<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
BancTec, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BancTec, Inc.
- --------------------------------------------------------------------------------
(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)(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:
[_] 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:
Notes:
<PAGE>
[LOGO OF BANCTEC APPEARS HERE]
4851 LBJ FREEWAY, SUITE 1100
DALLAS, TEXAS 75244
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
Notice is hereby given that the Annual Meeting of Stockholders of BancTec,
Inc., a Delaware corporation (the "Company"), will be held at Texas Commerce
Bank Tower, Fourth Floor Boardroom, 2200 Ross Avenue, Dallas, Texas on May 21,
1998, at 10:00 a.m., Dallas, Texas time for the following purposes:
(i) To elect one director;
(ii) To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
The accompanying Proxy Statement contains information regarding, and a more
complete description of, the items of business to be considered at the
meeting.
Only stockholders of record at the close of business on April 6, 1998, are
entitled to notice of, and to vote at, the Annual Meeting of Stockholders or
any adjournment(s) thereof.
You are cordially invited and urged to attend the meeting, but if you are
unable to attend, you are requested to sign and date the accompanying proxy
and return it promptly in the enclosed self-addressed envelope. If you attend
the meeting, you may vote in person, if you wish, whether or not you have
returned your proxy. In any event, a proxy may be revoked at any time before
it is exercised.
By Order of the Board of Directors
Tod V. Mongan
Secretary
Dallas, Texas
April 13, 1998
<PAGE>
[LOGO OF BANCTEC APPEARS HERE]
4851 LBJ FREEWAY, SUITE 1100
DALLAS, TEXAS 75244
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
This Proxy Statement is sent to stockholders of BancTec, Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company (the "Board") for use at the Annual
Meeting of Stockholders of the Company, and any adjournment(s) thereof (the
"Meeting"), to be held on May 21, 1998, at 10:00 a.m., Dallas, Texas time at
Texas Commerce Bank Tower, Fourth Floor Boardroom, 2200 Ross Avenue, Dallas,
Texas for the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. Solicitation of proxies may be made in person or by mail,
telephone, or telegraph by directors, officers, and regular employees of the
Company. The Company has also retained D.F. King & Company, Inc. to solicit
stockholders in connection with the matters to be presented at the Meeting for
a fee not to exceed $4,500 plus reimbursement of certain expenses. The Company
may also request banking institutions, brokerage firms, custodians, nominees,
and fiduciaries to forward solicitation materials to the beneficial owners of
Common Stock of the Company held of record by such persons, and the Company
will reimburse the forwarding expenses. The cost of solicitation of proxies
will be paid by the Company. This Proxy Statement was first mailed to
stockholders on or about April 13, 1998.
The Company's Annual Report on Form 10-K covering the twelve month period
from January 1, 1997 through December 31, 1997 ("1997"), including audited
financial statements, is enclosed herewith. Such Annual Report on Form 10-K
does not form any part of the material for the solicitation of proxies.
Any stockholder returning the accompanying proxy may revoke such proxy at
any time prior to its exercise: (i) by giving written notice to the Company of
such revocation; (ii) by voting in person at the Meeting; or (iii) by
executing and delivering to the Company a later dated proxy.
The voting securities of the Company are shares of its Common Stock, $.01
par value ("Common Stock"), each share of which entitles the holder thereof to
one vote. On April 6, 1998, there were outstanding and entitled to vote
21,634,438 shares of Common Stock. Only stockholders of record at the close of
business on April 6, 1998, are entitled to notice of, and to vote at, the
Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute
a quorum at the Meeting. If a quorum is not present or represented at the
Meeting, the stockholders entitled to vote thereat, present in person or
represented by proxy, have the power to adjourn the Meeting from time to time,
without notice other than an announcement at the Meeting, until a quorum is
present or represented. At any such adjourned Meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the original Meeting. Abstentions
1
<PAGE>
and broker non-votes are each included in the determination of the number of
shares present for purposes of a quorum, but will not be counted as votes in
favor of a proposal.
Cumulative voting is not permitted in the election of directors of the
Company. On all matters (including election of directors) submitted to a vote
of the stockholders at the Meeting, each stockholder will be entitled to one
vote for each share of Common Stock owned of record by such stockholder at the
close of business on April 6, 1998.
Proxies in the accompanying form, if properly executed and returned, will be
voted at the Meeting in accordance with the instructions thereon. Any proxy
upon which no instructions have been indicated with respect to any of the
following matters will be voted as follows: (i) "FOR" the election of the one
person named in this Proxy Statement as the Board's nominee for election to
the Board; and (ii) in accordance with the discretion of the holders of such
proxies with respect to any other business that properly comes before the
stockholders at the Meeting. The Board knows of no matters, other than those
stated above, to be presented for consideration at the Meeting. If, however,
other matters properly come before the Meeting, it is the intention of the
persons named in the accompanying proxy to vote such proxy in accordance with
their judgment on any such matters. The persons named in the accompanying
proxy may also, if it is deemed to be advisable, vote such proxy to adjourn
the Meeting from time to time.
ELECTION OF DIRECTORS
The directors of the Company have been divided into three classes. The
members of each class serve for three years. Pursuant to the Company's bylaws,
the Board has fixed the number of directors at nine. Three of the nine
directors' terms expire this year. The term of office for each director shall
be until the year following each nominee's name below or until a successor is
elected and qualified. Directors are elected by a plurality of the votes of
shares of Common Stock present in person or by proxy and entitled to vote at
the Meeting.
In 1997, the Board established a Nominating Committee (herein so called),
which is composed of Paul J. Ferri, Rawles Fulgham, and Michael A. Stone. The
Nominating Committee was established to ensure that the Company will continue
to benefit from a broad base of industry and business leadership and to
address the replacement of retiring directors. The Nominating Committee has
developed qualifications for independent board members and is engaged in
identifying prospective candidates. The Nominating Committee expects to fill
at least one vacancy in 1998. The Nominating Committee held two meetings in
1997.
The Board recommends a vote FOR the election of the following nominee to be
elected for a term expiring in 2001:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ------------------------------
<S> <C> <C>
Rawles Fulgham............................ 70 Director
</TABLE>
The following directors are presently serving unexpired terms, ending the
year following such director's name:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ------------------------------
<S> <C> <C>
Grahame N. Clark, Jr. (1999).............. 55 Chairman, President and Chief
Executive Officer and Director
Michael E. Faherty (2000)................. 63 Director
Paul J. Ferri (2000)...................... 59 Director
A.A. Meitz (1999)......................... 60 Director
Michael A. Stone (1999)................... 61 Director
</TABLE>
Mr. Clark has been a director of the Company since September 1985. Mr. Clark
has been Chairman and Chief Executive Officer of the Company since April 1987
and President since September 1995. Mr. Clark also serves as a director of The
Dyson-Kissner-Moran Corporation (a private investment company).
2
<PAGE>
Mr. Faherty has been a director of the Company since September 1984. Since
1977, Mr. Faherty has been president of MICO, Inc., a family-owned consulting
and contract executive business. As part of the contract executive business,
Mr. Faherty from time to time serves as a corporate officer of companies.
Currently, he is serving as chairman of eccs inc. (a manufacturer of mass
storage subsystems and an integrator of systems utilizing such subsystems).
Mr. Faherty also serves as a director of eccs inc. and of Frontier Corporation
(a provider of telecommunication services).
Mr. Ferri has been a director of the Company since September 1978. Mr. Ferri
has been managing general partner in Matrix Partners I, II, III, and IV, L.P.
(venture capital investment partnerships) since January 1982, August 1985,
March 1990, and January 1995, respectively. In addition, Mr. Ferri is a
director of Applix, Inc. (real time decision support software), Stratus
Computer, Inc. (fault tolerant computer systems), Techforce Corp. (integrated
network support solutions), and VideoServer Inc. (video teleconferencing).
Mr. Fulgham has been a director of the Company since June 1982. Since
September 1989, Mr. Fulgham has served as senior advisor of Merrill Lynch &
Co., Inc. From August 1982 to September 1989, Mr. Fulgham was executive
director of Merrill Lynch Private Capital Inc. In addition, Mr. Fulgham
presently serves on the Advisory and Audit Committee of Dorchester Hugoton,
Ltd. (engaged in development, production and processing of natural gas) and as
a director of Dresser Industries, Inc. (a supplier to energy-related
companies), NCH Corporation (a manufacturer of products used in maintenance
applications), and Global Industrial Technologies, Inc. (a provider of
products for industrial production and infrastructure development).
Mr. Meitz was formerly with the firm of Booz-Allen & Hamilton, Inc. (an
international management and technology consulting firm) for more than 25
years and was a Senior Vice President until he elected retirement in August
1994. Mr. Meitz also served as a member of the Booz-Allen Board of Directors
and Chairman of its Audit Committee. The majority of his work has focused on
issues of business strategy, marketing and organization design. In addition,
Mr. Meitz served as a director of Recognition International Inc. until October
1995. Presently, Mr. Meitz serves as a director of Associated Materials
Incorporated (a building products company), Northern Trust Bank of Texas (a
subsidiary of Northern Trust Bank of Illinois), and Greyhound Lines Inc. (a
transportation company).
Mr. Stone has been a director of the Company since January 1979. Since March
1985, Mr. Stone has been general partner of Davis Venture Group, L.P., the
general partner of Davis Venture Partners, L.P. (a venture capital
partnership).
Should any nominee named herein for the office of director become unable or
unwilling to accept nomination or election, it is intended that the persons
acting under the proxy will vote for the election, in his stead, of such other
person as the Board may recommend. The Board has no reason to believe that any
nominee named above will be unable or unwilling to serve if elected.
MEETINGS AND COMMITTEES OF THE BOARD
The Board held six meetings in 1997, and each director attended at least 75%
of the aggregate of (i) the total number of meetings of the Board held during
the period for which he served as a director and (ii) the total number of
meetings held by all committees of the Board on which he served.
The Board has an Option Committee (herein so called), which is composed of
Michael E. Faherty, Paul J. Ferri, Rawles Fulgham, A.A. Meitz and Michael A.
Stone. The Option Committee administers the 1989 Plan and the 1994 Plan. The
Option Committee held five meetings during 1997.
The Board has a Compensation Committee (herein so called), which is composed
of Michael E. Faherty, Paul J. Ferri, Rawles Fulgham, A.A. Meitz, and Michael
A. Stone. The Compensation Committee reviews and makes recommendations
regarding compensation and other employment benefits of officers and employees
of the Company. The Compensation Committee held three meetings during 1997.
3
<PAGE>
The Board has an Audit Committee (herein so called), which is composed of
Michael E. Faherty, Paul J. Ferri, Rawles Fulgham, A.A. Meitz, and Michael A.
Stone. The Audit Committee reviews the Company's financial results, recommends
the appointment of the Company's outside auditors, reviews the scope and
results of audits, and reviews internal accounting controls. The Audit
Committee held two meetings during 1997.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
earned during 1997, the fiscal year ended December 31, 1996 ("1996"), and the
nine-month period ended December 31, 1995 ("1995A"), by the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers (based upon salary and bonus earned during 1997). All
information relating to shares of Common Stock and options to purchase Common
Stock contained herein has been adjusted to reflect the three-for-two stock
split of Common Stock effected in February 1993.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------- ------------------------------
RESTRICTED
NAME AND PRINCIPAL FISCAL SALARY BONUS LONG TERM STOCK OPTIONS
POSITION(S) YEAR ($) ($)(1) BONUS(2) AWARD(S)($) (#)(3)
------------------ ------ ------- ------- --------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Grahame N. Clark, Jr. ... 1997 281,390 310,675 164,475 51,000(4) 100,000
Chairman, President and
Chief 1996 280,919 289,000 153,000 210,902 100,000
Executive Officer 1995A 198,835 165,106 0 0 81,000
Raghavan Rajaji.......... 1997 200,278 148,750 43,750 25,500(5) 50,000
Senior Vice President,
Treasurer and 1996 201,653 144,500 42,500 6,817 57,500
Chief Financial Officer 1995A 46,923 38,709 0 0 70,000
John G. Guthrie.......... 1997 176,307 110,633 58,570 20,995(6) 10,000
Senior Vice President 1996 176,653 119,000 63,000 13,583 50,000
1995A 123,249 76,978 0 0 5,500
Tod V. Mongan............ 1997 140,707 122,719 50,531 21,037(7) 40,000
Senior Vice President,
Secretary and 1996 140,772 119,212 49,088 242,678 62,500
General Counsel 1995A 95,996 59,735 0 97,219 33,500
James E. Uren............ 1997 136,307 118,405 62,685 23,630(8) 10,000
Senior Vice President 1996 136,226 133,875 70,875 57,908 62,500
1995A 84,846 61,622 0 26,899 43,500
</TABLE>
- --------
(1) Reflects bonus earned during the fiscal year. In some instances, all or a
portion of the bonus was paid during the next fiscal year.
(2) Bonus vests ratably over a period of three years and is not available to
the individual until the later of retirement from the Company or
attainment of the age of 62.
(3) Options to acquire shares of Common Stock.
(4) On December 31, 1997, Mr. Clark held 32,758 shares of restricted Common
Stock granted under the 1989 Plan with a value of $878,242 based upon the
last sales price of Common Stock reported on the NYSE on December 31,
1997, the last trading day of 1997. Of these 32,758 shares of restricted
stock, 18,148 shares vest, in whole or in part, within three years of this
date and the remaining shares of restricted stock will vest beyond three
years from this date. Of such 18,148 shares, 6,240 will vest on or before
January 1, 1999, 6,240 will vest on or before January 1, 2000, and 5,668
will vest on or before January 1, 2001. Dividends, if any, paid in respect
of Common Stock will be paid in respect of Common Stock held as restricted
stock.
4
<PAGE>
(5) On December 31, 1997, Mr. Rajaji held 1,468 shares of restricted Common
Stock granted under the 1989 Plan with a value of $39,357 based upon the
last sales price of Common Stock reported on the NYSE December 31, 1997,
the last trading day of 1997. Of these 1,468 shares of restricted stock,
534 will vest on or before January 1, 1999, 534 shares will vest on or
before January 1, 2000, and 400 shares will vest on or before January 1,
2001. Dividends, if any, paid in respect of Common Stock will be paid in
respect of Common Stock held as restricted stock.
(6) On December 31, 1997, Mr. Guthrie held 1,521 shares of restricted Common
Stock granted under the 1989 Plan with a value of $40,778 based upon the
last sales price of Common Stock reported on the NYSE on December 31,
1997, the last trading day of 1997. Of these 1,521 shares of restricted
stock, 596 will vest on or before January 1, 1999, 596 will vest on or
before January 1, 2000, and 329 will vest on or before January 1, 2001.
Dividends, if any, paid in respect of Common Stock will be paid in respect
of Common Stock held as restricted stock.
(7) On December 31, 1997, Mr. Mongan held 26,226 shares of restricted Common
Stock granted under the 1989 Plan with a value of $703,119 based upon the
last sales price of Common Stock reported on the NYSE on December 31,
1997, the last trading day of 1997. Of these 26,226 shares of restricted
stock, 6,721 shares vest, in whole or in part, within three years of this
date and the remaining shares of restricted stock will vest beyond three
years from this date. Of such 6,721 shares, 2,309 will vest on or before
January 1, 1999, 2,309 will vest on or before January 1, 2000, and 2,103
will vest on or before January 1, 2001. Dividends, if any, paid in respect
of Common Stock will be paid in respect of Common Stock held as restricted
stock.
(8) On December 31, 1997, Mr. Uren held 2,810 shares of restricted Common
Stock granted under the 1989 Plan with a value of $75,336 based upon the
last sales price of Common Stock reported on the NYSE on December 31,
1997, the last trading day of 1997. Of these 2,810 shares of restricted
stock, 1,856 will vest on or before January 1, 1999, 584 will vest on or
before January 1, 2000, and 370 will vest on or before January 1, 2001.
Dividends, if any, paid in respect of Common Stock will be paid in respect
of Common Stock held as restricted stock.
OPTION GRANTS IN 1997
The following table sets forth information related to options granted to the
named executive officers during 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- --------------------------------------------------------------------------------- -----------------
PERCENT OF TOTAL
OPTIONS OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE
NAME (#)(2) FISCAL YEAR (%) ($/SH)(3) EXPIRATION DATE 5%($) 10%($)
---- ------- ------------------ ----------- ----------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Grahame N. Clark, Jr. .. 100,000 12.734 25.19 December 11, 2003 856,700 1,943,562
Raghavan Rajaji......... 40,000 5.0963 25.19 December 11, 2003 342,680 777,424
John G. Guthrie......... 10,000 1.2734 25.19 December 11, 2003 85,670 194,356
Tod V. Mongan........... 40,000 5.0963 25.19 December 11, 2003 342,680 777,424
James E. Uren........... 10,000 1.2734 25.19 December 11, 2003 85,670 194,356
</TABLE>
- --------
(1) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compound
rates of appreciation of the Common Stock over the term of the options.
These amounts do not take into account provisions of certain options
providing for termination of the options following termination of
employment, nontransferability, or vesting periods of up to five years.
These amounts represent certain assumed rates of appreciation only. Actual
gains on stock option exercises are dependent on the future performance of
the Common Stock and overall stock market conditions. There can be no
assurance that the potential values reflected in this table will be
achieved. All amounts have been rounded to the nearest whole dollar
amount.
5
<PAGE>
(2) Options to acquire shares of Common Stock, which were granted on December
11, 1997, under the 1989 Plan will vest ratably over five years beginning
one year after the date of grant.
(3) The option exercise price may be paid in shares of Common Stock owned by
the executive officer, in cash, or a combination of either of the
foregoing, as approved by the Option Committee in its discretion.
AGGREGATED OPTION EXERCISES IN 1997 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information related to the number of options
exercised in 1997 and the value realized by the named executive officers.
Further, the table provides information related to the number and value of
options held by the named executive officer at the end of 1997.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ------------------------------- -------------------------------
NAME EXERCISE(#) REALIZED($)(2) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- ----------- -------------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Grahame N. Clark, Jr. .. 60,000 694,000 140,400 260,600 978,972 1,162,458
Raghavan Rajaji......... 0 0 39,500 128,000 250,655 585,320
John G. Guthrie......... 1,500 13,940 26,800 58,700 172,096 294,674
Tod V. Mongan........... 15,000 172,891 54,300 119,700 366,041 536,569
James E. Uren........... 3,000 22,052 55,900 100,100 387,897 583,133
</TABLE>
- --------
(1) The last sales price of Common Stock as reported on the NYSE on December
31, 1997, the last trading day of 1997, was $26.81. Value is calculated on
the basis of the remainder of $26.81 minus the exercise price multiplied
by the number of shares of Common Stock underlying the option.
(2) Value is calculated based on the remainder of the closing market price of
Common Stock on the date of the exercise minus the exercise price
multiplied by the number of shares to which the exercise relates.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to receive
compensation in the amount of $20,000 per year plus a fee of $1,000 for each
day on which he attends a meeting of the Board or a meeting of a committee of
the Board, if the committee meeting is not held on the same day as a Board
meeting.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Agreements") with
Grahame N. Clark, Jr., Tod V. Mongan, and Raghavan Rajaji. Each of the
Agreements provides for the payment of base salary amounts and the
participation in any employee benefit or bonus plan or arrangement made
available by the Company on a basis consistent with the terms, conditions, and
overall administration of such plan or arrangement. The Agreements for Messrs.
Clark and Mongan expire on November 7, 2000 and Mr. Rajaji's Agreement expires
on September 27, 2000.
Upon the death of an executive during the term of that executive's
Agreement, the Company is obligated to pay the executive's base salary for a
period of months (not to exceed twelve months) determined by multiplying two
times the number of complete twelve-month periods of employment of the
executive with the Company. Each Agreement provides that if the executive's
employment is terminated (whether such termination is by the executive or by
the Company) within three years after a Triggering Event (which, generally
speaking, is defined in the Agreement as a change in control of the Company)
for any reason other than (i) termination by the Company for cause (as defined
in the Agreement), (ii) the executive having reached the age of 65, or (iii)
the executive's death, the Company is obligated to make a lump sum cash
payment equal to 2.99 times the average of the executive's annualized
includable compensation (as defined in the Agreement) received from the
Company during the period consisting of the five full taxable years ending
immediately preceding the Triggering Event.
6
<PAGE>
The Company is obligated to transfer to an irrevocable trust upon the
occurrence of a Triggering Event, or as soon thereafter as the Company knows
of the Triggering Event, the amount of cash that the Company would be
obligated to pay under the Agreement if such executive's employment were
terminated on that date.
COMPENSATION COMMITTEE AND OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
During 1997, the Compensation Committee was composed of Michael E. Faherty,
Paul J. Ferri, Rawles Fulgham, Thomas G. Kamp, A.A. Meitz, and Michael A.
Stone and the Option Committee was composed of Michael E. Faherty, Paul J.
Ferri, Rawles Fulgham, Thomas G. Kamp, A.A. Meitz, and Michael A. Stone. See
"Election of Directors" and "Meetings and Committees of the Board." No member
of the Compensation Committee or the Option Committee is an officer of the
Company. No member of the Compensation Committee or the Option Committee was
formerly an officer of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting and administering the
policies governing annual compensation of the executive officers of the
Company. These policies are based upon the philosophy that the Company's long-
term success is best achieved through recruitment and retention of the best
people in the industry. The Compensation Committee applies this philosophy in
determining compensation for the Company's executive officers in three areas:
salary; bonuses; and stock options and awards.
Base Salary. The Company strives to offer salaries to its executive officers
which are competitive in its industry for similar positions requiring similar
qualifications. In determining executive officers' salaries, the Compensation
Committee considers information provided by Hewitt Associates and from
published salary surveys specific to the Company's industry, size, and
geographic location.
The executive officers' base salaries are targeted at slightly below the
median as indicated in the salary surveys. Base salaries are reviewed bi-
annually to determine if adjustments are necessary based upon competitive
practices and economic conditions. In addition, executive officers' salaries
are periodically adjusted based on individual performance and changes in job
content and responsibilities.
The Compensation Committee evaluates the performance and sets the salary of
the Company's Chairman, President and Chief Executive Officer, Grahame N.
Clark, Jr. Mr. Clark does not participate in any discussions of the
Compensation Committee regarding his salary or performance. Mr. Clark
evaluates the performance of all other executive officers and recommends
salary adjustments which are reviewed and acted upon by the Compensation
Committee. Performance evaluations for individual executive officers are based
on achievement of predetermined individual goals. For Mr. Clark, these goals
are set by the Compensation Committee, and for all other officers, these goals
are set by Mr. Clark.
Bonuses. The Company seeks to provide additional incentives and rewards to
executives who make contributions of outstanding value to the Company. For
this reason, the Compensation Committee administers a bonus plan, which can
comprise a substantial portion of the total compensation of executive officers
when earned and paid. It is the intention of the Compensation Committee to
weight the total compensation of the executive officers heavily in the area of
incentive compensation. The Compensation Committee believes that optimal
performance is encouraged through the use of incentive programs, furthering
the goal of having performance compensation as an important component of total
executive compensation.
In consultation with the Chairman, the Compensation Committee determines
annually the total amount of cash bonuses available for executive officers.
Awards under the plan are contingent upon the performance of the Company as a
whole, based upon the Company attaining certain financial and operational
goals set by the Board annually in consultation with the Chairman. The target
amounts of bonus available to each executive officer are set annually by the
Compensation Committee with regard to Mr. Clark and by Mr. Clark, subject to
review and approval by the Compensation Committee, with regard to executive
officers other than Mr. Clark. In all cases
7
<PAGE>
the target amounts for individual officers are based upon such officer's
individual goals and objectives and the goals and objectives established for
the particular operating unit such officer is responsible for managing.
Executive officers earn a percentage of the target amounts under the bonus
plan based on the achievement of these performance goals and objectives as
determined annually by the Compensation Committee and a percentage based on
the Company's attainment of the pre-tax goals. Awards are weighted so that
proportionately higher awards are received when the Company's performance
exceeds targets and proportionately smaller or no awards are made when the
Company does not meet targets.
Stock Options. The Compensation Committee believes that employee equity
participation provides significant additional motivation to executive officers
to maximize value for the Company's stockholders, and therefore recommends to
the Option Committee periodic grants of stock options under the 1989 Plan.
Stock options are approved by the Option Committee, based on the
recommendation of the Compensation Committee, with exercise prices at the
prevailing market price at date of grant. The stock options will have value
only if the Company's stock price increases over the exercise price.
Therefore, the Compensation Committee believes that stock options serve to
align the interest of executive officers closely with the other stockholders
because of the direct benefit executive officers receive through improved
stock performance.
The Compensation Committee makes recommendations to the Option Committee
concerning the size and frequency of option grants for executive officers,
after consideration of recommendations from the Chairman. Recommendations for
options are based upon relative position and responsibilities of each
executive officer, historical and expected contributions of each officer to
the Company, and previous option grants to such executive officers within the
Company. Generally, option grants vest over five years and expire six years
from date of grant. Option grants for 1997 are set forth in the table entitled
"Option Grants in 1997."
Restricted Stock. The Company has implemented the use of restricted stock in
order to further the goal of having its executive officers maintain a "stake"
in the long-term success of the Company, through equity ownership, as well as
encouraging long-term employment with the Company. Restricted awards are given
to executive officers in lieu of base salary increases and in lieu of a fixed
percentage of the available bonus for each fiscal year.
Each time an executive officer's base salary is increased such executive
officer must take a minimum of 50% of such increase as a restricted stock
award. It is such officer's option to take up to the entire amount of such
increase as a restricted stock award but in no event can the percentage fall
below 50%. The amount of restricted stock awarded is based on the base salary
increase, the percentage to be taken in stock, the number of years remaining
until such officer reaches sixty years of age, and the closing price of the
Company's Common Stock on the day of the award. This restricted stock award
vests in equal annual installments over the number of years remaining until
such officer attains the age of sixty.
Executive officers are required to take 15% of their annual incentive bonus,
if any, in the form of a restricted stock award. The number of shares of
restricted stock awarded is based upon the closing price of the Company's
Common Stock on the date the incentive bonus is approved by the Compensation
Committee. The restricted stock awarded to each executive officer vests over a
period of three years.
Supplemental Long-Term Bonus Plan. The Compensation Committee engaged Hewitt
Associates to address long-term incentives and retirement plan alternatives
for executive officers in an effort to attract and retain qualified
individuals for long-term employment with the Company. As a result of this
process, the Company instituted a long-term bonus plan as an additional
encouragement for long-term employment with the Company. The bonus available
for each participant is based upon their position within the Company, age, and
years of service with the Company. The amount of bonus actually paid is a
percentage (45%, 35%, or 25%) of the incentive bonus actually paid to the
executive officer. See "Bonus" previously discussed. The bonus awarded to each
executive officer vests over a period of three years and is not available to
the executive officer until the later of retirement or attainment of the age
of 62. If no incentive bonus is paid to the executive officer, no long-term
bonus will be paid.
8
<PAGE>
Stock Ownership. In addition, the Compensation Committee monitors compliance
with the stock ownership guidelines established for the executive officers of
the Company. The stock ownership guidelines require executive officers to own
an established multiple of their base annual compensation in market value of
Common Stock. These values range from 2.0 to .5 times the executive officer's
base annual compensation.
COMPENSATION COMMITTEE
A.A. Meitz, Chairman
Michael E. Faherty
Paul J. Ferri
Rawles Fulgham
Thomas G. Kamp
Michael A. Stone
PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the cumulative
total stockholder return of the Company's Common Stock during the five fiscal
years ended December 31, 1997, with the yearly change in cumulative total
return of the NYSE Composite Index and Standard and Poors (S&P) Computer
Software and Services Industry Group Index. The comparison assumes that $100
was invested on March 27, 1994, in the Company's Common Stock and in each of
the foregoing indices and assumes reinvestment of dividends.
CALCULATED INDEX
S&P
NYSE Software
Composite I & Service
Date BancTec. NYC.I SSF.I
---- -------- ----- -----
27-Mar-94 100 100 100
26-Mar-95 72 110 137
31-Dec-95 79 133 170
31-Dec-96 88 159 275
31-Dec-97 114 207 363
[PERFORMANCE GRAPH APPEARS HERE]
9
<PAGE>
CERTAIN STOCKHOLDERS
The following table sets forth certain information as of March 23, 1998
regarding the ownership of Common Stock of: (i) each person who is known by
the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock; (ii) each director of the Company; (iii)
each executive officer named in the Summary Compensation Table; and (iv) all
executive officers and directors of the Company as a group. Included in the
"Number of Shares of Common Stock" are shares attributable to options that are
exercisable as of, or will be exercisable within 60 days after, March 23,
1998.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OF OUTSTANDING
NAME OF BENEFICIAL OWNER(1) COMMON STOCK COMMON STOCK
- --------------------------- ------------ ------------
<S> <C> <C>
FMR Corp.(2)......................................... 2,472,700 11.4%
82 Devonshire Street
Boston, Massachusetts 02109
Grahame N. Clark, Jr.(3)............................. 261,672 1.2%
Tod V. Mongan(4)..................................... 102,335 *
Norton A. Stuart, Jr. (5)............................ 70,500 *
Michael E. Faherty(6)................................ 67,042 *
Michael A. Stone(7).................................. 62,500 *
James E. Uren(8)..................................... 61,859 *
Rawles Fulgham(9).................................... 59,500 *
Paul J. Ferri(10).................................... 43,750 *
Raghavan Rajaji(11).................................. 42,693 *
John G. Guthrie(12).................................. 31,733 *
Thomas G. Kamp(13)................................... 25,000 *
A.A. Meitz(14)....................................... 5,950 *
All executive officers and directors as a group (15 1,040,364 4.8%
persons)(15)........................................
</TABLE>
- --------
* Less than one percent.
(1) Except as otherwise indicated, each stockholder has sole investment and
sole voting power with respect to the shares of Common Stock shown.
(2) As of December 31, 1997, Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp. and an investment
adviser registered under Section 203 of the Investment Advisers Act of
1940, is the beneficial owner of 2,472,700 shares or 11.4% of the Common
Stock of the Company as a result of acting as investment adviser to
various investment companies registered under Section 8 of the Investment
Company Act of 1940. The ownership of one investment company, Fidelity
Low-Priced Stock Fund, amounted to 1,692,500 shares or 7.8% of the Common
Stock of the Company.
(3) Includes 156,400 shares that Mr. Clark may acquire pursuant to stock
options and 25,448 shares of unreleased restricted stock.
(4) Includes 59,400 shares that Mr. Mongan may acquire pursuant to stock
options and 24,853 shares of unreleased restricted stock.
(5) Includes 26,500 shares that Mr. Stuart may acquire pursuant to stock
options.
(6) Includes 17,500 shares that Mr. Faherty may acquire pursuant to stock
options.
(7) Includes 21,250 shares that Mr. Stone may acquire pursuant to stock
options.
(8) Includes 60,400 shares that Mr. Uren may acquire pursuant to stock options
and 954 shares of unreleased restricted stock.
10
<PAGE>
(9) Includes 17,500 shares that Mr. Fulgham may acquire pursuant to stock
options.
(10) Includes 17,500 shares that Mr. Ferri may acquire pursuant to stock
options.
(11) Includes 40,000 shares that Mr. Rajaji may acquire pursuant to stock
options and 801 shares of unreleased restricted stock.
(12) Includes 27,800 shares that Mr. Guthrie may acquire pursuant to stock
options and 925 shares of unreleased restricted stock.
(13) Includes 17,500 shares that Mr. Kamp may acquire pursuant to stock
options.
(14) Includes 3,000 shares that Mr. Meitz may acquire pursuant to stock
options.
(15) Also includes 581,260 shares subject to stock options and 66,913 shares
of unreleased restricted stock.
STOCKHOLDER PROPOSALS
Any stockholder of the Company desiring to present a proposal for action at
the Annual Meeting of Stockholders to be held in 1999 must deliver the
proposal to the executive offices of the Company by no later than January 1,
1999, unless the Company notifies the stockholders otherwise.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board, upon the recommendation of the Audit Committee, has selected
Arthur Andersen & Co. to act as independent auditors for the fiscal year
ending in December 1998.
Arthur Andersen & Co. has advised the Company that it will have a
representative in attendance at the Meeting with the opportunity to make a
statement, if such representative desires to do so, and to respond to
appropriate questions presented at the Meeting.
OTHER MATTERS
The Board does not intend to bring any other matters before the Meeting and
does not know of any matters which will be brought before the Meeting by
others. However, if any other matters properly come before the Meeting, it is
the intention of the persons named in the accompanying proxy to vote such
proxy in accordance with their judgment on such matters.
By Order of the Board of Directors
Tod V. Mongan
Secretary
Dallas, Texas
April 13, 1998
11
<PAGE>
BANCTEC, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21, 1998
The undersigned hereby appoints Grahame N. Clark, Jr. and Raghavan
Rajaji as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote as designated below, all the shares of
common stock of BancTec, Inc. held of record by the undersigned on April 6,
1998, at the Annual Meeting of Stockholders to be held on May 21, 1998 at 10:00
a.m., Dallas, Texas time, at the Texas Commerce Bank Tower, Fourth Floor
Boardroom, 2200 Ross Avenue, Dallas, Texas, and at any adjournment(s) thereof.
Receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement
in connection therewith, each dated April 13, 1998, is hereby acknowledged. The
undersigned hereby revokes any proxies heretofore given.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS HEREON.
IN THE ABSENCE OF SUCH SPECIFICATIONS, THE PROXY WILL BE VOTED FOR THE ELECTION
TO THE BOARD OF DIRECTORS OF THE NOMINEE LISTED ON THIS PROXY AND IN THE
DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS.
--------------------
SEE REVERSE
SIDE
--------------------
<PAGE>
[ ] Please mark your
votes as in this
example.
FOR the nominee WITHHOLD AUTHORITY
listed to the right to vote for the
(except as marked nominee listed
to the contrary) to the right
1. ELECTION OF [ ] [ ] Nominee: Rawles Fulgham
DIRECTOR
For, except vote witheld from the following nominee:
- ----------------------------------------------------
2. IN THEIR DISCRETION, THE PROXIES ARE TO VOTE WITH RESPECT TO ANY OTHER MATTER
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21, 1998.
SIGNATURE(S) DATE
-------------------------------------------- -------------------
Signature (IF HELD JOINTLY)
When signing on behalf of a corporation, partnership, estate, trust, or in any
other representative capacity, please sign name and title. For joint accounts
each joint owner must sign.
