<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
SANCHEZ COMPUTER ASSOCIATES, INC.
(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)(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
[ ] 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:
<PAGE> 2
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 3
[SANCHEZ LOGO]
40 VALLEY STREAM PARKWAY
MALVERN, PA 19355
PHONE: (610) 296-8877
FAX: (610) 296-7371
INTERNET: www.sanchez.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are invited to attend the Sanchez Computer Associates, Inc. 2000 Annual
Meeting of Stockholders.
DATE: Wednesday, May 24, 2000
TIME: 2:00 p.m. Eastern time
PLACE: The Wyndham Valley Forge Hotel
888 Chesterbrook Boulevard
Wayne, PA 19087
(610) 647-6700
DIRECTIONS: Included on the last page
No admission tickets are required. If you cannot attend the meeting in person,
you may listen to the meeting over the Internet through Vcall, Inc. at
http://www.vcall.com. Please go to this web site approximately 15 minutes early
to register and download any necessary audio software.
Only stockholders who owned stock at the close of business on April 7, 2000, can
vote at this meeting or any adjournments that may take place.
At the meeting, we will elect 11 directors and attend to any other business
properly presented at the meeting. We also will report on our 1999 business
results and other matters of interest to our stockholders. You will have an
opportunity at the meeting to ask questions, make comments, and meet our
management team.
<PAGE> 4
OUR BOARD OF DIRECTORS IS A VITAL RESOURCE. WE CONSIDER YOUR VOTE IMPORTANT, NO
MATTER HOW MANY SHARES YOU HOLD, AND WE ENCOURAGE YOU TO VOTE AS SOON AS
POSSIBLE.
The proxy statement, accompanying proxy card, and 1999 annual report are being
mailed to stockholders beginning April 27, 2000, in connection with the
solicitation of proxies by the board of directors.
Sincerely,
/s/ Michael A. Sanchez /s/ Carl Sottosanti
Michael A. Sanchez Carl Sottosanti
Co-Chairman of the Board Secretary
April 27, 2000
<PAGE> 5
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QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders of record as of the close of business on April 7, 2000, may
vote at the annual meeting.
Q: HOW MANY SHARES CAN VOTE?
A: On April 7, 2000, there were 24,910,038 shares issued and outstanding.
Every stockholder may cast one vote for each share owned.
Q: WHAT MAY I VOTE ON?
A: You may vote on the election of 11 directors who have been nominated to
serve on our board of directors.
Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSAL?
A: The board recommends a vote FOR each board nominee.
Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive, mark the boxes indicating how
you wish to vote, and return the proxy card in the prepaid envelope
provided.
If you sign your proxy card, but do not mark any boxes showing how you wish
to vote, Michael A. Sanchez, Frank R. Sanchez and Joseph F. Waterman will
vote your shares as recommended by the board of directors.
Q: WHAT IF I HOLD MY SHARES IN A BROKERAGE ACCOUNT?
A: If you hold your shares through a broker, bank or other nominee, you will
receive a voting instruction form directly from them describing how to vote
your shares. This form will, in most cases, offer you three ways to vote:
1. by telephone,
2. via the Internet, or
3. by returning the form to your broker.
Your vote by telephone or Internet will help us save money. Remember, if
you vote by telephone or Internet, do not return your voting instruction
form.
Q: WHAT IF I WANT TO CHANGE MY VOTE?
A: You may change your vote at any time before the meeting in any of the
following three ways:
1. notify our corporate secretary, Carl Sottosanti, in writing,
2. vote in person at the meeting, or
3. submit a proxy card with a later date.
If you hold your shares through a broker, bank or other nominee and wish to
vote at the meeting, you must obtain a legal proxy from that nominee
authorizing you to vote at the meeting. We will be unable to accept a vote
from you at the meeting without that form. If you hold your shares directly
and wish to vote at the meeting, no additional forms will be required.
Q: HOW WILL DIRECTORS BE ELECTED?
A: The 11 nominees who receive the highest number of affirmative votes at a
meeting at which a quorum is present will be elected as directors.
Q: WHO WILL COUNT THE VOTES?
A: A representative of Sanchez will count the votes and act as the judge of
election.
[SANCHEZ LOGO] 1
<PAGE> 6
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QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: Your shares may be registered differently or may be in more than one
account. We encourage you to have all accounts registered in the exact same
name and address (whenever possible). You may obtain information about how
to do this by contacting our transfer agent:
ChaseMellon Shareholder Services
85 Challenger Road
Ridgefield Park, NJ 07660
Toll-free telephone 800-526-0801.
If you provide ChaseMellon with photocopies of the proxy cards that you
receive or with the account numbers that appear on each proxy card, it will
be easier to accomplish this.
You also can find information on transferring shares and other useful
stockholder information on their web site at www.chasemellon.com.
Q: WHAT IS A QUORUM?
A: A quorum is a majority of the outstanding shares. The shares may be
represented at the meeting either in person or by proxy. To hold the
meeting, there must be a quorum present.
Q: WHAT IS THE EFFECT IF I ABSTAIN OR FAIL TO GIVE INSTRUCTIONS TO MY BROKER?
A: If you submit a properly executed proxy, your shares will be counted as
part of the quorum even if you abstain from voting or withhold your vote
for a particular director.
Broker non-votes also are counted as part of the quorum. A broker non-vote
occurs when banks, brokers or other nominees holding shares on behalf of a
stockholder do not receive voting instructions from the stockholder by a
specified date before the meeting. In this event, banks, brokers and other
nominees may vote those shares on routine matters, such as the election of
directors.
Broker non-votes and abstentions are not counted in the tally of votes FOR
or AGAINST a proposal. A WITHHELD vote is treated the same as an
abstention.
Q: WHO CAN ATTEND THE MEETING?
A: All stockholders are encouraged to attend the meeting. Admission tickets
are not required.
Q: WHAT IF I CAN'T ATTEND THE MEETING?
A: If you cannot attend the meeting in person, you may listen to the
proceedings over the Internet through Vcall, Inc. at http://www.vcall.com.
Please go to this web site approximately fifteen minutes early to register
and download any necessary audio software. If you cannot listen to the live
broadcast, Vcall will have a replay of the meeting available on its web
site beginning immediately after the meeting and a transcript of the
meeting available by approximately May 29.
Q: ARE THERE ANY EXPENSES ASSOCIATED WITH COLLECTING THE STOCKHOLDER VOTES?
A: We will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding
proxy and other materials to our stockholders. We do not anticipate hiring
an agency to solicit votes at this time.
[SANCHEZ LOGO] 2
<PAGE> 7
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QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
Q: WHAT IS A STOCKHOLDER PROPOSAL?
A: A stockholder proposal is your recommendation or requirement that Sanchez
or our board of directors take action on a matter that you intend to
present at a meeting of stockholders. However, under applicable rules, we
have the ability to exclude certain matters proposed, including those that
deal with matters relating to our ordinary business operations.
Q: CAN ANYONE SUBMIT A STOCKHOLDER PROPOSAL?
A: To be eligible to submit a proposal, you must have continuously held at
least $2,000 in market value, or 1% of our common stock, for at least one
year by the date you submit your proposal. You also must continue to hold
those securities through the date of the meeting.
Q: IF I WISH TO SUBMIT A STOCKHOLDER PROPOSAL FOR THE ANNUAL MEETING IN 2001,
WHAT ACTION MUST I TAKE?
A: If you wish us to consider including a stockholder proposal in the proxy
statement for the annual meeting in 2001, you must submit the proposal, in
writing, so that our corporate secretary receives it no later than December
28, 2000. The proposal must meet the requirements established by the SEC.
Send your proposal to:
Carl Sottosanti, Vice President, General Counsel and Secretary
Sanchez Computer Associates, Inc.
40 Valley Stream Parkway
Malvern, PA 19355
If you wish to present a proposal at the annual meeting in 2001 that has
not been included in the proxy statement, the management proxies will be
allowed to use their discretionary voting authority unless notice of your
proposal has been received by our corporate secretary no later than March
13, 2001.
Q: CAN A STOCKHOLDER NOMINATE SOMEONE TO BE A DIRECTOR?
A: We will consider qualified candidates recommended by our stockholders. You
should submit your recommendation, including a detailed statement of the
individual's qualifications, to our corporate secretary at the address
shown in the preceding question.
Q: WHO ARE THE LARGEST STOCKHOLDERS OF SANCHEZ?
A: Safeguard Scientifics, our largest stockholder, beneficially owns 25.2% of
our shares. Michael Sanchez, our co-chairman, beneficially owns 15.0%, and
Frank Sanchez, our CEO, beneficially owns 6.5%. Other directors and
executive officers beneficially own a total of an additional 8.7% of our
common stock. At December 31, 1999, no other stockholder owned more than 5%
of our stock.
[SANCHEZ LOGO] 3
<PAGE> 8
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ELECTION OF DIRECTORS
ITEM 1 ON PROXY CARD
- --------------------------------------------------------------------------------
Directors are elected annually and serve a one-year term. There are 11 nominees
for election this year. Each nominee, with the exception of Joseph Waterman, is
currently serving as a director. Each nominee has consented to serve until the
next annual meeting if elected. You will find detailed information on each
nominee below. If any director is unable to stand for re-election after
distribution of this proxy statement, the board may reduce its size or designate
a substitute. If the board designates a substitute, proxies voting on the
original director candidate will be cast for the substituted candidate.
THE BOARD RECOMMENDS A VOTE FOR EACH NOMINEE. THE 11 NOMINEES WHO RECEIVE THE
HIGHEST NUMBER OF AFFIRMATIVE VOTES WILL BE ELECTED AS DIRECTORS.
- --------------------------------------------------------------------------------
MICHAEL A. SANCHEZ Director since 1979
Age 42
Mr. Michael Sanchez founded the company in 1979, serving as chief executive
officer from inception until April 1997, as well as its chairman since inception
until April 1999 when he was named co-chairman along with Mr. Zlatoper. Mr.
Sanchez also has served as chief executive officer of e-PROFILE since April
1999. In addition to assisting with the strategic direction for Sanchez, he is
also responsible for the organizational growth and development of e-PROFILE. Mr.
Sanchez is a director of e-PROFILE. Michael Sanchez and Frank Sanchez are
brothers.
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FRANK R. SANCHEZ Director since 1980
Age 43
Mr. Frank Sanchez has been the chief executive officer since April 1999 and
previously was president and chief operating officer of the company since 1994.
In his capacity as chief executive officer, Mr. Sanchez is responsible for the
overall strategy and performance of the company. He was the principal architect
of the PROFILE integrated banking system and continues to be responsible for
developing the product and technical strategy. From 1980 until 1994, Mr. Sanchez
was executive vice president in charge of technology and product development.
- --------------------------------------------------------------------------------
JOSEPH F. WATERMAN Director nominee
Age 48
Mr. Waterman has served as president and chief operating officer of Sanchez
since April 1999 and is responsible for the day-to-day operation of the company.
Previously, he was senior vice president and chief financial officer from 1992
when he joined the company. Prior to joining Sanchez, Mr. Waterman was employed
by Safeguard Scientifics, Inc. for 13 years. Mr. Waterman is a director of
e-PROFILE.
[SANCHEZ LOGO] 4
<PAGE> 9
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WARREN V. MUSSER Director since 1987
Age 73
Mr. Musser has served, since 1953, as chairman of the board and chief executive
officer of Safeguard Scientifics, Inc., a leading Internet company focused on
the infrastructure market. Mr. Musser is chairman of the board of Cambridge
Technology Partners (Massachusetts), Inc., a director of CompuCom Systems, Inc.
and DocuCorp International, Inc., and a trustee of Brandywine Realty Trust. Mr.
Musser serves on a variety of civic, educational and charitable boards of
directors, and serves as vice president/development, Cradle of Liberty Council,
Boy Scouts of America; vice chairman of The Eastern Technology Council; and
chairman of the Pennsylvania Partnership on Economic Education.
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LAWRENCE CHIMERINE Director since 1987
Age 59
Dr. Chimerine has served as managing director and chief economist of the
Economic Strategy Institute since August 1993 and as president of Radnor
International Consulting, an economic advisory firm, since August 1991. Dr.
Chimerine was an advisor to the WEFA Group from 1997 to 1999. Dr. Chimerine is a
director of Bank United Corp., Outsource International, Inc., and Global Capital
Partners.
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ALEX W. HART Director since 1998
Age 59
Since 1998, Mr. Hart has served as an independent consultant. Before 1998, Mr.
Hart served as chief executive officer of Advanta Corp., a consumer and small
business service company that he joined in March 1994. Before joining Advanta
Corp., Mr. Hart had been president and chief executive officer of MasterCard
International, Inc., a worldwide association of over 29,000 member financial
institutions. Mr. Hart is a director of HNC Software, Inc., Who? Vision Systems,
Inc., Presideo, Inc., Retek, Inc., Destiny Solutions, Inc., 4anything.com, Inc.
and serves as chairman of the board of e-PROFILE.
- --------------------------------------------------------------------------------
KAILASH C. KHANNA Director since 1997
Age 61
Dr. Khanna is currently chief operating officer and chief technology officer of
MoneyTran.com, a business-to-business electronic payment company. Previously, he
was executive vice president of CBSI, an information technology services
company. In September 1993, Dr. Khanna joined the Society for Worldwide
Interbank Financial Telecommunication s.c., a cooperatively owned provider of
interbank financial transfer services, initially as head of information
technology. In 1994, he was appointed the head of technology, operations and
support and remained in that position until March 1999. Dr. Khanna is a director
of TransNexus, Inc.
[SANCHEZ LOGO] 5
<PAGE> 10
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JOHN D. LOEWENBERG Director since 1996
Age 59
Mr. Loewenberg is currently managing partner of JDL Enterprises, a consulting
firm. Previously, Mr. Loewenberg was an executive vice president and chief
operating officer of Connecticut Mutual, a life insurance company, from May 1995
through March 1996. Before joining Connecticut Mutual, Mr. Loewenberg held
several senior management positions with Aetna Life and Casualty and its
affiliates. Mr. Loewenberg is a director of CompuCom Systems, Inc., Diamond
Technology Partners Incorporated, DocuCorp International, Inc., and Presideo,
Inc.
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THOMAS C. LYNCH Director since 1996
Age 58
Mr. Lynch has been president and chief operating officer, since August 1999, of
CompuCom Systems, Inc., a subsidiary of Safeguard Scientifics, Inc. and a
leading provider of information technology products and technology management to
large- and medium-sized businesses throughout the United States. From October
1998 until becoming president, Mr. Lynch had served as executive vice president
and chief operating officer of CompuCom. Previously, Mr. Lynch served as senior
vice president of Safeguard Scientifics since November 1995. Before that time,
Mr. Lynch retired from the U.S. Navy as an Admiral after 31 years of service,
including serving as Superintendent of the U.S. Naval Academy from 1991 through
1994 and Director of the Navy Staff from 1994 through 1995. Mr. Lynch is a
trustee of the U.S. Naval Academy Foundation and is a director of CompuCom
Systems, eMerge Interactive, Inc., The Eastern Technology Council, and AFBA Life
Insurance Company.
- --------------------------------------------------------------------------------
JAMES R. STOJAK Director since 1999
Age 53
Mr. Stojak has served since 1985 as a member of Citibank's management team and
since 1996 as executive vice president of Citibank's Global Operations and
Technology. From 1990 to 1996, Mr. Stojak was the senior vice president and
chief operating officer of Citibank's Europe/North America Credit Card business.
He serves as chairman of Citibank (South Dakota), N.A. and as a director of
Citibank (Nevada) N.A. Prior to joining Citibank, Mr. Stojak held executive
positions with Wells Fargo Bank and Continental Illinois National Bank.
- --------------------------------------------------------------------------------
GARY C. WENDT Director since 1999
Age 58
Mr. Wendt served as chairman and chief executive officer of General Electric
Capital Services, Inc. from 1986 to 1999. He is currently the executive managing
director of Global Opportunity Advisors. Mr. Wendt is a director of iXL
Enterprises, Inc. and eXL Services, Inc. and an advisory director of Internet
Capital Group, Inc. He also serves as a member of the National Board of
Governors Boys & Girls Clubs of America.
[SANCHEZ LOGO] 6
<PAGE> 11
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BOARD OF DIRECTORS -- ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
BOARD MEETINGS: The board of directors held four meetings in 1999. Each director
attended 100% of the total number of meetings of the board and committees of
which he was a member, with the exception of Dr. Khanna, who attended 57% of the
meetings, and Mr. Stojak, who was unable to attend the first meeting subsequent
to his election to the board.
BOARD COMPENSATION: Directors receive reimbursement of out-of-pocket expenses
incurred in connection with attendance at meetings or other company business.
Each director who is not an executive officer of Sanchez or Safeguard is
eligible to receive stock option grants, in the discretion of the compensation
committee. The term and vesting of options awarded to directors are determined
by the committee at the time of grant. The exercise price of each option is
equal to the high/low average price of a share of our common stock on the grant
date.
In May 1999, Mr. Wendt received an option to purchase 16,800 shares at an
exercise price of $38.50 per share. The option vests one-third each year
starting May 2000 and has a term of five years from the date it first becomes
exercisable.
In August 1999, Mr. Stojak received an option to purchase 16,800 shares at an
exercise price of $38.375 per share. The option vests one-third each year
starting August 2000 and has a term of five years from the date it first becomes
exercisable.
In September 1999, Messrs. Chimerine, Khanna, Loewenberg, Lynch, Stojak and
Wendt each received an option to purchase 3,000 e-PROFILE shares at an exercise
price of $13.33 per share which was the fair market value established by the
e-PROFILE board of directors on the date of grant. The option vested one-third
immediately upon grant, the second third will vest on September 7, 2000, and the
final third on September 7, 2001, and has a term of five years from the date it
first becomes exercisable.
[SANCHEZ LOGO] 7
<PAGE> 12
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BOARD COMMITTEE MEMBERSHIP ROSTER
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AUDIT COMPENSATION EXECUTIVE
<S> <C> <C> <C>
MEETINGS HELD IN 1999 3 1 0
Michael A. Sanchez * X X
Frank R. Sanchez X
Warren V. Musser X X
Lawrence A. Chimerine X X
Kailash C. Khanna X
John D. Loewenberg X X
Thomas C. Lynch X
</TABLE>
* Mr. Sanchez is a non-voting member of the Compensation Committee
AUDIT COMMITTEE
- - discusses the scope and results of our audit with the independent certified
public accountants
- - reviews with management and the independent certified public accountants
the interim and year-end operating results
- - considers the adequacy of our internal accounting controls and audit
procedures
COMPENSATION COMMITTEE
- - determines compensation levels for our officers and other principal
employees, including incentive compensation
- - administers our equity compensation plans
EXECUTIVE COMMITTEE
- - acts upon all matters with respect to the routine management of our
business
[SANCHEZ LOGO] 8
<PAGE> 13
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STOCK OWNERSHIP OF DIRECTORS, OFFICERS AND
BENEFICIAL OWNERS OF MORE THAN 5%
AS OF APRIL 7, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OUTSTANDING OPTIONS OWNED
SHARES EXERCISABLE ASSUMING
BENEFICIALLY WITHIN 60 EXERCISE OF PERCENT OF
NAME OWNED DAYS OPTIONS SHARES
---- ----- ---- ------- ------
<S> <C> <C> <C> <C>
Safeguard Scientifics, Inc. 6,288,184 0 6,288,184 25.2%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087-1945
Michael A. Sanchez 3,636,689 122,497 3,759,186 15.0%
40 Valley Stream Parkway
Malvern, PA 19355
Frank R. Sanchez 1,513,220 122,801 1,636,021 6.5%
40 Valley Stream Parkway
Malvern, PA 19355
Ronald J. Zlatoper 70,664 100,000 170,664 *
Joseph F. Waterman 496,197 0 496,197 2.0%
Warren V. Musser 1,127,668 0 1,127,668 4.5%
Lawrence A. Chimerine 94,000 0 94,000 *
Alex W. Hart 2,000 5,600 7,600 *
Kailash C. Khanna 4,700 12,000 16,700 *
John D. Loewenberg 3,420 32,600 36,020 *
Thomas C. Lynch 2,898 0 2,898 *
James R. Stojak 0 0 0 *
Gary C. Wendt 0 0 0 *
Douglas J. Enns 5,000 11,667 16,667 *
Dan S. Russell 126,302 0 126,302 *
Executive officers and directors as 7,240,844 418,133 7,658,977 30.2%
a group (18 persons)
</TABLE>
* Less than 1% of our outstanding shares of common stock
Each individual has the sole power to vote and to dispose of the shares (other
than shares held jointly with spouse) except as follows:
Safeguard Scientifics Shares are held of record by wholly owned
subsidiaries of Safeguard as follows:
Safeguard Scientifics (Delaware), Inc. --
5,470,584 shares; Safeguard Delaware, Inc. --
817,600 shares
Michael A. Sanchez Includes 198,000 shares held in custodial
accounts for three minor children and 90,000
shares held by his spouse
Warren V. Musser Includes 128,800 shares held by a charitable
foundation established by Mr. Musser and
24,000 shares held by two trusts of which he
serves as a co-trustee
Joseph F. Waterman Includes 3,996 shares held by his spouse,
1,800 shares held in custodial accounts for
three minor children, 1,054 shares held in a
spousal trust
[SANCHEZ LOGO] 9
<PAGE> 14
SHARES OF SUBSIDIARY CORPORATION OWNED BY SANCHEZ DIRECTORS AND OFFICERS:
e-PROFILE is a majority owned subsidiary of Sanchez. As of April 7, 2000, all
executive officers and directors of Sanchez as a group beneficially owned less
than 1% of the shares of common stock outstanding.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE: The rules of the
Securities and Exchange Commission require that we disclose late filings of
reports of stock ownership by our directors and executive officers. To the best
of our knowledge, the only late filings during 1999 were as follows: a Form 4
filed late by Michael A. Sanchez, Dan S. Russell, and Joseph F. Waterman on one
occasion; a Form 4 filed late on two occasions by Lawrence Chimerine; 5
transactions reported late on a Form 4 by Kailash C. Khanna; and a Form 3 filed
late by Douglas J. Enns, James R. Stojak and Gary C. Wendt.
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph compares the cumulative total return on our common stock for
the period November 13, 1996, through December 31, 1999, with the cumulative
total return on the Nasdaq Index and the peer group index for the same period.
The peer group consists of Nasdaq companies with SIC Code 737 -- Computer
Programming and Data Processing Services. The comparison assumes that $100 was
invested on November 13, 1996, in our common stock and in each of the comparison
indices, and assumes reinvestment of dividends. We have historically reinvested
earnings in the growth of our business and have not paid cash dividends on our
common stock.
COMPARISON OF CUMULATIVE TOTAL RETURNS
[LINE GRAPH]
[SANCHEZ LOGO]
<TABLE>
<CAPTION>
Nov 96 Dec 96 Dec 97 Dec 98 Dec 99
<S> <C> <C> <C> <C> <C>
Sanchez 100 143 530 532 1586
Nasdaq 100 103 126 177 320
Peer Group 100 102 126 224 474
</TABLE>
10
<PAGE> 15
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REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
COMPENSATION PHILOSOPHY
We are in a highly competitive industry. To succeed, we must be able to
- - attract and retain qualified employees,
- - promote among them the economic benefits of stock ownership in our company,
and
- - motivate and reward employees who, by their hard work, loyalty, and
exceptional service, make contributions of special importance to the
success of our business.
COMPENSATION STRUCTURE
The compensation of our executives consists of
- - base pay,
- - cash incentives, and
- - stock options.
BASE PAY
Base pay is established initially for new executives on the basis of subjective
factors, including experience, individual achievements, and the level of
responsibility to be assumed. Salary increases also are awarded based on
subjective factors, including
- - an executive's increased levels of individual responsibility,
- - maintaining an appropriate scale among our executives based on relative
positions and responsibilities,
- - the competitiveness of the labor market in the technology sector, and
- - general levels of inflation.
MR. FRANK SANCHEZ' 1999 BASE PAY. Mr. Sanchez' base salary was increased from
$230,000 to $250,000 or approximately 8.7% when he was appointed chief executive
officer in April 1999.
MR. ZLATOPER'S 1999 BASE PAY. Mr. Zlatoper's base salary was fixed by the
committee when he was appointed chief executive officer in April 1997, a
position he served in until April 1999. There was no salary increase in 1999.
OTHER HIGHLY COMPENSATED EXECUTIVES' 1999 BASE PAY. Base pay for 1999 was
determined by considering the subjective factors discussed previously.
CASH INCENTIVES
Cash incentives may be awarded at the discretion of the committee. Cash
incentives are intended to motivate executives to achieve and exceed not only
the targeted tasks and objectives determined for each executive according to his
or her functional responsibilities within the organization, but also our annual
performance targets and strategic objectives as defined in our annual strategic
plan.
MR. FRANK SANCHEZ' 1999 CASH INCENTIVE. Mr. Sanchez was awarded a cash incentive
of $40,000 for 1999 based on corporate performance and other subjective factors.
MR. ZLATOPER'S 1999 CASH INCENTIVE. Mr. Zlatoper was not awarded a cash
incentive for 1999.
OTHER HIGHLY COMPENSATED EXECUTIVES' 1999 CASH INCENTIVE. Cash incentives for
1999 were determined by considering corporate performance and other subjective
factors.
STOCK OPTIONS
Our equity compensation plan is designed to attract, retain and reward employees
who make significant contributions toward achievement of our financial and
operational objectives. Grants under the
[SANCHEZ LOGO] 11
<PAGE> 16
plan align the interests of our executives and employees with the long-term
interests of our stockholders and motivate executives and employees to remain in
our employ. Generally, grants are not made every year, but are awarded
subjectively, based on a number of factors, including the achievement of our
financial and strategic objectives, the individual's contributions toward the
achievement of our financial and operational objectives, and the amount and term
of options already held by each individual.
1999 STOCK OPTION AWARDS. The committee granted stock options during 1999 to
certain of its new executives and employees and also granted options to certain
executives and employees for performance during 1999. The relative number of
options granted to new executives and employees was based on each person's
responsibilities. In addition, e-PROFILE granted stock options to most Sanchez
executives and employees who were employed by Sanchez on September 7, 1999.
IRS LIMITS ON DEDUCTIBILITY OF COMPENSATION.
The committee is aware that Internal Revenue Code section 162(m) provides that
publicly held companies may not deduct in any taxable year compensation in
excess of one million dollars paid to any of the individuals named in the
compensation tables that is not "performance based" as defined in section
162(m). The committee believes that annual levels of executive compensation that
are not performance based are not likely to exceed one million dollars in the
foreseeable future.
By the Compensation Committee:
Lawrence Chimerine
John D. Loewenberg
Warren V. Musser
Michael A. Sanchez
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Chimerine, Loewenberg and Musser are the voting members of the
committee. Mr. Michael Sanchez, co-chairman of the board and one of our
executive officers, serves as a non-voting member of the committee. Mr. Sanchez
did not participate in discussions regarding his compensation.
[SANCHEZ LOGO] 12
<PAGE> 17
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION & OTHER ARRANGEMENTS
- --------------------------------------------------------------------------------
1999 ANNUAL COMPENSATION FOR TOP SIX OFFICERS
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
----------------------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS/SARS COMPENSATION
POSITION YEAR SALARY ($) BONUS($)(2) ($)(6) (#) ($)(3)
-------- ---- ---------- ----------- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
Frank R. Sanchez, CEO 1999 $235,005 $ 40,000 $ -- 22,000 $ 9,300
50,000(7)
1998 224,000 150,000 -- 80,000 8,970
1997 204,500 -- -- -- 4,800
Ronald J. Zlatoper, 1999 $225,000 $ -- $ -- -- $ 6,750
Co-Chairman(4)
1998 225,000 17,500 -- -- 3,900
1997 152,586 -- -- 400,000 --
Michael A. Sanchez, 1999 $233,755 $ 40,000 $ -- 22,000 $ 9,263
Co-Chairman 50,000(7)
1998 217,675 150,000 -- 80,000 8,030
1997 194,275 -- -- -- 4,800
Joseph F. Waterman, 1999 $192,500 $ 25,000 $ -- 20,700 $ 6,975
President and COO 25,000(7)
1998 163,550 77,500 -- 40,000 6,031
1997 143,149 -- -- -- 5,194
Dan S. Russell, 1999 $179,500 $ 20,000 $ -- 21,000 $ 5,197
Senior Vice President, 15,000(7)
Technical Development
1998 156,240 40,000 -- 40,000 4,687
1997 129,305 20,000 -- -- 3,879
Douglas J. Enns, 1999 $124,998 $ 20,000 $ 56,502 80,000 $ --
Managing Director, 15,000(7)
International
Operations (5)
</TABLE>
NOTES TO ANNUAL COMPENSATION TABLE:
(1) Includes compensation that has been deferred by the top six officers
under defined contribution plans.
(2) Includes amounts paid or accrued related to 1999.
(3) Represents a contribution under our 401(k) plan.
(4) Mr. Zlatoper's employment commenced in April 1997 and he served as CEO
until April 1999.
(5) Mr. Enns' employment commenced in July 1999.
(6) Includes payments for housing, benefits and auto expenses related to
overseas assignment.
(7) Represents options granted by e-PROFILE to acquire shares of e-PROFILE
common stock under its equity compensation plan.
[SANCHEZ LOGO] 13
<PAGE> 18
1999 STOCK OPTION GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS(1) OF STOCK PRICE
APPRECIATION
FOR OPTION TERM(2)
- ------------------------------------------------------------------------------------ ------------------------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO
OPTIONS/ EMPLOYEES EXERCISE OR
SARS IN FISCAL BASE PRICE EXPIRATION 5% 10%
NAME GRANTED(#) YEAR ($/SH) DATE ($) ($)
---- ---------- ---- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Frank R. Sanchez 22,000 (3) 3.8% $ 11.438 2/25/07 $ 85,580 $ 194,152
50,000 (4) 6.5% 13.330 9/07/06 338,571 662,171
Ronald J. Zlatoper -- -- -- -- -- --
Michael A. Sanchez 22,000 (3) 3.8% $ 11.438 2/25/07 $ 85,580 $ 194,152
50,000 (4) 6.5% 13.330 9/07/06 338,571 662,171
Joseph F. Waterman 20,700 (3) 3.6% $ 11.438 2/25/07 $ 80,523 $ 182,680
25,000 (4) 3.3% 13.330 9/07/06 169,285 331,085
Dan S. Russell 21,000 (3) 3.7% $ 11.438 2/25/07 $ 81,690 $ 185,327
15,000 (4) 2.0% 13.330 9/07/06 101,572 198,651
Douglas J. Enns 80,000 (3) 13.9% $ 27.000 7/01/06 $ 617,110 $ 1,369,023
15,000 (4) 2.0% 13.330 9/07/06 101,572 198,651
</TABLE>
(1) All options have an exercise price equal to or greater than the fair market
value of the shares subject to each option on the grant date. The option
exercise price may be paid in cash, by delivery of previously acquired
shares, subject to certain conditions, or same-day sales (that is, a
cashless exercise through a broker). The compensation committee, upon
exercise of an option, may elect to pay an individual, in cash or in common
stock, the difference between the exercise price and the fair market value
on the exercise date. The committee may modify the terms of outstanding
options, including acceleration of the exercise date.
(2) These values assume that the shares appreciate at the compounded annual
rate shown from the grant date until the end of the option term. These
values are not estimates of our future stock price growth. Executives will
not benefit unless the common stock price increases above the stock option
exercise price. The expiration date shown is the last date when the final
vested portion of each option may be exercised.
(3) These options vest one-third each year commencing on the first anniversary
of the grant. Each vested segment of these options has a five-year term
from the date it first becomes exercisable.
(4) These options were granted by e-PROFILE on September 7, 1999 to purchase
shares of e-PROFILE common stock. The options vested one-third immediately
upon grant, the second third will vest on September 7, 2000, and the final
third on September 7, 2001. Each option has a term of five years from the
date it first becomes exercisable.
[SANCHEZ LOGO] 14
<PAGE> 19
1999 STOCK OPTION EXERCISES AND YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)(2)
ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Frank R. Sanchez
Sanchez Options -- $ -- 92,134 68,666 $3,589,964 $2,277,258
e-PROFILE Options -- -- 16,667 33,333 27,834 55,666
Ronald J. Zlatoper
Sanchez Options 250,000 $6,505,000 0 100,000 $ -- $4,139,500
Michael A. Sanchez
Sanchez Options -- $ -- 91,527 69,273 $3,551,373 $2,279,488
e-PROFILE Options -- -- 16,667 33,333 27,834 55,666
Joseph F. Waterman
Sanchez Options 31,830 $ 520,627 0 44,470 $ -- $1,465,537
e-PROFILE Options -- -- 8,333 16,667 13,916 27,834
Dan S. Russell
Sanchez Options 30,168 $ 796,938 0 44,240 $ -- $1,457,372
e-PROFILE Options -- -- 5,000 10,000 8,350 16,700
Douglas J. Enns
Sanchez Options -- $ -- 26,667 53,333 $ 443,338 $ 886,661
e-PROFILE Options -- -- 5,000 10,000 8,350 16,700
</TABLE>
(1) Sanchez option value is calculated using the difference between the option
exercise price and the year-end stock price of $43.625, multiplied by the
number of shares subject to an option.
(2) e-PROFILE option value is calculated using the difference between the
option exercise price and the last valuation of e-PROFILE common stock
established by the e-PROFILE board of directors during 1999 of $15.00,
multiplied by the number of shares subject to an option.
[SANCHEZ LOGO] 15
<PAGE> 20
RELATIONSHIPS AND RELATED TRANSACTIONS WITH MANAGEMENT AND OTHERS
We have an administrative services agreement with Safeguard for administrative
support services. The services that Safeguard provides include consultation
regarding our general management, investor relations, certain legal services,
insurance programs administration, and tax research and planning. The annual
administrative services fee does not cover extraordinary services provided by
Safeguard or services that are contracted out. The agreement provides for
automatic quarterly renewals unless terminated by either Safeguard or Sanchez
upon notice at least ninety days before the end of any given quarter. We
expensed $100,000 during 1999 for these services.
In March 1995, we loaned Frank Sanchez $114,000. We made this loan to provide
funding to exercise certain stock options for the purchase of common stock as
part of a company-wide program enabling all employees who had been granted
options before December 31, 1993, to exercise similar options. In consideration
of this loan, Mr. Sanchez executed a full recourse note. The note has a 10-year
term and bears interest at the rate of 7.75% per annum. The highest outstanding
balance during 1999 was $105,268, and the loan was fully repaid in February
2000.
In June 1997, we agreed to loan Safeguard up to $12.0 million on a revolving
basis at Safeguard's effective borrowing rate minus 0.75%. Interest is paid
monthly. This rate is higher than we are earning on our money market
investments. The highest outstanding balance during 1999 was $12.0 million. The
loan was fully repaid in June 1999.
In September 1997, we loaned Ronald Zlatoper $176,593. This loan provided
funding for the exercise of a portion of his stock options and the related
taxes. The full recourse note bears interest at the rate of 5.81%. Interest is
payable in arrears on March 31 of each year. The principal balance is due upon
demand, but in any event becomes automatically payable in full within 15
business days after he sells the stock. The highest outstanding balance during
1999 was $180,892, and the loan was fully repaid in September 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
In November 1998, we retained Arthur Andersen, LLP as our independent public
accountants for 1998, replacing PricewaterhouseCoopers LLP, the former
independent public accountants. The report of PricewaterhouseCoopers on the
audit of our consolidated financial statements as of and for the year ended
December 31, 1997 contained no adverse opinion, no disclaimer of opinion, and
was not qualified or modified as to uncertainty, audit scope, or accounting
principles. We are not aware of any disagreements with our former accountants
during our last most recent fiscal year and through August 7, 1998, of any
matters of accounting principles or practices, financial statement disclosures,
or auditing scope and procedures which, if not resolved to their satisfaction,
would have caused them to make reference to the matters in their report. The
decision to change auditors was a result of the merger of Coopers & Lybrand
L.L.P., our then auditors, and Price Waterhouse LLP, and the existence of a
business consulting relationship with Price Waterhouse which was expected to
impair its auditor independence. The selection of Arthur Andersen was
recommended to and approved by our audit committee. We intend to retain Arthur
Andersen for 2000. A representative of Arthur Andersen is expected to be present
at the annual meeting, will have an opportunity to make a statement at the
meeting, if desired, and will be available to respond to appropriate questions.
[SANCHEZ LOGO] 16
<PAGE> 21
[SANCHEZ LOGO]
40 VALLEY STREAM PARKWAY
MALVERN, PA 19355
PHONE: (610) 296-8877
FAX: (610) 296-7371
INTERNET: www.sanchez.com
DIRECTIONS TO THE WYNDHAM VALLEY FORGE HOTEL
888 Chesterbrook Boulevard
Wayne, PA 19087
(610) 647-6700
<TABLE>
<S> <C>
FROM PHILADELPHIA FROM WILMINGTON AND POINTS SOUTH
(DELAWARE AND MARYLAND)
Take the Schuylkill Expressway (I-76) West. Take I-95 North to Route 202 North. Follow
Follow I-76 West to Route 202 South. Take Route 202 North to the Route 252/
Route 202 South to the Chesterbrook Chesterbrook/Paoli Exit. At the bottom of
Boulevard exit. The hotel is on the right. the ramp, turn left. Turn right at the light
onto Duportail Road and follow to the second
light. Cross the intersection into the hotel
parking lot.
FROM SOUTH NEW JERSEY FROM HARRISBURG AND POINTS WEST
Take I-95 South to Route 322 West. Take Take PA Turnpike East to Exit 24, Valley
Route 322 West to US Route 1 South to Forge. Take Route 202 South to the
Route 202 North. Follow Route 202 North to Chesterbrook Boulevard. The hotel is on
the Route 252/Chesterbrook Exit. At the the right.
bottom of the ramp, turn left. Turn right at
the light onto Duportail Road and follow to
the second light. Cross the intersection into
the hotel parking lot.
FROM PHILADELPHIA AIRPORT FROM NEW YORK AND POINTS NORTH
Take I-95 South to Route 476 North. Follow Take the New Jersey Turnpike South to
Route 476 North to the Schuylkill Exit 6, the Pennsylvania Turnpike extension.
Expressway (I-76) West to Route 202 South. Follow the Turnpike West to Exit 24, Valley
Take Route 202 South to the Chesterbrook Forge. Take Route 202 South to the Chesterbrook
Boulevard exit. The hotel is on the right. Boulevard exit. The hotel is on the right.
</TABLE>
<PAGE> 22
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. Please mark
your votes as
indicated in [X]
this example
1. ELECTION OF DIRECTORS Nominees: Michael A. Sanchez, Frank R. Sanchez,
Joseph F. Waterman, Warren V. Musser, Lawrence
Chimerine, Alex W. Hart, Kailash C. Khanna,
John D. Loewenberg, Thomas C. Lynch, James R.
Stojak, Gary C. Wendt
FOR ALL NOMINEES WITHHOLD
LISTED TO THE RIGHT AUTHORITY
(EXCEPT AS MARKED TO VOTE FOR ALL NOMINEES
TO THE CONTRARY) LISTED TO THE RIGHT
[ ] [ ]
To withhold authority to vote for any individual nominee while voting for the
remainder, strike a line through the nominee's name in the list.
Signature Signature Date , 2000
--------------------- ---------------------- -------
YOU MUST SIGN EXACTLY AS YOUR NAME APPEARS ON THIS CARD. IF SHARES ARE JOINTLY
OWNED, YOU MUST BOTH SIGN. INCLUDE YOUR FULL TITLE IF YOU ARE SIGNING AS AN
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, OR ON BEHALF OF A
CORPORATION OR PARTNERSHIP.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
[SANCHEZ LOGO]
40 Valley Stream Parkway
Malvern, PA 19355
Phone: (610) 296-8877
Fax: (610) 296-7371
For more information about Sanchez, please visit our website at
www.sanchez.com
If you cannot attend the meeting in person,
you may listen to the meeting over the Internet through
Vcall, Inc. at
http://www.vcall.com.
Please go to this web site approximately fifteen minutes early to
register and download any necessary audio software.
<PAGE> 23
PROXY
SANCHEZ COMPUTER ASSOCIATES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please sign and date this proxy, and indicate how you wish to vote, on the back
of this card. Please return this card promptly in the enclosed envelope. Your
vote is important.
When you sign and return this proxy card, you
- - appoint Michael A. Sanchez, Frank R. Sanchez and Joseph F. Waterman, and
each of them (or any substitutes they may appoint), as proxies to vote your
shares, as you have instructed, at the annual meeting on May 24, 2000, and
at any adjournments of that meeting,
- - authorize the proxies to vote, in their discretion, upon any other business
properly presented at the meeting, and
- - revoke any previous proxies you may have signed.
IF YOU DO NOT INDICATE HOW YOU WISH TO VOTE, THE PROXIES WILL VOTE FOR ALL
NOMINEES TO THE BOARD OF DIRECTORS, AND AS THEY MAY DETERMINE, IN THEIR
DISCRETION, WITH REGARD TO ANY OTHER MATTER PROPERLY PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
[SANCHEZ LOGO]
