<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SS&C Technologies, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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 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:
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(4) Date Filed:
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<PAGE>
SS&C TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of SS&C
Technologies, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, April 24, 1997 at 10:00 a.m. at The Hartford Golf Club, 134 Norwood
Road, West Hartford, Connecticut 06117-2297 (the "Meeting") for the purpose of
considering and voting upon the following matters:
1. To elect two Class I Directors for the ensuing three years;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the current year; and
3. To transact such other business, if any, as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on Friday, March 21,
1997 as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting and at any adjournments thereof. A list
of the Company's stockholders is open for examination to any stockholder at
the principal executive offices of the Company, Corporate Place, 705
Bloomfield Avenue, Bloomfield, Connecticut 06002 and will be available at the
Meeting.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1996, which contains consolidated financial statements and other
information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.
By Order of the Board of Directors,
William C. Stone, Secretary
April 4, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
SS&C TECHNOLOGIES, INC.
CORPORATE PLACE
705 BLOOMFIELD AVENUE
BLOOMFIELD, CONNECTICUT 06002
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 24, 1997
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of SS&C Technologies, Inc., a Delaware corporation (the
"Company"), of proxies for use at the Annual Meeting of Stockholders to be
held on Thursday, April 24, 1997 at 10:00 a.m. at The Hartford Golf Club, 134
Norwood Road, West Hartford, Connecticut 06117-2297 and at any adjournments
thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation to the Secretary of the Company. Attendance at the Meeting
will not itself be deemed to revoke a proxy unless the stockholder gives
affirmative notice at the Meeting that the stockholder intends to revoke the
proxy and vote in person.
On March 21, 1997, the record date for determination of stockholders
entitled to vote at the Meeting, there were outstanding and entitled to vote
an aggregate of 12,433,712 shares of common stock of the Company, $.01 par
value per share (the "Common Stock"). Each share entitles the record holder to
one vote on each of the matters to be voted upon at the Meeting.
THE NOTICE OF MEETING, THIS PROXY STATEMENT, THE ENCLOSED PROXY CARD AND THE
COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1996
ARE BEING MAILED TO STOCKHOLDERS ON OR ABOUT APRIL 4, 1997. THE COMPANY WILL,
UPON WRITTEN REQUEST OF ANY STOCKHOLDER, FURNISH WITHOUT CHARGE A COPY OF ITS
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS. PLEASE ADDRESS ALL
SUCH REQUESTS TO THE COMPANY, ATTENTION OF JOHN S. WIECZOREK, VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER, SS&C TECHNOLOGIES, INC., CORPORATE PLACE, 705
BLOOMFIELD AVENUE, BLOOMFIELD, CONNECTICUT 06002. EXHIBITS WILL BE PROVIDED
UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 1997,
with respect to the beneficial ownership of shares of Common Stock by (i) each
person known to the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (ii) the directors and nominees for director of the
Company, (iii) the Chief Executive Officer and the four executive officers
listed in the Summary Compensation Table below (the "Named Executive
Officers"), and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1)
-----------------------------
NAME AND ADDRESS NUMBER OF PERCENT OF
OF BENEFICIAL OWNER SHARES CLASS
------------------- --------------- -------------
<S> <C> <C>
5% STOCKHOLDERS
William C. Stone(2)......................... 4,514,680 36.3%
c/o SS&C Technologies, Inc.
Corporate Place
705 Bloomfield Avenue
Bloomfield, CT 06002
William E. Ford(3)(4)....................... 2,808,890 22.6
c/o General Atlantic Service Corporation
Three Pickwick Plaza
Greenwich, CT 06830
General Atlantic Partners, LLC(3)........... 2,802,640 22.5
c/o General Atlantic Service Corporation
Three Pickwick Plaza
Greenwich, CT 06830
General American Life Insurance Company(5).. 897,430 7.2
700 Market Street
St. Louis, MO 63101
The Conning Funds(5)........................ 897,430 7.2
c/o Conning & Company
CityPlace II
185 Asylum Street
Hartford, CT 06103
John B. Clinton(5).......................... 897,430 7.2
c/o Conning & Company
CityPlace II
185 Asylum Street
Hartford, CT 06103
OTHER DIRECTORS AND NOMINEES
Peter L. Bloom(3)(6)........................ 7,917 *
Shane A. Chalke(7).......................... 133,750 1.0
David W. Clark, Jr.(8)...................... 50,000 *
Joseph H. Fisher............................ 25,000 *
William W. Wyman(9)......................... 8,594 *
Jonathan M. Schofield....................... 200 *
OTHER NAMED EXECUTIVE OFFICERS
Patrick W. Kenny(10)........................ 20,292 *
David A. Varsano(11)........................ 39,079 *
Marc W. Zimmerman(12)....................... 17,790 *
All executive officers and directors, as a
group(13) (13 Persons)..................... 8,578,747 67.6
</TABLE>
2
<PAGE>
- --------
* Less than 1%
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after March 31, 1997
through the exercise of any stock option or other right. The inclusion
herein of such shares, however, does not constitute an admission that the
named stockholder is a direct or indirect beneficial owner of such
shares. Unless otherwise indicated, each person or entity named in the
table has sole voting power and investment power (or shares such power
with his or her spouse) with respect to all shares of capital stock
listed as owned by such person or entity.
(2) The information reported is based on a Schedule 13G, dated February 4,
1997, filed with the Securities and Exchange Commission by Mr. Stone.
(3) Consists of 2,569,300 shares held by General Atlantic Partners 15, L.P.
("GAP 15") and 233,340 shares held by GAP Coinvestment Partners, L.P.
("GAP Coinvestment"). The general partner of GAP 15 is General Atlantic
Partners, LLC, a Delaware limited liability company. The managing members
of General Atlantic Partners, LLC are Steven A. Denning, David C.
Hodgson, Stephen P. Reynolds, J. Michael Cline, William O. Grabe and
William E. Ford. The same individuals are the general partners of GAP
Coinvestment. Messrs. Ford and Bloom, directors of the Company, are
members of General Atlantic Partners, LLC. Messrs. Ford and Bloom
disclaim beneficial ownership of shares owned by GAP 15 and GAP
Coinvestment, except to the extent of their pecuniary interests therein.
The information reported is based on a Schedule 13G, dated February 14,
1997, filed with the Securities and Exchange Commission by GAP 15 and GAP
Coinvestment.
(4) Includes 6,250 shares subject to outstanding stock options which are
exercisable within the 60-day period following March 31, 1997.
(5) Consists of 199,160 shares of Common Stock held by Conning Insurance
Capital Limited Partnership II; 389,090 shares of Common Stock held by
Conning Insurance Capital Limited Partnership III; 224,590 shares of
Common Stock held by Conning Insurance Capital International Partners II;
and 84,590 shares of Common Stock held by Conning Insurance Capital
International Partners III, L.P. Conning Insurance Capital Limited
Partnership II, Conning Insurance Capital Limited Partnership III,
Conning Insurance Capital International Partners II, and Conning
Insurance Capital International Partners III, L.P. are collectively
referred to as the "Conning Funds." Conning & Company is the direct or
indirect general partner of each of the Conning Funds and, as such, has
voting and dispositive control with respect to the securities held by
each of the Conning Funds. General American Life Insurance Company, a
Missouri corporation ("GALIC"), has indirect sole ownership of all of the
voting stock of Conning & Company. Mr. John B. Clinton, a current Class I
director of the Company who is not standing for re-election, is a Senior
Vice President of Conning & Company. Mr. Clinton disclaims beneficial
ownership of the shares of Common Stock held by the Conning Funds except
to the extent of his proportionate pecuniary interests therein. GALIC
disclaims beneficial ownership of the shares of Common Stock held by the
Conning Funds except to the extent of its proportionate pecuniary
interests therein. The information reported is based on a Schedule 13G,
dated January 10, 1997, filed with the Securities and Exchange Commission
by GALIC, the Conning Funds and other GALIC affiliates.
(6) Consists of 7,917 shares subject to outstanding stock options which are
exercisable within the 60-day period following March 31, 1997.
(7) Includes 113,750 shares of Common Stock subject to outstanding stock
options which are exercisable with the 60-day period following March 31,
1997.
3
<PAGE>
(8) Includes 40,000 shares held by the Clark Limited Family Partnership, of
which Mr. Clark is a general partner. Mr. Clark disclaims beneficial
ownership of such shares except to the extent of his proportionate
pecuniary interests therein.
(9) Consists of 8,594 shares subject to outstanding stock options which are
exercisable within the 60-day period following March 31, 1997.
(10) Includes 19,792 shares subject to outstanding stock options which are
exercisable within the 60-day period following March 31, 1997.
(11) Includes 32,500 shares subject to outstanding stock options which are
exercisable within the 60-day period following March 31, 1997.
(12) Includes 16,188 shares subject to outstanding stock options which are
exercisable within the 60-day period following March 31, 1997.
(13) Includes an aggregate of 239,116 shares subject to outstanding stock
options which are exercisable within the 60-day period following March
31, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock ("Reporting Persons")
to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Based solely on its review of copies of reports
filed by the Reporting Persons furnished to the Company, the Company believes
that during 1996 the Reporting Persons complied with all Section 16(a) filing
requirements.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum exists at the
Meeting.
The affirmative vote of the holders of a plurality of the votes cast by the
stockholders entitled to vote at the Meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented by proxy and voting on the matter is
required for the ratification of the selection of Coopers & Lybrand L.L.P. as
the Company's independent public accountants for the current year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a
particular matter, will not be counted as votes in favor of such matter, and
will also not be counted as votes cast or shares voting on such matter.
Accordingly, abstentions and "broker non-votes" will have no effect on the
voting on a matter that requires the affirmative vote of a certain percentage
of the votes cast or shares voting on a matter.
PROPOSAL 1--ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTOR
The Company has a classified Board of Directors currently consisting of two
Class I directors, three Class II directors, and three Class III directors.
The Class I, Class II and Class III Directors will serve until the annual
4
<PAGE>
meeting of stockholders to be held in 1997, 1998 and 1999, respectively, and
until their respective successors are elected and qualified. At each annual
meeting of stockholders, directors are elected for a full term of three years
to succeed those whose terms are expiring.
The persons named in the enclosed proxy will vote to elect, as Class I
directors, William W. Wyman and Jonathan M. Schofield, the two director
nominees named below, unless the proxy is marked otherwise. Mr. Wyman is
currently a director of the Company. Mr. John B. Clinton, a current Class I
director of the Company, is not standing for re-election to the Board of
Directors.
Each Class I director will be elected to hold office until the 2000 annual
meeting of stockholders and until his successor is elected and qualified. Each
of the nominees has indicated his willingness to serve, if elected; however,
if any nominee should be unable to serve, the person acting under the proxy
may vote the proxy for a substitute nominee. The Board of Directors has no
reason to believe that any of the nominees will be unable to serve if elected.
For each member of the Board of Directors, including those who are nominees
for election as Class I Directors, there follows information given by each
concerning his principal occupation and business experience for the past five
years, the names of other publicly held companies of which he serves as a
director and his age and length of service as a director of the Company.
PETER L. BLOOM, age 39, has served on the Board of Directors of the Company
since October 1995. He is currently a member of General Atlantic Partners,
LLC, a private investment firm and principal stockholder of the Company, and
has been with General Atlantic Partners, LLC since January 1996. Mr. Bloom was
previously employed by Salomon Brothers Inc. from May 1982 to December 1995 in
various positions including Managing Director of Technology.
SHANE A. CHALKE, age 39, joined the Company in March 1995 as Executive Vice
President and Director upon the Company's acquisition of substantially all of
the assets and operations of Chalke Incorporated. Specializing in the
financial analysis of insurance companies, Mr. Chalke founded Chalke
Incorporated in 1983 and served as its Chairman, Chief Executive Officer and
President until March 1995.
DAVID W. CLARK, JR., age 59, has served on the Board of Directors of the
Company since November 1992. He is currently the Managing Director of Pryor &
Clark Company, a corporation involved in private investments and venture
capital, where he has served since 1991. Mr. Clark has previously served as
President, Chief Operating Officer and Treasurer of Corcap, Inc., an elastomer
and molded rubber manufacturer, President and Chief Executive Officer of
CompuDyne Corporation, a defense services contractor, and President and Chief
Operating Officer of Lydall, Inc., a diversified manufacturer of industrial
products. He also serves as a member of the Boards of Directors of Acme United
Corporation, Checkpoint Systems Inc., CompuDyne Corporation and Corcap, Inc.
JOSEPH H. FISHER, age 53, has served on the Board of Directors of the
Company since January 1992. Mr. Fisher was formerly employed by KPMG Peat
Marwick LLP and served as the Managing Partner of the Hartford, Connecticut
office from 1983 to 1991. Since his retirement in 1991, Mr. Fisher served as
interim Chief Financial Officer of Big Y Foods Inc., a supermarket chain, from
May 1992 to September 1992 and as the Special Assistant to the President for
Financial and Administrative Affairs at the University of Hartford from
October 1992 to November 1993. During 1994 and 1995, he served as an
independent consultant to the University of Hartford.
WILLIAM E. FORD, age 35, has served on the Board of Directors of the Company
since September 1994. Mr. Ford is a managing member of General Atlantic
Partners, LLC and has been with General Atlantic Partners,
5
<PAGE>
LLC since July 1991. From August 1987 to July 1991, Mr. Ford was an associate
with Morgan Stanley & Co. Incorporated in the mergers and acquisitions
department. Mr. Ford is also a director of Envoy Corporation, Ex Tende Group,
Inc., GT Interactive Software Corp. and Marcam Corporation and several private
software companies in which General Atlantic Partners or one of its affiliates
is an investor.
JONATHAN M. SCHOFIELD, age 56, is a nominee for election to the Board of
Directors of the Company. Since 1993, Mr. Schofield has served as the Chairman
and Chief Executive Officer of Airbus Industrie of North America, Inc., a
subsidiary of Airbus Industrie, a manufacturer of large civil aircraft. From
1989 to 1992, he served as President of United Technologies International, a
wholly owned subsidiary of United Technologies Corporation, a diversified
manufacturer of industrial products.
WILLIAM C. STONE, age 41, founded the Company in 1986 and has served as
Chairman of the Board of Directors, Chief Executive Officer and President
since the Company's inception. Prior to founding the Company, he directed the
financial services consulting practice of KPMG Peat Marwick LLP in Hartford,
Connecticut and was Vice President of Administration and Special Investment
services at Advest, Inc.
WILLIAM W. WYMAN, age 59, has served on the Board of Directors of the
Company since February 1996. From 1984 to 1995, he served as Managing Partner
of Oliver, Wyman & Company, a consulting firm he founded which specializes in
management consulting to financial institutions in North America and Europe.
From 1965 to 1984, Mr. Wyman was employed at Booz, Allen & Hamilton, an
international management consulting firm.
For information relating to shares of Common Stock owned by each of the
directors, see "Security Ownership of Certain Beneficial Owners and
Management."
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company met six times (including by telephone
conference) during 1996. All directors attended at least 75% of the meetings
of the Board of Directors and of the committees on which they served.
The Board of Directors has a Compensation Committee, which has the authority
and responsibility to establish the compensation of, and compensation policies
applicable to, the Company's executive officers and administers the Company's
1994 Stock Option Plan and 1996 Employee Stock Purchase Plan. The Compensation
Committee held three meetings during 1996. The members of the Compensation
Committee are Messrs. Clark and Ford.
The Board of Directors has an Audit Committee, which reviews and evaluates
the Company's audit procedures and the results and scope of the audit and
other services provided by the Company's independent public accountants. The
Audit Committee held four meetings during 1996. The current members of the
Audit Committee are Messrs. Clinton and Fisher. It is currently anticipated
that the Board of Directors will designate a replacement for Mr. Clinton
following the expiration of his term at the Meeting.
The Company has no nominating committee of the Board of Directors.
DIRECTOR COMPENSATION
All of the directors are reimbursed for expenses incurred in connection with
their attendance at Board and committee meetings. Each non-employee director
is paid $500 for attendance at each meeting of the Board (other than
telephonic meetings). Other directors are not entitled to compensation in
their capacities as directors.
6
<PAGE>
1996 Director Stock Option Plan
The 1996 Director Stock Option Plan (the "Director Plan") was adopted by the
Board of Directors and approved by the stockholders of the Company in April
1996. Under the terms of the Director Plan, directors of the Company who are
not employees of the Company or any subsidiary of the Company are eligible to
receive nonstatutory options to purchase shares of Common Stock. A total of
150,000 shares of Common Stock may be issued upon exercise of options granted
under the Director Plan.
Each eligible director will receive annual options to purchase 5,000 shares
of Common Stock on the date of each annual meeting of stockholders, commencing
with the 1997 Annual Meeting of Stockholders. Options to purchase 5,000 shares
of Common Stock will also be granted to each eligible director upon his or her
initial election to the Board of Directors. All options granted under the
Director Plan will vest on the first anniversary of the date of grant and the
exercise price of options granted under the Director Plan will equal the
closing price of the Common Stock on the date of grant on the Nasdaq National
Market (or such other nationally recognized exchange or trading system if the
Common Stock is no longer traded on the Nasdaq National Market).
In the event an optionee ceases to serve as a director, each option may be
exercised by the optionee for the portion then exercisable at any time within
60 days after the optionee ceases to serve as a director; provided, however,
that in the event that the optionee ceases to serve as a director due to his
death or disability, then the optionee, or his or her administrator, executor
or heirs may exercise the exercisable portion of the option for up to 180 days
following the date the optionee ceased to serve as a director. No option is
exercisable after the expiration of ten years from the date of grant.
Federal Income Tax Consequences. Options granted under the Director Plan do
not qualify as incentive stock options under the Internal Revenue Code of
1986, as amended (the "Code"). See "Compensation of Executive Officers--1993
and 1994 Option Plans" for a description of federal income tax consequences of
options granted under the Director Plan.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation
The following table sets forth certain information with respect to the annual
and long-term compensation of the Chief Executive Officer of the Company and
each of the four other most highly compensated executive officers of the
Company (the "Named Executive Officers") for the two years ended December 31,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ---------------------
AWARDS
---------------------
NAME AND PRINCIPAL ALL OTHER SECURITIES OTHER ANNUAL
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) UNDERLYING OPTIONS(#) COMPENSATION($)
------------------ ---- --------- -------- --------------- --------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William C. Stone....... 1996 225,028 -- -- -- 1,000(1)
President and Chief 1995 150,000 30,000 -- -- 1,000(1)
Executive Officer
Shane A. Chalke(2)..... 1996 317,061(3) -- -- -- --
Executive Vice 1995 262,500 -- -- 210,000 --
President
Patrick W. Kenny(4).... 1996 212,035 -- -- -- --
Senior Vice President, 1995 25,942 -- -- 50,000 --
Services
Marc W. Zimmerman(5)... 1996 180,000 -- 38,500(6) 9,000 --
Senior Vice President, 1995 64,846 -- -- 31,000 --
Strategic Products
David A. Varsano(7).... 1996 155,000 -- -- -- --
Senior Vice President, 1995 48,942 57,500 -- 78,000 --
Development and Client
Services
</TABLE>
- --------
(1) Represents the Company's contribution under its 401(k) savings plan.
(2) Mr. Chalke joined the Company as Executive Vice President in March 1995
upon the Company's acquisition of substantially all of the assets and
operations of Chalke Incorporated.
(3) Represents a base salary of $200,000 and, in accordance with Mr. Chalke's
employment agreement, additional compensation of $108,781 based upon a
percentage of certain licensing fees and consulting fees collected by the
Company during fiscal 1996 and attributable to Mr. Chalke's efforts. See
"--Employment Agreements."
(4) Mr. Kenny joined the Company as a Senior Vice President in November 1995.
(5) Mr. Zimmerman joined the Company as a Senior Vice President in August 1995.
(6) Represents a reimbursable moving expense paid by the Company.
(7) Mr. Varsano joined the Company as a Senior Vice President in September
1995.
8
<PAGE>
Option Grants
The following table sets forth certain information concerning grants of
stock options made during fiscal 1996 to each of the Named Executive Officers.
The Company granted no stock appreciation rights during fiscal 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (1)
---------------------------------------------------------------------- ----------------------
PERCENT OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE PRICE PER
NAME GRANTED (#) FISCAL YEAR (%) SHARE(2) EXPIRATION DATE 5% 10%
---- ------------------ ---------------- ------------------ --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
William C. Stone........ -- -- -- -- -- --
Shane A. Chalke......... -- -- -- -- -- --
Patrick W. Kenny........ -- -- -- -- -- --
Marc W. Zimmerman....... 9,000 5.3% $9.00 3/31/06 $ 50,940 $ 129,093
David A. Varsano........ -- -- -- -- -- --
</TABLE>
- --------
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compound rates of appreciation (5% and 10%) on
the market value of the Common Stock on the date of option grant over the
term of the options. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth. Actual gains, if any,
on stock option exercises and Common Stock holdings are dependent on the
timing of such exercise and the future performance of the Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by
the option holder.
(2) All options were granted at fair market value as determined by the Board
of Directors of the Company on the date of the grant.
Fiscal Year-End Option Value Table
The following table summarizes certain information regarding the number and
value of unexercised stock options held as of December 31, 1996 by each of the
Named Executive Officers. No stock options were exercised during fiscal 1996
by the Named Executive Officers and no stock appreciation rights were
exercised during fiscal 1996 by the Named Executive Officers or were
outstanding at year end.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END AT FISCAL YEAR END
(#) ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ------------------------------- ----------------------------
<S> <C> <C>
William C. Stone.. --/-- --/--
Shane A. Chalke... 91,875/118,125 $218,203/$280,547
Patrick W. Kenny.. 14,583/35,417 5,469/13,281
Marc W. Zimmer-
man.............. 10,333/29,667 14,208/40,792
David A. Varsano.. 24,375/53,625 33,516/73,734
</TABLE>
- --------
(1) Value based upon the last sales price per share ($6.375) of the Company's
Common Stock on December 31, 1996, as reported on the Nasdaq National
Market, less the exercise price.
9
<PAGE>
Employment Agreements
In March 1996, the Company and Mr. Stone entered into an employment
agreement providing for the employment of Mr. Stone as the President and
Chairman of the Board of Directors of the Company. The employment agreement
provides for a three-year term ending on March 28, 1999, after which time it
renews automatically for additional one-year periods until terminated by the
Company or Mr. Stone. The agreement provides for an annual base salary of
$250,000 as well as annual incentive compensation in an amount determined by
the Board of Directors or the Compensation Committee in their respective sole
discretion. The agreement also contains a non-competition covenant pursuant to
which Mr. Stone is prohibited from competing with the Company during his
employment by the Company and for one year (if the employment agreement is not
renewed by the Company after expiration of its initial three-year term) or two
years (if Mr. Stone's employment is terminated for cause by the Company or
voluntarily by Mr. Stone) thereafter.
The Company is a party to an employment agreement with Mr. Chalke for the
period commencing March 31, 1995 and ending March 31, 2000. The agreement
provides that, in 1996, Mr. Chalke was entitled to receive a base salary of
$200,000 and additional compensation of up to $150,000 based upon a percentage
of certain license fees and consulting fees collected by the Company during
fiscal 1996 and attributable to Mr. Chalke's efforts, as well as a bonus at
the discretion of the Company of up to $100,000. Beginning in 1997, Mr. Chalke
is entitled to receive an annual base salary of $350,000. Pursuant to the
agreement, in 1995 the Company also granted Mr. Chalke an option to purchase
210,000 shares of Common Stock at an exercise price of $4.00 per share. If his
employment is terminated by the Company without cause (as defined), Mr. Chalke
will be entitled to receive severance compensation in an amount equal to six
months' base salary. Throughout the term of this employment agreement, the
Board agrees to nominate Mr. Chalke, and the Company agrees to use its best
efforts to cause Mr. Chalke to be elected, to the Board of Directors of the
Company.
1993 and 1994 Stock Option Plans
The Company's 1993 Stock Option Plan (the "1993 Plan") was adopted by the
Board of Directors and approved by the stockholders of the Company on March
24, 1993. The 1993 Plan authorized the issuance of up to 1,000,000 shares of
Common Stock, but no options have been granted to any employees or directors
of the Company under the 1993 Plan since December 31, 1994. As of December 31,
1996, options to purchase an aggregate of 128,000 shares of Common Stock at a
weighted average exercise price of $.08 per share were outstanding under the
1993 Plan.
The Company's 1994 Stock Option Plan (the "1994 Plan") was adopted by the
Board of Directors on December 7, 1994 and approved by the stockholders of the
Company on January 31, 1995. An amendment to the 1994 Plan increasing the
number of shares authorized under the 1994 Plan was adopted by the Board of
Directors and approved by the stockholders of the Company in April 1996. The
1994 Plan provides for the grant of stock options to employees, officers and
directors of, and consultants or advisers to, the Company and its
subsidiaries. The 1993 Plan is identical to the 1994 Plan in all material
respects. Under the 1994 Plan, the Company may grant options that are intended
to qualify as incentive stock options within the meaning of Section 422 of the
Code ("incentive stock options"), or options not intended to qualify as
incentive stock options ("nonstatutory options"). Incentive stock options may
only be granted to employees of the Company. The 1994 Plan authorizes the
issuance of up to 3,000,000 shares of Common Stock. As of December 31, 1996,
options to purchase an aggregate of 1,146,208 shares of Common Stock at a
weighted average exercise price of $4.96 per share were outstanding under the
1994 Plan. Unless otherwise terminated, the 1994 Plan will terminate on
January 31, 2005.
10
<PAGE>
The 1994 Plan is administered by the Compensation Committee of the Board of
Directors. Subject to the provisions of the 1994 Plan, the Compensation
Committee has the authority to select the employees to whom options are
granted and determine the terms of each option, including (i) the number of
shares of Common Stock subject to the option, (ii) when the option becomes
exercisable, (iii) the option exercise price, which, in the case of incentive
stock options, must be at least 100% (110% in the case of incentive stock
options granted to a stockholder owning in excess of 10% of the Company's
Common Stock) of the fair market value of the Common Stock as of the date of
grant, and (iv) the duration of the option (which, in the case of incentive
stock options, may not exceed ten years, or five years in the case of
incentive stock options granted to stockholders owning in excess of 10% of the
Company's Common Stock). The Compensation Committee may, in its sole
discretion, include additional provisions in any option or award granted or
made under the 1994 Plan, so long as not inconsistent with the 1994 Plan or
applicable law. The Compensation Committee may also, in its sole discretion,
accelerate or extend the date or dates on which all or any particular option
or options granted under the 1994 Plan may be exercised.
Payment of the option exercise price may be made in cash, shares of Common
Stock, a combination of cash or stock or by any other method (including
delivery of a promissory note payable on terms specified by the Compensation
Committee) approved by the Compensation Committee consistent with Section 422
of the Code and Rule 16b-3 ("Rule 16b-3") under the Exchange Act.
As of December 31, 1996, the Company had 197 employees, all of whom were
eligible to participate in the 1994 Plan. The number of individuals receiving
stock options varies from year to year depending on various factors, such as
the number of promotions and the Company's hiring needs during the year, and
thus the Company cannot now determine the number of shares of Common Stock to
be awarded to any particular current executive officer, to all current
executive officers as a group or to non-executive employees as a group.
All outstanding options are nontransferable other than by will or the law of
descent and distribution. Incentive stock options are exercisable during the
lifetime of the option holder only while the option holder is in the employ of
the Company, or within three months after termination of employment. In the
event that termination is due to death or disability, or if death occurs
within three months after termination, the option is exercisable for a one-
year period thereafter.
To the extent not exercised, all options granted under the 1994 Plan shall
terminate immediately prior to a dissolution or liquidation of the Company. In
the event of a merger of the Company, or the sale of substantially all of the
assets of the Company, the Board of Directors shall have the discretion to
accelerate the vesting of the options granted under the 1994 Plan.
Federal Income Tax Consequences. In general, a participant will not
recognize taxable income upon the grant or exercise of an incentive stock
option. Instead, a participant will recognize taxable income with respect to
an incentive stock option only upon the sale of Common Stock acquired through
the exercise of the option ("ISO Stock"). Nevertheless, in the case of a
participant who has not been an employee of the Company at all times between
the date on which a particular option was granted (the "Option Grant Date")
and the date that is three months before the date on which the option is
exercised (the "Exercise Date"), and for purposes of the alternative minimum
tax, an option will be treated as though it were a nonstatutory option and
taxed as described below. While a participant will pay alternative minimum tax
only to the extent of the excess of that tax over the participant's regular
tax, the treatment of an option as a nonstatutory option for purposes of the
alternative minimum tax could create such an excess.
11
<PAGE>
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least
two years from the Option Grant Date and one year from the Exercise Date, then
the participant will recognize long-term capital gain in an amount equal to
the excess of the sale price of the ISO Stock over the exercise price. If the
participant sells ISO Stock prior to having owned it for at least two years
from the Option Grant Date and one year from the Exercise Date (an "ISO
Disqualifying Disposition"), then the participant generally will recognize
ordinary compensation income in an amount equal to the lesser of: (A) the
excess of the fair market value of the ISO Stock on the Exercise Date over the
exercise price; and (B) the excess of the sale price of the ISO Stock over the
exercise price. A participant making an ISO Disqualifying Disposition will
also recognize capital gain in an amount equal to the excess of the sale price
of the ISO Stock over the fair market value of the ISO Stock on the Exercise
Date. This capital gain will be a long-term capital gain if the participant
has held the ISO Stock for more than one year prior to the date of the sale
and will be a short-term capital gain if the participant has held the ISO
Stock for a shorter period. If a participant sells ISO Stock for less than the
exercise price, then the participant will recognize capital loss equal to the
excess of the exercise price over the sale price of the ISO Stock. This
capital loss will be a long-term capital loss if the participant has held the
ISO Stock for more than one year prior to the date of the sale and will be a
short-term capital loss if the participant has held the ISO Stock for a
shorter period.
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory option. Unlike the
case of an incentive stock option, however, a participant will recognize
taxable income upon the exercise of a nonstatutory option. In particular, a
participant who exercises a nonstatutory option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair
market value of the Common Stock acquired through the exercise of the option
(the "NSO Stock") on the Exercise Date over the exercise price. With respect
to any NSO Stock, a participant will have a tax basis equal to the exercise
price plus any income recognized upon the exercise of the option. Upon selling
NSO Stock, a participant generally will recognize capital gain or loss in an
amount equal to the excess of the sale price of the NSO Stock over the
participant's tax basis in the NSO Stock. This capital gain or loss will be a
long-term capital gain or loss if the participant has held the NSO Stock for
more than one year prior to the date of the sale and will be a short-term
capital gain or loss if the participant has held the NSO Stock for a shorter
period.
The grant of a stock option will have no tax consequences to the Company.
Moreover, in general, neither the exercise of an incentive stock option nor
the sale of any ISO Stock or NSO Stock will have any tax consequences to the
Company. The Company generally will be entitled to a business-expense
deduction, however, with respect to any ordinary compensation income
recognized by a participant under the 1994 Plan. Any such deduction will be
subject to the limitations of Section 162(m) of the Code.
1996 Employee Stock Purchase Plan
The Company's 1996 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors and approved by the stockholders of the
Company in April 1996. The Purchase Plan authorizes the issuance of up to a
total of 200,000 shares of Common Stock to participating employees.
All employees of the Company, including directors of the Company who are
employees, and all employees of any participating subsidiaries whose customary
employment is more than 20 hours per week and for more than five months in any
calendar year are eligible to participate in the Purchase Plan. Employees who
would immediately after the grant own 5% or more of the total combined voting
power or value of the stock of the Company or any subsidiary are not eligible
to participate. As of December 31, 1996, 156 of the Company's employees were
eligible to participate in the Purchase Plan.
12
<PAGE>
On the first day of a designated payroll deduction period (the "Offering
Period"), the Company will grant to each eligible employee who has elected to
participate in the Purchase Plan an option to purchase shares of Common Stock
as follows: the employee may authorize an amount (a whole percentage from 1%
to 10% of such employee's regular pay) to be deducted by the Company from such
pay during the Offering Period. On the last day of the Offering Period, the
employee is deemed to have exercised the option, at the option exercise price,
to the extent of accumulated payroll deductions. Under the terms of the
Purchase Plan, the option price is an amount equal to 85% of the fair market
value per share of the Common Stock on either the first day or the last day of
the Offering Period, whichever is lower. In no event may an employee purchase
in any one Offering Period a number of shares which is more than 15% of the
employee's annualized base pay divided by 85% of the market value of a share
of Common Stock on the commencement date of the Offering Period. The
Compensation Committee may, in its discretion, choose an Offering Period of 12
months or less for each of the Offering and choose a different Offering Period
for each Offering.
If an employee is not a participant on the last day of the Offering Period,
such employee is not entitled to exercise any option, and the amount of such
employee's accumulated payroll deductions will be refunded. An employee's
rights under the Purchase Plan terminate upon voluntary withdrawal from the
Purchase Plan at any time, or when such employee ceases employment for any
reason, except that upon termination of employment because of death, the
employee's beneficiary has certain rights to elect to exercise the option to
purchase the shares which the accumulated payroll deductions in the
participant's account would purchase at the date of death.
Because participation in the Purchase Plan is voluntary, the Company cannot
now determine the number of shares of Common Stock to be purchased by any
particular current executive officer, by all current executive officers as a
group or by non-executive employees as a group.
Federal Income Tax Consequences. The Purchase Plan is intended to qualify as
an "employee stock purchase plan" within the meaning of Section 423 of the
Code. The Purchase Plan is not a qualified plan under Section 401(a) of the
Code. In general, a participant will not recognize taxable income upon
enrolling in the Purchase Plan or upon purchasing shares of Common Stock at
the end of an Offering. Instead, if a participant sells Common Stock acquired
under the Purchase Plan at a sale price that exceeds the price at which the
participant purchased the Common Stock, then the participant will recognize
taxable income. A portion of that taxable income will be ordinary income, and
a portion may be capital gain.
If the participant sells the Common Stock more than one year after acquiring
it and more than two years after the date on which the Offering commenced (the
"Grant Date"), then the participant will be taxed as follows. If the sale
price of the Common Stock is higher than the price at which the participant
purchased the Common Stock, then the participant will recognize ordinary
compensation income in an amount equal to the lesser of (A) the excess of the
fair market value of the Common Stock on the Grant Date over the price at
which the participant purchased the Common Stock; and (B) the excess of the
sale price of the Common Stock over the price at which the participant
purchased the Common Stock. Any further income will be long-term capital gain.
If the sale price of the Common Stock is less than the price at which the
participant purchased the Common Stock, then the participant will recognize
long-term capital loss in an amount equal to the excess of the price at which
the participant purchased the Common Stock over the sale price of the Common
Stock.
If the participant sells the Common Stock within one year after acquiring it
or within two years after the Grant Date (a "Disqualifying Disposition"), then
the participant will recognize ordinary compensation income in an amount equal
to the excess of the fair market value of the Common Stock on the date that it
was purchased over the price at which the participant purchased the Common
Stock. The participant will also recognize capital
13
<PAGE>
gain in an amount equal to the excess of the sale price of the Common Stock
over the fair market value of the Common Stock on the date that it was
purchased, or capital loss in an amount equal to the excess of the fair market
value of the Common Stock on the date that it was purchased over the sale
price of the Common Stock. This capital gain or loss will be a long-term
capital gain or loss if the participant has held the Common Stock for more
than one year prior to the date of the sale and will be a short-term capital
gain or loss if the participant has held the Common Stock for a shorter
period.
The offering of Common Stock under the Purchase Plan will have no tax
consequences to the Company. Moreover, in general, neither the purchase nor
the sale of Common Stock acquired under the Purchase Plan will have any tax
consequences to the Company except that the Company will be entitled to a
business-expense deduction with respect to any ordinary compensation income
recognized by a participant upon making a Disqualifying Disposition. Any such
deduction will be subject to the limitations of Section 162(m) of the Code.
CERTAIN TRANSACTIONS
On March 31, 1995, the Company entered into an Asset Purchase Agreement with
Chalke Incorporated ("Chalke") and Shane A. Chalke, the Chairman, Chief
Executive Officer, President, sole director and sole shareholder of Chalke,
for the purchase by the Company of all the assets of Chalke for $7,400,000 in
cash, a $3,000,000 promissory note and the assumption of certain liabilities
by the Company, plus the costs of effecting the acquisition. The face value of
the promissory note includes principal and simple interest accruing annually
at 7.91% and is payable in two installments of $1,500,000 on each of March 31,
1996 and 1997. The first installment was paid by the Company to Chalke on
April 2, 1996. Mr. Chalke and William C. Stone, the Company's President and
Chief Executive Officer, determined the purchase price of the Chalke assets in
an arm's-length negotiation. In arriving at a purchase price, the Company
compared comparable transactions within the industry and conducted its own
analysis of Chalke, including a review of the financial condition of Chalke
and the strategic value of Chalke to the Company. At the time of the Chalke
Acquisition, Mr. Chalke was unaffiliated with the Company. In connection with
the Asset Purchase Agreement, the Company entered into an employment agreement
with Mr. Chalke for a period of five years.
From 1990 to 1996, the Company licensed its CAMRA and FILMS application
software to Conning & Company pursuant to license, maintenance and
professional services agreements. On January 27, 1996, the Company licensed
its CAMRA and FILMS application software and certain other programs to GALIC,
Conning Asset Management Company, a wholly owned subsidiary of GALIC, and
other GALIC subsidiaries (collectively, the "GALIC Group") pursuant to a
Software License Agreement. The Company was paid license and update fees of
$1,110,000 in fiscal 1996 under the agreement. The License Agreement also
provides for the payment of license and update fees in the amount of $210,000
per year for a period of four years beginning in January 1997. Such payments
may increase during the term of the License Agreement due to the possibility
of extraordinary licensing fees, sublicensing fees or licensing fees for other
products and modules. Under the License Agreement, the Company licensed to the
GALIC Group rights to use the Company's source and object code for use in its
asset management business and, in the case of Conning Asset Management
Company, for outsourcing to customers in the insurance industry. As the GALIC
Group is not restricted under the terms of the License Agreement from
competing with the Company for business within the foregoing areas, there can
be no assurance that the GALIC Group may not in the future compete with the
Company in such areas. GALIC, a Missouri corporation, has indirect sole
ownership of all of the voting stock of Conning & Company. Mr. John B.
Clinton, a current Class I director of the Company who is not standing for re-
election, is a Senior Vice President of Conning & Company.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overview and Philosophy
The Compensation Committee of the Company's Board of Directors (the
"Committee") is responsible for establishing the compensation of, and
compensation policies with respect to, the Company's executive officers,
including the Company's Chief Executive Officer, and administering the 1994
Plan and Purchase Plan. The Committee currently consists of Messrs. Clark and
Ford.
The objectives of the Company's executive compensation program are to:
. Attract and retain key executives critical to the long-term success of
the Company;
. Align the executive officers' interests with the interests of
stockholders and the success of the Company; and
. Recognize and reward individual performance and responsibility.
Compensation Program
General. The Company's executive compensation program consists of base
salary, short-term incentive compensation in the form of cash bonuses and
long-term incentive compensation in the form of stock options. Executives also
participate in benefit programs that are generally available to employees of
the Company, including medical benefits, the Purchase Plan and the Company's
401(k) Profit Sharing Plan and Trust.
For fiscal 1996, management of the Company recommended the executive
compensation packages, subject to approval and oversight by the Committee. In
the future, however, the Committee intends to review the appropriate mix
between salary and other forms of compensation and set annual compensation
guidelines for the Company's executives.
Base Compensation. The Chief Executive Officer and the Executive Vice
President are parties to multi-year employment agreements with the Company
that fixed each executive's annual base salary for fiscal 1996. See
"Compensation of Executive Officers--Employment Agreements." Mr. Stone's
employment agreement provides for an annual base salary of $250,000, subject
to any increase as may be approved by the Board of Directors or the Committee
and agreed to by Mr. Stone. The Committee believes that a $250,000 salary was
comparable to salaries of chief executive officers of other software companies
at the Company's stage of development and reflected the Committee's
qualitative judgment of Mr. Stone's contributions to the Company and overall
performance over the past several years. In addition, the Committee believes
that the Chief Executive Officer's base salary for fiscal 1995 ($150,000) was
relatively low compared with the Executive Vice President's salary, which was
$262,500 during fiscal 1995, and salaries of recently hired executive officers
of the Company. See "Compensation of Executive Officers--Summary Compensation
Table."
The employment agreement with Mr. Chalke was entered into in March 1995 in
connection with the Company's arm's-length acquisition of Chalke Incorporated.
Under the employment agreement, which was amended as of January 1996, Mr.
Chalke's salary for fiscal 1996 consisted of $200,000 of base salary and
$108,781 of sales commissions with respect to certain license agreements and
consulting arrangements attributable to Mr. Chalke's selling efforts. After
fiscal 1996, Mr. Chalke is entitled to receive an annual base salary of
$350,000.
For fiscal 1996, compensation for other executive officers was set within
the range of compensation for executives with comparable qualifications,
experience and responsibilities at other companies in the same or similar
businesses, based on the determination of management and approved by the
Committee. Base
15
<PAGE>
compensation was also determined in light of a particular individual's
contribution to the Company as a whole, including the ability to motivate
others, develop the necessary skills to grow as the Company matures, recognize
and pursue new business opportunities and initiate programs to enhance the
Company's growth and success.
Short-Term Incentive Compensation. For fiscal 1996, the Committee did not
award any annual cash bonuses to the Company's executive officers, including
the Chief Executive Officer. The Committee believed that bonuses were
inappropriate given the Company's operating loss during fiscal 1996 and the
Company's failure to achieve its growth targets.
In March 1997, the Committee approved the Company's Senior Officer Short-
Term Incentive Plan (the "Short-Term Plan"), which sets forth the criteria for
awarding annual cash bonuses to the Company's executive officers beginning in
fiscal 1997. The Short-Term Plan provides for an executive officer bonus pool
equal to a percentage of the aggregate base compensation paid to the Company's
executive officers, with the size of such percentage varying with the
Company's pre-tax net income. Once the Committee calculates the bonus pool for
a given year, 75% of the total bonus will be allocated to the executive
officers based on the percentage of the aggregate base compensation
represented by each respective officer's base salary, and 25% of the total
bonus will be awarded to individual executive officers at the discretion of
the Committee. The Committee believes the Short-Term Plan aligns executive
compensation with the success of the Company while enabling the Committee to
award bonuses for outstanding individual achievement.
Long-Term Incentive Compensation. Long-term incentives for executive
officers and key employees are provided through stock options. The objectives
of this program are to align executive and stockholder long-term interests by
creating a strong and direct link between executive compensation and
stockholder return, and to enable executives to develop and maintain a
significant, long-term stock ownership position in the Company's Common Stock.
Stock options are granted at an option price equal to the fair market value of
the Company's Common Stock on the date of grant and will only have value if
the Company's stock price increases. In selecting executives eligible to
receive option grants and determining the amount and frequency of such grants,
the Company evaluates a variety of factors, including (i) the job level of the
executive, (ii) option grants awarded by competitors to executives at a
comparable job level, and (iii) past, current and prospective service to the
Company rendered, or to be rendered, by the executive. The Company did not
grant a large number of options to executive officers during fiscal 1996 as a
number of officers joined the Company during fiscal 1995 and received options
upon commencement of employment. As Mr. Stone owns approximately 36% of the
Company's outstanding Common Stock, the Board of Directors did not grant any
options to Mr. Stone during fiscal 1996.
Section 162(m). Section 162(m) of the Internal Revenue Code ("Section
162(m)"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million dollars paid to its Chief Executive
Officer or any of its four other most highly compensated executive officers.
Qualifying performance-based compensation is not subject to the deduction
limit if certain requirements, such as stockholder approval of a compensation
plan, are met. Although the Committee considered the limitations on the
deductibility of executive compensation imposed by Section 162(m) in designing
the Company's executive compensation programs, the Committee believes that it
is unlikely that such limitation will affect the deductibility of the
compensation to be paid to the Company's executive officers in the near term.
Based in part on this judgment, the Committee has determined not to recommend
to the Company's Board of Directors that the Short-Term Plan be submitted to
the Company's stockholders for their approval. The Committee will, however,
continue to monitor the impact of Section 162(m) on the Company.
David W. Clark, Jr.
William E. Ford
16
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Compensation Committee are Messrs.
Clark and Ford. No executive officer of the Company has served as a director
or member of the compensation committee (or other committee serving an
equivalent function) of any other entity, one of whose executive officers
served as a director of or member of the Compensation Committee of the
Company.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the period from May 31, 1996 through December
31, 1996 with the cumulative total return on (i) Standard and Poor's S&P 500
Composite Index and (ii) Nasdaq's Computer and Data Processing Index. The
comparison assumes the investment of $100 on May 31, 1996 in the Company's
Common Stock and in each of the indices and, in each case, assumes
reinvestment of all dividends. Prior to May 30, 1996, the Company's Common
Stock was not registered under the Exchange Act.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
5/31/96 6/28/96 7/31/96 8/30/96 9/30/96 10/31/96 11/29/96 12/31/96
------- ------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SS&C $100 $ 77.22 $60.76 $41.14 $ 51.27 $ 37.97 $ 36.71 $ 32.28
S&P $100 $100.38 $95.95 $97.97 $103.48 $106.34 $114.38 $112.11
Nasdaq Index $100 $ 96.34 $86.28 $88.59 $ 98.26 $ 96.54 $103.51 $102.23
</TABLE>
17
<PAGE>
PROPOSAL 2--RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. as independent
public accountants of the Company for the year ending December 31, 1997,
subject to ratification by stockholders at the Meeting. If the stockholders do
not ratify the selection of Coopers & Lybrand L.L.P., the Board of Directors
will reconsider the matter. A representative of Coopers & Lybrand L.L.P.,
which served as independent public accountants for the year ended December 31,
1996, is expected to be present at the Meeting to respond to appropriate
questions, and to make a statement if he or she so desires.
The Company retained Coopers & Lybrand L.L.P. as its independent accountants
and replaced Arthur Andersen LLP in February 1995. Arthur Andersen LLP had
been retained to audit the Company's financial statements for the year ended
December 31, 1993. The report of Arthur Andersen LLP for the year ended
December 31, 1993 contained no adverse opinion or disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope or application of
accounting principles. During the year ended December 31, 1993 and through the
date of replacement, there were no disagreements with Arthur Andersen LLP on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure. In connection with the Company's
initial public offering, Coopers & Lybrand L.L.P. reaudited the Company's
consolidated financial statements for the year ended December 31, 1993.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 1998 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at
its offices, Corporate Place, 705 Bloomfield Avenue, Bloomfield, Connecticut
06002, no later than December 5, 1997 in order to be considered for inclusion
in the Proxy Statement relating to that meeting.
18
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business which will be presented for
consideration at the Meeting other than that described above. However, if any
other business should come before the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, facsimile
and personal interviews. The Company will also request brokerage houses,
custodians, nominees and fiduciaries to forward copies of the proxy material to
those persons for whom they hold shares and request instructions for voting the
Proxies. The Company will reimburse such brokerage houses and other persons for
their reasonable expenses in connection with this distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, SIGN, DATE, AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXY CARDS.
By Order of the Board of Directors,
William C. Stone, Secretary
April 4, 1997
19
<PAGE>
SS&C TECHNOLOGIES, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
To be held April 24, 1997
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
AND SHOULD BE RETURNED AS SOON AS POSSIBLE
The undersigned, having received notice of the Annual Meeting of
Stockholders and the Board of Directors' proxy statement therefor, and revoking
all prior proxies, hereby appoint(s) William C. Stone, John S. Wieczorek and
John A. Burgess, and each of them, attorneys or attorney of the undersigned
(with full power of substitution in them and each of them) for and in the
name(s) of the undersigned to attend the Annual Meeting of Stockholders of SS&C
TECHNOLOGIES, INC. (the "Company") to be held on Thursday, April 24, 1997 at
10:00 a.m. at The Hartford Golf Club, 134 Norwood Road, West Hartford,
Connecticut, and any adjournments thereof, and there to vote and act upon the
following matters in respect of all shares of stock of the Company which the
undersigned may be entitled to vote or act upon, with all the powers the
undersigned would possess if personally present.
In their discretion, the proxy holders are authorized to vote upon such
other matters as may properly come before the meeting or any adjournments
thereof. The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to office or
proposal, this proxy will be voted as recommended by the Board of Directors.
Attendance of the undersigned at the meeting or at any adjournment thereof will
not be deemed to revoke this proxy unless the undersigned shall revoke this
proxy in writing.
1. To elect the following nominees for Class I Director to serve for the
ensuing three years (except as marked below):
William W. Wyman Jonathan M. Schofield
[_] FOR [_] WITHHOLD
both nominees
(except as marked below)
(Instruction: To withhold a vote for an individual nominee, write the name
of such nominee in the space provided below. Your shares will be voted for
the remaining nominee.)
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2. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the current year.
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE PROXIES
SHALL VOTE "FOR" BOTH DIRECTOR NOMINEES AND "FOR" PROPOSAL NUMBER 2.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
A VOTE "FOR" BOTH DIRECTOR NOMINEES AND A VOTE "FOR" PROPOSAL NUMBER 2 IS
RECOMMENDED BY THE BOARD OF DIRECTORS.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT
THEREOF.
MARK HERE MARK HERE IF
FOR ADDRESS [_] YOU PLAN TO [_]
CHANGE AND ATTEND THE
NOTE AT LEFT MEETING
Date: , 1997
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Signature
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Signature if held jointly
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
WHEN SHARES ARE HELD BY JOINT OWNERS, BOTH SHOULD
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN
IN FULL CORPORATE NAME BY AUTHORIZED OFFICER,
GIVING FULL TITLE. IF A PARTNERSHIP, PLEASE SIGN
IN PARTNERSHIP NAME BY AUTHORIZED PERSON, GIVING
FULL TITLE.
