<PAGE> 1
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 (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 Rule 14a-11(c) or Rule 14a-12
SUPERIOR CONSULTANT HOLDINGS COMPANY
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
April 25, 1997
Dear Stockholder:
It is my pleasure to invite you to attend the 1997 Annual Meeting of
Stockholders of Superior Consultant Holdings Corporation. The meeting will be
held at 4:00 p.m. on Wednesday, May 14, 1997, at Hyatt Orlando Hotel, 6375 Irlo
Bronson Memorial Highway, Kissimmee, Florida 34747.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describes the items of business which will be discussed during the
meeting. It is important that you vote your shares whether or not you expect to
attend the meeting. To be sure your vote is counted, we urge you to carefully
review the Proxy Statement and to vote your choices. PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE.
If you attend the meeting and wish to vote in person, the ballot that you submit
at the meeting will supersede your proxy.
I look forward to seeing you at the meeting. On behalf of the management
and directors of Superior Consultant Holdings Corporation, I want to thank you
for your continued support and confidence in the Company.
Sincerely,
RICHARD D. HELPPIE, JR.
Richard D. Helppie, Jr.
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 3
SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1997
To the Stockholders of Superior Consultant Holdings Corporation:
The Annual Meeting of Stockholders of Superior Consultant Holdings
Corporation, a Delaware corporation (the "Company"), will be held at Hyatt
Orlando Hotel, 6375 Irlo Bronson Memorial Highway, Kissimmee, Florida on
Wednesday, May 14, 1997, at 4:00 p.m. local time for the following purposes, as
more fully described in the accompanying Proxy Statement:
1. To elect two directors to the Board of Directors of the Company,
each to serve for a term of three years; and
2. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record of the Company's common stock, par value $0.01 per
share, at the close of business on March 18, 1997, the record date fixed by the
Board of Directors, are entitled to notice of, and to vote at, the meeting, as
more fully described in the Proxy Statement. A list of stockholders entitled to
vote at the meetings will be available for inspection by any stockholder during
the meeting.
Stockholders who cannot attend are urged to sign, date and otherwise
complete the enclosed proxy card and return it promptly in the envelope
provided. Any stockholder giving a proxy has the right to revoke it at any time
before it is voted.
The annual report of the Company for the fiscal year ended December 31,
1996 is being mailed to all stockholders of record and accompanies this Proxy
Statement.
For the Board of Directors,
SUSAN M. SYNOR
Secretary
Southfield, Michigan
April 25, 1997
<PAGE> 4
SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
-------------------------
PROXY STATEMENT
-------------------------
The following information is provided in connection with the solicitation
of proxies for the 1997 Annual Meeting of Stockholders of Superior Consultant
Holdings Corporation, a Delaware corporation (the "Company"), to be held on May
14, 1997, and any adjournments thereof (the "Annual Meeting"), for the purposes
stated in the Notice of Annual Meeting of Stockholders preceding this Proxy
Statement. Unless the context otherwise indicates, all references to the
"Company" include the Company's wholly-owned subsidiaries, Superior Consultant
Company, Inc. ("Superior") and UNITIVE Corporation ("Unitive").
VOTING OF SHARES
This Proxy Statement and the accompanying proxy card are being mailed to
stockholders, beginning on or about April 25, 1997, in connection with the
solicitation of proxies on behalf of the Board of Directors of the Company (the
"Board") for the Annual Meeting. Proxies are solicited to give all stockholders
of record on March 18, 1997 (the "Record Date") an opportunity to vote on
matters to be presented at the Annual Meeting. Shares can be voted at the
meeting only if the stockholder is present or represented by proxy.
Each share of the Company's common stock, par value $0.01 per share (the
"Common Stock"), represented at the Annual Meeting is entitled to one vote on
each matter properly brought before the Annual Meeting. Please specify your
choices by marking the appropriate boxes on the enclosed proxy card and signing
it. Directors are elected by a plurality of the votes cast by the shares
entitled to vote at a meeting at which a quorum is present. A plurality means
that the nominees with the largest number of votes are elected as directors up
to the maximum number of directors to be chosen at the meeting. Any other
matters that may be submitted at the meeting shall be determined by a majority
of the votes cast. Shares represented by proxies that are marked "withhold
authority" with respect to the election of one or more nominees for election as
directors, and proxies which are marked to deny discretionary authority on other
matters will not be counted in determining whether a majority vote was obtained
in such matters. If no directions are given and the signed card is returned, the
persons named in the proxy card will vote the shares in favor of the election of
all listed nominees, and at their discretion on any other matter that may
properly come before the meeting in accordance with their best judgment. If a
broker or other nominee holding shares for a beneficial owner does not vote on a
proposal (broker non-votes), the shares will not be counted in determining the
number of votes cast. Stockholders voting by proxy may revoke that proxy at any
time before it is voted at the meeting by delivering to the Company a proxy
bearing a later date or by attending in person and casting a ballot.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED AND SIGNED PROXY CARD
PROMPTLY SO YOUR SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE
MEETING IN PERSON.
As of the Record Date, 7,634,325 shares of Common Stock were issued and
outstanding.
<PAGE> 5
MEETINGS OF THE BOARD OF DIRECTORS,
BOARD COMMITTEES AND COMMITTEE COMPOSITION
GENERAL
The business affairs of the Company are managed under the direction of the
Board. Members of the Board are kept informed through various reports and
documents sent to them on a regular basis, through operating and financial
reports routinely presented at Board and committee meetings by the Chief
Executive Officer and other officers, and through other means. The Board had no
meetings in 1996.
Biographical information on the director nominees and the directors serving
unexpired terms is set forth herein under the caption "Item No. 1 -- Election of
Directors."
COMMITTEES
Prior to October 1996 the Board did not have any committees. In October
1996, the Board formed the Audit Committee and the Compensation Committee to
assist the Board in carrying out its duties. The Company has no nominating
committee. The nominating function is performed by the Board, which has not
established any policy or procedure for considering nominees recommended by
stockholders.
The AUDIT COMMITTEE had two members as of December 31, 1996, both of whom
were independent, nonemployee directors. Members of this committee were Bernard
J. Lachner and Richard P. Saslow. Mr. Saslow joined the Company in January 1997
as vice-president and general counsel of the Company. The Audit Committee was
expanded on January 20, 1997 to add Douglas S. Peters as chairperson of the
Committee. Mr. Peters is an independent, non-employee director. The Audit
Committee, as now constituted, therefore has three members, two of whom are
independent, non employee directors. The Audit Committee considers the adequacy
of the internal controls of the Company and the objectivity and integrity of
financial reporting and meets with the independent certified public accountants
and appropriate Company financial personnel about these matters.
The COMPENSATION COMMITTEE has three members, two of whom are independent,
non-employee directors. Members of the committee are Mr. Lachner, Donald W.
Simborg, M.D. and Richard D. Helppie, Jr., who is the President and Chief
Executive Officer of the Company. This committee monitors and makes
recommendations to the Board with respect to compensation programs for directors
and officers, administers compensation plans for executive officers, and
provides oversight with respect to employee benefit plans. Its Report on
Executive Compensation is set forth herein under the caption "Compensation
Committee Report on Executive Compensation." The committee has constituted a
subcommittee, consisting of the two independent, nonemployee directors, with
responsibility for determining the nature, timing and amount of awards and
grants under the Company's Long-Term Incentive Plan (the "Plan") to those
employees subject to the requirements of Section 16(b) under the Securities
Exchange Act of 1934.
COMPENSATION OF DIRECTORS
Directors who are not executive officers of the Company are paid a fee of
$1,000 for each Board meeting attended in person and all directors are
reimbursed for travel expenses incurred in connection with attending board and
committee meetings. Directors are not entitled to additional fees for serving on
committees of the Board of Directors. Pursuant to the terms of the formula
program of the Plan, each director of the Company appointed after October 1996
who is not otherwise employed by the Company when he becomes a director
automatically will be granted an option to purchase 3,000 shares of Common Stock
for each year of the term to be served upon his initial election or re-election
to the Board of Directors. The options will have an exercise price equal to the
fair market value of the Common Stock on the date of grant and will be fully
vested on the date of grant. Messrs. Lachner, Simborg, Peters, Saslow and
Ballantyne were each granted an option to purchase 3,000 shares of Common Stock,
all of which vested on October 9, 1996. These options are exercisable at $16.00
per share.
2
<PAGE> 6
ITEM NO. 1 -- ELECTION OF DIRECTORS
The Board, pursuant to the Company's Certificate of Incorporation, has
determined that the number of directors of the Company shall be six. The Board
is divided into three classes with staggered terms so that the term of one class
expires at each annual meeting of stockholders. Directors are elected by a
plurality of the votes cast.
The following nominees have been selected and approved by the Board for
submission to the stockholders: Bernard J. Lachner and Douglas S. Peters, each
to serve a three-year term expiring at the 2000 Annual Meeting. Except as
otherwise specified in the proxy, proxies will be voted for election of these
nominees.
If a nominee becomes unable or unwilling to serve, proxies will be voted
for election of such person as shall be designated by the Board; however,
management knows of no reason why any nominee should be unable or unwilling to
serve. All of the nominees have consented to be named as nominees and to serve
as directors if elected.
A brief listing of each nominee and each director serving an unexpired term
follows.
3
<PAGE> 7
NOMINEES FOR ELECTION AT THIS
MEETING TO TERMS EXPIRING IN 2000
THE BOARD RECOMMENDS A VOTE "FOR" THESE NOMINEES
DOUGLAS S. PETERS (age 53) has served as a director of the Company since
August 1996. Mr. Peters has served as the President and Chief Executive Officer
of Jefferson Health System since the 1995 merger with Main Line Health System.
Previous to that, Mr. Peters served in the same capacity for Main Line. Mr.
Peters is also a director with the Philadelphia Contributionship and serves on
the Advisory Board of First Union Bank. Mr. Peters is a fellow with American
College of Healthcare Executives ("ACHE").
BERNARD J. LACHNER (age 69) has served as a director of the Company since
August 1996. From July 1972 until his retirement in November 1992, Mr. Lachner
served as the Chief Executive Officer of Evanston Hospital Corporation. Other
directorships include subsidiaries of Allstate Insurance and St. Joseph Health
System. Mr. Lachner founded Ohio State University's graduate program in Health
Services Administration and served as its first director. He is a fellow in
ACHE, and is a past member of its Board of Governors. He has also served as the
Chairman of the American Hospital Association ("AHA").
DIRECTORS WHOSE TERMS
CONTINUE UNTIL 1998
DONALD W. SIMBORG M.D. (age 56) has served as a director of the Company
since August 1996. Mr. Simborg has been the Chief Executive Officer of KnowMed
Systems, a software company, since October 1995. In 1994, Dr. Simborg served as
a Vice President of Medicus Systems. From 1990 to 1993, he served as Chief
Executive Officer for Bell Atlantic Healthcare.
REGINALD M. BALLANTYNE III (age 53) has served as a director of the Company
since August 1996. He has served as the President of PMH Health Resources, Inc.
since 1984. Prior to that, Mr. Ballantyne served as President of Phoenix
Memorial Hospital. Mr. Ballantyne is the current Chairman of the AHA and
continues to be the Chairman for the 1997 term. He is also a fellow of the ACHE.
Mr. Ballantyne has served as a member of the national Board of Commissioners for
the Joint Commission on Accreditation of Healthcare Organizations, and as
Chairman of the AHA Committee of Commissioners.
DIRECTORS WHOSE TERMS
CONTINUE UNTIL 1999
RICHARD D. HELPPIE, JR. (age 41) has served as Superior's President and
Chief Executive Officer since he founded Superior in May 1984. Mr. Helppie also
founded Unitive and currently serves as Unitive's Chairman and Chief Executive
Officer. Mr. Helppie also serves as Chairman, Chief Executive Officer and
President of the Company and is a director. Mr. Helppie has more than 20 years
of experience in the healthcare and information systems industries.
RICHARD P. SASLOW (age 50) has served as a director of the Company since
August 1996 and has served as a vice president and general counsel of the
Company since January 1997. Prior to that, Mr. Saslow practiced business law and
commercial litigation and provided services to the Company with the firm of
Butzel Long, PC since January 1991. Prior to that period, Mr. Saslow practiced
law with the firm of Butzel, Keidan, Simon, Myers & Graham from 1974 to 1990.
4
<PAGE> 8
OTHER MATTERS TO COME BEFORE MEETING
If any matter not described herein should properly come before the meeting,
the persons named in the proxy card will vote the shares in accordance with
their best judgment. At the time this Proxy Statement was printed, the Company
knew of no other matters which might be presented for stockholder action at the
Annual Meeting.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
RESPONSIBILITIES AND COMPOSITION OF THE COMMITTEE
The Compensation Committee of the Company's Board of Directors (the
"Committee") is responsible for (i) establishing compensation programs for
executive officers of the Company designed to attract, motivate and retain key
executives responsible for the Company's success; (ii) administering and
maintaining such programs in a manner that will benefit the long-term interests
of the Company and its stockholders; and (iii) determining the compensation of
the Company's Chief Executive Officer. The Committee is composed of three
directors. Two of these directors are nonemployees. The third member of the
Committee is the Company's Chief Executive Officer.
This report is intended to clearly describe the philosophy that underlies
the cash, equity and equity-based components of the Company's executive
compensation program. It also describes the details of each element of the
program, as well as the rationale for compensation paid to the Company's Chief
Executive Officer and its executive officers in general.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that the Company's executive officer compensation
should be determined according to a competitive framework and based on overall
financial results, individual contributions and teamwork that help build value
for the Company's stockholders. Within this overall philosophy, the Committee
bases the compensation program on the following principles:
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
The Company's executive compensation program is designed to link executive
pay to Company performance and to provide an incentive to executives to manage
the Company with a principal view to enhancing stockholder value.
Generally, the Company's executive compensation program makes a significant
portion of each executive's cash compensation contingent upon growth and
improvement in the Company's results of operations, with the potential to earn
exceptional rewards for exceptional performance. More specifically, the program
is designed to provide compensation for meeting and exceeding internal goals and
to provide incentives to increase the market value of the Company's Common
Stock. The program is also designed to attract and retain talented executives
who are essential to the Company's long-term success within a highly competitive
industry that demands unique talents, skills and capabilities.
Compensation criteria are evaluated annually to ensure they are appropriate
and consistent with the business objectives which are important in meeting the
Company's earnings per share, operating profits and revenue goals and in
enhancing stockholder value. The Company's executive compensation policies and
programs are intended to: (i) provide rewards contingent upon Company and
individual performance; (ii) link executive compensation to sustainable
increases in and the preservation of stockholder value; (iii) promote teamwork
among executives and other Company employees; (iv) effect retention of a strong
management team; and (v) encourage personal and professional development and
growth.
5
<PAGE> 9
ANNUAL COMPENSATION
Each of the executive officers has entered into an employment agreement
with the Company. In general, these employment agreements fix base compensation
and provide for bonuses contingent upon the attainment of certain performance
objectives.
BASE SALARY. The Committee reviews the salary of each of its executive
officers annually. Objective and subjective performance goals are set each year
for each such executive officer. These goals vary depending upon the specific
position or role of the executive within the Company. The Committee's review
takes into consideration both the Company's performance with respect to earnings
per share, operating profits and revenue, and also the duties and performance of
each executive. The Committee also considers provisions relating to salary set
forth in employment agreements with certain of the Company's executive officers.
In making salary recommendations or decisions, the Committee exercises its
discretion and judgment based on the foregoing criteria, without applying a
specific formula to determine the weight of each factor considered. The
Committee also considers equity and fairness when comparing base salaries of
executives.
INCENTIVE BONUSES. In 1996 the Board approved a new compensation program
based on certain financial performance criteria, including revenue growth,
profitability and percentage performance of target goals, and in 1997 these
financial performance criteria were revised. Each of the Company's Named
Executive Officers (as defined below) is covered under either the 1996
compensation program or the 1997 compensation program. Named Executive Officers
have annual and other periodic bonus opportunities equal to a portion of their
respective base salaries. The bonus payable is contingent upon the attainment of
objectives determined by the Committee. Other senior managers have similar bonus
arrangements.
LONG-TERM INCENTIVE COMPENSATION PLAN
The Committee believes that the granting of stock options and other forms
of equity compensation is an important method of rewarding and motivating
management by aligning management's interests with those of the Company's
stockholders on a long-term basis. In addition, the Committee recognizes that
the Company conducts its business in an increasingly competitive industry and
that, in order for the Company to remain highly competitive and at the same time
pursue a high-growth strategy, it must employ the best and most talented
executives, managers, and technical personnel who possess demonstrated skills
and experience. The Company believes that stock options and other forms of
equity compensation have given and continue to give the Company a significant
advantage in attracting and retaining such employees. The Committee believes the
Plan is an important feature of the Company's executive compensation package.
Under the Plan, the Committee's stock option subcommittee may grant options and
other forms of equity, equity-based or performance-based compensation to
executive officers who are expected to contribute materially to the Company's
future success. In determining the size of stock option and other grants, the
subcommittee focuses primarily on the Company's performance and the perceived
role of each executive in accomplishing such performance objectives, as well as
the attainment of individual performance objectives.
The Committee intends to continue using stock options and other forms of
equity-based compensation as the primary long-term incentive for the Company's
executive officers. Because they generally provide rewards to executives only to
the extent the Company's stock price increases after the options or other equity
awards are granted the Committee feels that stock options and other equity-based
awards granted under the Plan are an appropriate means to provide executives
with incentives that closely align their interests with those of stockholders
and thereby encourage them to promote the ongoing success of the Company.
6
<PAGE> 10
POLICY ON DEDUCTIBILITY OF COMPENSATION
It is the responsibility of the Committee to address the provisions of
Section 162(m) of the Internal Revenue Code which, except in the case of
"performance-based compensation" and certain other types of compensation, limit
to $1,000,000 the amount of the Company's federal income tax deduction for
compensation paid to the Chief Executive Officer and the other four most highly
paid executive officers. In that regard, the Committee must determine whether
any actions with respect to Section 162(m) should be taken by the Company. At
this time, the Committee has determined that the Section 162(m) deduction
limitation will not apply in 1996 because the Company falls within the extended
reliance period for corporations that become publicly held in connection with an
initial public offering. The Committee will continue to monitor the reliance
period and will take appropriate action when it is warranted in the future.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's salary, bonus and long-term awards follow the
policies set forth above. For the 1996 fiscal year, Mr. Helppie's base salary
was $436,196. Mr. Helppie was awarded a bonus of $2,558,779. He also received
$7,054 in profit sharing under the Company's 401(k) plan. Mr. Helppie did not
receive grants of any stock options, restricted stock, stock appreciation rights
or any payout under the Plan.
The foregoing report has been approved by all of the members of the
Committee.(1)
THE COMPENSATION COMMITTEE
Richard D. Helppie, Jr.
Bernard J. Lachner
Donald W. Simborg, M.D.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Richard D. Helppie, Jr. is the Company's Chief Executive Officer and a
member of the Compensation Committee since August 1996. The Company did not have
a Compensation Committee prior to August 1996. Accordingly, Mr. Helppie who
served as both a director and executive officer prior to August 1996, had
responsibility for all decisions with respect to executive officer compensation.
- ---------------
(1) Pursuant to Item 402(a)(9) of Regulation S-K promulgated by the Securities
and Exchange Commission (the "SEC"), neither the "Compensation Committee
Report on Executive Compensation" nor the material under the caption
"Stockholder Return Performance Graph" shall be deemed to be filed with the
SEC for purposes of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), nor shall such report or such material be deemed to be
incorporated by reference in any past or future filing by the Company under
the Exchange Act or the Securities Act of 1933, as amended (the "Securities
Act").
7
<PAGE> 11
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
Nasdaq Market Index and a Company-selected peer group of providers of consulting
and/or information services (the "Peer Group"). The graph assumes that $100 was
invested on October 10, 1996 (the effective date of the Company's initial public
offering) at the initial public offering price of $16.00 per share, in each of
the Company's Common Stock, the Nasdaq Market Index and the Peer Group, and that
all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR SUPERIOR CONSULTANT HOLDINGS CORPORATION
Prepared by Media General Financial Services
Produced on 03/24/97 including data to 12/31/96
<TABLE>
<CAPTION>
SUPERIOR
MEASUREMENT PERIOD CONSULTANT NASDAQ
(FISCAL YEAR HOLDINGS MARKET PEER
COVERED) CORPORATION INDEX GROUP
<S> <C> <C> <C>
10/10/96 100.00 100.00 100.00
10/31/96 153.13 98.85 93.25
11/30/96 150.00 104.99 93.26
12/31/96 154.69 104.75 97.97
</TABLE>
Notes:
(a) Peer Group return is weighted by market capitalization.
(b) The Peer Group is comprised of the common stock of the following
companies: Cambridge Technology Partners, Inc.; Cerner Corporation;
Claremont Technology Group; Computer Sciences Corporation; HBO &
Company; The Metzler Group, Inc.; The Registry, Inc.; Renaissance
Solutions, Inc.; Sapient Corporation; Shared Medical Systems
Corporation; and Whittman-Hart, Inc.
8
<PAGE> 12
MANAGEMENT COMPENSATION
GENERAL
The following table sets forth all compensation awarded or earned by the
Company's President and Chief Executive Officer and the four other most highly
paid executive officers during the last two fiscal years (the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
------------------------------------ ------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS (#) COMPENSATION(4)
--------------------------- ------ ------ ----- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Helppie, Jr. ..... 1996 $436,196 $2,558,779 $ -- -- $7,926
President, Chief Executive 1995 477,000 1,948,448 -- 9,709
Officer and Chairman of the
Company
Charles O. Bracken........... 1996 317,136 527,061 -- -- 7,926
Executive Vice President 1995 318,000 378,419 150,000(2) 9,709
Superior
Robert R. Tashiro............ 1996 204,493 364,745 -- 5,000 7,926
Senior Vice President and 1995 176,000 207,162 75,000(2) 9,709
Chief Operating Officer of
Superior
James T. House............... 1996 95,000 120,413 13,556(3) 20,000 7,664
Vice President, Chief 1995 80,000 62,145 -- 7,198
Financial Officer,
Treasurer and Assistant
Secretary of the Company
Kenneth T. Boone............. 1996 125,000 13,464 -- -- 7,332
President and Chief 1995 90,000 63,500 -- 7,975
Operating Officer of
Unitive
</TABLE>
- -------------------------
(1) The Company has entered into agreements, effective as of October 16, 1996
through the end of fiscal 1997, with Messrs. Helppie, Bracken and Tashiro,
which provide these three executives with aggregate annual compensation of
$1,060,000, comprised of base salary and bonus compensation based on
achievement of certain pre-determined performance criteria. These agreements
do not apply to amounts paid to these three officers on or prior to the
consummation of the Company's initial public offering.
(2) Other annual compensation for Messrs. Bracken and Tashiro represents the
difference between the dollar value paid by such persons for shares of
Common Stock in 1995 and the fair market value of the shares at the time of
the sale.
(3) Consists of gain on exercise of stock options.
(4) Represents amounts paid by the Company during fiscal 1996 for (i) long-term
and short-term disability insurance premiums as follows: Messrs. Helppie,
Bracken, Tashiro and Boone $450 each, and Mr. House $348, (ii) life
insurance premiums for which the Company is not the beneficiary as follows:
Messrs. Helppie, Bracken and Tashiro $422 each, Mr. House $262 and Mr. Boone
$450, and (iii) profit sharing contributions made by the Company as follows:
Messrs. Helppie, Bracken, Tashiro and House $7,054 each and Mr. Boone
$6,432.
9
<PAGE> 13
EXECUTIVE OPTION GRANTS
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers in 1996.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
NUMBER OF GRANTED TO OPTION TERM(1)
SECURITIES UNDERLYING EMPLOYEES IN EXERCISE PRICE EXPIRATION ----------------------
NAME OPTIONS GRANTED FISCAL 1996 PER SHARE(2) DATE 5% 10%
---- --------------------- ------------- -------------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Richard D. Helppie,
Jr.................... -- -- $ -- -- $ -- $ --
Charles O. Bracken...... -- -- -- -- -- --
Robert R. Tashiro....... 5,000 2.2% 16.00 10/10/06 22,100 48,850
James T. House.......... 20,000 8.9% 16.00 10/10/06 88,400 195,400
Kenneth T. Boone........ -- -- -- -- -- --
</TABLE>
- -------------------------
(1) In accordance with SEC rules, these columns show gains that might exist for
the option over the life of the option, a period of ten years. This
valuation is hypothetical; if the stock price does not increase above the
exercise price, compensation to the named executive officers will be zero. A
5% or 10% annually compounded increase in the Company's stock price from the
date of grant to the end of 10-year option term would result in stock prices
of $20.42 and $25.77 per share, respectively.
(2) The options becomes exercisable at a rate of 20% per year, on the
anniversary date of the grant, over a five-year period.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning stock options
exercised by the Named Executive Officers during 1996, as well as the value of
unexercised options held by such persons on December 31, 1996. The values of
in-the-money options (which represent the positive spread between the exercise
price of any existing stock options and $24.75 per share, the closing price of
the Common Stock as reported by the Nasdaq National Market on December 31, 1996)
also are included.
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1996 DECEMBER 31, 1996
UPON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Helppie, Jr...... -- $ -- -- -- $-- $ --
Charles O. Bracken.......... -- -- -- -- -- --
Robert R. Tashiro........... -- -- -- 5,000 -- 43,750
James T. House.............. 1,066 13,556 -- 20,000 -- 175,000
Kenneth T. Boone............ -- -- -- -- -- --
</TABLE>
- -------------------------
(1) Calculated as the difference between the fair market value of the Company's
Common Stock at the time of the option exercise and the exercise price.
10
<PAGE> 14
EMPLOYMENT AGREEMENTS
Richard D. Helppie, Jr.'s employment agreement limits his aggregate annual
compensation to $400,000, consisting of a combination of base salary and bonus,
through the end of fiscal 1997. This agreement became effective October 16,
1996.
Charles O. Bracken's employment agreement provides for an annual base
salary of $290,000 and annual performance-based bonus of up to $75,000 per year
through the end of fiscal 1997. Under the employment agreement, Mr. Bracken is
subject to noncompetition, nonsolicitation and nondisclosure covenants.
Robert R. Tashiro's employment agreement provides for an annual base salary
of $220,000 and an annual performance-based bonus of up to $75,000 per year
through the end of fiscal 1997. Under the employment agreement, Mr. Tashiro is
subject to noncompetition, nonsolicitation and nondisclosure covenants.
James T. House's employment agreement provides for his employment as a Vice
President and Chief Financial Officer of the Company at an annual base salary of
approximately $110,000. Mr. House also participates in the Company's 1997 Vice
President Bonus Plan pursuant to which he is eligible to receive quarterly and
annual base bonuses of $10,000 and $25,000, respectively (which base bonuses are
subject to increase or decrease based on performance as measured by revenue,
profit and certain other criteria as set forth in the respective plans). Under
the employment agreement, Mr. House is subject to noncompetition,
nonsolicitation and nondisclosure covenants.
Unitive has an agreement with Kenneth T. Boone that provides for his
employment as the President and Chief Operating Officer of Unitive at an annual
base salary of approximately $130,000. Mr. Boone is also participating in an
Executive Bonus Plan pursuant to which he is eligible to receive monthly,
quarterly, and annual base bonuses of $1,000, $10,500, and $20,000, respectively
(which base bonuses are subject to increase or decrease based on performance as
measured by revenue, profit and certain other criteria as set forth in the
respective plans). Under the employment agreement, Mr. Boone is subject to
noncompetition, nonsolicitation and nondisclosure covenants.
11
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1995, Superior loaned Mr. Bracken $500,000, evidenced by a term
promissory note bearing interest at 7.71% per annum. The note provides for equal
annual payments of principal and interest of $50,000, payable on December 31 of
each year beginning December 31, 1995 with the entire unpaid principal balance
due on December 31, 2015. At the option of the Company, the entire outstanding
indebtedness under the note may be accelerated in the event that Mr. Bracken's
employment with the Company is terminated. The largest amount of indebtedness
outstanding under such note during fiscal 1996 was $477,000 and as of December
31, 1996 was $465,000.
In April 1995, Superior loaned to Mr. Tashiro $250,000, evidenced by a term
promissory note, bearing interest of 7.71% per annum. The note provides for
equal annual payments of $25,000, payable on December 31 of each year beginning
December 31, 1995 with the entire principal balance due on December 31, 2015. At
the option of the Company, the entire outstanding indebtedness under the note
may be accelerated in the event that Mr. Tashiro's employment with the Company
is terminated. The largest amount of indebtedness outstanding under such note
was $238,000 during fiscal 1996 and as of December 31, 1996 was $233,000.
In September 1995, The Richard D. Helppie, Jr. Trust, of which Mr. Helppie
is Trustee, loaned Unitive $200,000, evidenced by a term promissory note bearing
interest at 8.75% per year. The outstanding principal balance was repaid by
Unitive before December 31, 1996.
In 1996, the Company entered into a tax indemnification agreement with the
S corporation shareholders of Superior which provides for, among other things,
the indemnification of each such shareholder for any losses or liabilities with
respect to any additional taxes (including interest, penalties and legal fees)
and the repayment to the Company of any amounts received as refunds, resulting
from Superior's operations during the period in which it was an S corporation.
Management believes that the Company's maximum exposure pursuant to this
agreement is not material.
In 1996, the Company chartered aircraft from Clearwater Aviation, Inc., of
which Mr. Helppie is sole stockholder. Payments under this arrangement were at
or below market rates and totaled $36,000 in 1996. This arrangement was approved
by a majority of the independent and disinterested members of the Board of
Directors.
Mr. Saslow, a Director, was a shareholder in the law firm of Butzel Long,
PC, Detroit, Michigan. Butzel Long and Mr. Saslow's prior firm Butzel, Keidan,
Simon, Myers & Graham, have been outside general counsel to Superior since 1985
and Unitive since 1993. Mr. Saslow joined the Company as a vice president and
general counsel in January 1997.
12
<PAGE> 16
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND PRINCIPAL HOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 17, 1997 by: (i) each person known by the
Company to own beneficially more than five percent of the outstanding shares of
Common Stock; (ii) each of the Company's directors and nominees for directors;
(iii) each of the Named Executive Officers; and (iv) all directors and executive
officers of the Company as a group. (Each person named below has an address in
care of the Company's principal executive offices.) The Company believes that
each person named below has sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by such holder, subject to
community property laws where applicable.
NAME OF BENEFICIAL OWNER
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
--------------------
NUMBER PERCENT
------ -------
<S> <C> <C>
Richard D. Helppie, Jr.(2).................................. 3,927,001 51.3%
Charles O. Bracken.......................................... 389,223 5.1
Robert R. Tashiro........................................... 194,610 2.5
James T. House.............................................. 12,500 *
Kenneth T. Boone............................................ 38,576 *
Reginald M. Ballantyne III(3)............................... 3,000 *
Bernard Lachner(3).......................................... 3,000 *
Douglas S. Peters(3)........................................ 3,000 *
Richard P. Saslow(3)........................................ 3,000 *
Donald W. Simborg, M.D.(3).................................. 3,000 *
All Directors and Executive Officers as a group (10
persons).................................................. 4,576,910 59.8%
</TABLE>
- -------------------------
* less than 1%
(1) Applicable percentage of ownership as of March 17, 1997 is based upon
7,649,325 shares of Common Stock outstanding, and is determined by assuming
the exercise of options that are held by such persons (but not those held by
any other person) which are exercisable within 60 days of the date hereof.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes voting and investment power
with respect to the shares shown as beneficially owned.
(2) All shares are held by The Richard D. Helppie, Jr. Trust, of which Mr.
Helppie is the sole trustee.
(3) Includes 3,000 shares issuable upon exercise of options exercisable within
60 days from the date hereof.
SECTION 16(A) BENEFICIAL OWNER REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
directors and executive officers, and any persons who own more than ten percent
of the Company's Common Stock, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock. Such persons are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all such Section 16(a) filing requirements were complied
with during the year ended December 31, 1996.
13
<PAGE> 17
STOCKHOLDER PROPOSALS FOR THE 1998 PROXY STATEMENT
Any stockholder satisfying the SEC requirements and wishing to submit a
proposal to be included in the Proxy Statement for the 1998 Annual Meeting of
Stockholders should submit the proposal in writing to Secretary, Superior
Consultant Holdings Corporation, 4000 Town Center, Suite 1100, Southfield,
Michigan 48075. The Company must receive a proposal by December 20, 1997 in
order to consider it for inclusion in the Proxy Statement for the 1998 Annual
Meeting of Stockholders.
VOTING PROCEDURES
Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business at the
Meeting. With regard to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld and broker non-votes will be excluded entirely
from the vote and will have no effect on the outcome.
OTHER INFORMATION
A copy of the Annual Report on Form 10-K as filed with the SEC for the year
1996 (excluding exhibits) will be furnished, without charge, by writing to Susan
Synor, Investor Relations, Superior Consultant Holdings Corporation, 4000 Town
Center, Suite 1100, Southfield, Michigan 48075.
SOLICITATION OF PROXIES
All expenses incident to the solicitation of proxies by the Company will be
paid by the Company. Solicitation may be made personally, or by telephone,
telegraph or mail, by one or more employees of the Company, without additional
compensation. The Company will reimburse brokerage houses and other custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred in
forwarding copies of solicitation material to beneficial owners of Common Stock
held of record by such persons.
The above Notice of Annual Meeting and Proxy Statement are sent by order of
the Company's Board of Directors.
SUSAN M. SYNOR
Secretary
Southfield, Michigan
April 25, 1997
14
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. ELECTION OF TWO CLASS I DIRECTORS -- FOR WITHHOLD FOR ALL
Nominees: Bernard J. Lachner ALL ALL EXCEPT AS NOTED
Douglas S. Peters / / / / / /
2. In their discretion, the Proxies are authorized
(INSTRUCTION: To withhold authority to to vote upon such other business as may properly
vote for any individual nominee, strike come before the meeting, or any adjournment
a line through the nominee's name in the thereof.
list above.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO SELECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
Dated:_____________________,1997
Signature(s)______________________________________
__________________________________________________
Please sign exactly as name appears at left. When
Shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or gaurdian, please give full title as
such. If as a corporation, please sign in full
corporate name by President or other authorized
officer. If as a partnership, please sign in full
partnership name by authorized person.
</TABLE>
PROXY PROXY
SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Richard D. Helppie, Jr. and Richard P.
Saslow as Proxies, and each of them, with the power to appoint their
substitutes, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares (Common) of Superior Consultant Holdings
Corporation (the "Company") held of record by the undersigned on March 18, 1997
at the Meeting of Shareholders when convened on Wednesday, May 14, 1997, or any
adjournment, thereof.
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT THE COMPANY AT 1-810-386-8300.
(Continued and to be signed on reverse side.)
