<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
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(3)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CLARK/BARDES HOLDINGS, 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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
CLARK/BARDES HOLDINGS, INC.
2121 SAN JACINTO STREET, SUITE 2200
DALLAS, TEXAS 75201-7906
NOTICE OF THE 1999 ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD APRIL 27, 1999
To the Stockholders
of Clark/Bardes Holdings, Inc.:
Clark/Bardes Holdings, Inc., a Delaware corporation ("CBH," and, together
with Clark/Bardes, Inc., a Delaware corporation ("CBI") and wholly owned
subsidiary of CBH, "Clark/Bardes"), cordially invites you to attend the 1999
annual meeting of its stockholders at the Willard Inter-Continental Washington,
1401 Pennsylvania Avenue, N.W., Washington, D.C. 20004-1010, on April 27, 1999,
at 9:00 a.m. local time (the "Annual Meeting"), for the following purposes:
(1) To elect two Class I directors of Clark/Bardes to serve until the
2002 annual meeting of our stockholders, and until the respective
successor of each is duly elected and qualified;
(2) To ratify the appointment of Ernst & Young LLP by Clark/Bardes'
board of directors (the "Board of Directors") as the independent
accountants of Clark/Bardes' financial statements for the year ended
December 31, 1999; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
be postponed.
The Board of Directors has established the close of business on March 17,
1999 as the record date for determining the stockholders (the "Stockholders")
entitled to notice of and to vote at the annual meeting or any adjournment
thereof. For purposes pertaining to the Annual Meeting, any Stockholder may
examine the list of Stockholders as of the record date at the offices of
Clark/Bardes in Dallas, Texas, during regular business hours on any business day
prior to the Annual Meeting or any adjournment thereof.
We have included, along with this notice a proxy statement and the 1998
Form 10-K, which describes certain of Clark/Bardes' activities during 1998 and
contains Clark/Bardes' financial statements for the year ended December 31,
1998. The Form 10-K does not form any part of the material for solicitation of
proxies.
WE URGE STOCKHOLDERS, WHETHER OR NOT THEY PLAN TO ATTEND THE ANNUAL
MEETING, TO SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED. IF A STOCKHOLDER WHO HAS SUBMITTED A PROXY ATTENDS THE ANNUAL MEETING
IN PERSON, THAT STOCKHOLDER MAY REVOKE THE PROXY AND VOTE IN PERSON ON ALL
MATTERS SUBMITTED AT THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ MELVIN G. TODD
Melvin G. Todd
President, Chief Executive Officer
and Director
March 31, 1999
Dallas, Texas
<PAGE> 3
CLARK/BARDES HOLDINGS, INC.
2121 SAN JACINTO STREET, SUITE 2200
DALLAS, TEXAS 75201-7906
PROXY STATEMENT
1999 ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD APRIL 27, 1999
INTRODUCTION
The board of directors (the "Board of Directors") of Clark/Bardes Holdings,
Inc., a Delaware corporation ("CBH," and, together with Clark/Bardes, Inc., a
Delaware corporation ("CBI") and wholly owned subsidiary of CBH,
"Clark/Bardes"), hereby solicits your proxy on behalf of Clark/Bardes for use at
the 1999 annual meeting of Clark/Bardes' stockholders and any continuation of
such meeting pursuant to any adjournment thereof (the "Annual Meeting"). The
Annual Meeting will be held at the Willard Inter-Continental Washington, 1401
Pennsylvania Avenue, N.W., Washington, D.C. 20004-1010, on April 27, 1999, at
9:00 a.m. local time.
Clark/Bardes' principal executive office is located at 2121 San Jacinto
Street, Suite 2200, Dallas, Texas 75201-7906. Clark/Bardes' telephone number is
(214) 871-8717. Clark/Bardes will mail this proxy statement and the accompanying
proxy card on or about March 31, 1999. The date of this proxy statement is March
31, 1999.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the holders of record (the "Stockholders") of shares
of common stock, par value $0.01 per share, of Clark/Bardes (the "Common Stock")
on March 17, 1999 will vote upon the following matters:
(1) The proposal to elect two Class I directors of Clark/Bardes to serve
until the 2002 annual meeting of out Stockholders and until the
respective successor of each is duly elected and qualified
("Proposal One");
(2) The ratification of the appointment of Ernst & Young LLP by the
Board of Directors as the independent accountants of Clark/Bardes'
financial statements for the year ended December 31, 1999 ("Proposal
Two"); and
(3) The transaction of such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors recommends that you vote "FOR" each of Proposal One
and Proposal Two.
RECORD DATE AND VOTING
RECORD DATE AND STOCKHOLDERS LIST
The Board of Directors has established the close of business on March 17,
1999 as the record date (the "Record Date") for determining the Stockholders
entitled to notice of and to vote at the Annual Meeting. On the Record Date,
Clark/Bardes had 7,882,458 shares of Common Stock outstanding. Clark/Bardes did
not have any other shares of capital stock outstanding on the Record Date.
A list of Stockholders entitled to vote at the Annual Meeting, which will
be arranged in alphabetical order and which will show each Stockholder's address
and the number of shares registered in his or her name, will be open to any
Stockholder to examine for any purpose related to the Annual Meeting. Any
Stockholder
<PAGE> 4
may examine this list during ordinary business hours commencing March 31, 1999,
and continuing through the date of the Annual Meeting at the principal office of
Clark/Bardes, at 2121 San Jacinto Street, Suite 2200, Dallas, Texas 75201-7906.
QUORUM, REQUIRED VOTE AND VOTING RIGHTS
Quorum. The presence, in person or by proxy, of Stockholders holding a
majority of the outstanding shares of Common Stock on the Record Date will
constitute a quorum at the Annual Meeting. Shares that are represented at the
Annual Meeting but abstain from voting on any or all matters and shares that are
"broker non-votes" (shares held by brokers or nominees as to which they have no
discretionary power to vote on a particular matter and have received no
instructions from the beneficial owners thereof or persons entitled to vote
thereon) will be counted in determining whether a quorum is present at the
Annual Meeting. The election inspectors appointed for the Annual Meeting will
determine the number of shares of Common Stock present at the meeting, determine
the validity of proxies and ballots, determine whether or not a quorum is
present, and count all votes and ballots. Unless a quorum is present at the
Annual Meeting, no action may be taken at the meeting except the adjournment
thereof until a later time.
Required Vote. With respect to Proposal One, a plurality of all the votes
cast by Stockholders, in person or by proxy, will elect each nominee for
director. A majority of the votes cast, in person or by proxy, is required for
Proposal Two. Abstentions are not counted as a vote cast, and will not affect
the outcome of Proposal One or Proposal Two. Broker non-votes will be treated as
not present and not entitled to vote with respect to both proposals. Therefore,
broker non-votes will have no effect on the outcome of either proposal.
Voting Rights. With respect to each proposal, each Stockholder will be
entitled to one vote per share of Common Stock held as of the Record Date by
such Stockholder.
PROXIES
Thomas M. Pyra and Keith L. Staudt, the persons named as proxies on the
proxy card accompanying this proxy statement, were selected by the Board of
Directors to serve as proxies (collectively, the "Proxyholders"). Messrs. Pyra
and Staudt are officers of Clark/Bardes. Each executed and returned proxy card
will be voted according to the directions indicated on that proxy card. If no
direction is indicated, the proxy will be voted according to the Board of
Directors' recommendations, which are contained in this proxy statement.
The Board of Directors does not intend to present, and has no information
that others will present, any business at the Annual Meeting that requires a
vote on any other matter. If any other matter requiring a vote properly comes
before the Annual Meeting, the Proxyholders will vote the proxies that they hold
in accordance with their best judgment, including voting them to adjourn the
Annual Meeting to another time if a quorum is not present at the Annual Meeting
or if they believe that an adjournment is in the best interests of Clark/Bardes.
Each Stockholder giving a proxy has the power to revoke it at any time
before the shares of Common Stock it represents are voted. This revocation is
effective upon receipt, at any time before the Annual Meeting is called to
order, by the Secretary of Clark/Bardes of either (i) an instrument revoking the
proxy or (ii) a duly executed proxy bearing a later date than the preceding
proxy. Additionally, a Stockholder may change or revoke a previously executed
proxy by voting in person at the Annual Meeting.
PROXY SOLICITATION COSTS
Clark/Bardes will bear the cost to solicit proxies. Clark/Bardes may
solicit proxies from the Stockholders and other persons in person or by mail,
facsimile transmission, telephone, personal interview, or any other means.
Clark/Bardes will also reimburse banks, brokers, custodians, fiduciaries,
nominees, securities dealers, trust companies, and other persons for the
reasonable expenses that they incur when forwarding this proxy statement and the
accompanying materials to the beneficial owners of shares of Common Stock.
Clark/ Bardes' directors and officers also may solicit proxies from Stockholders
and other persons by any of the means described above. Clark/Bardes will not pay
these directors and officers any extra compensation for participating in this
solicitation.
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<PAGE> 5
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Board of Directors is divided, as nearly equal in number as possible,
into three classes, denominated Class I, Class II and Class III. The Board of
Directors currently consists of six directors. The Board of Directors has
nominated two Class I directors, Melvin G. Todd and George D. Dalton, to
continue to serve as Class I directors for a three year term until the annual
meeting of stockholders to be held in 2002 and until the respective successor of
each is duly elected and qualified. The four directors whose terms of office
expire in 2000 and 2001 will continue to serve after the Annual Meeting until
such time as their respective terms of office expire and until their respective
successors are duly elected and qualified. See "-- Other Directors" below. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF
THE NOMINEES NAMED IN THIS PROXY STATEMENT TO CONTINUE TO SERVE AS DIRECTORS OF
CLARK/BARDES. See "-- Nominees for Election as Class I Directors" below.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
The Board of Directors has nominated the following persons to serve as
Class I directors of Clark/Bardes until the 2002 annual meeting of Clark/Bardes'
stockholders and until the respective successor of each duly elected and
qualified:
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR CLASS
- ---- --- -------- --------------
<S> <C> <C> <C>
Melvin G. Todd........ 43 President, Chief Executive Officer and Class I
Director of each of CBH and CBI
George D. Dalton...... 71 Director of CBH and CBI Class I
</TABLE>
Melvin G. Todd has served as a director of CBH since June 1998 and his
current term as director expires at the 1999 Annual Meeting. Mr. Todd also
served as a director of Clark/Bardes, Inc., a Texas corporation and predecessor
to CBI (the "Predecessor Company"), from January 1993 to July 1998. Mr. Todd has
served as Chief Executive Officer and President of CBH since June 1998 and as
Chief Executive Officer and President of CBH since July 1998. Prior to joining
the Predecessor Company, Mr. Todd served as a Vice President with The Great-West
Life Assurance Company. Mr. Todd graduated with honors from the University of
Manitoba with a Bachelor of Commerce degree. Mr. Todd is also an active member
of the American Academy of Actuaries and a Fellow of the Society of Actuaries.
George D. Dalton has served as a director of CBH and CBI and a member of
the Compensation Committee since October 1998, and his current term as director
expires at the 1999 Annual Meeting. Since July 1984, Mr. Dalton has served as
the Chairman of the Board and Chief Executive Officer of Fiserv Inc., a public
company engaged in data processing outsourcing. Since 1995, Mr. Dalton has
served as a director and a member of the compensation and audit committees of
APAC Teleservices, Inc., a public telemarketing company. Further, Mr. Dalton has
served as a director and member of the compensation committee of ARI Network
Services, Inc., a public company engaged in computer networking services since
1992.
3
<PAGE> 6
OTHER DIRECTORS
The following persons will continue to serve as directors of Clark/Bardes
after the Annual Meeting until such time as their respective terms of office
expire and until their respective successors are duly elected and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR CLASS
- ---- --- -------- --------------
<S> <C> <C> <C>
W.T. Wamberg.............. 46 Chairman of the Board of Directors and Class III
director of each of CBH and CBI
Lawrence H. Hendrickson... 59 Vice Chairman of the Board of Directors Class II
and director of each of CBH and CBI
Randolph A. Pohlman....... 55 Director of each of CBH and CBI Class III
L. William Seidman........ 77 Director of each of CBH and CBI Class II
</TABLE>
W.T. Wamberg has served as the Chairman of the Board of Directors and a
director of CBH since June 1998, and became the Chairman of the Board of
Directors and a director of CBI in July 1998. Mr. Wamberg's term as a director
of CBH expires at the 2001 annual meeting of Clark/Bardes' stockholders. Mr.
Wamberg served as a director of the Predecessor Company since 1988 and served as
the Chairman of the Board of the Predecessor Company from September 1996 until
July 1998. Mr. Wamberg, who has been a producer for Clark/Bardes since 1976, is
also President and Chief Executive Officer of The Wamberg Organization, Inc., an
independently operated sales office that markets Clark/Bardes' products. Mr.
Wamberg graduated from Baldwin-Wallace College with a Bachelor of Arts degree in
finance. Mr. Wamberg was formerly President of the Association for Advanced Life
Underwriting.
Lawrence H. Hendrickson has served as the Vice Chairman of the Board of
Directors and director of CBH since June 1998, and became the Vice Chairman of
the Board of Directors and a director of CBI in July 1998. Mr. Hendrickson's
term as director of CBH expires at the 2000 annual meeting of Clark/Bardes'
stockholders. From September 1996 until July 1998, Mr. Hendrickson served as the
Vice Chairman of the Board of Directors and a director of the Predecessor
Company. Mr. Hendrickson founded Bank Compensation Strategies, Inc., a Minnesota
company ("BCS"), in May 1982 and since that time and through the date of the BCS
acquisition served as its Chief Executive Officer. Prior to founding BCS, Mr.
Hendrickson was President of L.H. Hendrickson & Co., Inc. providing investment
and insurance solutions to small businesses and affluent individuals since 1960.
Mr. Hendrickson is a graduate of the University of Minnesota with a Bachelor of
Arts degree in business.
Randolph A. Pohlman has served as a director of CBH and a member of the
Compensation Committee since June 1998 and became a director of CBI in July
1998. Mr. Pohlman's term as a director of CBH expires at the 2001 annual meeting
of Clark/Bardes' stockholders. Since February 1996 until July 1998, Mr. Pohlman
served as a member of the Predecessor Company's Advisory Board. Since July 1995
Mr. Pohlman has served as the Dean at the School of Business and
Entrepreneurship at Nova Southeastern University in Fort Lauderdale, Florida.
From April 1990 to July 1995, Mr. Pohlman served as Director of Human Resources
World Wide for Koch Industries. Mr. Pohlman graduated from Kansas State
University with a Bachelor of Science and Master of Science degrees in Business
Administration and, in addition, earned a Ph.D. in finance and organizational
behavior from Oklahoma State University.
L. William Seidman has served as a director of CBH and a member of the
Compensation Committee since June 1998 and became a director of CBI in July
1998. Mr. Seidman's term as director of CBH expires at the 2000 annual meeting
of Clark/Bardes' stockholders. From September 1997 until July 1998, Mr. Seidman
served as a member of the Predecessor Company's Advisory Board. Mr. Seidman is
the chief commentator on NBC cable network's CNBC and publisher of Bank Director
magazine. From 1985 to 1991, Mr. Seidman served as the fourteenth chairman of
the Federal Deposit Insurance Corporation under Presidents Reagan and Bush. He
became the first chairman of the Resolution Trust Corporation in 1989 and served
in that capacity until 1991. Earlier, Mr. Seidman had served as President
Reagan's co-chair of the White House Conference on Productivity, President
Ford's Assistant of Economic Affairs and a member of the Arizona Governor's
4
<PAGE> 7
Commission on Interstate Banking. The former dean of Arizona State's College of
Business, Mr. Seidman holds an A.B. from Dartmouth (Phi Beta Kappa), an LL.B.
from Harvard Law School and an M.B.A. (with honors) from the University of
Michigan.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Meeting of the Board of Directors. Clark/Bardes' business is under the
general management of its Board of Directors. There are presently six directors,
including three independent directors. The Board of Directors held four meetings
during 1998, and all of the directors attended every meeting.
Committees. The Board of Directors has established an audit committee of
independent directors (the "Audit Committee"), which consists of Messrs. Dalton,
Pohlman and Seidman. The Audit Committee reviews the scope and approach of the
annual audit, the annual financial statements of Clark/Bardes and the auditors'
report thereon and the auditors' comments relative to the adequacy of
Clark/Bardes' system of internal controls and accounting systems. The Audit
Committee also recommends to the Board of Directors the appointment of
independent public accountants for the following year.
The Board of Directors has established a compensation committee of
independent directors (the "Compensation Committee"), which consists of Messrs.
Dalton, Pohlman and Seidman. The Compensation Committee reviews management
compensation levels and provides recommendations to the Board of Directors
regarding salaries and other compensation for Clark/Bardes' executive officers,
including bonuses and incentive plans, and administers the 1998 Stock Option
Plan.
The Board of Directors has established an executive committee (the
"Executive Committee"), which consists of Messrs. Wamberg, Hendrickson and Todd.
The Executive Committee has the power and authority of the Board of Directors to
manage the affairs of Clark/Bardes between meetings. The Executive Committee
also regularly reviews significant corporate matters and recommends action as
appropriate to the Board of Directors.
The Board of Directors has no standing nominating committee, and the entire
Board of Directors acts in such capacity.
DIRECTORS AND EXECUTIVE OFFICERS OF CLARK/BARDES
EXECUTIVE OFFICERS
Set forth below is a table identifying executive officers of Clark/Bardes
who are not identified herein as a director or nominee for director:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard C. Chapman................... 44 Executive Vice President of CBI
Robert E. Miller..................... 55 Executive Vice President of CBI and Chief
Executive Officer of Bank Compensation
Consulting Division
Thomas M. Pyra....................... 46 Chief Financial Officer of each of CBH and CBI
James V. Meyer....................... 41 Senior Vice President of CBI
James C. Bean........................ 46 Senior Vice President of CBI
</TABLE>
Richard C. Chapman became an Executive Vice President of CBI in July 1998.
From September 1997 to July 1998, Mr. Chapman served as the President and Chief
Executive Officer of Bank Compensation Strategies Group, an operating division
of the Predecessor Company. Prior to joining the Predecessor Company, Mr.
Chapman was a producer for BCS since 1985 and served as President of BCS since
January 1994. Prior to joining BCS, Mr. Chapman was an officer with First Bank
System, a regional bank holding company in Minneapolis, Minnesota. Mr. Chapman
graduated cum laude from Augustana College in Sioux Falls, S.D., with a double
major in mathematics and business administration.
5
<PAGE> 8
Robert E. Miller has served as Executive Vice President of CBI and
President and Chief Executive Officer of the Bank Compensation Consulting
Division since September 1998. From June 1974 until September 1998, Mr. Millers
was a partner of McGladrey & Pullen, LLP, an accounting and consulting firm. Mr.
Miller graduated from Jamestown College.
Thomas M. Pyra became the Chief Financial Officer of CBH and CBI in July
1998. Mr. Pyra served as the Chief Financial Officer for the Predecessor Company
during July of 1998. Prior to joining the Predecessor Company, Mr. Pyra served
as Vice President and Chief Financial Officer of Geodesic Systems, L.L.C. from
April 1997. Mr. Pyra served as Chief Financial Officer for Recompute Corporation
from October 1995 until January 1997 and served as Vice President and Controller
of Intercraft Company from October 1992 until June 1995. Mr. Pyra received a
Bachelor of Science degree in finance and an MBA from DePaul University.
James V. Meyer became Senior Vice President of CBI in July 1998 and has
served in the same capacity for Bank Compensation Strategies Group, an operating
division of the Predecessor Company, since September 1997. Prior to joining the
Predecessor Company, Mr. Meyer served as Senior Vice President of BCS from
November 1995 to December 1996 and as Executive Vice President of BCS from
January 1997 to August 1997. Prior to joining BCS, Mr. Meyer served as a Vice
President at Blanski Peter Kronlage & Zoch, public accountants, from May 1987 to
November 1995. Mr. Meyer graduated from the University of St. Thomas with a
Bachelor of Science degree in Accounting, and from the American College with a
Masters of Science in Financial Services. Mr. Meyer is a Certified Public
Accountant and Certified Financial Planner.
James C. Bean became the Senior Vice President of CBI in July 1998 and
served in the same capacity for Bank Compensation Strategies Group, an operating
division of the Predecessor Company, since February 1998. From October 1990 to
February 1998, Mr. Bean served as Senior Vice President and Managing Principal
of Mullin Consulting, an executive benefits firm. Mr. Bean graduated from the
University of Minnesota with a Bachelor of Arts degree in Liberal Arts.
TERMS OF OFFICE
The officers of Clark/Bardes are elected by the Board of Directors. Each of
the officers holds office until his successor is duly elected and qualified or
until their earlier death, disqualification, retirement, resignation or removal
from office.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires directors and officers of Clark/Bardes, and persons
who own more than 10% of the Common Stock, to file with the Commission initial
reports of Common Stock ownership and reports of changes in such ownership. A
reporting person must file a Form 3 -- Initial Statement of Beneficial Ownership
of Securities within 10 days after such person becomes a reporting person. A
reporting person must file a Form 4 -- Statement of Changes of Beneficial
Ownership of Securities within 10 days after any month in which such person's
beneficial ownership of securities changes, except for certain changes exempt
from the reporting requirements of Form 4. Such exempt changes include stock
options granted under a plan qualifying pursuant to Rule 16b-3 under the
Exchange Act. A reporting person must file a Form 5 -- Annual Statement of
Beneficial Ownership of Securities within 45 days after the end of the issuer's
fiscal year to report any changes in ownership during such year not reported on
a Form 4, including changes exempt from the reporting requirements of Form 4.
The SEC's rules require Clark/Bardes' reporting persons to furnish
Clark/Bardes with copies of all Section 16(a) reports that they file. Based
solely upon a review of the copies of such reports furnished to Clark/Bardes and
written representations that no other reports were required with respect to the
year ended December 31, 1998, Clark/Bardes believes that the reporting persons
have complied with all applicable Section 16(a) filing requirements for 1998 on
a timely basis, except for a Form 3 due in September 1998 with respect to Mr.
Miller.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation earned
during the last three fiscal years with respect to Clark/Bardes' Chief Executive
Officer and Clark/Bardes' four most highly compensated executive officers in
1998 other than the Chief Executive Officer (the "named executive officers") for
services rendered during the referenced year.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1)(2) COMPENSATION
------------------------------ -------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING
YEAR SALARY($) BONUS($)(3) AWARDS($) OPTIONS(#)
---- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Melvin G. Todd.......................... 1998 $251,278 $616,607 $216,972(4) 30,523
President, Chief Executive Officer 1997 250,886 225,007 -- 70,833
and Director 1996 250,008 200,006 -- --
Richard C. Chapman...................... 1998 256,276 212,000 -- 65,000
Executive Vice President 1997 84,191 75,000 -- --
1996 -- -- -- --
Larry R. Sluder......................... 1998 142,971 99,749 -- 7,500
Senior Vice President and 1997 131,554 78,500 -- 30,145
Corporate Actuary 1996 111,000 49,400 -- --
James V. Meyer.......................... 1998 175,000 111,563 -- 32,500
Senior Vice President 1997 58,333 -- -- --
1996 -- -- -- --
James C. Bean........................... 1998 148,208 94,482 -- 25,000
Senior Vice President 1997 -- -- -- --
1996 -- -- -- --
</TABLE>
- ---------------
(1) Does not include "Other Annual Compensation" because amounts of certain
perquisites and other noncash benefits provided by Clark/Bardes did not
exceed the lesser of $50,000 or 10% of the total annual base salary and
bonus disclosed in this table for the respective officer.
(2) Clark/Bardes does not pay Mr. Wamberg for services other than as Chairman of
the Board and Director. Clark/Bardes pays commission splits to The Wamberg
Organization which in turn pays Mr. Wamberg's salary. See "Certain
Transactions -- Principal Office Agreement with W.T. Wamberg" and
"-- Compensation of Directors."
(3) Bonuses represent incentive compensation, whether under employment
agreements entered into with the named executive officers, or otherwise. See
"Management -- Employment Agreements." Bonuses reflect amounts earned by the
named executive officers during the referenced year, even though paid
subsequent to such year.
(4) Represents the value of 24,108 shares of Common Stock on the date of grant.
As of December 31, 1998, Mr. Todd held all of such shares of Common Stock
the value of which was $406,822 based upon a closing price of $16.875 per
share. See "Certain Relationships and Related Transactions -- Restructuring
of the Grant of Stock to Melvin G. Todd."
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning the options
granted to the named executive officers during 1998. The options were granted
pursuant to Clark/Bardes' 1998 Stock Option Plan. No SARs
7
<PAGE> 10
were granted during 1998. For additional information on and certain terms of
options, see "-- 1998 Stock Option Plan."
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM($)(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
GRANTED(#) FISCAL YEAR(1) ($/SH) DATE 5% 10%
---------- -------------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Melvin G. Todd............. 30,523 8.0 $9.00 6/30/03 $447,469 $ 644,488
Richard C. Chapman......... 65,000 17.1 $9.00 8/18/08 952,903 1,507,339
Larry R. Sluder............ 7,500 2.2 $9.00 8/18/08 109,950 175,077
James V. Meyer............. 32,500 8.5 $9.00 8/18/08 476,451 758,670
James C. Bean.............. 25,000 6.5 $9.00 8/18/08 366,501 583,592
</TABLE>
- ---------------
(1) Options to purchase a total of 379,023 shares of Common Stock at an exercise
price of $9.00 per share were granted in 1998.
(2) In accordance with the rules of the SEC, the amounts shown on this table
represent hypothetical gains that could be achieved for the respective
options if exercised at the end of the option term. These gains are based on
the assumed rates of stock appreciation of 5.0% and 10.0% compounded
annually from the date the respective options were granted to their
expiration date and do not reflect Clark/Bardes' estimates or projections of
future Common Stock prices. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of the Common Stock, the option holder's
continued employment through the option period, and the date on which the
options are exercised.
OPTION EXERCISES IN LAST FISCAL YEAR
The following table sets forth certain information concerning all
unexercised options held by the named executive officers as of December 31,
1998. For additional information on and certain terms of such options, see
"-- 1998 Stock Option Plan." No options were exercised during 1998.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END(#) FISCAL YEAR-END(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Melvin G. Todd........................ 101,356 -- $965,676 --
Richard C. Chapman.................... -- 65,000 -- $511,875
Larry R. Sluder....................... 30,146 7,500 309,013 59,063
James V. Meyer........................ -- 32,500 -- 255,938
James C. Bean......................... -- 25,000 -- 196,875
</TABLE>
- ---------------
(1) Value for "in-the-money" options represents the positive spread between the
respective exercise prices of outstanding options and the closing price of
$16.875 on December 31, 1998.
COMPENSATION OF DIRECTORS
The members of the Board of Directors of each of CBH and CBI who are also
employees receive no additional compensation for their services as a director.
In 1998, Clark/Bardes reimbursed Mr. Wamberg and Mr. Hendrickson $100,000 and
$80,090, respectively, for expenses incurred on behalf of Clark/Bardes.
Non-employee directors, other than Mr. Pohlman, are paid an annual stipend
of $15,000, and all non-employee director are reimbursed all reasonable expenses
incurred by them related to their services as non-employee directors of
Clark/Bardes. In addition, non-employee directors, other than Mr. Pohlman, are
eligible to participate in the 1998 Non-Employee Director Stock Option Plan (the
"Non-Employee Director Plan"). See "-- 1998 Non-Employee Director Stock Option
Plan."
8
<PAGE> 11
EMPLOYEE BENEFIT AND RETIREMENT PLANS
Clark/Bardes maintains a defined contribution plan for its employees that
is qualified under Section 401(k) of the Internal Revenue Code of 1986, as
amended (the "401(k) Plan"). Clark/Bardes matches 50.0% of the first 6.0% of
salary that an eligible participant contributes to the 401(k) Plan.
1998 STOCK OPTION PLAN
A total of 2,000,000 shares of Common Stock has been reserved for issuance
pursuant to the 1998 Stock Option Plan. The 1998 Stock Option Plan was initially
adopted by the Predecessor Company in March 1997 and assumed, amended and
restated by CBH in July 1998. The 1998 Stock Option Plan is administered by the
Board of Directors or the Compensation Committee, who have full authority to
determine the individuals to whom, and the time at which, the options may be
granted and the number of shares covered by each option. Both nonqualified stock
options and incentive stock options (as defined in the Internal Revenue Code)
may be granted under the 1998 Stock Option Plan. The option price per share is
determined by the Compensation Committee but may not be less than fair market
value for incentive stock options. Options may be granted to officers, employees
(including officers who are also directors), non-employee directors or licensed
insurance producers of Clark/Bardes. Incentive stock options are not
transferable or assignable by an optionee other than by will or the laws of
descent and distribution. Nonqualified stock options may be transferred to
certain permitted transferees to the extent permitted in the applicable
nonqualified stock option agreement granting any such nonqualified stock
options.
As of March 17, 1999, 337,500 options had been granted under the 1998 Stock
Option Plan, none of which had been exercised and 337,500 of which remained
outstanding. A total of 1,662,500 shares of Common Stock remain available for
grant as of March 17, 1999.
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
A total of 100,000 shares of Common Stock has been reserved for issuance
pursuant to the Non-Employee Director Plan. The Non-Employee Director Plan is
administered by either the Board of Directors or the Compensation Committee.
Only nonqualified options may be granted under the Non-Employee Director Plan.
All non-employee directors of Clark/Bardes, other than Mr. Pohlman, may
participate in the Non-Employee Director Plan. The Non-Employee Director Plan
provides for the automatic grant of stock options to purchase 10,000 shares of
Common Stock to each newly elected non-employee director on the first day of the
month following the election of such director. The appointment stock options
vest and become exercisable over three years in increments of 277 shares on the
first day of every month beginning in the month immediately after the stock
options were granted. The Non-Employee Director Plan also provides for the
automatic grant of stock options to purchase 4,000 shares of Common Stock to
continuing non-employee directors on the first day of the month immediately
following Clark/Bardes' annual stockholder meetings. The annual grants of stock
options to continuing non-employee directors vest and become exercisable in
increments of 1,000 shares for each regularly scheduled quarterly meeting of the
Board of Directors that the non-employee director attends in person. The
exercise price for stock options granted under the Non-Employee Director Plan is
the fair market value of the Common Stock on the date of grant.
As of March 17, 1999, 1,666 options had been granted under the Non-Employee
Director Plan, and a total of 98,334 shares of Common Stock remain available for
grant.
EMPLOYEE STOCK PURCHASE PLAN
In July 1998, the Board of Directors adopted the Stock Purchase Plan, under
which a total of 200,000 shares of Common Stock have been reserved for issuance.
A committee of directors appointed by the Board of Directors administers the
Stock Purchase Plan. Any employee who has been employed by Clark/ Bardes for 90
days is eligible to participate in offerings under the Stock Purchase Plan.
The Stock Purchase Plan consists of eight semi-annual offerings of Common
Stock beginning on each January 1 and July 1 in each of the years 1999, 2000,
2001 and 2002, and terminating on June 30 and
9
<PAGE> 12
December 31 of each such year. The maximum number of shares issued in such years
will be 50,000 in 1999, and 50,000 plus the number of unissued shares from prior
offerings for each of 2000, 2001 and 2002.
On the commencement date of each offering under the Stock Purchase Plan, a
participating employee will be deemed to have been granted an option to purchase
a maximum number of shares of Common Stock equal to: (i) the percentage of the
employee's base pay that such employee has elected to be withheld (not to exceed
10.0%), (ii) multiplied by such employee's base pay during the period of such
offering and (iii) divided by the lower of 85.0% of the closing market price of
the Common Stock on the applicable offering commencement date or 85.0% of the
closing market price of the Common Stock on the offering termination date.
Options held by a participant shall be exercisable only by that participant.
No employee may be granted options pursuant to the Stock Purchase Plan if,
as a result of such grant, such employee would (i) own stock or hold options to
purchase stock possessing 5.0% or more of the total combined voting power or
value of all classes of stock of Clark/Bardes or (ii) have rights to purchase
stock under all employee stock purchase plans of Clark/Bardes that accrue at a
rate in excess of $25,000 in fair market value for any calendar year.
Unless a participant gives written notice to Clark/Bardes, such
participant's option for the purchase of Common Stock with payroll deductions
made during an offering shall be deemed to have been exercised automatically on
the offering termination date applicable to such offering, for the purchase of
the number of full shares of Common Stock that the accumulated payroll
deductions at that time will purchase at the applicable option price. A
participant may withdraw payroll deductions credited to his account under the
Stock Purchase Plan at any time.
KEY EXECUTIVE LIFE INSURANCE
Clark/Bardes maintains and is the sole beneficiary of key man life
insurance policies on the lives of Messrs. Wamberg, Hendrickson, Todd and
Chapman in the amounts of $23.0 million, $2.0 million, $1.0 million and $2.0
million, respectively.
EMPLOYMENT AGREEMENTS
On September 1, 1997, Clark/Bardes entered into an employment agreement
with Mr. Chapman, which terminates on December 31, 1999 or upon earlier
termination by Mr. Chapman or Clark/Bardes with or without cause. Mr. Chapman's
employment agreement provides for an annual base salary of $250,000. Mr. Chapman
is subject to non-competition and confidentiality provisions. If Mr. Chapman is
terminated without cause, he is entitled to severance compensation equal to his
annual base salary for a period of twelve months.
Clark/Bardes entered into an employment agreement, effective as of
September 1, 1998, with Mr. Miller, which terminates on June 30, 2001. Mr.
Miller's employment agreement provides for an annual base salary of $250,000. In
addition to the base salary, Mr. Miller is entitled to receive a bonus each year
of up to 50% of his annual base salary and up to 10% of the pre-tax operating
income for the Bank Compensation Consulting Division. Mr. Miller is entitled to
a minimum bonus, payable monthly, equal to $75,000 for the first twelve months
following the effective date of his employment agreement. In addition, on the
effective date of Mr. Miller's employment agreement, he was granted an option,
which terminates on February 28, 2007, to purchase 25,000 shares of Common Stock
at an exercise price of $9.00 per share under Clark/Bardes' 1998 Stock Option
Plan. Mr. Miller is subject to non-competition, non-solicitation and
confidentiality provisions. If Mr. Miller is terminated for cause, including any
willful breach of the non-competition, non-solicitation or confidentiality
provisions of his employment agreement, all payments to him will end. If Mr.
Miller is terminated without cause, he is entitled to severance compensation
equal to his annual base salary for a period equal to the greater of 90 days or
the remaining term of his employment agreement.
Effective as of July 1, 1998, Clark/Bardes entered into employment
agreements with Mr. Todd and Mr. Pyra. The term of both employment agreements is
for a period of three years ending on June 30, 2001. Mr. Todd's and Mr. Pyra's
employment agreements provide for annual base salaries of $250,000 and $200,000,
10
<PAGE> 13
respectively. In addition to their annual base salary, Mr. Todd is entitled to
receive a bonus each year of up to 100% of his annual base salary based upon
Clark/Bardes' performance, and Mr. Pyra is entitled to receive a bonus each year
of up to 75% of his annual base salary based upon net income and incremental
five-year net income. On August 19, 1999, Mr. Pyra was granted an option, which
terminates on February 28, 2007, to purchase 50,000 shares of Common Stock at an
exercise price of $9.00 per share under Clark/Bardes' 1998 Stock Option Plan.
Mr. Todd's employment agreement provides that if there is a "change of control"
of Clark/Bardes, Mr. Todd will be paid, for the term of his employment plus two
years thereafter, his annual "cash compensation" (which is based upon Mr. Todd's
average cash compensation for the two years prior to such change of control),
plus an annual amount equal to 50% of such average annual cash compensation. The
total amount, however, cannot exceed the amount that would cause such payment to
be deemed a "parachute payment" under Section 280G of the Internal Revenue Code
of 1986, as amended. If, following a change of control, Mr. Todd voluntarily
terminates employment for other than good cause (as defined in the employment
agreement), his annual cash compensation and bonus, payable upon such change of
control will be payable for only one year. Both Mr. Todd and Mr. Pyra are
subject to non-competition, non-solicitation and confidentiality provisions. If
either Mr. Todd or Mr. Pyra are terminated for cause including any willful
breach of the non-competition, non-solicitation or confidentiality provisions of
their employment agreements, all payments to the officer will end. If Mr. Todd
or Mr. Pyra is terminated without cause, the officer will be entitled to
severance compensation equal to his annual base salary for a period equal to the
greater of 90 days or the remaining term of his employment agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Compensation Committee of the Board of Directors consisted
of Messrs. Dalton, Pohlman and Seidman, all of whom are independent directors.
Clark/Bardes' officers who are not directors do not participate in deliberations
of the Compensation Committee or the Board of Directors regarding executive
compensation.
11
<PAGE> 14
JOINT REPORT OF
THE COMPENSATION COMMITTEE AND
THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee is responsible for establishing the compensation
of Clark/Bardes' directors, officers and other managerial personnel, including
salaries, bonuses, termination agreements and other executive officer benefits.
The Compensation Committee is comprised of Messrs. Dalton, Pohlman and Seidman,
each of whom is an independent director and none of whom is currently or was
formerly an officer or employee of Clark/Bardes or any of its affiliates.
Although the Board of Directors delegated certain responsibilities as
described above to the Compensation Committee, in determining compensation for
directors, officers and other managerial personnel for 1998, the Board of
Directors as a whole acted directly with respect to such decisions. The Board of
Directors is comprised of Messrs. Wamberg, Hendrickson, Todd, Pohlman, Dalton
and Seidman. Mr. Todd abstained from all compensation decisions with respect to
himself for his service as President and Chief Executive Officer.
1998 COMPENSATION
Base Salary. The base salaries of executive officers are established in
consideration of the competitive market for executives of comparable levels at
companies at a comparable stage of development. The Board of Directors caused
Clark/Bardes to enter into employment agreements with Messrs. Chapman and
Sluder, and, in conjunction with the initial public offering, with Messrs.
Miller, Pyra and Todd, the terms of which are described above under "Executive
Compensation -- Employment Agreements." The Board of Directors believed these
contracts to be necessary to ensure the continuation of experienced management
familiar with Clark/Bardes subsequent to the initial public offering. Pursuant
to the directive of the Board of Directors, the annualized compensation of
executive officers, other than the Chief Executive Officer, for 1998 was
established as follows:
<TABLE>
<CAPTION>
ANNUAL
EXECUTIVE OFFICER BASE SALARY
- ----------------- -----------
<S> <C>
Richard C. Chapman.......................................... $250,000
Executive Vice President of CBI
Robert E. Miller............................................ $250,000
Executive Vice President of CBI and Chief Executive
Officer of Bank Compensation Consulting Division
Thomas M. Pyra.............................................. $200,000
Chief Financial Officer
James V. Meyer.............................................. $175,000
Senior Vice President of CBI
James C. Bean............................................... $165,000
Senior Vice President of CBI
</TABLE>
The Board of Directors believes the annual compensation provided to each of the
above executive officers, whether pursuant to an employment agreement or
otherwise, is commensurate with the responsibilities, experience and individual
performance of such executive officers.
Bonuses. The Board of Directors granted bonuses in 1998 based on
Clark/Bardes' performance and the contribution of the particular executive
officer to whom such bonus was paid taking into account such executive officer's
contribution to the significant developments taking place in Clark/Bardes in
1998 including the initial public offering and related reorganization and
Clark/Bardes' acquisition strategy. The employment agreements of Messrs. Sluder,
Miller, Pyra and Todd also tie the amount of bonuses to be paid to such
12
<PAGE> 15
executive officers to certain measures of Clark/Bardes' performance. See
"Executive Compensation -- Employee Agreements." The Board of Directors directed
that the following bonuses be paid to the following executive officers, other
than the Chief Executive Officer, as follows:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER BONUS PAID
- ----------------- ----------
<S> <C>
Richard C. Chapman.......................................... $212,000
Executive Vice President of CBI
Robert E. Miller............................................ $ 25,000
Executive Vice President of CBI and Chief Executive
Officer of Bank Compensation Consulting Division
Thomas M. Pyra.............................................. $ 95,000*
Chief Financial Officer
James V. Meyer.............................................. $111,563
Senior Vice President of CBI
James C. Bean............................................... $ 94,482
Senior Vice President of CBI
</TABLE>
--------------------
* In addition to the bonus of $95,000 paid by Clark/Bardes, The Wamberg
Organization paid Mr. Pyra a bonus of $35,000 during 1998.
The Board of Directors believes that the bonuses paid to executive officers in
1998, whether pursuant to employment agreement or otherwise, is commensurate
with Clark/Bardes' performance and such executive officer's contribution to such
performance.
Stock Options. The purpose of the 1998 Stock Option Plan is to encourage
and enable participants under the plan to acquire and retain a proprietary
interest in Clark/Bardes by ownership of its stock. The Board of Directors has
directed the grant of stock options pursuant to the 1998 Stock Option Plan in
order to align the interests of its executive officers with the interests of
Clark/Bardes and its stockholders. In addition to Clark/ Bardes' performance,
the Board of Directors considered the significant developments taking place in
Clark/ Bardes in 1998 including the initial public offering and related
reorganization and Clark/Bardes' acquisition strategy. The Board of Directors
approved the grant of stock options to the following executive officers, other
than the Chief Executive Officer, pursuant to the 1998 Stock Option Plan, as
follows:
<TABLE>
<CAPTION>
NUMBER OF
STOCK OPTIONS
EXECUTIVE OFFICER GRANTED
- ----------------- -------------
<S> <C>
Richard C. Chapman.......................................... 65,000
Executive Vice President of CBI
Robert E. Miller............................................ 25,000
Executive Vice President of CBI and Chief Executive
Officer of Bank Compensation Consulting Division
Thomas M. Pyra.............................................. 50,000*
Chief Financial Officer
James V. Meyer.............................................. 32,500
Senior Vice President of CBI
James C. Bean............................................... 25,000
Senior Vice President of CBI
</TABLE>
--------------------
* Effective August 18, 1998, Mr. Wamberg granted Mr. Pyra an option to
purchase 25,000 shares of Common Stock from Mr. Wamberg at an exercise
price of $9.00 per share.
The Board of Directors believes the stock options granted to executive officers
in 1998, whether pursuant to employment agreement or otherwise, is commensurate
with the executive officer's responsibilities, experience and individual
performance of such executive officer.
13
<PAGE> 16
1998 COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the appropriate compensation for Mr. Todd, Clark/Bardes'
Chief Executive Officer, the Board of Directors is guided by Clark/Bardes'
performance, competitive practices, and the Board of Director's policy, as
discussed above, of determining compensation with reference to the compensation
paid to similarly situated executives of comparable companies. In addition to
Clark/Bardes' performance, the Board of Directors considered the significant
developments taking place in Clark/Bardes in 1998 including the initial public
offering and related reorganization and Clark/Bardes' acquisition strategy.
Appropriate adjustments in the compensation of the Mr. Todd is considered
concurrently with similar adjustments made for Clark/ Bardes' other executive
officers. The following outlines the annual base salary of, bonus paid to, and
stock option granted to Mr. Todd during 1998:
<TABLE>
<CAPTION>
NUMBER OF
ANNUAL STOCK OPTIONS
NAME BASE SALARY BONUS PAID GRANTED
- ---- ----------- ---------- -------------
<S> <C> <C> <C>
Melvin G. Todd.................................... $250,000 $616,607 30,523
President, Chief Executive Officer and Director
</TABLE>
The Board of Directors believes the annual base salary and stock options granted
to Mr. Todd in 1998 is commensurate with Mr. Todd's responsibilities,
experience, individual performance, and the bonus paid to Mr. Todd is
commensurate with Clark/Bardes' performance and Mr. Todd's contribution to such
performance.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
The Compensation Committee expects all compensation paid to executive
officers to be tax deductible to Clark/Bardes. Section 162(m) provides that
compensation in excess of $1,000,000 paid to the chief executive officer of
Clark/Bardes and the four highest compensated officers of Clark/Bardes (other
than the chief executive officer) cannot be deducted by Clark/Bardes for federal
income tax purposes unless, in general, such compensation is performance based,
is established by a committee of outside directors, is objectively determined
and the plan or agreement providing for such performance-based compensation is
approved by stockholders. In the future, however, the Compensation Committee may
determine to adopt a compensation program that does not satisfy the conditions
of Section 162(m) if, in its judgment after considering the additional costs of
not satisfying Section 162(m), such program is appropriate.
This report has been furnished by the members of the Compensation Committee
and by the Board of Directors.
<TABLE>
<S> <C>
COMPENSATION COMMITTEE BOARD OF DIRECTORS
Randolph A. Pohlman W.T. Wamberg
L. William Seidman Lawrence H. Hendrickson
George D. Dalton Melvin G. Todd
Randolph A. Pohlman
L. William Seidman
George D. Dalton
</TABLE>
14
<PAGE> 17
PERFORMANCE GRAPH
The following performance graph sets forth the cumulative total stockholder
return for the Common Stock, the Russell 2000 Index and the Nasdaq Insurance
Index for the period indicated. The performance graph assumes $100 invested in
the Common Stock at its closing price on August 18, 1998, the date on which the
Common Stock commenced trading on the Nasdaq National Market, and in each of the
Russell 2000 Index and the Nasdaq Insurance Index on the same date. The
Performance Graph also assumes the reinvestment of all dividends, if any. The
dates on the performance graph represent the last trading day of each month
indicated. The performance graph is not necessarily indicative of future
investment performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
CLARK/BARDES, THE RUSSELL 2000 INDEX, AND THE NASDAQ INSURANCE INDEX
[GRAPH]
<TABLE>
<CAPTION>
CLARK/BARDES NASDAQ
MEASUREMENT PERIOD HOLDINGS, RUSSELL 2000 INSURANCE
(FISCAL YEAR COVERED) INC. INDEX INDEX
<S> <C> <C> <C>
8/18/98 100 100 100
8/98 89 82 85
9/98 92 88 89
10/98 108 92 97
11/98 192 96 103
12/98 182 103 108
</TABLE>
15
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of the outstanding
shares of Common Stock owned beneficially as of March 17, 1999 by: (i) each
person or "group" (as that term is defined in Section 13(d)(3) of the Exchange
Act) known by Clark/Bardes to beneficially own more than 5% of the Common Stock,
(ii) each director of Clark/Bardes, (iii) each executive officer of Clark/Bardes
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1) OWNED(1)
- ------------------------ ------------ ------------
<S> <C> <C>
Provident Investment Counsel, Inc.(2)....................... 538,745 6.7%
300 North Lake Avenue
Pasadena, California 91101-4022
Wellington Management Company, LLP(3)....................... 489,700 6.1%
75 State Street
Boston, Massachusetts 02109
W.T. Wamberg(4)............................................. 1,919,520 23.8%
Lawrence H. Hendrickson..................................... 415,508 5.2%
Melvin G. Todd(5)........................................... 276,297 3.4%
Richard C. Chapman.......................................... 289,153 3.6%
Thomas M. Pyra(6)........................................... 30,000 *
James V. Meyer.............................................. 10,000 *
James C. Bean............................................... 600 *
Randolph A. Pohlman(7)...................................... 57,550 *
George D. Dalton(8)......................................... 7,666 *
L. William Seidman(9)....................................... 12,000 *
All directors and executive officers as a group (10
individuals).............................................. 3,006,294 37.3%
</TABLE>
- ---------------
* Less than 1%
(1) In computing the number of shares of Common Stock beneficially owned by a
person, shares of Common Stock subject to options and warrants or
convertible debt held by that person that are currently exercisable or that
become exercisable within 60 days of the record date are deemed outstanding
for such person but are not deemed to be outstanding for purposes of
computing the ownership percentage for any other person.
(2) Based solely upon information contained in Schedules 13G/A, filed with the
SEC on January 28, 1999.
(3) Based solely upon information contained in Schedules 13G, filed with the SEC
on February 8, 1999.
(4) Includes 25,000 shares of Common Stock which are subject to options granted
to Mr. Pyra giving him the right to buy such Common Stock at an exercise
price of $9.00 per share. The options are vested and exercisable by Mr. Pyra
for 8,333 shares of Common Stock within 60 days of the record date.
(5) Includes 70,833 shares of Common Stock issuable upon exercise of outstanding
stock options exercisable within 60 days of the record date.
(6) Includes 16,667 shares of Common Stock issuable upon exercise of outstanding
stock options exercisable within 60 days of the record date. Also includes
8,333 shares of Common Stock, issuable by Mr. Wamberg to Mr. Pyra pursuant
to an option granting Mr. Pyra the right to buy 25,000 shares of Common
Stock from Mr. Wamberg, exercisable within 60 days of the record date.
(7) Includes 55,550 shares of Common Stock issuable upon exercise of outstanding
stock options exercisable within 60 days of the record date.
(8) Includes 2,666 shares of Common Stock issuable upon exercise of outstanding
stock options exercisable within 60 days of the record date.
(9) Includes 7,000 shares of Common Stock issuable upon exercise of outstanding
stock options exercisable within 60 days of the record date.
16
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRINCIPAL OFFICE AGREEMENT WITH W.T. WAMBERG
Clark/Bardes and Mr. Wamberg are the parties to a Principal Office
Agreement dated July 29, 1993, pursuant to which The Wamberg Organization
markets, on behalf of Clark/Bardes, life insurance and administrative and
consulting services, and Clark/Bardes furnishes to The Wamberg Organization
marketing materials and concepts, program design ideas, selected life insurance
products, specimen plan documents and administrative services. Upon request,
Clark/Bardes will provide to The Wamberg Organization life insurance and benefit
plan illustrations, technical support personnel and such other services as are
reasonably necessary for the sale of Clark/Bardes' programs. The agreement can
be terminated by either party upon 90 days' written notice. The Wamberg
Organization's commissions range between 65.0% and 70.0% of total revenue
depending on the amount of total revenue generated from a case. Commissions and
fees payable to The Wamberg Organization are net of any of Clark/Bardes'
administrative costs as determined by the Board of Directors. Pursuant to the
terms of the Principal Office Agreement, The Wamberg Organization was paid
$4,964,000, $7,792,000 and $8,068,000 in 1996, 1997, and 1998, respectively, for
commissions and fees earned. The terms and conditions of Mr. Wamberg's Principal
Office Agreement are similar in all material respects to the terms and
conditions of such agreements with other producers designated as principals.
PURCHASE OF RENEWAL REVENUE FROM W.T. WAMBERG AND THE WAMBERG ORGANIZATION
On July 31, 1998, the Predecessor Company, Mr. Wamberg and The Wamberg
Organization entered into an agreement which provides for, among other things, a
purchase of the renewal revenue due under the Principal Office Agreement with
Mr. Wamberg in exchange for a cash payment of approximately $7.5 million.
Clark/Bardes considered the opportunity to acquire the renewal revenue from Mr.
Wamberg to be consistent with Clark/Bardes' overall strategy of acquiring
businesses when suitable opportunities arise. This transaction allows
Clark/Bardes to retain additional commission and fee revenue for the ten year
period following the consummation of the transaction. The additional revenue
equates to approximately 19.0% of the commission and fee revenue, prior to
deduction of servicing costs, related to renewal revenue on Mr. Wamberg's and
The Wamberg Organization's inforce business as of June 30, 1998. No independent
valuation of the business to be acquired was performed. This transaction was
approved by approximately 99.0% of the disinterested stockholders of the
Predecessor Company at a stockholders' meeting held on July 31, 1998. The
transaction was completed on January 4, 1999.
RESTRUCTURING OF THE GRANT OF STOCK TO MELVIN G. TODD
In December 1994, the Predecessor Company granted to Mr. Todd 52,500 shares
of the Predecessor Company's common stock effective July 1, 1998 if Mr. Todd is
employed as the Predecessor Company's Chief Executive Officer at that time. In
June 1998, this agreement was altered to provide that if Mr. Todd is employed as
Chief Executive Officer on July 1, 1998 he will receive 24,108 shares of Common
Stock, $162,128 in cash and a fully vested five year option to purchase 30,523
shares of Common Stock exercisable at the initial public offering price.
ANCILLARY BUSINESS ARRANGEMENTS
Because of various federal and state licensing restrictions, Clark/Bardes
markets certain products registered with the SEC and its insurance-financed
employee benefit programs in the states of Ohio, Pennsylvania and Texas through
insurance agencies for which Clark/Bardes provides almost all services pursuant
to an Administration and Services Agreement. Each of the insurance agencies,
Clark/Bardes Securities, Inc., a Texas corporation licensed as a broker/dealer,
Clark/Bardes Agency of Ohio, Inc., an Ohio corporation, Clark/Bardes, Inc. of
Pennsylvania, a Pennsylvania corporation, and Clark/Bardes of Texas, Inc., a
Texas corporation, provides the entity through which Clark/Bardes' producers
sell certain products and conduct business in such states. In exchange, each of
the insurance agencies is a party to an Administration and Services Agreement
pursuant to which such insurance agency pays Clark/Bardes to furnish facilities,
services, personnel and assistance, including (i) performing all bookkeeping and
accounting functions,
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(ii) establishing and maintaining all records required by law and by generally
accepted accounting principles, (iii) furnishing all stationery, forms, and
supplies, (iv) providing all necessary clerical and professional staff to
perform the above activities, (v) providing all computer hardware and software
capabilities and facilities, (vi) providing office space, furniture, fixtures,
equipment and supplies, (vii) assisting in the preparation of reports required
by governmental regulatory and supervisory authorities, and (viii) billing and
collection of all premiums. The charges and fees pursuant to the Administration
and Services Agreements are equal to the costs incurred by Clark/Bardes in
providing the services, personnel and property, plus an additional amount equal
to a certain percentage of such cost. Each insurance agency is solely
responsible for its own activities as an insurance producer and for its
relationship with the producers or employees in the course and scope of their
activities performed on behalf of such agency.
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PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Ernst & Young LLP, independent certified public accountants, as
independent accountants of Clark/Bardes' financial statements for 1999. Ernst &
Young LLP has acted as accountants for Clark/Bardes since June 2, 1997.
On June 2, 1997, the Predecessor Company dismissed Lane Gorman Trubitt, LLP
("Lane Gorman") and engaged Ernst & Young LLP to be its independent accountants.
The financial statements of the Predecessor Company at December 31, 1996 and
1995, and for each of the two years in the period ended December 31, 1996 did
not contain an adverse opinion or a disclaimer of opinion and were not qualified
or modified as to audit scope or accounting principles. In connection with the
audits of the Predecessor Company's financial statements at December 31, 1996
and 1995, and for each of the two years in the period ended December 31, 1996,
and subsequent interim periods, there were no disagreements between the
Predecessor Company and Lane Gorman on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure that,
if not resolved to the satisfaction of Lane Gorman, would have caused such firm
to make reference thereto. The Predecessor Company's decision to change to Ernst
& Young LLP was approved by the Board of Directors of the Predecessor Company.
The Board of Directors has determined to afford the Stockholders the
opportunity to express their opinions on the matter of accountants, and,
accordingly, is submitting to the Stockholders at the Annual Meeting a proposal
to ratify the appointment of Ernst & Young LLP by the Board of Directors. If a
majority of the shares voted at the Annual Meeting, in person or by proxy, are
not voted in favor of the ratification of the appointment of Ernst & Young LLP,
the Board of Directors will interpret this as an instruction to seek other
accountants. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
ACCOUNTANTS OF CLARK/BARDES' FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER
31, 1999.
Representatives of Ernst & Young LLP will not be present at the Annual
Meeting but are available to respond to appropriate questions in writing or by
telephone at (214) 969-8000.
STOCKHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
The Board of Directors will provide for the presentation of proposals by
stockholders of Clark/Bardes at the 2000 annual meeting of stockholders,
provided that such proposals are submitted by eligible stockholders who have
complied with the relevant regulations of the SEC regarding stockholder
proposals, and Clark/ Bardes' bylaws, a copy of which is available upon written
request from Mr. Staudt, General Counsel and Secretary of Clark/Bardes. To be
considered for inclusion in Clark/Bardes' proxy statement for the 2000 annual
meeting, stockholder proposals must be received at Clark/Bardes' principal
executive office no later than December 15, 1999.
INCORPORATION BY REFERENCE
With respect to any future filings with the SEC into which this proxy
statement is incorporated by reference, the material under the headings "Joint
Report of the Compensation Committee and the Board of Directors on Executive
Compensation" and "Performance Graph" shall not be incorporated into such future
filings.
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<PAGE> 22
FORWARD-LOOKING STATEMENTS
This proxy statement may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). When used in this proxy statement, words such as
"anticipate," "believe," "estimate," "expect," "intend," "predict," "project,"
and similar expressions, as they relate to Clark/Bardes or Clark/Bardes'
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of Clark/Bardes' management as well as assumptions made
by and information currently available to Clark/Bardes. These forward-looking
statements are subject to certain risks, uncertainties and assumptions,
including risks, uncertainties and assumptions including but not limited to
difficulties associated with changes in tax legislation, dependence on key
producers and key personnel, Clark/ Bardes' dependence on persistency of
existing business, credit risk related to renewal revenue, acquisition risks,
risks related to significant intangible assets, competitive factors and pricing
pressures, dependence on certain insurance companies, changes in legal and
regulatory requirements and general economic conditions. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, expected
or projected. Such forward-looking statements reflect Clark/Bardes' current
views with respect to future events and are subject to these and other risks,
uncertainties and assumptions, relating to Clark/Bardes' operations, results of
operations, growth strategy and liquidity. All subsequent written and oral
forward-looking statements attributable to Clark/Bardes or individuals acting on
Clark/Bardes' behalf are expressly qualified in their entirety by this
paragraph.
FORM 10-K
Accompanying this proxy statement is a copy of Clark/Bardes' Form 10-K for
the year ended December 31, 1998. The Form 10-K does not form any part of the
materials for the solicitation of proxies. CLARK/BARDES WILL MAIL ADDITIONAL
COPIES OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 TO
EACH STOCKHOLDER OR BENEFICIAL OWNER OF SHARES OF COMMON STOCK WITHOUT CHARGE
UPON SUCH PERSON'S WRITTEN REQUEST TO JAMES RADOSEVICH AT CLARK/BARDES'
EXECUTIVE OFFICES AT 2121 SAN JACINTO STREET, SUITE 2200, DALLAS, TEXAS
75201-7906.
By Order of the Board of Directors
/s/ MELVIN G. TODD
Melvin G. Todd
President, Chief Executive Officer
and Director
Dallas, Texas
March 31, 1998
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING:
WITHHOLD
AUTHORITY
FOR to vote
all for all
nominees nominees
1, Election of two Class I directors to
serve until the 2002 annual meeting
of Clark/Bardes' stockholders, and
until the respective successor of
each is dully elected and qualified: [ ] [ ]
Nominees: Melvin G. Todd, George D. Dalton
INSTRUCTION: To withhold authority to
vote for any individual nominee, write
that nominee's name in the space provided
below:
------------------------------------------ for against abstain
2. Ratification of the appointment of Ernst
& Young LLP by Clark/Bardes' board of
directors as the independent accountants
of Clark/Bardes' financial statements for
the year ended December 31, 1999: [ ] [ ] [ ]
NOTE: PLEASE SIGN EXACTLY AS
NAME APPEARS HEREON. JOINT
OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR
TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.
----------------------------
SIGNATURE(S)
----------------------------
NAME (PLEASE PRINT) DATE
CLARK/BARDES HOLDINGS, INC.
2121 SAN JACINTO STREET, SUITE 2200
DALLAS, TEXAS 75201-7906
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING ON APRIL 27, 1999
The undersigned hereby constitutes and appoints Keith L. Staudt, Vice
President, General Counsel and Secretary, and Thomas M. Pyra, Chief Financial
Officer, or any of them acting in the absence of the other, his or her true and
lawful agents and proxies, with full power of substitution, and hereby
authorizes them to represent the undersigned and to vote for the undersigned as
designated on the reverse side, at the annual meeting of stockholders to be
held at the Willard Inter-Continental Washington, 1401 Pennsylvania Avenue,
N.W., Washington, D.C. 20004-1010, on Tuesday, April 27, 1999, at 9:00 a.m.
Washington, D.C. time, and at any adjournments thereof, on all matters coming
before said meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement, both dated March 31, 1999 and hereby revokes any
proxy or proxies heretofore given to vote of said meeting or any adjournment
thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOXES ON THE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXYHOLDERS
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. ACTION TAKEN
PURSUANT TO THIS PROXY CARD WILL BE EFFECTIVE AS TO ALL THE SHARES THAT YOU
OWN.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR Items 1 and 2.
This proxy will be voted, in the discretion of proxyholders, upon such other
business as may properly come before the Annual Meeting or any adjournment
thereof.
