<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
[AMENDMENT NO. ]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(C) or Section 240.14a-12
ELECTRONIC DATA SYSTEMS CORPORATION
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-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
[EDS LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1997
To the Stockholders of
Electronic Data Systems Corporation:
The Annual Meeting of Stockholders of Electronic Data Systems
Corporation will be held at The Plano Convention Centre, 2000 E. Spring Creek
Parkway, Plano, Texas 75074 on Thursday, June 5, 1997 at 1:00 p.m. local time,
for the following purposes:
1. To elect four directors for a three-year term as described in the
accompanying proxy materials;
2. To ratify the appointment of KPMG Peat Marwick LLP as auditors to
audit the accounts of EDS for 1997; and
3. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 8, 1997 are
entitled to vote at the meeting. A complete list of those stockholders will be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours at the principal executive offices of
EDS, 5400 Legacy Drive, Plano, Texas 75024, for a period of 10 days prior to
the meeting.
Your attention is directed to the accompanying Proxy Statement and
proxy.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR
MAILING IN THE UNITED STATES.
By order of the Board of Directors
/s/ D. GILBERT FRIEDLANDER
D. Gilbert Friedlander
Senior Vice President, Secretary
and General Counsel
April 18, 1997
================================================================================
ANY STOCKHOLDER HAVING A DISABILITY REQUIRING SPECIAL ASSISTANCE WHO WOULD
LIKE TO ATTEND THE ANNUAL MEETING SHOULD CALL EDS INVESTOR RELATIONS AT (972)
605-8933 AND REASONABLE EFFORTS WILL BE MADE TO ACCOMMODATE SUCH NEEDS.
================================================================================
<PAGE> 3
[EDS LOGO]
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 5, 1997
The enclosed proxy is solicited by the Board of Directors of
Electronic Data Systems Corporation ("EDS") to be voted at the annual meeting
of stockholders to be held on June 5, 1997, or any adjournments thereof (the
"Annual Meeting"). A stockholder returning a proxy may revoke it at any time
prior to the voting at the Annual Meeting. A proxy returned by a stockholder
which is not subsequently revoked will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated on a returned
and duly executed proxy, the shares represented by the proxy will be voted FOR
the election of the four nominees for director proposed by the Board of
Directors and set forth herein, FOR the ratification of the appointment of KPMG
Peat Marwick LLP as the independent public accountants of EDS for 1997, and in
accordance with the judgment of the persons named in the proxy as to such other
matters as may properly come before the Annual Meeting.
If you are a stockholder and also participate in the EDS Stock
Purchase Plan (the "SPP"), the EDS Common Stock fund under any EDS Deferred
Compensation Plan (collectively, the "Deferred Compensation Plan"), the EDS
1996 Incentive Plan (the "Incentive Plan"), or the EDS Dividend Reinvestment
Plan (the "DRP"), you will receive one proxy with respect to all shares
registered in the same name. Stockholders whose accounts are not registered in
the same name will receive a separate proxy with respect to their individual,
SPP, Deferred Compensation Plan, Incentive Plan or DRP shares. Shares in the
SPP, the Incentive Plan or the DRP cannot be voted unless the proxy card is
signed and returned. If voting instructions are not received for shares in any
Deferred Compensation Plan, such shares will not be voted unless otherwise
directed by the plan's trustee or the committee administering the plan, in
which event the shares will be voted in the discretion of the trustee.
Only stockholders of record at the close of business on April 8, 1997
are entitled to notice of and to vote at the Annual Meeting. As of April 8,
1997, there were 489,567,324 shares of EDS Common Stock ("Common Stock")
outstanding and entitled to vote at the Annual Meeting, each such share
entitled to cast one vote. The holders of a majority of the shares outstanding
and entitled to vote, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting.
With the exception of the election of directors which requires a plurality of
the votes cast, the affirmative vote of a majority of the votes cast at the
meeting is required for each item set forth in the Notice of Annual Meeting.
Abstentions and broker non-votes are counted for purposes of determining
whether a quorum is present at the meeting. For the purpose of determining
whether a proposal (except for the election of directors) has received a
majority vote, abstentions will be included in the vote totals with the result
that an abstention will have the same effect as a negative vote. In instances
where brokers are prohibited from exercising discretionary authority for
beneficial owners who have not returned a proxy (broker non-votes), those
shares will not be included in the vote totals and, therefore, will have no
effect on the vote.
The cost of soliciting proxies will be borne by EDS. In addition to
solicitation by mail, employees of EDS, without extra remuneration, may solicit
proxies in person or by telephone. D.F. King & Co., Inc. has been retained by
EDS to assist in the solicitation of proxies for a fee of $12,500 plus
reimbursement of expenses. EDS may also reimburse brokerage firms, nominees,
custodians and fiduciaries for their out-of-pocket expenses for forwarding
proxy materials to beneficial owners and seeking instruction with respect
thereto.
This Proxy Statement and the enclosed form of proxy are being mailed
on or about April 18, 1997 to stockholders entitled to notice of, and to vote
at, the Annual Meeting. The mailing address of EDS' principal executive
offices is 5400 Legacy Drive, Plano, Texas 75024-3199.
<PAGE> 4
ELECTION OF DIRECTORS
EDS' Certificate of Incorporation provides for three classes of
directors to be as nearly equal in number as possible, with each class serving
a three year term and with one class being elected each year. Currently, the
Board of Directors is comprised of 11 members. The four Class I directors
whose terms expire at the 1997 Annual Meeting are William H. Gray, III, Ray J.
Groves, Jeffrey M. Heller and Ray L. Hunt. The Board of Directors has
nominated Messrs. Gray, Groves, Heller and Hunt for re-election as Class I
directors. The terms of these directors, if elected, will expire at the Annual
Meeting of Stockholders in 2000, or at such times as their successors are
elected and qualified. Other directors will continue in office until the
expiration of the terms of their classes at the 1998 or 1999 Annual Meeting of
Stockholders, as the case may be.
In the event that any of the nominees for director should become
unavailable for nomination or election, the persons designated as proxies will
have full discretion to cast votes for another person designated by the Board
of Directors, unless the Board of Directors reduces the number of directors.
If properly executed and timely returned, the accompanying proxy will be voted
FOR the election of the four nominees set forth below.
Certain information as of April 7, 1997 with respect to the nominees
for directors and as to each current director in the classes continuing in
office is shown below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR.
NOMINEES FOR DIRECTORS FOR THREE-YEAR TERM EXPIRING IN 2000
WILLIAM H. GRAY, III, 55
President and Chief Executive Officer of The
College Fund/UNCF since September 1991. Mr.
Gray has also served as the Senior Minister of
the Bright Hope Baptist Church in Philadelphia
since 1972. From 1968 through 1972, Mr. Gray was
a lecturer at Jersey City State College, Rutgers
University and Montclair State College. He was
an Assistant Professor and a director of St.
Peter's College from 1970 to 1974. Mr. Gray
served as a Congressman from the Second District
of Pennsylvania from 1979 to 1991. During his
tenure, he was Chairman of the House Budget
Committee, a member of the Appropriations
Committee, Chairman of the House Democratic
Caucus and Majority Whip. Mr. Gray is a director
of The Chase Manhattan Corporation, The
Prudential Insurance Company of America,
Municipal Bond Investors Assurance Corporation,
Rockwell International Corporation, Union Pacific
Corporation, Westinghouse Electric Corporation
and Warner-Lambert Company. Mr. Gray has served
as a director of EDS since February 1997.
RAY J. GROVES, 61
Chairman of Legg Mason Merchant Banking, Inc.
since March 1995. Mr. Groves retired as Chairman
and Chief Executive Officer of Ernst & Young LLP
in September 1994, which position he had held
since October 1977. He is a director of
Consolidated Natural Gas Company, Marsh &
McLennan Companies, Inc., RJR Nabisco Holdings
Corp. and RJR Nabisco, Inc. Mr. Groves has
served as a director of EDS since the
consummation of the split-off (the "Split-Off")
of EDS from General Motors Corporation ("GM") on
June 7, 1996.
2
<PAGE> 5
JEFFREY M. HELLER, 57
President and Chief Operating Officer of EDS
since the consummation of the Split-Off and a
director of EDS since 1983. Mr. Heller was a
Senior Vice President of EDS from 1984 until the
consummation of the Split-Off. He is chair of
EDS' Global Operations Council, which is
responsible for EDS' operating strategies and
other business issues. Mr. Heller joined EDS in
1968 and has served in numerous technical
management positions.
RAY L. HUNT, 54
Chairman of the Board, President and Chief
Executive Officer of Hunt Consolidated Inc. and
the Chairman of the Board and Chief Executive
Officer of Hunt Oil Company for more than five
years. Mr. Hunt is a director of Dresser
Industries, Inc., Pepsico, Inc. and Ergo Science
Corporation. He has served as a director of EDS
since the consummation of the Split-Off.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1998
RICHARD B. CHENEY, 56
President and Chief Executive Officer of
Halliburton Company since October 1995 and its
Chairman of the Board since January 1996. Mr.
Cheney was a Senior Fellow at the American
Enterprise Institute, a policy think tank, from
January 1993 to October 1995. He served as
United States Secretary of Defense from January
1989 to January 1993. Mr. Cheney is a director
of Halliburton Company, Union Pacific Corporation
and The Procter & Gamble Company. He has served
as a director of EDS since the consummation of
the Split-Off.
GARY J. FERNANDES, 53
Vice Chairman of EDS since the consummation of
the Split-Off and a director of EDS since 1981.
Mr. Fernandes had been a Senior Vice President of
EDS from October 1984 until the consummation of
the Split-Off. He has oversight responsibility
for EDS' worldwide business development and
corporate development (including marketing and
strategic planning) and is Chairman of its A.T.
Kearney management consulting services
subsidiary. Mr. Fernandes joined EDS in 1969 and
has served in numerous management capacities in
the United States, Europe and Japan. He is a
director of The Southland Corporation, Amtech
Corporation and John Wiley & Sons, Inc.
C. ROBERT KIDDER, 52
Chairman and Chief Executive Officer of Borden,
Inc. since January 1995. Mr. Kidder was Chairman
and Chief Executive Officer of Duracell
International, Inc. from August 1991 through
October 1994 and its President and Chief
Executive Officer from June 1988 to August 1991.
He is a director of Borden, Inc., Dean Witter,
Discover & Co. and AEP Industries Inc. Mr.
Kidder has served as a director of EDS since the
consummation of the Split-Off.
3
<PAGE> 6
ENRIQUE J. SOSA, 57
Executive Vice President of Amoco Corporation,
heading its chemicals sector, since October 1995.
For greater than five years prior to that time,
Mr. Sosa was with The Dow Chemical Company, most
recently serving as a Senior Vice President and a
director, as well as President of Dow North
America. He has served as a director of EDS
since the consummation of the Split-Off.
TERM EXPIRING IN 1999
LESTER M. ALBERTHAL, JR., 53
Chief Executive Officer of EDS since December
1986 and Chairman of the Board of EDS since June
1989. Mr. Alberthal has been a director of EDS
since 1981. He is chair of EDS' Executive
Council, the company's chief policy making and
strategy group. Mr. Alberthal joined EDS in
1968. He became responsible for EDS' health care
division in 1974 and was named Senior Vice
President with responsibility for EDS' insurance
group in 1979. Following the acquisition of EDS
by GM in 1984, Mr. Alberthal led all non-GM North
American operating groups. He served as
President of EDS from April 1986 until the
consummation of the Split-Off. Mr. Alberthal is
a director of Baker Hughes Incorporated.
JAMES A. BAKER, III, 66
Senior Partner of Baker & Botts, L.L.P. since
March 1993 and a Senior Counselor of The Carlyle
Group, a merchant banking firm, since 1993. Mr.
Baker served as Senior Counselor to the President
of the United States and White House Chief of
Staff from August 1992 to January 1993, as United
States Secretary of State from January 1989 to
August 1992, as United States Secretary of the
Treasury from 1985 to 1988, and as White House
Chief of Staff from 1981 to 1985. He is a
director of Houston Industries Incorporated as
well as Princeton University, Rice University,
Howard Hughes Medical Institute and The Woodrow
Wilson International Center for Scholars. Mr.
Baker has served as a director of EDS since the
consummation of the Split-Off.
JUDITH RODIN, 52
President of the University of Pennsylvania, as
well as a professor of psychology and of medicine
and psychiatry at the university, since 1994.
Dr. Rodin was Provost of Yale University from
1992 to 1994 and held various professorial and
other positions at Yale from 1972 to 1994,
including Dean of the Graduate School of Arts and
Sciences and Chair of the Department of
Psychology. She is a director of AETNA Life and
Casualty Company. Dr. Rodin has served as a
director of EDS since the consummation of the
Split-Off.
4
<PAGE> 7
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the
beneficial ownership of Common Stock and Common Stock equivalents as of March
17, 1997 by each director and nominee for director, the executive officers
named in the Summary Compensation table below, and by all directors and
executive officers as a group. Each of the individuals/groups listed below is
the owner of less than one percent of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Shares
Beneficially Share
Name Owned(a) Equivalents(b)
- ---- -------- --------------
<S> <C> <C>
Lester M. Alberthal, Jr. . . . . . . . . . . . . . . . . . . . . . . . 113,492 --
Gary J. Fernandes . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000 --
Jeffrey M. Heller . . . . . . . . . . . . . . . . . . . . . . . . . . . 269,623 --
Joseph M. Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,500 --
Paul J. Chiapparone . . . . . . . . . . . . . . . . . . . . . . . . . . 109,147 --
James A. Baker, III . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,125
Richard B. Cheney . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 1,031
William H. Gray, III . . . . . . . . . . . . . . . . . . . . . . . . . 200 --
Ray J. Groves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,499
Ray L. Hunt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,600 1,125
C. Robert Kidder . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800 1,312
Judith Rodin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 --
Enrique J. Sosa . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 1,125
Directors and executive officers of EDS as a group (17 persons) . . . . 833,465 7,217
</TABLE>
- -------------------
(a) Excludes units granted under the Incentive Plan (including its predecessor
plan) to Messrs. Alberthal, Fernandes, Heller, Grant and Chiapparone and
all directors and executive officers as a group representing 799,000,
446,000, 506,000, 162,000, 231,000 and 3,182,000 shares of unvested
restricted Common Stock, respectively. All such units are scheduled to
vest (subject to earlier vesting based on the achievement of performance
goals by EDS) during the period from 1998 through the earlier of normal
retirement age or 2009.
(b) Represents director fee deferrals treated as invested in Common Stock
pursuant to the Non-Employee Director Deferred Compensation Plan. See
"Director Compensation."
As of March 17, 1997, the General Motors Special Hourly Employees
Pension Trust under the General Motors Hourly Rate Employees Pension Plan, c/o
United States Trust Company of New York, 114 West 47th Street, New York, NY
10036, owned 126,537,219 shares of Common Stock, or approximately 25.9% of the
outstanding Common Stock.
MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held four meetings in 1996 following the
consummation of the Split-Off. Attendance at such meetings averaged
approximately 98%. All directors attended at least 75% of the meetings of the
Board of Directors and Board committees of which they are members. The
following committees of the Board of Directors were formed effective as of the
consummation of the Split-Off.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of
Directors on an annual basis the appointment of EDS' independent auditors and
reviews with them the scope and cost of proposed audit and non-audit services
as well as the qualifications and independence of the independent auditors.
The Committee reviews with the independent auditors and EDS' internal audit
staff the results of audits, any recommendations therefrom and the status of
management's actions for implementing such recommendations, as well as the
quality and adequacy of EDS' internal financial controls and internal audit
staff. The Committee also reviews EDS' Form 10-K filed with the Securities and
Exchange Commission (the "SEC"), EDS' programs established to monitor
compliance with its Code of Conduct, and the status of material pending
litigation or regulatory proceedings.
5
<PAGE> 8
During 1996, the Audit Committee met four times. Its members are Ray
J. Groves, Ray L. Hunt and Enrique J. Sosa.
COMPENSATION AND BENEFITS COMMITTEE. The Compensation and Benefits
Committee establishes the compensation of EDS' executive officers and reviews
recommendations made by the Chief Executive Officer with respect to the equity
based compensation of certain other corporate officers. The Committee also
reviews and makes recommendations to the Board of Directors with respect to all
new employee benefit plans or significant amendments to existing plans,
provides oversight with respect to all matters relating to EDS' employee
benefit plans and takes necessary actions to administer and carry out the
provisions of all EDS stock based plans.
During 1996, the Compensation and Benefits Committee met four times.
Its members are William H. Gray, III, Ray J. Groves and C. Robert Kidder. Mr.
Gray joined the Compensation and Benefits Committee effective as of February 4,
1997. Ray L. Hunt resigned as a member of the Compensation and Benefits
Committee effective October 21, 1996.
GOVERNANCE COMMITTEE. The Governance Committee's responsibilities
include determining the criteria for qualification and selection of directors,
recommending to the Board of Directors candidates for director and for
membership on committees of the Board of Directors, reviewing management
succession and development plans, recommending to the Board of Directors the
election of the Chairman of the Board and the Chief Executive Officer and
reviewing the Chief Executive Officer's recommendations regarding the election
of other principal officers, reviewing Board processes and policies and making
recommendations regarding stockholder proposals. The Governance Committee will
consider nominees for the Board of Directors recommended by stockholders. Any
such recommendation must be made in accordance with the procedures set forth in
EDS' By-laws as described below under "Stockholder Proposals for 1998 Annual
Meeting."
During 1996, the Governance Committee met three times. Its members
are James A. Baker, III, Richard B. Cheney and Judith Rodin.
DIRECTOR COMPENSATION
Any director who is an employee of EDS or its affiliates is not
entitled to any additional compensation for serving as a director. Each
non-employee director of EDS receives annual cash compensation in the amount of
$35,000, as well as annual cash compensation in the amount of $5,000 for
serving as a committee chairman and $2,500 for attendance at each meeting of
the Board of Directors and each committee thereof. In addition, each
non-employee director receives, on an annual basis pursuant to the Incentive
Plan, (i) options to purchase 1,500 shares of Common Stock at an exercise price
equal to the fair market value of such shares at the date of grant and (ii) 500
restricted shares of Common Stock, which options and restricted stock vest
ratably over a three-year period. A non-employee director may make an annual
election to receive, in lieu of all or any portion of the fees he or she would
otherwise receive in the next year, (i) non-qualified options to purchase
Common Stock and/or (ii) a restricted stock award covering shares of Common
Stock, in each case in accordance with the terms of the Incentive Plan.
The EDS Deferred Compensation Plan for Non-employee Directors permits
each non-employee director to elect annually to defer all or a portion of his
or her director's fees and to have such deferred fees treated as if they had
been, at the election of the director, invested either in an interest bearing
account or in units denominated in Common Stock. Fees deferred and treated as
invested in an interest bearing account earn interest from the effective date
of the deferral until paid at a rate, adjusted as of January 1 of each year,
equal to 120% of the applicable federal long-term rate published by the
Internal Revenue Service pursuant to Section 1274(d) of the Internal Revenue
Code of 1986, as amended (the "Code"), compounded monthly. Fees deferred and
treated as invested in Common Stock are deemed to have purchased shares of such
stock on the effective date of the deferral at the then fair market value of
Common Stock. All amounts accumulated in the account, including any interest
or deemed dividends, are paid to the director in either a lump sum or in annual
installments commencing upon (i) the date of termination of his or her status
as a director or (ii) the expiration of five years after such date. All
non-employee directors (other than Mr. Gray, who will not be eligible to
participate until June 1997) currently participate in this plan.
6
<PAGE> 9
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION AND BENEFITS COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors (the
"Committee"), which is comprised entirely of non-employee directors, is
responsible for the establishment and administration of the compensation
programs for EDS' executive officers, including the Chief Executive Officer.
The Committee was formed effective as of the Split-Off of EDS from GM on June
7, 1996. Prior to that time, the compensation of the Chief Executive Officer
and all other executive officers of EDS had been established subject to the
review and approval of GM and its Incentive and Compensation Committee.
Following the Split-Off, the Committee met four times in 1996 to address items
related to the compensation and benefits of EDS' executive officers.
Accordingly, the base salary for executive officers for the period of 1996
prior to the Split-Off was not established by the Committee, but compensation
for the post Split-Off period, including base salary and annual and long-term
incentive compensation awards, was established by the Committee, taking into
consideration financial targets established prior to the Split-Off with the
approval of GM.
Compensation Philosophy. In 1996, the Committee adopted a
compensation philosophy based on the premise that executives should receive
competitive compensation determined by reference to both EDS' performance and
the individual's contribution to that performance. Compensation plans and
programs are intended by the Committee to motivate and reward executives for
long-term strategic management and the enhancement of stockholder value,
support a performance-oriented environment that rewards achievement of internal
business goals, and attract and retain executives whose abilities are critical
to the long-term success and competitiveness of EDS.
The Committee resolved that in determining compensation levels, it
should first evaluate executive compensation against independent survey data of
comparator companies, with a key determinant being the comparative compensation
levels and pay practices in the technology industry. Because the Committee
believes the market for EDS' executive talent is broader than the information
technology services industry, the group of comparator companies, which consists
generally of approximately 25 large global corporations, includes a significant
number of companies outside of EDS' industry. The Committee's policy is to
compensate executives above the 50th percentile of the comparator group when
EDS achieves its business goals. EDS employs the services of an independent
third party consultant to provide comparator group data.
In addition to participation in employee benefit plans, programs and
practices that are generally available to all EDS employees, the Committee has
established three principal components of EDS' executive compensation
structure: base salary, annual incentive compensation and long-term incentive
compensation. The Committee has determined that compensation emphasis should
primarily be on these three elements, thus subjecting executive compensation to
substantial risk based on achievement-oriented incentives. In order to achieve
the goal of compensating executives above the 50th percentile of the comparator
group when EDS achieves its goals, the Committee has adopted the following
approach to base salary, annual incentive compensation and long-term incentive
compensation.
Base Salary. Consistent with the compensation philosophy described
above, the Committee targets executives' base salaries at average rates paid by
the comparator group. While salary levels for executive officers will be
reviewed by the Committee on an annual basis, they will not ordinarily be
adjusted each year. In 1996, based on a review of the comparator group, the
Committee determined to increase salaries for the majority of EDS' executive
officers, including the Chief Executive Officer, with such increased salaries
remaining significantly below the competitive level of the comparator group.
The Committee believed that further increases were warranted but determined to
transition to higher salary levels over more than one year.
Annual Incentive Compensation. The Committee believes that annual
incentive bonuses should reflect the Committee's policy that a significant
portion of each executive officer's annual compensation be contingent upon the
current performance of EDS, as well as the individual contribution of the
executive to that performance. The Committee has approved an Executive Bonus
Plan under the Incentive Plan pursuant to which financial targets will be
established by the Committee at the beginning of each fiscal year commencing in
1997 and only if such targets are met will cash bonuses be made to individuals
in respect of a performance year. In establishing the amount of the
7
<PAGE> 10
cash bonuses to be paid to executive officers, the Committee will consider not
only the achievement of EDS' business goals, but also the individual's
performance for that year. Bonus amounts will be established consistent with
the Committee's policy of compensating executive officers above average levels
of the comparator group when EDS achieves its business goals. Cash bonuses in
respect of 1996 were established by the Committee based on the financial
targets for 1996 approved by GM prior to the Split-Off, which targets were met,
as well as the individual executive's performance during 1996, with additional
consideration being given to the contribution of certain executive officers to
the consummation of the Split-Off.
Long-Term Incentive Compensation. The Committee has determined to
utilize both stock options and restricted stock as long-term incentive
compensation because such awards link management and stockholder interests and
motivate executives to make long-term decisions that are in the best interest
of EDS and its stockholders. Consistent with this policy, in December 1996 the
Committee approved a special grant of nonqualified stock options to executive
officers, including the Chief Executive Officer, with an exercise price equal
to the fair market value of the Common Stock on the date of grant. Such
options are not exercisable until the five-year period commencing on the
earlier of (i) the date the closing price of the Common Stock shall equal or
exceed 200% of the value on the date of grant or (ii) 10 years from date of
grant. Exercisability is further subject to the continued employment of the
executive, other than termination of employment as a result of death,
disability or normal retirement. In awarding such stock options, the Committee
considered the long-term incentive compensation paid by the comparator group,
EDS' 1996 performance relative to the financial targets established prior to
the Split-Off and each executive officer's contribution to that performance,
the number of shares of unvested Common Stock subject to previously granted
restricted stock awards, and the Committee's goal of linking the compensation
of EDS' executive officers to the future performance of the Common Stock.
Historically, EDS has used restricted stock grants as part of its
long-term incentive program, with such grants made from time to time at two or
three year intervals. There were no grants of restricted stock to executive
officers in 1996 (other than a grant of restricted stock to the Chief Executive
Officer in December 1996 described under the Summary Compensation table below),
the most recent broad grant prior to 1996 having occurred in 1994.
Historically, restricted stock grants provided for vesting ratably over 10
years based on achievement of performance goals established prior to the year
of vesting, subject to the continued employment of the executive officer. The
Committee will continue this practice and utilize restricted stock awards to
attract new key executives, to recognize and reward current executives and key
employees and to retain high performing executives and key employees by
financially linking them to future employment by EDS.
Chief Executive Officer Compensation. In September 1996, the
Committee determined to increase the Chief Executive Officer's salary based
primarily on the Committee's analysis of the comparator group and noting that
the increased salary remains below the average for chief executive officers of
the comparator group. The increase in the Chief Executive Officer's salary was
consistent with the salary increase for other executive officers. In December
1996, the Committee set the annual bonus for the Chief Executive Officer at a
level equal to that received for the prior year and awarded the Chief Executive
Officer non-qualified stock options and shares of restricted stock as described
in the tables below. The option and restricted stock awards will vest and
become exercisable or earned only in accordance with the general practices
concerning stock options or restricted stock with respect to all executive
officers as described above. In determining the amount of the Chief Executive
Officer's annual bonus and his long-term incentive compensation awards, the
Committee considered his substantial contribution to the achievement of EDS'
financial targets established prior to the Split-Off and his strong leadership
role in the Split-Off, as well as the Committee's goal of linking the Chief
Executive Officer's compensation to the future performance of the Common Stock
and the number of shares subject to unvested long-term incentive awards already
held by the Chief Executive Officer. The Committee's determination, however,
was ultimately based upon the performance of the Chief Executive Officer and
the Committee's judgment of the value of that performance.
Section 162(m). Section 162(m) of the Internal Revenue Code generally
limits the deductibility of compensation to the Chief Executive Officer and the
four other most highly compensated officers in excess of $1 million per year,
provided, however, that certain "performance-based" compensation may be
excluded from such $1 million limitation. Due to the timing of the Split-Off,
it was not practicable to structure any executive officer compensation in 1996
in a manner which would qualify for such "performance-based" exception.
However, the Committee intends to structure future annual cash bonus awards and
stock option grants under the Incentive Plan in
8
<PAGE> 11
a manner designed to make such awards "performance-based" compensation to the
extent practicable, although restricted stock awards under the Incentive Plan
will not qualify as "performance-based compensation" and will therefore be
subject to the $1 million limitation. The Committee anticipates that the $1
million level will be exceeded in every year with respect to the Chief
Executive Officer and other executive officers.
COMPENSATION AND BENEFITS COMMITTEE
C. Robert Kidder, Chairman
William H. Gray, III
Ray J. Groves
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Benefits Committee is composed of C. Robert
Kidder, William H. Gray, III, and Ray J. Groves, none of whom are employees or
current or former officers of EDS. Ray L. Hunt resigned as a member of the
Compensation and Benefits Committee effective as of October 21, 1996. Mr. Hunt
indirectly owns a 50% economic interest in Woodbine Development I, Ltd.
("Woodbine"). EDS has entered into an agreement with Woodbine under which EDS
has retained Woodbine to market and develop certain land owned by EDS
surrounding its Plano, Texas headquarters. During 1996, EDS paid Woodbine an
aggregate of $938,167 (excluding reimbursement for out-of-pocket expenses) for
real estate development and brokerage services provided under this agreement.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return
on Common Stock, including reinvestment of dividends, for the last five fiscal
years with the cumulative total return of the Standard & Poor's 500 Stock Index
and the Goldman Sachs Technology Services Index assuming an investment of $100
on January 1, 1992. As a result of the Split-off on June 7, 1996, each share
of GM Class E Common Stock was converted into one share of EDS Common Stock.
Accordingly, the return on Common Stock in the following graph assumes an
investment of $100 in the GM Class E Common Stock on January 1, 1992.
THE FOLLOWING GRAPH IS PRESENTED IN ACCORDANCE WITH SEC REQUIREMENTS.
STOCKHOLDERS ARE CAUTIONED AGAINST DRAWING ANY CONCLUSIONS FROM THE DATA
CONTAINED THEREIN, AS PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE
PERFORMANCE. THIS GRAPH IN NO WAY REFLECTS EDS' FORECAST OF FUTURE FINANCIAL
PERFORMANCE.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
1/1/92 1/1/93 1/1/94 1/1/95 1/1/96 6/7/96 12/31/96
<S> <C> <C> <C> <C> <C> <C>
EDS Common Stock (GM Class E Common
Stock prior to Split-Off) 100 106 95 120 165 182 146
S & P 500 Index 100 108 118 127 174 191 203
Goldman Sachs Technology Services Index 100 121 134 163 231 275 263
</TABLE>
9
<PAGE> 12
Notwithstanding anything to the contrary set forth in any of EDS' filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), that might incorporate future filings by
reference, including this Proxy Statement, in whole or in part, the foregoing
Report of the Compensation and Benefits Committee on Executive Compensation and
Performance Graph shall not be incorporated by reference into any such filings.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information with
respect to the compensation of the Chief Executive Officer and each of the four
other most highly compensated executive officers of EDS for services rendered
during 1995 and 1996.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------- ------------------------
NAME AND RESTRICTED ALL
PRINCIPAL POSITION DURING OTHER ANNUAL STOCK OPTIONS/ OTHER
1996 YEAR SALARY BONUS(a) COMPENSATION AWARDS(c) SARS (#) COMPENSATION(d)
----------------------------- ---- --------- ---------- --------------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lester M. Alberthal, Jr.,...... 1996 $733,333 $1,000,000 $207,298(b) $6,750,000 950,000 $33,785
Chairman of the Board 1995 675,000 1,000,000 10,902 -- 0 33,126
and Chief Executive Officer
Gary J. Fernandes,............. 1996 386,667 575,000 67,064(b) -- 500,000 17,935
Vice Chairman 1995 330,000 575,000 2,113 -- 0 9,026
Jeffrey M. Heller,............. 1996 423,333 550,000 66,523(b) -- 500,000 39,282
President and Chief 1995 385,000 550,000 11,498 -- 0 48,588
Operating Officer
Joseph M. Grant,............... 1996 380,000 400,000 72,281(b) -- 250,000 17,779
Executive Vice President 1995 360,000 350,000 499 -- 0 7,488
and Chief Financial Officer
Paul J. Chiapparone,........... 1996 346,667 400,000 88,947(b) -- 200,000 34,655
Executive Vice President 1995 320,000 460,000 2,725 -- 0 21,231
</TABLE>
- ----------------------------------
(a) Represents bonuses earned by the named executives with respect to the year
indicated. Of the amount reported with respect to any year, 50% is paid
during the following year and 25% is paid during each of the next two
following years, subject to certain conditions regarding the continuation of
the named executive's employment. In establishing the amount of the 1996
bonus, the Compensation and Benefits Committee considered, among other
factors, the contribution of the named executive officers to the
consummation of the Split-Off. See "Report of Compensation and Benefits
Committee on Executive Compensation" above.
(b) Includes for Mr. Alberthal $53,096 for personal use of corporate aircraft
and $83,845 for security services and equipment provided at his residence;
for Mr. Chiapparone $23,566 for security services and equipment provided at
his residence; and for each of the named executive officers approximately
$42,000 in respect of one-time awards commemorating the occurrence of the
Split-Off.
(c) The amount set forth with respect to Mr. Alberthal represents an award of
150,000 shares of restricted stock on December 17, 1996. Such shares will
vest ratably over each of the following 10 years subject to the achievement
by EDS of performance goals. Shares which do not vest in any year due to
failure to achieve such goals will vest in 2006. As of December 31, 1996,
the number and fair market value of the aggregate units representing shares
of unvested restricted Common Stock held by the named executive officers
were: Mr. Alberthal, 572,000 shares, $24,739,000; Mr. Fernandes, 228,000
shares, $9,861,000; Mr. Heller, 298,000 shares, $12,888,500; Mr. Grant,
80,000 shares, $3,460,000; and Mr. Chiapparone, 173,000 shares, $7,482,250.
All such restricted stock units have been granted pursuant to the Incentive
Plan (or its predecessor plan) and are
10
<PAGE> 13
scheduled to vest (subject to earlier vesting based on the achievement of
performance goals by EDS) during the period from 1997 through the earlier
of normal retirement age or 2009. Dividend equivalents are paid to the
named executive officers with respect to such restricted stock units in the
amount and at the time of the payment of dividends on the Common Stock.
(d) Consists of (i) payments by EDS of premiums under certain life insurance
policies the proceeds of which may be applied toward the continuation of
salary payments for the benefit of the named executives' surviving spouse
and (ii) the imputed value of outstanding non-interest bearing loans to the
named executives during 1996 for the payment of withholding taxes required
as a result of the vesting of restricted stock units under the predecessor
to the Incentive Plan. See "Certain Transactions."
INCENTIVE PLAN - STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Incentive Plan to the Chief Executive Officer and each of the
four other most highly compensated executive officers of EDS during 1996. No
SARs were granted during 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
% OF TOTAL
NUMBER STOCK POTENTIAL REALIZABLE VALUE
OF OPTIONS EXERCISE AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED OR STOCK PRICE APPRECIATION FOR
UNDERLYING TO BASE PRICE STOCK OPTION TERM
OPTIONS EMPLOYEES PER EXPIRATION ---------------------------
NAME GRANTED(a) IN 1996 SHARE(b) DATE 5%(c) 10%(c)
- ---- ------------ ---------- ----------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Lester M. Alberthal, Jr. . . 950,000 15.9 $45.06 (a) $ 46,189,000 $ 91,542,000
Gary J. Fernandes . . . . . 500,000 8.4 45.06 (a) 24,310,000 48,180,000
Jeffrey M. Heller . . . . . 500,000 8.4 45.06 (a) 24,310,000 48,180,000
Joseph M. Grant . . . . . . 250,000 4.2 45.06 (a) 12,155,000 24,090,000
Paul J. Chiapparone . . . . 200,000 3.4 45.06 (a) 9,724,000 19,272,000
</TABLE>
(a) The options are exercisable for a five year period commencing upon the
earlier of (i) the tenth anniversary of the date of grant, (ii) the date on
which the closing price of the Common Stock is equal to or greater than
200% of the exercise price or (iii) the normal retirement of the holder.
The options expire upon the termination of the holder's employment (other
than as a result of retirement, disability or death).
(b) The exercise price may be paid in cash, shares of Common Stock or pursuant
to a cashless exercise procedure under which the holder provides
irrevocable instructions to a brokerage firm to sell the purchased shares
and remit to EDS out of the sales proceeds an amount equal to the exercise
price plus applicable withholding taxes.
(c) The dollar amounts under these columns are the result of calculations at
the 5% and 10% annual appreciation rates for the term of the options
(assuming a term of 15 years at 5% appreciation and 12 years at 10%
appreciation) as required by the SEC, and, therefore, are not intended to
forecast possible future appreciation, if any, of the price of the Common
Stock.
EDS RETIREMENT PLAN
The following table indicates the estimated annual benefits payable
upon retirement to Messrs. Alberthal, Fernandes, Heller, Grant and Chiapparone
for the specified compensation and years of service classifications under the
combined formulas of the Amended and Restated EDS Retirement Plan (the
"Retirement Plan") and the EDS Supplemental Executive Retirement Plan (the
"Supplemental Plan"). The Supplemental Plan is a non-qualified, unfunded
retirement plan intended to pay benefits to certain executive level employees
whose benefits under the Retirement Plan are limited under the Code. Benefits
under the Supplemental Plan can be reduced, suspended or eliminated at any time
by the Compensation and Benefits Committee.
11
<PAGE> 14
PROJECTED TOTAL ANNUAL RETIREMENT BENEFITS
UNDER THE EDS RETIREMENT PLAN AND THE
EDS SUPPLEMENTAL PLAN
<TABLE>
<CAPTION>
YEARS OF SERVICE
- ------------------------------------------------------------------------------------------------------------
FINAL AVERAGE
EARNINGS 5 10 15 20 25 30
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 400,000 $ 32,304 $ 64,608 $ 96,911 $129,215 $161,519 $193,823
$ 600,000 $ 49,004 $ 98,008 $ 147,011 $196,015 $245,019 $294,023
$ 800,000 $ 65,704 $ 131,408 $ 197,111 $262,815 $328,519 $394,223
$ 1,000,000 $ 82,404 $ 164,808 $ 247,211 $329,615 $412,019 $494,423
$ 1,200,000 $ 99,104 $ 198,208 $ 297,311 $396,415 $495,519 $594,623
$ 1,400,000 $ 115,804 $ 231,608 $ 347,411 $463,215 $579,019 $694,823
</TABLE>
As of December 31, 1996, the final average earnings for the highest
five consecutive years over the last 10-year period and the eligible years of
credited service for each of the named executive officers were as follows: Mr.
Alberthal, $1,386,167--29 years; Mr. Fernandes, $706,500--28 years; Mr. Heller,
$786,167--29 years; Mr. Grant, $583,917--6 years; and Mr. Chiapparone,
$697,590--30 years. The total annual benefit for an executive may not exceed
the executive's highest annual salary. The salary for the most recent year
considered in the calculation of the sum of the averages of salary and bonus
income, which is reported here as final average earnings, is found in the
Summary Compensation Table above under the column labeled "Salary" and the
bonus for the most recent year considered in such calculation is as follows:
Mr. Alberthal--$925,000; Mr. Fernandes--$506,250; Mr. Heller--$500,000; Mr.
Grant--$325,000; and Mr. Chiapparone--$430,000.
"Earnings" under the Retirement Plan generally refer to total annual
cash compensation (up to $150,000 for 1996 as limited by the Code), together
with any salary reduction contributions to the EDS Deferred Compensation Plan
and EDS Flexible Benefits Plan, and excludes extraordinary compensation (such
as benefits under the Incentive Plan). Benefits under the Retirement Plan
generally equal (i) 55% of the participant's final average earnings (based on
the highest five consecutive years of includible earnings within the last ten
years of employment), less the maximum offset allowance that can be deducted
from final average earnings as determined under the Code, multiplied by (ii)
the participant's years of credited benefit service (not to exceed 30), divided
by 30. Benefits are payable in the form of a single or joint survivor life
annuity, unless otherwise elected. The benefit payable under the Supplemental
Plan for normal retirement, together with the benefit payable under the
Retirement Plan, will generally equal (i) 50% of the average of the
participant's total compensation (based on the highest five consecutive years
within the last ten years of employment) less (ii) the maximum offset allowance
that can be deducted from final average earnings as determined under the Code.
Such benefits are payable in the form of a single or joint survivor life
annuity.
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
EDS has entered into change of control employment agreements
("Employment Agreements") with each of its executive officers (each, an
"Executive") and certain of its other officers. The Employment Agreements
generally provide that, upon the occurrence of certain triggering events
involving an actual or potential change of control of EDS, the employment of
each Executive will be continued for a period of five years (the "Employment
Period").
The employment rights of an Executive under the Employment Agreements
would be triggered by either a "Change of Control" or a "Potential Change of
Control." Following a Potential Change of Control, the employment period may
terminate (but the Employment Agreement will remain in full force and a new
employment period will apply to any future Change of Control or Potential
Change of Control) if either (a) the Board of Directors of EDS (the "EDS
Board") determines that a Change of Control is not likely or (b) the Executive
elects to terminate his Employment Period as of any anniversary of the
Potential Change of Control. A "Change of Control" generally includes the
occurrence of any of the following: (i) any person, other than exempt persons
(including employee benefit plans), becoming a beneficial owner of 15% or more
of the voting stock of EDS then outstanding; (ii) a change in the identity of a
majority of the persons serving as members of the EDS Board, unless such change
was
12
<PAGE> 15
approved by a majority of the incumbent board members; (iii) the approval by
stockholders of a reorganization, merger or consolidation in which (x) existing
EDS stockholders would not own more than 85% of the common stock and voting
stock of the resulting company, (y) a person (other than exempt persons) would
own 15% or more of the common stock or voting stock of the resulting company or
(z) less than a majority of the board of the resulting company would consist of
the then incumbent members of the EDS Board; or (iv) the approval by
stockholders of a liquidation or dissolution of EDS, except as part of a plan
involving a sale to a company of which following such transaction (x) more than
85% of the common stock and voting stock would be owned by existing EDS
stockholders, (y) no person (other than exempt persons) would own more than 15%
of the common stock or voting stock of such company and (z) at least a majority
of the board of directors of such company would consist of the then incumbent
members of the EDS Board. A "Potential Change of Control" generally includes
any of the following: (i) the commencement of a tender or exchange offer for
EDS stock that, if consummated, would result in a Change of Control; (ii) EDS
entering into an agreement which, if consummated, would constitute a Change of
Control; (iii) the commencement of an election contest subject to certain proxy
rules; or (iv) the occurrence of any other event that the EDS Board determines
could result in a Change of Control.
Throughout the Employment Period, each Executive's position,
authority, duties and responsibilities will not be diminished from the most
significant held or exercised by, or assigned to, the Executive at any time
during the 90-day period immediately prior to the commencement of the
Employment Period, and all forms of the Executive's compensation, including
salary, bonus, regular salaried employee plans, stock options, restricted stock
and other awards, will continue on a basis no less favorable than as the same
exist during the same period.
The Employment Agreements provide that an Executive's Employment
Period terminates (i) automatically upon the Executive's death or after 180
days of the Executive's continuing "Disability", (ii) at EDS' option if the
Executive is terminated for "Cause" and (iii) at the Executive's option at any
time for "Good Reason" (as such terms are defined in the Employment Agreements)
or for any reason during the 180-day period beginning 60 days after a Change of
Control (a "Window Period"). If an Executive's employment is terminated for
any reason during a Window Period or for Good Reason at any time, the Executive
will be entitled to receive the following: (i) the employee benefits the
Executive has earned as of the date of termination; (ii) the Executive's then
current salary and bonus throughout the remainder of the Employment Period;
(iii) the cash value of the Executive's retirement and 401(k) benefits to the
end of the Employment Period; (iv) under certain circumstances, a pro rata
portion of the grants of options, restricted stock and other compensatory
awards the Executive would have received had his employment continued; and (v)
continued coverage under employee welfare benefit plans until the end of the
Employment Period. In addition, all options, restricted stock and other
compensatory awards held by the Executive will immediately vest and become
exercisable and the term thereof will be extended for up to one year following
termination of employment. The Executive may also elect to cash out equity-
based compensatory awards at the highest price per share paid by specified
persons during the Employment Period or the six-month period prior to the date
upon which the Employment Period commenced. Upon the death of an Executive
(other than during a Window Period), the Executive's legal representatives will
be entitled to receive the following: (i) the employee benefits earned by the
Executive as of the date of death, (ii) the Executive's then current salary for
one year from the date of death and (iii) the continuation of welfare benefits
until the end of the Employment Period. In addition, all options, restricted
stock and other compensatory awards will immediately vest and become
exercisable and the term thereof will be extended for up to one year following
death. The Executive's legal representatives may elect to cash out
equity-based compensatory awards at the highest price per share of Common Stock
paid by specified persons during the Employment Period or the six-month period
prior to the date upon which the Employment Period commenced. Upon termination
of an Executive's employment due to Disability, the Executive will be entitled
to receive the same amounts and benefits as would be provided upon the
termination of employment by reason of death. If an Executive's employment is
terminated, other than during a Window Period, (i) by EDS for Cause or (ii) by
the Executive other than for Good Reason, the Executive will be entitled to
receive only the compensation and benefits earned as of the date of termination
of employment.
13
<PAGE> 16
CERTAIN TRANSACTIONS
Holders of restricted stock units granted under the Incentive Plan are
required to reimburse EDS for the applicable withholding taxes paid by EDS in
respect of the vesting of such units within 60 days of such payment by EDS. In
the event that such holder was restricted from selling shares of Common Stock
by virtue of his or her being in possession of material non-public information
regarding EDS, EDS has historically extended the date for the reimbursement of
such payment until such restriction is terminated. As of March 17, 1997, the
indebtedness of Lester M. Alberthal, Jr., Hartmut Burger, John R. Castle, Jr.,
Paul J. Chiapparone, Gary J. Fernandes, Joseph M. Grant, Jeffrey M. Heller,
Dean Linderman and G. Stuart Reeves in respect of such advancement of payments
for withholding taxes in connection with the predecessor to the Incentive Plan
was $959,371, $183,989, $289,125, $551,967, $591,907, $236,557, $768,064,
$551,967 and $473,114, respectively, and the largest amount of such
indebtedness outstanding at any time since January 1, 1996 for such executive
officers was $964,009, $232,692, $365,659, $698,075, $591,907, $299,175,
$768,064, $971,929 and $598,350, respectively.
Mr. James A. Baker, III is a senior partner of the law firm of Baker &
Botts, L.L.P. EDS retained Baker & Botts, L.L.P. to provide various legal
services to EDS during 1996.
Transactions involving Mr. Hunt are set forth above under the caption
"Compensation and Benefits Committee Interlocks and Insider Participation."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
EDS' directors and executive officers are required under the Exchange
Act to file with the SEC and the New York Stock Exchange reports of ownership
and changes in ownership in their holdings of Common Stock. Copies of these
reports must also be furnished to EDS. Based on an examination of these
reports and on written representations provided to EDS, all such reports have
been timely filed, except that (i) John R. Castle, Jr., an executive officer of
EDS, inadvertently did not timely file a statement of changes in beneficial
ownership with respect to the sale on September 4, 1996 of 320 shares of Common
Stock which had been indirectly held for his benefit by a custodial IRA, (ii)
Judith Rodin, a director of EDS, inadvertently omitted from her initial
statement of beneficial ownership, which had been timely filed, 200 shares of
Common Stock beneficially owned by her spouse and did not timely file a
statement of changes in beneficial ownership with respect to 100 shares of
Common Stock purchased by her spouse on October 29, 1996; and (iii) Ray L.
Hunt, a director of EDS, inadvertently omitted from his initial statement of
beneficial ownership, which had been timely filed, certain indirect interests
in Common Stock. All of the foregoing beneficial ownership interests in Common
Stock have been reflected in subsequent filings by such individuals.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit
Committee, has appointed KPMG Peat Marwick LLP as EDS' independent public
accountants for the year ending December 31, 1997. Although not required to do
so, the Board of Directors is submitting the appointment of that firm for
ratification at the Annual Meeting. KPMG Peat Marwick LLP has been EDS'
auditors since 1984. If the appointment is not approved, the Board of
Directors will reconsider its appointment. A representative of KPMG Peat
Marwick LLP is expected to be present at the Annual Meeting, will be available
to respond to questions and will have the opportunity to make a statement,
should he or she so desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
1997.
14
<PAGE> 17
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Under the rules of the SEC, the date by which proposals of
stockholders intended to be presented at the 1998 Annual Meeting of
Stockholders must be received by EDS for inclusion in its Proxy Statement and
form of proxy relating to that meeting is December 19, 1997. Proposals may be
mailed to Electronic Data Systems Corporation, Secretary, 5400 Legacy Drive,
Mail Stop H2-8W-40, Plano, Texas 75024-3199.
EDS' By-laws provide for certain procedures which a stockholder must
follow to nominate persons for election as directors or to introduce an item of
business at an annual meeting of stockholders. Generally, these procedures
provide that stockholders desiring to make nominations for directors and/or
bring a proper subject of business before the meeting must do so by a written
notice timely received (not less than 90 days nor more than 270 days before the
scheduled meeting date) by the Secretary of EDS including the name and address
of the stockholder and of any other stockholders known by such stockholder to
be in favor of the proposal. If the notice relates to a nomination for
director, it must also set forth the name, age, principal occupation and
business and residence address of any nominee(s), the number of shares of
Common Stock beneficially owned by the nominee(s), and such other information
regarding each nominee as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC (including the written
consent of each nominee). Notice of an item of business shall include a
description of the proposed business and the reason for conducting the proposed
business at the annual meeting. Any stockholder proposal or nomination
determined by the presiding officer of the annual meeting to not have been made
in accordance with the foregoing requirements shall not be acted upon at the
meeting.
It is currently expected that the 1998 Annual Meeting of Stockholders
will be held on May 20, 1998, in which event any advance notice of nominations
for directors and items of business (other than proposals intended to be
included in the Proxy Statement and form of proxy, which as noted above must be
received by December 19, 1997) must be given by stockholders by February 19,
1998. Copies of EDS' Bylaws are available from the Secretary of EDS.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows
of no matters which will be presented for consideration at the Annual Meeting
other than the proposals set forth in this Proxy Statement. However, if any
other matter calling for a vote of stockholders is properly presented at the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote in accordance with their best judgment on such matters.
A COPY OF EDS' ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE SENT TO ANY STOCKHOLDER
WITHOUT CHARGE UPON WRITTEN REQUEST TO EDS INVESTOR RELATIONS, 5400 LEGACY
DRIVE, MAIL STOP H1-2D-05, PLANO, TEXAS 75024-3199. THE ANNUAL REPORT ON FORM
10-K IS ALSO AVAILABLE ELECTRONICALLY ON EDS' INTERNET WEB SITE AT
HTTP://WWW.EDS.COM.
By order of the Board of Directors,
/s/ D. GILBERT FRIEDLANDER
D. Gilbert Friedlander
Senior Vice President, Secretary
and General Counsel
April 18, 1997
15
<PAGE> 18
ADMISSION TICKET
[EDS LOGO]
1997 ANNUAL MEETING OF STOCKHOLDERS
JUNE 5, 1997
THE PLANO CONVENTION CENTRE
2000 E. SPRING CREEK PARKWAY
PLANO, TEXAS 75074
[MAP]
TAKE CENTRAL EXPRESSWAY (U.S. INTERSTATE 75) TO EXIT 31 (SPRING CREEK PARKWAY).
HEAD EAST ON SPRING CREEK PARKWAY TO PLANO CONVENTION CENTRE, LOCATED ON THE
SOUTHWEST CORNER OF SPRING CREEK PARKWAY AND JUPITER ROAD.
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PROXY/VOTING INSTRUCTION CARD
This Proxy is solicited on behalf of the Board of Directors
of Electronic Data Systems Corporation for the Annual Meeting of
Stockholders on June 5, 1997
The undersigned hereby authorizes Lester M. Alberthal, Jr., Joseph M.
Grant and D. Gilbert Friedlander, and each or any of them with power to appoint
his substitute, to vote as Proxy for the undersigned at the Annual Meeting of
Stockholders to be held at The Plano Convention Centre, 2000 E. Spring Creek
Parkway, Plano, TX 75074 on June 5, 1997 at 1:00 PM, or any adjournment or
postponement thereof, the number of shares which the undersigned would be
entitled to vote if personally present. The proxies shall vote subject to the
directions indicated on the reverse side of this card and proxies are
authorized to vote in their discretion upon such other business as may properly
come before the meeting and any adjournments or postponements thereof. The
proxies will vote as the Board of Directors recommends where the undersigned
does not specify a choice.
THIS CARD ALSO CONSTITUTES YOUR VOTING INSTRUCTIONS FOR SHARES HELD IN
THE EDS DEFERRED COMPENSATION PLAN, THE EDS STOCK PURCHASE PLAN, THE GM SAVINGS
STOCK PURCHASE PROGRAM, THE GM PERSONAL SAVINGS PLAN AND THE SATURN PERSONAL
CHOICES SAVINGS PLAN, AND THE UNDERSIGNED HEREBY AUTHORIZES THE RESPECTIVE
TRUSTEES/ADMINISTRATORS OF SUCH PLANS TO VOTE THE SHARES HELD IN THE
UNDERSIGNED'S ACCOUNTS.
ELECTRONIC DATA SYSTEMS CORP
P.O. BOX 11198
NEW YORK, N.Y. 10286-0198
<PAGE> 19
[EDS LOGO] Lester M. Alberthal, Jr.
Chairman of the Board and Chief
Executive Officer
April 18, 1997
Dear Stockholder:
On behalf of your Board of directors and your management, I cordially
invite you to attend the 1997 Annual Meeting of Stockholders of EDS. The
meeting will be held on Thursday, June 5, 1997, at 1:00 p.m. local time, at The
Plano Convention Centre, 2000 E. Spring Creek Parkway, Plano, Texas 75074. If
you plan to attend, be sure to bring the admission ticket to the meeting. The
admission ticket, along with directions to the meeting location, is printed on
the back of this form.
Enclosed are the Notice of Meeting and Proxy Statement relating to the
annual meeting, along with the 1996 Annual Report to Stockholders. Information
regarding the matters to be voted upon at the meeting is set forth in the
Notice of Meeting and Proxy Statement.
Your vote is important to us. Whether or not you plan to attend the
meeting, please complete and return the attached proxy card in the enclosed
envelope. Please note that your completed proxy will not prevent you from
attending the meeting and voting in person should you so choose.
We look forward to seeing you at the meeting.
Sincerely,
/s/ LESTER M. ALBERTHAL, JR.
Lester M. Alberthal, Jr.
DETACH PROXY CARD HERE
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CAUTION! PLEASE DO NOT FOLD, STAPLE, OR TEAR THIS CARD
1. Election of Directors
The Board of Directors recommends a vote "FOR" the nominees listed below;
(Nominees: William H. Gray III, Ray J. Groves, Jeffrey M. Heller, and Ray L.
Hunt)
FOR WITHHELD EXCEPTIONS*
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* Exceptions
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To vote your shares for all director nominees mark the "For" box on Item 1. To
withhold your votes for all nominees, mark the "Withheld" BOX. If you do not
wish your shares voted for a particular nominee, mark the "Exceptions" box and
enter the name(s) of the exception(s) in the space provided. Such a mark will
be deemed a vote "FOR" a nominee other than these listed as exceptions.
2. Ratification of the appointment of accountants.
The Board of Directors recommends a vote "FOR" the ratification of
accountants.
FOR AGAINST ABSTAIN
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3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
Check here if you:
*plan to attend the Annual Meeting [ ]
*want to stop receiving more than one Annual Report at this address [ ]
*have a change of address on this card (indicate address change below) [ ]
Please sign name exactly as it appears on this card. Joint owners should each
sign. Attorneys, trustees, executors, administrators, custodians, guardians or
corporate officers should give full title.
Date , 1997
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Signature
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Signature
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. [ ]
