<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
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(Name of Registrant as Specified in Its Charter)
Superior Consultant
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(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)(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:
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(4) Date filed:
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<PAGE> 2
SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
April 16, 1998
Dear Stockholder:
It is my pleasure to invite you to attend the 1998 Annual Meeting of
Stockholders of Superior Consultant Holdings Corporation. The meeting will be
held at 4:00 p.m. on Wednesday, May 13, 1998, at the Town & Country Resort and
Convention Center, 500 Hotel Circle North, San Diego, California 92108.
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 13, 1998
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 the Town &
Country Resort and Convention Center, 500 Hotel Circle, San Diego, California
92108 on Wednesday, May 13, 1998, at 4:00 p.m. local time for the following
purposes, as more fully described in the accompanying Proxy Statement:
1. To elect three directors to the Board of Directors of the Company,
each to serve for a term of three years;
2. To vote on amending the Company's Certificate of Incorporation to
increase the maximum number of authorized directors from nine to fifteen
(the "Amendment"); and
3. 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 25, 1998, 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. For ten days prior to the meeting,
a list of stockholders entitled to vote at the meeting with the address of and
number of shares held by each will be kept on file (i) at the offices of the
Company at 4000 Town Center, Suite 1100, Southfield, Michigan 48075, (ii) at the
offices of the Company's transfer agent, Harris Trust and Savings Bank, located
at 311 W. Monroe Street, Chicago, Illinois 60606 and (iii) at the meeting place
at the Town & Country Resort and Convention Center, 500 Hotel Circle, San Diego,
California 92108 and will be subject to inspection by any stockholder at any
time during usual business hours. The list will also 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,
1997 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 16, 1998
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YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING
-------------------------
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SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
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PROXY STATEMENT
-------------------------
The following information is provided in connection with the solicitation
of proxies for the 1998 Annual Meeting of Stockholders of Superior Consultant
Holdings Corporation, a Delaware corporation (the "Company"(1)), to be held on
May 13, 1998, and any adjournments thereof (the "Annual Meeting"), for the
purposes stated in the Notice of Annual Meeting of Stockholders preceding this
Proxy Statement.
VOTING OF SHARES
This Proxy Statement and the accompanying proxy card are being mailed to
stockholders, beginning on or about April 16, 1998, in connection with the
solicitation of proxies on behalf of the Board of Directors of The Company (the
"Board") for the Annual Meeting.
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. To amend the
Certificate of Incorporation, two-thirds of the shares of the Company's
outstanding Common Stock, entitled to vote, must be voted in favor of the
proposed amendment. 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 or as to the proposed amendment, and proxies
which are marked to deny discretionary authority on other matters will not be
counted in determining whether the requisite 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 for the election of all listed nominees, in
favor of the proposed amendment 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, by written revocation 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.
Proxies are solicited to give all stockholders of record on March 25, 1998
(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. As of the Record Date, 10,220,464 shares of
Common Stock were issued and outstanding.
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(1) Unless the context otherwise indicates, all references to the "Company"
include the Company's wholly- owned subsidiaries, Superior Consultant
Company, Inc. ("Superior") and Enterprise Consulting Group, Inc.
("Enterprise").
<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, Chief Financial Officer and other officers, and through other
means.
During 1997, the Board held four regularly scheduled meetings and acted by
unanimous written consent in lieu of a meeting on nine additional occasions.
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
In October 1996 the Board formed the standing Audit Committee and the
Compensation Committee to assist the Board in carrying out its duties. In
February 1998 the Board formed the Nominating Committee to assist the Board in
carrying out its duties.
The NOMINATING COMMITTEE currently has three members, two of whom are
independent, non-employee directors. Members of the committee are Richard P.
Saslow, Reginald M. Ballantyne III and John L. Silverman, its Chairperson.
The AUDIT COMMITTEE currently has three members, two of whom are
independent, non-employee directors. Members of the committee are Richard P.
Saslow, Bernard J. Lachner and Douglas S. Peters, its Chairperson. 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. This Committee met four times during 1997.
The COMPENSATION COMMITTEE has three members, two of whom are independent,
non-employee directors. Members of the committee are Bernard J. Lachner, John L.
Silverman 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 compensation and 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, non-employee 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. This
Committee met four times during 1997.
COMPENSATION OF DIRECTORS
Pursuant to the terms of the formula program of the Long-Term Incentive
Plan, each director of the Company who is not otherwise employed by the Company
automatically will be granted an option to purchase 5,000 shares of Common Stock
upon his or her initial election to the Board and on each anniversary date of
his or her appointment to the Board of Directors during his or her term, and for
so long as he/she remains a director. The options will have an exercise price
equal to the fair market value of the Common Stock on the date of the grant. Of
the options to purchase 5,000 shares of Common Stock, options to purchase 3,000
shares will be fully vested on the date of the grant. The remaining option to
purchase 2,000 shares will become fully vested on the first anniversary of the
date of the grant, provided that the director/grantee shall have attended all
regularly scheduled meetings of the Board and shall have participated in not
less than 80% of all Board conference calls scheduled on notice of not less than
48 hours. Messrs. Lachner, Peters and Ballantyne were each granted an option to
purchase 5,000 shares of Common Stock, 3,000 of which vested on August 14, 1997,
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and were exercisable at $29.75 per share. The remaining 2,000 shares will vest
under the formula program on August 14, 1998, and will be exercisable at $29.75.
Upon joining the Board, Mr. Silverman was granted an option under the formula
program to purchase 5,000 shares of Common Stock, 3,000 of which vested on
October 1, 1997, and were exercisable at $29.75, per share. The remaining 2,000
shares will vest under the formula program on October 1, 1998, and will be
exercisable at $29.75. Upon joining the Board, Mr. George was granted an option
under the formula program to purchase 5,000 shares of Common Stock, 3,000 of
which vested on November 10, 1997, and were exercisable at $29.75 per share. The
remaining 2,000 shares will vest under the formula program on November 10, 1998,
and will be exercisable at $29.75. Directors are also reimbursed for travel
expenses incurred in connection with attending board and committee meetings.
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 currently be set at
seven. The two employee directors on the Board are the Company's Chief Executive
Officer and Vice President-General Counsel. The Board is divided into three
classes with staggered, three-year 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: Reginald M. Ballantyne III, Kenneth S. George
and John L. Silverman, each to serve a three-year term expiring at the 2001
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.
NOMINEES FOR ELECTION AT THIS
MEETING TO TERMS EXPIRING IN 2001:
THE BOARD RECOMMENDS A VOTE "FOR" THESE NOMINEES
REGINALD M. BALLANTYNE III (age 54) has served as a Director of the Company
since August 1996. Mr. Ballantyne has served on Superior's advisory council
since 1995. 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 Speaker of the American Hospital Association
("AHA") House of Delegates and the immediate past Chairman of the AHA. He is
also a fellow of the American College of Healthcare Executives ("ACHE"). Mr.
Ballantyne has served as a member of the national Board of Commissioners for
Joint Commission on the Accreditation of Healthcare Organizations.
KENNETH S. GEORGE (age 49) has served as a Director of the Company since
November, 1997. Mr. George is currently a General Partner for Riverside
Acquisition, L.L.C. From 1994 to 1995, Mr. George served as Chairman and Chief
Executive Officer for AmeriStat, Inc. which was sold in October, 1995 to Med
Trans., a subsidiary of Laidlaw. From 1988 through its sale to Healthtrust, Inc.
in 1994, Mr. George was Chairman and CEO of Epic Healthcare Group. Mr. George is
the founding Director of the Texas Lyceum Association and served as a member on
the Board of Managers for the Dallas County Hospital District.
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JOHN L. SILVERMAN (age 56), has served as a Director of the Company since
October, 1997. Mr. Silverman is currently an independent consultant to the
healthcare industry. For the past three years, he served as Chief Executive
Officer of AsiaCare, Inc. a southeast Asian healthcare investment company. From
1990 to August, 1997, he was the Vice President and Chief Financial Officer of
Chi Systems, Inc., a healthcare consulting company. Mr. Silverman is currently a
director of Integrated Health Services, Inc., Superior Consultant Holdings
Corporation, MHM Services, Inc., and Chi Laboratory Systems, Inc.
DIRECTORS WHOSE TERMS
CONTINUE UNTIL 1999:
RICHARD D. HELPPIE, JR. (age 42) has served as Superior's President and
Chief Executive Officer since he founded Superior in May 1984. Mr. Helppie also
founded Unitive, which was the predecessor company to Enterprise and which is
now a wholly owned subsidiary of Superior Consultant Holdings Corporation. Mr.
Helppie currently serves as Enterprise's Chairman and Chief Executive Officer.
Mr. Helppie also serves as Chairman and Chief Executive Officer, and is a
Director, of the Company. Mr. Helppie has more than 22 years of experience in
the healthcare and information systems industries.
RICHARD P. SASLOW (age 51) has served as a Director of the Company since
August 1996. Mr. Saslow practiced business law and commercial litigation with
the firm of Butzel Long, PC from January 1991 to January 1997. Prior to that
period, Mr. Saslow practiced law with the firm of Butzel, Keidan, Simon, Meyers
& Graham from 1974 to 1990. Mr. Saslow joined the Company in January 1997 and
has served since that time as Vice President and General Counsel.
DIRECTORS WHOSE TERMS
CONTINUE UNTIL 2000:
DOUGLAS S. PETERS (age 54) 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 its 1995 merger with Main Line Health System.
Previous to that, Mr. Peters served in the same capacity for Main Line Health,
Inc. Mr. Peters was a Senior Vice President with Blue Cross Blue Shield of
Illinois and prior to that was the President and CEO of Henry Ford Health
System. Mr. Peters has 31 years of healthcare industry experience. 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 70) has served as a Director of the Company since
August 1996. Mr. Lachner has served as the chairman of Superior's advisory
council since 1993. 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 American Hospital Association ("AHA"). Mr. Lachner is also a
member of the Healthcare Hall of Fame.
ITEM NO. 2 -- CERTIFICATE OF INCORPORATION AMENDMENT
GENERAL
Article VI of the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation"), currently provides that the
authorized number of directors shall be not less than three (3) nor more than
nine (9), with the exact number within the range to be fixed by resolution of
the Board. The number of directors is presently fixed by resolution of the Board
at seven. The Board has adopted a resolution authorizing an amendment to Article
VI of the Certificate of Incorporation (the "Amendment") to increase the maximum
number of authorized directors to fifteen and has submitted the Amendment to the
Stockholders for their approval at the Annual Meeting.
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THE AUTHORIZED DIRECTOR AMENDMENT
Upon stockholder approval of the Amendment, the authorized number of
directors shall not be less than three (3) nor more than fifteen (15). The Board
will continue to fix the exact number of directors within that range by
resolution and currently intends for the exact number to remain initially fixed
at seven.
REASONS FOR THE AMENDMENT
The purpose of the Amendment is to provide more flexibility to the Board
with respect to determining the number of Directors on the Board. With the
ability to fix the number of directors at a number greater than nine, the
Company may both retain additional directors from outside the Company whose
skills and experience will benefit the Company and the conduct and operations of
the Board and provide the Board with the ability to more effectively expand the
Company, without subjecting the Company or its stockholders to the additional
expense and effort required to amend the Certificate of Incorporation each time
the Company wishes to add a new director. The ability to add additional
directors will allow the Company to more expeditiously pursue business
combinations and other growth opportunities where additions to the Board would
be warranted or required, although the Company does not currently have any
understandings, commitments or agreements with respect to such transactions.
VOTE REQUIRED
The affirmative vote of two-thirds of the outstanding shares of the Company
is required to approve the Authorized Directors Amendment. The Board has already
approved the Authorized Directors Amendment subject to shareholder approval.
The Board recommends a vote FOR the Authorized Directors Amendment.
THE AUTHORIZED DIRECTORS AMENDMENT
Proposal to amend Article VI of the Certificate of Incorporation of the
Company by deleting the first sentence of such Article in its entirety and
replacing it with the foregoing:
The authorized number of directors of this Corporation shall be not
less than three (3) nor more than fifteen (15), with the exact number to be
fixed from time to time by resolution of the Board of Directors.
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 went to press, 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 the
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 have never served as employees of the Company.
The third member of the Committee is the Company's Chief Executive Officer.
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This report describes the philosophy that underlies the cash 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.
ANNUAL COMPENSATION
Each of the executive officers has entered into an agreement with the
Company in connection with their employment with the Company.
BASE SALARY. The Committee reviews the compensation of each of its
executives officers, not less than annually. Additionally, the objective and
subjective performance goals are set not less than annually 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 compensation of 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 between 23% to 64%
of their respective base salaries. The bonus payable, if any, 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
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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 and managers 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 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 equity 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 satisfaction of
individual performance objectives.
The Committee intends to continue using stock options and other forms of
equity 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
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.
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. 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 1997 fiscal year, Mr. Helppie's base salary
was $325,000. Mr. Helppie did not receive a bonus in 1997. He also received
$7,500 in profit sharing under the Company's 401(k) Plan. Mr. Helppie did not
receive grants of any 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
John L. Silverman, Chairperson
Richard D. Helppie, Jr.
Bernard J. Lachner
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Richard D. Helppie, Jr. is the Company's Chief Executive Officer, and has
been a member of the Compensation Committee since August, 1996. The Company did
not have a Compensation Committee prior to August, 1996. Prior to August, 1996,
Mr. Helppie, who then served as both a director and Chief Executive Officer, had
responsibility for all decisions with respect to executive officer compensation.
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(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, 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").
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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 at a 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 FOURTEEN-MONTH CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR SUPERIOR CONSULTANT HOLDINGS CORPORATION
Prepared by Media General Financial Services
Produced on March 23, 1998 including data to 12/31/97
CHART
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; International Business Machines; Mastech Corporation; The
Metzler Group, Inc.; Renaissance Worldwide Corporation; 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 three other most highly
paid executive officers during the last three 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....... 1997 $325,000 $ -- $ -- -- $8,911
President, Chief Executive 1996 436,196 2,558,779 -- -- 7,926
Officer and Chairman of the 1995 477,000 1,948,448 -- -- 9,709
Company
Charles O. Bracken........... 1997 290,000 -- -- -- 8,911
Executive Vice President of 1996 317,136 527,061 -- -- 7,926
Superior 1995 318,000 378,419 150,000(2) -- 9,709
Robert R. Tashiro............ 1997 220,000 -- -- -- 8,729
Senior Vice President and 1996 204,493 364,745 -- 5,000 7,926
Chief Operating Officer 1995 176,000 207,162 75,000(2) -- 9,709
of Superior
James T. House............... 1997 110,000 35,306 -- 7,272 8,263
Vice President, Chief 1996 95,000 120,413 13,556(3) 20,000 7,664
Financial Officer, 1995 80,000 62,145 -- -- 7,198
Treasurer
and Assistant Secretary of
the Company
</TABLE>
- -------------------------
(1) In connection with the IPO, the Company entered into agreements, effective
as of October 16, 1996 through the end of fiscal 1997, with Messrs. Helppie,
Bracken and Tashiro, which provided 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 Company's initial public offering in 1996.
(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 1997 for (i) long-term
and short-term disability insurance premiums as follows: Messrs. Helppie,
Bracken and Tashiro $807 each and Mr. House $552, (ii) life insurance
premiums for which the Company is not the beneficiary as follows: Messrs.
Helppie and Bracken $604 each, Mr. Tashiro $422 and Mr. House $211, and
(iii) profit sharing contributions made by the Company as follows: Messrs.
Helppie, Bracken, Tashiro and House $7,500 each.
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 1997.
OPTION GRANTS IN FISCAL 1997
<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 1997 PER SHARE(2) DATE 5% 10%
---- --------------------- ------------- -------------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Richard D. Helppie,
Jr................... -- -- $ -- -- $ -- $ --
Charles O. Bracken..... -- -- -- -- -- --
Robert R. Tashiro...... -- -- -- -- -- --
James T. House......... 7,272 2.0% 24.75 01/01/07 113,152 287,171
</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 $40.31 and $64.24 per share, respectively.
(2) The options become exercisable at a rate of 20% per year, on the anniversary
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 1997, as well as the value of
unexercised options held by such persons on December 31, 1997. The values for
in-the-money options (which represent the positive spread between the exercise
price of any existing stock options and $30.00 per share, the closing price of
the Common Stock as reported by the Nasdaq National Market on December 31, 1997)
also are included.
AGGREGATE OPTION EXERCISES IN FISCAL 1997
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, 1997 DECEMBER 31, 1997
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 -- 70,000
James T. House.............. -- -- -- 27,272 -- 318,178
</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.
EMPLOYMENT AGREEMENTS
Richard D. Helppie, Jr.'s compensation agreement limited his aggregate
annual compensation to $400,000, consisting of a combination of base salary and
bonus, through the end of fiscal 1997. Mr. Helppie's compensation shall be
subject to review of the Compensation Committee of the Board.
10
<PAGE> 14
Charles O. Bracken's employment agreement provides for an annual base
salary of $290,000 and annual bonus of up to $75,000 per year. The bonus is
based upon performance. 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 bonus of up to $75,000 per year. The bonus is based on
performance. 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 Vice
President Bonus Plan pursuant to which he is eligible to receive quarterly and
annual base bonuses of $10,000 and $30,000, 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.
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 1997 was $465,000 and as of December
31, 1997 was $453,000.
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 $233,000 during fiscal 1997 and as of December 31, 1997 was $226,000.
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 1997, the Company chartered aircraft from Clearwater Aviation, Inc., of
which Mr. Helppie is sole stockholder. Payments under this arrangement totaled
approximately $36,000 in 1996 and $224,000 in 1997. This arrangement was
approved by a majority of all 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 Enterprise since 1993. Mr. Saslow joined the Company as a vice president and
general counsel in January, 1997.
Mr. Peters, a Director, is the President of Jefferson Health System, a
non-profit organization which, from time to time, is a client of the Company.
Mr. Ballantyne serves as president of PMH Health Resources, the parent
company of PMH Health Services Network, a customer of the Company. PMH Health
Services Network has purchased work re-design services of Chi Systems, Inc., a
division of Superior Consultant Company, Inc. PMH Health Services Network has
paid $150,000 to Chi Systems to date. It is expected that an additional $50,000
will be paid to Chi Systems following completion of the project.
11
<PAGE> 15
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 25, 1998 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 named
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)................................. 3,175,124 31.1%
GEOCAPITAL, LLC(4).......................................... 936,825 9.2
Charles O. Bracken.......................................... 316,378 3.1
Robert R. Tashiro(3)........................................ 150,610 1.5
John L. Silverman(3)........................................ 53,519 *
James T. House(3)........................................... 17,954 *
Douglas S. Peters(3)........................................ 6,700 *
Richard P. Saslow(3)........................................ 6,600 *
Reginald M. Ballantyne III(3)............................... 6,000 *
Bernard Lachner(3).......................................... 6,000 *
Kenneth S. George(3)........................................ 3,000 *
---------
All Directors, Executive Officers and 5% stockholders as a
group..................................................... 4,678,710
</TABLE>
- -------------------------
* less than 1%
(1) Applicable percentage of ownership as of March 25, 1998 is based upon
10,220,464 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 shares issuable upon exercise of options exercisable within 60 days
from the date hereof as follows: Mr. Tashiro 6,000 shares; Mr. House 5,454
shares; Mr. Ballantyne 6,000 shares; Mr. Lachner 6,000 shares; Mr. Peters
6,000 shares; Mr. Saslow 6,600 shares; Mr. Silverman 3,000 shares and Mr.
George 3,000 shares.
(4) According to Report on SEC's Schedule 13G, as of December 21, 1997
GEOCAPITAL, LLC has sole dispositive power over all shares listed.
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.
12
<PAGE> 16
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, during the year ended December 31, 1997, all such Section
16(a) filing requirements were complied with, except for the following: (i) a
Form 3 was to be filed by John L. Silverman by October 11, 1997. Such form was
filed on October 31, 1997; (ii) a Form 3 was to be filed by Kenneth S. George by
November 11, 1997. Such form was filed on March 11, 1998; (iii) a Form 5 was to
be filed by Richard D. Helppie, Jr. by February 14, 1997. Such form was filed on
July 2, 1997, (iv) a Form 4 was to be filed by James T. House by November 10,
1996. Such form was filed on March 9, 1998 and (v) a Form 4 was to be filed by
Douglas S. Peters by November 10, 1996. Such form was filed prior to April 10,
1998.
STOCKHOLDER PROPOSALS FOR THE 1999 PROXY STATEMENT
Any stockholder satisfying the SEC requirements and wishing to submit a
proposal to be included in the Proxy Statement for the 1999 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, 1998 in
order to consider it for inclusion in the Proxy Statement for the 1999 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.
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP, the Company's independent public accountants, has
audited the Company's financial statements for the fiscal year ended December
31, 1997. The Company expects representatives of Grant Thornton LLP to be
present at the Meeting and to be available to respond to appropriate questions
from stockholders. The Grant Thornton LLP representatives will be given an
opportunity to make a statement if they desire.
OTHER INFORMATION
A copy of the Annual Report on Form 10-K as filed with the SEC for the year
1997 (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 16, 1998
13
<PAGE> 17
<TABLE>
<CAPTION>
SUPERIOR CONSULTANT HOLDINGS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY / /
[ ]
<S> <C> <C> <C> <C> <C> <C> <C>
1. PROPOSAL to elect three Class II FOR WITHHOLD FOR ALL 2. PROPOSAL to adopt an amendment to FOR AGAINST ABSTAIN
Directors, for a term expiring at ALL ALL EXCEPT the Company's Amended and Restated / / / / / /
the Annual Meeting of Stockholders / / / / / / Certificate of Incorporation,
in 2001 (mark one of the ovals): thereby increasing the maximum
(Nominees: Reginald M. number of authorized directors
Ballantyne, III, Kenneth S. from nine to fifteen.
George and John L. Silverman.
3. In their discretion, the proxies are authorized to vote
(INSTRUCTION: To withhold authority to upon such other business as may properly come before the
vote for any individual nominee, write meeting, or any adjournment thereof.
that nominee's name in the space below.)
Dated:_____________________,1998
__________________________________________________
Signature
__________________________________________________
Signature (if filed jointly)
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>
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
PROXY PROXY
SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Richard D. Helppie, Jr. and Richard P.
Saslow, and each of them, as Proxies, with the power to appoint their
substitutes, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of common stock, par value $0.01 per share, of
Superior Consultant Holdings Corporation (the "Company") held of record by the
undersigned on March 25, 1998, at the Annual Meeting of Stockholders when
convened on Wednesday, May 13, 1998, 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 1-248-386-8300.
(Continued and to be signed on reverse side.)
