<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
May & Speh, 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):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
MAY & SPEH, INC.
1501 OPUS PLACE
DOWNERS GROVE, ILLINOIS 60515
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 12, 1997
------------------------
TO THE STOCKHOLDERS OF MAY & SPEH, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of May & Speh, Inc., a Delaware corporation (the "Company"), will be
held at Hamburger University, 2715 Jorie Boulevard, Oak Brook, Illinois, on
Wednesday, March 12, 1997 at 5:30 p.m., Central Standard Time, for the following
purposes:
1. To elect one person to the Board of Directors of the Company to serve
for a term of three years;
2. To ratify the appointment of Price Waterhouse LLP as the Company's
independent public accountants for the fiscal year ending September
30, 1997; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record as of the close of business on January 20, 1997 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting
or any adjournment thereof. A list of stockholders entitled to vote at the
Annual Meeting will be available for inspection by stockholders for any purpose
germane to the Annual Meeting at the offices of the Company for the ten days
immediately preceding the Annual Meeting date. The Annual Report of the Company
for the fiscal year ended September 30, 1996 is being mailed to all stockholders
of record on the Record Date and accompanies the enclosed Proxy Statement.
Whether or not you plan to attend the Annual Meeting, please complete, sign
and date the enclosed proxy card and return it promptly in the enclosed
envelope. Your proxy may be revoked in the manner described in the Proxy
Statement at any time before it has been voted at the Annual Meeting.
By Order of the Board of Directors,
[FACSIMILE SIGNATURE]
Kathleen M. Malinger
Secretary
Downers Grove, Illinois
February 5, 1997
<PAGE>
MAY & SPEH, INC.
1501 OPUS PLACE
DOWNERS GROVE, ILLINOIS 60515
----------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 12, 1997
----------------------
GENERAL INFORMATION
This Proxy Statement is being furnished to the stockholders of May & Speh,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Stockholders to be held at Hamburger University, 2715 Jorie
Boulevard, Oak Brook, Illinois, on Wednesday, March 12, 1997 at 5:30 p.m.,
Central Standard Time, and any adjournments thereof (the "Annual Meeting"). A
stockholder may revoke a proxy at any time before the meeting is convened by
filing with the Secretary of the Company an instrument of revocation or a duly
executed proxy bearing a later date. A proxy also may be revoked by attending
the Annual Meeting and voting in person, although attendance at the Annual
Meeting will not, in and of itself, constitute a revocation of proxy. This Proxy
Statement and the enclosed Notice of Annual Meeting and Form of Proxy are first
being sent to stockholders on or about February 5, 1997.
Stockholders are urged to sign the accompanying form of proxy and return it
as soon as possible in the envelope provided for that purpose. Returning a proxy
card will not prevent a stockholder from attending the Annual Meeting. If the
enclosed proxy is properly executed and returned in time for voting with a
choice specified thereon, the shares represented thereby will be voted as
indicated on such proxy. If no specification is made, the proxy will be voted by
the person(s) named thereon (i) for the election of the nominee named herein as
a director (or a substitute therefor if the nominee is unable or refuses to
serve), (ii) for the ratification of Price Waterhouse LLP as the Company's
independent public accountants for the 1997 fiscal year and (iii) in the
discretion of such persons(s) upon such matters not presently known or
determined that properly may come before the Annual Meeting. A stockholder who
wishes to designate a person or persons to act as his or her proxy at the Annual
Meeting, other than the proxies designated by the Board of Directors, may strike
out the names appearing on the enclosed form of proxy, insert the name of any
other such person or persons, sign the proxy and transmit it directly to such
other designated person or persons for use at the Annual Meeting.
Stockholders of record on January 20, 1997 (the "Record Date") are entitled
to notice of and to vote at the Annual Meeting. As of the Record Date,
25,024,354 shares of the Company's common stock, $.01 par value (the "Common
Stock"), were outstanding and entitled to one vote each on all matters to be
considered at the Annual Meeting. Stockholders do not have the right to cumulate
their
<PAGE>
votes in the election of directors. A majority of the shares entitled to vote
present, in person or by proxy, at the Annual Meeting shall constitute a quorum.
If a quorum is present, the affirmative vote of a plurality of the shares that
are present, in person or by proxy, at the Annual Meeting and entitled to vote
will be sufficient to elect a director, and the affirmative vote of a majority
of such shares will be sufficient to ratify the appointment of the independent
public accountants. Abstentions and broker non-votes will be treated as present
at the Annual Meeting for purposes of reaching a quorum. Abstentions shall have
no effect on the election of a director but shall be treated as a vote against
the ratification of the independent public accountants. Broker-non votes shall
have no effect on the outcome of either of the two proposals.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies in person or by telephone. Brokers, nominees, fiduciaries and
other custodians will be requested to forward soliciting materials to the
beneficial owners of shares of Common Stock and will be reimbursed by the
Company for their reasonable expenses in forwarding such materials.
2
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTOR
The Board of Directors presently consists of five directors and is divided
into three classes. One class of directors is elected annually, and each
director in the class serves a three-year term. The class to be elected at the
Annual Meeting consists of one director. The Board has nominated Robert C. Early
for this position, and Mr. Early, who is currently a director of the Company,
has indicated his willingness to serve if elected. In the event that the nominee
should become unwilling or unable to serve as a director, all duly executed
proxies shall be voted for the election of such other person as may be
designated by the Board of Directors. Unless authority to vote for the nominee
is withheld, all votes represented by a properly executed proxy will be cast in
favor of the nominee.
The Board of Directors recommends a vote FOR the nominee for director.
The table below contains a brief description of the business experience and
positions held by the nominee and the other directors of the Company.
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
- ---- --- --------------------------------
<S> <C> <C>
NOMINEE FOR ELECTION:
Robert C. Early(1)........ 43 Mr. Early has served as a director since November 1994. Mr. Early has
served as Executive Vice President, Corporate Development of the
Company since January 1997. From October 1995 to January 1997, he
served as Executive Vice President, Chief Financial Officer and
Treasurer of the Company, and as Director of Corporate Growth from
1993 through October 1995. Prior to joining the Company, Mr. Early
worked as an independent contractor with business advisory firms,
including Ridge Capital Corp. and Ridge Advisors, Inc., which provide
mergers and acquisitions, capital financing and strategic planning
advisory services. From 1990 through 1992 Mr. Early was also Vice
Chairman of Consolidated Convenience Systems, Inc., a holding
company. Prior to 1990, Mr. Early spent approximately 12 years at
Grant Thornton LLP, and was the partner responsible for the Chicago
office Capital Markets Group from 1985 through 1990. Mr. Early is a
CPA.
TERM EXPIRING IN 1998:
Lawrence J. Speh(1)....... 47 Mr. Speh has served as a director of the Company since July 1992 and
as President and Chief Executive Officer since January 1993. From
1977 until June 1988, Mr. Speh held various senior management
positions with the Company including President of Direct Marketing
Services, Marketing Director and Treasurer. From June 1988 until July
1992, Mr. Speh owned and operated Gallery Lainzberg, a direct
marketing company. Mr. Speh is the son of Albert J. Speh, Jr., the
Chairman of the Company.
</TABLE>
3
<PAGE>
Positions with Company, Business
Name Age Experience and Other Positions
---- --- --------------------------------
Deborah A. Bricker(2)(3).. 44 Ms. Bricker has served as a director of the
Company since March 1996. Ms. Bricker is the
founder and President of Bricker & Associates
Inc., a productivity consulting firm based in
Chicago, Illinois.
TERM EXPIRING IN 1999:
Albert J. Speh, Jr.(1).... 77 Mr. Speh is a founder of the Company and has
served as Chairman of the Board of Directors
since 1992. Prior to founding the Company, Mr.
Speh served in the Armed Forces during World
War II. He was later employed by Sears,
General Finance, Inc. and Encyclopedia
Britannica in the field of data processing.
Mr. Speh currently serves on the boards
of Fenwick High School and Loyola University
(Chicago).
Peter I. Mason(2)(3)...... 44 Mr. Mason has been a director of the Company
since November 1994. He is a founding partner
of the law firm of Freeborn & Peters, which
has served as general counsel to the Company
since 1993. He is a director of U.S. Robotics
Corporation, Eagle River Interactive, Inc. and
several privately held businesses.
- ----------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
The Board of Directors has three standing committees, the Executive
Committee, the Audit Committee and the Compensation Committee. The Company does
not have a nominating committee. The nominating function is performed by the
Executive Committee, which has not established a formal policy or procedure for
considering stockholder nominations.
The Executive Committee is empowered to exercise the authority of the Board
of Directors in the management of the business and affairs of the Company
between the meetings of the Board, except as provided by the Bylaws or limited
by the provisions of the Delaware General Corporation Law. During fiscal 1996,
the Executive Committee met formally and informally on a regular basis.
The Audit Committee recommends to the Board of Directors the appointment of
the independent certified public accountants for the following year and reviews
the scope of the audit, the independent certified public accountant's report and
the auditors' comments relative to the adequacy of the Company's system of
internal controls and accounting policies. During fiscal 1996, the Audit
Committee held one meeting.
The Compensation Committee is responsible for making determinations
regarding salaries, bonuses and other compensation for the Company's executive
officers, including decisions with respect to stock option grants. During fiscal
1996, the Compensation Committee held one meeting.
4
<PAGE>
During fiscal 1996, the Board of Directors held two meetings. All members
of the Board attended at least 75% of the Board meetings and of the meetings of
their respective committees during that period.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company are not separately
compensated for serving on the Board of Directors. Non-employee directors are
compensated through participation in the Company's 1994 Executive Stock Option
Plan (the "Executive Option Plan") and cash payments for attendance at Board and
committee meetings, and are reimbursed for related travel expenses. Non-employee
directors receive $1,000 for each Board meeting attended and $750 for each
standing committee meeting attended. Peter I. Mason, a non-employee director, is
a partner with the law firm of Freeborn & Peters, general counsel to the
Company. Mr. Mason is not separately compensated for his attendance at any
meeting of the Board of Directors or any committee thereof. Freeborn & Peters is
compensated for Board and committee meetings attended by Mr. Mason based on Mr.
Mason's standard hourly rate.
Pursuant to the Executive Option Plan, each non-employee director receives
options to purchase 21,600 shares of Common Stock, vesting over a three-year
period. No additional option grants are made to non-employee directors for
serving on a committee. The exercise price for such options is based upon the
fair market value of the Common Stock on the date of grant. Mr. Mason and Ms.
Bricker received the grants on the effective date of the Company's registration
statement filed in connection with its initial public offering. Directors
appointed after that date will receive grants on the effective date of their
appointment. Subsequent comparable grants of options will be made on the third
anniversary date of each option grant.
5
<PAGE>
OWNERSHIP OF SECURITIES
The following table sets forth, as of January 25, 1997, the number of
shares of Common Stock beneficially owned by (i) all persons known by the
Company to beneficially own more than five percent of the outstanding Common
Stock, (ii) all directors and nominees, (iii) the persons named in the Summary
Compensation Table below, and (iv) all directors and executive officers as a
group. Unless otherwise indicated, the persons named below have sole voting and
investment power with respect to all shares shown as beneficially owned by them:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------- ----------------------- --------
<S> <C> <C>
May & Speh, Inc. Employee Stock Ownership
Plan...................................... 8,366,832(1) 33.4%
Lawrence J. Speh............................ 4,662,107(2) 18.5
Albert J. Speh, Jr.......................... 2,079,264(3) 8.3
Robert C. Early............................. 251,050(4) 1.0
Michael J. Loeffler......................... 132,032(5) *
Terrance C. Cieslak......................... 131,540(6) *
Peter I. Mason.............................. 84,000(7) *
Deborah A. Bricker.......................... 7,200(8) *
All directors and executive officers
as a group (13 persons)................... 7,644,775(2)(3)(9) 29.9
</TABLE>
- ----------
* Less than one percent.
(1) The address of the May & Speh, Inc. Employee Stock Ownership Plan (the
"ESOP") is c/o Cole Taylor Bank, 850 W. Jackson Blvd., Chicago, Illinois
60607. Includes 6,190,154 shares that have been allocated or are available
for allocation to the accounts of certain employees or former employees of
the Company. ESOP participants have shared voting and investment power with
respect to the shares allocated to their individual accounts.
(2) Includes 768,156 shares held by trusts for the benefit of Lawrence J. Speh
and 3,122,851 shares held by trusts for the benefit of members of Mr.
Speh's family. Mr. Speh serves as sole trustee of each of these trusts and
has sole voting and investment power over the shares held by the trusts.
Also includes 161,000 shares issuable pursuant to currently exercisable
options, and 2,516 shares allocated to Mr. Speh's ESOP account. Also
includes 59,544 shares held by Mr. Speh's wife, as to which he disclaims
beneficial ownership. Mr. Speh's address is c/o May & Speh, Inc., 1501 Opus
Place, Downers Grove, Illinois 60515.
(3) Includes 143,600 shares held by trusts for the benefit of members of Albert
J. Speh, Jr.'s family. Mr. Speh serves as sole trustee of each of these
trusts and has sole voting and investment power over the shares held by the
trusts. Also includes 2,516 shares allocated to Mr. Speh's ESOP account.
Mr. Speh's address is c/o May & Speh, Inc., 1501 Opus Place, Downers Grove,
Illinois 60515.
(4) Includes 21,312 shares held by a trust for the benefit of Mr. Early. Mr.
Early serves as sole trustee of the trust and has sole voting and
investment power over the shares held by the trust. Also includes 200,803
shares issuable pursuant to currently exercisable options, and 28,935
shares allocated to Mr. Early's ESOP account.
(5) Includes 52,600 shares issuable pursuant to currently exercisable options,
and 79,432 shares allocated to Mr. Loeffler's ESOP account.
(6) Includes 42,600 shares issuable pursuant to currently exercisable options,
and 88,940 shares allocated to Mr. Cieslak's ESOP account.
(7) Includes 76,800 shares held by The Freeborn & Peters Profit Sharing Plan
for the benefit of Mr. Mason, and 7,200 shares issuable pursuant to options
that will become exercisable within 60 days.
(8) Shares issuable pursuant to options that will become exercisable within 60
days.
6
<PAGE>
(9) Includes 569,303 shares issuable pursuant to options that are currently
exercisable or that will become exercisable within 60 days, and
343,189 shares allocated to the ESOP accounts of the executive officers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and beneficial owners of more than ten percent of the Common
Stock to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission and to provide the Company with
copies of such reports. Based solely on a review of the copies provided to the
Company and written representations from the directors and executive officers,
the Company believes that all applicable Section 16(a) filing requirements have
been met.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid for services rendered
during fiscal 1996 and fiscal 1995 to the Company in all capacities by (i) the
Company's Chief Executive Officer, and (ii) the Company's four highest paid
executive officers during fiscal 1996, other than the Chief Executive Officer
(the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- --------------------------- ------ -------- ----- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Albert J. Speh, Jr. .............. 1996 $406,462 $200,000 -- $79,737
Chairman 1995 400,000 200,000 -- 74,000
Lawrence J. Speh.................. 1996 361,308 350,000 -- 42,970
President and Chief Executive 1995 346,000 300,000 900,000 34,574
Officer
Robert C. Early................... 1996 254,039 125,000 -- 48,222
Executive Vice President, Corporate 1995 192,000 40,000 600,000 44,508
Development
Michael J. Loeffler............... 1996 196,733 125,000 200,000 30,620
Executive Vice President, Direct 1995 175,000 234,000 180,000 30,033
Marketing Services
Terrance C. Cieslak............... 1996 167,797 110,000 50,000 30,620
Executive Vice President and Chief 1995 156,000 91,000 132,000 30,058
Technology Officer
</TABLE>
- -------------
(1) Includes contributions made by the Company to the Named Executive Officer's
ESOP account. Also includes premiums paid by the Company for split-dollar
life insurance policies in 1996 and 1995 as follows: Albert J. Speh, Jr.,
$74,000 and $74,000; Lawrence J. Speh, $37,233 and $34,574; and Robert C.
Early, $15,000 and $14,450, respectively.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options to the Named Executive Officers during fiscal 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM(2)
------------------------------------------------------- ------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED FISCAL YEAR(3) SHARE DATE 5% 10%
---- ---------- -------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Loeffler........ 200,000 18.4% $11.13 4/4/06 $1,400,000 $3,548,000
Terrance C. Cieslak........ 50,000 4.6 11.13 4/4/06 350,000 887,000
</TABLE>
- ----------
(1) Options granted pursuant to the Executive Option Plan and subject to the
terms of such plan. All options were granted at an exercise price equal to
the fair market value of the Common Stock on the grant date and vest in
equal annual installments over a five-year period.
(2) Hypothetical gains based on assumed rates of annual compounded stock price
appreciation of 5% and 10% from the date of grant over the full option
term. The 5% and 10% assumed rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future increases in the price of its
Common Stock.
(3) Based on an aggregate of 1,087,000 options granted to employees of the
Company in fiscal 1996.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information regarding the exercise
of stock options during fiscal 1996 by the Named Executive Officers and the
number and value of unexercised options held by the Named Executive Officers as
of September 30, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
--------------------------- --------------------------
NUMBER OF
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence J. Speh...... 180,000 $1,460,000 180,000 540,000 $3,270,600 $9,811,800
Robert C. Early....... 21,197 172,756 218,803 360,000 3,955,491 6,510,960
Michael J. Loeffler... 5,400 44,010 66,600 308,000 1,210,122 3,786,360
Terrance C. Cieslak... 5,400 44,010 54,600 122,000 992,082 1,764,240
</TABLE>
- ----------
(1) The value of "in-the-money" options represents the difference between the
exercise price of such option and $20 1/4, the last sale price of a share
of Common Stock on September 30, 1996 as reported by The Nasdaq Stock
Market.
8
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with three of the Named
Executive Officers, Albert J. Speh, Jr., Lawrence J. Speh and Michael J.
Loeffler. The agreements with Lawrence J. Speh and Michael J. Loeffler include
noncompetition agreements.
Albert J. Speh has entered into a five year employment agreement with the
Company, effective June 1, 1995, with an initial base salary of $400,000.
Following the employment term, the agreement provides for Mr. Speh to be
retained as a consultant to the Company for a five year consulting period at
$300,000 per year. During the employment term and consulting term, Mr. Speh is
entitled to participate in all benefit programs of the Company, including the
ability to receive bonus payments and option grants at the direction of the
Compensation Committee. In the event Mr. Speh is terminated other than for
cause, he will be entitled to receive his base salary for the remaining portion
of the employment period, if any, and the consulting fee for five years
thereafter.
Lawrence J. Speh has entered into a five year employment agreement with the
Company, dated October 13, 1995, with an initial base salary of $350,000. Mr.
Speh is entitled to participate in all benefit programs of the Company,
including the ability to receive bonus payments and option grants at the
direction of the Compensation Committee. The agreement provides for a severance
payment to Mr. Speh equal to three times his base salary in the event he is
terminated without cause or he terminates his employment for "Good Reasons,"
including a "Change of Control," each as defined in Mr. Speh's employment
agreement.
Mr. Loeffler's agreement, dated October 1, 1994, provides for an annual
base salary of at least $180,000 over a five year term. Mr. Loeffler is entitled
to a performance-based bonus tied directly to target sales levels for direct
marketing services. Mr. Loeffler is entitled to six months severance in the
event he is terminated without cause.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the monthly percentage changes in the Company's
cumulative total stockholder return from March 26, 1996 (the date of the
Company's initial public offering) through September 30, 1996 (the last day of
the Company's 1996 fiscal year) with the cumulative total return of the CRSP
Total Return Index for the Nasdaq Stock Market (U.S. Companies) and the CRSP
Total Return Index for Nasdaq Computer & Data Processing Services Stocks for the
same period. The graph assumes the investment of $100 and the reinvestment of
all dividends. The stock price performance shown on the graph below is not
necessarily indicative of future stock price performance.
[GRAPH APPEARS HERE]
COMPARISON OF SIX MONTH CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
3/26/96 3/29/96 4/30/96 5/31/96 6/28/96 7/31/96 8/30/96 9/30/96
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
May & Speh, Inc. 100 97.826 118.478 134.783 136.957 142.391 140.217 176.087
- -------------------------------------------------------------------------------------------------------
Nasdaq Stock Market
(U.S. Companies) 100 101.324 109.728 114.766 109.594 99.834 105.428 113.497
- -------------------------------------------------------------------------------------------------------
Nasdaq Computer &
Data Processing 100 101.357 113.198 116.939 112.662 100.893 103.594 114.905
- -------------------------------------------------------------------------------------------------------
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors determines the
compensation for the Company's Chief Executive Officer and its other most highly
compensated executive officers. To ensure that the Company's executive
compensation program is administered in an objective manner, the Compensation
Committee is composed entirely of directors who are neither executive officers
nor employees of the Company. In addition to determining the salary and bonus
compensation for all of the Company's most highly compensated executive
officers, the Compensation Committee determines the nature, timing and amount of
awards and grants under the Company's stock option plans and makes
recommendations as to the administration of other compensation plans and
programs of the Company as they relate to executive officers. As a result of
recent changes to the rules under Section 16 of the Securities Exchange Act of
1934, future option grants to executive officers may be made by the full Board
of Directors.
This report is intended to describe the philosophy that underlies the cash
and equity-based components of the Company's executive pay program. It also
describes the details of each element
10
<PAGE>
of the program, as well as the rationale for compensation paid to the Company's
Chief Executive Officer and its executive officers in general.
Compensation of Executive Officers Generally
The Company's executive compensation program is designed to link executive
pay to Company performance and to provide an incentive to executives to manage
the Company with a principal view to enhancing stockholder value.
Generally, the Company's executive compensation program makes a significant
portion of each executive's pay contingent upon growth and improvement in the
Company's results of operations, with the potential for exceptional reward for
truly exceptional performance. More specifically, the program is designed to
provide compensation for meeting and exceeding internal goals for earnings per
share and to provide incentives to increase the market value of the Common
Stock. The program is also designed to attract and retain talented executives
who are essential to the Company's long-term success within a highly competitive
industry that demands unique talents, skills and capabilities.
Compensation criteria are evaluated annually to ensure they are appropriate
and consistent with the business objectives that are important in meeting the
Company's earnings per share, operating profits and revenue goals and in
enhancing stockholder value. The Company's policies and programs are intended to
(i) provide rewards contingent upon Company and individual performance, (ii)
link executive compensation to sustainable increases in and the preservation of
stockholder value, (iii) promote teamwork among executives and other Company
employees, (iv) encourage the retention of a strong management team, and (v)
encourage personal and professional development and growth.
Components of Compensation
The primary components of the Company's executive compensation package are
salary, bonuses and stock options.
Salary. The Compensation Committee reviews each executive officer's salary
annually. Objective and subjective performance goals are set each year for each
executive officer which will vary depending upon the specific position or role
of the executive within the Company. The Compensation Committee's review takes
into consideration both the Company's performance with respect to earnings per
share, operating profits and revenue, together with the duties and performance
of each executive. The Compensation Committee also considers provisions relating
to salary set forth in employment agreements with certain of the Company's
executive officers. In making salary recommendations or decisions, the
Compensation Committee exercises its discretion and judgment based on the
foregoing criteria, without applying a specific formula to determine the weight
of each factor considered. The Compensation Committee also considers equity and
fairness when comparing base salaries of executives. The salary changes for
executive officers of the Company for fiscal 1996
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were in response to a significant improvement in performance at every level of
the Company, in earnings per share, operating profits and revenue, and in the
achievement of other individual performance objectives.
Bonus. Under the Company's Discretionary Compensation Plan for Senior
Executive Employees (the "Bonus Plan") as implemented for fiscal 1996, certain
employees of the Company who perform significant management and decision-making
functions were eligible to receive a performance bonus. Awards to executives may
be made by the Compensation Committee after considering the recommendation of
the Company's Chief Executive Officer (except for awards granted to the Chief
Executive Officer) and the financial performance of the Company as measured by
net earnings, operating income, earnings per share, cash flow, return on equity
or assets, pre-tax profit, earnings growth, revenue growth, or any combination
of the foregoing or any other factors that the Compensation Committee deems
relevant. Bonuses for fiscal 1996 were awarded based on the Company's financial
performance, as measured by a number of the factors listed above, and the
successful completion of the Company's initial public offering.
Stock Options. The Compensation Committee believes that the granting of
stock options is an important method of rewarding and motivating management by
aligning management's interests with those of the Company's stockholders on a
long-term basis. In addition, the Compensation Committee recognizes that the
Company conducts its business in an increasingly competitive industry and that,
in order for the Company to remain highly competitive and at the same time
pursue a high-growth strategy, it must employ the best and most talented
executives, managers, and research and development personnel who possess
demonstrated skills and experience. The Company believes that stock options play
an important role in attracting and retaining such employees. For these reasons,
the Company adopted the Executive Option Plan as a stock-based incentive program
primarily for its executive officers and directors. The Committee believes the
Executive Option Plan is an important feature of the Company's executive
compensation package. Under the Executive Option Plan, the Compensation
Committee may grant options to executive officers who are expected to contribute
materially to the Company's future success. In determining the size of stock
option grants, the Compensation Committee focuses primarily on the Company's
performance and the perceived role of each executive in accomplishing such
performance objectives, as well as the satisfaction of individual performance
objectives. Stock options granted to executive officers generally become
exercisable over a five-year period and typically are granted with an exercise
price equal to the fair market value of the Common Stock as of the date of
grant. The value of the stock options is directly tied to the value of a share
of the Common Stock.
Compensation of the Chief Executive Officer. Mr. Lawrence J. Speh currently
serves as Chief Executive Officer and President of the Company. Mr. Speh was
compensated during the 1996 fiscal year utilizing the same general philosophy
and criteria used for other executive officers as described above, including (i)
the Company's achievement of earnings per share, operating profits and revenue
goals, (ii) the growth and expansion of the Company, (iii) setting the strategic
direction and vision for the Company, and (iv) increasing the productivity of
the Company and other subjective criteria. During the 1996 fiscal year, Mr. Speh
received a salary of $361,308 pursuant to
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his employment agreement with the Company and received a bonus of $350,000 which
represented approximately 37% of the aggregate bonuses paid under the Bonus
Plan.
The Compensation Committee believes that Mr. Speh exceeded his individual
performance objectives for the 1996 fiscal year, as reflected by the Company's
outstanding overall performance. The Company's net revenues increased 25.3% from
$61.6 million in fiscal 1995 to $77.2 million in fiscal 1996, while net earnings
increased 30.1% from $7.9 million to $10.2 million and earnings per share
increased from $.39, based on 20.4 million weighted average shares outstanding,
to $.42, based on 24.4 million weighted average shares outstanding. The
Compensation Committee believes that Mr. Speh's total compensation for the 1996
fiscal year fairly and sufficiently rewarded him for such performance and will
serve to retain Mr. Speh as a key employee on whom the Company is dependent for
its continued success.
Tax Considerations. The Compensation Committee has determined that it is
unlikely that the Company would pay any amounts for fiscal 1996 that would
result in a loss of the federal income tax deduction under Section 162(m) of the
Internal Revenue Code of 1986, as amended, and, accordingly, has not recommended
that any special actions be taken or that any plans or programs be revised at
this time.
The foregoing report has been approved by all of the members of the
Compensation Committee.
The Compensation Committee
Deborah A. Bricker
Peter I. Mason
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, Deborah A. Bricker and Peter I. Mason, neither of whom
have been, at any time, employees of the Company, served on the Compensation
Committee of the Board of Directors. Ms. Bricker is the President of Bricker &
Associates, Inc. which provided consulting services to the Company during fiscal
1996. Mr. Mason is a partner in the law firm of Freeborn & Peters, which
provided legal services to the Company in fiscal 1996. See "Certain
Relationships and Related Transactions."
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Peter I. Mason, a director of the Company, is a partner in the law firm of
Freeborn & Peters. Since 1993, Freeborn & Peters has served as general counsel
to the Company.
Deborah A. Bricker, a director of the Company, is the founder and President
of Bricker & Associates, Inc., a productivity consulting firm. Bricker &
Associates, Inc. provides consulting services to the Company. During fiscal
1996, the Company paid Bricker & Associates, Inc. approximately $640,000 for
such services.
PROPOSAL 2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors of the
Company has selected Price Waterhouse LLP as independent public accountants to
audit the consolidated financial statements of the Company, and has directed
that this selection be presented to the stockholders for approval at the Annual
Meeting. Price Waterhouse LLP has audited the Company's financial statements
since 1995. It is anticipated that representatives of Price Waterhouse LLP will
attend the Annual Meeting, will have the opportunity to make a statement and
will be available to respond to questions from stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Price Waterhouse LLP. In the event
stockholders fail to ratify the appointment of Price Waterhouse LLP, the Board
of Directors will reconsider its selection. Even if the selection is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm at any time if the Board of Directors
determines that such a change would be in the best interests of the Company and
its stockholders.
The Board of Directors recommends a vote FOR the ratification of Price
Waterhouse LLP as the Company's independent public accountants.
In connection with the Company's initial public offering completed in March
1996, the Company dismissed Nykiel, Carlin & Co., Ltd., in September 1995 and
engaged Price Waterhouse LLP to audit the financial statements of the Company.
The decision to change accountants was approved by the Company's Board of
Directors. The report of Nykiel, Carlin & Co., Ltd. on the financial statements
for the Company as of September 30, 1994 and for the year then ended contained
no adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles. There were no
disagreements at any time between the Company and Nykiel, Carlin & Co., Ltd. on
any matter of accounting principles or practices, financial disclosure or
auditing scope or procedure.
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OTHER MATTERS
The Board of Directors is not aware of any matters to be presented at the
Annual Meeting other than those listed in the notice of the meeting. If any
other matters do come before the Annual Meeting, it is intended that the holders
of proxies solicited by the Board of Directors will vote on such other matters
in their discretion in accordance with their best judgment.
ADDITIONAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN
REQUEST ADDRESSED TO THE CORPORATE SECRETARY OF MAY & SPEH, INC., 1501 OPUS
PLACE, DOWNERS GROVE, ILLINOIS 60515.
STOCKHOLDER PROPOSALS
In the event any stockholder intends to present a proposal at the Annual
Meeting of Stockholders to be held in 1998, such proposal must be received by
the Corporate Secretary of the Company, in writing, on or before October 8, 1997
to be considered for inclusion in the Company's proxy materials relating to that
meeting.
By Order of the Board of Directors
[FACSIMILE SIGNATURE]
Albert J. Speh, Jr.
Chairman of the Board of Directors
Downers Grove, Illinois
February 5, 1997
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MAY & SPEH, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lawrence J. Speh and Robert C. Early,
jointly and individually, as proxies, each with full power of substitution, and
hereby authorizes them to represent and to vote, as directed below, all shares
of Common Stock, par value $.01 per share, of May & Speh, Inc., a Delaware
corporation (the "Company"), that the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on Wednesday, March 12, 1997, or any adjournment thereof, as follows:
(continued and to be signed and dated on reverse side)
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MAY & SPEH, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
1. Election of Director:
Nominee: Robert C. Early
[_] FOR ALL [_] WITHHOLD ALL
2. For the ratification of Price Waterhouse LLP as the Company's independent
public accountants for the 1997 fiscal year.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In accordance with their discretion upon such other matters as may properly
come before the meeting and any adjournment thereof.
When properly executed, this proxy will be voted in the manner directed by
the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS SET FORTH HEREIN.
Dated:_________________, 1997 _____________________________________________
(Signature)
_____________________________________________
(Signature)
(Please sign exactly as name appears on stock
certificate. Where stock is registered
jointly, all owners must sign. Corporate
owners should sign full corporate name by an
authorized person. Executors, administrators,
trustees or guardians should indicate their
status when signing.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
POSTMARKED ENVELOPE
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