<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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14a-6(e)(2))
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Deltek Systems, Inc.
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<PAGE> 2
DELTEK SYSTEMS, INC.
April 25, 1997
Dear Deltek Shareholder:
You are cordially invited to attend the 1997 annual meeting of shareholders
of Deltek Systems, Inc. ("Deltek") on Wednesday, May 21, 1997. The meeting will
begin promptly at 10:00 a.m. local time, at Deltek's training center on the 7th
floor of its executive offices at 8280 Greensboro Drive, McLean, Virginia.
The following items are included with this letter: (1) the official notice
of the meeting, (2) the proxy statement, (3) the proxy form, (4) the 1996 Annual
Report to Shareholders and (5) reservation request form. The matters listed in
the notice of meeting are described in detail in the proxy statement.
The annual report includes a financial review of Deltek's performance in
1996, while Deltek was still a privately held company. As a result of Deltek's
initial public offering completed earlier this year, Deltek became a publicly
held company.
If you plan to attend the annual meeting, please complete and return to
Deltek the meeting reservation request form.
Your vote is important. Whether or not you plan to attend the annual
meeting, I urge you to complete, sign and date the enclosed proxy card and
return it in the accompanying envelope as soon as possible so that your stock
may be represented at the meeting. If you are a shareholder of record and attend
the annual meeting and wish to vote your shares in person, even after returning
your proxy, you may do so.
Sincerely,
Kenneth E. deLaski
President and Chief Executive Officer
<PAGE> 3
DELTEK SYSTEMS, INC.
NOTICE OF MEETING
The 1997 annual meeting of shareholders of Deltek Systems, Inc. (the
"Company") will be held at the Company's training center on the 7th floor of its
executive offices at 8280 Greensboro Drive, McLean, Virginia, on Wednesday, May
21, 1997, at 10:00 a.m. local time, and thereafter as it may from time to time
be adjourned, for the following purposes:
- Item No. 1: Election of directors;
- Item No. 2: Ratification of the appointment of Arthur Andersen LLP
as the Company's independent auditors for its current fiscal year;
and
- Transaction of such other business as may properly come before the
meeting and any adjournment or postponement thereof.
Holders of record of Deltek Common Stock on April 20, 1997, are entitled to
notice of and to vote at the meeting. Whether or not you expect to be present at
the meeting, please date and sign the enclosed form of proxy and mail it
promptly in the enclosed envelope.
By order of the Board of Directors,
Alan R. Stewart
Secretary
McLean, Virginia
April 25, 1997
<PAGE> 4
DELTEK SYSTEMS, INC.
Principal Executive Offices:
8280 Greensboro Drive
McLean, VA 22102
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement and the accompanying proxy card and 1996 annual report
are furnished in connection with the solicitation of proxies by the board of
directors (the "Board") of Deltek Systems, Inc. ("Deltek" or the "Company") for
use at the annual meeting of shareholders to be held on Wednesday, May 21, 1997,
at 10:00 a.m., or at any adjournments thereof, at Deltek's training center on
the 7th floor of the Company's offices at 8280 Greensboro Drive, McLean,
Virginia (the "Annual Meeting"). These proxy materials are first being sent to
shareholders on or about April 25, 1997. Only shareholders of record on April
20, 1997 (the "Record Date") are entitled to notice of, and to vote at, the
Annual Meeting. This is the Company's first annual meeting of shareholders since
its initial public offering ("IPO").
VOTING OF PROXIES
Your vote is important. Shares can be voted at the annual meeting only if
you are present in person or represented by proxy. Even if you plan to attend
the meeting, you are urged to sign, date and return the accompanying proxy card.
When the enclosed proxy card is properly signed, dated, and returned, the
stock represented by the proxy will be voted in accordance with your directions.
You can specify your voting instructions by marking the appropriate boxes on the
proxy card. If your proxy card is signed and returned without specific voting
instructions, your shares of the Company's Common Stock will be voted as
recommended by the directors: "FOR" the election of the five nominees for
director named on the proxy card (Item No. 1), and "FOR" the ratification of the
independent auditors appointed by the Board (Item No. 2).
Proxies given by shareholders of record for use at the annual meeting may
be revoked at any time prior to the exercise of the powers conferred. In
addition to revocation in any other manner permitted by law, shareholders of
record giving a proxy may revoke the proxy by (a) delivering to the Company's
secretary at the Company's principal executive offices either (i) written notice
of revocation of the proxy executed by the shareholder or his attorney
authorized in writing or, if the shareholder is a corporation, by an officer or
attorney thereof duly authorized or (ii) a duly executed later-dated proxy, or
by (b) voting by ballot at the meeting.
VOTES REQUIRED
The presence, in person or by proxy, of the holders of at least a majority
of the shares of the Company's Common Stock outstanding on the Record Date is
necessary to have a quorum for the Annual Meeting. Abstentions and broker
"non-votes" are counted as present for purposes of determining a quorum. A
broker "non-vote" occurs when a nominee holding shares of the Company's Common
Stock for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner. Less than a quorum may
adjourn a meeting.
As of April 20, 1997, 16,922,801 shares of the Company's Common Stock were
outstanding. Each shareholder is entitled to one vote on each item at the Annual
Meeting, in person or by proxy, for each share of Common Stock held of record by
such shareholder on the Record Date. Election of each nominee for the Board
(Item No. 1) will require the plurality of the votes cast by shares entitled to
vote in the election. Should one or more of these nominees become unavailable to
accept nomination or election as a director, the individuals named as proxies on
your proxy card will vote the shares represented by your proxy card for the
election of such other persons as the Board may recommend, unless the Board
reduces the number of
<PAGE> 5
directors. The Board knows of no reason why any of the nominees will be
unavailable or unable to serve. Ratification of the appointment of independent
auditors (Item No. 2) will be approved if the votes cast favoring ratification
exceed the votes cast in opposition. Proxies solicited by the Board will be
voted "FOR" each item, unless otherwise instructed on your proxy card. Neither
shares not voted by abstention nor broker non-votes will be counted either for
or against an item, and such abstentions and broker non-votes will not affect
the outcome of the vote on such item but are counted for the purpose of
determining the presence or absence of a quorum.
SOLICITATION OF PROXIES
Solicitation of proxies may be made by use of the mails, and may also be
made in person or by telephone or other electronic communications. The Company
may reimburse brokerage firms and others for their expenses in forwarding proxy
materials to the beneficial owners and soliciting them to execute the proxies.
ANNUAL MEETING ATTENDANCE
Admission to the Annual Meeting is limited to shareholders of record or
their proxy, beneficial owners of the Company's Common Stock having evidence of
ownership, and guests of Deltek. If you are a registered owner of the Company's
Common Stock and plan to attend the meeting in person, please complete and
return to Deltek's Corporate Secretary the meeting reservation request form
printed on the back of this proxy statement. Shareholders who have not obtained
a reservation for the meeting will be admitted upon verification of ownership at
the meeting. Results of the meeting will be included in Deltek's next quarterly
report filed with the Securities and Exchange Commission.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent accountants to
audit the financial statements of the Company for the past 10 years.
Representatives from Arthur Andersen LLP are expected to be present at the
Annual Meeting, and they will have the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
PROCEDURE FOR SHAREHOLDER PROPOSALS AND NOMINATIONS
The Board currently performs the functions of a nominating committee and
will consider director nominees recommended by shareholders for election at an
annual meeting, in accordance with the procedures set forth in the Company's
Bylaws. Under the Bylaws, written notice of a shareholder's intent to make such
a nomination generally must be received at the Company's principal executive
offices not less than 120 calendar days in advance of the date that the
Company's proxy statement was released to the shareholders in connection with
the previous year's annual meeting of shareholders. The notice must contain the
information required by the Company's Bylaws.
The Bylaws also provide that no business shall be conducted at any meeting
of shareholders unless specified in the notice of the meeting (or any supplement
thereto) by or at the direction of the Board of Directors, otherwise brought
before the meeting by or at the direction of the Board of Directors, or properly
brought before the meeting by a shareholder of the Company who complies with
certain notice procedures set forth in the Bylaws. These requirements are
separate and apart from, and in addition to, the Securities and Exchange
Commission's requirements for the inclusion of a shareholder's proposal in the
Company's proxy statement.
The Company's Bylaws are incorporated herein by this reference. A copy of
the Bylaws may be obtained by following the instructions set forth on the last
page of this proxy statement.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1998 annual
meeting must be received by the Company's secretary at the Company's principal
executive offices no later than December 26, 1997, for
2
<PAGE> 6
inclusion in the Company's proxy statement and form of proxy relating to that
meeting. Such proposals must meet the requirements set forth in the Company's
Bylaws and the rules and regulations of the Securities and Exchange Commission
in order to be eligible for inclusion in the Company's 1998 proxy materials.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not know of any matters which will be brought before the
1997 annual meeting other than those specifically set forth in the notice of
meeting and this proxy statement. If any other matters are properly introduced
at the meeting for consideration, including, among other things, consideration
of a motion to adjourn the meeting to another time or place, the individuals
named on the proxy card will vote in accordance with their best judgment.
ITEM NO. 1 -- ELECTION OF DIRECTORS
The Company's board of directors (the "Board") currently consists of
Kenneth E. deLaski, Donald deLaski, Robert E. Gregg, Darrell J. Oyer and Charles
W. Stein. The Company's Articles of Incorporation and Bylaws provide that,
commencing with the 1997 annual meeting of shareholders, the Board shall be
divided into three classes with each class containing one third of the total
number of directors, as nearly equal in number as possible. At the Annual
Meeting, directors of the first class (Class I) shall be elected to hold office
for a term expiring at the 1998 annual meeting of shareholders, directors of the
second class (Class II) shall be elected to hold office for a term expiring at
the 1999 annual meeting of shareholders, and directors of the third class (Class
III) shall be elected to hold office for a term expiring at the 2000 annual
meeting of shareholders.
Because the Board currently consists of five members, which is not evenly
divisible by three, the Board has determined that there will initially be one
Class I director, two Class II directors, and two Class III directors. The Board
has placed Charles W. Stein as a Class I nominee, Donald deLaski and Darrell J.
Oyer as Class II nominees, and Kenneth E. deLaski and Robert E. Gregg as Class
III nominees.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING NOMINEES FOR THE
CLASS AND TERM INDICATED OPPOSITE EACH SUCH NOMINEE'S NAME:
<TABLE>
<CAPTION>
YEAR OF ANNUAL MEETING AT
NAME OF NOMINEE CLASS WHICH TERM EXPIRES
- ---------------------------------- ----- -------------------------
<S> <C> <C>
Charles W. Stein.................. I 1998
Donald deLaski.................... II 1999
Darrell J. Oyer................... II 1999
Kenneth E. deLaski................ III 2000
Robert E. Gregg................... III 2000
</TABLE>
3
<PAGE> 7
EXECUTIVE OFFICERS AND DIRECTORS
The Company's executive officers and directors are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Kenneth E. deLaski................. 39 President, Chief Executive Officer, Director and
Class III Director Nominee
Donald deLaski..................... 65 Chairman of the Board of Directors, Class II
Director Nominee, and Treasurer
Eric F. Brown...................... 32 Executive Vice President, Technical Operations
Johnny C. Cheng.................... 38 Vice President, Materials Management Product Group
Donald G. Craft.................... 44 Vice President, Client Services
Dien Hoang Do...................... 45 Vice President, Technology
Thomas W. Dudenhoefer.............. 49 Vice President, Sales
Alan R. Stewart.................... 42 Chief Financial Officer and Secretary
Robert E. Gregg.................... 49 Director and Class III Director Nominee
Darrell J. Oyer.................... 56 Director and Class II Director Nominee
Charles W. Stein................... 56 Director and Class I Director Nominee
</TABLE>
Kenneth E. deLaski was a co-founder of the Company in November 1983 and has
served as a director since its inception. Mr. deLaski also has served as the
Company's President since May 1990 and as its Chief Executive Officer since
February 1996. From May 1990 to February 1996, he served as the Company's Chief
Operating Officer. Mr. deLaski is a certified public accountant. Kenneth E.
deLaski is the son of Donald deLaski, Chairman of the Board of Directors and
Treasurer of the Company.
Donald deLaski was a co-founder of the Company in November 1983 and has
served as Chairman of the Board of Directors and Treasurer since its inception.
Mr. deLaski also served as the Company's Chief Executive Officer from its
inception until February 1996. Mr. deLaski is a certified public accountant.
Donald deLaski is the father of Kenneth E. deLaski, President and Chief
Executive Officer of the Company.
Eric F. Brown was a co-founder of the Company in November 1983. He has
served as the Company's Vice President, Technical Operations since May 1990, and
as Executive Vice President since January 1997. Prior to May 1990, Mr. Brown
held various technical and management positions with the Company, including
management of the Company's Technical Services Division, which provides custom
programming services to the Company's customers, and various of the Company's
product groups responsible for development and maintenance of the Company's core
software products.
Johnny C. Cheng joined the Company in December 1987. He has served as the
Company's Vice President, Materials Management Product Group since May 1994, and
is responsible for the design, development and support of the Company's
materials management software products. From December 1987 to May 1994, Mr.
Cheng was employed as a senior system consultant responsible for implementing
the Company's software systems at customer facilities. Mr. Cheng is a certified
public accountant.
Donald G. Craft joined the Company in September 1986. He has served as the
Company's Vice President, Client Services since October 1994, and is responsible
for all of the Company's accounting consultants and telephone support personnel.
From January 1991 to October 1994, Mr. Craft served as the Company's Director of
Client Services. Mr. Craft successfully completed the National Uniform Certified
Public Accountant Examination.
Dien Hoang Do joined the Company in October 1987. He has served as the
Company's Vice President, Technology since January 1995, and is responsible for
the Company's research and development. From October 1987 to January 1995, Mr.
Do held various technical positions with the Company.
4
<PAGE> 8
Thomas W. Dudenhoefer joined the Company in April 1988. He has served as
the Company's Vice President, Sales since January 1997. From April 1988 to March
1992, Mr. Dudenhoefer was employed as an account manager. From March 1992 to
January 1997, he served as Sales Manager.
Alan R. Stewart joined the Company in July 1992 as Chief Financial Officer
and has served as its Secretary since February 1996. From March 1991 until July
1992, he was employed as Director of Accounting at BTG, Inc., a government
contractor. Prior to March 1991, Mr. Stewart held positions as Controller and
Treasurer of Tempest Technologies, Inc., as assistant Controller of C3, Inc. and
as a staff accountant in the Division of Corporate Finance of the United States
Securities and Exchange Commission. Mr. Stewart is a certified public
accountant.
Robert E. Gregg has served as a Director of the Company since September
1986. He has been a shareholder in Hazel & Thomas, P.C., counsel to the Company,
since Hazel & Thomas' inception in 1987.
Darrell J. Oyer became a director of the Company immediately following the
closing of the Company's initial public offering in February, 1997. Since June
1991, Mr. Oyer has served as President of Darrell J. Oyer and Company, a
consulting company. Mr. Oyer is a certified public accountant.
Charles W. Stein became a director of the Company on April 1, 1997. From
February 1987 until February 1997, Mr. Stein served as President and Chief
Executive Officer of Netrix Corporation, a wide area network product and systems
company. Mr. Stein also was a member of Netrix's Board of Directors and was
serving as its Chairman when he resigned from the board on March 31, 1997. Mr.
Stein currently is a director of Trusted Information Systems, Inc.
Deltek's executive officers are appointed annually by, and serve at the
discretion of, the Board. Each executive officer is a full-time employee of the
Company. Other than the relationship between Donald deLaski and Kenneth E.
deLaski, there are no family relationships between any director or executive
officer of the Company.
THE BOARD OF DIRECTORS
The Board of Directors is responsible for overseeing the overall
performance of the Company. Members of the board are kept informed of the
Company's business through discussions with the Chairman and other members of
the Company's management and staff, by reviewing materials provided to them and
by participating in board and committee meetings. During 1996, the Board of
Directors acted primarily by unanimous written consent, but also met three
times. During 1996, no incumbent director attended fewer than 75 percent of the
meetings of the Board of Direcctors or of the Committees on which he served.
COMMITTEES OF THE BOARD
The Company has audit and compensation committees, but not a nominating
committee, of the Board. The Audit Committee, appointed in April, 1997, is
responsible for reviewing with management the financial controls, accounting,
credit and reporting activities of the Company. The Audit Committee reviews the
qualifications of the Company's independent auditors, makes recommendations to
the Board regarding the selection of independent auditors, reviews the scope,
fees and results of any audit, and reviews non-audit services and related fees
provided by the independent auditors. The members of the Audit Committee are
Darrell J. Oyer and Charles W. Stein, both of whom are independent directors. As
the Audit Committee did not exist until the current year, no meetings were held
during the last fiscal year.
The Compensation Committee, appointed in April, 1997, is responsible for
the administration of all salary and incentive compensation plans for the
officers and key employees of the Company, including bonuses. The Compensation
Committee may also administer the Company's 1996 Stock Option Plan and 1996
Employee Stock Purchase Plan. The members of the Compensation Committee are
Darrell J. Oyer and Charles W. Stein, both of whom are independent directors.
5
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1996, the Company did not have a
compensation committee. Accordingly, the Board of Directors made all decisions
concerning executive officer compensation.
DIRECTOR COMPENSATION
Prior to the Company's initial public offering in February 1997, directors
received no compensation for their services as members of the Board. Currently
directors who are not employees of the Company receive $1,000 for each meeting
of the Board or any committee thereof attended in person and $500 for each such
meeting attended telephonically, except that if a committee meeting is held on
the same day as a meeting of the full Board, the compensation for attendance at
such committee meeting is $300. The Company reimburses outside directors for any
travel expenses incurred in connection with attending Board or Committee
meetings. Each of the outside directors has been granted nonqualified options
under the Company's 1996 Stock Option Plan to purchase 8,000 shares of the
Company's Common Stock either at the initial public offering price or the
closing price on the date immediately prior to the date of the option grant.
Directors who are employees of the Company will receive no additional cash
compensation for their services as members of the Board of Directors or
committees thereof other than reimbursement for travel expenses incurred in
connection with attending board and committee meetings.
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth information concerning the compensation
earned during the year ended December 31, 1996 by the Company's Chief Executive
Officer and each of the Company's other four most highly compensated executive
officers (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ---------------
COMPENSATION OPTIONS GRANTED ALL OTHER
NAME AND PRINCIPAL POSITION SALARY (SHARES) COMPENSATION(1)
- --------------------------------------------------- ------------ --------------- ---------------
<S> <C> <C> <C>
Kenneth E. deLaski................................. $156,667 -- $ 7,493(2)
President and Chief Executive Officer
Dien Hoang Do...................................... 136,696 6,000 4,000(3)
Vice President, Technology
Donald deLaski..................................... 135,013 -- 6,607(4)
Chairman and Treasurer
Eric F. Brown...................................... 126,667 30,000 12,011(5)
Vice President, Technical Operations
Johnny C. Cheng.................................... 119,118 6,000 4,000(3)
Vice President, Materials Management Product
Group
</TABLE>
- ---------------
(1) Does not include pro rata distributions of S Corporation dividends to the
individual as a shareholder.
(2) Represents premiums and benefits of $3,493 paid under medical insurance and
benefit plans and a 401(k) plan profit sharing contribution of $4,000.
(3) Represents a 401(k) plan profit sharing contribution.
(4) Represents premiums and benefits of $2,607 paid under medical insurance and
benefit plans and a 401(k) plan profit sharing contribution of $4,000.
(5) Represents premiums and benefits of $8,011 paid under medical insurance and
benefit plans and a 401(k) plan profit sharing contribution of $4,000.
6
<PAGE> 10
Option Grants in Last Fiscal Year
The following table sets forth information concerning grants of options to
purchase the Company's Common Stock made during the year ended December 31, 1996
to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SHARES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OPTION TERM(2)
OPTIONS FISCAL PRICE PER EXPIRATION ------------------------
NAME GRANTED YEAR(1) SHARE DATE 5% 10%
- --------------------------------- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth E. deLaski............... -- -- -- -- -- --
Dien Hoang Do.................... 6,000 0.9% $4.00 4/1/06 $ 15,093 $ 38,250
Donald deLaski................... -- -- -- -- -- --
Eric F. Brown.................... 30,000 4.3 4.00 4/1/06 75,467 191,249
Johnny C. Cheng.................. 6,000 0.9 4.00 4/1/06 15,093 38,250
</TABLE>
- ---------------
(1) The Company granted options to purchase an aggregate of 693,000 shares of
the Company's Common Stock to employees during the year ended December 31,
1996.
(2) The potential realizable value is based on the term of the option at the
time of grant (ten years). Potential gains are net of the exercise price but
before taxes associated with the exercise. Amounts represent hypothetical
gains that could be achieved for the respective options if exercised at the
end of the option term. The assumed 5% and 10% rates of stock price
appreciation are provided in accordance with the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of the future Common Stock price. Actual gains, if any, on stock
option exercises are dependant on the future financial performance of the
Company, overall market conditions and the option holders' continued
employment through the vesting period. This table does not take into account
any appreciation in the price of the Common Stock from the date of grant to
the date of this Prospectus.
Option Exercises and 1996 Fiscal Year-End Option Values
The following table sets forth information concerning the exercise of stock
options during the year ended December 31, 1996 and the value of options held as
of such date by the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT DECEMBER 31, 1996 DECEMBER 31, 1996(2)
UPON VALUE ----------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------- ----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth E. deLaski....... -- -- -- -- -- --
Dien Hoang Do............ 4,500 $47,363 -- 16,500 -- $ 152,394
Donald deLaski........... -- -- -- -- -- --
Eric F. Brown............ -- -- -- 30,000 -- 210,000
Johnny C. Cheng.......... 3,000 31,450 -- 15,000 -- 136,350
</TABLE>
- ---------------
(1) "Value Realized" represents the fair market value of the underlying Common
Stock on the exercise date minus the aggregate exercise price of such
options. For purposes of this calculation, the fair market value of the
Company's Common Stock as of December 31, 1996 of $11.00 per share, as
determined by the Board of Directors, was used.
(2) Based upon the fair market value of the Company's Common Stock as of
December 31, 1996 of $11.00 per share, as determined by the Board of
Directors, minus the aggregate exercise price of such options.
7
<PAGE> 11
CERTAIN TRANSACTIONS
From 1987 until February 25, 1997 (the "Termination Date"), Deltek elected
to be treated for federal and certain state income tax purposes as an S
Corporation under Subchapter S of the Internal Revenue Code of 1986. As a
result, the Company's earnings for prior tax years and through February 24, 1996
were taxed, with certain exceptions, for federal and certain state income tax
purposes directly to Deltek's shareholders. Prior to its initial public
offering, Deltek and its pre-IPO shareholders entered into a Tax Indemnification
Agreement, which generally provides that those shareholders will be responsible
for any federal and certain state income taxes imposed upon the Company for all
taxable periods ending prior to the Termination Date and that the Company will
be responsible for all federal and state income taxes arising on or after the
Termination Date. All executive officers and directors (other than Messrs.
Gregg, Oyer and Stein who were not shareholders prior to the initial public
offering) executed the Tax Indemnification Agreement.
Robert E. Gregg, a director of the Company, is a shareholder in Hazel &
Thomas, P.C., a law firm that the Company has retained. The legal fees paid to
Hazel & Thomas by the Company did not exceed 5% of Hazel & Thomas' gross
revenues during the firm's last full fiscal year.
The Company has entered into indemnification agreements with its executive
officers and directors setting forth certain procedures and other conditions
applicable for claims for indemnification pursuant to the Company's articles of
incorporation and agreeing, subject to certain limitations, to obtain and
maintain directors' and officers' liability insurance coverage for its directors
and officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Prior to the Company's initial public offering, the Board of Directors,
which included the Company's Chairman and its President and Chief Executive
Officer, made all decisions concerning compensation of the Company's executive
officers, including its chief executive officer. During its fiscal year ended
December 31, 1996, the Company's decisions on executive officer compensation
were made in an effort to attract and retain highly qualified personnel and to
recognize individual performance through the use of incentives, including
equity-based incentives, that reward the creation of shareholder value and the
achievement of key Company objectives.
The current members of the Compensation Committee (the "Committee") were
not appointed until April 1997, and the Committee has neither reviewed nor
approved any compensation actions relating to the Company's fiscal year ended
December 31, 1996. The Committee recognizes that as a newly public company, the
Company needs a transition period during which to establish its long-range
compensation philosophy and objectives. The Committee is developing its
compensation policies and will describe them in the proxy materials to be
furnished in connection with the Company's 1998 annual meeting of shareholders.
The Compensation Committee:
Darrell J. Oyer
Charles W. Stein
8
<PAGE> 12
ITEM NO. 2 -- RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR ITS CURRENT FISCAL YEAR
Subject to ratification by the shareholders, the Board has reappointed
Arthur Andersen LLP as independent accountants to audit the consolidated
financial statements of the Company for its fiscal year ending 1997. THE BOARD
RECOMMENDS A VOTE FOR RATIFICATION OF THE REAPPOINTMENT OF ARTHUR ANDERSEN LLP.
The ratification of independent accountants is not a matter required to be
submitted to a vote of the shareholders, but is being submitted because of the
Company's general policy of submitting the appointment of independent
accountants to shareholder ratification. The Company believes this policy may
provide the auditors with a greater degree of independence from management. In
the event of a negative vote by the shareholders, the Board would reconsider the
reappointment of Arthur Andersen LLP.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table contains information regarding the beneficial ownership
of the Company's Common Stock by: (i) the Named Executive Officers; (ii) each of
the Company's directors; (iii) all directors and officers as a group; and (iv)
each person known by the Company to own beneficially more than 5% of the
Company's Common Stock, as of April 20, 1997.
<TABLE>
<CAPTION>
BENEFICIAL OWNER SHARES BENEFICIALLY OWNED(1) PERCENT
---------------------------------------------------- ---------------------------- -------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS:
Kenneth E. deLaski(2).......................... 5,205,000 30.8%
Donald deLaski................................. 4,772,800 28.2
Eric F. Brown(3)............................... 498,000 2.9
Johnny C. Cheng(4)............................. 37,200 *
Dien Hoang Do(5)............................... 35,700 *
Robert E. Gregg................................ -- --
Darrell J. Oyer(6)............................. 1,200 *
Charles W. Stein............................... -- --
All directors, director nominees and executive
officers as a group (11 persons)(7).......... 10,627,600 62.8
OTHER 5% SHAREHOLDERS:
Onae Trust, R.A. Jacobs, Trustee............... 1,115,000 6.6%
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005-1413
</TABLE>
- ---------------
* Represents less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable, or will become exercisable within 60 days after April
20, 1997, are deemed outstanding. Such shares, however, are not deemed
outstanding for purposes of computing the percentage ownership of any other
person. Unless otherwise indicated in the footnotes to this table, the
persons and entities named in the table have sole voting and sole investment
power with respect to all shares beneficially owned, subject to community
property laws where applicable. Unless otherwise indicated, the address of
each of the individuals listed in the table is: c/o Deltek Systems, Inc.,
8280 Greensboro Drive, McLean, Virginia 22102.
(2) Mr. deLaski's shares include 962,500 shares owned by his wife and 31,500
shares held in separate trusts for the benefit of his children, for which he
serves as a trustee.
(3) Mr. Brown's shares include 6,000 shares issuable upon exercise of stock
options which are exercisable and fully vested within 60 days of April 20,
1997.
9
<PAGE> 13
(4) Mr. Cheng shares voting and investment power as to 36,000 of these shares
with Emily Cheng. Mr. Cheng's shares include 1,200 shares issuable upon
exercise of stock options which are exercisable and fully vested within 60
days of April 20, 1997.
(5) Mr. Do shares voting and investment power as to 34,500 of these shares with
Thanh Hoang Do. Mr. Do's shares include 1,200 shares issuable upon exercise
of stock options which are exercisable and fully vested within 60 days of
April 20, 1997.
(6) Mr. Oyer's shares include 200 shares owned by his wife and 1,000 shares held
in a pension trust for which he serves as trustee.
(7) Includes 14,400 shares issuable upon exercise of stock options which are
exercisable and fully vested within 60 days of April 20, 1997.
10
<PAGE> 14
ADDITIONAL INFORMATION
THE COMPANY'S BYLAWS ARE INCORPORATED INTO THIS PROXY STATEMENT BY THIS
REFERENCE. THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM THIS
PROXY STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF THE COMPANY'S BYLAWS WITHIN ONE BUSINESS DAY OF THE RECEIPT OF SUCH
REQUEST, BY FIRST CLASS MAIL OR EQUALLY PROMPT MEANS. ANY SUCH REQUEST SHOULD BE
DIRECTED TO THE COMPANY'S INVESTOR RELATIONS DEPARTMENT AT THE COMPANY'S
EXECUTIVE OFFICES, 8280 GREENSBORO DRIVE, MCLEAN, VA 22102, (703) 734-8606.
PUBLICATIONS OF INTEREST TO DELTEK SHAREHOLDERS ARE AVAILABLE, FREE OF CHARGE.
THESE INCLUDE ANNUAL AND QUARTERLY REPORTS TO SHAREHOLDERS, AS WELL AS REPORTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION OTHER THAN EXHIBITS THERETO.
THIS MATERIAL MAY BE OBTAINED BY WRITTEN REQUEST TO THE COMPANY'S INVESTOR
RELATIONS DEPARTMENT SENT TO THE COMPANY'S EXECUTIVE OFFICES. SINCE DELTEK'S
1996 FISCAL YEAR ENDED PRIOR TO THE INITIAL PUBLIC OFFERING OF ITS COMMON STOCK,
DELTEK DID NOT FILE AN ANNUAL REPORT ON A FORM 10-K REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1996 WITH THE SECURITIES AND EXCHANGE COMMISSION.
11
<PAGE> 15
DETACH HERE \/
- --------------------------------------------------------------------------------
DELTEK SYSTEMS, INC.
1997 ANNUAL SHAREHOLDERS MEETING
RESERVATION REQUEST FORM
Complete the following information and return it to Corporate Secretary, Deltek
Systems, Inc., 8280 Greensboro Drive, McLean, VA 22102, for admission to the
1997 Annual Shareholders Meeting of Deltek Systems, Inc.
Shareholder's Name and Address:
--------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Number of Shares of Deltek
Common Stock held:
---------------------------------------------------------
If the shares listed above are not registered in your name, identify the
name of the shareholder of record below and bring with you to the annual meeting
evidence that you beneficially own the shares.
Shareholder of Record:
-----------------------------------------------------
THIS IS NOT A PROXY CARD
<PAGE> 16
[MASTER]
DETACH HERE
DELTEK SYSTEMS, INC.
8280 GREENSBORO DRIVE
MCLEAN, VIRGINIA 22102
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R DELTEK SYSTEMS, INC. ("DELTEK") FOR DELTEK'S ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 21, 1997.
O
The undersigned hereby appoints Kenneth E. deLaski and Donald deLaski, and
X each of them, proxies, each with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote all shares
Y of common stock of Deltek that the undersigned is entitled to vote at
Deltek's annual meeting of shareholders to be held in McLean, Virginia, on
May 21, 1997, and at any adjournment thereof, upon all subjects that may
properly come before the meeting, or any adjournment thereof, including the
matters described in the proxy statement furnished herewith.
THE PROXIES WILL VOTE YOUR SHARES IN ACCORDANCE WITH YOUR DIRECTIONS ON
THIS CARD. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR ITEM, YOUR
SHARES WILL BE VOTED "FOR" SUCH ITEM.
Your vote is important. Please mark, date, sign and return this proxy card
promptly, using the enclosed envelope. No postage is required if mailed in
the United States.
------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
------------
<PAGE> 17
DELTEK SYSTEMS, INC.
1997 ANNUAL SHAREHOLDERS' MEETING
Dear Shareholder:
Please take note of the proxy statement and other important information enclosed
with this Proxy. Your vote counts, and you are strongly encouraged to exercise
your right to vote your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then mark, sign and date the proxy card, detach it, and return it in the
enclosed postage pre-paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Deltek Systems, Inc.
DETACH HERE
Please mark
[x] votes as in
this example.
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors FOR AGAINST ABSTAIN
CLASS I NOMINEE: Charles W. Stein 2. Ratification of the appointment of [ ] [ ] [ ]
CLASS II NOMINEES: Donald deLaski, Darrell J. Oyer Arthur Andersen LLP as Deltek's
CLASS III NOMINEES: Kenneth E. deLaski, Robert E. Gregg independent auditors.
FOR WITHHELD
[ ] [ ] The proxies are authorized to vote in their discretion upon any
other business that may properly come before the meeting.
[ ]
-----------------------------------------
For all nominees except as noted above MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
Please sign exactly as name appears hereon. Joint owners should
each sign. Executors, administrators, trustees, guardians or other
fiduciaries should give full title as such. If signing for a
corporation, please sign in full corporate name by a duly authorized
officer. You must return this card promptly to have your shares of
Deltek common stock voted. If you attend the meeting and decide to
vote by ballot, such vote will supersede this proxy.
Signature: Date: Signature: Date:
----------------------------------- ----------------- ------------------------------- ---------
</TABLE>
