<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HBO & COMPANY
- - --------------------------------------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ 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:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
HBO & COMPANY
301 PERIMETER CENTER NORTH
ATLANTA, GEORGIA 30346
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1996
To the Stockholders of HBO & Company:
Notice is hereby given that the Annual Meeting of Stockholders of HBO &
Company will be held on Tuesday, May 14, 1996, at 9:00 A.M., local time, at the
offices of the Company at 301 Perimeter Center North, Atlanta, Georgia 30346,
for the following purposes:
1. To elect a Board of Directors consisting of nine members to hold office
until the next Annual Meeting of Stockholders or until their successors
are elected and qualified.
2. To approve the Amendment of the Certificate of Incorporation to increase
the number of authorized shares of Common Stock, par value $.05 per
share, from 60,000,000 to 250,000,000.
3. To approve the Amendment to the HBO & Company 1993 Stock Option Plan for
Nonemployee Directors to provide an initial grant of options to purchase
12,500 shares of Common Stock to newly elected Directors.
4. To approve the Amendment to the HBO & Company 1990 Executive Incentive
Plan to increase the number of shares available for awards thereunder by
an additional 1,500,000 shares of Common Stock.
5. To ratify the appointment of Arthur Andersen LLP as independent public
accountants to audit the accounts of the Company and its subsidiaries for
the year ending December 31, 1996.
6. To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.
Only stockholders of record at the close of business on March 29, 1996,
shall be entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
A proxy statement and a proxy solicited by the Board of Directors are
enclosed herewith. Whether or not you plan to attend the meeting in person,
please sign, date and mail your proxy card promptly in the enclosed postage-paid
envelope. If you attend the meeting, you may, if you wish, withdraw your proxy
and vote in person.
By order of the Board of Directors,
James A. Gilbert
SECRETARY
April 3, 1996
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE
COMPLETED AND RETURNED PROMPTLY
<PAGE>
HBO & COMPANY
301 PERIMETER CENTER NORTH
ATLANTA, GEORGIA 30346
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of HBO & Company (the "Company") of proxies to be used at the
Annual Meeting of Stockholders to be held on May 14, 1996. This proxy statement
and the accompanying proxy card are being mailed to stockholders on or about
April 3, 1996.
Any stockholder who executes and delivers a proxy may revoke it at any time
prior to its use by executing a later dated proxy. All shares represented by
effective proxies will be voted as specified therein, or, if no direction is
indicated, they will be voted in favor of each of the proposals set forth in the
notice attached hereto, all of which are more fully described herein.
Directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of Directors. When a quorum is present at the meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide the action proposed in each matter listed in
the accompanying Notice of Annual Meeting of Stockholders except the election of
Directors and except that the proposed amendment to the Certificate of
Incorporation requires approval by the holders of a majority of the outstanding
Common Stock. Abstentions and broker "nonvotes" will be counted as present in
determining whether the quorum requirement is satisfied. A broker "nonvote"
occurs when a broker holding shares for a beneficial owner votes on one proposal
pursuant to discretionary authority or instructions from the beneficial owner,
but does not vote on another proposal because the broker has not received
instructions from the beneficial owner and does not have discretionary power.
The aggregate number of votes entitled to be cast by all stockholders present in
person or represented by proxy at the meeting, whether those stockholders vote
"For", "Against" or abstain from voting, will be counted for purposes of
determining the minimum number of affirmative votes required for approval of
such proposals, and the total number of votes cast "For" each of these proposals
will be counted for purposes of determining whether sufficient affirmative votes
have been cast. An abstention from voting by a stockholder on a proposal has the
same effect as a vote "Against" such proposal except with respect to the
election of Directors, in which case abstentions will have no effect. Broker
"nonvotes" are not counted for purposes of determining whether a proposal has
been approved.
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, Directors, officers and employees of the Company may
solicit proxies by telephone, telegraph or personal interview, but will not be
compensated for such solicitation. The Company has retained D.F. King & Co.,
Inc. to assist in the solicitation of proxies for a fee of $9,000 plus expenses.
Brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward soliciting material to their principals, and the Company
will, upon request, reimburse them for the reasonable expense of doing so. Only
stockholders of record as of March 29, 1996, are entitled to vote at the
meeting. The number of shares of Common Stock outstanding and entitled to vote
as of March 29, 1996, was 40,356,174. Each share is entitled to one vote.
1
<PAGE>
ELECTION OF DIRECTORS
The Bylaws of the Company currently provide that the Board of Directors
shall consist of not less than three nor more than fifteen Directors, subject to
increase or decrease in such number within legal limits by action of the Board
of Directors or the stockholders. There are presently nine Directors. Directors
shall be elected to serve until the next Annual Meeting of Stockholders or until
their successors are elected and qualified.
In the event that any nominee withdraws, or for any reason is unable to
serve as a Director, the proxies will be voted for such other person as may be
designated by the Board of Directors as a substitute nominee, but in no event
will proxies be voted for more than nine nominees. Management of the Company has
no reason to believe that any nominee will not continue to be a candidate or
will not serve if elected. All of the nominees are currently Directors of the
Company.
The following sets forth as of March 1, 1996, certain biographical
information and business experience for the past five years for each of the
nominees:
<TABLE>
<S> <C>
ALFRED C. ECKERT III Mr. Eckert, age 47, has been President of Greenwich Street
Capital Partners, Inc., a private investment firm, since
January 1994 and has been a Principal of Greycliff Partners,
a private investment firm, since December 1991. He was a
Partner of Goldman, Sachs & Co., investment bankers, from
December 1984 to November 1991. Mr. Eckert is a Director of
Georgia Gulf Corporation. He has been a Director of the
Company since 1990.
HOLCOMBE T. GREEN, JR. Mr. Green, age 56, is the Chairman of the Board of Directors
of the Company and has been a Director of the Company since
1987. He served in the capacity of President and Chief
Executive Officer of the Company from January 1990 to
January 1991. Mr. Green has served as the Chairman and Chief
Executive Officer of WestPoint Stevens Inc., a textile
manufacturing company, since October 1992. Mr. Green has
been the Principal of Green Capital Investors, L.P., a
private investment fund, since October 1987. He is also a
Director of Georgia Gulf Corporation, Rhodes, Inc., A.D.A.M.
Software, Inc. and American Buildings Company.
PHILIP A. INCARNATI Mr. Incarnati, age 42, has been President and Chief
Executive Officer of McLaren Health Care Corporation, a
fully-integrated healthcare delivery system, since June
1989. He has been a Director of the Company since 1995.
ALTON F. IRBY III Mr. Irby, age 55, has been a Principal of J O Hambro Magan &
Co., investment bankers, since March 1988 and has also
served as Deputy Chairman since March 1994. Mr. Irby has
been a Director of the Company since 1990.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
GERALD E. MAYO Mr. Mayo, age 63, has served as Chairman and President of
Midland Financial Services, Inc., the holding company for
The Midland Life Insurance Company which is the successor to
The Midland Mutual Life Insurance Company, a life insurance
and annuities company, since December 1994. Mr. Mayo served
the predecessor company in similar capacities for over five
years. Mr. Mayo is a Director of Huntington BancShares Inc.,
The Columbia Gas System, Inc. and Borror Corporation. He has
been a Director of the Company since 1991.
CHARLES W. MCCALL Mr. McCall, age 51, has been President, Chief Executive
Officer and a Director of the Company since January 1991.
From 1985 until joining the Company, he served as President
and Chief Executive Officer of CompuServe, Inc., a computer
services and communications company. Mr. McCall is also a
Director of EIS International, Inc. and WestPoint Stevens
Inc.
JAMES V. NAPIER Mr. Napier, age 59, has served as the Chairman of the Board
of Directors of Scientific-Atlanta, Inc., a communications
equipment manufacturer, since November 1992 and served as
Acting Chief Executive Officer from December 1992 to July
1993. From June 1988 to October 1992, he was Chairman and
President of Commercial Telephone Group, a telecommunication
products company. Mr. Napier has been a private investor
since August 1987. Mr. Napier is a Director of Engelhard
Corporation, Intelligent Systems Corporation, Vulcan
Materials Corporation, Personnel Group of America, Inc.,
Westinghouse Air Brake Company and Rhodes, Inc. He has been
a Director of the Company since 1981.
CHARLES E. THOELE Mr. Thoele, age 60, has been a Consultant to Sisters of
Mercy Health Systems, a not for profit healthcare system,
since February 1991. From July 1986 to January 1991, he
served as the Chief Operating Officer and a Director of
Sisters of Mercy Health Systems. Mr. Thoele is also a
Director of Transcend Services, Inc. He has been a Director
of the Company since 1989.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
DONALD C. WEGMILLER Mr. Wegmiller, age 57, has been President and Chief
Executive Officer of Management Compensation
Group/HealthCare Compensation, an executive and physician
compensation consulting firm, since April 1993. He was Vice
Chairman and President of HealthSpan Health Systems
Corporation ("HealthSpan") from November 1992 to April 1993.
From May 1987 to November 1992, he was President and Chief
Executive Officer of Health One Corporation, a healthcare
services company that merged with HealthSpan. Mr. Wegmiller
is a Director of Medical Graphics Corporation, Possis
Medical Corporation, Minnesota Power & Light Company and
LifeRate Systems, Inc. He has been a Director of the Company
since 1988.
</TABLE>
During 1995, the Board of Directors held four meetings. The Company has an
Audit Committee, a Stock Option and Compensation Committee and an Executive
Committee. The Audit Committee, comprised of Messrs. Incarnati (as of November
14, 1995), Mayo, Napier, and Wegmiller, is responsible for recommending to the
Board of Directors the independent public accountants to be retained for the
year. The Audit Committee met twice during 1995 with the independent auditors
and the Company's management to review internal accounting controls, audit plans
and results, and accounting principles and practices. The Stock Option and
Compensation Committee, comprised of Messrs. Eckert, Irby and Thoele, met twice
during 1995. The Stock Option and Compensation Committee makes recommendations
to the Board of Directors concerning the compensation to be paid to all
executive officers and Directors and administers the Company's stock option
plans. During 1995, the Executive Committee, which acts in the absence of the
Board of Directors, held no meetings. The members are Messrs. Green, McCall and
Napier. The Company has designated a Nominating Committee composed of Messrs.
Green, McCall and Napier. The Nominating Committee will have the responsibility
to make recommendations for Board membership, rotation and retirement and will
serve as the committee responsible for the Board's policy and corporate
governance matters. Inasmuch as the Nominating Committee has not yet met, no
procedures regarding recommendations of nominees by stockholders to such
committee have yet been adopted. The Company has no other standing committees.
During 1995, no member of the Board of Directors attended fewer than 75% of the
total of the meetings of the Board of Directors and the committees of which he
was a member.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE ABOVE NOMINEES
COMPENSATION OF DIRECTORS
During 1995, Directors who were not officers of the Company received a
retainer of $5,000 per quarter and $1,000 for each Board and/or committee
meeting attended, with the exception of the Chairman, Mr. Green, who received
$11,000 per quarter plus $1,000 for each Board meeting attended. In addition,
nonemployee Directors received annual grants of options to purchase 5,000 shares
of Common Stock upon re-election. During 1995, no fees were paid to any Director
who was employed by the Company. Officers are appointed by and serve at the
pleasure of the Board of Directors. No Director or officer is related to any
other Director or officer of the Company.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 1, 1996, certain information
with respect to all stockholders known to the Company to beneficially own more
than five percent of its Common Stock, and information with respect to the
Company's Common Stock beneficially owned by each Director of the Company, the
executive officers of the Company included in the Summary Compensation Table set
forth under the caption "Executive Compensation" and all Directors and executive
officers of the Company as a group. Except as otherwise indicated, the
stockholders listed in the table have sole voting and investment powers with
respect to the Common Stock owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- - -------------------------------------------------- ---------------------- ------------
<S> <C> <C>
American Express Financial
Corporation 2,517,807(1) 6.25%
IDS Tower 10
Minneapolis, Minnesota 55440
FMR Corp. 2,583,250(2) 6.42%
82 Devonshire Street
Boston, Massachusetts 02109
Putnam Investments, Inc. 2,598,068(3) 6.45%
One Post Office Square
Boston, Massachusetts 02109
Alfred C. Eckert III 10,000(4) *
Holcombe T. Green, Jr. 614,430(5) 1.53%
Philip A. Incarnati -0- *
Alton F. Irby III 10,000(4) *
Gerald E. Mayo 36,000(4) *
Charles W. McCall 683,251(6) 1.7%
James V. Napier 29,544(7) *
Charles E. Thoele 6,000(8) *
Donald C. Wegmiller 5,000(4) *
Jay P. Gilbertson 18,378(9) *
James A. Gilbert 37,908(10) *
Albert J. Bergonzi 7,023(11) *
Russell G. Overton 10,734(12) *
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- - -------------------------------------------------- ---------------------- ------------
ADDITIONAL PERSONS WHO SERVED AS EXECUTIVE OFFICERS THROUGH MAY, 1995
<S> <C> <C>
Glenn N. Rosenkoetter 8,793(13) *
David A. Schenk 7,670(14) *
All Directors and Executive Officers as a Group
(15 persons) 1,484,731 3.7%
</TABLE>
- - ------------------------
* Less than 1%
(1) According to the joint Schedule 13G as of December 31, 1995, of American
Express Company ("AEC") and American Express Financial Corporation ("AEFC"),
each of AEC and AEFC has shared voting power with respect to 1,061,907
shares and has shared dispositive power with respect to 2,517,807 shares.
Neither has sole voting nor sole dispositive power with respect to such
shares. AEC, the parent holding company of AEFC, disclaims beneficial
ownership of all such shares.
(2) According to the Schedule 13G as of December 31, 1995, of FMR Corp. ("FMR"),
FMR has sole dispositive power with respect to all of such shares and sole
voting power with respect to 249,850 shares.
(3) According to the joint Schedule 13G as of December 31, 1995, of Putnam
Investments, Inc, ("PI"), its parent, Marsh & McLennan Companies, Inc. and
PI's subsidiaries, Putnam Investment Management, Inc. ("PIM") and The Putnam
Advisory Company, Inc. ("PAC"), PAC has shared voting and shared dispositive
power with respect to 267,650 and 388,500 of such shares, PIM has shared
dispositive power with respect to 2,209,568 of such shares and PI has shared
voting and shared dispositive power with respect to 267,650 and 2,598,068 of
such shares.
(4) Represents shares that may be acquired through the exercise of presently
exercisable stock options.
(5) Includes 215,000 shares that Mr. Green may acquire through the exercise of
presently exercisable stock options; 5,730 shares held in an IRA for the
benefit of Mr. Green; 331,650 shares held by a limited partnership of which
Mr. Green's wife is a general partner and with respect to which beneficial
ownership is disclaimed, except to the extent of his pecuniary interest
therein; and 62,050 shares held by HTG Corp. which is wholly owned by Mr.
Green.
(6) Includes 569,333 shares that may be acquired through the exercise of
presently exercisable stock options.
(7) Includes 15,000 shares that may be acquired through the exercise of
presently exercisable stock options.
(8) Includes 5,000 shares that may be acquired through the exercise of presently
exercisable stock options.
6
<PAGE>
(9) Includes 18,000 shares that may be acquired through the exercise of
presently exercisable stock options.
(10)Includes 750 shares owned by Mr. Gilbert's son and 6,000 shares that Mr.
Gilbert may acquire through the exercise of presently exercisable stock
options.
(11)Includes 6,200 shares that may be acquired through the exercise of presently
exercisable stock options.
(12)Includes 10,000 shares that may be acquired through the exercise of
presently exercisable stock options.
(13)Includes 6,000 shares that may be acquired through the exercise of presently
exercisable stock options.
(14)Includes 7,200 shares that may be acquired through the exercise of presently
exercisable stock options.
The Company believes all stock transaction reports for 1995 required to be
filed with the Securities and Exchange Commission were timely filed by officers
and Directors of the Company, except for one report of a single transaction for
Mr. Napier that was filed four days late.
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following tables set forth certain information as to the Chief Executive
Officer, the four most highly compensated executive officers of the Company at
December 31, 1995, and two additional persons who served as executive officers
through May, 1995 whose cash compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
AWARDS
-----------------------------
RESTRICTED
ANNUAL COMPENSATION STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL ---------------------------- AWARDS UNDERLYING COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS/SARS (#) ($)
- - --------------------- ---- ---------- --------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. McCall 1995 520,833 669,375 118,125 100,000 34,537(2)
President and Chief 1994 491,667 637,532 112,468 100,000 38,206
Executive Officer 1993 400,000 340,037 60,125 29,435
Jay P. Gilbertson 1995 175,110 85,680 15,120 90,000 4,500(3)
Senior Vice 1994 145,833 57,383 10,116 20,000 4,500
President - Finance 1993 100,000 48,920 8,580 40,000 3,849
and Chief Financial
Officer
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
AWARDS
-----------------------------
RESTRICTED
ANNUAL COMPENSATION STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL ---------------------------- AWARDS UNDERLYING COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS/SARS (#) ($)
- - --------------------- ---- ---------- --------- ---------- ---------------- ----------------
James A. Gilbert 1995 179,885 80,325 14,175 35,000 9,054(4)
Senior Vice 1994 174,417 89,251 15,749 10,000 9,703
President - HIS 1993 168,000 55,142 9,719 10,998
Products, General
Counsel and
Secretary
<S> <C> <C> <C> <C> <C> <C>
Albert J. Bergonzi 1995 156,938 81,845 14,443 105,000 8,833(5)
Executive Vice 1994 N/A
President - Sales, 1993 N/A
Pathways 2000
Development
Russell G. Overton 1995 158,333 65,280 11,520 10,000 7,302(6)
Senior Vice 1994 148,833 53,564 9,435 20,000 6,981
President - Business 1993 136,000 49,345 8,673 7,563
Development
ADDITIONAL PERSONS WHO SERVED AS EXECUTIVE OFFICERS THROUGH MAY, 1995
Glenn N. Rosenkoetter 1995 178,333 82,620 14,580 10,000 6,706(7)
Senior Vice 1994 169,167 79,904 14,099 10,000 6,731
President - 1993 160,000 52,989 9,347 20,000 9,012
Strategic Business
Units
David A. Schenk 1995 168,333 62,475 11,025 35,000 10,368(8)
Senior Vice 1994 N/A
President - Connect 1993 N/A
Technology and
Outsourcing
</TABLE>
8
<PAGE>
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(1) The dollar value of restricted stock awards for 1995 is calculated by
multiplying $88.25, the closing market price of the Company's Common Stock
on The Nasdaq Stock Market on February 13, 1996, the date of the grant, by
the number of shares awarded, including 1,338, 171, 160, 163, 130, 165 and
124 shares of restricted stock for Messrs. McCall, Gilbertson, Gilbert,
Bergonzi, Overton, Rosenkoetter and Schenk, respectively. Such restricted
stock will vest fully in two years. Dividends will be paid in accordance
with regular quarterly dividends to stockholders of record. The foregoing
stock awards are contingent upon stockholder approval of the proposal to
increase the number of shares available under the HBO & Company 1990
Executive Incentive Plan. The aggregate number of shares of restricted stock
held by Messrs. McCall, Gilbertson, Gilbert, Bergonzi, Overton, Rosenkoetter
and Schenk is 7,059, 823, 1,017, 163, 767, 960 and 124, respectively, and
the value of such shares on the date of grant (based upon the closing market
price of the Company's Common Stock) was $290,718, $33,816, $39,643,
$14,443, $29,628, $38,026 and $11,025, respectively.
(2) Represents $12,365 annual premium paid by the Company on $1,000,000 term
life insurance policy; $4,500 in contributions by the Company to the HBO &
Company Profit Sharing and Savings Plan, a defined contribution plan (the
"Profit Sharing Plan"); and $15,937 in contributions by the Company to the
HBO & Company Key Employee Supplemental Retirement Plan, a defined
contribution nonqualified plan ("SERP"), as well as $1,735 in interest under
the SERP.
(3) Represents $4,500 in contributions by the Company to the Profit Sharing
Plan.
(4) Represents $4,500 in contributions by the Company to the Profit Sharing Plan
and $4,099 in contributions by the Company to the SERP, as well as $455 in
interest under the SERP.
(5) Represents $4,500 in contributions by the Company to the Profit Sharing Plan
and $3,923 in contributions by the Company to the SERP, as well as $410 in
interest under the SERP.
(6) Represents $4,500 in contributions by the Company to the Profit Sharing Plan
and $2,527 in contributions by the Company to the SERP, as well as $275 in
interest under the SERP.
(7) Represents $4,500 in contributions by the Company to the Profit Sharing Plan
and $1,998 in contributions by the Company to the SERP, as well as $208 in
interest under the SERP.
(8) Represents $4,500 in contributions by the Company to the Profit Sharing Plan
and $5,340 in contributions by the Company to the SERP, as well as $528 in
interest under the SERP.
9
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------
% OF TOTAL
OPTIONS/
NUMBER OF SARS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE GRANT DATE
OPTIONS/SARS IN FISCAL PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) YEAR ($/SH) DATE $(7)
- - ------------------------- ------------ ---------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Charles W. McCall (1) 100,000 10.05% 75.00 11-14-2005 5,206,600
---------------
---------------
Jay P. Gilbertson (2) 50,000 9.04% 35.875 2-14-2005 1,248,000
40,000 75.00 11-14-2005 2,082,640
---------------
3,330,640
---------------
---------------
James A. Gilbert (3) 10,000 3.52% 35.875 2-14-2005 249,600
25,000 75.00 11-14-2005 1,301,650
---------------
1,551,250
---------------
---------------
Albert J. Bergonzi (4) 15,000 10.55% 35.875 2-14-2005 374,400
50,000 44.625 5-9-2005 1,547,200
40,000 75.00 11-14-2005 2,082,640
---------------
4,004,240
---------------
---------------
Russell G. Overton (5) 10,000 1.00% 35.875 2-14-2005 249,600
---------------
---------------
ADDITIONAL PERSONS WHO SERVED AS EXECUTIVE OFFICERS THROUGH MAY, 1995
Glenn N. Rosenkoetter (5) 10,000 1.00% 35.875 2-14-2005 249,600
---------------
---------------
David A. Schenk (6) 15,000 3.52% 35.875 2-14-2005 347,400
20,000 75.00 11-14-2005 1,041,320
---------------
1,415,720
---------------
---------------
</TABLE>
- - ------------------------
(1) Option for 100,000 shares becomes exercisable in increments of 20,000 shares
on November 14, 1996 through 2000.
(2) Option for 50,000 shares becomes exercisable in increments of 10,000 shares
on February 14, 1996 through 2000. Option for 40,000 shares becomes
exercisable in increments of 8,000 shares on November 14, 1996 through 2000.
(3) Option for 10,000 shares becomes exercisable in increments of 2,000 shares
on February 14, 1996 through 2000. Option for 25,000 shares becomes
exercisable in increments of 5,000 shares on November 14, 1996 through 2000.
10
<PAGE>
(4) Option for 15,000 shares becomes exercisable in increments of 3,000 shares
on February 14, 1996 through 2000. Option for 50,000 shares becomes
exercisable in increments of 10,000 shares on May 9, 1996 through 2000.
Option for 40,000 shares becomes exercisable in increments of 8,000 shares
on November 14, 1996 through 2000.
(5) Option for 10,000 shares becomes exercisable in increments of 2,000 shares
on February 14, 1996 through 2000.
(6) Option for 15,000 shares becomes exercisable in increments of 3,000 shares
on February 14, 1996 through 2000. Option for 20,000 shares becomes
exercisable in increments of 4,000 shares on November 14, 1996 through 2000.
(7) The present value was calculated using the Black-Scholes methodology. The
Company's future stock performance will not necessarily be consistent with
such valuation. The assumptions used to determine the value are as follows:
<TABLE>
<CAPTION>
ALBERT RUSSELL
CHARLES W. JAY P. JAMES A. J. G. GLENN N. DAVID A.
MCCALL GILBERTSON GILBERT BERGONZI OVERTON ROSENKOETTER SCHENK
---------- -------- -------- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fair Market Value On Grant Date $ 75.00 $35.875 $ 35.875 $ 35.875 $35.875 $ 35.875 $ 35.875
$ 75.00 $ 75.00 $ 44.625 $ 75.00
$ 75.00
Exercise Dates * * * * * * *
Risk-Free Rate (10-Year U.S. Treasury Strip as of 6.10% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50%
Grant Date) 6.10% 6.10% 6.80% 6.10%
6.10%
Volatility (5-Year Closing Price Volatility) 0.53 0.53 0.53 0.53 0.53 0.53 0.53
Annual Dividend Yield/ Share 0.21% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%
0.21% 0.21% 0.36% 0.21%
0.21%
Discount For Forfeitures 0% 0% 0% 0% 0% 0% 0%
Discount For Non-transferability 0% 0% 0% 0% 0% 0% 0%
</TABLE>
- - ------------------------
* On expiration date.
11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- - --------------------- --------------- ------------------ --------------- ----------------------
<S> <C> <C> <C> <C>
Charles W. McCall 132,000 7,951,750 497,000/294,667 35,210,485/12,403,040
Jay P. Gilbertson 16,000 772,376 -0-/130,000 -0-/4,466,376
James A. Gilbert 25,500 856,875 2,000/43,000 110,750/869,250
Albert J. Bergonzi -0- -0- 1,600/111,400 85,450/2,552,425
Russell G. Overton 18,000 869,625 4,000/26,000 213,625/1,255,751
ADDITIONAL PERSONS WHO SERVED AS EXECUTIVE OFFICERS THROUGH MAY, 1995
Glenn N. Rosenkoetter 18,000 640,875 2,000/18,000 106,813/828,500
David A. Schenk -0- -0- 2,600/45,400 132,075/1,150,175
</TABLE>
CHANGE IN CONTROL ARRANGEMENTS. The Company has one compensatory
arrangement with its executive officers that will result from a change in
control of the Company. Under the stock option agreements ("Option Agreements")
with each of the Company's executive officers named in the table under "Summary
Compensation Table" ("Optionees"), in the event there is a Change of Control (as
defined below) of the Company and either (i) the Optionee's employment by the
Company is terminated involuntarily by the Company or (ii) the Optionee
terminates his employment with the Company for Good Reason (as such term is
defined below), then the Option Agreement shall not terminate but rather the
Optionee shall have the immediate right to exercise the option with respect to
all shares granted pursuant thereto at any time, whether or not then otherwise
exercisable. See "Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End
Option/SAR Values." Further, should such Change of Control result in the
termination of the Option Agreement without the simultaneous conversion of the
option into options to purchase like stock of the Company or a corporation
acquiring or succeeding to the rights of the Company in such Change of Control,
upon terms substantially similar to those described therein, the option shall
vest immediately. Generally, "Change of Control" includes certain tender offers,
the sale of substantially all of the Company's assets, acquisition by any person
of 40% or more of the outstanding voting securities of the Company and certain
changes in the membership or composition of the Board of Directors of the
Company.
Generally, termination by an Optionee for "Good Reason" following a Change
of Control includes certain changes in the Optionee's duties, certain salary
reductions or cessation of bonus plans in which the Optionee participates,
certain relocations or failure of the Company to continue in effect certain
benefit and compensation plans.
12
<PAGE>
REPORT OF STOCK OPTION AND COMPENSATION COMMITTEE
COMPENSATION PHILOSOPHY
The Stock Option and Compensation Committee (the "Committee") believes the
Company must pay competitively to attract and retain qualified executives. To
motivate executive personnel to perform at their full potential, the Committee
believes a significant portion of compensation should be incentive-based. In
addition, the Committee believes it is important to reward not only individual
performance and achievement, but also to focus on overall corporate results.
This latter objective serves the dual purposes of encouraging teamwork among
executives and also supports the Company's objective of creating stockholder
value.
ELEMENTS OF THE PROGRAM
Total executive compensation consists of three key components: base
salaries, short-term incentive compensation ("Management Incentive Plan"), and
long-term incentives (Stock Options). Compensation objectives vary by component
of pay. Each of these elements, and the Company's competitive objective for that
element, is described in more detail below.
BASE SALARIES
For 1995, base salaries for all executive officers other than the CEO were
targeted at the size-adjusted market median (50th percentile). For this purpose,
the "market" consisted of a group of computer software and hardware companies
whose businesses are considered somewhat similar to the Company's and with whom
the Company competes for executive talent. These companies are different from
those included in the stock price performance graph elsewhere in this proxy
statement since the Company believes the market for executive talent extends to
a broader group of companies than those included in the stock price performance
graph.
Individual base salary increases for all executive officers other than the
CEO were based on a review of this market data, the actual salaries of the
executives and the CEO's recommendation. Factors considered by the CEO in making
recommendations for increases included, but were not limited to, levels of
responsibility, prior experience, and on-the-job performance. No specific weight
was assigned to these factors. As a group, salaries for the executive officers
(other than the CEO) were slightly below the size-adjusted market median of the
comparable companies.
SHORT-TERM INCENTIVES
The Management Incentive Plan (the "MIP"), which was adopted by the
Committee in 1993, was designed by a third-party consulting firm. This plan
covers approximately 200 management personnel, including all executive officers
other than the CEO (whose incentive compensation is described below). The
Committee believes this plan promotes the Company's philosophy of having a
substantial portion of executive pay "at-risk."
Awards for 1995 performance under the MIP were based on achievement of
Corporate Earnings Per Share (EPS) results, as well as individual performance
measures. A bonus pool is funded based on whether annual EPS goals are achieved
at the "threshold," "target" or "stretch" levels. The Committee believes that
measuring EPS is the best way to take stockholder expectations into account in
motivating executives.
13
<PAGE>
The individual performance measures for each of the named executive officers
(other than the CEO) generally are financial items such as operating income,
business unit revenues, etc. and also goals based on specific job
responsibilities or measures related to market share. In all cases, the measures
are quantifiable and measurable. "Threshold," "target" and "stretch" performance
levels also are established for each individual measure. No payouts will be made
if the specific goals established for each executive officer are not achieved.
Weightings for each measure varied somewhat among the executives, but generally
ranged from 40% to 60% for operating income and/or EPS goals, from 20% to 40%
for revenue goals and from 20% to 25% for goals related to specific job
responsibilities. Based on whether the individual performance goals are
achieved, and on the EPS results, actual awards may vary above or below target
levels. Maximum awards are 150% of target awards.
Payouts from the EPS bonus pool are made only to the extent that EPS results
are at or above the threshold performance level. If, based on performance, the
EPS pool is funded at or above a level sufficient to pay the full awards earned
by each participant, those amounts are paid. However, if the EPS pool is not
large enough to pay all awards otherwise earned, each participant's award is
decreased on a pro rata basis. Then, the actual payouts to participants depend
jointly on each person's success in achieving their individual goals, and on the
Company's EPS results.
Target awards for 1995 for each executive officer (other than the CEO) were
set at 40% of base salary, which is essentially at the median of the market. For
1995, EPS results were at the maximum level and thus the bonus pool was funded
at the maximum level. Although individual performance among the named executive
officers (other than the CEO) varied somewhat due to differences in goals, all
officers earned total bonuses above target but below maximum.
Awards earned are paid in cash (85%) and restricted stock (15%) after
year-end. Each restricted stock award is subject to forfeiture if the
executive's employment is terminated other than by reason of death, disability
or retirement within two years of the date of grant. The restricted stock awards
were structured as an incentive to participants to maximize the long-term return
to stockholders. They also are intended to encourage retention among executives
considered key to the Company's success.
LONG-TERM INCENTIVES
In 1995, the Committee made stock option awards to all of the named
executives. In making these grants, the Committee considered competitive market
information on long-term incentive awards for comparable positions, existing
stock holdings, each executive's individual performance, and the competitiveness
of the executive's overall pay package. No specific weighting was assigned to
these factors by the Committee. Because the Committee has not established a
competitive objective for this component of pay, the number of shares granted to
each executive was discretionary.
SPECIFICS OF CEO COMPENSATION
The Committee considers essentially the same factors in determining the
CEO's base salary increase as are considered in determining increases in base
salary for other executive officers. The Committee believed that the CEO's
contribution to the Company's 1994 performance was significant based on its
review (without specific weighting) of such factors as revenue growth,
accomplishment of strategic business objectives and EPS results. Accordingly,
the Committee increased the CEO's salary
14
<PAGE>
from $500,000 for 1994 to $525,000 for 1995. His base compensation thus was set
by the Committee at a level slightly above the 50th percentile, which the
Committee considered commensurate with his performance.
The CEO's bonus for 1995 was based solely on EPS results. The CEO's bonus
target was 100% of salary in 1995, which was established to be extremely
competitive with target bonuses for others in similar positions. Earnings per
share for 1995 was at the maximum level required; thus, the CEO earned the
maximum bonus payout (150% of salary, or $787,000). Of this amount, $669,375 was
paid in cash after year-end; the balance was deferred in the form of restricted
stock.
The CEO was granted an option to buy 100,000 shares of the Company's stock.
The Committee determined the size of this grant based on a review of competitive
data and on its assessment of the CEO's performance during the year as measured
by revenue growth, accomplishment of strategic objectives and EPS results.
Because these factors were considered in general, they were not subject to any
specific weighting.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
In 1993, Section 162(m) was added to the Internal Revenue Code. This section
generally limits to $1 million the tax deduction for compensation paid to
executive officers of a publicly-held corporation who are named in the proxy
statement unless certain requirements are met. To ensure the deductibility of
amounts in connection with exercises of stock options, the Committee approved an
amendment of the HBO & Company 1990 Executive Incentive Plan that sets a maximum
number of shares issuable during any two-year period to any optionee.
To preserve tax deductions related to executive compensation, the Company
asked for, and received, stockholder approval for the amendment to the 1990 Plan
and for the terms of the Chief Executive Officer Incentive Plan which relates to
the CEO's performance-based compensation through 1999.
ALFRED C. ECKERT III
ALTON F. IRBY III
CHARLES E. THOELE
15
<PAGE>
COMPANY PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total returns
for the Company's Common Stock, the Center for Research in Security Prices
("CRSP") Total Return Index for The Nasdaq Stock Market (U.S. companies) and the
CRSP Total Return Index for the NASDAQ Computer and Data Processing Services
Stocks. Upon request, the Company will furnish stockholders a list of the
component companies of such indexes.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
HBO & COMPANY
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
PRODUCED ON 02/21/96 INCLUDING DATA TO 12/29/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HB0 & COMPANY
<S> <C> <C>
12/31/90 100
01/31/91 114.286
02/28/91 110.204
03/28/91 119.613
04/30/91 136.112
05/31/91 134.049
06/28/91 104.352
07/31/91 98.091
08/30/91 108.526
09/30/91 122.394
10/31/91 173.039
11/29/91 181.48
12/31/91 197.654
01/31/92 218.907
02/28/92 223.157
03/31/92 230.797
04/30/92 312.003
05/29/92 309.866
06/30/92 253.449
07/31/92 307.146
08/31/92 285.667
09/30/92 278.385
10/30/92 384.128
11/30/92 392.76
12/31/92 446.059
01/29/93 428.736
02/26/93 370.272
03/31/93 414.892
04/30/93 354.07
05/28/93 421.409
06/30/93 470.591
07/30/93 566.452
08/31/93 623.097
09/30/93 646.2
10/29/93 683.313
11/30/93 711.693
12/31/93 804.785
01/31/94 841.963
02/28/94 817.907
03/31/94 875.479
04/29/94 919.253
05/31/94 945.517
06/30/94 885.475
07/29/94 999.447
08/31/94 1148.487
09/30/94 1193.836
10/31/94 1141.167
11/30/94 1110.443
12/30/94 1208.354
01/31/95 1252.294
02/28/95 1353.356
03/31/95 1530.539
04/28/95 1609.705
05/31/95 1706.464
06/30/95 1919.034
07/31/95 1945.443
08/31/95 1936.64
09/29/95 2202.164
10/31/95 2492.85
11/30/95 2633.789
12/29/95 2701.303
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The Index level for all series was set to $100.0 on 12/31/90.
<CAPTION>
NASDAQ STOCK MARKET (US
COMPANIES)
<S> <C>
12/31/90 100
01/31/91 111.085
02/28/91 121.77
03/28/91 129.918
04/30/91 130.742
05/31/91 136.742
06/28/91 128.414
07/31/91 136.016
08/30/91 142.779
09/30/91 143.304
10/31/91 148.04
11/29/91 143.073
12/31/91 160.548
01/31/92 169.937
02/28/92 173.788
03/31/92 165.585
04/30/92 158.485
05/29/92 160.544
06/30/92 154.268
07/31/92 159.731
08/31/92 154.85
09/30/92 160.607
10/30/92 166.932
11/30/92 180.217
12/31/92 186.851
01/29/93 192.171
02/26/93 185.001
03/31/93 190.356
04/30/93 182.232
05/28/93 193.118
06/30/93 194.011
07/30/93 194.241
08/31/93 204.281
09/30/93 210.367
10/29/93 215.095
11/30/93 208.68
12/31/93 214.496
01/31/94 221.006
02/28/94 218.941
03/31/94 205.475
04/29/94 202.809
05/31/94 203.305
06/30/94 195.87
07/29/94 199.888
08/31/94 212.63
09/30/94 212.087
10/31/94 216.254
11/30/94 209.082
12/30/94 209.67
01/31/95 210.775
02/28/95 221.915
03/31/95 228.494
04/28/95 235.691
05/31/95 241.773
06/30/95 261.365
07/31/95 280.573
08/31/95 286.254
09/29/95 292.865
10/31/95 291.187
11/30/95 298.033
12/29/95 296.505
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The Index level for all series was set to $100.0 on 12/31/90.
<CAPTION>
NASDAQ COMPUTER AND DATA
PROCESSING STOCKS
SIC 7370-7379 US & Foreign
12/31/90 100
01/31/91 121.676
02/28/91 130.544
03/28/91 137.634
04/30/91 133.617
05/31/91 141.756
06/28/91 129.716
07/31/91 142.103
08/30/91 158.588
09/30/91 162.383
10/31/91 178.169
11/29/91 174.127
12/31/91 201.545
01/31/92 214.72
02/28/92 219.119
03/31/92 203.296
04/30/92 190.145
05/29/92 196.104
06/30/92 178.44
07/31/92 183.916
08/31/92 179.286
09/30/92 191.374
10/30/92 207.868
11/30/92 219.219
12/31/92 216.847
01/29/93 226.554
02/26/93 215.634
03/31/93 227.24
04/30/93 211.687
05/28/93 229.064
06/30/93 227.367
07/30/93 208.987
08/31/93 215.41
09/30/93 228.368
10/29/93 232.318
11/30/93 230.989
12/31/93 229.518
01/31/94 241.989
02/28/94 243.929
03/31/94 232.69
04/29/94 232.485
05/31/94 243.048
06/30/94 227.708
07/29/94 228.446
08/31/94 252.564
09/30/94 253.513
10/31/94 279.57
11/30/94 275.518
12/30/94 278.649
01/31/95 272.12
02/28/95 293.324
03/31/95 313.67
04/28/95 329.286
05/31/95 334.549
06/30/95 371.8
07/31/95 394.222
08/31/95 393.434
09/29/95 406.249
10/31/95 426.872
11/30/95 430.254
12/29/95 425.122
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The Index level for all series was set to $100.0 on 12/31/90.
</TABLE>
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and HTG Corp., a corporation owned by Holcombe T. Green, Jr.,
Chairman of the Board of the Company, each own a half interest in an airplane,
which they operate pursuant to a Co-Ownership Agreement dated as of July 15,
1993 (the "Co-Ownership Agreement"). Pursuant to the Co-Ownership Agreement,
each party paid one-half of the acquisition cost of $1.5 million as well as
one-half of the initial readiness costs, an aggregate of $217,000, (together
with the acquisition cost, the "Initial Costs"). Each party pays its own direct
operating costs for use of the airplane and during 1995 each paid one-half of
the cost of new equipment of approximately $3.9 million. For 1995, fixed costs
were allocated based on the percentage of actual use. Payments made by either
party on behalf of the other party are reimbursed based upon the percentage of
use. For the year ended December 31, 1995, the percentages of use of HTG Corp.
and the Company were deemed to have been 44% and 56%, respectively. For 1995,
total fixed and direct expenses of HTG Corp. and the Company were $435,605 and
$403,452, respectively. Pursuant to the Co-Ownership Agreement, the Company has
the right to cause HTG Corp. to purchase its interest in the airplane for the
lesser of one-half of the fair market value or the Company's portion of the
Initial Costs.
In 1995 in connection with the purchase of new equipment for the airplane
and in order to repay approximately $1.1 million in indebtedness related to the
acquisition of the airplane, the Company and HTG Corp. jointly signed a series
of notes in favor of a third-party lender to evidence borrowings of $3.0 million
secured by the airplane. HTG Corp. has agreed to pay all principal and interest
due under the notes and to indemnify the Company in connection therewith. At
December 31, 1995, approximately $3.0 million in borrowings remained
outstanding.
During 1995, St. John's Mercy Medical Center paid the Company $978,385 for
information systems and services. Mr. Thoele, a Director of the Company, is a
Consultant to St. John's parent corporation, Sisters of Mercy Health Systems.
During 1995, McLaren HealthCare Corporation paid the Company $717,114 for
information systems and services. Mr. Incarnati, a Director of the Company, is
the President and Chief Executive Officer of McLaren HealthCare Corporation.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
On February 13, 1996, the Board of Directors approved, subject to
stockholder approval, an amendment to the Certificate of Incorporation of the
Company increasing the number of authorized shares of Common Stock, par value
$.05 per share, from 60,000,000 shares to 250,000,000 shares. A copy of the
proposed amendment as adopted by the Board of Directors appears as Appendix A to
this Proxy Statement.
Of the 60,000,000 shares of Common Stock now authorized to be issued under
the Certificate of Incorporation, 40,118,601 shares were outstanding, and
4,883,499 and 716,215 shares were reserved for stock option and incentive plans
and the employee discount stock purchase plan, respectively, for a total
outstanding and reserved of 45,718,315 shares, all as of December 31, 1995.
Since December 31, 1995, the Board of Directors has authorized, subject to
stockholder approval, an increase of 1,500,000 shares in the number of shares
issuable pursuant to the HBO & Company 1990 Executive Incentive Plan. In
addition, the Board of Directors has announced its intention to declare a
two-for-one stock split to be effected in the form of a stock dividend,
contingent upon approval of the
17
<PAGE>
amendment to the Certificate of Incorporation by the stockholders. Except for
the foregoing, the Company has no present plans or commitments with respect to
the issuance of the proposed additional authorized shares of Common Stock.
However, such shares can be issued by the Board of Directors from time to time
without further stockholder action for proper corporate purposes, including
stock dividends, stock splits or acquisitions, and the Board of Directors
believes it is desirable to have such additional shares available if the need
should arise. Holders of the Company's Common Stock have no preemptive rights.
Share amounts set forth herein do not give effect to the proposed
two-for-one stock split.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for approval of the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
APPROVAL OF THE AMENDMENT OF THE HBO & COMPANY 1993 STOCK
OPTION PLAN FOR NONEMPLOYEE DIRECTORS
The Board of Directors has adopted an amendment to the HBO & Company 1993
Stock Option Plan For Nonemployee Directors (the "1993 Plan"), subject to
approval by stockholders, to provide that each Director of the Company who is
not an employee of the Company or any of its subsidiaries (a "Nonemployee
Director") and did not receive a grant on the date the 1993 Plan was adopted
shall be entitled to receive an option to purchase 12,500 shares on the date of
the first board meeting which he participates in as a Director. A copy of the
proposed amendment to the 1993 Plan is attached as Appendix B to this Proxy
Statement.
The 1993 Plan provides for automatic annual grants of stock options to
Nonemployee Directors and is intended to provide a means for the Company to
attract and retain qualified Nonemployee Directors and to encourage such persons
to become owners of Common Stock of the Company in order to increase their
interest in the Company's long-term success.
The 1993 Plan was approved by the Board of Directors on February 9, 1993,
and by the stockholders on May 11, 1993. The maximum number of shares of Common
Stock reserved and available for distribution pursuant to stock options under
the 1993 Plan is 380,000 shares, subject to adjustment as provided below. Such
shares may consist, in whole or in part, of authorized and previously unissued
shares or treasury shares. If any stock option granted under the 1993 Plan
expires or terminates without having been exercised in full, the shares
remaining subject to such option will again be available for distribution in
connection with future awards under the 1993 Plan.
In the event of (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(ii) any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation of the Company or other
distribution of assets, issuance of rights or warrants to purchase securities of
the Company, or (iii) any other corporate transaction or event having an effect
similar to any of the foregoing, then the number or kind of securities issuable
under the 1993 Plan and the number or kind of securities covered by an
18
<PAGE>
option will be adjusted appropriately; provided, however, that the option will
be subject to only such adjustment as shall be necessary to maintain the
proportionate interest of the optionee and preserve, without exceeding, the
value of the option.
In the event of dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving corporation (except for a
merger or combination with a corporation wholly owned by the Company or its
stockholders in which an adjustment to the outstanding options will be made as
provided above), each outstanding option will terminate, but the optionee will
have the right immediately prior to such dissolution, liquidation, merger or
combination to exercise his option, in whole or in part, to the extent that the
option is then presently exercisable.
On the date the 1993 Plan was approved by the stockholders of the Company,
each Nonemployee Director then serving on the Board was granted an option to
purchase up to 12,500 shares of Common Stock, subject to the surrender and
cancellation of an outstanding option agreement or agreements previously issued
to such person for an identical number of shares of Common Stock. The terms and
conditions of the agreement evidencing such option (including, without
limitation, the exercise price and provisions regarding exercisability and
termination) were identical to the terms of the agreement evidencing the
outstanding option or options surrendered by such Nonemployee Director. The
proposed amendment will not result in the issuance of options to any person who
received an option in accordance with the foregoing provisions.
Pursuant to the 1993 Plan, on the date of each annual meeting of the
stockholders of the Company at which Directors are elected, each Nonemployee
Director elected or reelected to the Board at the meeting will be granted an
option to purchase 5,000 shares of Common Stock. Each grant is evidenced by a
stock option agreement having terms specified in the 1993 Plan. Each option will
become exercisable upon the expiration of a period of six months from the date
of grant. The exercise price of the option will be the fair market value of the
Common Stock on the date the option is granted, payable in cash or by transfer
to the Company of shares of nonforfeitable, unrestricted Common Stock having a
fair market value at the time of exercise equal to the option price, or a
combination of cash and Common Stock.
Each such option will terminate on the earliest of the following dates: (i)
three months after the date on which the optionee ceases to be a Director of the
Company (during which period the option shall be exercisable only to the extent
exercisable on the date of termination of such status), unless he or she ceases
to be a Director of the Company by reason of death; (ii) one year after the
death of the optionee if the optionee dies while a Director of the Company; or
(iii) ten years from the date on which the option was granted.
The 1993 Plan is administered by the Board of Directors, provided that the
Board may not vary the timing or amount of options granted under the 1993 Plan,
or the terms of the options, except by amendment to the 1993 Plan.
The Board may suspend or terminate the 1993 Plan at any time and may amend
the 1993 Plan from time to time in any respect the Board may deem to be in the
best interest of the Company; provided however, that to the extent required
pursuant to Rule 16b-3 under the Securities Exchange Act of 1934, no such
amendment will be effective without approval of the stockholders of the Company,
if such amendment would: (a) materially increase the total number of shares of
Common Stock that may be issued pursuant to the 1993 Plan except as contemplated
above; (b) materially increase the
19
<PAGE>
benefits accruing to participants in the 1993 Plan; or (c) materially modify the
requirements as to eligibility for participation in the 1993 Plan. In addition,
to the extent prohibited by Rule 16b-3, the 1993 Plan may not be amended more
than once every six months.
No option may be granted pursuant to the 1993 Plan on or after the tenth
anniversary of the effective date of the 1993 Plan, but options granted prior to
such tenth anniversary may extend beyond that date.
Generally, a Nonemployee Director will not realize income upon the grant of
an option. Upon exercise of an option, the optionee generally will recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the Common Stock received upon exercise. Upon the
sale or disposition of the Common Stock, the optionee generally will recognize
capital gain or loss in the amount of the difference between the fair market
value of the Common Stock on the date of exercise and the value received. The
Company generally will be entitled to a tax deduction corresponding in an amount
and time to the optionee's recognition of ordinary income as described above.
If the amendment to the 1993 Plan is approved, the number of shares subject
to options that would have been granted to all current Directors who are not
executive officers (the only persons eligible to receive options under the 1993
Plan) is shown in the following table:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1993 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
--------------------------------
NAME AND POSITION DOLLAR VALUE($) NUMBER OF UNITS
- - ------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Nonemployee Director Group (8 persons)............................. (1) (2)
</TABLE>
- - ------------------------
(1) With respect to annual grant of options to each Nonemployee Director to
purchase 5,000 shares, such options are exercisable at fair market value on
the date of grant and do not have a readily ascertainable value. In
addition, each Director who was not a Director on the date of adoption of
the 1993 Plan will receive an option for 12,500 shares.
(2) With respect to each Nonemployee Director, includes annual grant of options
to purchase 5,000 shares and with respect to each Director who was not a
Director on the date of the adoption of the 1993 Plan, includes grant of an
option for 12,500 shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THE AMENDMENT OF THE HBO & COMPANY
1993 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
APPROVAL OF THE AMENDMENT OF THE
HBO & COMPANY 1990 EXECUTIVE INCENTIVE PLAN
The Board of Directors has adopted an amendment to the HBO & Company 1990
Executive Incentive Plan (the "1990 Plan"), subject to approval by the
stockholders, to increase by 1,500,000 the number of shares of Common Stock that
may be issued under the 1990 Plan. The Board recommends
20
<PAGE>
this increase inasmuch as no shares remain available for options or other awards
under the 1990 Plan and awards with respect to 321,101 shares have been granted
contingent upon the approval of the proposed amendment.
The 1990 Plan is intended to encourage key executives and managerial
employees of the Company and its subsidiaries or affiliates to become owners of
stock of the Company in order to increase their interest in the Company's
long-term success, to provide incentive equity opportunities that are
competitive with other similarly situated corporations and to stimulate the
efforts of employees by giving suitable recognition for the services that
contribute materially to the Company's success. From and after the effective
date of the 1990 Plan, no stock options have been granted under the HBO &
Company 1986 Employee Nonqualified Stock Option Plan, the HBO & Company
Nonqualified Stock Option Plan and the 1981 HBO & Company Incentive Stock Option
Plan (the "Superseded Plans"). All outstanding stock options previously granted
under any of the Superseded Plans have remained or will become exercisable in
accordance with the terms thereof.
The 1990 Plan was initially adopted by the Board of Directors on February
19, 1990, and approved by the stockholders on May 15, 1990. Prior to the
adoption of the amendment, the total number of shares available for distribution
pursuant to stock options or other awards under the 1990 Plan is equal to
6,000,000, including 4,321,274 originally issuable under the Superseded Plans.
Pursuant to the proposed amendment to the 1990 Plan, an additional 1,500,000 new
shares will be available for issuance, so that the maximum number of shares
available for issuance under the 1990 Plan will increase to 7,500,000. The Plan
provides that no more than an aggregate of 500,000 shares may be issued to any
employee in a two-year period. As of March 29, 1996, the closing price of the
Common Stock was $94.25 per share.
The 1990 Plan is administered by the Stock Option and Compensation Committee
of the Board of Directors (the "Committee"). Officers and other key employees of
the Company, its subsidiaries and affiliates (but excluding members of the
Committee and any person who serves solely as a Director) who are responsible
for or contribute to the management, growth and/or profitability of the business
of the Company, its subsidiaries and affiliates, are eligible to participate.
Stock options, stock appreciation rights, restricted stock, deferred stock
and performance units may be granted under the 1990 Plan at the discretion of
the Committee.
Options granted may be either incentive stock options or nonqualified stock
options, provided that incentive stock options may not be granted to employees
of affiliates. Stock appreciation rights may be granted in conjunction with
options and, if in conjunction with a nonqualified stock option, may be granted
at the time of such option grant or thereafter. In the case of an incentive
stock option, the stock appreciation right may be granted only at the time of
the grant of such stock option. Upon the exercise of a stock appreciation right,
an optionee is entitled to receive an amount in cash and/ or shares of stock in
the aggregate equal to the excess of the fair market value at the time of
exercise of one share of stock over the option price per share specified in the
related stock option multiplied by the number of shares exercised pursuant to
the stock appreciation right, with the Committee having the right to determine
the form of payment. The Committee has discretion to fix the exercise price for
stock options, which, in the case of incentive stock options, shall be not less
than fair market value at the time of grant thereof. The Committee fixes the
terms of the stock options and stock appreciation rights, but under no
circumstances will an incentive stock option or a stock appreciation right have
a
21
<PAGE>
term exceeding ten years from date of grant. Stock appreciation rights will not
be exercisable during the first six months of their respective terms by any
optionee except in the event of death or disability of the optionee prior to the
expiration of the six-month period.
The Committee has the discretion to determine when an option will become
exercisable. The option exercise price may be satisfied in cash, or, in the
discretion of the Committee, acting at or after grant, by delivering
unrestricted shares already owned by the optionee, or, in the case of the
exercise of a nonqualified stock option, by delivery of restricted stock or
deferred stock; provided, however, that in the case of an incentive stock
option, the right to make a payment in the form of already owned shares may be
authorized only at the time the option is granted.
Upon receipt of written notice of exercise, the Committee also has the
discretion to cash-out all or part of the portion of the stock options to be
exercised by paying the optionee an amount, in cash or stock, equal to the
excess of the fair market value of the shares subject to the options over the
option price on the effective date of such cash-out, provided that the
optionee's option agreement so provides.
If an optionee's employment with the Company or any subsidiary or affiliate
is terminated by reason of disability or retirement, any stock option (to the
extent exercisable at the date of termination of employment) held by such
optionee may be exercised by the optionee for a period of three years (or such
shorter period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the option, whichever
period is shorter. If an optionee's employment with the Company or any
subsidiary or affiliate is terminated by reason of death, any stock option (to
the extent exercisable at the date of termination of employment) held by such
optionee may be exercised by the legal representative of the estate or by the
optionee's legatee for a period of one year (or such other period up to three
years as the Committee may specify at or after grant) from the date of death or
until the expiration of such stock option, whichever period is shorter. Unless
otherwise determined by the Committee, if an optionee's employment with the
Company or any subsidiary or affiliate is terminated for any reason other than
death, disability or retirement, such optionee's option will terminate
immediately.
An optionee generally does not recognize income as a result of the grant of
a nonqualified or incentive stock option. Upon the exercise of a nonqualified
stock option, the optionee generally will recognize ordinary income in the
amount of the "spread" between the exercise price and the fair market value of
the stock received upon exercise. When the shares are disposed of, the optionee
generally will recognize capital gain (or loss) in an amount equal to the
difference between the fair market value at the time of exercise and the net
proceeds from the sale.
Generally, an optionee does not recognize income upon the exercise of an
incentive stock option if he satisfies certain employment and holding period
requirements. To satisfy the employment requirement, an optionee must exercise
the option not later than three months after he ceases to be an employee of the
Company (one year if he is disabled) unless he has died. To satisfy the holding
period requirement, the optionee must hold the option stock for more than two
years from the date of grant of the option and more than one year from the
exercise. If these requirements are met, the optionee will recognize capital
gain (or loss) measured by the difference between the exercise price and the net
proceeds of the sale, at the time of disposition. If the stock is sold prior to
satisfaction of the holding period (a "disqualifying disposition"), the optionee
generally will recognize ordinary income
22
<PAGE>
at the time of disposition equal to the difference between the fair market value
of the option stock on the date of exercise (or the sale price, if less) and the
exercise price, and the balance of the optionee's gain will be treated as
capital gain.
The Company generally will be entitled to a tax deduction corresponding in
amount and time to the optionee's recognition of ordinary income in the
circumstances described above.
Awards of restricted stock may be made at the discretion of the Committee
and will consist of shares subject to forfeiture and restrictions on transfer.
The participant must accept an award of restricted stock within up to 60 days
after the award date by executing and delivering to the Company a restricted
stock award agreement and paying the purchase price (if any) for such stock as
determined by the Committee. The recipient of restricted stock will have all of
the rights of a stockholder of the Company, including the right to vote the
shares and the right to receive any dividends, subject to the restrictions set
forth in the 1990 Plan and the instrument evidencing such award. The Committee
may require that the stock certificates evidencing such shares be held in
custody by the Company during the restricted period. During a period set by the
Committee beginning with the date of the award, the recipient may not sell,
transfer, pledge, assign or otherwise encumber shares of restricted stock until
the restricted period has passed. Based on service, performance and/or such
other factors or criteria as the Committee may determine, the Committee may at
or after grant provide for the lapse of such restrictions in installments and/or
may accelerate or waive such restrictions in whole or in part. The Committee has
authority to determine the duration of the restricted period and the conditions
under which restricted stock may be forfeited, as well as the other terms and
conditions of such awards.
Awards of deferred stock under the 1990 Plan may be made at the discretion
of the Committee and will consist of shares, subject to forfeiture and
restrictions on transfer, which will be delivered at the end of the specified
deferral period. Deferred stock may not be sold, transferred, pledged, assigned
or otherwise encumbered until the deferral period has lapsed. Based on service,
performance and/or such other criteria as it may determine, the Committee may,
at or after grant, accelerate the vesting of all or any part of any deferred
stock award and/or waive the deferral limitations for all or any part of such
award. The Committee has authority to determine the duration of the deferral
period and the conditions under which deferred stock may be forfeited, as well
as the other terms and conditions of such awards. Unless otherwise determined by
the Committee, amounts equal to any dividends that would have been payable
during the deferral period with respect to the deferred stock shall be
reinvested in additional deferred stock. Subject to approval by the Committee, a
participant may elect to further defer receipt of deferred stock for a specified
period or until a specified event.
The Committee may grant performance units, which are contingent rights to
receive future payments based upon the achievement of specified management
objectives (for the Company or an operating division, department, function or
subsidiary) established by the Committee. Each grant will specify the number of
performance units and the initial value, if any, of the performance units to
which it pertains. The amount paid will be based upon the extent to which the
management objectives are achieved over a performance period (which may not be
less than one year) established by the Committee. Each grant will specify a
minimum acceptable level of achievement in respect of the specified management
objectives below which no payment will be made and shall set forth a formula for
determining the amount of payment to be made if performance is equal to or
greater than such minimum but less than the full achievement of the management
objectives. Payments may be made in
23
<PAGE>
cash or shares of stock, at the discretion of the Committee. The Committee may
adjust management objectives and the related minimum acceptable level of
achievement if, in the sole judgment of the Committee, events or transactions
have occurred after the date such performance units become effective that are
unrelated to the performance of the participant and result in distortion of the
management objectives or the related minimum acceptable achievement level.
The 1990 Plan may be amended, altered or discontinued at any time by the
Board of Directors without the optionees' or participants' consent, unless it
would impair their rights with respect to an outstanding award under the 1990
Plan. Stockholder approval is required for any increase in the total number of
shares reserved for the 1990 Plan, any change in class of eligible employees,
any extension of the maximum option period, or for any amendment or alteration
which would cause Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, to become inapplicable to the 1990 Plan. The Board of Directors may
amend the 1990 Plan to take into account changes in tax, securities law and
accounting rules, subject to the above provisions.
In the event of a change in corporate structure affecting the Common Stock
of the Company, the Board has discretion to make adjustments in the aggregate
number or kind of shares that are reserved for issuance under the 1990 Plan and
for shares subject to other outstanding awards granted under the 1990 Plan. In
such event, the Committee also has the discretion to make adjustments to the
option price of shares subject to outstanding options.
The Committee has discretion as to the specific terms and conditions of each
award and any rules applicable thereto. The awards authorized under the 1990
Plan are subject to applicable tax withholding requirements and may not be
assigned or transferred except by will or the laws of descent and distribution.
No award may be granted under the 1990 Plan after the tenth anniversary of
the effective date of the 1990 Plan, but awards granted prior to such tenth
anniversary may extend beyond that date.
Because the timing and amount of awards under the Plan are determined by the
Committee in its discretion, the benefits or amounts that will be received by
any person as a result of the amendment, other than contingent awards previously
granted, cannot be determined. Approximately 220 key employees of the Company
are eligible to receive awards under the 1990 Plan. Assuming approval of
24
<PAGE>
the amendment, the number of shares presently subject to awards issuable to the
persons indicated is set forth below:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
DOLLAR
NAME AND POSITION* VALUE ($)(1) NUMBER OF UNITS (2)
- - -------------------------------------------------------------- ----------------- -------------------
<S> <C> <C>
Charles W. McCall............................................. 1,338
Jay P. Gilbertson............................................. 171
James A. Gilbert.............................................. 160
Albert J. Bergonzi............................................ 163
Russell G. Overton............................................ 7,630(3)
ADDITIONAL PERSONS WHO SERVED AS EXECUTIVE OFFICERS THROUGH MAY, 1995
Glenn N. Rosenkoetter......................................... 20,165(4)
David A. Schenk............................................... 124
Executive Group............................................... 29,751(5)
Non-Executive Director Group.................................. -0-
Non-Executive Officer Employee Group.......................... 291,350(6)
</TABLE>
- - ------------------------
* See Summary Compensation Table
(1) Shares subject to awards were granted at the fair market value of $88.25 on
the date of grant and do not have a readily ascertainable value.
(2) Represents number of restricted shares awarded under the 1990 Plan pursuant
to the MIP for 1995 unless otherwise indicated.
(3) Represents 7,500 shares subject to options and 130 shares of restricted
stock.
(4) Represents 20,000 shares subject to options and 165 shares of restricted
stock.
(5) Includes 27,500 shares subject to options and 2,251 shares of restricted
stock.
(6) Includes 286,500 shares subject to options and 4,850 shares of restricted
stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
AMENDMENT OF THE HBO & COMPANY 1990 EXECUTIVE INCENTIVE PLAN
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP as independent public accountants for the Company
for the year ending December 31, 1996. The Board of Directors recommends that
such appointment be ratified.
Representatives of Arthur Andersen LLP will be present at the meeting and
shall have the opportunity to make a statement, if they desire to do so, and
respond to appropriate questions.
25
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those stated above
that are to be brought before the meeting. However, if any such other matters
should be presented for consideration and voting, it is the intention of the
persons named in the proxy to vote thereon in accordance with their judgment.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the 1997 Annual
Meeting must be forwarded in writing and received at the principal executive
office of the Company no later than December 5, 1996, directed to the attention
of the Secretary, for consideration for inclusion in the Company's proxy
statement for the Annual Meeting of Stockholders to be held in 1997. Any such
proposals must comply in all respects with the rules and regulations of the
Securities and Exchange Commission.
James A. Gilbert
SECRETARY
April 3, 1996
26
<PAGE>
APPENDIX A
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE
NUMBER OF SHARES OF AUTHORIZED COMMON STOCK
Set forth below is the text of the proposed amendment of the first paragraph
of Article 4 of the Certificate of Incorporation:
"4. The total number of shares of stock which the Company shall have
authority to issue is two hundred fifty one million (251,000,000), two
hundred fifty million (250,000,000) of which shall be common stock with a
par value of five cents ($.05) per share, amounting in the aggregate to
twelve million five hundred thousand dollars ($12,500,000), and one million
(1,000,000) of which shall be preferred stock without par value."
Set forth below is the text of the existing paragraph of Article 4 of the
Certificate of Incorporation, which would be stricken in its entirety and
replaced by the proposed amendment set forth above:
"4. The total number of shares of stock which the Company shall have
authority to issue is sixty-one million (61,000,000), sixty million
(60,000,000) of which shall be common stock with a par value of five cents
($.05) per share, amounting in the aggregate to three million dollars
($3,000,000), and one million (1,000,000) of which shall be preferred stock
without par value."
A-1
<PAGE>
APPENDIX B
PROPOSED AMENDMENT OF THE HBO & COMPANY 1993 STOCK
OPTION PLAN FOR NONEMPLOYEE DIRECTORS
Set forth below is the text of new Section 5(c) of the HBO & Company 1993
Stock Option Plan For Nonemployee Directors:
"(c) Initial Grants. Each Nonemployee Director other than those who received
a grant under Section 5(a), shall be granted an option to purchase 12,500
shares of Stock on the date of the first Board meeting which he participates
in as a Director, which option shall be, in the case of any Nonemployee
Director first elected at an annual meeting of stockholders, in addition to
the grant of any option provided for in Section 5(b)."
Set forth below is the text of the first sentence of Section 6 of the HBO &
Company 1993 Stock Option Plan For Nonemployee Directors as proposed to be
amended in its entirety:
"Each grant under Sections 5(b) and 5(c) above shall be evidenced by a Stock
Option Agreement in substantially the form of Exhibit A hereto."
B-1
<PAGE>
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF HBO & COMPANY FOR THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD MAY 14, 1996
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
1. To elect nine Directors.
FOR all nominees listed below WITHHOLD AUTHORITY to vote for
(except as instructed below) / / all nominees listed below / /
Alfred C. Eckert III, Holcombe T. Green, Jr., Philip A. Incarnati, Alton F.
Irby III, Gerald E. Mayo, Charles W. McCall, James V. Napier, Charles E.
Thoele, Donald C. Wegmiller.
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name here:
- - ------------------------------------------------------------------------------
2. To approve the Amendment of the Certificate of Incorporation to increase
authorized shares from 60,000,000 to 250,000,000.
FOR / / AGAINST / / ABSTAIN / /
3. To approve the Amendment to the HBO & Company 1993 Stock Option Plan for
Nonemployee Directors to provide an initial grant of options to purchase
12,500 shares to newly-elected Directors.
FOR / / AGAINST / / ABSTAIN / /
4. To approve the Amendment to the HBO & Company 1990 Executive Officer
Incentive Plan to increase the number of shares by an additional
1,500,000 shares.
FOR / / AGAINST / / ABSTAIN / /
5. To ratify appointment of Arthur Andersen LLP, as independent public
accountants.
FOR / / AGAINST / / ABSTAIN / /
The shares represented by this proxy card will be voted as directed above. IF
NO DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE SHARES WILL
BE VOTED FOR ALL LISTED PROPOSALS. In their discretion, the proxy holders are
authorized to vote upon such other business as may properly come before the
meeting.
<PAGE>
The undersigned hereby appoints Holcombe T. Green, Jr. and James A. Gilbert,
or either of them, with full power of substitution as proxy holders to
represent and to vote as designated on the reverse hereof, the Common Stock
of the undersigned at the Annual Meeting of Stockholders of the Company to be
held on May 14, 1996, or any postponement of adjournment thereof.
_____________________________________
Signature of Stockholder
_____________________________________
Signature of Stockholder
Dated _________________________, 1996
IMPORTANT: Sign exactly as your name
appears at left. Give full title of
executor, administrator, trustee,
guardian, etc. Joint owners should
each sign personally.
