<PAGE>
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
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 Rule 14a-11(c) or Rule 14a-12
-----------------
STERLING COMMERCE, INC.
(Name of Registrant as specified in Its Charter)
-----------------
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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(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>
STERLING COMMERCE, INC.
8080 NORTH CENTRAL EXPRESSWAY
SUITE 1100
DALLAS, TEXAS 75206
January 21, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Sterling Commerce, Inc. to be held at the Company's offices at 4600 Lakehurst
Court, Dublin, Ohio, South Building, on Thursday, February 27, 1997,
commencing at 10:00 a.m., local time. All stockholders of record as of January
16, 1997 are entitled to vote at the Annual Meeting.
This has been an exciting year for our Company, with the initial public
offering in March 1996 and the spin-off of the Company from Sterling Software,
Inc. in September 1996. This will be the first Annual Meeting of Stockholders
of Sterling Commerce, Inc. since becoming an independent public company.
At the Annual Meeting, you will be asked to elect two Class A directors for
terms expiring at the Company's Annual Meeting of Stockholders in 2000. The
Company's Board of Directors unanimously recommends a vote "FOR" the election
of the two persons nominated to serve as directors.
We hope that you will be able to attend the Annual Meeting. Whether or not
you plan to attend, you are urged to complete, sign, date and return the
enclosed proxy card without delay.
Sincerely,
Sterling L. Williams
Chairman of the Board
<PAGE>
STERLING COMMERCE, INC.
8080 NORTH CENTRAL EXPRESSWAY
SUITE 1100
DALLAS, TEXAS 75206
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 27, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Sterling Commerce, Inc. (the "Company") will be held at the
Company's offices at 4600 Lakehurst Court, Dublin, Ohio, South Building, on
Thursday, February 27, 1997, commencing at 10:00 a.m., local time, for the
following purposes:
1. The election of two Class A directors for terms expiring at the
Company's Annual Meeting of Stockholders in 2000; and
2. To consider and vote upon such other matters as may properly come before
the Meeting or any adjournment thereof.
The close of business on January 16, 1997 has been fixed as the record date
for determining stockholders entitled to notice of and to vote at the Meeting
or any adjournment thereof. For a period of at least ten days prior to the
Meeting, a complete list of stockholders entitled to vote at the Meeting shall
be open to the examination of any stockholder during ordinary business hours
at the offices of the Company at 8080 North Central Expressway, Suite 1100,
Dallas, Texas 75206 prior to February 24, 1997, and thereafter at 300 Crescent
Court, Suite 1200, Dallas, Texas 75201.
Information concerning the matters to be acted upon at the Meeting is set
forth in the accompanying Proxy Statement.
YOUR VOTE IS IMPORTANT. STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE
MEETING IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
By Order of the Board of Directors
Jeannette P. Meier
Secretary
Dallas, Texas
January 21, 1997
<PAGE>
STERLING COMMERCE, INC.
8080 NORTH CENTRAL EXPRESSWAY
SUITE 1100
DALLAS, TEXAS 75206
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 27, 1997
----------------
BACKGROUND
Sterling Commerce, Inc. (the "Company") was incorporated in December 1995 as
a wholly owned subsidiary of Sterling Software, Inc. ("Sterling Software").
The Company completed its initial public offering (the "Offering") on March
13, 1996. Pursuant to the Offering, the Company sold to the public 1,800,000
previously unissued shares of Common Stock, $0.01 par value, of the Company
("Common Stock"), and Sterling Software sold to the public 12,000,000 of the
73,200,000 shares of the Company's Common Stock then owned by it.
On September 23, 1996, the Board of Directors of Sterling Software declared
a special dividend consisting of the distribution (the "Distribution") of all
shares of the Company's Common Stock held by Sterling Software on September
30, 1996, payable pro rata to the holders of record of Sterling Software's
common stock as of the close of business on such latter date. As a result,
effective September 30, 1996, the Company ceased to be a subsidiary of
Sterling Software.
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the solicitation, on
behalf of the Board of Directors (the "Board") of the Company, of proxies for
use at the Annual Meeting of Stockholders (the "Meeting") to be held at the
Company's offices at 4600 Lakehurst Court, Dublin, Ohio, South Building, on
Thursday, February 27, 1997, commencing at 10:00 a.m., local time, or at such
other time and place to which the Meeting may be adjourned. This Proxy
Statement, the Notice of Annual Meeting of Stockholders and the accompanying
proxy card are first being mailed to stockholders on or about January 21,
1997.
At the Meeting, the stockholders of the Company will be asked to consider
and vote upon (i) the election of two Class A directors of the Company for
terms expiring at the Company's Annual Meeting of Stockholders in 2000, and
(ii) such other matters as may properly come before the Meeting or any
adjournment thereof.
All shares represented by valid proxies, unless the stockholder otherwise
specifies, will be voted FOR (i) the election of the two persons named under
"Election of Directors" as nominees for election as Class A directors of the
Company for terms expiring at the Company's Annual Meeting of Stockholders in
2000, and (ii) at the discretion of the proxy holders with regard to any other
matter that may properly come before the Meeting or any adjournment thereof.
Where a stockholder has appropriately specified how a proxy is to be voted, it
will be voted accordingly.
The proxy may be revoked at any time by providing written notice of such
revocation to The First National Bank of Boston, P.O. Box 9381, Boston,
Massachusetts 02205-9956, which notice must be received prior to the Meeting.
If notice of revocation is not received prior to the Meeting, a stockholder
may nevertheless revoke a proxy if he or she attends the Meeting and desires
to vote in person.
<PAGE>
RECORD DATE AND VOTING SECURITIES
The close of business on January 16, 1997 is the record date (the "Record
Date") for determining the stockholders entitled to vote at the Meeting, at
which time the Company had issued and outstanding 75,000,000 shares of Common
Stock. The Common Stock constitutes the only outstanding class of voting
securities of the Company entitled to be voted at the Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock is necessary to constitute
a quorum. Each share of Common Stock represented at the Meeting, in person or
by proxy, will be counted toward a quorum. If a quorum should not be present,
the Meeting may be adjourned from time to time until a quorum is obtained.
Each share of Common Stock is entitled to one vote with respect to each
proposal (including the election of directors) to be voted on at the Meeting.
Cumulative voting is not permitted with respect to any proposal to be acted
upon at the Meeting.
The accompanying proxy card is designed to permit each record holder of
Common Stock as of the close of business on the Record Date to vote in the
election of directors as described in this Proxy Statement. The proxy card
provides space for a stockholder to vote in favor of, or to withhold authority
to vote for, any or all nominees for election to the Board.
To be elected, each nominee must receive the affirmative vote of the holders
of a majority of the shares of Common Stock present at the Meeting, in person
or by proxy. Instructions to withhold authority to vote for any nominee will
be counted as present for the purposes of determining a quorum, but will have
the effect of a vote against the nominee for which the vote was withheld.
PARTICIPANTS IN THE STERLING COMMERCE, INC.
SAVINGS AND SECURITY PLAN
A participant in the Sterling Commerce, Inc. Savings and Security Plan (the
"Savings Plan") will receive a voting instruction card relating to the shares
allocated to such participant in the Savings Plan. The voting instruction card
serves as voting instructions to the trustee of the Savings Plan. If a
participant holds Common Stock outside of the Savings Plan, such participant
will also receive, in a separate mailing, a proxy card relating to those
shares. In order for all shares owned by, or allocated under the Savings Plan
to, a participant to be voted at the Meeting in accordance with such
participant's direction, the proxy card and the voting instruction card
received by the participant will need to be signed and returned to The First
National Bank of Boston. Information in the voting instruction card will not
be disclosed to the Company.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of Directors
divided into three classes, as nearly equal in number as possible, with the
term of office of one class expiring each year at the Company's Annual Meeting
of Stockholders. Each class of directors is elected for a term of three years
except in the case of elections to fill vacancies or newly created
directorships.
NOMINEES FOR DIRECTOR
Honor R. Hill and Evan A. Wyly are the directors whose terms expire at the
Meeting, each of whom has been nominated for reelection to serve for a term
expiring at the Company's Annual Meeting of Stockholders in 2000 or until his
or her successor has been duly elected and qualified. It is intended that the
persons named in the proxy will vote for the reelection of each of the two
nominees. Each of the nominees has indicated his or her willingness to serve
as a member of the Board if elected. However, in case any nominee should
become
2
<PAGE>
unavailable for election to the Board for any reason not presently known or
contemplated, the proxy holders will have discretionary authority in that
instance to vote the proxy for a substitute nominee. Proxies cannot be voted
for more than two nominees.
The Class A directors who are nominees for reelection at the Meeting are as
follows:
Honor R. Hill, age 55. Mrs. Hill has served as a director of the Company
since March 1996. She has been a listed Christian Science practitioner since
1986 and a Christian Science lecturer since 1994. Mrs. Hill, who has an honors
degree in English from the University of Calgary in Alberta, served on the
Board of Trustees of the Christian Science Publishing Society, the
publications of which include the Christian Science Monitor, during its 1993-
1994 term. Mrs. Hill is a member of the Audit Committee and the Special Stock
Option Committee of the Board.
Evan A. Wyly, age 35. Mr. Wyly has served as a director of the Company since
December 1995. He has been a partner of Maverick Capital, Ltd., an investment
fund management company, since 1991. In 1988, he founded Premier Partners,
Incorporated, a private investment firm, and served as President prior to
joining Maverick Capital, Ltd. Mr. Wyly also serves as a director and officer
of Sterling Software and as a director and officer of Michaels Stores, Inc., a
specialty retail chain ("Michaels Stores"). Sam Wyly is Evan Wyly's father.
CURRENT DIRECTORS
The current Class B directors of the Company, who are not standing for
reelection at the Meeting and whose terms will expire at the Company's Annual
Meeting of Stockholders in 1998, are as follows:
Warner C. Blow, age 59. Mr. Blow has served as the Company's President since
December 1995 and as Chief Executive Officer and a director of the Company
since October 1996. From December 1995 until October 1996, he also served as
Chief Operating Officer of the Company. Prior to December 1995, Mr. Blow
served as President of Sterling Software's Electronic Commerce Group (the
predecessor of the Company) from July 1993 and as an Executive Vice President
of Sterling Software from October 1989. Prior to July 1993, Mr. Blow also
served as President of Sterling Software's former EDI Group.
Robert E. Cook, age 55. Mr. Cook has served as a director of the Company
since March 1996. Prior to July 1993, Mr. Cook served as Chairman and a
director of Systems Center, Inc., a computer software company that was
acquired by Sterling Software in July 1993. Mr. Cook currently also serves as
Chairman of the Board of ROADSHOW International, Inc., a privately held
provider of computer-based routing solutions for private fleet operations, and
is an officer of Pitchfork Development, Inc., a privately held, Utah-based,
real estate development company. Mr. Cook is the Chairman of the Audit
Committee and a member of the Special Stock Option Committee of the Board.
Charles J. Wyly, Jr. age 63. Mr. Wyly has served as a director of the
Company since December 1995. Mr. Wyly co-founded Sterling Software in 1981 and
since such time has served as a director, and as Vice Chairman of Sterling
Software since 1984. He served as an officer and director of University
Computing Company, a computer software and services company, from 1964 to
1975, including President from 1969 to 1973. Mr. Wyly and his brother, Sam
Wyly, founded Earth Resources Company, an oil refining and silver mining
company, and Charles J. Wyly, Jr. served as Chairman of the Board from 1968 to
1980. Mr. Wyly served as Vice Chairman of the Bonanza Steakhouse chain from
1967 to 1989. Mr. Wyly currently serves as Vice Chairman of Michaels Stores.
Mr. Wyly is a member of the Executive Committee and the Stock Option Committee
of the Board.
The current Class C directors of the Company, who are not standing for
reelection at the Meeting and whose terms will expire at the Company's Annual
Meeting of Stockholders in 1999, are as follows:
Sterling L. Williams, age 53. Mr. Williams has served as Chairman of the
Board of the Company and a director since December 1995 and served as Chief
Executive Officer of the Company from December 1995 until
3
<PAGE>
October 1996. Mr. Williams co-founded Sterling Software in 1981, and since
such time has served and continues to serve as President, Chief Executive
Officer and a director of Sterling Software. Mr. Williams also currently
serves as a director of INPUT, an information technology market research
company. Mr. Williams is a member of the Executive Committee and the Stock
Option Committee of the Board.
Sam Wyly, age 62. Mr. Wyly has served as a director of the Company since
December 1995. Mr. Wyly co-founded Sterling Software in 1981 and since such
time has served as Chairman of the Board and a director of Sterling Software.
In 1963, Mr. Wyly founded University Computing Company, a computer software
and services company, and served as President or Chairman from 1963 until
1979. University Computing created a computer utility network, one of the
earliest and most successful marriages of computing and telecommunications.
University Computing was one of the original participants in the software
products industry in the late 1960s when the then market-dominant IBM
unbundled computer hardware and software. In 1968, Mr. Wyly founded Datran,
Inc., which was envisioned as the nation's first all-digital switched
"telephone company for computers" and contributed to the break up of AT&T's
telephone monopoly and the resulting benefits of increased competition in the
telecommunications industry. These Wyly-founded companies are among the
forerunners of today's electronic commerce industry. Mr. Wyly co-founded Earth
Resources Company, an oil refining and silver mining company, and served as
its Executive Committee Chairman from 1968 to 1980. Mr. Wyly and his brother,
Charles J. Wyly, Jr., bought the 20 restaurant Bonanza Steakhouse chain in
1967. It grew to approximately 600 restaurants by 1989, during which time
Sam Wyly served as Chairman. Sam Wyly currently serves as Chairman of Michaels
Stores, a specialty retail chain (which has grown from 70 to 525 stores in 12
years of Wyly control), and as a partner of Maverick Capital, Ltd., an
investment fund management company. Sam Wyly is the Chairman of the Executive
Committee and a member of the Stock Option Committee of the Board.
BOARD OF DIRECTORS AND COMMITTEES
General. The business of the Company is managed under the direction of the
Board. The Board meets on a regularly scheduled basis during the Company's
fiscal year to review significant developments affecting the Company and to
act on matters requiring Board approval. It also holds special meetings when
an important matter requires Board action between scheduled meetings. The
Board met or acted by unanimous written consent 15 times during the fiscal
year ended September 30, 1996. During fiscal 1996, each member of the Board
participated in at least 75% of all Board and applicable committee meetings
held during the period for which he or she was a director.
The Board has established executive, audit and stock option committees to
devote attention to specific subjects and to assist the Board in the discharge
of its responsibilities. The functions of those committees, their current
members and the number of meetings held during fiscal 1996 are set forth
below.
Executive Committee. The Executive Committee is empowered to act on any
matter except those matters specifically reserved to the full Board by
applicable law. Sam Wyly (Chairman), Charles J. Wyly, Jr. and Sterling L.
Williams are the current members of the Executive Committee. The Executive
Committee met or acted by unanimous written consent four times during fiscal
1996. The Executive Committee was responsible for determining executive
compensation for fiscal 1996 except for decisions relating to grants of stock
options under the Company's stock option plan.
Audit Committee. The Audit Committee recommends to the Board the appointment
of the firm selected to serve as independent auditors of the Company and its
subsidiaries and monitors the performance of such firm; reviews and approves
the scope of the annual audit and evaluates with the independent auditors the
Company's annual audit and annual consolidated financial statements; reviews
with management the status of internal accounting controls; evaluates issues
having a potential financial impact on the Company which may be brought to its
attention by management, the independent auditors or the Board; and evaluates
public financial reporting documents of the Company. Robert E. Cook (Chairman)
and Honor R. Hill are the current members of the Audit Committee. The Audit
Committee met one time during fiscal 1996.
4
<PAGE>
Stock Option Committee and Special Stock Option Committee. The Stock Option
Committee and the Special Stock Option Committee (collectively, the "Option
Committees") administer the Company's 1996 Stock Option Plan (the "Stock
Option Plan"). In this capacity, the Option Committees have the authority,
subject to certain restrictions set forth in the Stock Option Plan, to
determine from time to time the individuals to whom options are granted under
the Stock Option Plan, the number of shares covered by each option grant, the
time or times at which options become exercisable and other terms and
conditions of such options. Although each of the Option Committees has the
authority under the Stock Option Plan to make grants of options to any
eligible participant, it is anticipated that the Stock Option Committee will
make grants to those participants who are neither executive officers nor
directors of the Company and the Special Stock Option Committee will make
grants to those participants who are executive officers of the Company or
members of the Board. Sam Wyly, Charles J. Wyly, Jr. and Sterling L. Williams
are the current members of the Stock Option Committee. Honor R. Hill and
Robert E. Cook are the current members of the Special Stock Option Committee.
The Stock Option Committee met or acted by unanimous written consent three
times during fiscal 1996. The Special Stock Option Committee met or acted by
unanimous written consent seven times during fiscal 1996.
Other. The Company does not have a nominating or compensation committee. The
functions customarily attributable to a nominating committee are performed by
the Board as a whole, and the functions customarily attributable to a
compensation committee generally are performed by the Executive Committee and
the Option Committees.
DIRECTOR COMPENSATION
Each director of the Company who is not also an employee of the Company or
any of its subsidiaries receives an annual fee of $30,000 plus $3,000 for each
meeting of the Board or a committee thereof that he or she attends during the
fiscal year. All directors are reimbursed for their out-of-pocket expenses
incurred in connection with the attendance at meetings of the Board and Board
committees and other activities relating thereto. Directors are also eligible
to receive discretionary grants of options to purchase shares of Common Stock
under the terms of the Company's Stock Option Plan. During fiscal 1996,
Sterling L. Williams received options to purchase 3,000,000 shares of Common
Stock. See "Management Compensation--Option Grants During Fiscal 1996."
Additionally, in fiscal 1996, Sam Wyly, Charles J. Wyly, Jr., Evan A. Wyly,
Robert E. Cook and Honor R. Hill received options to purchase 3,000,000;
1,600,000; 200,000; 100,000 and 100,000 shares of Common Stock, respectively.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock by each director of the Company (which includes all
nominees), each of the Named Executive Officers (as defined below) and the
directors and executive officers of the Company as a group. To the Company's
knowledge, no person owns 5% or more of the outstanding shares of Common
Stock. Unless otherwise indicated, each person listed below has sole voting
and investment power with respect to such shares.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
OWNED BENEFICIALLY(1)
------------------------------
NAME NUMBER PERCENT OF CLASS
---- --------- ----------------
<S> <C> <C>
Sterling L. Williams........................... 1,006,370(2) 1.3%
Warner C. Blow................................. 7,213(3) *
Paul L. H. Olson............................... 6,939(4) *
Stephen R. Perkins............................. 579(5) *
J. Brad Sharp.................................. 3,917(6) *
Sam Wyly....................................... 1,269,442(7) 1.7
Charles J. Wyly, Jr............................ 1,589,846(8) 2.1
Evan A. Wyly................................... 134,479 *
Robert E. Cook................................. 11,943(9) *
Honor R. Hill.................................. 0 --
All executive officers and directors as a group
(20 persons).................................. 3,718,118(10) 4.9%
</TABLE>
- --------
* Less than 1%
(1) The number of shares shown includes outstanding shares owned by the
person indicated on December 31, 1996 and shares underlying options owned
by such person on December 31, 1996 that were exercisable within 60 days
of such date. Persons holding shares of Common Stock pursuant to the
Savings Plan generally have sole voting power, but not investment power,
with respect to such shares.
(2) Includes 1,000,000 shares of Common Stock that may be acquired upon
exercise of options granted under the Stock Option Plan.
(3) Includes 5,063 shares of Common Stock held pursuant to the Savings Plan.
(4) Includes 1,482 shares of Common Stock held pursuant to the Savings Plan
and 159 shares of Common Stock owned by Mr. Olson's son.
(5) Includes 579 shares of Common Stock owned pursuant to the Savings Plan.
(6) Includes 1,917 shares of Common Stock owned pursuant to the Savings Plan.
(7) Includes 570,909 shares of Common Stock owned by family trusts of which
Sam Wyly is trustee and 698,533 shares of Common Stock (477,780 of which
are also beneficially owned by Charles J. Wyly, Jr.) held of record by
two limited partnerships of which Sam Wyly is a general partner.
(8) Includes 703,447 shares of Common Stock owned by family trusts of which
Charles J. Wyly, Jr. is trustee and 886,399 shares of Common Stock
(477,780 of which are also beneficially owned by Sam Wyly) held of record
by two limited partnerships of which Charles J. Wyly, Jr. is a general
partner.
(9) Includes 1,592 shares of Common Stock held by a trust of which Robert E.
Cook is a trustee and has shared voting and investment power.
(10) Includes 13,949 shares of Common Stock held pursuant to the Savings Plan
by executive officers of the Company not named in the table above.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid or accrued for services rendered to the Company and its subsidiaries
during each of the Company's last two fiscal years, to the Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers (collectively, the "Named Executive Officers"), based on salary and
bonus earned during the Company's fiscal year ended September 30, 1996.
Prior to the completion of the Offering, Mr. Williams did not receive
compensation or benefits from the Company or any of its subsidiaries. Rather,
he was compensated by Sterling Software. The information in the following
table with respect to Mr. Williams for fiscal 1995 is based on salary and
bonus paid or accrued for services rendered to Sterling Software and its
subsidiaries (including the Company) during Sterling Software's
6
<PAGE>
fiscal year ended September 30, 1995, and for fiscal 1996 is based on salary
and bonus paid or accrued for services rendered to the Company and its
subsidiaries from the completion of the Offering through September 30, 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(3) COMPENSATION
- --------------------------- ----------- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sterling L. Williams.... 1996 $250,000 $250,000 0 3,000,000 0
Chairman of the 1995 750,000 450,000 $168,833(5) 650,000 $33,900
Board(4)
Warner C. Blow.......... 1996 401,550 223,667 157,680(6) 1,000,000 13,950(7)
President and Chief 1995 348,000 251,114 93,293(8) 75,000 7,233
Executive Officer(4)
Paul L. H. Olson........ 1996 231,000 121,409 3,818(9) 200,000 6,130(10)
Senior Vice President 1995 185,000 126,901 668(9) 0 4,500
and President, Commerce
Services Group
Stephen R. Perkins...... 1996 202,964 102,889 19,243(9) 180,000 6,560(11)
Senior Vice President 1995 173,000 84,909 668(9) 4,100 4,500
and President,
Communications Software
Group
J. Brad Sharp........... 1996 185,500 137,640 1,286(9) 160,000 5,036(12)
Senior Vice President 1995 143,000 109,215 668(9) 0 4,500
and President,
Interchange Software
Group
</TABLE>
- --------
(1) Reflects bonus earned during the fiscal year. In some instances, all or a
portion of the bonus has been or will be paid during the succeeding
fiscal year.
(2) Excludes perquisites and other personal benefits if the aggregate amount
of such compensation is less than the lesser of $50,000 or 10% of the
total annual salary and bonus reported for such Named Executive Officer.
(3) For fiscal 1995, reflects options issued by Sterling Software to acquire
shares of Sterling Software's common stock. For fiscal 1996, reflects
options to acquire shares of Common Stock of the Company. The Company has
not granted stock appreciation rights.
(4) Sterling L. Williams served as Chief Executive Officer during fiscal
1996. In October 1996, Mr. Williams resigned from that position and
Warner C. Blow was elected Chief Executive Officer of the Company.
(5) Includes $47,897 paid for medical reimbursements, a $44,222 bonus in the
form of a housing allowance and a $55,541 payment to cover taxes.
(6) Includes $43,145 in incentive travel and a $63,673 payment to cover
taxes.
(7) Consists of $4,500 in contributions to Sterling Software's Savings and
Security Plan and $9,450 in respect of premiums on a life insurance
policy for Mr. Blow's benefit.
(8) Includes $46,724 in incentive travel and a $39,969 payment to cover
taxes.
(9) Consists of reimbursements for the payment of taxes.
(10) Consists of $4,500 in contributions to Sterling Software's Savings and
Security Plan and $1,630 in respect of premiums on a life insurance
policy for Mr. Olson's benefit.
(11) Consists of $4,500 in contributions to Sterling Software's Savings and
Security Plan and $2,060 in respect of premiums on a life insurance
policy for Mr. Perkins' benefit.
(12) Consists of $4,500 in contributions to Sterling Software's Savings and
Security Plan and $536 in respect of premiums on a life insurance policy
for Mr. Sharp's benefit.
7
<PAGE>
OPTION GRANTS DURING FISCAL 1996
The following table provides information related to options to purchase
Common Stock granted by the Company to the Named Executive Officers during
fiscal 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
POTENTIAL REALIZABLE VALUE
PERCENTAGE OF AT ASSUMED ANNUAL RATES
NUMBER OF TOTAL OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES TERM(3)
OPTIONS IN FISCAL EXERCISE --------------------------
NAME GRANTED(1) 1996 PRICE(2) EXPIRATION DATE 5% 10%
- ---- ---------- ------------- -------- ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sterling L. Williams.... 3,000,000 41.8% $24.00 February 12, 2006 $ 45,280,413 $ 114,749,457
Warner C. Blow.......... 1,000,000 13.9 24.00 February 12, 2006 15,093,471 38,249,819
Paul L.H. Olson......... 200,000 2.8 24.00 February 12, 2001 1,326,152 2,930,448
Stephen R. Perkins...... 180,000 2.5 24.00 February 12, 2001 1,193,536 2,637,403
J. Brad Sharp........... 160,000 2.2 24.00 February 12, 2001 1,060,921 2,344,358
</TABLE>
- --------
(1) Reflects options to acquire shares of Common Stock. The Company has not
granted stock appreciation rights.
(2) The option exercise price may be paid in shares of Common Stock owned by
the executive officer, in cash or in any other form of valid consideration
or a combination of any of the foregoing, as determined by the Board, or
Special Stock Option Committee in its discretion. The exercise price was
equal to the fair market value of the Common Stock on the date of grant.
(3) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Common Stock over the term of the options.
These numbers do not take into account provisions contained in some of the
options providing for termination of the option following termination of
employment, nontransferability or vesting over periods of up to four
years. The use of the assumed 5% and 10% annual rates of stock price
appreciation are established by the Securities and Exchange Commission
(the "SEC") and is not intended by the Company to forecast possible future
appreciation of the price of the Common Stock.
OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to options to purchase
Common Stock issued by the Company and exercised by the Named Executive
Officers during fiscal 1996 and the number and value of options held at fiscal
year end. The Company does not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES AT SEPTEMBER 30, 1996(1) AT SEPTEMBER 30, 1996(2)
ACQUIRED ON VALUE ---------------------------- -------------------------
NAME EXERCISE(3) REALIZED EXERCISABLE(4) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sterling L. Williams.... 0 -- 0 3,000,000 0 $16,500,000
Warner C. Blow.......... 0 -- 0 1,000,000 0 5,500,000
Paul L. H. Olson........ 0 -- 0 200,000 0 1,100,000
Stephen R. Perkins...... 0 -- 0 180,000 0 990,000
J. Brad Sharp........... 0 -- 0 160,000 0 880,000
</TABLE>
- --------
(1) The Company has not granted stock appreciation rights.
(2) In accordance with SEC regulations, value was determined based upon the
per share closing price for Common Stock as reported by the New York Stock
Exchange on September 30, 1996 ($29 1/2) multiplied by the number of
shares of Common Stock of the Company underlying such options.
(3) No options to purchase Common Stock were exercised during the fiscal year
ended September 30, 1996.
(4) No options to purchase Common Stock were exercisable at September 30,
1996.
SERP II
In connection with its acquisition of Informatics General Corporation in
1985, Sterling Software retained the Informatics Supplemental Executive
Retirement Plan II ("SERP II"). Warner C. Blow is the only employee of the
Company who participates in SERP II. No other employee, including the other
Named Executive Officers, participates, or will be eligible to participate, in
SERP II. As of September 30, 1996, Mr. Blow had accrued approximately twenty-
two years of service under SERP II. The annual benefit payable upon retirement
at age 65
8
<PAGE>
or above under SERP II is equal to the lesser of the following amounts: (i) 2%
of the participant's "final average pay," which is equal to the highest
average of the participant's base salary plus the participant's bonuses (up to
a maximum bonus amount not to exceed 50% of the participant's base salary)
over three consecutive years of service times the participant's years of
service and (ii) 50% of the final average pay less the annuity equivalent of
the participant's account balance under the Sterling Software, Inc. Subsidiary
Retirement Plan as of June 30, 1987 (plus interest at an assumed rate) and the
annuity equivalent of the assumed Sterling Software matching contribution
under Sterling Software's Savings and Security Plan (the "Sterling Software
Savings Plan") thereafter, plus interest at an assumed rate (collectively, the
"annuity offset"). Benefits paid under SERP II are adjusted in the event of
disability or retirement prior to age 65. Benefits are also adjusted annually,
upward or downward, to the extent that the increase or decrease, if any, in
the Consumer Price Index for the preceding calendar year over the Consumer
Price Index for the next preceding calendar year exceeds 5%. Amounts paid
under SERP II are taxable as income. SERP II is not funded and benefits are
paid as they become due. Benefits under SERP II are paid in the form of a
joint and 50% survivor annuity. The Company has assumed the obligations of
Sterling Software under SERP II with respect to Mr. Blow.
The following table shows the estimated annual benefits payable upon
retirement at age 65 to the participant in SERP II for the indicated level of
three-year average annual compensation and various periods of service. The
amounts shown in the table may be subject to the annuity offset, the amount of
which will depend on the pay history of the participant and the return on the
Sterling Software Savings Plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$600,000........................... $180,000 $240,000 $300,000 $300,000 $300,000
700,000........................... 210,000 280,000 350,000 350,000 350,000
800,000........................... 240,000 320,000 400,000 400,000 400,000
900,000........................... 270,000 360,000 450,000 450,000 450,000
</TABLE>
CHANGE-IN-CONTROL AND SEVERANCE AGREEMENTS
The Company has entered into an agreement (a "Change-in-Control Agreement")
with fourteen of its executive officers, including each of the Named Executive
Officers, which agreements provide for certain payments and benefits upon the
termination of the employment of such persons with the Company following a
Change in Control (as defined in such agreements). Each of the Change-in-
Control Agreements covers termination within a specified number of years after
the date of a Change in Control and requires the Company to pay to such
executive officer, if prior to such expiration his or her employment is
terminated with or without cause by the Company (other than upon such
executive officer's death) or by such executive officer upon the occurrence of
certain constructive termination events, a lump sum amount equal to a multiple
of such executive officer's annual salary, bonus and cash incentive
compensation preceding such termination and to continue certain benefits for a
specified number of months. The specified number of years, the multiple and
the specified number of months referred to in the immediately preceding
sentence are five, 500% and 60, respectively, in the case of Mr. Williams;
four, 400% and 48, respectively, in the case of Mr. Blow; and two, 200% and
24, respectively, in the case of each of the other Named Executive Officers.
In addition, if any payments (including payments under the Change-in-Control
Agreement) to such executive officer are determined to be "excess parachute
payments" under the Internal Revenue Code of 1986, as amended (the "Code"),
such executive officer would be entitled to receive an additional payment (net
of income taxes) to compensate such executive officer for the excise tax
imposed by the Code on such payments.
The Company has entered into an agreement, as amended (the "Chairman
Agreement"), with Sterling L. Williams, providing for a minimum base salary
(subject to mutually agreeable annual increases) and certain benefits plus
such bonuses and other benefits which the Company and Mr. Williams may agree
upon. Mr. Williams' base salary for fiscal 1997 is $650,000. Under the terms
of the Chairman Agreement, upon termination of Mr. Williams' employment as
Chairman of the Board of the Company by (i) the Company (with
9
<PAGE>
or without cause) or (ii) Mr. Williams as a result of a reduction in his
compensation or of the nature or scope of his authority or duties, the
Chairman Agreement will convert into a five-year consulting agreement. In such
event, Mr. Williams would be entitled to continue receiving compensation and
certain benefits at the levels specified in the Chairman Agreement. Prior to
the expiration of its five-year term, the consulting agreement could be
terminated by Mr. Williams at any time and by the Company at Mr. Williams'
death. In the event of termination of Mr. Williams' employment following a
Change in Control, at Mr. Williams' option, the terms of his Change-in-Control
Agreement may govern the termination in lieu of conversion of the Chairman
Agreement into a consulting agreement. In the event of a Change in Control
following conversion of the Chairman Agreement into a consulting agreement,
Mr. Williams would have the option of terminating the consulting agreement and
would be entitled to receive a lump sum amount equal to all compensation due
through the unexpired portion of the five-year consulting agreement. In
addition, the Chairman Agreement provides that, in the event that Mr.
Williams' employment with Sterling Software is terminated (with or without
cause) and Mr. Williams is willing and able to devote his full-time efforts to
the Company, the Company will offer to increase his compensation and benefits
paid by the Company to a level reasonably equivalent to the combined
compensation and benefits he is entitled to receive from both the Company and
Sterling Software immediately prior to such termination.
The Company has entered into an agreement (a "Severance Agreement") with
twelve of its executive officers, including each of the Named Executive
Officers (other than Mr. Williams), providing for the continued compensation
of such executive officer in the event that the Company terminates his or her
employment, with or without cause. Each of these agreements will expire a
specified number of years (four in the case of Mr. Blow and two in the case of
each of the other Named Executive Officers) after the date on which notice of
termination is given to the executive officer by the Company. Each such
agreement requires the Company to continue to pay the executive officer, upon
his or her termination from employment by the Company, for a specified number
of months (48 in the case of Mr. Blow and 24 in the case of each of the other
Named Executive Officers), the salary, bonus and certain benefits in effect
prior to the termination of his or her employment. In the event of a
termination of employment following a Change in Control, at the executive
officer's option, the terms of his or her Change-in-Control Agreement may
govern such termination in lieu of the terms of the Severance Agreement.
In addition to the above described agreements, the Company has agreed to
reimburse each of the Named Executive Officers (other than Mr. Williams) for
certain legal, financial and other professional services.
REPORT OF THE EXECUTIVE AND OPTION COMMITTEES ON EXECUTIVE COMPENSATION
Overview and Philosophy. The Company is engaged in a highly competitive
industry. In order to succeed, the Company believes that it must be able to
attract and retain qualified executives. To achieve this objective, the
Company believes that providing executive compensation that is tied in part to
operating performance enables the Company to attract and retain key employees.
During fiscal 1996, the members of the Executive Committee had primary
responsibility for determining executive compensation levels. The Executive
Committee, as part of its review and consideration of executive compensation,
took into account, among other things, the following goals:
. Providing incentives and rewards that will attract and retain highly
qualified and productive people;
. Motivating employees to high levels of performance;
. Differentiating individual pay based on performance;
. Ensuring external competitiveness and internal equity; and
. Aligning the interests of the Company, its executives and stockholders.
10
<PAGE>
To achieve these goals, the Company's executive compensation policies
integrate annual base compensation with cash bonuses based on operating
performance, with a particular emphasis on attainment of planned objectives,
and on individual initiatives and performance. Compensation through stock
options is designed to attract and retain qualified executives and to ensure
that such executives have a continuing stake in the long-term success of the
Company. When granting stock options, the Option Committees evaluate a number
of criteria, including the recipient's level of cash compensation, years of
service with the Company, position with the Company, the number of unexercised
options held by the recipient and other factors. The Option Committees have
not established a formula to assign specific weights to any of these factors
when making their determinations.
Chief Executive Officer's Compensation for Fiscal 1996. In fiscal 1996, the
Company's Chief Executive Officer was compensated in accordance with an
agreement entered into effective March 13, 1996. Such agreement provided for
an annual base salary of $500,000 and certain benefits plus such bonuses or
other benefits and annual increases on which the Company and Mr. Williams may
agree. Because there was no pre-established formula for determining
Mr. Williams' bonus for fiscal 1996, the Executive Committee exercised its
judgment in awarding Mr. Williams a bonus of $250,000 for fiscal 1996. The
Company's fiscal 1996 year-end results reflected record revenue and profit
performance in each of the Company's major worldwide markets. Revenue
increased 31.5% in fiscal 1996 over fiscal 1995, and earnings per share
increased 30.5% in fiscal 1996 over fiscal 1995. In addition, the Executive
Committee took into account Mr. Williams' key role in the successful
completion of both the Offering and the Distribution. Based on these factors,
the Executive Committee concluded that Mr. Williams' outstanding performance
for the Company merited his bonus award. Mr. Williams was also granted options
in fiscal 1996 to purchase 3,000,000 shares of Common Stock. See "--Option
Grants During Fiscal 1996."
Compensation for Other Executive Officers. Compensation of the Company's
other executive officers is comprised of base salary, annual cash incentive
compensation, long-term incentive compensation in the form of stock options
and various benefits. Each element has a somewhat different purpose and all of
the determinations of the Executive and Option Committees regarding the
appropriate form and level of executive compensation were ultimately judgments
based on such committees' ongoing assessment and understanding of the
electronic commerce industry, the Company and the Company's executive
officers. In determining base salaries for executive officers in fiscal 1996,
the Executive Committee took into account individual experience and
performance of its executive officers, as well as the Company's operating
performance in fiscal 1996 and the attainment of financial and strategic
objectives. Specifically, the Executive Committee and the Option Committees
took into consideration the same types of factors (such as revenue and
earnings per share and the successful completion of the Offering and
Distribution) as were considered with respect to the Chief Executive Officer.
In addition, the Company establishes for each fiscal year a plan for group
presidents (the "Group Presidents Plan"), which is based on operating profits.
All group presidents are eligible to participate in the Group Presidents Plan
and, pursuant to such plan, they receive a salary as well as a bonus that is
calculated as a percentage of the operating profits for their respective
groups. No group president will be eligible for a bonus, however, unless his
or her group meets certain minimum performance criteria. In addition, because
the Group Presidents Plan does not constitute an employment agreement, a
participant's employment and participation in such plan may be terminated by
the Chief Executive Officer at any time.
The Company maintains the Stock Option Plan for its executive officers, as
well as directors, key employees, advisors and consultants. The Option
Committees believe that the grant of options aligns executive and stockholder
long-term interests by creating a strong and direct link between executive
compensation and stockholder return and enables executives to develop and
maintain a significant long-term ownership position in the Company's Common
Stock. All stock options granted during fiscal 1996 were granted at fair
market value on the date of grant.
11
<PAGE>
In August 1993, as part of the Omnibus Budget Reconciliation Act of 1993,
Section 162(m) of the Code was enacted, which section provides for an annual
$1,000,000 limitation on the deduction that an employer may claim for
compensation of certain executives. Section 162(m) of the Code provides
exceptions to the deduction limitation, and it is the intent of the Executive
Committee and the Option Committees to qualify for such exceptions to the
extent feasible and in the best interests of the Company. Option grants
pursuant to the Stock Option Plan are intended to meet the performance based
compensation exception to the deduction limitation.
This report is submitted by the members of the Executive, Stock Option and
Special Stock Option Committees:
<TABLE>
<CAPTION>
EXECUTIVE STOCK OPTION SPECIAL STOCK OPTION
COMMITTEE COMMITTEE COMMITTEE
-------------------- -------------------- --------------------
<S> <C> <C>
Sam Wyly Sterling L. Williams Robert E. Cook
Sterling L. Williams Charles J. Wyly, Jr. Honor R. Hill
Charles J. Wyly, Jr. Sam Wyly
</TABLE>
EXECUTIVE AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Executive Committee of the Board have been and will be
primarily responsible for determining executive compensation other than grants
of stock options. The Stock Option Committee and the Special Stock Option
Committee are responsible for determining grants of stock options. The
following directors, who also are members of the Executive Committee and the
Stock Option Committee, participated in meetings with respect to executive
officer compensation matters: Sam Wyly, Sterling L. Williams and Charles J.
Wyly, Jr. Sterling L. Williams is an executive officer of the Company.
Sam Wyly and Charles J. Wyly, Jr. are executive officers of both Sterling
Software and Michaels Stores and members of the executive committees, stock
option committees and the Boards of Directors of the Company, Sterling
Software and Michaels Stores and members of the compensation committee of the
Michaels Stores' Board of Directors. In addition, Sterling L. Williams is a
director and executive officer of both the Company and Sterling Software and a
member of the executive committees, stock option committees and the Boards of
Directors of the Company and Sterling Software. Accordingly, Sam Wyly, Charles
J. Wyly, Jr. and Sterling L. Williams have participated in decisions related
to compensation of executive officers of each of the Company and Sterling
Software, and Sam Wyly and Charles J. Wyly, Jr. have participated in decisions
related to compensation of executive officers of each of the Company, Sterling
Software and Michaels Stores. Evan A. Wyly, a director of the Company, is also
an executive officer and a director of Sterling Software and an executive
officer and a director of Michaels Stores. See "Certain Transactions."
12
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the percentage change in the cumulative total
stockholder return on the Company's Common Stock during the period commencing
March 8, 1996, the date the Common Stock first began trading on the New York
Stock Exchange on a when issued basis, and ending September 30, 1996 with a
cumulative total return on the S&P 500 Index and the NASDAQ Computer & Data
Processing Index. The comparison assumes $100 was invested on March 8, 1996 in
the Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[CHART]
<TABLE>
<CAPTION>
3/8/96 9/30/96
------ -------
<S> <C> <C>
Sterling Commerce, Inc. ......................................... 100 123
S&P 500 Index.................................................... 100 109
NASDAQ Computer & Data Processing Index.......................... 100 113
</TABLE>
13
<PAGE>
CERTAIN TRANSACTIONS
In anticipation of the Offering, the Company and Sterling Software entered
into a number of agreements (the "Intercompany Agreements") for the purpose of
defining certain relationships between them. As a result of Sterling
Software's ownership interest in the Company, the terms of such agreements
were not the result of arm's-length negotiation. The Intercompany Agreements
include a Tax Allocation Agreement, an International Marketing Agreement, a
Space Sharing Agreement and a Services Agreement. The Tax Allocation Agreement
states that for periods during which the Company and/or its subsidiaries were
included in Sterling Software's consolidated federal income tax returns or
consolidated, combined or unitary state tax returns, the Company is required
to pay to or is entitled to receive from Sterling Software its allocable
portion of the consolidated, federal and state income tax liability or
refunds, respectively. Additionally, the Tax Allocation Agreement contains
provisions for the handling of tax controversies. The International Marketing
Agreement defines the terms pursuant to which Sterling Software acts as the
exclusive distributor through March 1999 of certain of the Company's products
in markets outside the United States and Canada. The International Marketing
Agreement provides for the payment of royalties equal to 50% of the revenue
that Sterling Software derives from licenses of the Company's interchange and
communications software products and related product support services. In
fiscal 1996, the Company received aggregate royalties from Sterling Software
under the International Marketing Agreement of approximately $17,000,000. The
Space Sharing Agreement defines the terms pursuant to which the Company and
Sterling Software are allowed to utilize a portion of each other's office
facilities for a fee. The Services Agreement, which expired effective as of
the Distribution, included provisions related to cash management services
provided by Sterling Software to the Company. The Intercompany Agreements are
further described in the Company's Form 10-K which accompanies this Proxy
Statement.
Sterling Software remains the guarantor of certain office lease and other
obligations of the Company incurred pursuant to agreements entered into prior
to the Distribution. The aggregate payment over the remaining terms of the
agreements guaranteed by Sterling Software is approximately $40,000,000. The
Company is obligated to indemnify Sterling Software for any liabilities
incurred by Sterling Software as guarantor of such obligations, and the
Company has agreed to use reasonable efforts to promptly obtain Sterling
Software's release from its obligations under the related guarantees. Sterling
Software did not make any payments with respect to such guarantees during
fiscal 1996.
In fiscal 1996, the Company made payments totaling $118,436 to Intelecon
Services, Inc. ("Intelecon") for providing audio and visual aids and other
related services at prevailing rates at customer conferences, trade shows,
user group meetings and other corporate meetings. Laurie and David Matthews,
the daughter and son-in-law, respectively, of Sam Wyly, jointly hold
approximately 40% of the outstanding stock of Intelecon. David Matthews is
also an officer and a director of Intelecon.
INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP as independent auditors to examine
the Company's accounts for fiscal 1997. Representatives of Ernst & Young LLP
are expected to be present at the Meeting with the opportunity to make a
statement if they desire to do so and to be available to respond to
appropriate questions.
14
<PAGE>
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Exchange Act. For such proposals to be considered for
inclusion in the Proxy Statement relating to the 1998 Annual Meeting of
Stockholders, such proposals must be received by the Company not later than
September 24, 1997. Such proposals should be directed to Sterling Commerce,
Inc., Attention: Secretary, 8080 North Central Expressway, Suite 1100, Dallas,
Texas 75206 prior to February 24, 1997, and thereafter at 300 Crescent Court,
Suite 1200, Dallas, Texas 75201.
OTHER MATTERS
The Board of Directors knows of no other matters other than those described
herein that will be presented for consideration at the Meeting. However,
should any other matters properly come before the Meeting or any adjournment
thereof, it is the intention of the persons named in the accompanying proxy
card to vote in accordance with their best judgment in the interest of the
Company.
MISCELLANEOUS
All costs incurred in the solicitation of proxies will be borne by the
Company. In addition to the solicitation by mail, officers and employees of
the Company may solicit proxies by mail, telephone or in person, without
additional compensation. The Company may also make arrangements with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of Common Stock held of record
by such persons, and the Company may reimburse such brokerage houses and other
custodians, nominees and fiduciaries for their out-of-pocket expenses incurred
in connection therewith. In addition, Georgeson & Company has been retained by
the Company to aid in the solicitation of proxies and will solicit proxies by
mail, telephone or in person and may request brokerage houses and nominees to
forward soliciting material to beneficial owners of Common Stock. For these
services, Georgeson & Company will be paid a fee of $8,000, plus expenses.
The Company's Form 10-K, which includes the Company's audited financial
statements, accompanies this Proxy Statement.
ADDITIONAL COPIES OF THE COMPANY'S FORM 10-K WILL BE FURNISHED AT NO CHARGE
TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A
WRITTEN OR ORAL REQUEST OF SUCH PERSON ADDRESSED TO STERLING COMMERCE, INC.
ATTN: INVESTOR RELATIONS, 8080 NORTH CENTRAL EXPRESSWAY, SUITE 1100, DALLAS,
TEXAS 75206 (TELEPHONE: (214) 891-8680) PRIOR TO FEBRUARY 24, 1997, AND
THEREAFTER AT 300 CRESCENT COURT, SUITE 1200, DALLAS, TEXAS 75201 (TELEPHONE:
(214) 981-1100).
By Order of the Board of Directors
Jeannette P. Meier
Secretary
Dallas, Texas
January 21, 1997
15
<PAGE>
DETACH HERE
STERLING COMMERCE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 27, 1997
P
R
The undersigned hereby appoints Warner C. Blow and Jeannette P. Meier,
O each with power to act without the other and with full power of substitution
and resubstitution, as Proxies to represent and to vote, as designated on the
X reverse side, all of the shares of Common Stock, $.01 par value, of Sterling
Commerce, Inc. (the "Company") owned by the undersigned, at the Annual
Y Meeting of Stockholders (the "Meeting") to be held at the Company's offices
at 4600 Lakehurst Court, Dublin, Ohio, South Building, on Thursday, February
27, 1997, commencing at 10:00 a.m., local time, upon such business as may
properly come before the Meeting or any adjournments thereof including the
following as set forth on the reverse side hereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOX, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE |
| SIDE |
-------------
<PAGE>
SEE REVERSE SIDE
STERLING COMMERCE, INC.
Proxy Solicited on Behalf of the Board of Directors
For Annual Meeting of Stockholders to be held on February 27, 1997
1. The election as Class A directors of the two nominees listed below (except as
indicated to the contrary below); and
2. In their discretion on any other matter that may properly come before the
Meeting or any adjournments thereof.
DETACH HERE
[X] Please mark
votes as in
this example.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no specification is given, this
Proxy will be voted (i) FOR the election of each of the nominees for
director; and (ii) at the discretion of the proxy holders with regard to any
other matter that may properly come before the Meeting or any adjournments
thereof.
The Board of Directors unanimously recommends that stockholders vote FOR
each of the persons listed below as a nominee to serve as a Class A director
of the Company.
1. Election of Class A Directors
NOMINEES: Evan A. Wyly, Honor R. Hill
[_] FOR [_] WITHHELD
BOTH FROM BOTH
NOMINEES NOMINEES
[_]
-----------------------------------
For both nominees except as noted above MARK HERE [_]
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please sign name(s) exactly as appearing
hereon. When signing as attorney,
executor, administrator or other
fiduciary, please give your full title
as such. Joint owners should each sign
personally. If a corporation, sign in
full corporate name, by authorized
officer. If a partnership, please sign
in partnership name, by authorized
person.
Signature: Date:
------------------------------ ------------
Signature: Date:
------------------------------ ------------
