended December 31, 2005, 2004, and 2003, concerning compensation paid or accrued by Pediatrix and its subsidiaries to or on behalf of our Chief Executive Officer and other executive officers at the end of the last completed fiscal year:

 

 

 

 

 

Pediatrix did not grant any stock option awards to its named executive officers in 2005. See the column entitled “Restricted Stock Awards” in the table under “Summary of Cash and Certain Other Compensation” for a description of restricted stock awards that were granted in 2005.

 

The following table sets forth certain information concerning option exercises in 2005, the number of stock options held by Pediatrix’s executive officers as of December 31, 2005 and the value (based on the closing sales price on the New York Stock Exchange of a share of common stock on the last trading day of the year) of in-the-money options outstanding as of such date.

 

 

 

 

On November 11, 2004, Pediatrix entered into employment agreements with Roger J. Medel M.D., the Company’s Chief Executive Officer, Joseph M. Calabro, the Company’s President and Chief Operating Officer, Karl B. Wagner, the Company’s Chief Financial Officer and Treasurer, and Thomas W. Hawkins, the Company’s Senior Vice President, General Counsel and Secretary. The employment agreements for Messrs. Calabro, Hawkins and Wagner each have a one-year term, and Dr. Medel’s employment agreement has a five-year term. Each employment agreement is subject in all cases to automatic renewals for successive one-year terms. Pursuant to their employment agreements, Dr. Medel and Messrs. Calabro, Wagner and Hawkins will receive annual base salaries of $675,000, $450,000, $375,000 and $350,000, respectively, subject to annual review by the Compensation Committee of the Board of Directors, and each is eligible to receive an annual performance bonus in accordance with Compensation Committee approved incentive programs, with a targeted bonus payment of at least 100% of his respective base salary upon the fulfillment of reasonable performance objectives set by the Compensation Committee. In 2006, the Compensation Committee reviewed the base salaries under these employment agreements and determined to increase such salaries to the following amounts: Dr. Medel, $800,000; Mr. Calabro, $515,000; Mr. Wagner, $430,000 and Mr. Hawkins, $400,000. Under their respective employment agreements, Dr. Medel and Mr. Calabro are provided with the use of Pediatrix’s corporate aircraft for personal matters when the aircraft is not being used or needed for business-related matters. The number of hours for such use is limited unless approved in advance by the Compensation Committee.

 

Depending upon the basis for termination, each employment agreement provides for severance payments of up to 12 months’ base salary plus, in certain cases, a Pro Rata Bonus (as defined below) and the continuation of

specified fringe benefits. However, if an individual is terminated by the Company without cause or if he terminates his employment with “Good Reason” (as defined in each employment agreement), he would be entitled to receive (1) a continuation of his base salary for 24 months, (2) the payment on the first and second anniversaries of his termination (or a lump sum payment if terminated in connection with a “Change in Control” as defined in the employment agreements) of an amount equal to the lesser of (x) his Average Annual Performance Bonus (as defined in each Employment Agreement) and (y) his bonus for the year immediately preceding his termination and (3) with respect to the fiscal year in which termination occurs, a pro rata portion of the bonus that the individual would have received had he not been terminated (such portion, the “Pro Rata Bonus”). Also, certain fringe benefits must be continued for specified periods.

 

Furthermore, upon a Change in Control, all unvested stock options, restricted stock and other incentive awards will automatically vest and, in the case of stock options, become immediately exercisable. In connection with a Change in Control, Pediatrix is also required to increase or “gross up” any amounts payable to a terminated individual if such amount is subject to certain excise taxes under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

 

Each of the employment agreements provides for customary protections of Pediatrix’s confidential information and intellectual property and that each individual shall not, during his employment term and following his termination for a period of 12 to 30 months (depending on the basis for termination), compete with Pediatrix, hire away from or solicit to leave Pediatrix, its employees and independent contractors, or interfere in Pediatrix’s relationships with its hospitals, other healthcare facilities, vendors, clients and other third parties.

 

During 2005, there were no Compensation Committee interlocks or insider participations.

 

The following report of the Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of Pediatrix’s other filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate such report by reference.

 

Compensation Philosophy.  Pediatrix’s executive compensation program primarily consists of the following elements:

 

 

Our general philosophy with respect to the compensation of Pediatrix’s executive officers is to offer competitive compensation programs designed to attract, motivate, reward and retain highly-skilled executives critical to the long-term success of Pediatrix and to recognize an individual’s contribution and personal performance.

 

We believe that this approach serves Pediatrix’s shareholders’ best interests by tying a significant portion of Pediatrix’s executive compensation to the achievement of predetermined objectives that are aligned with Pediatrix’s corporate goals and its financial performance.

 

In establishing the executive compensation program, we take into account the financial performance of Pediatrix and compensation trends for comparable companies, and gauge achievement of corporate financial and individual financial and non-financial objectives. Performance bonus opportunities are structured to reinforce the achievement of both short and long-term Pediatrix objectives. Pediatrix uses equity compensation to foster a long-term perspective aligned with that of its shareholders. We have reviewed all components of Pediatrix’s executive officers’ compensation, including salary, bonus, equity awards, the dollar value of all perquisites and other potential personal benefits and the projected payout obligations in the case of severance and change-in-control scenarios, and have determined that the executive compensation packages have been fixed at levels that we believe are competitive to retain and motivate key executives and, in the aggregate, are reasonable and not excessive.

 

We consider the anticipated tax treatment of various payments and benefits when determining executive compensation and administer the executive compensation program in a manner that maximizes the tax deductibility of compensation paid to Pediatrix’s executives to the extent possible. Section 162(m) of the Internal Revenue Code, limits the tax deduction to $1 million for compensation paid to Pediatrix’s five most highly compensated executive officers, unless certain requirements are met. In order to comply with Section 162(m), the Amended and Restated Stock Option Plan and the 2004 Incentive Compensation Plan limit the number of shares underlying options awardable during the terms of these plans to any plan participant, are administered by our committee which consists of only “outside directors” (as defined in Section 162(m)) and provide for awards based on performance criteria that should qualify such awards as “performance based compensation” not subject to the limit on tax deductibility by Pediatrix under Section 162(m). While the tax impact of any compensation is one factor to consider, we believe that Pediatrix’s priority is to attract and retain highly skilled executives to manage the Company and, in some cases, the loss of a tax deduction may be necessary to accomplish that goal.

 

The following is a summary of the considerations underlying each component of compensation paid to Pediatrix’s executive officers for 2005.

 

Base Salary.  We review and recommend to the Board of Directors the base salaries for executive officers, taking into account plan designs approved by the Board of Directors and financial results reviewed by the Audit Committee. In 2004, based upon the advice of a consulting firm, we recommended that Pediatrix enter into new employment agreements providing for increased salaries for Pediatrix’s executive officers. In 2005, we reviewed these base salaries and decided to leave executive base salaries unchanged during 2005 since Pediatrix had just entered into new employment agreements with these executive officers in late 2004.

 

Performance Bonus.  We set performance goals for performance-based compensation to executive officers, review performance goals and executive officer performance, determine whether performance goals and any other material terms were met, and make recommendations to the Board of Directors with respect to performance-based compensation for executive officers. On March 29, 2005, we adopted specific performance criteria for the

determination of 2005 executive officer performance bonuses. Pursuant to these criteria, Messrs. Calabro, Wagner and Hawkins were eligible to receive performance bonuses in an amount equal to a varying percentage of their base salaries based on the percentage increase of Pediatrix’s 2005 income from operations over its 2004 income from operations after adding back any expense recognized for equity based compensation.

 

For the year ended December 31, 2005, Pediatrix recorded a one-time charge relating to an agreement in principle as to the financial amount for a settlement of a pending national Medicaid and TRICARE investigation. The amount of the settlement relates to services provided by Pediatrix from January 1996 to December 1999. Because of this charge, Pediatrix’s operating income for 2005 was reduced to a level at which none of Messrs. Calabro, Hawkins or Wagner was eligible to receive a performance bonus under the established performance bonus criteria. However, because Messrs. Calabro, Hawkins and Wagner met all of their individual performance objectives, we recommended that the Board award each a discretionary bonus equal to the percentage of his base salary to which he would have been entitled based on the percentage increase of Pediatrix’s 2005 income from operations over its 2004 income from operations after adding back the charge related to the Medicaid and TRICARE investigation and any expense recognized for equity based compensation. We determined that the executive officers’ performance should be measured without regard to the effect of the charge related to the Medicaid and TRICARE investigation due to the nature of this charge and to the fact that it was unrelated to the 2005 performance of Pediatrix’s executive officers and instead related to periods of more than six years ago. See the Annual Compensation Table above for the aggregate bonus amounts awarded to each executive officer.

 

Equity Compensation.  We supervise the administration of Pediatrix’s Amended and Restated Stock Option Plan and 2004 Incentive Compensation Plan and recommend and approve equity compensation awards to Pediatrix’s executives. We believe that awarding equity compensation awards to our executive officers will foster a long-term perspective and align our executive officers’ interests with those of our shareholders. In July 2005, Messrs. Calabro, Wagner and Hawkins were granted 25,000, 18,750 and 16,667 shares of Pediatrix restricted common stock, respectively, which vest in three equal installments on June 1, 2006, 2007, and 2008. In addition, in July 2005, we determined to grant to Messrs. Calabro and Wagner 30,000 and 22,500 shares of Pediatrix restricted common stock, respectively, which vest two thirds on the later of January 1, 2006 and the date on which Pediatrix’s operating income for any six-month period equals or exceeds a predetermined threshold and one third on the later of June 1, 2006 and the date on which Pediatrix’s operating income for any six-month period equals or exceeds a predetermined threshold, in order to make-up for the executives not having been granted any equity compensation in 2003. Based on the recommendation of a consulting firm, we concluded that this make-up award should be made in order to properly incentivize Messrs. Calabro and Wagner and better align their long-term interests with those of Pediatrix’s shareholders.

 

2005 Compensation for the Chief Executive Officer.  We review and approve Pediatrix’s goals and objectives relevant to our Chief Executive Officer’s compensation, evaluate the Chief Executive Officer’s performance in light of Pediatrix’s goals and objectives, and set the Chief Executive Officer’s compensation level based on this evaluation.

 

Like the other executive officers, we determined to leave Dr. Medel’s base salary unchanged at $675,000 for 2005. Due to the charge relating to the national Medicaid and TRICARE investigation, Dr. Medel was not eligible to receive a performance bonus under the established performance bonus criteria. However, because Dr. Medel met all of his individual performance objectives, we recommended that the Board award him a discretionary bonus of $715,500 which is equal to the percentage of his base salary to which he would have been entitled to based on the percentage increase of Pediatrix’s 2005 income from operations over its 2004 income from operations after adding back the charge related to the Medicaid and TRICARE investigation and any expense recognized for equity based compensation. We determined that Dr. Medel’s performance should be measured without regard to the effect of the charge related to the Medicaid and TRICARE investigation due to the nature of this charge and to the fact that the charge was unrelated to Dr. Medel’s 2005 performance and instead related to periods of more than six years ago. Dr. Medel also received 33,333 shares of Pediatrix restricted common stock which vest in three equal installments on June 1, 2006, 2007, and 2008.

 

Submitted by the Compensation Committee of the Board of Directors.

Waldemar A. Carlo, M.D.

Michael B. Fernandez

Roger K. Freeman, M.D.

 

The following performance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of Pediatrix’s other filings under the Securities Act or the Exchange Act.

 

The following graph compares the cumulative total shareholder return on $100 invested on December 31, 2000 in Pediatrix’s common stock against the cumulative total return of the S&P 500 Index, S&P 600 Health Care Index, and the NYSE Composite Index. The returns are calculated assuming reinvestment of dividends. The graph covers the period from December 31, 2000 through December 31, 2005. Pediatrix’s common stock is listed on the New York Stock Exchange under the trading symbol “PDX.”

 

 

 

Section 16(a) of the Exchange Act requires Pediatrix’s executive officers and Directors, and persons who own more than 10% of Pediatrix’s common stock, to file with the Securities and Exchange Commission reports of ownership and changes in ownership of Pediatrix common stock. Our executive officers, Directors and greater than 10% shareholders also are required by rules promulgated by the Securities and Exchange Commission to furnish Pediatrix with copies of all Section 16(a) forms they file.

 

Based solely on a review of the copies of such reports furnished to Pediatrix, the absence of a Form 3, 4 or 5, or representations from certain reporting persons that no Forms 5 were required, Pediatrix believes that all Section 16(a) filing requirements applicable to its officers, Directors and greater than 10% beneficial owners were complied with during the fiscal year ended December 31, 2005.

 

The following table sets forth information concerning the beneficial ownership of common stock of Pediatrix as of March 15, 2006 for the following:

 

 

 

 

 

Pediatrix’s independent auditors for the year ended December 31, 2005, was the firm of PricewaterhouseCoopers LLP (“PwC”). The Audit Committee has reappointed PwC as the independent public accounting firm to perform audit services for Pediatrix in 2006. Pediatrix expects that representatives of PwC will attend the annual meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

 

The aggregate fees billed by PwC for the indicated services rendered during fiscal years 2005 and 2004 were as follows:

 

Audit Fees

 

PwC has billed Pediatrix $938,500, in the aggregate, for professional services for the audit of Pediatrix’s consolidated financial statements and internal control over financial reporting for the year ended December 31, 2005, reviews of Pediatrix’s interim consolidated financial statements which are included in each of Pediatrix’s Quarterly Reports on Form 10-Q for the year ended December 31, 2005 and statutory audits of Pediatrix’s wholly-owned captive insurance subsidiary. During 2004, audit fees totaled $1,053,750 and included professional services for the audit of Pediatrix’s consolidated financial statements and internal controls over financial reporting for the year ended December 31, 2004, reviews of Pediatrix’s interim consolidated financial statements which are included in each of Pediatrix’s Quarterly Reports on Form 10-Q for the year ended December 31, 2004 and statutory audits of Pediatrix’s wholly-owned captive insurance subsidiary.

 

Audit Related Fees

 

During 2005, PwC billed Pediatrix $52,900 for audit related professional services. These services included the audit of Pediatrix’s benefit plans and consultations concerning financial accounting and reporting standards. During 2004, audit related fees totaled $52,500 and included professional services related to Pediatrix’s benefit plans and consultations concerning financial accounting and reporting standards.

 

Tax Fees

 

During 2005, PwC did not bill Pediatrix for tax consultation services. In 2004, PwC billed Pediatrix $6,185 for tax consultation services.

 

All Other Fees

 

There were no other fees billed by PwC for 2005 or 2004.

 

The Board of Directors knows of no other business to be brought before the annual meeting. If, however, any other business should properly come before the annual meeting, it is the intention of the persons named in the accompanying proxy card to vote the shares they represent in accordance with the recommendation of Pediatrix’s Board of Directors.

 

As more specifically provided in our Amended and Restated Articles of Incorporation, no business may be brought before an annual meeting unless it is specified in the notice of the meeting or is otherwise properly brought before the meeting by or at the direction of our Board of Directors or by a shareholder entitled to vote who has delivered proper notice, together with the information required by the Articles, to us not less than 120 days nor more than 180 days prior to the first anniversary of the preceding year’s notice of annual meeting. Accordingly, any shareholder proposal to be considered at the 2007 Annual Meeting of Shareholders must be properly submitted to us on or before December 1, 2006, but not earlier than October 2, 2006, or such proposal will be considered untimely. A copy of the provision of Pediatrix’s Articles relating to shareholder nominations is available upon request from Pediatrix’s Secretary at 1301 Concord Terrace, Sunrise, FL 33323. These requirements are separate from the Securities and Exchange Commission’s requirements that a shareholder must meet in order to have a shareholder proposal included in our proxy statement for the 2007 Annual Meeting of Shareholders.

 

Shareholders interested in submitting a proposal for inclusion in our proxy materials for the 2007 Annual Shareholders Meeting may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act and Pediatrix’s Amended and Restated Articles of Incorporation. To be eligible for inclusion in such proxy materials, shareholder proposals must be received by our Secretary, at the address noted above, not later than December 1, 2006. No shareholder proposal was properly received for inclusion in this proxy statement.

Appendix A

 

PEDIATRIX MEDICAL GROUP, INC.

 

Audit Committee of the Board of Directors

 

AMENDED AND RESTATED CHARTER

February 2006

 

 

The primary function of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Pediatrix Medical Group, Inc. (the “Company”) is to:

 

 

 

 

Consistent with this function, the Committee shall encourage continuous improvement of, and shall foster adherence to, the Company’s polices, procedures and practices at all levels and shall fulfill the duties and responsibilities enumerated in Section IV of this Charter. Adequate funding (as determined by the Committee) for such activities shall be provided by the Company.

 

 

The Committee shall be comprised of three or more directors, as determined by the Board, each of whom shall be an independent director as determined in accordance with the standards set forth in the Company’s Corporate Governance Principles. In addition, each member of the Committee must be “independent” as defined by Rule 10A-3(b)(1) under the Securities and Exchange Act of 1934.

 

All members of the Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Committee shall qualify as an “audit committee financial expert” as defined by the rules and regulations of the Securities and Exchange Commission.

 

The Committee members shall be elected by the Board at a meeting of the full Board and shall serve until a successor is elected and qualified, except as otherwise provided in the Bylaws of the Company or by resolution adopted by the full Board.

 

Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership. Upon a determination of the full Committee membership, matters may be delegated to a subcommittee for evaluation and recommendation back to the full Committee.

 

 

The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee shall meet at least annually with management and the Auditors in separate executive sessions to discuss any matters that the Committee or each of these groups believe should be discussed privately. After each meeting of the Committee, it shall report its activities to the Company’s Board.

     Action Without a Meeting

 

Any action required to be taken at a meeting of the Committee, or any action which may be taken at a meeting of the Committee, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, signed by all the members of the Committee is filed in the minutes of the proceedings of the Committee. Such consent shall have the same effect as a unanimous vote.

 

 

To fulfill its responsibilities and duties the Committee shall:

 

Documents/Reports Review

 

 

Independent Auditors

 

 

Financial Reporting Processes

 

 

Process Improvement

 

 

Other Matters

 

Appendix B

 

PEDIATRIX MEDICAL GROUP, INC.

 

Compensation Committee of the Board of Directors

 

AMENDED AND RESTATED CHARTER
February 2006

 

 

The primary function of the Compensation Committee (the “Committee”) is to assist the Board of Directors (the “Board”) of Pediatrix Medical Group, Inc. (the “Company”) by:

 

 

 

The Committee shall be comprised of three or more members, each of whom shall be an independent director as determined in accordance with the standards set forth in the Company’s Corporate Governance Principles.

 

The Committee members shall be elected by the Board of Directors at a meeting of the full Board and shall serve until a successor is elected and qualified, except as otherwise provided in the Bylaws of the Company or by resolution adopted by the full Board.

 

Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership. Upon a determination of the full Committee membership, matters may be delegated to a subcommittee for evaluation and recommendation back to the full Committee.

 

 

The Committee shall meet at least annually, or more frequently as circumstances dictate. After each meeting of the Committee, it shall report its activities to the Company’s Board.

 

Action Without a Meeting

 

Any action required to be taken at a meeting of the Committee, or any action which may be taken at a meeting of the Committee, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, signed by all the members of the Committee is filed in the minutes of the proceedings of the Committee. Such consent shall have the same effect as a unanimous vote.

 

 

To fulfill its responsibilities and duties the Committee shall:

 

1.1 Executive Officer Compensation

 

 

 

1.2 Incentive Compensation

 

 

1.3 Compensation Review

 

 

1.4 Other

 

 

Appendix C

 

PEDIATRIX MEDICAL GROUP, INC.

 

Nominating and Corporate Governance Committee of the Board of Directors

 

AMENDED AND RESTATED CHARTER

February 2006

 

 

The primary function of the Nominating and Corporate Governance Committee (the “Committee”) is to assist the Board of Directors (the “Board”) of Pediatrix Medical Group, Inc. (the “Company”) by:

 

 

 

The Committee shall be comprised of three or more members, each of whom shall be an independent director as determined in accordance with the standards set forth in the Company’s Corporate Governance Principles.

 

The Committee members shall be elected by the Board of Directors at a meeting of the full Board and shall serve until a successor is elected and qualified, except as otherwise provided in the Bylaws of the Company or by resolution adopted by the full Board.

 

Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership. Upon a determination of the full Committee membership, matters may be delegated to a subcommittee for evaluation and recommendation back to the full Committee.

 

 

The Committee shall meet at least annually, or more frequently as circumstances dictate. After each meeting of the Committee, it shall report its activities to the Company’s Board.

 

Action Without a Meeting

 

Any action required to be taken at a meeting of the Committee, or any action which may be taken at a meeting of the Committee, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, signed by all the members of the committee is filed in the minutes of the proceedings of the Committee. Such consent shall have the same effect as a unanimous vote.

 

 

To fulfill its responsibilities and duties the Committee shall:

 

1.1 Nomination of Directors

 

 

 

1.2 Board Committees

 

 

1.3 Corporate Governance

 

 

PEDIATRIX MEDICAL GROUP, INC.

1301 Concord Terrace

Sunrise, Florida 33323-2825

 

002CS-10708

DETACH HERE

      

PROXY		PEDIATRIX MEDICAL GROUP, INC.		PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY

The undersigned, a shareholder of PEDIATRIX MEDICAL GROUP, INC., Florida Corporation (the “Company”), hereby appoints Roger J. Medel, M.D., Thomas W. Hawkins and Karl B. Wagner, and each of them, as proxies for the undersigned, each with full power of substitution, and hereby authorizes them to represent and to vote, as designated on the reverse side of this proxy card, all of the shares of common stock of the Company held of record by the undersigned at the close of business on March 15, 2006, at the Company’s 2006 Annual Meeting of Shareholders to be held at the Sheraton Suites Plantation, 311 North University Drive, Plantation, Florida 33324, on Thursday, May 4, 2006 at 10:00 a.m., local time, and at any adjournments or postponements thereof.

PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENVELOPE PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.

      

SEE REVERSE SIDE		CONTINUED AND TO BE SIGNED ON REVERSE SIDE		SEE REVERSE SIDE

PEDIATRIX MEDICAL GROUP, INC.

    C/O COMPUTERSHARE TRUST COMPANY N.A.
P.O. Box 8694
EDISON, NJ 08818-8694

DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL

#PHO

x		Please mark
		votes as in
		this example.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF EACH NOMINEE FOR DIRECTOR LISTED HEREIN AND IN ACCORDANCE WITH THE RECOMMENDATION OF THE COMPANY’S BOARD OF DIRECTORS, “FOR” OR “AGAINST” ALL OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.

The Board of Directors unanimously recommends a vote FOR each of the following proposals.

1.			ELECTION OF DIRECTORS:						2.			In their discretion, the proxies are authorized to vote
			Nominees:									upon such other matters as may properly come before
			(01	)		Cesar L. Alvarez,						the Annual Meeting and any postponement of
			(02	)		Waldemar A. Carlo, M.D.,						adjournment thereof.
			(03	)		Michael B. Fernandez
			(04	)		Roger K. Freeman, M.D.,
			(05	)		Paul G. Gabos,
			(06	)		Pascal J. Goldschmidt, M.D.,
			(07	)		Roger J. Medel, M.D.,
			(08	)		Lawrence M. Mullen, and
			(09	)		Enrique J. Sosa, Ph.D.

		FOR ALL NOMINEES		o		o	WITHHELD FROM ALL NOMINEES

o
		INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee(s) name(s) on the above.

		The undersigned hereby acknowledges receipt of (1) the Notice of Annual Meeting (2) the Proxy Statement, and (3) the Annual Report to Shareholders.
		IMPORTANT: Please sign exactly as your name appears hereon and mail it promptly even if you plan to attend the meeting. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. When shares are held by joint tenants, both should sign. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by an authorized person.

Signature:

Date:

Signature if held jointly:

Date: