-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ISZLoMDZ4JLRZUUh4nl1A7dWUsO634WEU6iL6Drb5EyNdrGwNqMZ5/mkMmC5FB8X DbPxOYUyM19JjqoRNR6lLQ== 0000740112-98-000006.txt : 19980413 0000740112-98-000006.hdr.sgml : 19980413 ACCESSION NUMBER: 0000740112-98-000006 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980410 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCORD EFS INC CENTRAL INDEX KEY: 0000740112 STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099] IRS NUMBER: 042462252 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-13848 FILM NUMBER: 98591337 BUSINESS ADDRESS: STREET 1: 2525 HORIZON LAKE DR STE 120 CITY: MEMPHIS STATE: TN ZIP: 38133 BUSINESS PHONE: 9013718000 MAIL ADDRESS: STREET 1: 2525 HORIZON LAKE DRIVE STREET 2: SUITE 120 CITY: MEMPHIS STATE: TN ZIP: 38133 FORMER COMPANY: FORMER CONFORMED NAME: CONCORD COMPUTING CORP DATE OF NAME CHANGE: 19920515 DEF 14A 1 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS CONCORD EFS, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held on May 14, 1998 To the Stockholders of Concord EFS, Inc. Notice is hereby given that the Annual Meeting of Stockholders of Concord EFS, Inc. ("Concord" or the "Company") will be held at Colonial Country Club, 2736 Countrywood Parkway, Memphis Tennessee on May 14, 1998 beginning at 9:30 a.m. local time, for the following purposes: 1. To elect directors to serve for the ensuing year; 2. To approve the Amendment to the Certificate of Incorporation to increase Number of Authorized Shares of Common Stock; 3. To transact such other business as may properly come before the annual meeting and any adjournments thereof. The Board of Directors has fixed the close of business on March 9, 1998 as the record date for determination of the stockholders entitled to notice of and to vote at the Annual Meeting. The By-Laws of the Company require that the holders of a majority of all stock issued, outstanding and entitled to vote be present in person or represented by proxy at the meeting in order to constitute a quorum. By Order of the Board of Directors Richard M. Harter Secretary April 10, 1998 WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THE ENCLOSED PROXY. No postage is required if mailed in the United States. CONCORD EFS, INC. PROXY STATEMENT April 10, 1998 This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Concord EFS, Inc. ("Concord" or the "Company") of proxies for use at the Annual Meeting of Stockholders to be held on May 14, 1998 and any adjournments thereof. Shares as to which proxies have been executed will be voted as specified in the proxies. A proxy may be revoked at any time by notice in writing received by the Secretary of the Company before it is voted. A majority in interest of the outstanding shares represented at the meeting in person or by proxy shall constitute a quorum for the transaction of business. Votes withheld from any nominee, abstentions and broker "non-votes" are counted as present or represented for purposes of determining the presence of absence of a quorum for the meeting. A "non-vote" occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions from the beneficial owner. Abstentions are included in the number of shares present or represented and voting on each matter. Broker "non-votes" are not so included. BENEFICIAL OWNERSHIP OF COMMON STOCK The Company's only issued and outstanding class of voting securities is its Common Stock, par value $.33 1/3 per share. Each stockholder of record on March 9, 1998 is entitled to one vote for each share registered in such stockholder's name. As of that date, the Company's Common Stock was held by approximately 13,650 stockholders. The following table sets forth, as of March 9, 1998, the ownership of the Company's Common Stock by each person who is known by the Company to own beneficially more than 5% of the Company's outstanding Common Stock, by each director who owns shares and by all directors and officers of the Company as a group. Percent of Shares Outstanding Beneficial Owner (1) Owned Shares (2) - ---------------------------------- ---------- ----------- Dan M. Palmer (3), Chairman 859,454 1.4% Edward A. Labry III (4), Director 565,960 0.9% Joyce Kelso, Director 217,099 0.4% Richard P. Kiphart, Director 2,477,080 4.0% Richard M. Harter (5), Director 56,844 0.1% Jerry D. Mooney (5), Director 24,944 0.0% Douglas C. Altenbern(6), Director 8,000 0.0% David C. Anderson (5), Director 11,506 0.0% J. Richard Buchignani (5), Director 9,648 0.0% Paul Whittington (5), Director 9,819 0.0% All officers, directors and nominees as a group (10 persons) (7) 4,240,354 6.7% William Blair & Company, LLC 222 West Adams Street Chicago, IL 60606 (8) 8,715,161 14.1% Pilgrim Baxter & Associates, Ltd. 1255 Drummers Lane, Suite 300 Wayne, Pennsylvania 19087 (9) 4,324,434 7.0% AMVESCAPP PLC and Subsidiaries 11 Devonshire Square London EC2M 4YR England (10) 4,438,637 7.2% The Capital Group Companies Inc. and Capital Research and Management Company 333 South Hope Street Los Angeles, CA. 90071 (11) 4,449,900 7.2% (1) The address of each beneficial owner that is also a director, is the same as the Company's. (2) Percentage ownership is based on 61,997,502 shares issued and outstanding, plus the number of shares subject to options exercisable within 60 days from the record date by the person or the aggregation of persons for which such percentage ownership is being determined. (3) Shares owned are unexercised stock options. (4) Shares owned include 563,908 shares covered by unexercised stock options. (5) Shares owned include 6,444 shares covered by unexercised stock options. (6) Shares owned include 50 June 25, 1998 option contracts. (7) Shares owned include 1,455,582 shares covered by unexercised stock options. (8) Based on a Schedule 13G dated as of February 14, 1998, filed by William Blair & Company, LLP (Blair). Includes 1,328,658 shares as to which Blair has sole voting power and 8,715,161 shares as to which Blair has sole dispositive power. Blair disclaims beneficial ownership as to 7,386,503 of such shares. (9) Based on a Schedule 13G dated as of January 20, 1998, filed by Pilgrim Baxter & Associates. (10) Based on a Schedule 13G dated as of February 9, 1998, filed by AMVESCAP PLC and Subsidiaries. (11) Based on a Schedule 13G dated as of February 10, 1998, filed by The Capital Group Companies, Inc. and Capital Research and Management Company (Capital). Capital, acting as investment advisers, disclaims beneficial ownership of these shares pursuant to Rule 13d-4. ELECTION OF DIRECTORS Ten directors are to be elected to hold office until the next annual meeting of stockholders and until their successors are elected and qualified. Unless a proxy is executed to withhold authority for the election of any or all of the directors, then the persons named in the proxy will vote the shares represented by the proxy for the election of the following ten nominees. If the proxy indicates that the stockholder wishes to withhold a vote from one or more nominees for director, such instruction will be followed by the persons named in the proxy. All ten of the nominees are now members of the Board of Directors. The Board of Directors has no reason to believe that any of the nominees will be unable to serve. In the event that any nominee should not be available, the persons named in the proxies will vote for the others and may vote for a substitute for such nominee. An affirmative vote of a majority of the Company's Common Stock represented in person or by proxy at the meeting is necessary for the election of the individuals named below. Recommended Vote The Board of Directors recommends that you vote "FOR" the election of these ten individuals as directors. The following table lists the name of each proposed nominee; his/her age; his/her business experience during at least the past five years, including principal offices with the Company or a subsidiary of the Company; and the year since which he/she has served as a director of the Company. There are no family relationships among the nominees. Office With the Company, Business Nominees and Ages Experience and Year First Elected Director - -------------------------- ---------------------------------------------------- Dan M. Palmer (55) Mr. Palmer became Chairman of the Board in February 1991. Mr. Palmer has been Chief Executive Officer of the Company since August 1989, and a Director of the Company since May 1987. Mr. Palmer has been the Chief Executive Officer of EFS National Bank (formerly EFS, Inc.) since its inception in 1982. He joined Union Planters National Bank in June 1982 and founded the EFS operations within the bank. He continued as President and Chief Executive Officer of EFS when it was acquired by Concord in March 1985. Joyce Kelso (56) Mrs. Kelso has been a Director since May 1991. She was Vice President in charge of Customer Service when EFS began operations. In August 1990, she was elected Senior Vice President of the Company. January 1, 1995, Mrs. Kelso semi-retired and on January 1, 1997, she became fully retired. Edward A. Labry III (35) Mr. Labry joined EFS in 1984. He was made Director of Marketing in March 1987 and Vice President of Sales in February 1988. In August 1990, he was elected to Chief Marketing Officer of the Company. In February 1991, he was elected Senior Vice President of the Company. He became President of the Company in October 1994, and President of EFS National Bank in December 1994. Richard M. Harter (61)* Mr. Harter has been the Company's Secretary and a Director since the Company's formation. He is a partner of Bingham Dana LLP, legal counsel to the Company. Jerry D. Mooney (45)* + Mr. Mooney has been a Director of the Company since August 1992. Since August 1997, he has been President and CEO of ServiceMaster Employer Services, Inc. Prior to then he was President of Healthcare New Business Initiatives and formerly served as Chairman, President and CEO of Service- Master Diversified Health Services, Inc. (formerly VHA Long Term Care) since 1981. David C. Anderson (55)* + Mr. Anderson has been a Director of the Company since August 1992. Mr. Anderson was Senior Vice President and Chief Financial Officer with Federal Express in Memphis, Tennessee for seven years and Executive Vice President and Chief Financial Officer at Burlington Northern in Fort Worth, Texas for three years prior to his retirement in 1995. J. Richard Buchignani (49)* Mr. Buchignani has been a Director of the Company since August 1992. He is a partner in the Memphis, Tennessee office of the law firm of Wyatt, Tarrant & Combs, who also serves as local counsel to the Company. Mr. Buchignani has been affiliated with the law firm since 1995 when most of the members of his firm of 18 years joined Wyatt, Tarrant & Combs. Paul L. Whittington (62)* + Mr. Whittington has been a Director of the Company since May 1993. Mr. Whittington had been the Managing Partner of the Memphis, Tennessee and Jackson, Mississippi offices of Ernst & Young from 1988 until his retirement in 1991. Since 1979, he had been the partner in charge of consulting at various Ernst & Young offices. Richard P. Kiphart (55)* Mr. Kiphart has been a Director of the Company since March 1997. In 1972 he became a General Partner of William Blair & Company, LLC. He served as head of Equity Trading from 1972 to 1980. He joined the Corporate Finance Department in 1980, and was made head of that department in January 1995. Douglas C. Altenbern (61) Mr. Altenbern was voted a Director of the Company in February 1998. Mr. Altenbern served as Vice Chairman of First Financial Management Corporation until 1989, at which time he resigned to found Argosy Network Corporation, of which he served as Chairman and CEO. In 1992 he sold his interest in Argosy and in 1993 founded Pay Systems of America, of which he served as Chairman and CEO through December 1996. He currently is a private investor and serves as a Director on the Boards of The Bradford Funds, Inc., OPTS, Inc., Interlogics, Inc., CSM, Inc., and Equitas. * Member of the Board's Audit Committee. + Member of the Board's Compensation Committee. Compensation of Directors The Company currently pays an annual fee of $8,000 plus $2,000 for each meeting attended to each non-employee Director of the Company. There are normally four meetings per year. In addition, non-employee directors are granted options to purchase 3,000 shares of the Company's common stock at closing market value on the date of the annual meeting of stockholders. Directors are reimbursed for expenses incurred in attending meetings of the Board of Directors. Two of the ten nominees are employees of the Company and are not separately compensated for serving as directors. Executive Compensation The following summary compensation table is intended to provide a comprehensive overview of the Company's executive pay practices. It includes the cash compensation paid or accrued by the Company and its subsidiaries for services in all capacities during the fiscal year ended December 31, 1997, to or on behalf of each of the Company's named executives. Named executives include the Chief Executive Officer and the President of the Company. Summary Compensation Table Annual Compensation Long-Term Compensation Name and Salary Bonus Principal Position Year ($) ($) Options Awarded* - ------------------------ ---- -------- ------- ---------------------- Dan M. Palmer 1997 427,392 262,000 800,000 Chairman of the Board 1996 425,000 125,000 237,500 Chief Executive Officer 1995 363,738 80,000 202,500 of the Company and EFS National Bank Edward A. Labry III 1997 417,777 262,000 800,000 President of the Company 1996 392,308 125,000 237,500 and EFS National Bank 1995 279,315 100,000 168,750 * Options awarded have been restated to reflect all stock splits. Stock Options The following tables present the following types of information for options granted to the Company's named executives under the Company's 1993 Incentive Stock Option Plan. Table I - options granted and the potential realizable value of such options, and Table II - options exercised in the latest fiscal year and the number of unexercised options held. Table I Options Granted in 1997
Individual Grants ----------------------------------------- Potential Realizable % 0f Total Value at Assumed Options Annual Rates of Stock Granted to Exercise Price Appreciation Options Employees in price Expiration for Option Term Name Granted 1997 ($/Share) Date 5% ($) 10% ($) - ------------------- ------- ------------ --------- ---------- ---------- ---------- Dan M. Palmer 800,000 41% $22.88 3/6/2007 11,508,772 29,165,487 Edward A. Labry III 800,000 41% $22.88 3/6/2007 11,508,772 29,165,487
Table II Options Exercised in 1997 and 1997 Year End Option Values Value of Number of Unexercised Shares Acquired Value ($) Unexercised In-the-Money Name on Exercise (#) Realized(1) Options(#) Options($)(2) - ------------------- --------------- ----------- ----------- ------------- Dan M. Palmer 200,000 4,743,443 859,454(E) 11,619,100(E) 788,672(U) 3,387,813(U) Edward A. Labry III 200,000 4,950,644 563,908(E) 5,758,056(E) 773,906(U) 3,128,409(U) (1) Values are calculated by subtracting the exercise price from the fair market value of the stock as of the exercise date. (2) Values are calculated by subtracting the exercise price from the fair market value of the stock on December 31, 1997. (E) = Exercisable at December 31, 1997 (U) = Unexercisable at December 31, 1997 Committees; Attendance The Board of Directors held four meetings during the fiscal year ended December 31, 1997. Each of the directors attended at least 75% of the total number of meetings of the Board. The Audit Committee, consisting of Messrs. Anderson, Buchignani, Harter, Mooney, Whittington and Kiphart met twice during the fiscal year ended December 31, 1997. The Audit Committee reviewed the results of the audit conducted by outside auditors and management's response to the management letter prepared by outside auditors. The Board of Directors has no Nominating Committee. Compensation Committee Report on Executive Compensation The Board of Directors has a Compensation Committee consisting of Messrs. Anderson, Mooney and Whittington who are not employees of the Company or any of its affiliates and have never been employees of the Company or any of its affiliates. It is the policy of the Compensation Committee to establish base salaries, award bonuses and grant stock options to such executives and in such amounts as will assure the continued availability to the Company of the services of the executives and will recognize the contributions made by the executives to the success of the Company's business and the growth over time in the market capitalization of the Company. To achieve these goals, the Committee establishes base salaries at levels it believes to be below the mid-point for comparable executives in companies of comparable size and scope. The Committee then awards cash bonuses reflecting individual performance during the year for which the awards are made. For executives other than the Chief Executive Officer, the Committee receives bonus award recommendations from the Chief Executive Officer. The Committee grants stock options to senior and middle management executives of the Company and its affiliates at levels which it believes to be higher than average for comparable companies in order to give the executives significant incentive to improve the revenue of the Company and its market capitalization. Section 162(m) of the Internal Revenue Code limits the tax deduction to $1 million for compensation paid to certain executives of public companies. The Committee has considered these new requirements and believes that the Company's 1993 Incentive Stock Option Plan meets the requirement that it be "performance based" and, therefore, exempt from the limitations on deductibility. Historically, the combined salaries and bonuses of the Company's executive officers have been well under the $1 million limit. The Committee's present intention is to comply with Section 162(m) unless the Committee feels that required changes would not be in the best interest of the Company or its stockholders. The Chief Executive Officer's base salary, cash bonus and option grants are established by the Committee based upon its members' own experience in their companies and in other companies which they serve as directors or advisors. In addition, the Committee received advice from a compensation consulting firm in setting compensation levels for executive officers. In setting the bonus and salary awards for 1997 for the Chief Executive Officer and President, the Committee considered the 44% increase in revenues and the 51% increase in diluted earnings per share in 1997 over 1996. Additionally, the Committee noted that for the preceding three years the Company's revenue growth averaged approximately 36% per year, that its market capitalization growth averaged approximately 64% per year and that these individuals were responsible for past growth and uniquely situated to contribute to the future growth of the Company. David C. Anderson Jerry D. Mooney Paul L. Whittington Five Year Cummulative Stockholder Return Below is a performance table which compares the Company's cumulative total stockholder return during the previous five years with the NASDAQ stock market, and the NASDAQ financial stocks (the Company's peer group). NASDAQ NASDAQ Date Concord EFS, Inc. Stock Market Financial Stocks - -------- ----------------- ------------ ---------------- 12/31/92 100.00 100.00 100.00 12/31/93 75.00 114.80 116.23 12/31/94 127.12 112.21 116.50 12/31/95 322.25 158.70 169.67 12/31/96 484.80 195.19 217.50 12/31/97 426.88 239.53 333.81 AMEND CERTIFICATE OF INCORPORATION TO INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK The Company's authorized capital stock consists of 100,000,000 shares of Common Stock, $.33 1/3 par value. The Board of Directors finds advisable that the Company's Certificate of Incorporation be amended to increase the number of authorized shares of Common Stock to 200,000,000 shares, $.33 1/3 par value. The holders of Common Stock are not entitled to preemptive rights to purchase Common Stock of the Company. The authorized shares of Common Stock can be issued without stockholder approval upon such terms and in consideration of such amounts as the Board of Directors determines is in the best interest of the Company. The Board in the past has issued stock to effect stock splits, to fulfill the exercise of stock options and to make relatively small acquisitions. It has no present plans for any further issuance other than to complete the proposed acquisition of Digital Merchant Systems, Inc. and Affiliated Companies. Dilutive Effect of Issuance of Additional Shares The authorization of additional shares of Common Stock pursuant to this proposal will have no dilutive effect upon the proportionate voting power of the present stockholders of the Company. However, issuance of additional shares could have a substantial dilutive effect on present stockholders. Anti-takeover Effect The issuance of additional shares of Common Stock by the Company may also make it more difficult to obtain stockholder approval of various actions, such as a merger or other corporate combination. The proposed increase in the number of authorized shares of Common Stock could enable the Board of Directors to render more difficult an attempt by another person or entity to obtain control of the Company, though the Board of Directors has no present intention of issuing additional shares for such purpose and no present knowledge of any takeover efforts by any person or entity. Recommended Vote An affirmative vote of a majority of the Company's outstanding Common Stock is necessary to adopt the amendment to the Company's Certificate of Incorporation to increase the number of authorized shares of Common Stock to 200,000,000 shares. The Board of Directors recommends that you vote "FOR" the proposal. OTHER MATTERS The Board of Directors knows of no matters which are likely to be presented for action at the Annual Meeting other than the proposals specifically set forth in the Notice and referred to herein. If any other matter properly comes before the Annual Meeting for action, it is intended that the persons named in the accompanying proxy and acting thereunder will vote or refrain from voting in accordance with their best judgment pursuant to the discretionary authority conferred by the proxy. CERTAIN TRANSACTIONS Bingham Dana LLP serves as legal counsel to the Company. Richard M. Harter, Secretary and Director of the Company, is a partner of that firm. Wyatt, Tarrant and Combs also serves as legal counsel to the Company. J. Richard Buchignani, Director of the Company, is a partner of that firm. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the Company's directors and certain of its officers and persons holding more than ten percent of the Company's common stock are required to report their ownership of the common stock and any changes in such ownership to the Securities and Exchange Commission and the Company. The Company believes that Jerry D. Mooney, one of the directors, filed one Form 4 later than the date required. INFORMATION CONCERNING AUDITORS Representatives of Ernst & Young LLP are expected to be at the Annual Meeting and will have an opportunity to make a statement if they desire to do so. Such representatives are also expected to be available to respond to appropriate questions. STOCKHOLDERS PROPOSALS Stockholder proposals to be submitted for vote at the 1999 Annual Meeting must be delivered to the Company on or before December 9, 1998. EXPENSES OF SOLICITATION Solicitations of proxies by mail is expected to commence on April 10, 1998, and the cost thereof will be borne by the Company. Copies of solicitation materials will also be furnished to brokerage firms, fiduciaries and custodians to forward to their principals, and the Company will reimburse them for their reasonable expenses. By Order of the Board of Directors Richard M. Harter Secretarty ANNUAL REPORT ON FORM 10-K The Company will deliver without charge to each of its stockholders, upon their written request, a copy of the Company's most recent annual report on Form 10-K and any information contained in any subsequent reports filed with The Securities and Exchange Commission. Request for such information should be directed to Investor Relations, Concord EFS, Inc., 2525 Horizon Lake Drive, Suite 120, Memphis, Tennessee 38133. (This is the front side of the proxy card.) CONCORD EFS, Inc. 2525 Horizon Lake Drive, Suite 120 Memphis, Tennessee 38133 This proxy is solicited on behalf of the Board of Directors. The undersigned hereby appoints Dan M. Palmer and Thomas J. Dowling or either of them as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote as designated below, all the shares of Common Stock of Concord EFS, Inc. held of record by the undersigned on March 9, 1998, at the Annual Meeting of Stockholders to be held on May 14, 1998 at Colonial Country Club, 2736 Countrywood Parkway, Memphis, Tennessee beginning at 9:30 a.m. local time, or any adjournment thereof. 1. To elect directors. ___ FOR all nominees (except as marked to the contrary below) ___ WITHHOLD AUTHORITY for all nominees listed below Dan M. Palmer Edward A. Labry III Richard M. Harter Joyce Kelso David C. Anderson Jerry D. Mooney J. Richard Buchignani Paul L. Whittington Richard P. Kiphart Douglas C. Altenbern (Instruction: To withhold authority to vote for any individual(s), write the name(s) of such nominee(s) on the space provided below.) _____________________________________________________________________ 2. To approve the Amendment of the Certificate of Incorporation to Increase Number of Authorized Shares of Common Stock. ____FOR ____AGAINST ____ABSTAIN (This is the back side of the proxy card.) This proxy, when properly executed, will be voted in the manner directed by the undersigned stockholder. If no direction is made, this proxy will be voted FOR all nominees for director and FOR the action described in Item No. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the Annual Meeting or any adjournment thereof. Please sign exactly as the name appears. When shares are held by joint tenants, both should sign. 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