<PAGE> 1
SCHEDULE 14(a) 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:
<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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
JDA SOFTWARE GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
JDA SOFTWARE GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth in 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
[JDA Logo]
April 22, 1997
Dear Stockholder:
This year's annual meeting of stockholders will be held on Friday, May 23,
1997 at 10:00 a.m. local time, at the Scottsdale Plaza Resort located at 7200
North Scottsdale Road, Scottsdale, Arizona. You are cordially invited to attend.
The Notice of Annual Meeting of Stockholders and a Proxy Statement, which
describe the formal business to be conducted at the meeting, follow this letter.
After reading the Proxy Statement, please promptly mark, sign, and return
the enclosed proxy in the prepaid envelope to assure that your shares will be
represented. Your shares cannot be voted unless you date, sign, and return the
enclosed proxy or attend the annual meeting in person. Regardless of the number
of shares you own, your careful consideration of, and vote on, the matters
before our stockholders are important.
A copy of the Company's 1996 Annual Report is also enclosed.
The Board of Directors and Management look forward to seeing you at the
annual meeting.
Very truly yours,
/s/ James D. Armstrong
JAMES D. ARMSTRONG
Chief Executive Officer
<PAGE> 3
JDA SOFTWARE GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY MAY 23, 1997
To The Stockholders:
Please take notice that the annual meeting of the stockholders of JDA
Software Group, Inc. (the "Company"), will be held on May 23, 1997, at 10:00
a.m., at the Scottsdale Plaza Resort at 7200 North Scottsdale Road, Scottsdale,
Arizona, for the following purposes:
1. To elect one Class I director to hold office for a three-year term and
until his successor is elected and qualified.
2. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent public accountants
for the year ending December 31, 1997.
3. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on April 10, 1997 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the stockholders
entitled to vote at the meeting will be available for examination by any
stockholder for any purpose relating to the meeting during ordinary business
hours at the principal office of the Company.
By order of the Board of Directors
/s/ Thomas M. Proud
Secretary
Phoenix, Arizona
April 22, 1997
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY
CARD IN THE ACCOMPANYING POSTPAID ENVELOPE TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY CHOOSE TO VOTE IN
PERSON EVEN IF YOU HAVE PREVIOUSLY SENT IN YOUR PROXY CARD.
<PAGE> 4
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JDA SOFTWARE GROUP, INC.
11811 NORTH TATUM BOULEVARD, SUITE 2000
PHOENIX, ARIZONA 85028
The accompanying proxy is solicited by the Board of Directors of JDA
Software Group, Inc., a Delaware corporation ("JDA" or the "Company") for use at
the Annual Meeting of Stockholders to be held Friday, May 23, 1997, or any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting. The date of this Proxy Statement is April 22, 1997, the
approximate date on which this Proxy Statement and the accompanying form of
proxy were first sent or given to stockholders.
GENERAL INFORMATION
SOLICITATION AND VOTING OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
soliciting stockholders by mail through its regular employees, the Company will
request banks and brokers, and other custodians, nominees and fiduciaries, to
solicit their customers who have stock of the Company registered in the names of
such persons and will reimburse them for their reasonable, out-of-pocket costs.
The Company may use the services of its officers and directors and others to
solicit proxies, personally or by telephone, without additional compensation.
Only stockholders of record as of the close of business on April 10, 1997,
will be entitled to vote at the meeting and any adjournment thereof. As of that
date, there were 13,027,930 shares of common stock of the Company, par value
$.01 per share ("Common Stock"), issued and outstanding. Stockholders may vote
in person or by proxy. Each holder of shares of Common Stock is entitled to one
(1) vote for each share of stock held on the proposals presented in this Proxy
Statement. The Company's By-Laws provide that the holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at the meeting.
All valid proxies received prior to the meeting will be voted. All shares
represented by a proxy will be voted, and where a stockholder specifies by means
of the proxy a choice with respect to any matter to be acted upon, the shares
will be voted in accordance with the specification so made. If no choice is
indicated on the proxy, the shares will be voted in favor of the proposal. A
stockholder giving a proxy has the power to revoke his or her proxy, at any time
prior to the time it is voted, by delivering to the Secretary of the Company a
written instrument revoking the proxy or a duly executed proxy with a later
date, or by attending the meeting and voting in person. All votes will be
tabulated by the inspector of elections appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes. Abstentions and broker non-votes are counted towards a quorum, but
are not counted for any purpose in determining whether a matter has been
approved.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information, as of April 1, 1997,
with respect to the beneficial ownership of the Company's Common Stock by (i)
all persons known by the Company to be the beneficial owners of more than 5% of
the outstanding Common Stock of the Company, (ii) each director and director-
nominee of the Company, (iii) each executive officer of the Company named in the
Summary Compensation Table, and (iv) all executive officers and directors of the
Company as a group.
1
<PAGE> 5
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
------------------------
NAME AND ADDRESS OF NUMBER PERCENTAGE
BENEFICIAL OWNERS OF SHARES OF CLASS
- ---------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
James D. Armstrong(2)................................................. 1,965,588 15.1%
c/o JDA Software Group, Inc. 11811 North Tatum Boulevard, Suite 2000
Phoenix, AZ 85028
Frederick M. Pakis(3)................................................. 2,023,587 15.5%
c/o JDA Software Group, Inc. 11811 North Tatum Boulevard, Suite 2000
Phoenix, AZ 85028
TA Associates Group(4)................................................ 1,892,515 14.5%
435 Tasso Street, Suite 200 Palo Alto, CA 94301
Pilgrim Baxter & Associates, Ltd...................................... 1,305,100 10.0%
1255 Drummers Lane, Ste. 300 Wayne, PA 19087-1590
Geoffrey J. Finlay(5)................................................. 0 *
James L. Smith(6)..................................................... 266,429 2.0%
Brent W. Lippman(7)................................................... 153,429 1.2%
Thomas M. Proud(8).................................................... 1,018 *
Kurt R. Jaggers(9).................................................... 37,694 *
Crawford L. Cole(10).................................................. 55,000 *
All executives officers and directors as a group (9 persons).......... 4,505,878 33.7%
</TABLE>
- ---------------
* Represents less than one percent.
(1) Shares beneficially owned and percentage of class data are based on
13,027,930 shares of Common Stock outstanding as of April 1, 1997, and
include where appropriate additional shares pursuant to the rules of the
Securities and Exchange Commission.
(2) Mr. Armstrong is the Chief Executive Officer of the Company. Includes
30,000 shares held by Mr. Armstrong as trustee of a trust for the benefit
of Mr. Pakis' children. Mr. Armstrong disclaims beneficial ownership of
such shares.
(3) Mr. Pakis is the President of the Company. Includes 60,000 shares held by
Mr. Pakis as trustee of a trust for the benefit of Mr. Armstrong's
children. Mr. Pakis disclaims beneficial ownership of such shares.
(4) Includes 983,052 shares held by Advent VII L.P., 583,301 shares held by
Advent Atlantic and Pacific II Limited Partnership, 98,306 shares held by
Advent New York L.P., 210,162 shares held by Advent Industrial II L.P. and
17,694 shares held by TA Venture Investors L.P. Each of these entities is
part of an affiliated group of investment partnerships referred to,
collectively, as the TA Associates Group. The general partner of Advent VII
L.P. is TA Associates VI, L.P. The general partner of Advent Atlantic and
Pacific II Limited Partnership is TA Associates AAP II Partners, L.P. the
general partner of each of Advent New York L.P., Advent Industrial II L.P.
and TA Venture Investors L.P. is TA Associate VII, L.P. The general partner
of each of TA Associates VI L.P., TA Associates AAP II Partners, L.P. and
TA Associates VII, L.P. is TA Associates, Inc. In such capacity, TA
Associates, Inc. exercises sole voting and investment power with respect to
all of the shares held of record by the named investment partnerships, with
the exception of those shares held by TA Venture Investors, L.P.
Individually no stockholder, director or officer of TA Associates, Inc. is
deemed to have or share such voting or investment power. Principals and
employees of TA Associates, Inc. (including Mr. Jaggers, a director of the
Company) comprise the general partners of TA Venture Investors, L.P. In
such capacity, Mr. Jaggers may be deemed to share voting and investment
power with respect to the 17,694 shares held of record by TA Venture
Investors, L.P. Mr. Jaggers disclaims beneficial ownership of such shares,
except to the extent of 2,587 shares as to which he holds a pecuniary
interest. Does not include 20,000 shares issuable to Mr. Jaggers within 60
days of April 1, 1997.
2
<PAGE> 6
(5) Mr. Finlay served as the Managing Director of JDA International until
October 1996.
(6) Mr. Smith is the Director of Special Projects for the Company. Includes
97,713 shares subject to options exercisable within 60 days of April 1,
1997.
(7) Mr. Lippman is the Chief Operating Officer of the Company. Includes 110,570
shares subject to options exercisable within 60 days of April 1, 1997.
(8) Mr. Proud is a Vice President and the Chief Financial Officer of the
Company.
(9) Mr. Jaggers is a director of the Company. Includes 17,694 shares held by TA
Venture Investors, L.P., all of which are included in the 1,892,515 shares
described in footnote (4) above. Mr. Jaggers disclaims beneficial ownership
to such shares, except to the extent of 2,587 shares as to which he holds a
pecuniary interest. Does not include any shares beneficially owned by
Advent VII L.P., Advent Atlantic and Pacific II Limited Partnership, Advent
Industrial II L.P. or Advent New York L.P., of which Mr. Jaggers disclaims
beneficial ownership. Includes 20,000 shares subject to options exercisable
within 60 days of April 1, 1997.
(10) Mr. Cole is a director of the Company. Includes 20,000 shares subject to
options exercisable within 60 days of April 1, 1997.
BOARD OF DIRECTORS
Directors. This section sets forth the ages and backgrounds of the
Company's current Directors, including the Class I nominee to be elected at this
meeting.
<TABLE>
<CAPTION>
POSITIONS DIRECTOR
NAME AGE WITH THE COMPANY SINCE
- ------------------------------------------ --- -------------------------------------- --------
<S> <C> <C> <C>
Class I Director nominated for election at
the 1997 Annual Meeting of Stockholders:
Crawford L. Cole.......................... 38 Director 1996
Class II Director whose term expires at
the 1998 Annual Meeting of Stockholders:
Kurt R. Jaggers........................... 38 Director 1995
Class III Directors whose terms expire at
the 1999 Annual Meeting of Stockholders:
James D. Armstrong........................ 46 Chief Executive Officer and Director 1985
Frederick M. Pakis........................ 43 President and Director 1985
</TABLE>
Mr. Armstrong co-founded the Company with Mr. Pakis in 1985 and has since
served as the Chief Executive Officer and a director. In 1978, Mr. Armstrong
founded JDA Software Services, Ltd. in Canada and served as its President until
1987. From September 1985 to December 1987, Mr. Armstrong served on the board of
directors of Mark's Work Wearhouse, a publicly held Canadian specialty retailing
company. Mr. Armstrong attended Ryerson Polytechnic Institute in Toronto,
Ontario.
Mr. Pakis co-founded the Company with Mr. Armstrong in 1985 and has since
served as President and a director. From April 1981 to December 1985, Mr. Pakis
was a Manager -- Retail Consulting with Touche Ross & Co. From April 1976 to
March 1981, Mr. Pakis served as Director of Corporate Planning for The Sherwin
Williams Company, a home improvement specialty store company. Mr. Pakis attended
the United States Military Academy at West Point, received a B.S. in Operations
Research from Case Western Reserve University and an M.B.A. from the London
School of Business, where he studied as a Sloan Fellow.
Mr. Jaggers has served as a director of the Company since March 1995. Mr.
Jaggers was elected to the Board of Directors in March 1995 pursuant to the
Exchange Agreement between the Company and TA Associates. See "Certain
Transactions". Mr. Jaggers joined TA Associates, an equity investment firm, in
August 1990 where he served as a Principal from January 1993 until January 1997,
when he was named Managing Director, the position he currently holds. Mr.
Jaggers also serves on the Board of Directors of
3
<PAGE> 7
Network Appliance, Inc., a network file server company. Mr. Jaggers received a
B.S. and M.S. in electrical engineering and an M.B.A. from Stanford University.
Mr. Cole has served as a director of the Company since January 1996. Mr.
Cole is the Chief Executive Officer and President of West Marine, Inc., a
publicly held retailer and wholesaler of boating equipment and apparel, and has
served in those positions since April 1995. Mr. Cole has been a director of West
Marine, Inc. since July 1990. Mr. Cole also held the position of President of
West Marine, Inc. from July 1990 to August 1993, before resigning his position
to live abroad. Prior to West Marine, Inc., Mr. Cole held a variety of positions
with Northern Automotive from July 1987 to May 1990, including Senior Vice
President, Store Operations. Prior to that, for three years Mr. Cole was with
Garr Consulting Group, a retail consulting firm, where his last position was
Vice President. Mr. Cole received a B.S.M.E degree from the University of
Virginia and an M.B.A from the University of Georgia.
Meetings of the Board of Directors. During the year ended December 31,
1996, the Board of Directors held eight (8) meetings. Each director attended at
least 75% of the aggregate of the meetings of the Board of Directors and of the
committees of the Board of Directors on which he served.
The Company maintains an Audit Committee and a Compensation Committee. The
Company does not have a standing Nominating Committee.
The Audit Committee's function is to review with the Company's independent
public accountants and management the annual financial statements and
independent public accountants' opinion, review the scope and results of the
examination of the Company's financial statements by the independent public
accountants, approve all professional services performed by the independent
public accountants, recommend the retention of the independent public
accountants to the Board, subject to ratification by the stockholders, and
periodically review the company's accounting policies and internal accounting
and financial controls. The members of the Audit Committee are Mr. Jaggers and
Mr. Cole. During the year ended December 31, 1996, the Audit Committee held
three meetings.
The Compensation Committee's function is to review and approve salary and
bonus levels for senior management and stock option grants. The members of the
compensation Committee are Mr. Jaggers and Mr. Cole. During the year ended
December 31, 1996, the Compensation Committee held two meetings and took action
by written consent on three occasions. For additional information concerning the
Compensation Committee, see "Report of the Compensation Committee of the Board
of Directors on Executive Compensation" and "Executive Compensation and Other
Matters -- Compensation Committee Interlocks and Insider Participation."
4
<PAGE> 8
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the compensation for
the years 1995 and 1996 of the Chief Executive Officer of the Company and the
four other most highly compensated executive officers of the Company as of
December 31, 1996. Amounts under the caption "Bonus" are amounts earned for
performance during the year, including amounts paid after the end of the year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
--------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES) COMPENSATION
- --------------------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
James D. Armstrong..................... 1996 $175,000 $100,000 -- $ 10,240(1)
Chief Executive Officer 1995 $360,000 $100,000 -- $ 8,949
Frederick M. Pakis..................... 1996 $175,000 $100,000 -- $ 9,040(2)
President 1995 $360,000 $100,000 -- $ 8,019
James L. Smith......................... 1996 $165,000 $100,000 20,000 $ 6,550(3)
Dir. of Special Projects 1995 $150,000 $175,000 235,000 $ 5,769
Brent W. Lippman....................... 1996 $150,000 $100,000 20,000 $ 1,140(4)
Chief Operating Officer 1995 $125,000 $200,000 235,000 $ 1,109
Geoffrey J. Finlay(5).................. 1996 $308,782 $118,043 20,000 $ 19,359(6)
1995 $141,675 $310,000 235,000 $ 51,422
Thomas M. Proud(7)..................... 1996 $150,000 $ 50,000 15,000 $ 1,140(8)
Vice President and Chief 1995 $ 20,000 -- 60,000 --
Financial Officer
</TABLE>
- ---------------
(1) Includes Company contributions under its 401(k) Plan of $1,109 for 1995 and
$1,140 for 1996. Also includes premiums paid for life insurance coverage of
$7,840 for 1995 and $9,100 for 1996.
(2) Includes Company contributions under its 401(k) Plan of $1,109 for 1995 and
$1,140 for 1996. Also includes premiums paid for life insurance coverage of
$6,910 for 1995 and $7,900 for 1996.
(3) Includes Company contributions under its 401(k) plan of $1,109 for 1995 and
$1,140 for 1996. Also includes premiums paid for life insurance coverage of
$4,660 for 1995 and $5,410 for 1996.
(4) Includes Company contributions under its 401(k) Plan of $1,109 for 1995 and
$1,140 for 1996.
(5) Mr. Finlay served as Managing Director of JDA International until October
1996 when he resigned his position as an executive officer of the Company.
He resigned his employment with the Company on January 2, 1997. Includes all
amounts earned in 1996 including amounts earned after Mr. Finlay resigned as
an executive officer.
(6) Includes individual retirement account payments by the Company of $24,287
for 1995 and $19,359 for 1996. Also includes vehicle expenses paid by the
Company of $27,135 for 1995.
(7) Mr. Proud began his employment with the Company in November 1995.
(8) Includes $1,140 of Company contributions under its 401(k) Plan.
5
<PAGE> 9
The following table provides the specified information concerning grants of
options to purchase the Company's Common Stock made during the year ended
December 31, 1996 to the persons named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS IN 1996 VALUE AT ASSUMED
------------------------------------------------ ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS EXERCISE OPTION TERM(1)
OPTIONS GRANTED TO PRICE PER EXPIRATION ---------------------
NAME GRANTED(2) EMPLOYEES SHARE(3) DATE 5%($) 10%($)
- -------------------------------- ---------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
James L. Smith.................. 20,000 6.6% $ 18.44 6/19/06 $231,950 $587,800
Brent W. Lippman................ 20,000 6.6% $ 18.44 6/19/06 $231,950 $587,800
Geoffrey J. Finlay.............. 20,000 6.6% $ 18.44 6/19/06 $231,950 $587,800
Thomas M. Proud................. 15,000 4.9% $ 18.44 6/19/06 $173,950 $440,850
</TABLE>
- ---------------
(1) The 5% and 10% assumed compounded annual rates of stock price appreciation
are in accordance with the potential gains and are net of exercise price,
but before taxes associated with exercise rules of the Securities and
Exchange Commission. These amounts and assumed rates of appreciation do not
represent the Company's estimate of future stock price. Actual gains, if
any, on stock option exercises will be dependent on future performance of
the Common Stock. There can be no assurance that the actual stock price
appreciation over the ten-year option term will be at the assumed 5% and 10%
levels or at any other defined level. Unless the market price of the Common
Stock appreciates over the option term, which increase would benefit all
stockholders, no value will be realized from the option grants made to the
persons named in the Summary Compensation Table.
(2) All options granted in 1996 under the Company's 1996 Stock Option Plan (the
"Option Plan") generally vest and are exercisable over a four year period at
the rate of one-fourth on the first anniversary of the date of grant and
1/48th per month thereafter for each full month of the optionee's continuous
employment with the Company. Under the Option Plan, the Board retains
discretion to modify the terms, including the price, of outstanding options.
See "Executive Compensation and Other Matters -- Employment and Change of
Control Arrangements."
(3) All options were granted at an exercise price equal to the fair market value
of the Company's Common Stock on the date of grant based on the closing
sales price on the day preceding the date of grant.
OPTION EXERCISES AND FISCAL 1996 YEAR-END VALUE
The following table provides the specified information concerning exercises
of options to purchase the Company's Common Stock in the year ended December 31,
1996, and unexercised options held as of December 31, 1996, by the persons named
in the Summary Compensation Table.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES AT 12/31/96 12/31/96(1)
ACQUIRED VALUE --------------------------- ------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- ---------- ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James L. Smith........... 0 0 69,142 71,571 $1,707,550 $1,450,225
Brent W. Lippman......... 58,571 $1,037,375 81,999 71,571 $2,743,250 $1,450,225
Geoffrey J. Finlay....... 212,000 $5,279,000 0 0 $ 0 $ 0
Thomas M. Proud.......... 20,000 $ 427,000 0 55,000 $ 0 $1,080,900
</TABLE>
- ---------------
(1) Based on the closing price of the Company's Common Stock on December 31,
1996 on the Nasdaq National Market of $28.50 per share.
6
<PAGE> 10
COMPENSATION OF DIRECTORS
Board members of the Company do not receive compensation for attending
Board meetings. On January 12, 1996, the Company granted options to purchase
30,000 shares of Common Stock under the 1996 Stock Option Plan at an exercise
price of $9.60 per share to each of its current outside directors, Kurt R.
Jaggers and Crawford L. Cole, which options vested one-third on March 31, 1996
and fully vest over the subsequent two years. Under the Directors Plan,
directors who are not employees of the Company will receive yearly grants of
options to Purchase Common Stock. The Company does not pay additional amounts
for committee participation or special assignments of the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1996, Mr. Cole and Mr. Jaggers, the
Company's non-employee directors, served as the Compensation Committee. There
are no Compensation Committee interlocks between the Company and other entities
involving the Company's executive officers and board members who serve as
executive officers of such entities. This Proxy Statement contains disclosure
regarding a transaction between the Company and West Marine Products, Inc.
("West Marine"). Mr. Cole is the President of West Marine. See "Certain
Transactions."
EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
On March 30, 1995, the Company entered into employment agreements with Mr.
Armstrong, Mr. Pakis and Mr. Smith. Under the terms of the agreements, each of
the foregoing executives receives a base salary and a bonus determined by the
Board of Directors or its Compensation Committee. The agreements have terms of
two years and renew automatically for not less than a one year period.
On November 13, 1995, the Company entered into an employment agreement with
Mr. Thomas M. Proud, the Company's Vice President and Chief Financial Officer.
Under the agreement, Mr. Proud received an annual base salary and bonus of
$200,000 in 1996. Mr. Proud's base salary is subject to annual review and
adjustment and bonus is determined annually by the Board of Directors.
The Company has entered into indemnification agreements with its directors
and certain executive officers, as well as with TA Associates. The Company
intends to enter into indemnification agreements with its remaining executive
officers. Such agreements require the Company to indemnify such individuals to
the fullest extent permitted by Delaware law.
CERTAIN TRANSACTIONS
Prior to March 30, 1995, the Company's business was conducted through five
affiliated companies, the stock of four of which was owned by Messrs. James D.
Armstrong (either directly or through JDA Investments Ltd., a Canadian
corporation wholly owned by Mr. Armstrong), Frederick M. Pakis and James L.
Smith, and the fifth of which was a wholly-owned subsidiary. The four principal
affiliated companies were JDA Services, JDA Software, JDA Worldwide and JDA
International.
On March 14, 1995, the Company was formed and subsequently, on March 30,
1995, JDA Services, JDA Software, JDA Worldwide, JDA International, Messrs.
Armstrong, Pakis and Smith, JDA Investments Ltd. and TA Associates entered into
a Series A Preferred Stock and Common Stock Exchange Agreement (the "Exchange
Agreement"). Pursuant to the Exchange Agreement Messrs. Armstrong, Pakis and
Smith and JDA Investments Ltd. each exchanged all of the outstanding shares of
stock of JDA Services, JDA Software, JDA Worldwide and JDA International owned
by them for, in part, Promissory Notes executed by the Company in the aggregate
amounts of $15,285,197. As a result of the Exchange Agreement, Mr. Armstrong
received, in part, Promissory Notes in the aggregate amount of $6,964,034, JDA
Investments Ltd. received a Promissory Note in the amount of $487,500; Mr. Pakis
received, in part, Promissory Notes in the aggregate amount of $7,451,534; and
Mr. Smith received 180,000 shares of Common Stock of the Company, Promissory
Notes in the aggregate amount of $382,130. As a result of the Exchange
Agreement, JDA Services, JDA Software, JDA Worldwide and JDA International
became wholly-owned subsidiaries of the Company.
Of the Promissory Notes described above, Promissory Notes in the principal
amounts of $6,337,500, $487,500, $6,825,000, and $350,000 payable to Mr.
Armstrong, JDA Investments Ltd. and Messrs. Pakis and
7
<PAGE> 11
Smith, respectively, each bore interest at the rate of 6.32297% per annum and,
according to their terms, were paid in full by the Company on January 11, 1996.
The remaining Promissory Notes in the principal amounts of $626,534, $626,534
and $32,130 payable to Messrs. Armstrong, Pakis and Smith, respectively, each
bore interest at the rate of 8% per annum, and provided for annual payment of
accrued interest and were paid in full on the closing of the Company's initial
public offering.
Also as part of the Exchange Agreement, the Company guaranteed six
Promissory Notes payable by its newly acquired subsidiaries, JDA Software and
JDA Worldwide, to Messrs. Armstrong and Pakis. These Promissory Notes
represented distributions to Messrs. Armstrong and Pakis from JDA Software and
JDA Worldwide when these two corporations were S Corporations prior to the
Exchange Agreement. Two of these Promissory Notes were each in the principal
amount of $449,495, bore interest at 8% per annum and, according to their terms,
were paid in full by JDA Software and JDA Worldwide to Messrs. Armstrong and
Pakis on January 13, 1996. The other four Promissory Notes were payable by JDA
Software and JDA Worldwide to Messrs. Armstrong and Pakis in the principal
amounts of $1,718,002 and $241,365, each bore interest at the rate of 8% per
annum, provided for monthly payments of principal and interest and were paid in
full on March 25, 1996.
On March 30, 1995, the Company entered into a Redemption Agreement with
Messrs. Armstrong and Pakis whereby each individual agreed to have his stock in
the Company redeemed by the Company upon the exercise of up to an aggregate of
1,350,000 shares of the Company's Common Stock by the option holders under the
1995 Stock Option Plan. The Redemption Agreement enables the Company to redeem
from Messrs. Armstrong and Pakis, pro rata, a number of shares of Common Stock
of the Company equal to the number of shares as to which applicable options are
exercised. As to the first 850,000 options exercised under the 1995 Stock Option
Plan, the redemption price is equal to the exercise price of the option (as set
forth in the applicable option agreements), and as to the remaining 500,000
options exercised under the 1995 Stock Option Plan, the redemption price is $.01
per share. As a result of the Redemption Agreement, existing stockholders of the
Company will not be diluted by the exercise of stock options under the 1995
Stock Option Plan, and only the ownership percentages of Messrs. Armstrong and
Pakis are diluted by the stock options exercised under the 1995 Stock Option
Plan. During 1996, Messrs. Armstrong and Pakis sold 225,306 and 225,307 shares
of Common Stock to the Company for an aggregate of $874,096 and $874,097,
respectively, pursuant to the Redemption Agreement to cover exercises of
options.
Effective January 1, 1996, the Company entered into a lease with
Pakis-Armstrong Venture, an Arizona General Partnership, the general partners of
which are Messrs. Armstrong and Pakis, for approximately 5,400 square feet of
office space in Scottsdale, Arizona, at a base rent of $67,500 per year. The
Company is also required to pay all real property taxes, insurance and ordinary
maintenance on the premises and to name Pakis-Armstrong Venture as an additional
insured on an insurance policy for general liability. The term of the lease
commences on January 1, 1996, and terminates on December 31, 1997, unless
otherwise extended by the parties. The Company intends to use this facility
primarily for training purposes. The Company understands that all amounts to be
paid by the Company to Pakis-Armstrong Venture for the lease described in this
paragraph will be evenly distributed to Messrs. Armstrong and Pakis. The Company
believes that the terms of the lease agreement with Pakis-Armstrong Venture are
at least as favorable as those that would have been obtained for a similar lease
of a comparable property from unaffiliated third parties.
On April 26, 1996, the Company entered into its standard form Software
License Agreement with West Marine for the license of the Company's WinDSS
product. Crawford Cole, the President of West Marine is a director of the
Company. The Software License Agreement provides for a license fee of
approximately $400,000 be paid to the Company over time. The Company also
provides consulting services to West Marine at its standard billing rates.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission
8
<PAGE> 12
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms filed by such persons.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and more than 10% stockholders were complied with, except a single
report with respect to a single purchase by Mr. Cole in connection with the
Company's initial public offering, which was filed late.
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the Nasdaq Computer and Data Processing Index, and the Nasdaq
Stock Market-U.S. Index for the period commencing on March 15, 1996 (1) and
ending on December 31, 1996 (2).
COMPARISON OF CUMULATIVE TOTAL RETURN FROM MARCH 15, 1996 THROUGH
DECEMBER 31, 1996 (3)
JDA SOFTWARE GROUP, INC., NASDAQ COMPUTER AND DATA PROCESSING STOCKS INDEX
AND THE NASDAQ STOCK MARKET-U.S. INDEX
[GRAPH PLOTTING THE FOLLOWING REFERENCE POINTS]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) JDA NASDAQ CDPS
<S> <C> <C> <C>
3/15/96 100.00 100.00 100.00
3/29/96 94.06 100.24 99.54
4/30/96 162.38 108.56 111.16
5/31/96 187.13 113.54 114.84
6/28/96 163.37 108.42 110.64
7/31/96 144.55 98.77 99.08
8/30/96 160.40 104.30 101.73
9/30/96 217.82 112.28 112.84
10/31/96 272.28 111.04 110.85
11/29/96 211.88 117.92 118.84
12/31/96 225.74 117.80 117.37
</TABLE>
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(1) The Company's initial public offering commenced on March 15, 1996. For
purposes of this presentation, the Company has assumed the closing sales
price on March 15, 1996, the day trading commenced, would have been the
closing sales price on the day prior to the commencement of trading.
(2) December 31 was the last day of trading in the Company's year ended December
31, 1996.
(3) Assumes that $100.00 was invested on March 15, 1996 in the Company's Common
Stock at $12.63, the closing price of the Company's common Stock on the date
of its initial public offering, and at the closing sales price for each
index on that date and that all dividends were reinvested. No dividends have
been declared on the Company's Common Stock. Stockholder returns over the
indicated period should not be considered indicative of future stockholder
returns.
9
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee was formed in January 1996 in preparation for
the Company's initial public offering in March, 1996. The Compensation Committee
is composed of Mr. Cole and Mr. Jaggers, the Company's two non-employee
directors. The Compensation Committee's primary function is to review and
recommend salary levels of, to approve bonus plans for, and to approve stock
option grants to executive officers, and to set the compensation of the Chief
Executive Officer and the President.
COMPENSATION PHILOSOPHY
The Compensation Committee strives to align executive compensation with the
value achieved by the executive team for the Company's stockholders. Toward that
goal, the Company's compensation program emphasizes both short- and long-term
incentives designed to attract, motivate, and retain highly qualified executives
who will effectively manage the Company and maximize stockholder value. The
Company uses salary, executive officer bonuses and stock options to motivate
executive officers to achieve the Company's business objectives and to align the
incentives of officers with the long-term interests of stockholders. The
Compensation Committee reviews and evaluates each executive officer's base and
variable compensation annually relative to corporate performance and comparative
market information.
In setting total compensation, the Compensation Committee considers
individual and Company performance, as well as market information in the form of
published survey data provided to the Compensation Committee by the Company's
human resources staff. The market data consists primarily of base salary and
total cash compensation rates, as well as incentive bonus and stock programs, of
companies considered by the Compensation Committee to be comparable technology
companies. The Compensation Committee's policy is to generally target levels of
cash and equity compensation paid to its executive officers to be competitive
with such compensation paid by such comparable companies.
In preparing the performance graph for this Proxy Statement, the Company
has selected the Nasdaq Computer and Data Processing Index, and the Nasdaq Stock
Market-U.S. Index as its peer groups. The companies that the Company included in
its stratified salary surveys are not necessarily those included in the indices,
as such companies may not be competitive with the Company for executive talent.
The Compensation Committee has considered the potential impact of Section
162(m) of the Internal Revenue Code ("Section 162(m)") adopted under the Federal
Revenue Reconciliation Act of 1993. Section 162(m) disallows a tax deduction to
any publicly-held corporation for individual compensation exceeding $1 million
in any taxable year paid to the Chief Executive Officer or any of the four other
most highly compensated executive officers, unless compensation is
performance-based. Since the targeted cash compensation of each of the named
executive officers is well below the $1 million threshold and the Company
believes that any options granted under the Option Plan currently meet the
requirement of being performance-based in accordance with the regulations under
Section 162(m), the Compensation Committee believes that Section 162(m) will not
reduce the tax deduction available to the Company. The Company's policy is to
qualify to the extent reasonable its executive officers' compensation for
deductibility under applicable tax laws.
FORMS OF COMPENSATION
Salary. The Company strives to offer executive officers salaries that are
competitive with comparable companies in the technology sector generally and in
the vertical market enterprise software and general software industries. During
1996, James D. Armstrong, Chief Executive Officer of the Company, and Frederick
M. Pakis, President of the Company, approved executive salaries at the beginning
of the year or at the time executives joined the Company.
Salaries for 1996 were established prior to the Company's initial public
offering and were approved by the full Board of Directors. In November 1996 the
Committee reviewed compensation data from 16 publicly traded enterprise system
software companies and, based upon such review and a comparison with the
Company's 1996 salary structure for executives, the Committee determined to make
no change to the existing
10
<PAGE> 14
arrangements for 1996. The Committee expects that annual salary adjustments will
take into account achievements of individual executive officers during the prior
year towards key Company-wide objectives set annually by the Committee, as well
as the executive officers' performance of their individual responsibilities.
Incentive Compensation. Cash incentive compensation is provided through
participation in the Company's executive bonus plan. For 1996 the Board
established distributions to executive officers under the executive bonus plan
following completion of the Company's fiscal year, based generally on the
Company's profitability targets. During 1996 the Company exceeded its
profitability targets, including an increase of over 50% in earnings per share
in 1996 compared to 1995. Accordingly, bonuses for 1996 to executive officers
were 100% of individual bonus targets.
Stock Options. The Compensation Committee believes that equity ownership
provides significant additional motivation to executive officers to maximize
value for the Company's stockholders, and therefore grants stock options under
the Company's 1996 Stock Option Plan at the commencement of an executive
officer's employment and, depending on that officer's performance and the
propriety, in the Committee's judgment, of additional awards to retain key
employees, periodically thereafter. Stock options are granted at the prevailing
market price, generally vest over a period of four years and will only have
value if the Company's stock price increases over the exercise price. Therefore,
the Compensation Committee believes that stock options serve to align the
interests of executive officers closely with other stockholders because of the
direct benefit executive officers receive through improved stock price
performance.
Other Compensation Plans. The Company has adopted certain broad-based
employee benefit plans in which executive officers have been permitted to
participate. The incremental cost to the Company of benefits provided to
executive officers under these life and health insurance plans and retirement
plans is less than 10% of the base salaries for executive officers for 1996.
Benefits under the broad-based plans are not directly or indirectly tied to
Company performance.
The Company has also adopted its 1996 Employee Stock Purchase Plan, which
allows all eligible Company employees (including executive officers, but
excluding those who beneficially own more than 5% of the outstanding Common
Stock) to purchase shares of the Company's Common Stock through payroll
deductions at a purchase price of the lower of 85% of the fair market value of
the share on the first day or the last day of the applicable offering period of
the Plan. The Committee believes the 1996 Stock Purchase Plan encourages
broad-based equity ownership throughout the Company's employee base, and thereby
encourages alignment of employee incentive with stockholder interests.
CHIEF EXECUTIVE OFFICER AND PRESIDENT COMPENSATION
The compensation of the Chief Executive Officer and the President is based
generally upon the same criteria outlined above for the other executive officers
of the Company. While the Chief Executive Officer and the President make
recommendations about the compensation levels, goals and performance of the
other executive officers, neither participates in discussions regarding his own
compensation or performance. The Committee reviewed the compensation
arrangements applicable to Mr. Pakis and Mr. Armstrong for fiscal 1996 and did
not believe modification of such arrangements was appropriate.
1996 COMPENSATION COMMITTEE
Crawford L. Cole
Kurt R. Jaggers
11
<PAGE> 15
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of one Class I
Director, (Crawford L. Cole), one Class II Director (Kurt R. Jaggers), and two
Class III Directors (James D. Armstrong and Frederick M. Pakis), who will serve
until the annual meetings of stockholders to be held in 1997, 1998 and 1999,
respectively, and until their respective successors are duly elected and
qualified. See "General Information -- Board of Directors". At each annual
meeting of stockholders, Directors are elected for a term of three years to
succeed those Directors whose terms expire on the annual meeting dates.
The term of the Class I Director will expire on the date of the upcoming
annual meeting. One person is to be elected to serve as Class I Director of the
Board of Directors at that meeting. Management's nominee for election by the
stockholders to the position is Crawford L. Cole. If elected, the nominee will
serve as Director until the Company's annual meeting of stockholders in 2000,
and until his successor is elected and qualified. If the nominee declines to
serve or if a vacancy occurs before the election (although management knows of
no reason to anticipate that this will occur), the proxies may be voted for
substitute nominee by the Board of Directors.
If a quorum is present and voting, the nominee for Class I Director
receiving the highest number of votes will be elected. Abstentions will have no
effect on the vote.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche LLP as
independent public accountants to audit the financial statements of the Company
for the year ending December 31, 1997. A representative of Deloitte & Touche LLP
is expected to be present at the annual meeting with the opportunity to make a
statement if the representative desires to do so, and is expected to be
available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast at the annual meeting
of stockholders at which a quorum representing a majority the Common Stock of
the Company issued and outstanding and entitled to vote thereat present in
person or represented by proxy, is required for approval of this proposal.
Abstentions and "broker non-votes" will each be counted as present for purposes
of determining the presence of a quorum, but will not be counted as having been
voted on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
YEAR ENDING DECEMBER 31, 1997.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next annual
meeting of the stockholders of the Company must be received by the Company at
its offices at 11811 North Tatum Boulevard, Suite 2000, Phoenix, Arizona 85028,
no later than December 23, 1997, and satisfy the conditions established by the
Securities and Exchange Commission for stockholder proposals to be included in
the Company's proxy statement for that meeting.
12
<PAGE> 16
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business that the Board of
Directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
By Order of the Board of Directors
/s/ Thomas M. Proud
Secretary
April 22, 1997
13
<PAGE> 17
PROXY
JDA SOFTWARE GROUP, INC.
Proxy for Annual Meeting of Stockholders
Solicited by the Board of Directors
The undersigned hereby appoints James D. Armstrong and Frederick M. Pakis, and
each of them, with full power of substitution to represent the undersigned and
to vote all of the shares of stock in JDA Software Group, Inc. (the "Company")
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Company to be held at the Scottsdale Plaza Resort, Scottsdale, Arizona
on Friday, May 23, 1997 at 10:00 a.m., and at any adjournment thereof (1) as
hereinafter specified upon the proposals listed on the reverse side and as more
particularly described in the Company's Proxy Statement, receipt of which is
hereby acknowledged, and (2) in their discretion upon such other matters as may
properly come before the meeting.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C>
Please mark
votes as in /X/
this sample.
A vote FOR the following proposals is recommended
by the Board of Directors:
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTOR 2. To approve the selection of
Nominee: Crawford L. Cole / / / / Deloitte & Touche LLP as the Company's / / / / / /
independent public accountants for the
year ending December 31, 1997.
MARK HERE FOR ADDRESSS CHANGE
AND NOTE BELOW. / /
Even if you are planning to attend the meeting in person,
you are urged to sign and mail the Proxy in the return
envelope so that your stock may be represented at the
meeting.
Sign exactly as your name(s) appears on your stock
certificate. If shares of stock stand on record in the names
of two or more persons or in the name of husband and wife,
whether as joint tenants or otherwise, both or all of such
persons should sign the above Proxy. If shares of stock are
held of record by a corporation, the Proxy should be
executed by the President or Vice President and the
Secretary or Assistant Secretary, and the corporate
seal should be affixed thereto. Executors or administrators
or other fiduciaries who execute the above Proxy for
a deceased stockholder should give their title.
Please date the Proxy.
Signature(s) Date
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- ----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
