<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
SCB COMPUTER TECHNOLOGY, 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)(1) 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:
<PAGE> 2
(SCB LOGO/LETTERHEAD)
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 18, 2000
To our Shareholders:
The 2000 Annual Meeting of Shareholders of SCB Computer Technology, Inc.
(the "Company") will be held at the Ridgeway Inn, 5679 Poplar Avenue, Memphis,
Tennessee, on October 18, 2000, beginning at 2:00 p.m. (Memphis time), for the
following purposes:
1. to elect five directors to serve on the Company's Board of Directors for
a one-year term;
2. to ratify the appointment of BDO Seidman, LLP as the Company's
independent auditor for the fiscal year ending April 30, 2001; and
3. to transact any other business that properly comes before the meeting.
Shareholders of record at the close of business on September 13, 2000, are
entitled to receive notice of, and to vote at, the meeting and any postponement
or adjournment thereof.
You are cordially invited to attend the meeting. Regardless of whether you
plan to attend the meeting in person, please vote by telephone or complete, date
and sign the enclosed proxy card and return it promptly in the accompanying
postage-paid envelope.
By Order of the Board of Directors,
/s/ Gordon L. Bateman
Gordon L. Bateman
Secretary
September 19, 2000
YOUR VOTE IS IMPORTANT!
TO ENSURE THAT YOU ARE REPRESENTED AT THE MEETING, PLEASE VOTE BY TELEPHONE OR
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON. NO
ADDITIONAL POSTAGE IS NECESSARY IF THE PROXY IS MAILED IN THE UNITED STATES. YOU
MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE MEETING........................................... 1
What is the purpose of the meeting?....................... 1
Who is entitled to vote?.................................. 1
Who can attend the meeting?............................... 1
What constitutes a quorum?................................ 1
How do I vote my shares?.................................. 2
How are the shares credited to my KSOP account voted?..... 2
Can I vote by telephone?.................................. 2
Can I change my vote after I return my proxy card or KSOP
voting instruction form?............................... 2
What are the Board's recommendations?..................... 2
What vote is required to approve each item?............... 3
STOCK OWNERSHIP............................................. 4
How much common stock do the Company's largest
shareholders and its management own?................... 4
Section 16(a) Beneficial Ownership Reporting Compliance... 5
ITEM 1 -- ELECTION OF DIRECTORS............................. 6
General................................................... 6
Nominees for Director..................................... 6
How does the Board of Directors operate?.................. 7
How often did the Board of Directors and its committees
meet in fiscal 2000?................................... 7
How are directors nominated?.............................. 7
How are directors compensated?............................ 8
Compensation Committee Interlocks and Insider
Participation.......................................... 8
EXECUTIVE COMPENSATION...................................... 8
Report of the Compensation Committee on Executive
Compensation........................................... 8
Summary Compensation Table................................ 10
Stock Option Grants in Fiscal 2000........................ 11
Stock Option Exercises and Values for Fiscal 2000......... 12
Employment Agreements..................................... 12
Other Compensation Agreements............................. 13
Comparison of Total Shareholder Returns................... 14
ITEM 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITOR................................................... 15
OTHER MATTERS............................................... 15
ADDITIONAL INFORMATION...................................... 16
Solicitation of Proxies................................... 16
Shareholder Proposals for 2001 Annual Meeting of
Shareholders........................................... 16
</TABLE>
<PAGE> 4
(SCB LOGO/LETTERHEAD)
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 18, 2000
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of SCB Computer Technology, Inc. (the
"Company") for use at the 2000 Annual Meeting of Shareholders to be held at the
Ridgeway Inn, 5679 Poplar Avenue, Memphis, Tennessee, on October 18, 2000,
beginning at 2:00 p.m. (Memphis time), and at any postponement or adjournment
thereof. This Proxy Statement and the enclosed proxy card, together with the
Company's 2000 Annual Report to Shareholders, are first being sent to the
shareholders of the Company entitled to vote at the meeting on or about
September 19, 2000.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE MEETING?
At the meeting, the Company's shareholders will act upon the matters
outlined in the accompanying Notice of 2000 Annual Meeting of Shareholders.
These matters include (1) the election of five directors to serve on the
Company's Board of Directors for a one-year term, and (2) the ratification of
the appointment of BDO Seidman, LLP as the Company's independent auditor for the
fiscal year ending April 30, 2001. In addition, the Company's management will
report on the performance of the Company during fiscal 2000 and respond to
questions from shareholders.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on the record date,
September 13, 2000, are entitled to receive notice of the meeting and to vote
the shares of common stock that they held on that date at the meeting. Each
outstanding share entitles its holder to cast one vote on each matter to be
voted on at the meeting.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date or their duly appointed proxies,
together with their guests, may attend the meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of the Company's common stock outstanding on the record
date will constitute a quorum, thereby permitting the shareholders to conduct
their business at the meeting. As of the record date, there
<PAGE> 5
were 25,045,324 outstanding shares of common stock. Broker non-votes and proxies
received but marked as abstentions will be included in the calculation of the
number of shares considered present at the meeting.
HOW DO I VOTE MY SHARES?
If you complete and properly sign the accompanying proxy card and return it
to the Company, it will be voted as you direct. If you are a registered
shareholder (i.e., you hold your shares in your own name) and attend the
meeting, you may deliver your completed proxy card or vote in person at the
meeting. "Street name" shareholders who wish to vote at the meeting will need to
obtain a proxy from the broker or other nominee that holds their shares.
HOW ARE THE SHARES CREDITED TO MY KSOP ACCOUNT VOTED?
If you are a participant in the Company's KSOP, you may instruct Merrill
Lynch Trust Company, the trustee of the KSOP, to vote the shares of common stock
credited to your KSOP account as of the record date. You may provide your voting
instructions to the KSOP trustee pursuant to the KSOP voting instruction form
being mailed with this Proxy Statement to KSOP participants. The KSOP trustee
will vote the shares of common stock credited to your KSOP account in accordance
with the instructions set forth in your KSOP voting instruction form if it is
completed and properly signed and is received by ChaseMellon Shareholder
Services, LLC, the Company's voting instruction tabulator, by October 16, 2000.
If your voting instructions are not received by such date, the trustee will vote
the shares of common stock credited to your KSOP account in the same proportion
that it votes the shares for which timely instructions were received.
CAN I VOTE BY TELEPHONE?
If you are a registered shareholder, you may vote by telephone by following
the instructions included with your proxy card. If your shares are held in
"street name," you will need to contact your broker or other nominee to
determine whether you will be able to vote by telephone.
If you are a participant in the KSOP, you may provide your voting
instructions to the KSOP trustee by telephone by following the instructions
included with your KSOP voting instruction form.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD OR KSOP VOTING INSTRUCTION
FORM?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with the Secretary of
the Company either a written notice of revocation or a duly executed proxy card
bearing a later date. "Street name" shareholders must contact their broker or
other nominee and follow its instructions if they wish to change their vote. If
you are a participant in the KSOP, you may revoke your previously given voting
instructions by filing with the voting instruction tabulator by October 16,
2000, either a written notice of revocation or a duly executed KSOP voting
instruction form bearing a later date. The powers of the proxy holders will be
suspended if you attend the meeting in person and so request, although
attendance at the meeting will not by itself revoke a previously granted proxy
or voting instruction.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote your shares in accordance with the
recommendations of the Board of Directors. The Board's recommendations, together
with a description of each item, are set forth in this Proxy Statement. In
summary, the Board recommends a vote:
- for election of the nominated slate of five directors to serve on the
Company's Board of Directors for a one-year term (see page 6); and
2
<PAGE> 6
- for ratification of the appointment of BDO Seidman, LLP as the Company's
independent auditor for the fiscal year ending April 30, 2001 (see page
15).
With respect to any other item of business that properly comes before the
meeting, the proxy holders will vote your shares as recommended by the Board of
Directors or, if no recommendation is given, as they may determine in their own
discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. A properly
executed proxy card marked "WITHHOLD AUTHORITY" with respect to the election of
one or more directors will not be voted with respect to the director or
directors indicated, although it will be counted for the purpose of determining
whether there is a quorum.
OTHER ITEMS. For ratification of the appointment of BDO Seidman, LLP as
the Company's independent auditor for the fiscal year ending April 30, 2001, and
for each other item of business that properly comes before the meeting, the
affirmative vote of the holders of a majority of the shares of common stock
present at the meeting, in person or by proxy, and entitled to vote on the item
will be required for approval. A properly executed proxy card marked "ABSTAIN"
with respect to any such matter will not be voted, although it will be counted
for purposes of determining whether there is a quorum.
In general, if you hold shares of common stock in "street name" through a
broker or other nominee, and if your broker or other nominee is not instructed
or otherwise empowered to vote your shares at a meeting with respect to a
particular matter, then your shares will constitute "broker non-votes" as to
such matter. However, there will be no "broker non-votes" at this meeting,
because the nature of the matters to be acted upon by the shareholders at this
meeting is such that your broker or other nominee will have discretion to vote
your shares even in the absence of express instructions from you.
3
<PAGE> 7
STOCK OWNERSHIP
HOW MUCH COMMON STOCK DO THE COMPANY'S LARGEST SHAREHOLDERS AND ITS MANAGEMENT
OWN?
The table below shows the amount of common stock of the Company
beneficially owned as of July 31, 2000, by (1) each shareholder known to
management of the Company to be the beneficial owner of more than 5% of the
outstanding shares of common stock, (2) each director and nominee for director
of the Company, (3) each executive officer of the Company named in the Summary
Compensation Table in this Proxy Statement, and (4) all directors, director
nominees, and executive officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF SHARES OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1-3) OUTSTANDING(4)
------------------------ ------------------------- --------------
<S> <C> <C>
Ben C. Bryant, Jr.(5)....................................... 5,044,953 20.1%
3440 Pinebrake
Memphis, Tennessee 38125
T. Scott Cobb............................................... 3,731,697 14.9
3800 Forest Hill-Irene Road, Suite 100
Memphis, Tennessee 38125
Lord, Abbett & Co........................................... 1,704,741 6.8
90 Hudson Street
Jersey City, New Jersey 07302
SCB Computer Technology, Inc. KSOP(6)....................... 1,559,862 6.2
3800 Forest Hill-Irene Road, Suite 100
Memphis, Tennessee 38125
Wellington Management Company............................... 1,270,000 5.1
75 State Street
Boston, Massachusetts 02109
Gordon L. Bateman........................................... 300,694 1.2
Jack R. Blair............................................... 2,000 *
Michael J. Boling........................................... 109,000 *
George E. Cates............................................. 3,900 *
Jeffrey S. Cobb............................................. 302,362 1.2
James E. Harwood............................................ 40,000 *
Gary E. McCarter(7)......................................... 300,011 1.2
Robert G. McEniry........................................... 10,000 *
All directors, director nominees, and executive officers as
a group (10 persons)(5,7)................................. 9,844,617 38.1
</TABLE>
---------------
* Less than 1% of the 25,045,324 outstanding shares of common stock.
(1) The numbers of shares of common stock shown in the table include shares that
are individually or jointly owned, as well as shares over which the
individual, directly or indirectly, has either sole or shared investment or
voting authority. Certain of the Company's directors, director nominees, and
executive officers disclaim beneficial ownership of some of the shares of
common stock included in the table as follows: Mr. Bateman -- 20,000 shares
held by his wife; Mr. Boling -- 1,000 shares held by his wife; Mr.
Bryant -- 31,934 shares held by Mr. Bryant as custodian for his
grandchildren, 895,852 shares held by his wife, and 42,542 shares held by
his wife as custodian for their grandchildren; T. Scott Cobb -- 3,869 shares
held by Mr. Cobb as custodian for his daughter, 908,668 shares held by his
wife, and 139,347 shares held by his wife as custodian for their daughter;
and all directors, director nominees, and executive officers as a
group -- 2,043,212 shares.
4
<PAGE> 8
(2) For certain of the Company's executive officers, the numbers of shares of
common stock shown in the table include the following numbers of shares held
in the trust created pursuant to the SCB Computer Technology, Inc. KSOP (the
"KSOP") that were credited to their respective accounts as of July 31, 2000:
Mr. Bateman -- 72,238 shares; Mr. Bryant -- 284,190 shares; Jeffrey S.
Cobb -- 5,034 shares; Mr. McCarter -- 11 shares; and all executive officers
as a group -- 361,473 shares.
(3) For certain of the Company's directors, director nominees, and executive
officers, the numbers of shares of common stock shown in the table include
the following numbers of shares that are issuable by the Company upon the
exercise of options as of July 31, 2000, or within 60 days thereafter: Mr.
Bateman -- 140,300 shares; Mr. Boling -- 100,000 shares; Mr.
Bryant -- 35,211 shares; Jeffrey S. Cobb -- 190,300 shares; Mr.
Harwood -- 30,000 shares; Mr. McCarter -- 300,000 shares; and all directors,
director nominees, and executive officers as a group -- 795,811 shares.
(4) The percentages of shares outstanding were calculated based on the
25,045,324 shares of common stock that were outstanding as of July 31, 2000.
For the purpose of calculating the percentage ownership of each beneficial
owner, the shares outstanding include shares that such person has the right
to acquire as of July 31, 2000, or within 60 days thereafter.
(5) Mr. Bryant resigned as the Chief Executive Officer, President and Treasurer
of the Company on May 5, 2000, and he resigned as a director, the Chairman
of the Board, and an employee of the Company as of September 1, 2000.
(6) Approximately 1,629 employees of the Company participate in the KSOP.
Pursuant to the terms of the KSOP and the related trust agreement, Merrill
Lynch Trust Company, the trustee of the KSOP, is required to vote the shares
of common stock credited to participants' accounts in accordance with their
instructions. If the trustee does not receive voting instructions from a
participant in a timely manner, the trustee is to vote the shares of common
stock credited to the participant's KSOP account in the same proportion that
it votes the shares for which timely instructions are received.
(7) Mr. McCarter resigned as the President -- Enterprise Solutions Division and
an employee of the Company as of June 30, 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and executive officers and the beneficial owners of more
than 10% of the outstanding shares of the Company's common stock (the "Reporting
Persons") file initial reports of, and subsequent reports of changes in,
beneficial ownership of the common stock with the Securities and Exchange
Commission (the "SEC"). The Reporting Persons are required to furnish the
Company with copies of all Section 16(a) reports filed with the SEC. Based
solely on the Company's review of the copies of such reports and written
representations from certain Reporting Persons furnished to the Company, the
Company believes that the Reporting Persons complied with all applicable Section
16(a) filing requirements during fiscal 2000, except that T. Scott Cobb, upon
returning to the Company as Chief Executive Officer in May 2000, did not file
his initial report of beneficial ownership until June 2000.
5
<PAGE> 9
ITEM I -- ELECTION OF DIRECTORS
GENERAL
The Board of Directors of the Company is to consist of no fewer than two or
more than nine directors. There are four directors at present. The Board has
nominated five persons to serve as directors of the Company. Each director
serves for a term of one year.
NOMINEES FOR DIRECTOR
The Board of Directors proposes that the five nominees described below be
elected to serve as directors of the Company for a one-year term and until their
successors are duly elected and qualified. All nominees other than T. Scott Cobb
are incumbent directors, although Mr. Cobb formerly was a director of the
Company. Each nominee has consented to serve on the Board.
JACK R. BLAIR. Mr. Blair, age 58, has been a director of the Company since
December 14, 1999, and the non-executive Chairman of the Board of the Company
since September 1, 2000. He was a director from 1989 to 1998, and a Group
President from 1987 to 1998, of Smith & Nephew plc, a global medical device
manufacturer. Mr. Blair was President of Richards Medical Company, which Smith &
Nephew plc acquired in 1986, from 1982 to 1987. He is a director of AdvaMed, a
health industry manufacturers association; National Bank of Commerce; and Bulab
Holdings, Inc., the parent company of Buckman Laboratories, a manufacturer of
specialty industrial chemicals.
GEORGE E. CATES. Mr. Cates, age 62, has been a director of the Company
since December 14, 1999. He has been Chairman of the Board and Chief Executive
Officer of Mid-America Apartment Communities, Inc. ("MAAC"), a real estate
investment trust that owns and operates apartment communities primarily in the
southeastern United States, since 1994. He also was President of MAAC from 1994
to 1996. Mr. Cates was President and Chief Executive Officer of The Cates
Company, an owner and operator of apartment communities, from 1977 until its
merger with MAAC in 1994. He is a director of First Tennessee National
Corporation, a bank holding company.
T. SCOTT COBB. Mr. Cobb, age 63, is a co-founder of the Company and has
been Chief Executive Officer since May 5, 2000. He previously served the Company
as a director and Chairman of the Board from 1984 to November 16, 1999, and
President from 1984 to 1996. Mr. Cobb was a partner in Seltmann, Cobb & Bryant,
the Company's predecessor, from its formation in 1976 to 1984. He is the father
of Jeffrey S. Cobb, the President of the Company's Professional Services
Division.
JAMES E. HARWOOD. Mr. Harwood, age 64, has been a director of the Company
since 1996. He has been President of Sterling Equities, Inc., an investment
services firm, since 1990. Mr. Harwood held several executive positions with
Schering-Plough Corporation, a pharmaceutical and health care products company,
from 1980 to 1990. He also is a director of Morgan Keegan & Company, Inc., an
investment banking firm; Union Planters Corporation, a bank holding company; and
Washington Life Insurance Co.
ROBERT G. MCENIRY. Mr. McEniry, age 59, has been a director of the Company
since December 14, 1999. Since 1996 he has been Chairman of the Board and Chief
Executive Officer of nexAir LLC ("nexAir"), a distributor of atmospheric and
industrial gases, safety and welding equipment, specialized medical equipment,
and industrial supplies. He was President of Standard Welders Supply Company, a
predecessor of nexAir, from 1971 to 1996, and held various sales and management
positions there beginning in 1963. Mr. McEniry is a member of the board of
advisors of the Steel Processing Center and is active in several industrial
associations.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF
THE NOMINEES FOR DIRECTOR LISTED ABOVE.
6
<PAGE> 10
If any nominee were to become unavailable to serve as a director, the Board
may designate a substitute nominee. In that case, the persons named as proxies
will vote for the substitute nominee designated by the Board.
HOW DOES THE BOARD OF DIRECTORS OPERATE?
The Board of Directors has established a policy of holding meetings on a
regular quarterly basis and on other occasions when required by special
circumstances. The Board delegates certain of its functions to its standing
Audit and Compensation Committees, the principal functions and members of which
are described below.
AUDIT COMMITTEE. The Audit Committee assists the directors in fulfilling
their responsibilities and duties to the Company's shareholders and other
constituencies relating to the quality and integrity of the Company's accounting
and financial reporting practices. The Audit Committee is authorized to
recommend to the Board of Directors the retention or discharge of the Company's
independent auditor; review and approve the engagement of the independent
auditor, including the scope, extent and procedures of the audit and the fees to
be paid therefor; review, in consultation with the independent auditor, the
audit results and the proposed opinion letter or audit report and any related
management letter; review and approve the audited financial statements of the
Company; consult with the independent auditor and management of the Company on
the adequacy of internal accounting controls; review the independence of the
independent auditor; review and approve the engagement of accounting firms for
non-audit services; oversee the internal audit function to ensure proper
recording of accounting and financial information, the Company's compliance with
applicable regulatory requirements, and the ethical conduct of its affairs; and
direct and supervise investigations into matters within the scope of its duties
and responsibilities. The members of the Audit Committee are Messrs. Blair,
Harwood and McEniry, with Mr. Blair serving as the chairman.
COMPENSATION COMMITTEE. The Compensation Committee assists the directors
in addressing the compensation of the Company's directors, executive officers
and other employees. The Compensation Committee is authorized to review and
approve the Company's compensation policies and programs; review the performance
of the Chief Executive Officer on an annual basis; and review and approve the
salaries, bonus awards, and grants of stock options and other incentive
compensation for the Chief Executive Officer and other executive officers. The
members of the Compensation Committee are Messrs. Cates, Harwood and McEniry,
with Mr. Harwood serving as the chairman.
HOW OFTEN DID THE BOARD OF DIRECTORS AND ITS COMMITTEES MEET IN FISCAL 2000?
The Board of Directors met twelve times and took action by unanimous
written consent three times during fiscal 2000. The Audit Committee met ten
times during fiscal 2000. The Compensation Committee met three times and took
action by unanimous written consent two times during fiscal 2000. Each director
attended more than 75% of the total number of meetings of the Board and its
committees on which he or she served in fiscal 2000.
HOW ARE DIRECTORS NOMINATED?
The Board of Directors does not have a nominating committee. Nominations
for election as a director of the Company may be made by the Board, a nominating
committee appointed by the Board, or any shareholder entitled to vote for the
election of directors. As required by the Company's bylaws, shareholder
nominations for election to the Board must be made by written notice delivered
to the Secretary of the Company in a timely manner and must identify the nominee
by name and provide pertinent information concerning his or her background and
experience.
7
<PAGE> 11
HOW ARE DIRECTORS COMPENSATED?
The Company compensates its outside (i.e., non-employee) directors for
service in such capacity. Directors who are also employees of the Company are
not separately compensated for their service as directors. All directors are
reimbursed for the out-of-pocket expenses that they incur in attending meetings.
On December 14, 1999, the Board of Directors adopted new guidelines for the
Company's compensation of outside directors. The compensation of outside
directors now consists of (1) an annual cash retainer of $20,000; (2) a cash fee
of $1,000 for each meeting of the Board of Directors or any of its committees
attended by a director or committee member, with an additional cash fee of
$1,000 to be paid to the chairman of the meeting due to the additional
responsibilities attendant to such position; (3) upon initial election as a
director, a grant of stock options to purchase 20,000 shares of common stock at
an exercise price equal to the fair market value on the effective date of grant;
and (4) upon re-election as a director, a grant of stock options to purchase
10,000 shares of common stock at an exercise price equal to the fair market
value on the effective date of grant. The principal goals of this compensation
program are to enhance the equity and incentive elements of outside director
compensation through reliance on stock option grants, to reward such directors
for taking on extra responsibilities such as service on a committee, and to make
the total compensation package an effective tool for the retention and
recruitment of qualified, talented outside directors.
On August 29, 2000, the Compensation Committee adopted guidelines for the
Company's compensation of Jack R. Blair as the non-executive Chairman of the
Board beginning on September 1, 2000. The Company will pay to Mr. Blair a
monthly fee of $8,000 as compensation for his service as the non-executive
Chairman of the Board. The Company also will reimburse Mr. Blair for the
out-of-pocket expenses that he incurs in performing such service. As an outside
director, Mr. Blair will be entitled to receive the meeting attendance fees and
stock option grants, but not the annual cash retainer, provided to outside
directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
George E. Cates, James E. Harwood and Robert G. McEniry, who currently are
directors of the Company, and Joseph W. McLeary, who was a director of the
Company until he resigned on November 10, 1999, served as members of the
Compensation Committee of the Board of Directors during fiscal 2000. None of
such persons is or has been an officer or employee of the Company or any of its
subsidiaries. In addition, no executive officer of the Company served during
fiscal 2000 as a member of a compensation committee or as a director of any
entity of which any of the Company's directors served as an executive officer.
EXECUTIVE COMPENSATION
The following Report of the Compensation Committee on Executive
Compensation and the cumulative total shareholder returns graph included
elsewhere in this Proxy Statement do not constitute soliciting material and
should not be deemed filed or incorporated by reference into any other filing by
the Company under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates such
information by reference therein.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW. The Company's executive compensation program is administered by
the Compensation Committee of the Board of Directors (the "Committee"). The
Committee is composed of George E. Cates, James E. Harwood, and Robert G.
McEniry. Mr. Harwood served on the Committee throughout fiscal 2000 and is its
chairman, while Messrs. Cates and McEniry were initially appointed to the
Committee on February 14, 2000. The Committee is responsible for making
8
<PAGE> 12
decisions with respect to the compensation of the Company's executive officers,
including the Chief Executive Officer. In making decisions regarding executive
compensation, the Committee has attempted to implement a policy that serves the
financial interests of the Company's shareholders while providing appropriate
incentives to its executive officers.
COMPENSATION PHILOSOPHY. The Company's executive compensation program is
designed to attract and retain high caliber executives and motivate them to
achieve superior performance for the benefit of the Company's shareholders. The
Committee believes that a significant portion of executive officers'
compensation potential on an annual basis should be at risk based on the
Company's performance and total shareholder return. When the Company's
performance does not meet criteria established by the Committee, incentive
compensation is reduced accordingly.
COMPENSATION PROGRAM. The compensation for executive officers of the
Company generally consists of a base salary and an annual incentive bonus
opportunity. The total cash compensation (i.e., base salary plus annual
incentive bonus) paid to the Company's executive officers is intended to be
competitive with the total cash compensation paid to executive officers in
similar positions at companies primarily in the information technology services
industry with revenues similar to those of the Company. These components of
executive compensation are discussed more fully below.
BASE SALARY. The Committee determines the base salaries of the Chief
Executive Officer and all other executive officers of the Company. The Committee
does not rely on a specific list of companies to compare salaries, but seeks
relevant compensation data. Salaries are reviewed annually, and increases are
based primarily on merit according to each executive officer's achievement of
specific performance objectives.
ANNUAL INCENTIVE BONUS. The Company, in a departure from prior years, did
not implement a bonus plan for its executive officers with respect to their
performance in fiscal 2000. As a consequence, the Company made no plan-based
bonus awards to its executive officers for fiscal 2000. On an individual basis,
the Company paid a bonus of $60,417 to Michael J. Boling, its Executive Vice
President -- Finance and Chief Financial Officer, in respect of his performance
during fiscal 2000.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Ben C. Bryant, Jr., was the Chief
Executive Officer of the Company during fiscal 2000. Mr. Bryant had an
employment agreement with the Company, which is discussed in greater detail
elsewhere in this Proxy Statement. The agreement provided for Mr. Bryant to
receive a base salary at the rate of $425,000 per year during the period from
November 1, 1998, to January 31, 2000, $600,000 per year during the period from
February 1, 2000, to May 4, 2000, and $300,000 per year from May 5, 2000, until
the agreement expired on October 31, 2001. The Company paid Mr. Bryant a base
salary of $461,458 in fiscal 2000. He also was entitled to receive incentive
compensation as determined in accordance with any bonus plan authorized by the
Committee. Mr. Bryant did not receive an annual incentive bonus for fiscal 2000.
The Committee considers the total compensation received by Mr. Bryant for fiscal
2000 to be reasonable and appropriate under the circumstances. As described
elsewhere in this Proxy Statement, Mr. Bryant resigned as the Chief Executive
Officer of the Company on May 5, 2000, and he resigned as an employee of the
Company and terminated his employment agreement with the Company as of September
1, 2000.
INTERNAL REVENUE CODE LIMITS ON DEDUCTIBILITY OF COMPENSATION. Section
162(m) of the Internal Revenue Code generally disallows a tax deduction to
public corporations such as the Company for compensation over $1,000,000 paid
for any tax year to the corporation's chief executive officer and four other
most highly compensated executive officers as of the year end. However, the
Internal Revenue Code exempts qualifying performance-based compensation from the
deduction limit if certain requirements are met. The Committee currently intends
to structure performance-based compensation, including annual incentive bonuses
and stock option grants, to executive officers who may be subject to Section
162(m) in a manner that satisfies these requirements. The Board of Directors and
the Committee, however, reserve the authority to award
9
<PAGE> 13
non-deductible compensation in other circumstances as they deem appropriate.
Furthermore, because of ambiguities and uncertainties in the application and
interpretation of Section 162(m) and the implementing regulations issued
thereunder, no assurance can be given that, notwithstanding the Company's
efforts, executive officer compensation intended to satisfy the requirements for
deductibility under Section 162(m) will in fact do so.
Submitted by the Compensation Committee:
George E. Cates
James E. Harwood (chairman)
Robert G. McEniry
SUMMARY COMPENSATION TABLE
The table below sets forth summary compensation information for each of the
last three fiscal years with respect to (1) the Company's Chief Executive
Officer in fiscal 2000 (Ben C. Bryant, Jr., who subsequently resigned from such
position on May 5, 2000); (2) the four other most highly compensated executive
officers of the Company for fiscal 2000 who were serving in such capacities on
April 30, 2000 (Michael J. Boling, Jeffrey S. Cobb, Gordon L. Bateman, and Gary
E. McCarter, of whom Mr. McCarter subsequently resigned from the Company as of
June 30, 2000); and (3) one executive officer of the Company who would have been
among the four other most highly compensated executive officers of the Company
for fiscal 2000 had he been serving in such capacity on April 30, 2000 (T. Scott
Cobb, who resigned as Chairman of the Board on November 16, 1999, and
subsequently was elected Chief Executive Officer on May 5, 2000).
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL NUMBER OF
COMPENSATION STOCK
FISCAL ------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY(1) BONUS GRANTED COMPENSATION
---------------------------- ------ --------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Ben C. Bryant, Jr.(2)................................... 2000 $461,458 -- -- $14,785(3)
Former Chairman of the Board, Chief 1999 362,500 -- 35,211 10,600
Executive Officer, President and Treasurer 1998 300,000 -- -- 7,608
T. Scott Cobb(4)........................................ 2000 232,516 -- -- 6,405(5)
Chief Executive Officer 1999 362,500 -- 35,211 13,600
1998 300,000 -- -- 10,608
Michael J. Boling(6).................................... 2000 120,833 $60,417 100,000 4,389(7)
Executive Vice President -- Finance, 1999 -- -- -- --
Chief Financial Officer, and Treasurer 1998 -- -- -- --
Jeffrey S. Cobb(8)...................................... 2000 305,930 -- 200,000 15,500(9)
President -- Professional Services Division 1999 178,500 -- -- 14,300
1998 132,000 -- -- 1,990
Gordon L. Bateman....................................... 2000 214,583 -- 100,000 14,234(10)
Chief Administrative Officer 1999 170,000 -- -- 9,751
1998 140,000 -- -- 5,303
Gary E. McCarter(11).................................... 2000 252,241 -- 425,000 14,635(12)
Former Chief Financial Officer and 1999 191,154 -- -- 3,083
President -- Enterprise Solutions Division 1998 140,000 -- -- 1,389
</TABLE>
---------------
(1) The salary figures shown in the table include amounts deferred by the
employees under the Company's deferred compensation plans.
(2) Mr. Bryant was Vice Chairman of the Board of the Company until he was
elected Chairman of the Board on December 1, 1999. He also was Chief
Executive Officer, President, and Treasurer until he resigned from these
positions on May 5, 2000. Mr. Bryant resigned as a director, the Chairman
of the Board, and an employee of the Company as of September 1, 2000.
10
<PAGE> 14
(3) Mr. Bryant's other compensation for fiscal 2000 consisted of $5,095 of
Company matching contributions under a deferred compensation plan, $690 for
excess life insurance, and $9,000 as an automobile allowance.
(4) T. Scott Cobb was Chairman of the Board of the Company until he resigned on
November 16, 1999. He was elected Chief Executive Officer on May 5, 2000.
(5) T. Scott Cobb's other compensation for fiscal 2000 consisted of $1,155 for
excess life insurance and $5,250 as an automobile allowance.
(6) Mr. Boling was elected Executive Vice President -- Finance and Chief
Financial Officer of the Company on December 1, 1999. He was elected
Treasurer on May 5, 2000.
(7) Mr. Boling's other compensation for fiscal 2000 consisted of $363 of
Company matching contributions under a deferred compensation plan, $276 for
excess life insurance, and $3,750 as an automobile allowance.
(8) Jeffrey S. Cobb was Chief Operating Officer of the Company until he was
elected President -- Professional Services Division on December 1, 1999.
(9) Jeffrey S. Cobb's other compensation for fiscal 2000 consisted of $6,477 of
Company matching contributions under a deferred compensation plan, $216 for
excess life insurance, and $8,807 as an automobile allowance.
(10) Mr. Bateman's other compensation for fiscal 2000 consisted of $4,751 of
Company matching contributions under a deferred compensation plan, $483 for
excess life insurance, and $9,000 as an automobile allowance.
(11) Mr. McCarter was Chief Financial Officer of the Company until he was
elected President -- Enterprise Solutions Division on December 1, 1999. He
resigned as the President -- Enterprise Solutions Division and an employee
of the Company as of June 30, 2000.
(12) Mr. McCarter's other compensation for fiscal 2000 consisted of $5,083 of
Company matching contributions under a deferred compensation plan, $552 for
excess life insurance, and $9,000 as an automobile allowance.
STOCK OPTION GRANTS IN FISCAL 2000
The table below sets forth information regarding grants of stock options
made to the executive officers named in the Summary Compensation Table during
fiscal 2000 and the potential realizable value of such stock options at assumed
annual rates of stock price appreciation for the ten-year option terms.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM(2)
GRANTED IN EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME FISCAL 2000 FISCAL 2000 ($/SHARE) DATE(1) 5% 10%
---- ----------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ben C. Bryant, Jr.... -- -- -- -- -- --
T. Scott Cobb........ -- -- -- -- -- --
Michael J. Boling.... 100,000(3) 5.9% $2.9375 12/01/2009 $ 184,738 $ 468,162
Jeffrey S. Cobb...... 200,000(4) 11.9 3.75 10/07/2009 471,671 1,195,307
Gordon L. Bateman.... 100,000(5) 5.9 3.75 10/07/2009 235,835 597,653
Gary E. McCarter..... 425,000(6) 25.3 3.75 10/07/2009 1,002,301 2,540,027
</TABLE>
---------------
(1) The Compensation Committee, which administers the 1997 Stock Incentive Plan
(the "1997 Plan") and the Company's other incentive plans, has general
authority to accelerate, extend or otherwise modify the benefits under the
stock options in certain circumstances within overall plan and other
limitations. The Compensation Committee has no present intention to exercise
that authority with respect to these stock options.
(2) These dollar figures represent the potential realizable value of each grant
of stock options, assuming that the market price of the common stock
appreciates in value from the date of grant to the end of the ten-year
option term at annualized rates of 5% and 10%. These assumed rates of stock
price appreciation have
11
<PAGE> 15
been established by the SEC solely for the purpose of this disclosure. The
Company's use of this option valuation methodology should not be interpreted
as an endorsement of its accuracy. The actual value of the stock options may
be significantly different, and the value actually realized, if any, will
depend upon the excess of the market value of the common stock over the
option exercise price at the time of exercise.
(3) The stock options granted to Mr. Boling in fiscal 2000 became exercisable as
follows: 50,000 shares on December 1, 1999; and 50,000 shares on June 1,
2000.
(4) The stock options granted to Mr. Cobb in fiscal 2000 become exercisable as
follows: 100,000 shares on October 7, 1999; and 100,000 shares on October 7,
2000.
(5) The stock options granted to Mr. Bateman in fiscal 2000 become exercisable
as follows: 50,000 shares on October 7, 1999; and 50,000 shares on October
7, 2000.
(6) The stock options granted to Mr. McCarter in fiscal 2000 originally became
exercisable as follows: 300,000 shares on October 7, 1999; and 125,000
shares on October 7, 2000. In accordance with the 1997 Plan, all of Mr.
McCarter's stock options, including those granted in fiscal 2000, terminated
as of June 30, 2000, as a result of his resignation from the Company;
however, the Company has allowed Mr. McCarter a period of three years after
the date of his resignation (i.e., until June 30, 2003) in which to exercise
the 300,000 stock options that were granted in fiscal 2000 and were vested
as of his resignation date.
STOCK OPTION EXERCISES AND VALUES FOR FISCAL 2000
The executive officers named in the Summary Compensation Table did not
exercise any stock options during fiscal 2000. The table below sets forth
information concerning the number and value of their unexercised options at
April 30, 2000.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
APRIL 30, 2000 APRIL 30, 2000*
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ben C. Bryant, Jr........................... 35,211 -- $ -- $ --
T. Scott Cobb............................... -- -- -- --
Michael J. Boling........................... 50,000 50,000 -- --
Jeffrey S. Cobb............................. 190,300 100,000 -- --
Gordon L. Bateman........................... 140,300 50,000 -- --
Gary E. McCarter............................ 412,300 125,000 -- --
</TABLE>
---------------
* In accordance with the SEC's rules, a stock option is in-the-money if the fair
market value of the underlying security exceeds the exercise price of the
option. For the purposes of this table, the fair market value of the Company's
common stock at April 30, 2000, is deemed to have been $2.125 per share, which
is the closing sale price of the common stock reported for transactions
effected on the Nasdaq Stock Market ("Nasdaq") on April 13, 2000. Nasdaq
suspended trading in the common stock on April 14, 2000, up to and beyond
April 30, 2000, and subsequently delisted the common stock on August 18, 2000.
As so determined, the fair market value of the common stock is less than the
exercise prices of all the stock options shown in the table. Consequently,
none of the options is in-the-money.
EMPLOYMENT AGREEMENTS
BEN C. BRYANT, JR. Ben C. Bryant, Jr., served as an executive officer and
employee of the Company pursuant to an employment agreement which was entered
into on November 1, 1998, and was terminated as of September 1, 2000. The term
of Mr. Bryant's employment was three years ending on October 31, 2001, unless
the Company or he gave written notice to the contrary at least 30 days prior to
the second anniversary of the agreement or any anniversary thereafter, in which
event the term would have been extended for an additional year so that the
remaining term always would have been two years from such anniversary. The
Company and Mr. Bryant modified the employment agreement twice during fiscal
2000 -- effective as of November 1, 1999, and May 5, 2000 -- each time to reduce
the current base salary payable to Mr. Bryant thereunder. The agreement provided
for Mr. Bryant to receive a base salary at the rate of $425,000 per year during
12
<PAGE> 16
the period from November 1, 1998, to January 31, 2000, $600,000 per year during
the period from February 1, 2000, to May 4, 2000, and $300,000 per year from May
5, 2000, until the agreement expired on October 31, 2001. The Company paid Mr.
Bryant a base salary of $461,458 in fiscal 2000. He also was entitled to receive
incentive compensation as determined in accordance with any bonus plan
authorized by the Compensation Committee of the Board of Directors. Mr. Bryant
did not receive an annual incentive bonus for fiscal 2000. Mr. Bryant's
employment agreement was terminated upon his resignation from the Company as of
September 1, 2000. See "Other Compensation Agreements."
T. SCOTT COBB. T. Scott Cobb served as the Chairman of the Board and an
employee of the Company pursuant to an employment agreement which was entered
into on November 1, 1998, and was terminated on November 16, 1999. Mr. Cobb's
employment agreement was identical in all material respects to that of Mr.
Bryant, except that it was not subsequently modified to adjust the compensation
payable to Mr. Cobb thereunder. The Company paid Mr. Cobb a base salary of
$232,516 in fiscal 2000 through the date of his resignation. He did not receive
an annual incentive bonus for fiscal 2000. Mr. Cobb's employment agreement was
terminated upon his resignation from the Company on November 16, 1999. As noted
elsewhere in this Proxy Statement, Mr. Cobb was elected the Chief Executive
Officer of the Company on May 5, 2000. He does not have an employment agreement
in his current capacity with the Company.
OTHER COMPENSATION AGREEMENTS
BEN C. BRYANT, JR. Ben C. Bryant, Jr., resigned from all of his positions
with the Company, including as a director, the Chairman of the Board, and an
employee of the Company, effective as of September 1, 2000. The Company and Mr.
Bryant entered into a separation agreement in connection with his resignation.
In the separation agreement, Mr. Bryant agreed, among other things, (1) to
terminate his employment agreement, which was scheduled to run through October
31, 2001, effective immediately, and to forego his right to receive $350,000 in
future base salary thereunder; (2) not to disclose or use any of the Company's
confidential information; (3) not to compete with the Company until October 31,
2002; (4) to refer to the Company any and all opportunities known to him for the
performance of IT professional staffing services until October 31, 2002; (5) not
to acquire any of the Company's assets or voting securities or make a proxy
solicitation with respect to the Company's voting securities until October 31,
2002; (6) not to sell, transfer or otherwise dispose of more than 50,000 shares
of the Company's common stock during any period of 30 consecutive trading days,
subject to certain limited exceptions, until October 31, 2002; (7) to cooperate
with the Company in any future investigations and legal proceedings; (8) to
release the Company and related persons and entities from liabilities arising
from the termination of his employment; and (9) not to participate in any legal
proceeding against the Company and related persons, except in certain limited
situations. In exchange for these and other covenants, the Company agreed to pay
to or on behalf of Mr. Bryant under the separation agreement (a) $94,615 for
earned but not taken vacation accumulated during his career with the Company;
(b) $9,627 with respect to the premiums for group medical, dental, long-term
disability and term life insurance coverage for Mr. Bryant until August 31,
2001, which the Company otherwise would have been required to pay under his
employment agreement; and (c) $650,000 as severance which is to be paid ratably
over 26 months from September 2000 to October 2002.
GARY E. MCCARTER. Gary E. McCarter resigned as the President -- Enterprise
Solutions Division and an employee of the Company as of June 30, 2000. In
connection with his resignation, the Company and Mr. McCarter entered into a
transitional support services agreement effective as of July 1, 2000. The term
of the agreement is six months ending on December 31, 2000. Mr. McCarter is
obligated to perform such transitional support services relating to the
accounting, financial, operational and other functions of the Company's business
and affairs as the Company may request from time to time. As compensation for
such services, the Company agreed to pay a
13
<PAGE> 17
fee of $24,811 per month to Mr. McCarter. The Company also is required to
reimburse Mr. McCarter for all reasonable and necessary costs that he incurs in
performing the services.
COMPARISON OF TOTAL SHAREHOLDER RETURNS
The graph below compares the cumulative total shareholder returns for the
period from February 15, 1996, to April 30, 2000, for the Company's common
stock, the CRSP Index for the Nasdaq Stock Market -- U.S. Companies (the "Nasdaq
U.S. Companies Index"), and the CRSP Index for Nasdaq Computer and Data
Processing Stocks (the "Nasdaq Computer and Data Processing Index"). The graph
assumes that $100 was invested on February 15, 1996 (when trading in the common
stock commenced on the Nasdaq Stock Market following the Company's initial
public offering) in the Company's common stock, the Nasdaq U.S. Companies Index,
and the Nasdaq Computer and Data Processing Index, and that all dividends were
reinvested. Total returns for the two Nasdaq indexes are weighted based on the
market capitalization of the companies included therein. Historic stock price
performance is not indicative of future stock price performance. The Company
does not make or endorse any prediction as to future stock price performance.
CUMULATIVE TOTAL SHAREHOLDER RETURNS
BASED ON REINVESTMENT OF $100 BEGINNING ON FEBRUARY 15, 1996
(CHART)
<TABLE>
<CAPTION>
2/15/96 4/30/96 4/30/97 4/30/98 4/30/99 4/30/00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SCB COMPUTER TECHNOLOGY, INC........................ $100 $162 $107 $220 $124 $ 39
NASDAQ U.S. COMPANIES INDEX......................... 100 110 116 174 238 361
NASDAQ COMPUTER AND DATA PROCESSING INDEX........... 100 113 125 195 299 437
</TABLE>
Source: Center for Research in Security Prices, University of Chicago Graduate
School of Business
14
<PAGE> 18
ITEM 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors has appointed BDO Seidman, LLP as the Company's
independent auditor for the fiscal year ending April 30, 2001, subject to
shareholder ratification. The appointment was made at the recommendation of the
Audit Committee.
BDO Seidman, LLP audited the Company's financial statements for fiscal
2000. Representatives of BDO Seidman, LLP are expected to be present at the
meeting. They will be given an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT
AUDITOR FOR THE FISCAL YEAR ENDING APRIL 30, 2001. If the shareholders do not
ratify the appointment, the matter will be reconsidered by the Audit Committee
and the Board of Directors.
As previously disclosed, Ernst & Young LLP resigned as the independent
auditor of the Company as of April 10, 2000. On that date, as a result of the
internal investigation then being conducted by the Audit Committee of the
Company's Board of Directors into the concerns raised by five employees
regarding the Company's accounting treatment of certain matters, Ernst & Young
LLP advised the Audit Committee that information had come to its attention that
could materially impact the fairness and reliability of the Company's financial
statements for fiscal 1998 and 1999 and the first three quarters of fiscal 2000.
In addition, pending the completion of the investigation, Ernst & Young LLP
advised the Audit Committee that based on such information Ernst & Young LLP was
uncertain as to whether it would be able to continue to be associated with the
Company's restated financial statements. Based on these determinations, Ernst &
Young LLP advised the Audit Committee of its resignation as the Company's
independent auditor effective as of April 10, 2000.
The reports of Ernst & Young LLP on the Company's financial statements for
fiscal 1998 and 1999 did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles. In addition, in connection with the audits of the
Company's financial statements for fiscal 1998 and 1999, and in the first three
quarters of fiscal 2000, there were no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not resolved to the
satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to make
reference to the matter in connection with its report.
Notwithstanding its resignation as the Company's auditor on a going-forward
basis, Ernst & Young LLP subsequently audited and issued an unqualified report
on the Company's restated financial statements for fiscal 1998 and 1999.
On June 30, 2000, the Company appointed BDO Seidman, LLP as its independent
auditor for fiscal 2000. BDO Seidman, LLP audited and issued an unqualified
report on the Company's financial statements for fiscal 2000.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no business
that will be presented for consideration at the meeting other than the items
referred to above. If any other matter is properly brought before the meeting
for action by the Company's shareholders, the proxy holders will vote the shares
of common stock represented by proxies in the enclosed form that are returned to
the Company as recommended by the Board of Directors or, if no recommendation is
given, as they may determine in their own discretion.
15
<PAGE> 19
ADDITIONAL INFORMATION
SOLICITATION OF PROXIES
The Company will bear the cost of preparing and mailing this Proxy
Statement and soliciting proxies in the enclosed form. The Company has retained
Corporate Communications, Inc. ("CCI") to provide various investor communication
services, including the solicitation of proxies, for which the Company pays CCI
a monthly fee plus reimbursement of certain out-of-pocket expenses. Directors,
officers and other employees of the Company also may solicit proxies without any
additional compensation. The solicitations will be made through the mail and may
also be made in person or by telephone, facsimile or other electronic means. The
Company requests that brokerage firms and other nominees forward the proxy
solicitation materials to the beneficial owners of the shares of common stock
held of record by such nominees and will reimburse them for their reasonable
forwarding expenses.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
Shareholders interested in presenting a proposal for consideration at the
Company's annual meeting of shareholders in 2001 must follow the procedures
prescribed in the Company's bylaws and the Securities Exchange Act of 1934 and
the rules and regulations thereunder. Shareholder proposals must be received by
the Secretary of the Company no later than May 22, 2001, to be considered timely
under the advance notice provisions of the Company's bylaws and to be eligible
for inclusion in the Company's Proxy Statement and related proxy for the 2001
annual meeting of shareholders. Nothing in this paragraph shall be deemed to
require the Company to include any shareholder proposal that does not meet all
the requirements for such inclusion established by the Company's bylaws or the
Securities Exchange Act of 1934 and the rules and regulations thereunder.
By Order of the Board of Directors,
/s/ Gordon L. Bateman
Gordon L. Bateman
Secretary
Memphis, Tennessee
September 19, 2000
16
<PAGE> 20
(SCB LOGO)
(SYMBOL) Printed on Recycled Paper
<PAGE> 21
PLEASE MARK
YOUR VOTE AS INDICATED IN
THIS PARAGRAPH
<TABLE>
<S> <C>
1. ELECTION OF FIVE DIRECTORS to serve on the 2. RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN,
Company's Board of Directors for a one-year term. LLP as the Company's independent auditor for the fiscal
year ending April 30, 2001.
FOR all nominees WITHHOLD
listed (except as AUTHORITY 01 Jack R. Blair 02 George E. Cates FOR AGAINST ABSTAIN
otherwise for all nominees 03 T. Scott Cobb [ ] [ ] [ ]
indicated*) listed 04 James E. Harwood
05 Robert G. McEniry
(*)Instruction: To withhold authority to vote for any director
nominee, draw a line through the name of the nominee in the
list above.
This proxy is solicited on behalf of the Board of Directors and will be voted in
accordance with the undersigned's directions set forth herein. If no such
direction is made, this proxy will be voted FOR each of the matters described
above.
Date: _______________________, 2000
------------------------------------
Signature of shareholder
----------------------------------------------------------------------
Signature of shareholder, if held jointly
Please sign your name as it appears on this proxy. Joint owners each should
sign. When signing as trustee, administrator, executor, attorney, etc. please
indicate your full title as such. Corporations should sign in full corporate
name by President or other authorized officer. Partnerships should sign in full
partnership name by authorized partner.
* FOLD AND DETACH HERE *
VOTE BY TELEPHONE
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you completed, signed, dated and returned your proxy card.
CALL TOLL-FREE 1-800-840-1208 ON A TOUCH-TONE TELEPHONE ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the Control Number located in the lower right
corner of this form.
OPTION A: To vote as the Board of Directors recommends on ALL
items, press 1.
OPTION B: If you choose to vote on each item separately, press
0. You will hear these instructions:
Item 1: To vote FOR ALL nominees, press 1. To WITHHOLD FOR ALL
nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and
listen to the instructions.
item 2: To vote FOR,press 1. To vote AGAINST, press 9. To ABSTAIN,
press 0. When asked,you must confirm your vote by pressing 1.
THANK YOU FOR VOTING.
Call * * Toll-Free * * On a Touch-Tone
Telephone
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
</TABLE>
<PAGE> 22
SCB COMPUTER TECHNOLOGY, INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The 2000 Annual Meeting of Shareholders of SCB Computer Technology, Inc. (the
"Company") will be held at the Ridgeway Inn, 5679 Poplar Avenue, Memphis,
Tennessee, on October 18, 2000, beginning at 2:00 p.m. (Memphis time). The
undersigned hereby acknowledges receipt of the related Notice and Proxy
Statement dated September 19, 2000, accompanying this proxy, to which reference
is hereby made for further information regarding the meeting and the matters to
be considered and voted on by the shareholders at the meeting.
The undersigned hereby appoints Gordon L. Bateman and Michael J. Boling, and
each of them, attorneys and agents, with full power of substitution, to vote as
proxy all shares of common stock of the Company owned of record by the
undersigned and otherwise to act on behalf of the undersigned at the 2000
Annual Meeting of Shareholders and any postponement or adjournment thereof, in
accordance with the directions set forth herein and with discretionary
authority with respect to any other business, not known or determined at the
time of the solicitation of this proxy, that properly comes before such meeting
or any postponement or adjournment thereof.
The undersigned hereby revokes any proxy heretofore given and directs said
attorneys and agents to vote or act as indicated on the reverse side hereof.
(Continued on reverse side)
-------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
[SCB COMPUTER TECHNOLOGY, INC. LOGO]
3800 Forest Hill - Irene Road, Suite 100, Memphis, TN 38125 (800) 221-1640
(901) 754-6577 Fax: (901) 754-8463
September 19, 2000
Dear Shareholder:
It is a great pleasure to have this opportunity to provide you with our 2000
Annual Report and the Proxy Statement for our 2000 Annual Meeting of
Shareholders. The Annual Report discusses our performance in fiscal 2000 as
well as our business strategy for the future. The Proxy Statement provides you
with information relating to the business to be conducted at our annual meeting
on October 18, 2000.
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Call toll-free 1-800-840-1208 on a touch-tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this
call.
or
2. Complete, sign, date and return your proxy card in the accompanying
envelope.
Thank you for your interest and ownership in SCB Computer Technology, Inc.
Sincerely,
/S/ T. Scott Cobb
T. Scott Cobb
Chief Executive Officer
<PAGE> 23
<TABLE>
<S> <C>
PLEASE MARK
YOUR VOTES AS
INDICATED IN [X]
THIS EXAMPLE
1. ELECTION OF FIVE DIRECTORS to serve on the Company's Board of 2. RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN,
Directors for a one-year term. LLP as the Company's independent auditor for the fiscal
year ending April 30, 2001.
FOR all nominees WITHHOLD
listed (except as AUTHORITY 01 JACK R. BLAIR 02 GEORGE E. CATES
otherwise for all nominees
indicated*) listed 03 T. SCOTT COBB 04 JAMES E. HARWOOD FOR AGAINST ABSTAIN
[ ] [ ] 05 ROBERT G. MCENIRY [ ] [ ] [ ]
* Instruction: To withhold authority to vote for any
director nominee, draw a line through the name of
the nominee in the list above.
The Trustee will vote the shares of common stock
credited to the undersigned's KSOP account in
accordance with the voting instructions set forth
herein if this voting instruction form is completed
and properly signed and is received by ChaseMellon
Shareholder Services, LLC, the Company's voting
instruction tabulator, by October 16, 2000. If
voting instructions from the undersigned are not
received by such date, the Trustee will vote the
shares of common stock credited to the undersigned's
KSOP account in the same proportion that it votes
the shares for which timely instructions were
received.
Date: , 2000
----------------------------------------
---------------------------------------------------
Signature of KSOP participant(*)
Please sign your name as it appears on this voting
instruction form.
-----------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
VOTE BY TELEPHONE
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you completed, signed, dated and returned your proxy card.
CALL TOLL-FREE 1-800-840-1208 ON A TOUCH-TONE TELEPHONE ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the Control Number located in the lower right
corner of this form.
OPTION A: To vote as the Board of Directors recommends on ALL items, press 1.
OPTION B: If you choose to vote on each item separately, press 0. You will hear these instructions:
Item 1: To vote FOR ALL nominees, press 1. To WITHHOLD FOR ALL nominees, press 9. To WITHHOLD FOR
AN INDIVIDUAL nominee, press 0 and listen to the instructions.
Item 2: To vote FOR, press 1. To vote AGAINST, press 9. To ABSTAIN, press 0.
When asked, you must confirm your vote by pressing 1.
THANK YOU FOR VOTING.
CALL * * TOLL-FREE * * ON A TOUCH-TONE
TELEPHONE
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
</TABLE>
<PAGE> 24
SCB COMPUTER TECHNOLOGY, INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 18, 2000
VOTING INSTRUCTION FORM FOR PARTICIPANTS IN
SCB COMPUTER TECHNOLOGY, INC. KSOP
The 2000 Annual Meeting of Shareholders of SCB Computer Technology, Inc. (the
"Company") will be held at the Ridgeway Inn, 5679 Poplar Avenue, Memphis,
Tennessee, on October 18, 2000, beginning at 2:00 p.m. (Memphis time). The
undersigned hereby acknowledges receipt of the related Notice and Proxy
Statement dated September 19, 2000, accompanying this voting instruction form,
to which reference is hereby made for further information regarding the meeting
and the matters to be considered and voted on by the shareholders at the
meeting.
The undersigned, a participant in the SCB Computer Technology, Inc. KSOP (the
"KSOP"), hereby instructs Merrill Lynch Trust Company, as Trustee of the KSOP
(the "Trustee"), to vote all shares of common stock of the Company credited to
the undersigned's KSOP account as of the record date and otherwise to act on
behalf of the undersigned at the 2000 Annual Meeting of Shareholders and any
postponement or adjournment thereof, in accordance with the directions set
forth herein.
The undersigned hereby revokes any proxy heretofore given and instructs the
Trustee to vote or act as indicated on the reverse side hereof.
(Continued on reverse side)
-------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
[SCB COMPUTER TECHNOLOGY, INC. LOGO]
3800 Forest Hill - Irene Road, Suite 100, Memphis, TN 38125 (800) 221-1640
(901) 754-6577 Fax: (901) 754-8463
September 19, 2000
Dear KSOP Participant:
It is a great pleasure to have this opportunity to provide you with our 2000
Annual Report and the Proxy Statement for our 2000 Annual Meeting of
Shareholders. The Annual Report discusses our performance in fiscal 2000 as well
as our business strategy for the future. The Proxy Statement provides you with
information relating to the business to be conducted at our annual meeting on
October 18, 2000.
YOUR VOTE IS IMPORTANT!
You can vote in one of two ways:
1. Call TOLL-FREE 1-800-840-1208 on a touch-tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this
call.
or
2. Complete, sign, date and return your proxy card in the accompanying
envelope.
Thank you for your interest and ownership in SCB Computer Technology, Inc.
Sincerely,
/S/ T. Scott Cobb
T. Scott Cobb
Chief Executive Officer
