SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934, as Amended
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
THE ULTIMATE SOFTWARE GROUP, INC.
---------------------------------
(Name of Registrant as Specified in Its Charter)
---------------------------------
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
THE ULTIMATE SOFTWARE GROUP, INC.
3111 STIRLING ROAD
FORT LAUDERDALE, FLORIDA 33312
April 22, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of The Ultimate Software Group, Inc. (the "Company" or "Ultimate
Software"), which will be held on Thursday, May 20, 1999 at 9:00 a.m. at the
Company's current principal corporate office at 3111 Stirling Road, Fort
Lauderdale, Florida 33312 (the "Annual Meeting").
The principal business of the meeting will be to elect two directors to
serve for three-year terms or until their respective successors are duly
elected and qualified and to transact such other business as may properly come
before the meeting or any postponement or adjournment thereof. During the
Annual Meeting, we will also review the results of the past fiscal year and
report on significant aspects of our operations during the first quarter of
fiscal 1999.
Whether you plan to attend the Annual Meeting or not, please complete,
sign, date and return the enclosed proxy card in the postage prepaid envelope
provided so that your shares will be voted at the meeting. If you decide to
attend the meeting, you may, of course, revoke your proxy and personally cast
your votes.
For your benefit, enclosed is a copy of Ultimate Software's Annual Report
to Stockholders as well as our Annual Report on Form 10-K filed with the
Securities and Exchange Commission, which includes audited financial statements
and notes thereto. We thank you for your continued interest in Ultimate
Software.
Sincerely yours,
/s/ SCOTT SCHERR
Scott Scherr
Chairman, President and Chief Executive Officer
<PAGE>
THE ULTIMATE SOFTWARE GROUP, INC.
3111 STIRLING ROAD
FORT LAUDERDALE, FLORIDA 33312
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
TO THE STOCKHOLDERS OF THE ULTIMATE SOFTWARE GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The
Ultimate Software Group, Inc. (the "Company") will be held on Thursday, May 20,
1999 at 9:00 a.m. at the Company's current principal corporate office at 3111
Stirling Road, Fort Lauderdale, Florida 33312 for the following purposes:
1. To elect two directors to serve until the 2002 Annual Meeting of
Stockholders or until their respective successors are duly elected and
qualified; and
2. To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.
Holders of record of the voting stock of the Company at the close of
business on April 1, 1999 are entitled to notice of and to vote at the Annual
Meeting or any postponement or adjournment thereof.
Enclosed are a Proxy Statement, a form of proxy and an addressed return
envelope. ALL STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO BE PRESENT AT THE
MEETING, ARE REQUESTED TO FILL IN, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Stockholders
who attend the meeting may, if they desire, revoke their proxies and vote in
person.
By Order of the Board of Directors:
/s/ Vivian Maza
Vivian Maza
Secretary
Fort Lauderdale, Florida
April 22, 1999
<PAGE>
THE ULTIMATE SOFTWARE GROUP, INC.
3111 STIRLING ROAD
FORT LAUDERDALE, FLORIDA 33312
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of The Ultimate Software Group, Inc. (the "Company") for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held on Thursday,
May 20, 1999, at 9:00 a.m., at the Company's current principal corporate office
at 3111 Stirling Road, Fort Lauderdale, Florida and at any postponement or
adjournment thereof, for the purposes set forth in the Notice of Annual Meeting
of Stockholders. This Proxy Statement, the accompanying proxy and the Company's
Annual Report to Stockholders for 1998 including therewith the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, are first being
mailed to stockholders commencing on or about April 22, 1999.
Proxies are being solicited from holders of the Company's common stock,
par value $0.01 per share (the "Common Stock"). If a proxy is properly executed
and returned, the shares represented by it will be voted and, where
specification is made by the stockholder as provided in such proxy, will be
voted in accordance with such specification. Unless a stockholder specifies
otherwise, all shares represented by valid proxies will be voted (i) FOR the
election of the persons named in this Proxy Statement as the nominees of the
Company under the heading "Election of Directors," and (ii) at the discretion
of the proxy holders on any other matter that may properly come before the
Annual Meeting or any adjournment thereof.
SOLICITATION OF PROXIES
The Company is paying the costs of solicitation, including the cost of
preparing and mailing this Proxy Statement. Proxies are being solicited
primarily by mail, but in addition, the solicitation by mail may be followed by
solicitation in person, or by telephone or facsimile, by directors, officers
and regular employees of the Company without additional compensation. Brokers,
dealers, banks, voting trusts, custodians and other institutions, and their
nominees, who are holders of shares of the Company's Common Stock on the Record
Date referred to below, will be requested to forward the soliciting material to
the beneficial owners of such shares of Common Stock and to obtain
authorization for the execution of proxies. The Company will, upon request,
reimburse such institutions for their reasonable expenses in forwarding proxy
material to their beneficial owners.
VOTING RIGHTS AND PROCEDURES
Only stockholders of record of the Common Stock of the Company at the
close of business on April 1, 1999 (the "Record Date"), will be entitled to
vote at the Annual Meeting. As of that date, a total of 15,893,705 shares of
Common Stock were outstanding, each share being entitled to one vote. There is
no cumulative voting. Assuming the presence of a quorum, the affirmative vote
of a plurality of the votes cast is required for the election of directors.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock will constitute a quorum for the
transaction of business at the Annual
<PAGE>
Meeting. If a stockholder returns a proxy withholding authority to vote the
proxy with respect to a nominee for director, then the shares of the Common
Stock covered by such proxy shall be deemed present at the Annual Meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to such nominee, but shall not be deemed to have been voted for such
nominee. If a stockholder abstains from voting as to any matter, then the
shares held by such stockholder shall be deemed present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to such matter, but shall not be deemed to have been voted in favor of
such matter. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on such matter, then the shares covered by such non-vote
shall be deemed present at the Annual Meeting for purposes of determining a
quorum but shall not be deemed to be present and entitled to vote at the Annual
Meeting for purposes of calculating the vote with respect to such matter.
A stockholder may revoke a proxy at any time prior to its exercise by
giving to the Secretary of the Company a written notice of revocation of the
proxy's authority prior to the voting thereof or by submitting a duly executed
proxy bearing a later date at the Annual Meeting.
PROPOSAL I--ELECTION OF DIRECTORS
The Board of the Company is composed of seven members divided into three
classes. The members of each class are elected to serve three-year terms with
the term of office of each class ending in successive years. Mr. LeRoy A.
Vander Putten and Mr. Robert A. Yanover are the directors in the class whose
term expires at the Annual Meeting.
The Board has nominated Messrs. Vander Putten and Yanover for election to
the Board at the Annual Meeting for terms of three years, expiring at the 2002
Annual Meeting, and each has indicated a willingness to serve. The other
directors of the Company will continue in office for their existing terms. Mr.
Marc Scherr and Mr. Rick Wilber serve in the class whose term expires at the
Annual Meeting in 2000 and Mr. Scott Scherr, Dr. Alan Goldstein and Mr. Ofer
Nemirovsky serve in the class whose term expires at the Annual Meeting in 2001.
The affirmative vote of a plurality of the votes cast at the Annual Meeting is
necessary to elect the nominees for director. The persons named as proxies in
the enclosed form of proxy will vote the proxies received by them for the
election of Messrs. Vander Putten and Yanover, unless otherwise directed. In
the event that any nominee becomes unavailable for election at the Annual
Meeting, the persons named as proxies in the enclosed form of proxy may vote
for a substitute nominee in their discretion as recommended by the Board.
The following table sets forth certain information concerning the
nominees, based on data furnished by them. Information regarding incumbent
directors whose terms are not expiring is included in the section labeled
"Directors and Executive Officers" below.
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- - --------------- --- -------------------- --------------
<S> <C> <C> <C>
LeRoy A. Vander Putten .......... 64 Chairman, Trade Resources International October 1997
Holdings, Ltd.
Robert A. Yanover ............... 62 President, Computer Leasing Corporation January 1997
</TABLE>
LeRoy A. Vander Putten has served as a director of the Company since
October 1997 and is a member of the Compensation Committee of the Board. Mr.
Vander Putten has served as the Chairman of Trade Resources International
Holdings, Ltd., a corporation engaged in trade finance for exporters from
developing countries, since April 1998. From January 1988 until May 1997, Mr.
Vander Putten was Chairman and Chief Executive Officer of Executive Risk Inc.,
a specialty insurance holding company ("ERI"). Since May 1997, Mr. Vander
Putten has been engaged as a consultant to ERI. From August 1982 to January
1988, Mr. Vander Putten served as Vice President and Deputy Treasurer of The
Aetna Life and Casualty Company, an insurance company.
Robert A. Yanover has served as a director of the Company since January
1997 and is a member of the Audit Committee of the Board. Mr. Yanover founded
Computer Leasing Corporation of
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Michigan, a private leasing company, in 1975 and has served as its President
since that time. Mr. Yanover also founded Lason, Inc., a corporation
specializing in the imaging business, and served as Chairman of the Board from
its inception in 1987 until 1998 and is currently a director.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS. VANDER PUTTEN AND
YANOVER AS DIRECTORS OF THE COMPANY TO HOLD OFFICE UNTIL THE 2002 ANNUAL
MEETING OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND QUALIFIED.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During fiscal 1998, the Board held five meetings. During fiscal 1998, each
director holding office during the year attended at least 75% of the total
number of meetings of the Board and committees of the Board on which he served.
The Board has an Executive Committee, an Audit Committee and a Compensation
Committee, which are described below.
EXECUTIVE COMMITTEE. The Executive Committee is composed of Messrs. Scott
Scherr, Ofer Nemirovsky, Marc Scherr and Dr. Goldstein. The Executive Committee
has the authority to exercise (except as provided by law or as may have been
specifically reserved by or for the Board) all the powers and authority of the
Board in the management of the business and affairs of the Company between
regular meetings of the Board and while the Board is not in session. The
Executive Committee held no meetings during fiscal 1998.
AUDIT COMMITTEE. Messrs. Nemirovsky and Yanover are members of the Audit
Committee. The Audit Committee is responsible for reviewing the Company's
financial condition with officers and employees of the Company, as well as the
Company's independent auditors, and reports to the Board concerning such
reviews. The Audit Committee also makes recommendations to the Board and
management of the Company concerning auditing and accounting matters and the
selection of independent auditors. The Audit Committee held two meetings during
fiscal 1998, following the completion of the Company's initial public offering
in June 1998 (the "IPO").
The Company's independent auditors for the fiscal year ended December 31,
1998 were Arthur Andersen LLP. Representatives of Arthur Andersen LLP will be
present at the Annual Meeting. They will be afforded the opportunity to make a
statement, should they desire to do so, and to respond to appropriate
questions.
As of the date of this Proxy Statement, the Board has not appointed
independent auditors to audit the Company's financial statements for the fiscal
year ended December 31, 1999 ("fiscal 1999"). Management intends to make a
recommendation to the Audit Committee and the Board in favor of the appointment
of Arthur Andersen LLP as the independent auditors for fiscal 1999 at their
next meetings scheduled to be held on April 22, 1999.
COMPENSATION COMMITTEE. Messrs. Vander Putten and Wilber are members of
the Compensation Committee. The Compensation Committee is responsible for
determining the compensation and benefits for the executive officers of the
Company and oversees the Company's stock plans and such other benefits plans as
the Company may from time to time maintain. The Compensation Committee held
five meetings during fiscal 1998.
DIRECTOR COMPENSATION
As compensation for serving on the Board, each non-employee director of
the Company receives a quarterly retainer of $5,000, payable exclusively in the
form of options to purchase Common Stock under The Ultimate Software Group,
Inc. Nonqualified Stock Option Plan (the "Stock Option Plan"). Such options are
exercisable at a 70% discount of the fair market value of the Common Stock at
the grant date, with the total discount on all options granted for a calendar
quarter equaling the retainer
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<PAGE>
fees earned by the non-employee directors for such quarter. Such options are
fully vested on the date of grant. All directors are reimbursed for expenses
incurred in connection with their attendance at Board and related committee
meetings.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 1, 1999 (unless otherwise
noted) by (i) each person who is known by the Company to own beneficially more
than 5% of the Common Stock; and (ii) each of the Company's directors and
executive officers and all directors and executive officers of the Company as a
group. Unless otherwise noted, the stockholders listed in the table have sole
voting and investment powers with respect to the shares of Common Stock owned
by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(2)
- - ------------------------------------ ----------------- -----------
<S> <C> <C>
HarbourVest Partners V--Direct Fund L.P.(3) ......... 1,550,807 9.8%
One Financial Center, 44th Fl.
Boston, MA 02111
Scudder Kemper Investments, Inc.(4) ................. 1,062,300 6.7%
345 Park Avenue
New York, New York 10154
J.P. Morgan Investment Corporation(5) ............... 969,267 6.1%
60 Wall Street
New York, NY 10260
Michael Feinberg(6) ................................. 1,046,740 6.6%
3980 N. 32 Terrace
Hollywood, FL 33312
Scott Scherr(7) ..................................... 707,493 4.5%
Alan Goldstein, M.D.(8) ............................. 532,679 3.4%
Mitchell K. Dauerman(9) ............................. 121,434 *
Ofer Nemirovsky(3)(10) .............................. 1,553,074 9.8%
Marc D. Scherr(11) .................................. 312,030 2.0%
LeRoy A. Vander Putten(12) .......................... 22,505 *
Rick Wilber(13) ..................................... 350,377 2.2%
Robert A. Yanover(14) ............................... 162,784 1.0%
All directors and executive officers
as a group (8 persons)(15) ........................ 3,762,376 23.7%
</TABLE>
- - ----------------
* Indicates beneficial ownership of less than 1.0% of the outstanding Common
Stock.
4
<PAGE>
<TABLE>
<S> <C>
(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange
Commission (the "Commission") and includes voting or investment power with respect to
securities. Shares of Common Stock issuable upon the exercise of stock options or exercisable
within 60 days hereof are deemed outstanding and to be beneficially owned by the person
holding such option for purposes of computing such person's percentage ownership, but are not
deemed outstanding for the purpose of computing the percentage ownership of any other
person. Except for shares held jointly with a person's spouse or subject to applicable
community property laws, or as indicated in the footnotes to this table, each stockholder
identified in the table possesses the sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by such stockholder.
(2) Applicable percentage of ownership is based on 15,893,705 shares of Common Stock
outstanding.
(3) Mr. Nemirovsky, a director of the Company, is a Managing Director of HarbourVest Partners,
L.L.C. which is the Managing Director of the HVP V-Direct Associates, L.L.C. which in turn is
the General Partner of HarbourVest Partners V--Direct Fund L.P. ("HarborVest").
Mr. Nemirovsky disclaims beneficial ownership of the shares held by HarbourVest, except to
the extent of his pecuniary interest therein.
(4) Represents shares held as of December 31, 1998.
(5) Represents 899,032 shares of Common Stock held by J.P. Morgan Investment Corporation and
70,235 shares of Common Stock held as of December 31, 1998 by Sixty Wall Street SBIC Fund,
L.P., which is an affiliate of J.P. Morgan Investment Corporation.
(6) Represents 949,815 shares of Common Stock and 96,925 shares of Common Stock owned by
Ann Feinberg, his spouse, held as of December 31, 1998.
(7) Represents 431,735 shares of Common Stock, 116,369 shares of Common Stock held by the
Scott Scherr Living Trust, of which Mr. Scott Scherr is the trustee, and exercisable options to
purchase 159,390 shares of Common Stock. Mr. Scott Scherr disclaims beneficial ownership of
the shares owned by the Scott Scherr Living Trust.
(8) Represents 339,985 shares of Common Stock, 69,315 shares of Common Stock held by the
Alan S. Goldstein Irrevocable Trust, of which Mr. Goldstein's wife, Cheryl A. Zickler, is the
trustee, and exercisable options to purchase 123,379 shares of Common Stock. Mr. Goldstein
disclaims beneficial ownership of the shares owned by the Alan S. Goldstein Irrevocable Trust.
(9) Represents 3,884 shares of Common Stock held by certain trusts established for the benefit of
Mr. Dauerman's children, and exercisable options to purchase 117,550 shares of Common
Stock. Mr. Dauerman disclaims beneficial ownership of the shares owned by the trusts
established for the benefit of his children.
(10) Includes exercisable options to purchase 2,267 shares of Common Stock. Options issued and
issuable to Mr. Nemirovsky in his capacity as a director of the Company's Board are
beneficially owned by HarbourVest by special agreement between Mr. Nemirovsky and
HarbourVest. See note (3) for balance of shares disclosed herein as beneficially owned.
(11) Represents 23,259 shares of Common Stock, 13,567 shares of Common Stock held by certain
trusts established for the benefit of Mr. Marc Scherr's children, and exercisable options to
purchase 275,204 shares of Common Stock. Mr. Marc Scherr disclaims beneficial ownership of
the shares owned by the trusts established for the benefit of his children.
(12) Represents 20,238 shares of Common Stock and exercisable options to purchase 2,267 shares of
Common Stock.
(13) Represents 322,812 shares of Common Stock and exercisable options to purchase 27,565 shares
of Common Stock.
(14) Represents 135,219 shares of Common Stock held by Yanover Associates, the general partner
of which Mr. Yanover is the President, and exercisable options to purchase 27,565 shares of
Common Stock.
(15) Represents an aggregate of 3,027,189 shares of Common Stock and exercisable options to
purchase an aggregate of 735,187 shares of Common Stock.
</TABLE>
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The directors, executive officers (Messrs. S. Scherr, Alu and Dauerman and
Dr. Goldstein) and other key employees of the Company, and their ages as of
April 1, 1999, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- - ---- --- -----------
<S> <C> <C>
Scott Scherr ...................... 47 Chairman of the Board, President and Chief Executive Officer
Alan Goldstein, M.D. .............. 48 Executive Vice President, Chief Technology Officer and Director
Mitchell K. Dauerman .............. 42 Executive Vice President, Chief Financial Officer and Treasurer
James M. Alu ...................... 54 Executive Vice President and Chief Operating Officer
Dale T. Baker ..................... 49 Vice President--Web Strategies
Jeffrey G. Bonar, Ph. D. .......... 44 Vice President--Development
J.C. Gonzalez ..................... 35 Vice President--Product Support
Paul Gonzalez ..................... 47 Vice President--Business Development
Jon Harris ........................ 34 Vice President--Professional Services
Linda Larrivee .................... 42 Vice President--Product Management
Ted Malley ........................ 32 Vice President--Chief Information Officer
Vivian Maza ....................... 37 Vice President--People and Secretary
Linda Miller ...................... 54 Vice President--Public Relations
Steven J. Oakley .................. 40 Vice President--Strategic Alliances
Laura Perkins ..................... 34 Vice President--Product Marketing
H. Stephen Smith .................. 49 Vice President--National Sales
Marc D. Scherr .................... 41 Vice Chairman of the Board
Ofer Nemirovsky ................... 40 Director
LeRoy A. Vander Putten ............ 64 Director
Rick Wilber ....................... 52 Director
Robert A. Yanover ................. 62 Director
</TABLE>
Scott Scherr has served as President and a director of the Company since
its inception in April 1996 and has been Chairman of the Board and Chief
Executive Officer of the Company since September 1996. In 1990, Mr. Scherr
founded The Ultimate Software Group, Ltd. (the "Partnership"), the business and
operations of which were assumed by the Company in 1998. Mr. Scherr served as
President of the Partnership's general partner from the inception of the
Partnership until its dissolution in March 1998. From 1979 until 1990, he held
various positions at Automatic Data Processing, Inc. ("ADP"), a payroll
services company, where his titles included Vice President of Operations and
Sales Executive. Prior to joining ADP, Mr. Scherr ran Management Statistics,
Inc., a data processing service bureau founded by his father, Reuben Scherr, in
1959. He is the brother of Marc Scherr, the Vice Chairman of the Board of the
Company.
Alan Goldstein, M.D., FACS has served as a director of the Company since
its inception in April 1996 and as Executive Vice President and Chief
Technology Officer since September 1996. From April 1996 through September
1996, he served as Vice President and Treasurer of the Company. From January
1994 until February 1998, Dr. Goldstein served as Vice President of the general
partner of the Part
nership. In 1989, Dr. Goldstein founded Strategic Image
Systems, Inc., which produced and developed software applications and tools.
From 1985 to 1986, Dr. Goldstein served as Vice President
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<PAGE>
of Information Systems for Loren Industries, Inc., a jewelry casting
manufacturer. From 1985 to 1987, Dr. Goldstein served as Director of Surgical
Services at Kings County Hospital in New York. In 1985, as a trauma surgeon
engaged in research and medical education, Dr. Goldstein developed a software
application for use in hospitals to aid in patient management, quality
assurance and physician education.
Mitchell K. Dauerman has served as Executive Vice President of the Company
since April 1998 and as Chief Financial Officer and Treasurer of the Company
since September 1996. From 1979 to 1996, Mr. Dauerman held various positions
with KPMG LLP, a global accounting and consulting firm, serving as a Partner in
the firm from 1988 to 1996.
James M. Alu has served as Executive Vice President of the Company since
February 1999 and as Chief Operating Officer since January 1998. Prior to that,
Mr. Alu served as Vice President of the Company from September 1996 and Vice
President of the general partner of the Partnership from July 1993 until April
1996. From 1988 until 1993, Mr. Alu served as Area Sales Vice President for the
northeastern United States for ADP's Dealer Services Group.
Dale T. Baker has served as Vice President--Web Strategies since January
1999. From September 1996 until January 1999, he served the Company as Vice
President--Strategic Alliances. From April 1996 through September 1996, he
served as Vice President of the Company. Prior to that, he had served as a Vice
President of the general partner of the Partnership from 1993 until April 1996.
From 1990 to 1993, Mr. Baker was a Branch Manager for Cap Gemini America, an
information services consulting firm.
Jeffrey G. Bonar, Ph.D. has served as Vice President--Development for the
Company since July 1998 after performing senior-level technical consulting
services for the Company beginning in February 1998. From December 1996 to
February 1998, Mr. Bonar was an independent consultant, consulting on front
office, help desk and Internet commerce projects at various computer software
companies, including assuming the role of acting Vice President of Development.
From 1993 to 1996, Mr. Bonar served in a variety of senior-level technical
leadership positions at International Business Machines Corporation ("IBM"), a
measurement, computation and communications company, concluding as the
technical lead for IBM's Object Technology Products group in Austin, Texas.
From 1987 to 1993, Mr. Bonar served as President, and later Chief Technical
Officer of Guidance Technologies, a company that sold software development
tools available for Windows programming.
J.C. Gonzalez has served as Vice President--Product Support since January
1999. Prior to that, Mr. Gonzalez served as Manager and then Director of
Product Support from January 1994 until December 1998. Mr. Gonzalez is a
Payroll Professional and holds a Certified Payroll Professional (CPP)
certification from the American Payroll Association (APA). From May 1983 until
December 1993, Mr. Gonzalez held various positions at ADP, including Customer
Support Manager for the Major and National Accounts of ADP.
Paul Gonzalez has served as Vice President--Business Development for the
Company since January 1999. From April 1997 until January 1999 Mr. Gonzalez
served as Vice President--Implementation Partners. He served as Vice President
of the Company from April 1996 to September 1996 when he was elected Vice
President of Support Services. Prior to that, he served as a Vice President of
the general partner of the Partnership from 1994 until April 1996 and as
Secretary from 1990 until 1994. From 1980 to 1990, Mr. Gonzalez held various
management positions at ADP where his positions included National Product
Manager for ADP's Wholesale Distribution Division and Branch Manager for the
southeast region.
Jon Harris has served as Vice President--Professional Services since July
1998. From 1992 to 1997, Mr. Harris held various management positions within
ADP's National Accounts Division. From 1989 to 1992, Mr. Harris held the
position of Consulting Services Director for Sykes Enterprises, Inc., a diverse
information technology company.
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Linda Larrivee has served as Vice President--Product Management since July
1998. Ms. Larrivee previously served as the Human Resources Product Manager for
the Company from August 1995 until August 1998. Ms. Larrivee has worked in the
human resource and human resource management systems field since 1979, for
various corporations including those engaged in high technology and retail
businesses.
Ted Malley has served as Vice President--Chief Information Officer for the
Company since August 1998. Mr. Malley has served in various technical pre-sales
and professional services management positions since joining the Company in
March 1997. From December 1994 through March 1997, Mr. Malley held various
positions in technical pre-sales and sales management with ADP. From September
1989 through December 1994, Mr. Malley worked for IBM and held various
positions as a systems engineer and client/server consultant.
Vivian Maza has served as Vice President-People for the Company since
January 1998 and as Secretary of the Company since September 1996. Prior to
that, Ms. Maza served as the Office Manager of the Company from its
organization in April 1996 and of the Partnership from its inception in 1990
until April 1996. Ms. Maza is an HR Generalist and holds a Professional in
Human Resources (PHR) certification from the Society for Human Resource
Management (SHRM) association. From 1985 to 1990, Ms. Maza was a systems
analyst for the Wholesale Division of ADP.
Linda Miller has served as Vice President--Marketing since January 1999.
Ms. Miller served as Vice President, Public Relations, for the Company from
July 1998 to January 1999. Prior to that, Ms. Miller served as the Company's
Director of Marketing from January 1997. From 1992 to 1996, Ms. Miller held
various positions at Best Software, Inc., a developer of corporate resource
management applications, Abra Products Division, including Public Relations
Manager.
Steven J. Oakley has served as Vice President--Strategic Alliances since
January 1999. From January 1997 until January 1999, he served as Vice
President/General Manager for the West Region of the Company. From 1989 to
1996, Mr. Oakley was National Accounts Division Vice President for ADP.
Laura Perkins has served as Vice President--Product Marketing since July
1998. From May 1996 to July 1998, Ms. Perkins served as the Director of
Application Consulting for the Company. From 1991 to 1996, Ms. Perkins held
various positions with Best Software, Inc., Abra Products Division. Ms. Perkins
holds a Certified Payroll Professional (CPP) certification from the American
Payroll Association (APA).
H. Stephen Smith has served as Vice President--National Sales for the
Company since January 1999. From September 1996 until January 1999, Mr. Smith
served as Vice President/General Manager for the East Region of the Company.
Prior to joining the Company in 1996, Mr. Smith was employed for 20 years at
ADP, where his most recent position was Division Vice President for the
development and management of strategic alliances.
Marc D. Scherr has been a director of the Company since its inception in
April 1996 and was elected as Vice Chairman in July 1998. Currently, he is also
a director of Gerschel & Co., Inc., a private investment firm. In December
1995, Mr. Scherr co-founded Residential Company of America, Ltd. ("RCA"), a
real estate firm, and has since served as President of its general partner. Mr.
Scherr also served as Vice President of RCA's general partner from its
inception in August 1993 until December 1995. From 1990 to 1992, Mr. Scherr was
a real estate pension fund advisor at Aldrich, Eastman & Waltch. Previously, he
was a partner in the Boston law firm of Fine & Ambrogne. Mr. Scherr is the
brother of Scott Scherr, Chairman of the Board, President and Chief Executive
Officer of the Company.
Ofer Nemirovsky has served as a director of the Company since June 1997.
Mr. Nemirovsky has been a Managing Director of HarbourVest Partners, LLC since
January 1997. HarbourVest Partners,
8
<PAGE>
LLC was formed by the management team of Hancock Venture Partners, Inc.
("HVP"), where Mr. Nemirovsky had served in various capacities since 1986.
Prior to joining HVP, Mr. Nemirovsky held various computer sales and marketing
positions at Hewlett-Packard Company, a measurement, computation and
communications company. He is currently a director of Primix Solutions, Inc.
(formerly OneWave, Inc.), an Internet software and services company and
Paradigm Geophysical, a company engaged in the development and licensing of
computer software and the provision of seismic data processing and
interpretation services to facilitate the exploration and development of oil
and gas reserves, as well as several privately-held companies.
Rick Wilber has served as a director of the Company since October 1997.
Mr. Wilber was a co-founder of Champs Sports Shops and served as its President
from 1974 to 1984. He served on the Board of Royce Laboratories, a
pharmaceutical concern, from 1990 until April 1997, when the company was sold
to Watson Pharmaceuticals, Inc., a pharmaceutical concern. Mr. Wilber currently
is the President of Lynn's Hallmark Cards which owns and operates a number of
Hallmark Card stores.
Information regarding Messrs. Vander Putten and Yanover is included under
the heading "Proposal I--Election of Directors."
EXECUTIVE COMPENSATION
The following table summarizes the compensation for services rendered in
all capacities to the Company during the past two completed fiscal years by the
Company's Chief Executive Officer and all other executive officers of the
Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------- SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND POSITION(1) YEAR SALARY BONUS OPTIONS COMPENSATION(2)
- - -------------------- ------ ------ ----- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Scott Scherr 1998 $239,774 $0 0 $2,500
Chairman of the Board, 1997 200,000 0 316,725 2,084
President and Chief
Executive Officer
Alan Goldstein, M.D. 1998 219,231 0 0 2,500
Executive Vice President and 1997 200,000 0 244,880 2,375
Chief Technology Officer
Mitchell K. Dauerman 1998 209,615 0 0 2,500
Executive Vice President, 1997 200,000 0 86,012 2,375
Chief Financial Officer
and Treasurer
</TABLE>
- - ----------------
(1) James M. Alu became an executive officer in February 1999 when he became an
Executive Vice President of the Company. Since he was not an executive
officer before that date, Mr. Alu is not included in this table or the
table below with respect to option grants.
(2) Consists of contributions by the Company to the Company's 401(k) Plan on
behalf of the executive officers indicated.
OPTION GRANTS IN LAST FISCAL YEAR
There were no individual grants of options to the executive officers
during the year ended December 31, 1998.
9
<PAGE>
The following table shows the number of shares covered by both exercisable
and unexercisable stock options held by the executive officers as of the fiscal
year ended December 31, 1998, and the values for exercisable and unexercisable
options. No options were exercised during such fiscal year by the executive
officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT FISCAL YEAR-END
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, 1998 DECEMBER 31, 1998(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Scott Scherr ................. 158,362 158,362 $ 0 $ 0
Alan Goldstein, M.D. ......... 122,440 122,440 0 0
Mitchell K. Dauerman ......... 116,652 43,006 144,714 0
</TABLE>
- - ----------------
(1) Options are in-the-money if the fair market value of the shares covered
thereby is greater than the option exercise price. This calculation is
based on the fair market value at December 31, 1998 of $7.125 per share,
less the exercise price.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANY STATEMENT TO THE CONTRARY IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS WITH THE COMMISSION, THIS REPORT SHALL NOT BE DEEMED
TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
The Compensation Committee of the Board (the "Committee") is composed of
two non-employee directors, Messrs. Vander Putten and Wilber, and is
responsible for developing and approving the Company's compensation program for
the executive officers, including the Chief Executive Officer, and other
officers of the Company. In addition, the Committee oversees the Company's
stock plans and such other benefits plans as the Company may from time to time
maintain.
COMPENSATION PHILOSOPHY
In general, the executive compensation program is designed to attract and
retain qualified executive officers who will contribute to the Company's
long-term success, to reward executive officers for achieving the Company's
strategic goals and to align the interests of the executive officers with those
of the Company's stockholders. This philosophy is reflected in a compensation
package that includes base salaries and benefits which are competitive with
other software and technology companies of comparable size and incentive
compensation which is related to the Company's achievement of specified
financial and other performance targets and which includes the granting of
stock options which creates a link between executive compensation and the
interests of the Company's stockholders.
BASE SALARY AND BENEFITS
In order to attract and retain qualified executives, the Company strives
to offer competitive base salaries and employee benefits, including health care
plans, a Section 401(k) Profit Sharing Plan and other employee benefit
programs. The Committee establishes base salary levels for executives by
comparison to industry compensation data for other software and technology
companies with revenues in the same range as that of the Company. The base
salaries of the executive officers were increased in July 1998 based on the
foregoing.
INCENTIVE COMPENSATION
Annual bonuses paid to the executive officers under the Incentive
Compensation Plan adopted by the Company in October 1998 (the "ICP"), are
expected to be a significant element of the Company's
10
<PAGE>
executive compensation program. The ICP is designed to reward executive
officers and employees for the achievement of corporate goals. Annual bonuses
under the ICP are based on actual performance measured against "key performance
variables." For 1998, these variables were (i) the Company's "net income before
bonuses" which is the Company's consolidated net income for the year before
taxes and before the charge to earnings from bonuses, (ii) the Company's
"license revenues", which are the Company's consolidated license revenues for
the year and (iii) "management objectives" which are financial and other
factors designated by the Committee for participants in the ICP.
The Compensation Committee assigns a relative weight to each of the key
performance variables to determine the portion of annual bonuses to be
represented by each variable. In addition, "threshold," "target" and "maximum"
objectives are set for each of the variables, and bonus payments, as a
percentage of base salary, are established for each objective level. Bonuses
are paid in the form of cash or stock options, issued under the Stock Option
Plan. The per share purchase price of the Common Stock under the stock options
is the fair market price of the Common Stock as of the date of grant. The
Black-Scholes evaluation method is used for determining the number of stock
options awarded in lieu of cash.
Awards of stock options to purchase an aggregate of 11,455 shares of the
Company's Common Stock were granted in 1999 to those individuals who were
executive officers in 1998. No cash compensation was awarded to executive
officers under the ICP for 1998 as the Committee determined when it adopted the
performance objectives for 1998 that any bonuses payable to executive officers
would be payable in stock options. No stock options were granted in 1998 to the
executive officers in view of a grant of stock options to the executive
officers in October 1997, prior to the completion of the Company's IPO and the
adoption of the ICP.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee determined the compensation for the fiscal year 1998 for the
Company's Chief Executive Officer, Mr. Scott Scherr, based primarily on
objective and subjective factors, including growth of the Company's business,
the key performance variables under the ICP, management of the operations of
the Company and by comparison to other software and technology companies of
similar size. Based on the foregoing, the Committee increased Mr. Scherr's base
salary from $200,000 to $250,000 in July 1998. For 1998, Mr. Scherr received a
bonus, paid in 1999, under the ICP in the form of options to purchase 4,108
shares of the Company's Common Stock for $7.75 per share. (See "Annual
Incentive Compensation.") No cash bonuses or stock options were granted to Mr.
Scherr in 1998 in view of a grant of stock options to Mr. Scherr and the other
executive officers in October 1997. The Committee believes that Mr. Scherr is
being appropriately compensated in a manner that relates to the performance and
competitive position of the Company and is in the long-term interests of the
stockholders.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Federal tax law generally disallows the corporate tax deduction for
certain compensation paid in excess of $1,000,000 annually to each of the chief
executive officer and the four other most highly paid executive officers of
publicly held companies. One of the exceptions to the deduction limit is for
"performance-based" compensation. The Committee believes the Stock Option Plan
satisfies the requirements for "performance-based compensation," thereby
exempting awards thereunder from the $1,000,000 compensation deduction limit.
For this reason, and because the Company's annual cash compensation to its
executive officers is currently below the $1,000,000 limit, the Company does
not at this time anticipate any loss of deductibility under the Federal tax law
for compensation paid to its executive officers. The Company was not denied a
deduction under this law for any compensation paid to its executive officers
during 1998.
LeRoy A. Vander Putten, Chairman
Rick Wilber
Members of the Compensation Committee
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board are Messrs.
LeRoy A. Vander Putten and Rick Wilber. No executive officer of the Company has
served as a member of the compensation committee of any other entity whose
executive officers served as a member of the Compensation Committee of the
Board.
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder returns on
the Company's Common Stock for the period covering June 2, 1998 (the first day
of trading pursuant to the Company's initial public offering of 3,250,000
shares of Common Stock at an offering price of $10 per share) through December
31, 1998, on a monthly basis, with the cumulative total return of The Nasdaq
Stock Market--US (the "Nasdaq Market") Index and the Hambrecht & Quist Computer
Software (the "H & Q Computer Software ") Index for the same period.
COMPARISON OF SEVEN-MONTH CUMULATIVE TOTAL RETURN(1) AMONG THE COMPANY(2),
THE NASDAQ MARKET INDEX AND H & Q COMPUTER SOFTWARE INDEX
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
- - ----------------------------------------------------------------------------------------------
6/2/98 6/98 7/98 8/98 9/98 10/98 11/98 12/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ULTIMATE SOFTWARE 100 93 85 60 95 70 63 71
NASDAQ MARKET 100 108 107 86 98 102 112 127
H&Q COMPUTER SOFTWARE 100 109 103 79 91 87 97 106
</TABLE>
- - ----------------
(1) Assumes the investment of $100 on June 2, 1998 and reinvestment of
dividends (no dividends were declared on the Company's Common Stock
during the period).
(2) Prior to the IPO, the Company's Common Stock was not listed or quoted on
any organized market system.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In mid-1999, the Company intends to move its corporate headquarters into a
new and larger facility currently under construction in Weston, Florida. On
December 31, 1998, the Company executed a commercial office lease to lease all
available square footage in this new facility, or approximately 40,000 square
feet. The lessor for this facility is a limited partnership of which Mr. Marc
Scherr, a director of the Company, is a limited partner. Execution of the lease
was approved by a majority of disinterested members of the Board of Directors
of the Company. The annual rent payable under the lease is approximately
$698,000. The Company believes that the terms of the lease are no less
favorable than could be obtained from an unaffiliated party.
Mr. Marc Scherr, Vice Chairman of the Board, devotes a portion of his
professional time to assisting the Company's management in connection with the
Company's business operations generally and, in particular, the negotiation and
development of the Company's business partner relationships. Mr. Scherr
receives no salary for these services and he does not receive the quarterly
retainer payable to non-employee directors. (See "Director Compensation.") Mr.
Scherr does participate in the ICP. In connection therewith, Mr. Scherr
received options to purchase 25,000 shares of Common Stock at $10.00 per share
for performance in 1998. In addition, in 1998 the Company paid $150,000 to Mr.
Scherr's employer, Gerschel & Company, to reimburse it for Mr. Scherr's time
and certain business-related expenses.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who beneficially own
more than 10% of the Company's Common Stock to file initial reports of
ownership and reports of changes in ownership with the Commission. Such
executive officers, directors and greater than 10% beneficial owners are
required by the regulations of the Commission to furnish the Company with
copies of all Section 16(a) reports they file. Based solely on a review of the
copies of such reports furnished to the Company and written representations
from the executive officers and directors, the Company believes that all
Section 16(a) filing requirements applicable to its executive officers and
directors and greater than 10% beneficial owners were met during 1998.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Under the rules of the Commission, any proposal by a stockholder to be
presented at the 2000 Annual Meeting of Stockholders and to be included in the
Company's proxy statement must be received at the Company's principal corporate
office: 3111 Stirling Road, Fort Lauderdale, Florida 33312 (prior to June 30,
1999) or 2000 Ultimate Way, Weston, Florida 33326 (after June 30, 1999), no
later than the close of business on December 24, 1999. Proposals should be sent
to the attention of the Secretary of the Company. Any such stockholder proposal
must comply with the applicable rules of the Commission.
Under the Company's By-Laws, proposals of Stockholders not included in the
proxy materials may be presented at the 2000 Annual Meeting of Stockholders
only if the Company's Secretary has been notified of the nature of the proposal
and is provided certain additional information at least sixty days but not more
than ninety days prior to April 22, 2000, the first anniversary of the proxy
statement in connection with the 1999 Annual Meeting of Stockholders (subject
to exceptions if the 2000 Annual Meeting is advanced by more than thirty days
and the proposal is a proper one for stockholder action). These provisions do
not affect the right of stockholders to make stockholder proposals for
inclusion in the proxy statements for the Company's Annual Meetings pursuant to
the rules of the Commission.
14
<PAGE>
OTHER MATTERS
FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Stockholders, including therewith
a copy of the Company's Annual Report on Form 10-K, for the year ended December
31, 1998 is being provided to stockholders with this Proxy Statement.
OTHER
The Company is not aware of any other matters that may come before the
Annual Meeting. If other matters are properly presented at the Annual Meeting,
it is the intention of the persons named as proxies in the enclosed proxy to
vote in accordance with their best judgment.
By Order of the Board of Directors:
/s/ Vivian Maza
Vivian Maza
Secretary
Fort Lauderdale, Florida
April 22, 1999
15
<PAGE>
DETACH HERE
USG48B
PROXY
THE ULTIMATE SOFTWARE GROUP, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoints Mitchell K.
Dauerman and Vivian Maza, with full power of substitution, as proxies to
represent and vote, as designated herein, all the shares of stock of The
Ultimate Software Group,Inc. (the "Company") which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company to be held at 3111 Stirling Road, Fort Lauderdale, Florida, on
Thursday, May 20, 1999, at 9:00 a.m., and at any adjournment thereof (the
"Annual Meeting").
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the Annual Meeting.
This proxy, when property executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAME HEREIN. Attendance
of the undersigned at the Annual Meeting will not be deemed to revoke this proxy
unless the undersigned shall revoke this proxy in writing or shall deliver a
subsequently dated proxy to the Secretary of the Company prior to the Annual
Meeting or shall vote in person at the Annual Meeting.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
DETACH HERE
USG48A
[X] Please mark
votes as in
this example.
1. To elect two directors to serve until the 2002 Annual Meeting.
Nominees:
FOR WITHHELD
LeRoy A. Vander Putten [ ] [ ]
Robert A. Yanover [ ] [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID
RETURN ENVELOPE.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
Signature:__________________ Date_______ Signature_______________ Date _________
