<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SEI Investments Company
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
------------------------------------------------------------------------
(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:
[_] 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 From 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>
SEI Investments
NOTICE OF ANNUAL MEETING
of Shareholders to be held May 14, 1997
<PAGE>
SEI INVESTMENTS COMPANY
Oaks, PA 19456-1100
PROXY STATEMENT
1997 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with
the solicitation by the Board of Directors of SEI
Investments Company (the "Company") of proxies for
use at the 1997 Annual Meeting of Shareholders of the
Company to be held on May 14, 1997 (the "1997 Annual
Meeting") and at any adjournments thereof. Action
will be taken at the meeting upon the election of
three directors, approval of an amendment and
restatement of the Company's Stock Option Plan,
ratification of the selection of Arthur Andersen LLP
as the Company's auditors for 1997, and such other
business as may properly come before the meeting and
any adjournments thereof. This Proxy Statement, the
accompanying proxy card, and the Company's Annual
Report for 1996 will first be sent to the Company's
shareholders on or about April 17, 1997.
VOTING AT THE MEETING
Only the holders of the Company's Common Stock, par
value $.01 per share ("Shares"), of record at the
close of business on April 3, 1997 are entitled to
vote at the 1997 Annual Meeting. On that date there
were 18,522,159 Shares outstanding and entitled to be
voted at the meeting. Each holder of Shares entitled
to vote will have the right to one vote for each
Share outstanding in his or her name on the books of
the Company. See "Ownership of Shares" for
information regarding the ownership of Shares by
directors, nominees, officers, and certain
shareholders of the Company.
The Shares represented by each properly executed
proxy card will be voted in the manner specified by
the shareholder. If instructions to the contrary are
not given, such Shares will be voted FOR the election
to the Board of Directors of the nominees listed
herein, FOR the approval of the Amendment and FOR
ratification of the selection of Arthur Andersen LLP
as the Company's auditors for 1997. If any other
matters are properly
1
<PAGE>
presented to the meeting for action, the proxy
holders will vote the proxies (which confer
discretionary authority to vote on such matters) in
accordance with their best judgment.
Execution of the accompanying proxy card will not
affect a shareholder's right to attend the meeting
and vote in person. Any shareholder giving a proxy
has the right to revoke it by giving written notice
of revocation to the Secretary of the Company at any
time before the proxy is voted. Under the
Pennsylvania Business Corporation Law, if a
shareholder (including a nominee, broker, or other
record owner) records the fact of abstention or fails
to vote (including broker non-votes) either in person
or by proxy, such action is not considered a vote
cast and will have no effect on the election of
directors or voting upon Proposals two or three, but
will be considered present for purposes of
determining a quorum.
(Proposal No. 1) Election of Directors
The Board of Directors of the Company currently
consists of seven members and is divided into three
classes, two classes each being comprised of two
directors and one class being comprised of three
directors. One class is elected each year to hold
office for a three-year term and until successors of
such class are duly elected and qualified, except in
the event of death, resignation, or removal. Subject
to shareholder approval at this meeting, three
directors will be elected for the current class. This
class will be elected at the 1997 Annual Meeting by a
plurality of votes cast at the meeting.
Messrs. Greer, Lieb and Romeo, all of whom are
current members of the Board, have been nominated by
the Board of Directors for election as directors at
the 1997 Annual Meeting. Shares represented by
properly executed proxy cards in the accompanying
form will be voted for such nominees in the absence
of instructions to the contrary. The nominees have
consented to be named and to serve if elected. The
Company does not know of anything that would preclude
the nominees from serving if elected. If, for any
reason, a nominee should become unable or unwilling
2
<PAGE>
to stand for election as a director, either the
Shares represented by all proxies authorizing votes
for such nominee will be voted for the election of
such other person as the Board of Directors may
recommend or the number of directors to be elected at
the 1997 Annual Meeting will be reduced accordingly.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS VOTE FOR THE ELECTION OF MESSRS.
GREER, LIEB AND ROMEO AS DIRECTORS AT THE 1997 ANNUAL
MEETING.
Set forth below is certain information concerning
Messrs. Greer, Lieb and Romeo and each of the five
directors whose terms continue after the 1997 Annual
Meeting.
Nominees for election at the 1997 Annual Meeting:
HENRY H. GREER, 59, has been a director since
November 1979 and is a member of the Audit Committee
of the Board. Mr. Greer has served as the Company's
President and Chief Operating Officer since August
1990 and as the Company's Chief Financial Officer
since September 1996. From May 1989 until August
1990, Mr. Greer served as President of the Company's
Benefit Services Division under a consulting
arrangement. For the eleven-year period prior to
August 1990, Mr. Greer was President of the Trident
Capital Group, a venture capital firm.
RICHARD B. LIEB, 49, has been an Executive Vice
President of the Company since October 1990 and a
director since 1994. Mr. Lieb was named President of
the Company's Investment Systems and Services Unit in
1995. Mr. Lieb was President and Chief Executive
Officer of the Company's Insurance Asset Services
Division from March 1989 until October 1990. From
1986 to 1989, Mr. Lieb served in various executive
positions with the Company.
CARMEN V. ROMEO, 53, has been an Executive Vice
President of the Company since December 1985 and a
director since June 1979. Mr. Romeo was Treasurer and
Chief Financial Officer of the Company from June 1979
until September 1996.
3
<PAGE>
Directors continuing in office with terms expiring in
1998:
ALFRED P. WEST, JR., 54, has been the Chairman of the
Board of Directors and Chief Executive Officer of the
Company since its inception in 1968. From June 1979
until August 1990, Mr. West also served as the
Company's President. He is a member of the
Compensation Committee of the Board.
WILLIAM M. DORAN, 56, has been a director since March
1985 and is a member of the Compensation Committee of
the Board. Mr. Doran is Secretary of the Company and
since October 1976 has been a partner in the law firm
of Morgan, Lewis & Bockius LLP, Philadelphia,
Pennsylvania. Mr. Doran is a trustee of SEI Liquid
Asset Trust, SEI Tax Exempt Trust, SEI Daily Income
Trust, SEI Institutional Managed Trust, SEI Index
Funds, SEI International Trust, SEI Asset Allocation
Trust, SEI Institutional Investments Trust, The Arbor
Fund, The Advisors' Inner Circle Fund, and The
Marquis Funds, each of which is an investment company
for which the Company's subsidiaries act as advisor,
administrator and/or distributor.
Directors continuing in office with terms expiring in
1999:
DONALD C. CARROLL, 66, has been a director since
November 1979 and is the Chairman of the Audit
Committee of the Board. Dr. Carroll has been a
financial consultant since 1986. From 1984 until
November 1986, he was Chairman of CGW Data Services,
Inc., a computer services company. From 1972 until
1985, Dr. Carroll was Professor of Management and
Decision Sciences of the Wharton School of the
University of Pennsylvania, and from 1972 until 1983
he served as Dean of the Wharton School. Dr. Carroll
is the Chairman of Schulco, Inc., a privately-held
company, and is a member of the Board of Directors of
Vestaur Securities, Inc., a publicly-held company.
HENRY H. PORTER, JR., 62, has been a director since
September 1981 and is a member of the Audit and
Compensation Committees of the Board. Since June
1980, Mr. Porter has been a private investor and
financial consultant. Mr. Porter is a member of the
Board of Directors of Caldwell & Orkin Funds, Inc.,
which is an investment company.
4
<PAGE>
Board and Committee The Board of Directors of the Company held six
Meetings meetings in 1996. During the year, all directors
attended at least 75% of all meetings of the Board of
Directors and of the committees on which they served,
except for Mr. Carroll, who attended three of the six
meetings of the Board of Directors. Standing
committees of the Board of Directors of the Company
are the Audit Committee and Compensation Committee.
Members of the Audit Committee are Messrs. Carroll,
Greer and Porter. Members of the Compensation
Committee are Messrs. West, Doran and Porter.
During 1996, the Audit Committee met three times.
The principal functions of the Audit Committee are to
review with management and the Company's independent
public accountants the scope and results of the
various audits conducted during the year; to discuss
with management and the Company's independent public
accountants the Company's annual financial
statements; and to review fees paid to, and the scope
of services provided by, the Company's independent
public accountants.
During 1996, the Compensation Committee met three
times. The principal function of the Compensation
Committee is to administer the Company's compensation
programs, including its stock option plans and bonus
and incentive plans. The Committee also reviews with
management and approves the salaries of senior
corporate officers and employment agreements between
the Company and senior corporate officers.
The Board of Directors does not have a Nominating
Committee. The Board will consider nominees for
election to the Board of Directors recommended by the
Company's shareholders. All such recommendations
should be submitted in writing to the Board at the
Company's principal office.
In February 1997, the Board of Directors
established a Stock Option Committee. The principal
function of the Stock Option Committee will be to
administer the Company's Stock Option Plan. Members
of the Stock Option Committee are Messrs. Carroll and
Porter.
5
<PAGE>
OWNERSHIP OF SHARES
The following table contains information as of
February 28, 1997 relating to the beneficial
ownership of Shares by each of the nominees for
election to, and members of, the Board of Directors,
by the Chief Executive Officer and each of the four
other most highly compensated executive officers of
the Company, by the nominees for election to, and
members of, the Board of Directors and the Company's
officers as a group, and by the holders of 5% or more
of the total Shares outstanding. As of February 28,
1997, there were 18,560,946 Shares outstanding.
Information as to the number of Shares owned and the
nature of ownership has been provided by these
persons and is not within the direct knowledge of the
Company. Unless otherwise indicated, the named
persons possess sole voting and investment power with
respect to the Shares listed.
<TABLE>
<CAPTION>
PERCENT
NAME OF INDIVIDUAL NUMBER OF OF
OR IDENTITY OF GROUP SHARES OWNED CLASS (1)
---------------------------------------------------------------
<S> <C> <C>
Alfred P. West, Jr.(/2/)................ 5,220,277 26.6%
William M. Doran(/3/) (/4/)............. 818,320 4.2%
Carmen V. Romeo(/3/) (/5/).............. 467,430 2.4%
Henry H. Greer(/3/)..................... 356,371 1.8%
Richard B. Lieb(/3/).................... 211,000 1.1%
Donald C. Carroll(/3/).................. 179,984 *
Edward D. Loughlin(/3/)................. 148,119 *
Henry H. Porter, Jr.(/3/)............... 58,000 *
All executive officers and directors as
a group (11 persons)................... 7,687,042 39.2%
Thomas W.Smith(/7/)..................... 1,779,400 9.1%
Thomas N. Tryforos(/7/)................. 1,389,044 7.1%
-------------------------------------------------------------
</TABLE>
* Less than one percent.
(1) Based upon 19,629,396 Shares which is comprised of
18,560,946 Shares outstanding on February 28, 1997
plus 1,068,450 Shares which may be acquired upon the
exercise of stock options by all executive officers
and directors as a group on or before June 17, 1997.
(2) Includes an aggregate of 4,000 Shares held by Mr.
West's wife and 815,354 Shares held in trusts for
the benefit of Mr. West's children, of which
Mr. West's wife is a trustee or co-trustee. Mr. West
disclaims beneficial ownership of the Shares held in
trust. Mr. West's address is c/o SEI Investments
Company, Oaks, PA 19456-1100.
6
<PAGE>
(3) Includes, with respect to Messrs. Carroll, Doran,
Porter, Greer, Romeo, Lieb, and Loughlin, 34,000,
34,000, 34,000, 327,750, 108,750, 173,000 and
141,500 Shares, respectively, which may be acquired
upon exercise of stock options exercisable on or
before June 17, 1997.
(4) Includes an aggregate of 699,000 Shares held in
trust for the benefit of Mr. West's children, of
which Mr. Doran is a co-trustee and, accordingly,
shares voting and investment power. Mr. Doran
disclaims beneficial ownership of the Shares held in
trust.
(5) Includes an aggregate of 5,500 Shares held in
custodianship for the benefit of Mr. Romeo's minor
children, of which Mr. Romeo's brother is a
custodian. Mr. Romeo disclaims beneficial ownership
of the Shares held in custodianship.
(6) Includes 1,068,450 Shares which may be acquired upon
the exercise of stock options exercisable on or
before June 17, 1997.
(7) Based upon a Schedule 13D filing with the SEC dated
July 31, 1992, as amended on August 26, 1992, and
May 13, 1993, and accounting for a two-for-one stock
split on July 6, 1993. Messrs. Smith and Tryforos
share voting and investment power with respect to
1,382,000 Shares in their capacities as general
partners to private investment limited partnerships.
Mr. Smith is the beneficial owner of an additional
197,400 Shares in his capacity as investment manager
to certain advisory clients. In addition, Messrs.
Smith and Tryforos own 200,000 and 7,044 Shares,
respectively, for their own accounts. The address of
Messrs. Smith and Tryforos is 323 Railroad Avenue,
Greenwich, CT 06830. The Company has been advised by
Messrs. Smith and Tryforos that Edward J. McAree no
longer possesses any voting or dispositive power
with respect to any Shares held by such
partnerships.
EXECUTIVE COMPENSATION
The Summary Compensation Table set forth below
includes individual compensation information on the
Company's Chief Executive Officer and the Company's
four other most highly paid executive officers for
services rendered in all capacities for the years
ended December 31, 1996, 1995 and 1994.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- -------------------
OTHER ANNUAL SECURITIES ALL OTHER
FISCAL SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) (1) ($) (2) ($) (3) OPTIONS/SAR'S ($) (4)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alfred P. West, Jr....... 1996 $310,000 $190,000 -0- -0- $3,600
Chairman of the Board
and 1995 $310,000 $240,000 -0- -0- $3,600
Chief Executive Officer 1994 $310,000 $240,000 -0- -0- $3,600
Henry H. Greer........... 1996 $285,000 $165,000 -0- 15,000 $3,600
Director, President,
Chief Operating Officer 1995 $285,000 $215,000 -0- -0- $3,600
and Chief Financial Of-
ficer 1994 $285,000 $215,000 -0- 15,000 $3,600
Richard B. Lieb.......... 1996 $260,000 $190,000 -0- 15,000 $3,600
Director and Executive 1995 $260,000 $265,000 -0- -0- $3,600
Vice President 1994 $260,000 $150,000 -0- 20,000 $3,600
Edward D. Loughlin....... 1996 $250,000 $175,000 -0- 15,000 $3,600
Executive Vice President 1995 $250,000 $150,000 -0- -0- $3,600
1994 $250,000 $150,000 -0- 10,000 $3,600
Carmen V. Romeo.......... 1996 $250,000 $200,000 -0- 15,000 $3,600
Director and Executive
Vice President 1995 $250,000 $150,000 -0- -0- $3,600
1994 $215,252 $185,000 -0- 15,000 $3,600
- -------------------------------------------------------------------------------------------------
</TABLE>
(1)Compensation deferred at the election of the executive, pursuant to the
Company's Capital Accumulation Plan ("CAP"), is included in the year earned.
(2)Cash bonuses for services rendered during 1996, 1995 and 1994 have been
listed in the year earned, but were actually paid in the following fiscal
year.
(3)The table does not include the discount that the executive received when he
purchased Shares of Common Stock pursuant to the Company's Employee Stock
Purchase Plan, which permits all employees of the Company who satisfy certain
length of service requirements to purchase Shares of Common Stock at 85% of
fair market value.
(4)The stated amounts are Company matching contributions to the CAP.
8
<PAGE>
The Company has an employment agreement with Mr.
West (which renews annually in May) pursuant to which
he is entitled to a certain minimum base salary, a
bonus based on the performance of the Company, and
certain retirement benefits. The Company also has an
employment agreement with Mr. Richard B. Lieb,
Executive Vice President of the Company. Mr. Lieb's
employment agreement is for a one-year term and
renews annually in July of each year unless
terminated prior thereto by either Mr. Lieb or the
Company. In the event that the Company terminates his
employment agreement without cause, Mr. Lieb is
entitled to one year's severance pay. Mr. Lieb's
employment agreement provides for a certain minimum
base salary and participation in management bonus
programs. Mr. Lieb received a base salary of $260,000
in 1996.
The Securities and Exchange Commission's proxy
rules also require disclosure of the range of
potential realizable values from stock options
granted during the fiscal year ended December 31,
1996, at assumed rates of stock price appreciation
through the expiration date of the options, and the
value realized from the exercise of options during
the fiscal year ended December 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SAR'S EXERCISE OR
OPTIONS/SAR'S GRANTED TO BASE PRICE GRANT DATE
GRANTED EMPLOYEES IN PER SHARE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SH) DATE VALUE($)(2)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alfred P. West, Jr...... -0- 0.0 N/A N/A N/A
Henry H. Greer.......... 15,000 4.25% $21.625 12/17/06 $144,600
Richard B. Lieb......... 15,000 4.25% $21.625 12/17/06 $144,600
Edward D. Loughlin...... 15,000 4.25% $21.625 12/17/06 $144,600
Carmen V. Romeo......... 15,000 4.25% $21.625 12/17/06 $144,600
------------------------------------------------------------------------------
</TABLE>
(1) All options granted to the named executive
officers were non-qualified options granted on
December 17, 1996 at an exercise price equal to
the fair market value on such date. All options
become exercisable in four equal annual
installments beginning one year from the date of
option grant.
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<PAGE>
(2) Based on the Black-Scholes option pricing model
adapted for use in valuing executive stock
options. The actual value, if any, an executive
officer may realize will depend on the excess of
the stock price over the exercise price on the
date of exercise; therefore, there is no
assurance that the value actually received by an
executive officer will be at or near the value
estimated by the Black-Scholes model. The
estimated values under the model are based on
arbitrary assumptions as to variables such as
interest rates, stock price, volatility, and
future dividend yield. The key assumptions used
in the Black-Scholes model valuation of the
options are (i) an annual dividend yield of 1%,
(ii) a risk free rate of return of 6.435%, (iii)
a beta coefficient of 34.89%, (iv) an exercise
date of 7 years from the date of grant, and (v)
no reduction in values to reflect non-
transferability and other restrictions on the
options. These assumptions are not a forecast of
future dividend yield or stock price performance
or volatility.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED,
UNEXERCISED IN-THE-MONEY
OPTIONS HELD OPTIONS AT FISCAL
SHARES VALUE AT FISCAL YEAR-END (#) YEAR END ($)(2)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alfred P. West, Jr...... -0- $ 0 -0- -0- $ 0 $ 0
Henry H. Greer.......... 25,000 $ 320,312 327,750 26,250 $3,626,687 $ 39,375
Richard B. Lieb......... 88,000 $1,595,125 173,000 30,000 $2,046,500 $ 49,375
Edward D. Loughlin...... -0- $ 0 141,500 47,500 $1,000,937 $142,812
Carmen V. Romeo......... 20,000 $ 326,250 108,750 26,250 $1,197,500 $ 39,375
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the difference between the closing price of the Company's
Common Stock on the exercise date and the exercise price of the options.
(2) Represents the difference between the closing price of the Company's
Common Stock at December 31, 1996 ($22.25) and the exercise price of the
options.
Director Each director who is not an employee of the Company
Compensation receives $1,800 per meeting attended and an annual
retainer of $10,800. The chairman of the Audit
Committee receives an additional annual fee of
$2,400.
10
<PAGE>
Under the Company's Stock Option Plan for Non-
Employee Directors (the "Directors' Option Plan"),
which was approved by the shareholders at the 1988
Annual Meeting, each director not employed by the
Company is awarded an option on the last business day
of each year to purchase 4,000 Shares. These options
have an exercise price equal to the fair market value
of the Shares as of the date of grant and a ten-year
term. The options become exercisable in four equal
annual installments beginning one year from the date
of option grant. Options generally terminate 30 days
after the optionee ceases to be a non-employee
director of the Company, except that this period is
extended to one year in the event such termination
was due to the director's death or disability.
In 1996, Messrs. Carroll, Doran and Porter, the
Company's non-employee directors, each received
options under the Directors' Option Plan to purchase
4,000 Shares at an exercise price of $22.25 per
share.
Notwithstanding anything to the contrary, the following Report of the
Compensation Committee and the Performance Graph on page 15 shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of
1933, as amended, or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
Compensation The Company's compensation philosophy (which is
Committee Report on intended to apply to all members of management,
Executive including the Chief Executive Officer and the
Compensation President and Chief Operating Officer), as
implemented by the Compensation Committee, is to
provide a compensation program which results in
competitive levels of compensation while providing
incentives for management to attain the Company's
annual goals and longer term objectives. The
Compensation Committee, consisting of two non-
employee directors and Mr. West, the Chairman and
Chief Executive Officer and largest shareholder of
the Company, approves all policies and plans under
which compensation is paid or awarded to management
employees. Included in this group are management
employees of all of its business units other than
sales employees who are under sales commission
11
<PAGE>
compensation plans. The compensation program for
management employees consists of base salary; bonuses
pursuant to incentive plans; and grants of stock
options (in addition to benefits afforded all
employees such as healthcare insurance). Included in
management is the Company's 16 member Management
Committee which is referred to herein as "senior
management."
The compensation program includes annual financial
goals as well as non-financial goals which are
reviewed each year in light of the Company's goals
for that year. The Company believes that this
compensation approach has enabled it to attract,
retain and reward highly qualified personnel who
contribute to the Company's short-term and long-term
goals.
The discussion below describes the Compensation
Committee's compensation process for 1996 and its
current strategies for compensation, although the
Committee intends to retain an independent consultant
in 1997 to again review the Company's compensation
program.
Base Salaries
The Compensation Committee seeks to set base salaries
for senior management at levels that are competitive
with salaries paid to management with comparable
qualifications, experience, and responsibilities at
companies of comparable size engaged in the same or
similar businesses as the Company. Several years ago,
the Company retained an independent compensation
consultant to provide competitive compensation
information which was used by the Compensation
Committee in reviewing base salaries and total
compensation for senior management at that time.
Based upon this information, the Company believes the
base salaries for senior management were then set at
or near the median of competitive base salaries.
Since then the Committee has minimized base salary
increases for senior management and, in general, base
salaries have not increased from 1992 to 1996 except
in connection with promotions or increased
responsibilities of certain individuals. The
Committee expects to continue to minimize base salary
increases with
12
<PAGE>
more compensation tied to performance objectives.
Base salaries, however,
may be adjusted if an officer is promoted to a higher
level management position or is given increased
responsibilities.
Incentive Bonuses
During the first quarter of each year, the
Compensation Committee reviews target goals of
profitability and revenue growth for the Company
which are developed by the Chief Executive Officer,
the President and Chief Operating Officer, and senior
management of the Company. The Compensation Committee
uses these to set threshold and target goals of
profitability and revenue growth for purposes of the
incentive compensation plan for the year. Goals are
established at the corporate level and also at
business unit levels. Bonus pools for achieving
targets are established for business units and for
senior management (including the Chief Executive
Officer and the President and Chief Operating
Officer). These target bonus pools are prorated if
the target goals are exceeded or if they are not met,
provided that the threshold goals are met. In
addition, the size of the final bonus pools may be
adjusted for non-financial achievements, changes in
the market units or other organizational changes
during the year. During December of each year, the
Compensation Committee reviews the Company's actual
performance as compared to the threshold and target
goals and determines the total amount of bonuses for
the year and the specific bonuses to be paid to the
Chief Executive Officer, the President and Chief
Operating Officer and senior management. The amount
of the bonus paid to each member of senior management
(other than the Chief Executive Officer and the
President and Chief Operating Officer) is based upon
recommendations from the Chief Executive Officer and
the President and Chief Operating Officer and
reflects, in addition to overall Company performance,
the performance of his or her business unit, and any
individual achievements during the year as well as
internal and client evaluations. The amounts of the
bonuses paid to the Chief Executive Officer and the
President and Chief Operating
13
<PAGE>
Officer of the Company are determined by the non-
employee members of the Compensation Committee based
upon the Company's achievement of profitability and
revenue growth goals and the achievement of strategic
organizational goals.
Stock Options
Prior to 1992, the philosophy of the Company was to
grant stock options to senior management as an
additional form of compensation for services
rendered. In accordance with this philosophy, senior
management normally would receive option grants each
year except that Mr. West, the Chairman, Chief
Executive Officer and largest shareholder of the
Company, has never received stock option grants from
the Company.
The Compensation Committee has been reviewing the
use of the stock option grants as a way to promote
long-term ownership of the Company's common stock by
management. The Committee believes that ownership of
common stock and options increases the alignment of
management's incentives to the long-term goals of the
Company and its shareholders.
Application of Section 162(m)
Payments during 1996 to the Company's management
employees as discussed above were made with regard to
the provisions of section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
Section 162(m) limits the deduction that may be
claimed by a "public company" for compensation paid
to certain individuals to $1 million except to the
extent that any excess compensation is "performance-
based compensation." It is the Compensation
Committee's intention to consider the deductibility
of compensation under Section 162(m).
COMPENSATION COMMITTEE
Alfred P. West, Jr.
William M. Doran
Henry H. Porter, Jr.
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<PAGE>
Compensation Members of the Company's Compensation Committee are
Committee Interlocks Messrs. West, Doran and Porter. Mr. West is the Chief
and Insider Executive Officer of the Company. Mr. Doran is a
Participation partner in the law firm of Morgan, Lewis & Bockius
LLP, which performed services for the Company during
the year ended December 31, 1996. The Company
proposes to retain the services of such firm in 1997.
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below compares the
yearly percentage change in the cumulative total
return (based upon changes in share prices) of the
Company's Common Stock against the NASDAQ National
Market System ("NASDAQ Market Index") and a peer
industry group that consists of software, data
processing companies (40%) and financial, fund
management companies (60%). The percentage allocation
for each industry group is based on the approximate
percentage of the Company's revenue attributable to
each line of business during the fiscal year ended
December 31, 1996. The graph assumes a $100
investment on January 1, 1991 and the reinvestment of
all dividends.
Comparison of Cumulative Total Return of SEI Investments, Industry Index, and
NASDAQ Market Index
[LINE GRAPH APPEARS HERE]
15
<PAGE>
(Proposal No. 2) APPROVAL OF SEI INVESTMENTS COMPANY STOCK OPTION PLAN
At the Annual Meeting, there will be presented to the
shareholders a proposal to approve the adoption of
the SEI Investments Company Stock Option Plan, as
amended and restated, (the "Plan")(formerly the SEI
Corporation Stock Option Plan). The amended and
restated Plan was adopted by the Board of Directors
on February 11, 1997, subject to shareholder
approval. The Plan, as amended and restated, will not
be effective unless or until shareholder approval is
obtained.
Under the proposal, the primary changes to the
Plan include: (i) 250,000 share increase in the
number of Shares available for issuance under the
Plan, from 12,054,988 Shares to 12,304,988 Shares;
(ii) the establishment of a maximum number of Shares
that may be granted to any individual during any
calendar year in an amount equal to 25,000 Shares;
(iii) the requirement that the Plan be administered
by a committee (the "Committee") consisting of at
least two individuals all of whom are "outside"
directors within the meaning of section 162(m) of the
Code and who are "non-employee" directors within the
meaning of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); (iv)
substituting Committee discretionary authority in
determining exercisability of stock options for the
previously prescribed minimum three year schedule of
exercisability for stock options with a term of four
years or longer; (v) the ability of the Committee to
permit employees to transfer nonqualified stock
options granted under the Plan to family members or
other persons or entities; and (vi) restrictions on
the Committee's ability to act and the effectiveness
of Plan provisions that would result in a
consolidation or merger of the Company being
ineligible for pooling of interest accounting
treatment, if such treatment is desired and would
otherwise be available.
The Omnibus Reconciliation Act of 1993 added
Section 162(m) to the Code. Effective January 1,
1994, this provision disallows a public company's
deductions for employee remuneration exceeding
$1,000,000 per year for the CEO and the other four
most highly compensated officers, but contains an
exception for qualified "performance-based
16
<PAGE>
compensation." In December 1995, the Internal Revenue
Service issued final regulations interpreting this
provision. Under certain circumstances, these
regulations grandfathered existing plans, including
the Plan, until the first shareholders meeting at
which directors are elected on or after January 1,
1997. Since the grandfathering period will expire for
the Plan on the date of the Annual Meeting, certain
actions must be taken by a compensation committee of
two or more outside directors and the material terms
of the Plan must be approved by the shareholders to
qualify remuneration paid under the Plan as
"performance-based compensation." The Plan, as
amended and restated, is intended to qualify grants
of stock options made under the Plan as "performance-
based compensation" pursuant to section 162(m) of the
Code, as discussed above.
The closing price of the Company's Shares reported
on the Nasdaq National Market System for April 3,
1997, was $20.75 per share.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES
CAST AT THE ANNUAL MEETING BY THE HOLDERS OF
OUTSTANDING SHARES IS REQUIRED TO APPROVE THE PLAN.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS VOTE FOR APPROVAL OF THIS PROPOSAL.
DESCRIPTION OF THE PLAN
THE PLAN IS SET FORTH AS EXHIBIT A TO THIS PROXY
STATEMENT AND THE DESCRIPTION OF THE PLAN CONTAINED
HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
EXHIBIT A.
General. The purpose of the Plan is to assist the
Company in attracting and retaining employees and
consultants by offering these individuals a
proprietary interest in the Company. The Company
believes that the Plan will encourage these
individuals to contribute materially to the growth of
the Company, thereby benefiting the shareholders, and
will align the economic interests of the participants
with those of the shareholders. Subject to
adjustments under certain circumstances as discussed
below, the Plan currently authorizes up to 12,054,988
Shares for issuance pursuant to the terms of the
Plan. The Plan, as amended and restated, increases
the number of Shares available for issuance under the
17
<PAGE>
Plan to 12,304,988 Shares. If and to the extent stock
options granted under the Plan cease to be
exercisable because of the: (i) expiration of the
option term; (ii) cancellation of the stock option
with the consent of the optionee; (iii) termination
of the optionee's employment with the Company; or
(iv) forfeiture, exchange or surrender of the stock
option, the Shares subject to such stock options will
again be available under the Plan.
Administration of the Plan. The Plan is
administered and interpreted by the Committee, as
described above. The Committee has the sole authority
to determine (i) the individuals to whom stock
options may be granted under the Plan, (ii) the type,
size and other terms and conditions of each stock
option, (iii) the time when the stock option grants
will be made and the duration of any applicable
exercise period, including the criteria for
exercisability and the acceleration of
exercisability, and (iv) any other matters arising
under the Plan.
The Committee has full power and authority to
administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules,
regulations, agreements and instruments for
implementing the Plan and for conduct of its business
as it deems necessary or advisable, in its sole
discretion. In February 1997, the Board of Directors
established the Stock Option Committee which shall
serve as the Committee required by the Plan.
Eligibility for Participation. Grants may be made
to any employee (including officers and directors) of
the Company or any of its affiliates as designated in
the discretion of the Committee. During any calendar
year, no participant may receive stock options for
more than 25,000 Shares issued or available for
issuance under the Plan. Grants may also be made
under the Plan to consultants who perform services to
the Company or any of its affiliates, if the
consultants perform bona fide services and such
services are not in connection with the offer or sale
of securities in a capital-raising transaction. As of
December 31, 1996, the Company and its affiliates
employed approximately 1,100 individuals and retained
approximately 150 consultants who were eligible to
participate in the Plan.
18
<PAGE>
As of December 31, 1996, 8,265,988 stock options have
been exercised by employees as a group and 3,724,344
stock options were outstanding and held by all
employees as a group. As of December 31, 1996, stock
options granted under the Plan to nominees for
director, Messrs. Greer, Lieb and Romeo were 399,000,
378,960 and 488,012, respectively.
Stock Options. Stock options granted under the
Plan may consist of (i) options intended to qualify
as incentive stock options ("ISOs") within the
meaning of section 422 of the Code and (ii) so-called
"nonqualified stock options" that are not intended to
so qualify ("NQSOs"). All stock options are subject
to the terms and conditions set forth in the Plan as
the Committee deems appropriate and as are specified
in writing by the Committee to the participant (the
"Stock Option Agreement"). The Committee must approve
the form and provisions of each Stock Option
Agreement.
The Committee fixes the option price per Share at
the date of grant. The option price of any stock
option granted under the Plan will not be less than
the fair market value of the underlying Shares on the
date of grant, except that the option price of an ISO
granted to an employee who owns more than 10% of the
Shares may not be less than 110% of the fair market
value of the underlying Shares on the date of grant.
The Committee shall determine the term of each
option; provided, however, that the exercise period
may not exceed ten years from the date of grant, and
the exercise period of an ISO granted to an employee
who owns more than 10% of the Shares may not exceed
five years from the date of grant. To the extent that
the aggregate fair market value of Shares, determined
on the date of grant, with respect to which ISOs
become exercisable for the first time by a
participant during any calendar year exceeds
$100,000, such ISOs will be treated as NQSOs.
The exercisability of stock options will be as
determined by the Committee, in its sole discretion,
and specified in the Stock Option Agreement. A
participant, or, in the discretion of the Committee,
a properly authorized broker-dealer on behalf of a
participant, may exercise a stock option by
delivering notice of exercise to the Treasurer of the
Company, or such other person designated by the
Treasurer, with
19
<PAGE>
accompanying payment of the option price. Under the
Plan, a participant may pay the option price in cash,
or any other manner approved by the Committee which
may include, payment by delivering Shares owned by
the participant and having a fair market value on the
date of exercise equal to the option price.
The participant must pay, at the time of exercise,
the option price and the amount of any federal, state
or local withholding tax due in connection with such
stock option exercise. The Company may require the
optionee or other person receiving Shares upon the
exercise of a stock option granted under the Plan to
pay to the Company the amount of any applicable
federal, state and local taxes the Company is
required to withhold in connection with the exercise
of the stock option, or the Company may deduct from
other wages paid to the individual by the Company the
amount of any such withholding taxes due.
Alternatively, the Treasurer of the Company may, in
his or her discretion, withhold Shares in an amount
sufficient to cover the Company's withholding
obligations with respect to the exercise of a stock
option granted under the Plan.
Other Plan Provisions. The Plan provides that no
portion of a stock option granted under the Plan may
vest after the individual terminates their
relationship with the Company or any of its
affiliates. The Plan also provides that all stock
options will terminate automatically on the first to
occur of the expiration of the option term, or one of
the following events: (i) 10 days after notice by the
Company of a sale of all or substantially all of the
assets of the Company, during which ten-day period
such stock options shall be exercisable in full; (ii)
30 days after a termination of employment (or within
such other period specified by the Committee) for any
reason other than death, retirement or disability;
(iii) one year from the date of a termination of
employment (or within such other period specified by
the Committee) because of the optionee's death; (iv)
three months from the date of a termination of
employment (or within such other period specified by
the Committee) because of the optionee's disability
or retirement; or (v) as of the date of a termination
of employment because of a termination for cause. The
Committee may determine the terms and conditions
governing the termination of stock
20
<PAGE>
options granted to consultants. If the Committee
makes no such determination, then the same terms and
conditions applicable to employees that are listed
above will also apply to consultants.
Restrictions on Transferability of Grants. No
stock options granted under the Plan may be
transferred, except by will or the laws of descent
and distribution, or with respect to NQSOs pursuant
to a domestic relations order (within the meaning of
the Code or the Employee Retirement Income Security
Act of 1974), as permitted by the Committee;
provided, however, that if permitted by the Committee
and subject to such terms and conditions as the
Committee shall specify, the participant may also
transfer a NQSO to such participant's family members
or to other persons or entities. During the lifetime
of the participant, a stock option is exercisable
only by him or by the family member or other person
or entity to whom such stock option has been
transferred in accordance with the previous sentence.
Amendment, Term and Termination of the Plan. The
Board of Directors may amend or terminate the Plan at
any time; provided, however, that the Board of
Directors may not amend the Plan without shareholder
approval, if such approval is required by section
162(m) or section 422 of the Code. If approved by the
shareholders, the Plan, as amended and restated, will
be effective on February 11, 1997, and will terminate
on January 1, 2001, unless terminated earlier by the
Board of Directors or extended by the Board of
Directors with approval of the shareholders. No grant
may be made under the Plan after its termination, but
grants made prior thereto may extend beyond the date
of termination.
Adjustment Provisions. If there is any change in,
reclassification of, subdivision of, combination of,
split-up or spin-off with respect to, stock dividend
on, or exchange of stock of the Company for
outstanding Shares, the number of Shares available
for stock option grants under the Plan, the maximum
number of Shares that may be subject to stock options
granted to any individual under the Plan during a
calendar year, the number and class of Shares subject
to any stock option and the option prices of stock
options may be adjusted by the Committee, in its
discretion. If there is any other change, other than
as described above, in the number or kind of
21
<PAGE>
outstanding Shares, or in the event of a dividend to
shareholders in other than cash or stock of the
Company, the Committee, in its discretion, may adjust
the number or kind of Shares available under the
Plan, the maximum number or kind of Shares that may
be granted to any individual under the Plan during
any calendar year, or the number, price or kind of
Shares then subject to stock options. The Plan
provides restrictions on the Committee's ability to
act and on the effectiveness of certain Plan
provisions, if such actions or provisions would
result in a consolidation or merger of the Company
being ineligible for pooling of interest accounting
treatment, if such treatment is desired and would
otherwise be available.
Federal Income Tax Consequences. There are no
federal income tax consequences to participants or to
the Company upon the grant of an NQSO under the Plan.
Upon the exercise of NQSOs, a participant will
recognize ordinary compensation income in an amount
equal to the excess of the fair market value of the
Shares at the time of exercise over the exercise
price of the NQSO, and the Company generally will be
entitled to a corresponding federal income tax
deduction. Upon the sale of Shares acquired by
exercise of an NQSO, a participant will have a
capital gain or loss (long-term or short-term
depending upon the length of time the Shares were
held) in an amount equal to the difference between
the amount realized upon the sale and the
participant's adjusted tax basis in the Shares (the
exercise price plus the amount of ordinary income
recognized by the participant at the time of exercise
of the NQSO).
A participant who is granted an ISO will not
recognize taxable income for purposes of the regular
income tax, upon either the grant or exercise of the
ISO. A participant who disposes of the Shares
acquired upon exercise of an ISO after two years from
the date the ISO was granted and after one year from
the date such shares were transferred to him will
recognize long-term capital gain or loss in the
amount of the difference between the amount realized
on the sale and the option price (or the
participant's other tax basis in the shares), and the
Company will not be entitled to any tax deduction by
reason of the grant or exercise of the ISO. As a
general rule, if a participant disposes of the Shares
acquired
22
<PAGE>
upon exercise of an ISO before satisfying both
holding period requirements (a "disqualifying
disposition"), his or her gain recognized on such a
disposition will be taxed as ordinary income to the
extent of the difference between the fair market
value of such Shares on the date of exercise and the
option price, and the Company will be entitled to a
deduction in that amount. The gain, if any, in excess
of the amount recognized as ordinary income on such a
disqualifying disposition will be long-term or short-
term capital gain, depending upon the length of time
the participant held his or her Shares prior to the
disposition.
Local and state tax authorities may also tax
incentive compensation awarded under the Plan.
The table below summarizes the number of stock
options that were granted under the Plan to each
person and the groups listed below during the year
ended December 31, 1996.
<TABLE>
<CAPTION>
RECIPIENT OPTION SHARES
----------------------------------------------------------------
<S> <C>
Alfred P. West, Jr................................ -0-
Henry H. Greer.................................... 15,000
Richard B. Lieb................................... 15,000
Edward D. Loughlin................................ 15,000
Carmen V. Romeo................................... 15,000
Executive Officers as a Group (8 persons)......... 100,000
All Non-Executive Employees as a Group............ 253,000
----------------------------------------------------------------
</TABLE>
(Proposal No. 3) RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed Arthur Andersen
LLP, independent public accountants, to be the
Company's auditors for 1997. Although not required to
do so, the Board has determined that it would be
desirable to request ratification of this appointment
by the holders of Shares of the Company. If such
ratification is not received, the Board will
reconsider the appointment. Representatives of Arthur
Andersen LLP are expected to be available at the
Annual Meeting to respond to appropriate questions
and to make a statement if they so desire.
23
<PAGE>
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES
CAST AT THE ANNUAL MEETING BY THE HOLDERS OF THE
OUTSTANDING SHARES IS REQUIRED FOR THE RATIFICATION
OF THIS SELECTION. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THIS PROPOSAL.
OTHER MATTERS
As of the date of this Proxy Statement, management
knows of no other matters to be presented for action
at the Annual Meeting. However, if any further
business should properly come before the Annual
Meeting, the persons named as proxies in the
accompanying proxy card will vote on such business in
accordance with their best judgment.
SOLICITATION OF PROXIES
The accompanying proxy card is solicited on behalf of
the Board of Directors of the Company. Following the
original mailing of the proxy materials, proxies may
be solicited personally by officers and employees of
the Company, who will not receive additional
compensation for these services. The Company will
reimburse banks, brokerage firms, and other
custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy material
to beneficial owners of Shares.
PROPOSALS OF SHAREHOLDERS
Proposals which shareholders intend to present at the
next Annual Meeting of Shareholders of the Company
must be received by the Secretary of the Company at
its principal offices (Oaks, PA 19456-1100) no later
than December 18, 1997.
ADDITIONAL INFORMATION
The Company will provide without charge to any person
from whom a proxy is solicited by the Board of
Directors, upon the written request of such person, a
copy of the Company's 1996 Annual Report on Form
24
<PAGE>
10-K, including the financial statements and
schedules thereto, required to be filed with the
Securities and Exchange Commission pursuant to Rule
13a-1 under the Securities Exchange Act of 1934, as
amended. Such written requests should be directed to
Murray A. Louis, Vice President, at the Company's
principal offices.
25
<PAGE>
EXHIBIT A
AMENDED, RESTATED AND RENEWED
AS OF FEBRUARY 11, 1997
SEI INVESTMENTS COMPANY
STOCK OPTION PLAN
1. Background.
The Board of Directors of SEI Investments Company (formerly known as SEI
Corporation), a Pennsylvania corporation (the "Company"), by resolution dated
January 21, 1981, adopted the Stock Option Plan (the "Plan") providing for the
grant of stock options for the purchase of shares of Non-Voting Common Stock
of the Company, which shares were subsequently converted to Common Stock, par
value $.01 (the "Shares"), to employees of the Company and its subsidiaries.
The Plan was initially approved by the shareholders of the Company on February
9, 1981. The Plan has been subsequently amended and restated from time to time
by all requisite action of the Board of Directors and shareholders of the
Company. The Plan was again amended and restated by action of the Board of
Directors on February 11, 1997, subject to approval by shareholders of the
Company.
2. Purpose of Plan.
The purpose of the Plan is to allow for the issuance thereunder of
Incentive Stock Options and Non-Qualified Options in order to provide an
additional means through which the Company can attract and retain employees
and consultants. The Company believes that the Plan will encourage the
participants to contribute materially to the growth of the Company, thereby
benefitting the Company's shareholders, and will align the economic interests
of the participants with those of the shareholders.
3. Administration of the Plan.
(a) Committee. The Plan shall be administered and interpreted by a Stock
Option Committee (the "Committee"). The Committee shall consist of two or more
persons appointed by the Board of Directors, all of whom shall be "outside
directors" as defined under section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code") and related Treasury regulations and "non-
employee directors" as defined under Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
26
<PAGE>
(b) Committee Authority. The Committee shall have the sole authority to (i)
determine the individuals to whom grants shall be made under the Plan, (ii)
determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the
duration of any applicable exercise period, including the criteria for
exercisability and the acceleration of exercisability and (iv) deal with any
other matters arising under the Plan.
(c) Committee Determinations. The Committee shall have full power and
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals.
4. Shares Subject to the Plan.
(a) Plan Share Limits. The maximum aggregate number of Shares with respect
to which options may be granted from time to time under the Plan (subject to
the provisions of Section 12) shall be 12,304,988 Shares. The maximum aggregate
number of Shares that shall be subject to grants made under the Plan to any
individual during any calendar year shall be 25,000 Shares.
(b) Other Share Requirements. If an option granted under the Plan ceases to
be exercisable in whole or in part by reason of (i) the expiration of the term
of the option; (ii) the cancellation of the option with the consent of the
optionee; (iii) upon or following termination of employment of the optionee in
accordance with Section 10; or (iv) the forfeiture, exchange or surrender of
the option, the Shares which were subject to such option, but to which the
option had not been exercised at the time of termination of the option, shall
continue to be available under the Plan. The Shares to be issued upon exercise
of options granted under the Plan shall be either authorized but unissued
Shares or Shares reacquired by the Company and held in the treasury of the
Company, including Shares purchased by the Company on the open market for
purposes of the Plan.
27
<PAGE>
5. Designation of Participants
(a) Eligible Individuals. Employees of the Company, and affiliates of the
Company, shall be eligible to receive options under the Plan. Consultants who
perform services to the Company or any of its affiliates shall be eligible to
participate in the Plan if the consultants render bona fide services and such
services are not in connection with the offer or sale of securities in a
capital-raising transaction. Notwithstanding the foregoing, only employees of
the Company or its subsidiaries shall be eligible to receive Incentive Stock
Options.
(b) Selection of Optionees. From time to time, the Committee shall designate
from such eligible persons those who will receive options and the number of
Shares to be covered by each option.
(c) Rights of Participants. Nothing in the Plan shall entitle any employee,
consultant or other person to any claim or right to be granted an option under
this Plan. Nothing in this Plan, in any option granted pursuant to this Plan,
or in any action taken hereunder shall be construed as conferring on any
individual any rights to continue in the employ (or as a consultant) of the
Company or any of its subsidiaries, or any other employment (or consulting)
rights. Nothing in the Plan or in any option granted pursuant to this Plan
shall in any way interfere with the right of the Company or any of its
subsidiaries to terminate the optionee's employment (or consulting
relationship) at any time. Options may be granted to eligible persons whether
or not they hold or have held options under the Plan or under plans or
arrangements previously adopted by the Company.
(d) Definitions. For the purposes of the Plan, the term "subsidiary" shall
mean any corporation now existing or hereafter organized or acquired by the
Company in an unbroken chain of corporations beginning with the Company if, at
the time of the granting of the option, each of the corporations (including the
Company) other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one or the other corporations, in such chain. The term
"affiliate" shall mean any corporation, partnership or other entity in which
the Company holds, directly or indirectly, fifty percent (50%) or more of the
entity's equity interest.
6. Types of Options.
Options granted under the Plan may be of two types: (a) options intended to
meet the requirements of section 422 of the Code ("Incentive Stock Options")
and (b) options not intended to meet the requirements of section 422 of the
Code ("Non-Qualified Options"). The Committee shall have authority and
discretion to grant to an eligible person either Incentive Stock Options, Non-
Qualified Options or both but shall clearly designate the nature of each option
at the time of option grant.
28
<PAGE>
7. Stock Option Agreement.
Each option granted under the Plan shall be subject to the terms and
conditions set forth herein and shall be evidenced by a stock option agreement,
which shall be executed by the Company. The agreement shall contain such terms
and provisions, not inconsistent with the Plan, as shall be determined by the
Committee, including (a) a clear designation of the status of the options
granted thereby; and (b) in the case of Incentive Stock Options such terms as
shall be requisite to cause such options to comply with the provisions of
section 422 of the Code. The Committee shall approve the form and provisions of
each stock option agreement, and any amendment thereto. Incentive Stock Options
and Non-Qualified Options may be granted simultaneously and subject to a single
option agreement, provided that, in no event shall a Non- Qualified Option be
granted in tandem with an Incentive Stock Option, such that the exercise of one
affects the right to exercise the other. The terms and provisions of such
option agreements may vary between optionees and between different options
granted to the same optionee. By accepting any option granted under the Plan,
an optionee will be deemed to have agreed to all provisions contained in the
option agreement.
8. Option Price.
(a) Determination of Option Price. The option price shall be determined by
the Committee and shall be not less than the Fair Market Value (as defined
below) of the Shares at the time the option is granted provided; however, that
the option price of Shares with respect to Incentive Stock Options granted to
any person possessing (at the time of option grant) over ten percent of the
total combined voting power of all classes of stock of the Company and any
parent and subsidiary corporations (such person hereinafter a "control person")
shall be 110% of such Fair Market Value of a Share on the date the Incentive
Stock Option is granted.
(b) Determination of Fair Market Value. For the purposes of this Plan, the
Fair Market Value of the Shares shall mean the average (mean) of the closing
bid and asked prices of the Shares as reported on the relevant date through the
National Association of Securities Dealers Automated Quotation System or, if
the Shares are listed or admitted to trading on the Nasdaq National Market
System or any national securities exchange or if the last reported sale price
of such Shares is generally available, the last reported sale price on such
system or exchange on the relevant date. The Fair Market Value for any day for
which there is no such bid and asked price or last reported sales price shall
be the Fair Market Value of the next preceding day for which there is such a
price.
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Should the Shares be traded otherwise than on the markets referred to above,
then the Fair Market Value shall be determined by the Committee. If the Shares
are not publicly traded, then the Fair Market Value shall be not less than the
value established for the Shares by an independent appraisal as of a date not
more than twelve months before such value determination by the Committee.
9.Amount of Incentive Stock Options.
With respect to Incentive Stock Options granted after December 31, 1986, if
the aggregate Fair Market Value (determined as of the time of option grant) of
the Shares with respect to which such Incentive Stock Options first become
exercisable during any calendar year under this Plan and any other plan of the
Company or any parent or subsidiary, exceeds $100,000, then such Incentive
Stock Options, to the extent of such excess, shall be treated for all tax
purposes as Non-Qualified Options.
10. Terms of Options.
The Committee shall have the authority to determine the term of each option,
provided that no Incentive Stock Option granted to a control person shall be
exercisable after the expiration of five (5) years from the date of option
grant and no other option shall be exercisable after the expiration of ten (10)
years from the date of option grant. Subject to the limitation periods
hereinabove set forth, no option, or portion thereof, granted under the Plan
shall vest after the optionee ceases to be employed by (and is employed by
neither) the Company or one of its subsidiaries or affiliates (a "termination
of employment") and all options shall terminate automatically on the earliest
to occur of the expiration of the option term (as described above), or one of
the following events:
a. Upon the expiration of ten (10) days after notice by the Company pursuant
to Section 12(d) of the sale of all or substantially all of its assets;
b. Thirty (30) days after a termination of employment (or within such other
period of time as may be specified by the Committee) for any reason other than
death, retirement or disability;
c. One year from the date of a termination of employment (or within such
other period of time as may be specified by the Committee) by reason of the
optionee's death;
d. Three months from the date of a termination of employment (or within such
other period of time as may be specified by the Committee) by reason of the
optionee's disability or retirement; or
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e. As of the date of a termination of employment by reason of a termination
for cause.
For purpose of determining whether or not a termination of employment has
occurred, (i) the transfer of an optionee among the Company or any subsidiary
or affiliate shall not be deemed a termination of employment, (ii) the sale of
any subsidiary or affiliate to an unaffiliated party shall be deemed a
termination of employment of any optionee who continues to be employed by such
subsidiary or affiliate subsequent to such sale, (iii) a consultant shall be
deemed to have incurred a termination of employment at the time he is no
longer required to perform services for the Company or any subsidiary or
affiliate, as determined by the Committee, (iv) an optionee shall be deemed to
have been terminated for cause if the Committee finds that the optionee has
breached his employment or service contract with the Company, any subsidiary
or affiliate, or has been engaged in disloyalty to the Company, any subsidiary
or affiliate, including, without limitation, fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his employment or
service, or has disclosed trade secrets or confidential information of the
Company, any subsidiary or affiliate to persons not entitled to receive such
information, and (v) an optionee shall be deemed to be disabled if the
optionee becomes disabled within the meaning of section 22(e)(3) of the Code.
Notwithstanding the foregoing, with respect to an option granted to a
consultant, the Committee, in its sole discretion, shall establish the
provisions concerning termination of such option at the time of option grant.
In the absence of such establishment, the provisions of (a) through (e) above
shall apply.
11. Exercise of Options.
(a) Exercisability of Options. The time or times at which or during which
options granted under this Plan may be exercised, and any conditions
pertaining to such exercise, shall be determined by the Committee and
specified in the stock option agreement or an amendment to the stock option
agreement; provided however, that no Incentive Stock Option granted on or
before December 31, 1986 shall become exercisable while the optionee has
outstanding any previously granted incentive stock option (as defined in
section 422 of the Code) to purchase stock in the Company, in a corporation
that (at the time of option grant) was a parent or subsidiary of the Company
or in a predecessor corporation of any of such corporations.
(b) Transferability of Options.
(i) Nontransferability of Options. Except as provided below, no option
granted under this Plan shall be assignable or otherwise transferable
except by will or the laws of descent and distribution or, with respect to
Non-Qualified Options, if permitted in any specific case by the Committee,
pursuant to a domestic relations order (as defined under the Code or Title
I of the Employee Retirement Income Security Act of 1974, as amended, or
the regulations thereunder). Any option shall be exercisable solely by
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the optionee during the lifetime of the optionee and, after the death of
the optionee, an option shall be exercisable (subject to the provision of
Section 10) solely by either the duly qualified personal representative or
representatives of the optionee, or the person or persons who acquire the
right to exercise such option by will or the laws of descent and
distribution and such person or persons furnish proof satisfactory to the
Company of his or their right to receive the option under the optionee's
will or under the applicable laws of descent and distribution.
(ii) Transfer of Non-Qualified Options. Notwithstanding the foregoing,
the Committee may provide, in a stock option agreement, that an optionee
may transfer Non-Qualified Options to family members or other persons or
entities according to such terms as the Committee may determine; provided
that the optionee receives no consideration for the transfer of a Non-
Qualified Option and the transferred Option shall continue to be subject to
the same terms and conditions as were applicable to the Option immediately
before the transfer.
(c) Payment of Option Price. The purchase price of the Shares as to which
an option is exercised shall be paid in full in cash or in any other manner
approved by the Committee which may include, but shall not be limited to,
payment by surrender of unrestricted Shares owned by the optionee (including
Shares acquired in connection with the exercise of the option, subject to such
restrictions as the Committee deems appropriate) and having a Fair Market
Value on the date of exercise equal to the purchase price, or payment through
a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board. The optionee shall pay the option price and the amount
of any withholding tax due (pursuant to Subsection (d)) at the time of
exercise.
(d) Withholding of Taxes.
(i) Required Withholding. All options under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company may require the optionee or other person
receiving such Shares to pay to the Company the amount of any such taxes
that the Company is required to withhold with respect to the exercise of
such options, or the Company may deduct from other wages paid by the
Company the amount of any withholding taxes due with respect to such
exercise.
(ii) Withholding Shares. If the Company is required to withhold any
taxes arising from an exercise of options under the Plan, the Treasurer of
the Company may, in such person's discretion, withhold delivery of Shares
issuable upon exercise of an option in an amount (valued at the Fair Market
Value of such Shares on the date of exercise of the option) sufficient to
cover the Company's withholding obligation with respect to such taxes.
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<PAGE>
(e) Notice of Exercise. Notice in writing shall be given by the optionee to
the Treasurer of the Company, or such other person as may be designated from
time to time by the Treasurer, on any day on which the offices of the Company
are generally open for the conduct of business, which notice shall indicate the
exercise of any option and specify the number of Shares desired at the option
price.
(f) Limitations on Issuance of Shares. The obligation of the Company to
deliver Shares upon such exercise shall be subject to all applicable laws,
rules, regulations, and such approvals by governmental agencies as may be
deemed appropriate by the Committee, including, among others, such steps as
counsel for the Company shall be deem necessary or appropriate to comply with
requirements of relevant securities laws. Such obligation shall also be subject
to the condition that the Shares reserved for issuance upon the exercise of
options granted under the Plan shall have been duly listed on any national
securities exchange which then constitutes the principal trading market for the
Shares.
12. Capital Change of the Company.
(a) Adjustments. In the event that there is a change in, reclassification
of, subdivision of, combination of, split-up or spin-off with respect to, stock
dividend on, or exchange of stock of the Company for the outstanding Shares of
the Company, the maximum aggregate number and class of Shares as to which
options may be granted under the Plan, the maximum aggregate number of Shares
that any individual participating in the Plan may be granted in any calendar
year, and the number and class of Shares as to which each outstanding option
and the option price may (but need not) be adjusted by the Committee in any
manner in which the Committee, in is absolute discretion, deems appropriate.
Such adjustment to Shares subject to the Plan or to Shares subject to options
under the Plan shall not in any event take place with respect to any dividend
payable in Shares of the Company, unless such dividend would result in either
(i) an increase of ten percent (10%) or more in the outstanding Shares of the
Company since the adoption of the Plan or the grant of the subject option
thereunder, as the case may be; or (ii) an increase in any one transaction of
five percent (5%) or more in the outstanding Shares.
(b) Consolidation or Merger of the Company. If the Company shall be
consolidated or merged with another corporation, each optionee who has an
outstanding option hereunder shall, at the time for issuance of Shares upon
exercise or partial exercise of such option, be entitled to receive the same
number and kind of shares, or the same amount of other property, cash, or
securities as the optionee would have been entitled to receive upon the
happening of such consolidation or merger if the optionee had been, immediately
prior to such event, the holder of the number of Shares to which the optionee
has an outstanding option hereunder (to the extent of such exercise or partial
exercise) adjusted in the manner provided in this Section, or, if another
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<PAGE>
corporation shall be the survivor, such other corporation shall substitute
therefor a substantially equivalent number and kind of shares of stock or other
property, cash, or securities of such other corporation. Notwithstanding
anything in the Plan to the contrary, in the event of a consolidation or merger
described above, the Committee shall not have the right to take any actions
described in the Plan that would make the consolidation or merger ineligible
for pooling of interests accounting treatment or that would make the
consolidation or merger ineligible for desired tax treatment if, in the absence
of such right, the consolidation or merger would qualify for such treatment and
the Company intends to use such treatment with respect to the consolidation or
merger.
(c) Further Adjustments. In the event that there shall be any change, other
then as specified above, in the number or kind of the outstanding Shares or of
any stock or other securities into which such Shares shall have been changed or
for which they shall have been exchanged, or in the event of a dividend to
holders of the Shares payable other than in cash or stock of the Company, then
if the Committee shall determine that such change equitably requires an
adjustment in the number or kind of Shares theretofore appropriated for the
purposes of the Plan but not yet covered by an option, an adjustment in the
number or kind of Shares that may be granted to any individual during any
calendar year under the limit set forth in Section 4 of the Plan, or an
adjustment with respect to the number, price or kind of Shares then subject to
an option or options, such adjustment shall be made and shall be effective and
binding for all purposes of the Plan.
(d) Sale of Substantially all Assets. Notwithstanding the above, if all or
substantially all of the assets of the Company shall be sold or exchanged
(otherwise than by merger or consolidation), each optionee shall have the right
to exercise such option in full, to the extent that it has not previously been
exercised within ten (10) days after the notice by the Company of the right to
exercise, and any such option not so exercised shall lapse.
13. Termination and Amendment.
(a) Termination and Amendment of Plan. Unless the Plan shall theretofore
have been terminated as hereinafter provided, it shall terminate on, and no
option shall be granted thereunder after, January 1, 2001. The Board of
Directors may also terminate the Plan or make such modifications or amendments
thereof as it shall deem advisable; provided, however, that the Board of
Directors shall not, amend the Plan without further approval by the holders of
a majority of the outstanding common stock of the Company if such approval is
required by section 162(m) of the Code or such approval is required by section
422 of the Code.
(b) Termination and Amendment of Outstanding Options. The Committee may
authorize amendments of outstanding options including without limitation the
reduction of the option prices specified therein (or the
34
<PAGE>
granting of new options at lower prices upon the cancellation of outstanding
options), so long as all options granted hereunder outstanding at any one time
shall not call for issuance of more shares of common stock than those provided
in Section 4 hereof and so long as the provisions of any amended option would
have been permissible under the Plan if such option had been originally granted
as of the date of such amendment with such amended terms. No termination,
modification, or amendment of this Plan may adversely affect any then
outstanding option under such Plan without the consent of the person to whom
such option has been granted. Whether or not the Plan has terminated, an
outstanding option may be terminated or amended under Section 18(c) or may be
amended by agreement of the Company and the optionee consistent with the Plan.
(c) Governing Document. The Plan shall be the controlling document. No other
statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
14. Funding of the Plan.
This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of grants under this Plan. In no event shall interest be
paid or accrued on any grant.
15. No Fractional Shares
No fractional Shares shall be issued or delivered pursuant to the Plan or
any option. The Committee shall determine whether cash, other awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
16. Headings.
Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.
17. Effective Date.
Subject to the approval of the Company's shareholders, the Plan, as amended
and restated, shall be effective on February 11, 1997.
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<PAGE>
18. Miscellaneous.
(a) Grants in Connection with Corporate Transactions and Otherwise. Nothing
contained in this Plan shall be construed to (i) limit the right of the
Committee to make grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including options to employees thereof
who become employees of the Company, or for other proper corporate purposes, or
(ii) limit the right of the Company to grant stock options or make other awards
outside of this Plan. Without limiting the foregoing, the Committee may make a
grant to an employee of another corporation who becomes an employee by reason
of a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for a stock option or restricted stock grant made by such
corporation. The terms and conditions of the substitute grants may vary from
the terms and conditions required by the Plan and from those of the substituted
stock incentives. The Committee shall prescribe the provisions of the
substitute grants.
(b) Rights of an Optionee. No optionee shall have any rights of a
shareholder with respect to any Shares unless and until the optionee has
exercised the option with respect to such Shares and has paid the full option
price therefor.
(c) Compliance with Law. The Plan and the exercise of options shall be
subject to all applicable laws and to approvals by any governmental or
regulatory agency as may be required. With respect to persons subject to
section 16 of the Exchange Act, it is the intent of the Company that the Plan
and all transactions under the Plan comply with all applicable provisions of
Rule 16b-3 or its successors under the Exchange Act. The Committee may revoke
any grant if it is contrary to law or modify a grant to bring it into
compliance with any valid and mandatory government regulation. The Committee
may also adopt rules regarding the withholding of taxes on payments to
optionees. The Committee may, in its sole discretion, agree to limit its
authority under this Section.
(d) Governing Law. The validity, construction, interpretation and effect of
the Plan and stock option agreements issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the Commonwealth of
Pennsylvania, to the extent such law is not superseded by or inconsistent with
Federal law.
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SEI Investments Oaks, PA 19456
<PAGE>
- --------------------------------------------------------------------------------
PROXY SEI INVESTMENTS COMPANY PROXY
This proxy is solicited on behalf of the Board of Directors
The undersigned shareholder of SEI Investments Company (the "Company")
hereby appoints Kevin P. Robins, Sandra K. Orlow and Marc Cahn, or any of them
(with full power to act alone in the absence of the other and with full power of
substitution in each), the proxy or proxies of the undersigned, and hereby
authorizes any of them to represent and to vote as designated on the reverse,
all Shares of Common Stock of the Company held of record by the undersigned at
the close of business on April 3, 1997, at the Annual Meeting of Shareholders to
be held on May 14, 1997, and at any adjournments thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
SEI INVESTMENTS COMPANY
May 14, 1997
Please Detach and Mail in the Envelope Provided
[X] Please mark your
votes as in this
example.
(Instructions: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list of nominees.)
FOR ALL WITHHOLD ALL
1. Election of [_] [_] Nominees: Henry H. Greer
Directors Richard B. Lieb
Carmen V. Romeo
FOR, except vote withheld from the following nominee(s):
- ------------------------------
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Company's [_] [_] [_]
Stock Option Plan.
3. Ratification of the selection of Arthur Andersen [_] [_] [_]
LLP as the Company's auditors for 1997:
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
This proxy, when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR Proposals 1, 2
and 3.
CHECK HERE FOR ADDRESS CHANGE [_]
CHECK HERE IF YOU PLAN TO ATTEND [_]
THE MEETING
Please mark, sign, date, and return the proxy card promptly using the enclosed
envelope.
SIGNATURE(S) DATE
---------------------------------- --------------------------
Note: Please sign exactly as name appears hereon. When Shares are held by
joint tenants, all joint tenants should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give the full title as
such. If a corporation, please sign in the full corporate name by the President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
