<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
Affiliated Computer Services, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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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:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
ACS LOGO
AFFILIATED COMPUTER SERVICES, INC.
2828 North Haskell Avenue
Dallas, Texas 75204
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held October 26, 2000
To the Stockholders of
AFFILIATED COMPUTER SERVICES, INC.:
The Annual Meeting of Stockholders of Affiliated Computer Services, Inc.
will be held at Cityplace Conference Center, 2711 North Haskell Avenue, Dallas,
Texas 75204 on October 26, 2000 at 11:00 a.m. for the following purposes:
1. To elect two directors to hold office for a three year term and
until their respective successors shall have been duly elected and
qualified;
2. To consider and vote upon the performance-based incentive
compensation for the company's executive officers; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 22,
2000 as the record date for the determination of stockholders of ACS entitled to
notice of, and to vote at, the Annual Meeting of Stockholders. Only stockholders
of record at the close of business on the record date are entitled to notice of
and to vote at the Annual Meeting. A holder of shares of the ACS' Class A common
stock is entitled to one vote, in person or by proxy, for each share of Class A
common stock on all matters properly brought before the Annual Meeting, and a
holder of shares of the ACS' Class B common stock will be entitled to 10 votes,
in person or by proxy, for each share of Class B common stock on all matters
properly brought before the Annual Meeting.
ALL HOLDERS OF ACS' CLASS A COMMON STOCK AND CLASS B COMMON STOCK (WHETHER
THEY EXPECT TO ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE,
SIGN, DATE AND RETURN PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
/s/ WILLIAM L. DICKELMAN JR
William L. Deckelman, Jr.
Corporate Secretary
September 28, 2000
<PAGE> 3
AFFILIATED COMPUTER SERVICES, INC.
2828 NORTH HASKELL AVENUE
DALLAS, TEXAS 75204
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 26, 2000
GENERAL INFORMATION
This proxy statement is being furnished to stockholders of record, as of
September 22, 2000, of Affiliated Computer Services, Inc. (a Delaware
corporation) in connection with the solicitation by the Board of Directors of
ACS of proxies to be voted at the Annual Meeting of Stockholders to be held at
Cityplace Conference Center, 2711 North Haskell Avenue, Dallas, Texas 75204, on
October 26, 2000, at 11:00 a.m., Dallas time, or at any adjournments thereof,
for the purposes stated in the Notice of Annual Meeting. The approximate date of
mailing this proxy statement and enclosed form of proxy to stockholders is on or
about September 29, 2000.
RECORD DATE AND VOTING
The Board of Directors of ACS has fixed the close of business on September
22, 2000 as the record date for the Annual Meeting. Only holders of record of
the outstanding shares of Class A common stock and Class B common stock at the
close of business on the record date are entitled to notice of, and to vote at,
the Annual Meeting or any adjournments thereof. As of the close of business on
the record date, ACS had outstanding shares of Class A common stock,
$0.01 par value, and 3,299,686 shares of Class B common stock, $0.01 par value.
A holder of shares of Class A common stock is entitled to one vote, in person or
by proxy, for each share of Class A common stock standing in his or her name on
the books of ACS on the record date on any matters properly presented to a vote
of the stockholders at the Annual Meeting. A holder of shares of Class B common
stock is entitled to 10 votes, in person or by proxy, for each share of Class B
common stock standing in his or her name on the books of ACS on the record date
on any matter properly presented to a vote of the stockholders at the Annual
Meeting. The Class A common stock and the Class B common stock are the only
classes of stock entitled to vote at the Annual Meeting. The presence, in person
or by proxy, of the holders of a majority of the issued and outstanding shares
of Class A common stock and Class B common stock entitled to vote at the Annual
Meeting or any adjournment thereof is necessary to constitute a quorum to
transact business. Abstentions are counted in tabulations of votes cast on
proposals submitted to stockholders to determine the total number of votes cast.
Abstentions are not counted as votes for or against any such proposal. Broker
nonvotes are not counted as votes cast for purposes of determining whether a
proposal has been approved.
VOTE REQUIRED
The affirmative vote of the holders of shares of Class A common stock and
Class B common stock, voting together as a class, having a plurality of the
voting power of ACS, in person or by proxy, is required to approve Proposal 1,
the proposal to elect directors. The affirmative vote of the holders of shares
of Class A common stock and Class B common stock, voting together as a class,
having a majority of the voting power of ACS eligible to vote and voting, either
in person or by proxy, at the Annual Meeting, is required to approve Proposal 2,
the proposal to approve the performance-based incentive compensation for ACS'
executive officers.
PROXY SOLICITATION, REVOCATION AND EXPENSES
All proxies that are properly completed, signed and returned prior to the
Annual Meeting will be voted as indicated on the proxy. If the enclosed proxy is
signed and returned, it may, nevertheless, be revoked at any time prior to the
voting thereof at the pleasure of the stockholder signing it, either by (i)
filing a written notice
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<PAGE> 4
of revocation received by the person or persons named therein, (ii) the
stockholder attending the Annual Meeting and voting the shares covered thereby
in person, or (iii) delivering another duly executed proxy dated subsequent to
the date thereof to the addressee named in the enclosed proxy.
Shares represented by duly executed proxies in the accompanying form will
be voted in accordance with the instructions indicated on such proxies, and, if
no such instructions are indicated thereon, will be voted in favor of the
nominees for election of directors named below and to approve the
performance-based compensation for ACS' executive officers. Abstentions, broker
non-votes and proxies directing that the shares are not to be voted will not be
counted as a vote in favor of a matter called for vote.
The cost of preparing, assembling, printing and mailing this proxy
statement and the enclosed proxy form and the cost of soliciting proxies related
to the Annual Meeting will be borne by ACS. ACS will request banks and brokers
to solicit their customers who are beneficial owners of shares of common stock
listed of record in names of nominees, and will reimburse such banks and brokers
for the reasonable out-of-pocket expenses for such solicitation.
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<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the record date, certain information
with respect to the shares of Class A common stock and the Class B common stock
beneficially owned by stockholders known to ACS to own more than 5% of the
outstanding shares of such classes and the shares of Class A common stock and
Class B common stock beneficially owned by each of ACS' directors and executive
officers and by all ACS' executive officers and directors as a group:
<TABLE>
<CAPTION>
PERCENT OF AMOUNT PERCENT OF
AMOUNT AND TOTAL AND NATURE TOTAL
NATURE OF SHARES OF SHARES OF PERCENT OF TOTAL
BENEFICIAL OF CLASS A BENEFICIAL CLASS B SHARES OF CLASS A
OWNERSHIP OF COMMON OWNERSHIP COMMON AND CLASS B PERCENT OF
CLASS A STOCK OF CLASS B STOCK COMMON STOCK TOTAL
COMMON OWNED COMMON OWNED OWNED VOTING
DIRECTORS AND EXECUTIVE OFFICERS STOCK BENEFICIALLY STOCK BENEFICIALLY BENEFICIALLY POWER(1)
-------------------------------- ------------ ------------ ---------- ------------ ----------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Darwin Deason(2)............... 2,572,025 -- 3,299,686 100% --
Jeffrey A. Rich(3)............. 199,820 * -- -- *
Mark A. King(4)................ 90,405 * -- -- *
Henry G. Hortenstine(5)........ 105,856 * -- -- *
William A. Woodard(6).......... 4,009 * -- -- *
Lynn R. Blodgett............... 18,000 * -- -- *
William L. Deckelman, Jr. ..... -- -- -- -- --
Frank A. Rossi(7).............. 55,000 * -- -- *
Joseph P. O'Neill(8)........... 43,810 * -- -- *
Peter A. Bracken(9)............ 154,463 * -- -- *
Clifford M. Kendall(10)........ 320,655 * -- -- *
All Executive Officers and
Directors as a Group (eleven
persons)(11)................. 3,564,043 -- 3,299,686 100% -- --
BENEFICIAL OWNERS OF MORE THAN 5% OF ACS'S COMMON STOCK (12)
T. Rowe Price Associates,
Inc. ........................ 5,190,000 -- -- -- --
100 E. Pratt Street
Baltimore, MD 21202
Massachusetts Financial Services
Company...................... 3,856,000 -- -- -- -- --
500 Boylston Street
Boston, MA 02116
Wellington Management Company... 2,822,000 -- -- -- -- --
75 State Street
Boston, MA 02109
Franklin Advisors, Inc. ....... 2,862,000 -- -- -- -- --
777 Mariners Island
San Mateo, CA 94404
Fidelity Financial Services.... 2,278,000 -- -- --
14651 Dallas Parkway
Suite 200
Dallas, TX 75240
</TABLE>
---------------
* Less than 1%.
(1) In calculating the percent of total voting power, the voting power of
shares of Class A common stock (one vote per share) and Class B common
stock (ten votes per share) are aggregated.
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<PAGE> 6
(2) 3,299,686 of the shares of ACS Class B common stock listed and 1,003,397 of
the shares of ACS Class A common stock listed are owned by The Deason
International Trust. 67,851 of the shares of ACS Class A common stock
listed are owned by the Deason Foundation. Mr. Deason holds the sole voting
power with respect to such shares through an irrevocable board resolution
passed by the Trust and the Foundation. The investment power with respect
to such shares is held by the Trust and the Foundation. The shares of ACS
Class A common stock include 7,310 shares owned by Mr. Deason's spouse and
spouse's daughter, as to which shares Mr. Deason disclaims beneficial
ownership and 1,767 shares owned by Mr. Deason under the ACS Employee Stock
Purchase Plan.
(3) Includes 172,050 shares of Class A common stock, which are not outstanding,
but are subject to options exercisable within sixty days of the record
date; 88 shares owned through the ACS 401(k) Plan; and 496 shares owned
through the ACS Employee Stock Purchase Plan.
(4) Includes 40,014 shares of Class A common stock, which are not outstanding,
but are subject to options exercisable within sixty days of the record
date; 5,689 shares of ACS Class A common stock owned by Mr. King's spouse
(of which 1,000 shares are in an IRA of Mr. King's spouse), to which Mr.
King disclaims beneficial ownership; 897 shares of ACS Class A common stock
owned through the ACS 401(k) Plan; 2,993 shares of ACS Class A common stock
owned by Mr. King through the ACS Employee Stock Purchase Plan; and 2,000
shares of Class A common stock owned by Mr. King in an IRA.
(5) Includes 103,970 shares of Class A common stock, which are not outstanding,
but are subject to options exercisable within sixty days of the record
date; 1,815 shares owned through the ACS Employee Stock Purchase Plan; and
71 shares owned through the ACS 401(k) Plan.
(6) Includes 1,112 shares of Class A Common Stock owned owned through the ACS
Employee Stock Purchase Plan and 2,897 shares owned through the ACS 401(k)
Plan.
(7) Includes 45,000 shares of Class A common stock, which are not outstanding,
but are subject to options exercisable within sixty days of the record
date.
(8) Includes 20,000 shares of Class A common stock, which are not outstanding,
but are subject to options exercisable within sixty days of the record
date.
(9) Includes 90,360 shares of Class A common stock, which are not outstanding,
but are subject to options exercisable within sixty days of the record
date; 609 shares of Class A common stock owned jointly by Mr. Bracken with
his spouse; 1,279 shares of Class A common stock owned by Mr. Bracken
through the ACS Employee Stock Purchase Plan; and 1,855 shares owned
through the ACS 401(k) Plan.
(10) Includes 145,385 shares of ACS Class A common stock owned by Mr. Kendall's
spouse, as to which Mr. Kendall disclaims beneficial ownership, and 2,409
shares owned by Mr. Kendall in an individual retirement account.
(11) Includes 471,394 shares of ACS Class A common stock, which are not
outstanding, but are subject to options exercisable within sixty days of
the record date; 5,808 shares of ACS Class A common stock owned through the
ACS 401(k) Plan; and 9,462 shares of ACS Class A common stock owned under
the ACS Employee Stock Purchase Plan.
(12) Based on filings by the stockholder with the Securities and Exchange
Commission.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is comprised of nine directors, divided into three
classes. Messrs. Hortenstine, O'Neill, Rossi and Kendall are in the class whose
terms expire in 2002; Messrs. King, Deckelman and Bracken are in the class whose
terms expire in 2001. The third class of directors, each of whom currently
serves on the Board of Directors and is up for election at this meeting for a
three-year term, is comprised of Messrs. Deason and Rich.
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<PAGE> 7
Shares represented by proxies returned duly executed will be voted, unless
otherwise specified, in favor of the two nominees for the Board of Directors
named below. The proxies cannot be voted for more than two nominees. The
nominees have indicated that they are able and willing to serve as directors. If
any (or all) such persons should be unable to serve, the persons named in the
enclosed proxy will vote the shares covered thereby for such substitute nominee
(or nominees) as the Board of Directors may select pursuant to the
recommendation of Mr. Deason under his authority as the Nominating Committee for
the Board. Stockholders may withhold authority to vote for any nominee by
entering the name of such nominee in the space provided for such purpose on the
proxy card.
NOMINEES FOR ELECTION AS DIRECTOR, CONTINUING DIRECTORS
The following table lists the name and principal occupation of each nominee
and each continuing director, and the year in which each such person was first
elected as a director of ACS.
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
---- -------------------- ---------
<S> <C> <C>
Darwin Deason*............................ Chairman of the Board 1988
Jeffrey A. Rich*.......................... President and Chief Executive Officer 1991
Mark A. King.............................. Executive Vice President and Chief Financial
Officer 1996
William L. Deckelman, Jr. ................ Executive Vice President, Corporate Secretary
and General Counsel 2000
Henry Hortenstine......................... Executive Vice President; Group President of
ACS Technology Solutions Group 1996
Peter A. Bracken.......................... Vice Chairman of ACS Government Solutions
Group, Inc 1997
Joseph P. O'Neill......................... President and Chief Executive Officer, Public
Strategies, Washington, Inc. 1994
Frank A. Rossi............................ Chairman, FAR Holdings Company, L.L.C. 1994
Clifford M. Kendall....................... Private Investor 1997
</TABLE>
---------------
* Nominee for election as director at this year's Annual Meeting.
BUSINESS EXPERIENCE OF NOMINEES AND CONTINUING DIRECTORS
Set forth below is certain information with respect to each of the nominees
for the office of director and each continuing director.
DARWIN DEASON*, age 60, has served as Chairman of the Board of ACS since
its formation in 1988. He also served as Chief Executive Officer from the
formation of ACS until February 1999. Prior to the formation of ACS, Mr. Deason
spent 20 years with MTech Corp., a data processing subsidiary of MCorp, a bank
holding corporation based in Dallas, Texas, serving as MTech's Chief Executive
Officer and Chairman of the Board from 1978 until April 1988, and served on the
board of various subsidiaries of MTech and MCorp. Prior to that, Mr. Deason was
employed in the data processing department of Gulf Oil in Tulsa, Oklahoma. Mr.
Deason has over 30 years of experience in the information technology industry.
Mr. Deason is a director of Precept Business Services, Inc., an affiliate of ACS
and a publicly traded company, where he is Chairman of the Board and has voting
control.
JEFFREY A. RICH*, age 40, has served as President and Chief Executive
Officer of ACS since February 1999. Prior to then, he had served as President
and Chief Operating Officer since April 1995. He has served as a director of ACS
since August 1991. Mr. Rich joined ACS in 1989 as Senior Vice President and
Chief Financial Officer and was named Executive Vice President in 1991. Prior to
joining ACS, Mr. Rich served as
---------------
* Nominee for election as director at this year's Annual Meeting.
6
<PAGE> 8
a Vice President of Citibank N.A. from March 1986 through June 1989, and also
served as an Assistant Vice President of Interfirst, Bank Dallas, N.A. from 1982
until March 1986.
MARK A. KING, age 43, has served as Executive Vice President and Chief
Financial Officer since May 1995 and as a director since May 1996. Mr. King
joined ACS in November 1988 as Chief Financial Officer of various ACS
subsidiaries. Prior to joining ACS, Mr. King was Vice President and Assistant
Controller of MTech. Mr. King has over 20 years of finance and accounting
experience, including over 14 years of experience in the information technology
industry.
WILLIAM L. DECKELMAN, JR., age 43, rejoined ACS as Executive Vice
President, Corporate Secretary and General Counsel of ACS in March of 2000 and
was appointed at that time to serve out the remainder of the term of David W.
Black as director, who had resigned from the board. From May 1995 to March 2000,
Mr. Deckelman was in private law practice, and was a shareholder of the law firm
of Munsch Hardt Kopf & Harr, P.C. in Austin, Texas from January 1996 until March
2000. Previously, Mr. Deckelman served as Executive Vice President, Secretary
and General Counsel of ACS from November 1993 until May 1995, and as Senior Vice
President, Secretary and General Counsel of ACS from February 1989 through
November 1993. Prior to that time he was an attorney with Electronic Data
Systems Corporation, MTech and Winstead Sechrest & Minick, Dallas, Texas.
HENRY G. HORTENSTINE, age 56, has served as Executive Vice President of ACS
since March 1995, as Group President of ACS Technology Solutions Group since
April 1998 and as a director since September 1996. Prior to that time, he served
as Senior Vice President -- Business Development from July 1993 to March 1995.
Mr. Hortenstine was engaged by ACS as a consultant providing various business
and corporate development services from 1990 to July 1993. Prior to that, he was
Senior Executive Vice President of Lomas Mortgage USA, a subsidiary of Lomas
Financial Corporation, from 1987 to 1989.
PETER A. BRACKEN, age 59, joined Computer Data Systems, Inc. (now known as
ACS Government Solutions Group, Inc.) in May 1996 as Chief Executive Officer and
President. At the time of the acquisition by ACS of ACS Government Solutions
Group, Inc. by a merger in December 1997, Mr. Bracken became an Executive Vice
President and ACS director, and served as Group President of ACS Government
Solutions Group, Inc. from April 1998 until July 1999. Mr. Bracken now serves
ACS as Vice Chairman of ACS Government Solutions Group, Inc. From 1986 to 1996,
Mr. Bracken was employed by Martin Marietta Corporation (now Lockheed Martin
Corporation), most recently as President of the Information Sciences Group.
Before joining Martin Marietta in 1986, Mr. Bracken served as Director of
Mission Operation and Data Systems for NASA's Goddard Space Flight Center.
JOSEPH P. O'NEILL, age 53, has served as a director of ACS since November
1994 and also serves as a consultant to ACS. Mr. O'Neill has served as President
and Chief Executive Officer of Public Strategies Washington, Inc., a public
affairs and consulting firm, since March 1991, and from 1985 through February
1991 served as President of the National Retail Federation, a national
association representing United States retailers. Mr. O'Neill also is a director
of Careerstaff, Inc.
FRANK A. ROSSI, age 63, has served as a director of ACS since November 1994
and also serves as a consultant to ACS. Mr. Rossi has served as Chairman of FAR
Holdings Company, L.L.C., a private investment firm, since February 1994, and
before that was employed by Arthur Andersen & Co. for over 35 years. Mr. Rossi
served in a variety of capacities for Arthur Andersen since 1959, including
Managing Partner/Chief Operating Officer and as a member of the firm's Board of
Partners and Executive Committee.
CLIFFORD M. KENDALL, age 69, had been with ACS Government Solutions Group,
Inc. since the founding of its predecessor in 1968 until it was acquired by ACS
by a merger in December 1997. At the time of the merger in December 1997, Mr.
Kendall became an ACS director. From 1970 to 1991, Mr. Kendall served as Chief
Executive Officer of ACS Government Solutions, Inc. Mr. Kendall also currently
serves as a director of Washington Real Estate Investment Trust.
Except as set forth above, none of the nominees holds a directorship in any
company with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, or subject to
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<PAGE> 9
the requirements of Section 15(d) of the Securities Exchange Act or any company
registered as an investment company under the Investment Company Act of 1940, as
amended.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE TWO NOMINEES FOR DIRECTOR SET
FORTH ABOVE.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors are the Audit Committee,
the Compensation Committee, the Special Compensation Committee, the Independent
Directors Committee, the Special Transactions Committee and the Nominating
Committee. The Audit Committee is composed of Messrs. Rossi (Chairman), O'Neill
and Kendall. The Audit Committee was formed in 1994 and given general
responsibility for meeting periodically with representatives of ACS' independent
public accountants and electronic data processing ("EDP") auditors to review the
general scope of audit coverage, including consideration of ACS' accounting and
EDP practices and procedures and the adequacy of ACS' system of internal
controls, and to report to the Board of Directors with respect thereto. The
Audit Committee also is responsible for recommending to the Board of Directors
the appointment of ACS' independent public accountants and EDP auditors and is
also responsible for monitoring ACS' "Year 2000" compliance.
The Compensation Committee was formed in May 1994. The members of the
Compensation Committee are Messrs. Deason (Chairman), Rossi and O'Neill. The
Compensation Committee is responsible for recommending to the Board of Directors
policies and plans concerning the salaries, bonuses and other compensation of
the executive officers of ACS, including reviewing the salaries of the executive
officers and recommending bonuses and other forms of additional compensation for
the executive officers and the administration of and grant of awards under ACS'
stock option plans. In connection with ACS' establishment of certain procedures
to comply with the requirements of Section 162(m) of the Internal Revenue Code
of 1986, as amended, so that compensation to executive officers whose annual
compensation exceeds $1 million may be deductible by ACS for federal income tax
purposes, ACS formed the Special Compensation Committee in August 1996. The
members of the Special Compensation Committee are Messrs. Rossi and O'Neill
(Chairman). The Special Compensation Committee is responsible for reviewing the
compensation of the executive officers whose annual compensation exceeds $1
million, including reviewing and recommending salaries, bonuses and other forms
of additional compensation, including grants of awards under the stock option
plans.
The members of the Independent Directors Committee are Messrs. O'Neill and
Rossi (Chairman). The Independent Directors Committee was formed in May 1994 to
review annually the prices and terms of the services, forms and supplies
provided between ACS and Precept Business Services, Inc., an affiliate of ACS,
pursuant to the parties' reciprocal services agreement, and other related party
transactions. See "Certain Transactions."
The Special Transactions Committee, which was formed in August 1997 and on
which Mr. Deason serves, has the responsibility of considering, evaluating, and
approving the terms of potential transactions resulting in the acquisition of
assets, businesses, or stock of third parties for cash, ACS Class A common
stock, or other consideration with a dollar value of up to the greater of
$50,000,000 or 10% of ACS' consolidated assets.
The Nominating Committee, which was formed in March 1999 and on which Mr.
Deason serves, has the responsibility of considering, evaluating and
recommending to the Board the slate of director nominees. Recommendations as to
nominees will be considered by the Nominating Committee. Such recommendations
can be submitted to the Nominating Committee by directing them to ACS' executive
offices at 2828 North Haskell Avenue, Dallas, Texas 75204, to the attention of
Darwin Deason.
During the fiscal year ended June 30, 2000, there were four regular,
meetings of ACS' Board of Directors. During the fiscal year, there were eleven
meetings (several of which were for the purpose of monitoring Y2K compliance)
held by the Audit Committee, seven meetings held by the Compensation Committee,
one
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<PAGE> 10
meeting held by the Special Compensation Committee, one meeting held by the
Independent Directors Committee and one meeting held by the Nominating
Committee.
PROPOSAL 2
APPROVAL OF PERFORMANCE-BASED INCENTIVE
COMPENSATION FOR THE COMPANY'S EXECUTIVE OFFICERS
The Internal Revenue Code limits ACS' tax deduction for expense in
connection with compensation of its chief executive officer and its four other
most highly-compensated executive officers for any fiscal year to the extent
that the remuneration of such person exceeds $1 million during such fiscal year,
excluding remuneration that qualifies as "performance-based compensation."
Section 162(m) of the Internal Revenue Code provides that in order for
remuneration to be treated as qualified performance-based compensation, the
material terms of the performance goals must be disclosed to and approved by the
stockholders of the employer.
At the Annual Meeting, the stockholders will be asked to approve the terms
relating to incentive compensation to be paid to ACS' executive officers.
Executive officer compensation for fiscal year 2001 will consist of a base
salary, stock option plan, and bonus compensation and will be based on criteria
similar to criteria previously used for ACS' executive officers. See "Executive
Compensation and Other Information -- Compensation Committee Report on Executive
Compensation." Executive officers will be entitled to receive varying ranges of
up to 250% (up to 250% for the Chairman of the Board, up to 200% for the
President and Chief Executive Officer and from 125% up to 150% for all other
executive officers) of their base salaries upon achievement of bonus performance
goals, which include ACS' achievement of four targeted financial measures:
consolidated revenues, consolidated earnings before interest, taxes and
depreciation, consolidated pre-tax earnings and consolidated earnings per share.
In addition to the above described bonus plan, for fiscal year 2001, there is an
accelerator bonus plan which allows each of the executive officers to earn up to
an additional 25% of their maximum bonus upon exceeding certain financial
projections. The maximum bonus that any executive officer may receive for the
fiscal year 2001 will be $1,794,648. The bonus performance goals have been
pre-established by the Compensation Committee and approved by the Board of
Directors for all executive officers other than any executive officer whose
compensation may exceed $1 million. For any executive officer whose compensation
may exceed $1 million, bonus performance goals are previously established by the
Special Compensation Committee, which is comprised solely of non-employee
directors, and approved by the Board of Directors. ACS believes that the
incentive-related provisions provide performance incentives that are and will be
beneficial to ACS and its stockholders.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE INCENTIVE COMPENSATION
PROVISIONS FOR THE EXECUTIVE OFFICERS.
DIRECTOR AND EXECUTIVE COMPENSATION AND OTHER INFORMATION
DIRECTOR'S COMPENSATION
Messrs. Rossi, O'Neill and Kendall, three of the members of the Board of
Directors of ACS who are not employed by ACS, receive compensation in the amount
of $3,000 for attendance at each Board meeting. Directors are reimbursed for
their travel expenses incurred in connection with the meetings. ACS has granted
Messrs. Rossi's and O'Neill's options to purchase 50,000 and 20,000 shares of
Class A common stock, respectively. Messrs. Rossi's and O'Neill's options are
fully vested and exercisable and Mr. Rossi has exercised options to purchase
5,000 shares of Class A common stock. In addition, Mr. Kendall has an option
covering 50,000 shares of Class A common stock which was awarded to him shortly
after the acquisition by merger of ACS Government Solutions, Inc. in December
1997, in recognition of his duties after the merger with ACS and ACS Government
Solutions, Inc. Mr. Kendall's options vest ratably over five years.
9
<PAGE> 11
SUMMARY OF NAMED EXECUTIVE OFFICERS' CASH AND OTHER COMPENSATION
The following table sets forth certain information regarding compensation
paid for all services rendered to ACS in all capacities during fiscal years
2000, 1999 and 1998 by ACS' chief executive officer and the four other most
highly compensated executive officers of ACS whose total annual salary and bonus
exceeded $100,000, based on salary and bonuses earned during fiscal year 2000
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------- -------------------------------------------------
PAYOUTS
RESTRICTED -------
STOCK LTIP
NAME AND PRINCIPAL OTHER ANNUAL AWARDS OPTIONS/ PAYOUTS ALL OTHER
POSITION YEAR SALARY BONUS($) COMPENSATION($)(1) ($)(2) SARS(3) ($)(2) COMPENSATION($)
------------------ ---- ------- --------- ------------------ ---------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Darwin Deason.......... 2000 525,000 1,367,625 -- -- -- --
Chairman of 1999 525,000 1,312,500 -- -- 75,000 -- --
the Board 1998 487,500 1,250,000 -- -- -- -- --
Jeffrey A. Rich........ 2000 425,000 885,700 -- -- -- -- 1,063
President and Chief 1999 425,000 850,000 -- -- 250,000 -- 2,922
Executive Officer 1998 312,500 650,000 -- -- -- -- --
Mark A. King........... 2000 275,000 429,825 -- -- 50,000 -- 1,146
Executive Vice 1999 275,000 412,500 -- -- 50,000 -- 1,289
President and Chief 1998 212,500 337,500 -- -- 40,000 -- --
Financial Officer
Henry G. Hortenstine... 2000 275,000 429,825 -- -- 100,000 -- 1,203
Group President -- 1999 275,000 412,500 -- -- -- -- 1,719
ACS Technology 1998 237,500 375,000 -- -- 40,000 -- --
Solutions, and
Executive Vice
President
Lynn Blodgett.......... 2000 225,000 261,000 -- -- -- -- 2,501
Group President -- 1999 196,875 180,000 -- -- 80,000 -- --
Business Process 1998 143,750 91,875 -- -- 40,000 -- --
Solutions Group, and
Executive Vice
President
</TABLE>
---------------
(1) None of the Named Executive Officers received personal benefits, securities
or property in excess of the lesser of $50,000 or 10% of such individual's
reported salary and bonus during fiscal years 2000, 1999 and 1998.
(2) ACS did not grant any restricted stock awards or long-term incentive plan
payouts to the Named Executive Officers during fiscal years 2000, 1999 and
1998.
(3) ACS did not grant any stock appreciation rights ("SARS") to the Named
Executive Officers during fiscal years 2000, 1999 or 1998.
10
<PAGE> 12
The following table sets forth the number of options granted during the
fiscal year ended June 30, 2000 to the Named Executive Officers to purchase
shares of Class A common stock and the potential realizable value of these
options.
OPTION GRANTS DURING FISCAL YEAR 2000
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS/SARS ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES IN FOR OPTION TERM(1)
OPTIONS/SARS FISCAL EXERCISE OR EXPIRATION -------------------------
NAME GRANTED(#) YEAR(%) BASE PRICE($) DATE 5%($) 10%($)
---- ------------ ------------ ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Darwin Deason.......... -- -- -- -- -- --
Jeffrey A. Rich........ -- -- -- -- -- --
Mark A. King........... 50,000 4.2% 39.00 9/13/09 1,226,350 3,107,800
Henry G. Hortenstine... 100,000 8.5% 39.00 9/13/09 2,452,700 6,215,600
Lynn Blodgett.......... -- -- -- -- -- --
</TABLE>
---------------
(1) The amounts in these columns are the result of calculations at the 5% and
10% rates set by the SEC and are not intended to forecast possible future
appreciation, if any, of ACS' stock price.
The following table provides information related to options exercised by
the Named Executive Officers during fiscal year 2000 and the number and value of
options held at fiscal year end. ACS does not have any SARS outstanding.
AGGREGATE OPTION/SAR EXERCISES IN FISCAL 2000
AND FISCAL YEAR END 2000 OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES VALUE FISCAL YEAR END(#) AT FISCAL YEAR END($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Darwin Deason......... -- -- -- 75,000 -- $ 754,687
Jeffrey A. Rich....... -- -- 222,050 510,000 $5,107,150 $6,485,625
Mark A. King.......... -- -- 40,014 260,000 $ 920,322 $2,333,125
Henry G.
Hortenstine......... -- -- 103,970 300,000 $2,391,310 $2,480,000
Lynn Blodgett......... -- -- -- 120,000 -- $ 20,000
</TABLE>
---------------
(1) Represents the value realized upon exercise calculated as the number of
options exercised times difference between the average of the high and low
stock trading price from the trading day immediately prior to the exercise
date and the exercise price.
(2) Represents the value of unexercised options calculated as the number of
unexercised options times the difference between the closing price at June
30, 2000 of $33.125 and the exercise price.
MR. DEASON'S SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT AND EMPLOYMENT
AGREEMENT; SEVERANCE AGREEMENTS FOR CERTAIN EXECUTIVE OFFICERS
In December 1998, ACS entered into a Supplemental Executive Retirement
Agreement with Mr. Deason. Pursuant to the Supplemental Executive Retirement
Agreement, which was previously reviewed and approved by the Special
Compensation Committee, Mr. Deason will receive a benefit upon the occurrence of
certain events equal to the excess of the value of particular options granted to
Mr. Deason (including 75,000 shares covered by options granted in October 1998
with an exercise price of $23.08 per
11
<PAGE> 13
share) over an actuarially calculated amount based on a percentage of his
average monthly compensation determined by his monthly compensation during the
highest thirty-six consecutive calendar months from among the 120 consecutive
calendar months ending on the earlier of his termination with ACS or his normal
retirement date. The percentage applied to the average monthly compensation will
vary from 2% on June 30, 1999 to 56% on May 18, 2005. The events triggering the
benefit are normal retirement, late retirement, total and permanent disability,
death, resignation, change in control of ACS or termination for reasons other
than cause. The benefit will be paid in a lump sum or, at the election of Mr.
Deason, in monthly installments over a period not to exceed ten years. If the
payment is caused by a change in control and at such time Mr. Deason would be
subject to an excise tax under the Internal Revenue Code with respect to the
benefit, the amount of the benefit will be grossed-up to offset this tax.
In March 1999, ACS also entered into an Employment Agreement with Mr.
Deason. The Employment Agreement, which was previously reviewed and approval by
the Special Compensation Committee and replaced an earlier severance agreement,
has a term until May 18, 2004, unless extended in accordance with its terms or
terminated earlier, either by Mr. Deason or by a unanimous vote of the Board of
Directors (not including Mr. Deason). The Employment Agreement provides for a
base salary of $525,000 per year, subject to annual adjustments by a percentage
equal to the average percentage adjustments to the annual salaries of the top
five executive officers of ACS. The Employment Agreement also provides for an
annual bonus based on the achievement of financial goals set for Mr. Deason by
the Special Compensation Committee. This bonus can be up to 250% of Mr. Deason's
base salary for that year. In addition, the Employment Agreement provides for
severance benefits for Mr. Deason upon a change of control of ACS and for
supplemental retirement benefits for Mr. Deason.
ACS has previously entered into severance agreements with certain of its
executive officers, which upon the occurrence of certain events, will entitle
the executive to receive a severance benefit. Under the severance agreements,
one of the conditions to payment of the severance benefit is that one of the
following triggering events must occur: (i) ACS undergoes a consolidation or
merger in which ACS is not the surviving company or in which ACS common stock is
converted into cash, securities or other property such that ACS holders of
common stock do not have the same proportionate ownership of the surviving
company's common stock as they held of ACS' common stock prior to the merger or
consolidation; (ii) ACS sells, leases or transfers all or substantially all of
its assets to a company in which ACS owns less than 80% of the outstanding
voting securities; or (iii) ACS adopts or implements a plan or proposal to
liquidate ACS. If the board of directors of ACS does not approve the
consummation of any of such foregoing triggering events, then each executive
officer shall be entitled to receive the severance benefit. If the board of
directors of ACS approves the consummation of the triggering event, then the
executive's right to receive the severance benefit accrues only if, within three
years of the consummation of the triggering event, (a) the executive is
terminated without cause, (b) the executive is directly or indirectly removed
from a position he held prior to the consummation of the triggering event, (c)
the executive suffers a significant and adverse change in the nature or scope of
his authority or responsibilities, (d) the executive believes in good faith that
he has been rendered unable to carry out his responsibilities or has suffered a
reduction of his authority or responsibilities, (e) the executive is required to
travel significantly more than prior to the consummation of the triggering
event, or (f) if ACS materially breaches the severance agreement.
The executive's right to receive such severance benefit also accrues if a
person or entity (other than one or more trusts established by ACS for the
benefit of employees of ACS or a person or entity that holds 15% or more of ACS'
outstanding common stock on the date the particular severance agreement was
entered into) becomes the beneficial owner of 15% or more of ACS' outstanding
common stock, but only if during any period of 24 consecutive months there is a
turnover of a majority of the board of directors. There shall be excluded from
the determination of the turnover of directors, (i) those directors who are
replaced by new directors who are approved by a vote of at least a majority of
the directors (continuing director) who have been a member of the board of
directors of ACS since August 5, 1997, (ii) a member of the board who succeeds
an otherwise continuing director and who was elected, or nominated for election
by ACS' stockholders, by a majority of the continuing directors then still in
office, and (iii) any director elected, or
12
<PAGE> 14
nominated for election by ACS' stockholders to fill any vacancy or newly created
directorship by a majority of the continuing directors still in office.
The severance benefit to be received by each executive includes a lump sum
payment, equal to three times the sum of (i) the executive's per annum base
salary, plus (ii) the executive's bonus for the preceding fiscal year, plus
(iii) the executive's target bonus for the then-current fiscal year, pro rated
to reflect the number of days the executive was employed by ACS in that fiscal
year. In addition, ACS will, for up to three years after severance, continue to
pay insurance benefits to the executive until the executive secures employment
that provides replacement insurance, and ACS will continue to provide insurance
benefits to the executive to the extent any new insurance the executive receives
from a subsequent employer does not cover a pre-existing condition. Also, when
determining any executive's eligibility for post-retirement benefits under any
welfare benefit plan, the executive shall be credited with three years of
participation and age credit. The executive is also entitled to receive
additional payments to compensate for the effect of excise taxes imposed under
Section 4999 of the Internal Revenue Code and any interest or penalties
associated with these excise taxes upon payments made by ACS for the benefit of
the executive.
These severance agreements may be terminated by ACS with one year advance
written notice; however, if a triggering event is consummated prior to
termination by ACS, then these agreements will remain in effect for at least
three years plus any additional time necessary to give effect to the terms of
the agreements.
COMPENSATION COMMITTEE AND SPECIAL COMPENSATION COMMITTEE REPORTS ON EXECUTIVE
COMPENSATION
The Compensation Committee has been responsible for administering ACS'
Stock Option Plans and approving compensation for ACS' senior executives,
including recommending to the Board of Directors policies and plans concerning
the salaries, bonuses and other compensation for all executive officers, except
that such approval and recommendation with respect to salaries, bonus and other
compensation for Mr. Deason and Mr. Rich are the responsibility of the Special
Compensation Committee. The objective of ACS' executive compensation program is
to attract and retain qualified, motivated executives and to closely align their
financial interests with both the short and long-term interests of ACS'
stockholders. The executive compensation program is intended to provide ACS'
executive officers with overall levels of compensation that are competitive
within the information industry, as well as within a broader spectrum of
companies of size and complexity.
The three principal components of ACS' executive compensation program are
base salary, annual incentive bonus opportunities and stock options.
BASE SALARIES
Each executive officer's base salary is reviewed annually and is
subject to adjustment on the basis of individual, corporate and, in some
instances, business unit performance, as well as competitive and
inflationary considerations.
INCENTIVE BONUS
Incentive bonus payments for executive officers are made at the end of
each fiscal year based upon the achievement of some or all of the
following: consolidated financial criteria (which can include consolidated
revenues, consolidated earnings before interest, taxes and depreciation,
consolidated pre-tax earnings and consolidated earnings per share),
business unit financial criteria, and the attainment of individual goals.
Such criteria and goals are established by the Chairman of the Board of
ACS, subject to approval by the Compensation Committee of the Board of
Directors, at the beginning of each fiscal year (or, in the cases of the
Chairman and the Chief Executive Officer, subject to the approval of the
Special Compensation Committee). During fiscal year 2000, ACS achieved
99.2% of such measures of consolidated financial criteria.
For fiscal year 2000, executive officers were eligible to receive
maximum bonuses of between 125% and 250% of salary provided the set goals
and criteria were met.
13
<PAGE> 15
In addition to the above described bonus plan, for fiscal year 2001,
there is an accelerator bonus plan which allows each of the executive
officers to earn up to an additional 25% of their maximum annual bonus upon
exceeding certain consolidated financial criteria. During fiscal year 2000,
ACS achieved 20% of such measures of consolidated financial criteria under
the accelerator bonus plan, resulting in a payment of 5% of the maximum
annual bonus to each of the executive officers.
STOCK OPTION PLAN
ACS' 1997 Stock Incentive Plan ("Stock Option Plan") is administered
by the Compensation Committee and, with respect to Darwin Deason and
Jeffrey A. Rich, the Special Compensation Committee of ACS' Board of
Directors. The Compensation Committee and the Special Compensation
Committee have determined the individuals eligible to receive grants of
options under the Stock Option Plan, the type of option granted, the number
of shares of Class A common stock subject to a grant and the terms of the
grant, including exercise price, exercise date and any restrictions on
exercise. The Compensation Committee also has been responsible for
determining the advisability and terms of any buyout of options previously
granted, reductions in the exercise prices of previously granted options
and the terms of any deferred grant of options granted under the Stock
Option Plan.
The Stock Option Plan also provides for the issuance of stock purchase
rights. When the Compensation Committee determines to grant a stock
purchase right, it will advise the recipient of the grant of the terms and
conditions of the grant, including any restrictions on the grant, the
number of shares subject to the grant, the exercise price of the grant and
the time within which the grant must be accepted by the recipient. The
maximum amount of time that a recipient may have to accept the grant is 30
days. The purchase price of stock acquired pursuant to a stock purchase
right shall not be less than 50% of the fair market value of ACS' Class A
common stock at the time of grant. There have been no stock purchase rights
granted through June 30, 2000.
Submitted by the Compensation
Committee
and the Special Compensation
Committee
of the Board of Directors:
DARWIN DEASON*
FRANK A. ROSSI
JOSEPH P. O'NEILL
*Not a member of the
Special Compensation Committee
14
<PAGE> 16
COMPARISON OF TOTAL CUMULATIVE RETURN FROM SEPTEMBER 26, 1994
THROUGH JUNE 30, 2000 OF
AFFILIATED COMPUTER SERVICES, INC. CLASS A COMMON STOCK,
STANDARD & POOR'S COMPUTER SOFTWARE & SERVICES INDEX
AND THE STANDARD & POOR'S STOCK INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
09/26/94 06/30/95 06/25/96 06/30/97 06/30/98 06/30/99 06/30/00
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ACS 100 191 294 350 481 633 414
Standard & Poor's
Computer Software
& Services Index 100 145 192 296 427 641 717
Standard & Poor's
Stock Index 100 120 150 200 267 312 334
</TABLE>
Note: The graph above compares the total cumulative return of ACS Class A
common stock from September 26, 1994 through June 30, 2000 with the Standard &
Poor's Computer Software & Services Index and the Standard & Poor's Stock Index.
The graph assumes the investment of $100 and the reinvestment of all
dividends. The stock price performance shown on the graph is not necessarily
indicative of future stock performance.
THE ABOVE REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE
GRAPH WILL NOT BE DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH OR
INCORPORATED BY REFERENCE INTO ANY FILING BY ACS UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT ACS
SPECIFICALLY INCORPORATES SUCH REPORT OR GRAPH BY REFERENCE.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For information on Compensation Committee interlocks and insider
participation, see "Certain Transactions."
15
<PAGE> 17
CERTAIN TRANSACTIONS
In connection with the reorganization of ACS on June 30, 1994, ACS and
Precept Business Services, Inc. ("Precept") entered into a reciprocal services
agreement pursuant to which Precept would sell business forms and supplies, and
provide courier and certain other administrative services to ACS, and ACS would
provide office space and certain administrative services to Precept. Mr. Deason
is a director and holds voting control of Precept. Douglas Deason, one of Mr.
Deason's sons, is the President and Chief Executive officer and a director of
Precept and owns approximately 7.4% of Precept's outstanding common stock. The
prices for all services, forms and supplies provided by Precept to ACS under
such agreement must be no less favorable than could be obtained from an
independent third party and are subject to review from time to time by the
Independent Directors Committee of ACS. The prices for all services provided by
ACS to Precept will be at no less than ACS' direct cost. The costs incurred by
ACS for services provided by Precept covered by such reciprocal services
agreement, which are believed to approximate fair market value, were
approximately $4.5 million for fiscal year 2000. Precept's payments to ACS under
the reciprocal services agreement were approximately $100,000 for fiscal year
2000.
Mr. Deason and ACS, along with two other investors, are the stockholders in
DDH Aviation, Inc., a corporate airplane brokerage firm organized in late 1997.
DDH has a $35 million line of credit with Wells Fargo Bank, N.A., for which Mr.
Deason and ACS, in exchange for warrants to acquire additional voting stock, act
as guarantors with ACS guaranteeing up to approximately $11.5 million of the
line of credit and Mr. Deason guaranteeing up to approximately $16.5 million of
the line of credit. Assuming that all warrants are exercised and all shares to
be issued to certain key employees of DDH (upon the attainment of certain
performance goals) have been issued, Mr. Deason owns approximately 32% of the
equity interests in DDH and ACS owns approximately 16%. Mr. Deason is one of the
five directors of DDH, as well as its Chairman of the Board. ACS has access to
aircraft from DDH.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, independent certified accountants, has been
selected as ACS' independent accountant for the fiscal year 2001.
PricewaterhouseCoopers LLP was also ACS' independent accountant for fiscal year
2000. A representative of PricewaterhouseCoopers LLP is expected to be present
at the Annual Meeting. That representative will have an opportunity to make a
statement, if desired, and will be available to respond to appropriate
questions.
16
<PAGE> 18
STOCKHOLDERS PROPOSALS FOR 2001 ANNUAL MEETING
If any stockholder of ACS intends to present a proposal for consideration
at the Fiscal Year 2001 Annual Meeting of Stockholders and desires to have such
proposal in the proxy statement and form of proxy distributed by the Board of
Directors with respect to such meeting, such proposal must be received at ACS'
principal executive offices, 2828 North Haskell Avenue, Dallas, Texas 75204,
Attention: William L. Deckelman, Jr., Corporate Secretary, no sooner than May 1,
2001 but not later than June 1, 2001.
By Order of the Board of Directors
/s/WILLIAM L. DECKELMAN, JR.
William L. Deckelman, Jr.
Corporate Secretary
September 28, 2000
17
<PAGE> 19
AFFILIATED COMPUTER SERVICES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 26, 2000
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Affiliated Computer Services, Inc., a
Delaware corporation (the "Corporation"), hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and accompanying Proxy Statement each
dated September 28, 2000 and the Corporation's Annual Report and hereby appoints
Jeffrey A. Rich and William L. Deckelman, Jr. or either of them, as proxies and
attorneys-in-fact, each with full power of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of the Corporation to be held at Cityplace Conference Center, 2711
North Haskell Avenue, Dallas, Texas 75204, on October 26, 2000 at 11:00 a.m.
local time, and at any adjournment or adjournments thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote if then
and there personally present, on all matters set forth in the Notice of Annual
Meeting of Stockholders and accompanying Proxy Statement, and in their
discretion upon any other business or matters that may properly come before the
meeting or any adjournment or adjournments thereof:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
--------------------------------------------------------------------------------
oFOLD AND DETACH HEREo
<PAGE> 20
Please mark
your votes as
indicated in [X]
this example
(1) To elect two (2) Directors to serve until the Annual Meeting of
Stockholders for the year 2003 or until their successors are duly
elected and qualified.
FOR all nominees listed below
(except as indicated below) WITHHOLD
[ ] [ ]
(2) To approve the performance-based incentive compensation for the
Corporation's executive officers
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If you wish to withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list below.
Nominees: Darwin Deason and Jeffrey A. Rich
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE
VOTED FOR THE ELECTION OF DIRECTORS, FOR THE APPROVAL OF THE PERFORMANCE-BASED
INCENTIVE COMPENSATION FOR THE CORPORATION'S EXECUTIVE OFFICERS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS MAY VOTE IN
PERSON EVEN THOUGH THEY PREVIOUSLY MAILED THIS PROXY.
Signature(s) Dated: , 2000
---------------------------------------------- ---------
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
--------------------------------------------------------------------------------
oFOLD AND DETACH HEREo
