<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):
[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 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:
<PAGE>
SEI
Investments Notice of Annual Meeting
of Shareholders to be held May 21, 1998
<PAGE>
SEI INVESTMENTS COMPANY
Oaks, PA 19456-1100
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1998
The Annual Meeting of Shareholders of SEI Investments
Company (the "Company"), a Pennsylvania business
corporation, will be held at 10:00 a.m., local time,
Thursday, May 21, 1998, at One Freedom Valley Drive,
Oaks, PA 19456-1100 for the following purposes:
1. To elect two directors for a term expiring at the
2001 Annual Meeting;
2. To consider approval of the SEI Investments Company
1998 Equity Compensation Plan;
3. To consider approval of the SEI Investments Company
Employee Stock Purchase Plan, as amended and
restated;
4. To ratify the selection of Arthur Andersen LLP as
the Company's auditors for 1998; and
5. To transact such other business as may properly come
before the Annual Meeting or any adjournments
thereof.
Only shareholders of record at the close of business
on April 7, 1998 will be entitled to notice of, and
to vote at, the Annual Meeting and at any
adjournments thereof.
By order of the Board of Directors,
William M. Doran
Secretary
April 24, 1998
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO
COMPLETE, SIGN, AND RETURN THE ACCOMPANYING PROXY
CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
SEI INVESTMENTS COMPANY
Oaks, PA 19456-1100
PROXY STATEMENT
1998 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 1998 Annual Meeting of Shareholders of the
Company to be held on May 21, 1998 (the "1998 Annual
Meeting") and at any adjournments thereof. Action
will be taken at the meeting upon the election of two
directors, approval of the SEI Investments Company
1998 Equity Compensation Plan, approval of the SEI
Investments Company Employee Stock Purchase Plan, as
amended and restated, ratification of the selection
of Arthur Andersen LLP as the Company's auditors for
1998, 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 1997 will first be sent
to the Company's shareholders on or about April 24,
1998.
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 7, 1998 are entitled to
vote at the 1998 Annual Meeting. On that date there
were 17,813,363 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 approval of the
1
<PAGE>
SEI Investments Company 1998 Equity Compensation
Plan, FOR the approval of the SEI Investments Company
Employee Stock Purchase Plan, as amended and
restated, and FOR ratification of the selection of
Arthur Andersen LLP as the Company's auditors for
1998. If any other matters are properly 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 1998
Annual 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, three or
four, 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 six members and is divided into three
classes, one class being comprised of three
directors, one class being comprised of two directors
and one class currently comprised of one director and
one vacancy due to the death of a director. 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, two directors will be
elected for the current class. This class will be
elected at the 1998 Annual Meeting by a plurality of
votes cast at the meeting.
Messrs. West and Doran, both of whom are current
members of the Board of Directors, have been
nominated by the Board of Directors for election as
directors at the 1998 Annual Meeting. Shares
represented by
2
<PAGE>
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
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 1998 Annual Meeting will be reduced accordingly.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS VOTE FOR THE ELECTION OF MESSRS.
WEST AND DORAN AS DIRECTORS AT THE 1998 ANNUAL
MEETING.
Set forth below is certain information concerning
Messrs. West and Doran and each of the four other
current directors whose terms continue after the 1998
Annual Meeting.
Nominees for election at the 1998 Annual Meeting:
ALFRED P. WEST, JR., 55, 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 of Directors.
WILLIAM M. DORAN, 57, has been a director since March
1985 and is a member of the Compensation Committee of
the Board of Directors. 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
3
<PAGE>
company for which the Company's subsidiaries act as
advisor, administrator and/or distributor.
Director continuing in office with a term expiring in
1999:
HENRY H. PORTER, JR., 63, has been a director since
September 1981 and is a member of the Audit,
Compensation and Stock Option Committees of the Board
of Directors. 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.
On February 24, 1998 Donald C. Carroll, a director
since 1979, died, resulting in a vacancy in the class
of directors with terms expiring in 1999. At this
time, the Board of Directors is not proposing a
nominee to fill the vacancy created by Mr. Carroll's
death because it is currently in the process of
reviewing candidates for such vacancy. It is
anticipated that the Board of Directors will fill
such vacancy within the next several months. Upon
election by the Board of Directors, the new director
will continue in office with a term expiring in 1999.
Directors continuing in office with terms expiring in
2000:
HENRY H. GREER, 60, has been a director since
November 1979 and is a member of the Audit Committee
of the Board of Directors. 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, 50, 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
4
<PAGE>
in 1995. From 1986 to 1995, Mr. Lieb served in
various executive positions with the Company.
CARMEN V. ROMEO, 54, has been an Executive Vice
President of the Company since December 1985 and a
director since June 1979. Mr. Romeo is President of
the Company's Investment Advisory Group. Mr. Romeo
was Treasurer and Chief Financial Officer of the
Company from June 1979 until September 1996.
Board and Committee The Board of Directors of the Company held five
Meetings meetings in 1997. During the year, all current
directors attended at least 75% of all meetings of
the Board of Directors and of the committees on which
they served. Standing committees of the Board of
Directors of the Company are the Audit Committee,
Compensation Committee and Stock Option Committee.
Currently, the Audit Committee has two members,
Messrs. Greer and Porter. Members of the Compensation
Committee are Messrs. West, Doran and Porter.
Currently, the sole member of the Stock Option
Committee is Mr. Porter. The Board of Directors
anticipates that any candidate elected to fill the
vacancy created by the death of Mr. Carroll would
qualify as both a "Non-Employee Director" (as defined
in Rule 16b-3 under the Exchange Act) and an "Outside
Director" (as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended) and would
join Mr. Porter on the Stock Option Committee and
Messrs. Greer and Porter on the Audit Committee.
During 1997, the Audit Committee met two 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 1997, the Compensation Committee met four
times. The principal function of the Compensation
Committee is to administer the Company's compensation
programs, including its stock option plans and
5
<PAGE>
bonus and incentive plans. The Compensation Committee
also reviews with management and approves the
salaries of senior corporate officers and employment
agreements between the Company and senior corporate
officers.
During 1997, the Stock Option Committee met one
time. The principal function of the Stock Option
Committee is to administer the Company's Stock Option
Plan. The Stock Option Committee was established in
February 1997.
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 of
Directors at the Company's principal office.
OWNERSHIP OF SHARES
The following table contains information as of
February 28, 1998 relating to the beneficial
ownership of Shares by each of the members of the
Board of Directors, the Chief Executive Officer and
each of the four other most highly compensated
executive officers of the Company, by 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, 1998, there
were 17,729,912 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.
6
<PAGE>
<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/)................ 5,223,537 29.4%
William M. Doran(/3/) (/4/)............. 804,320 4.5%
Carmen V. Romeo(/3/) (/5/).............. 429,580 2.4%
Henry H. Greer(/3/)..................... 377,476 2.1%
Richard B. Lieb(/3/).................... 217,250 1.2%
Edward D. Loughlin(/3/)................. 185,167 1.0%
Henry H. Porter, Jr.(/3/)............... 62,000 *
All executive officers and directors as
a group (10 persons)(/6/).............. 6,855,916 36.5%
Thomas W. Smith(/7/).................... 1,812,300 10.2%
Thomas N. Tryforos(/7/)................. 1,444,814 8.1%
---------------------------------------------------------------
</TABLE>
* Less than one percent.
(1) Applicable percentage of ownership is based on
17,729,912 Shares of Common Stock outstanding on
February 28, 1998. Beneficial ownership is
determined in accordance with the rules of the
Securities and Exchange Commission and means voting
or investment power with respect to securities.
Shares of Common Stock issuable upon the exercise of
stock options exercisable currently or within 60
days of February 28, 1998 are deemed outstanding and
to be beneficially owned by the person holding such
option for purposes of computing such person's
percentage ownership, but are not deemed outstanding
for the purpose of computing the percentage
ownership of any other person. Except for Shares
held jointly with a person's spouse or subject to
applicable community property laws, or as indicated
in the footnotes to this table, each shareholder
identified in the table possesses sole voting and
investment power with respect to all Shares of
Common Stock shown as beneficially owned by such
shareholder.
(2) Includes an aggregate of 4,000 Shares held by Mr.
West's wife and 816,734 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. Also includes 756,250 Shares held by APWest
Associates, L.P., a Delaware limited partnership of
which Mr. West is the sole general partner. Also
includes 18,000 Shares which may be acquired upon
exercise of stock options exercisable within 60 days
of February 28, 1998 by a trust, the beneficiaries
of which are not related to
7
<PAGE>
Mr. West, of which Mr. West is a trustee. Mr. West's
address is c/o SEI Investments Company, Oaks, PA
19456-1100.
(3) Includes, with respect to Messrs. Doran, Porter,
Greer, Romeo, Lieb, and Loughlin, 12,000, 30,000,
341,500, 102,500, 148,250 and 177,750 Shares,
respectively, which may be acquired upon exercise of
stock options exercisable within 60 days of February
28, 1998.
(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 5,000 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 1,058,950 Shares which may be acquired upon
the exercise of stock options exercisable within 60
days of February 28, 1998.
(7) Messrs. Smith and Tryforos share voting and
investment power with respect to 1,437,000 Shares in
their capacities as general partners to private
investment limited partnerships and trustees of a
profit sharing trust. Mr. Smith is the beneficial
owner of an additional 100,300 Shares in his
capacity as investment manager to certain managed
accounts. Mr. Tryforos is the beneficial owner of an
additional 790 Shares in his capacity as investment
manager to certain managed accounts. In addition,
Messrs. Smith and Tryforos own 275,000 and 7,024
Shares, respectively, for their own accounts. The
address of Messrs. Smith and Tryforos is 323
Railroad Avenue, Greenwich, CT 06830.
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, 1997, 1996 and 1995.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- --------------------------
SECURITIES ALL OTHER
FISCAL SALARY BONUS UNDERLYING COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) (1) ($) (2) OPTIONS/SAR'S ($) (3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alfred P. West, Jr........ 1997 $ 310,000 $ 365,000 -0- $3,840
Chairman of the Board and 1996 $ 310,000 $ 190,000 -0- $3,600
Chief Executive Officer 1995 $ 310,000 $ 240,000 -0- $3,600
Henry H. Greer............ 1997 $ 285,000 $ 290,000 15,000 $3,840
Director, President,
Chief Operating Officer 1996 $ 285,000 $ 165,000 15,000 $3,600
and Chief Financial Offi-
cer 1995 $ 285,000 $ 215,000 -0- $3,600
Richard B. Lieb........... 1997 $ 260,000 $ 315,000 20,000 $3,840
Director and Executive 1996 $ 260,000 $ 190,000 15,000 $3,600
Vice President 1995 $ 260,000 $ 265,000 -0- $3,600
Edward D. Loughlin........ 1997 $ 250,000 $ 275,000 15,000 $3,840
Executive Vice President 1996 $ 250,000 $ 175,000 15,000 $3,600
1995 $ 250,000 $ 150,000 -0- $3,600
Carmen V. Romeo........... 1997 $ 250,000 $ 275,000 25,000 $3,840
Director and Executive
Vice President 1996 $ 250,000 $ 200,000 15,000 $3,600
1995 $ 250,000 $ 150,000 -0- $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 1997, 1996 and 1995 have been
listed in the year earned, but were actually paid in the following fiscal
year.
(3) The stated amounts are Company matching contributions to the CAP.
9
<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 $260,000
in 1997.
The Securities and Exchange Commission's proxy
rules also require disclosure of the range of
potential realizable values from stock options
granted during the fiscal year ended December 31,
1997, at assumed rates of stock price appreciation
through the expiration date of the options, and the
value realized from the exercise of options during
the fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SAR'S EXERCISE OR
OPTIONS/SAR'S GRANTED TO BASE PRICE GRANT DATE
GRANTED EMPLOYEES IN PER SHARE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR(2) ($/SH) DATE VALUE ($)(3)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alfred P. West, Jr. .... -0- 0.0% N/A N/A N/A
Henry H. Greer.......... 10,000 2.4% $19.500 4/24/07 $ 89,200.00
5,000 $42.000 12/8/07 $ 99,350.00
Richard B. Lieb......... 10,000 3.2% $19.500 4/24/07 $ 89,200.00
10,000 $42.000 12/8/07 $198,700.00
Edward D. Loughlin...... 10,000 2.4% $19.500 4/24/07 $ 89,200.00
5,000 $42.000 12/8/07 $ 99,350.00
Carmen V. Romeo......... 10,000 4.0% $19.500 4/24/07 $ 89,200.00
15,000 $42.000 12/8/07 $298,050.00
-----------------------------------------------------------------------------------------
</TABLE>
(1) All options granted to the named executive
officers were non-qualified options granted on
April 24, 1997 and December 8, 1997, at an
exercise price equal to the fair market value on
such date. The April 24, 1997 options become
exercisable in four equal annual installments
beginning one year from the date
10
<PAGE>
of option grant. 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
December 8, 1997 options become exercisable in two
equal installments upon achievement by the Company
of certain earnings per share goals; provided that
all options fully vest upon the seventh anniversary
of the date of the option grant.
(2) Based on total number of Shares granted to
employees in 1997 of 622,000.
(3) 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% for both option grants, (ii)
a risk free rate of return of 7.052% for the
4/24/97 options and 6.054% for the 12/8/97
options, (iii) a beta coefficient of 34.71% for
the 4/24/97 options and 40.01% for the 12/8/97
options, (iv) an exercise date of 7 years from the
date of grant for both option grants, 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.......... -0- $ 0 339,000 30,000 $10,294,281 $543,281
Richard B. Lieb......... 41,000 $865,437 145,750 36,250 $ 4,455,656 $572,969
Edward D. Loughlin...... -0- $ 0 175,250 28,750 $ 4,587,906 $513,594
Carmen V. Romeo......... 20,000 $705,000 100,000 40,000 $ 2,839,844 $543,281
- ---------------------------------------------------------------------------------------------------
</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, 1997 ($42.00) and the exercise price of the
options.
11
<PAGE>
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.
In 1997, Messrs. Doran and Porter, the Company's
non-employee directors, each received options to
purchase 4,000 Shares at an exercise price of $42.00
per share under the SEI Investments Company 1997
Stock Option Plan, which was adopted by the Board of
Directors on December 4, 1997. 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 two equal
installments upon achievement by the Company of
certain earnings per share goals; provided that all
options fully vest upon the seventh anniversary of
the date of the option grant.
Notwithstanding anything to the contrary, the following Report of the
Compensation Committee and the Performance Graph on page 17 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 and which
incorporates incentives for management to attain the
Company's annual goals and longer term objectives.
The Company believes that this approach enables it to
attract, retain and reward highly qualified
personnel.
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 the Company's business units
other than sales employees who are under sales
commission compensation plans. The compensation
program for management employees consists of base
salary; bonuses pursuant to incentive plans; and
12
<PAGE>
grants of stock options (in addition to benefits
afforded all employees such as healthcare insurance
and stock purchase and defined contribution plans).
Included in management is the Company's 16 member
Management Committee which is referred to herein as
"senior management."
In 1997, the Compensation Committee retained an
independent compensation consulting firm to review
compensation levels for senior management and its
overall compensation program. Its review included a
comparison of compensation of senior management to
the compensation for senior executives of comparable
companies and interviews with individual members of
senior management. As a result of this review the
Compensation Committee implemented certain changes in
the compensation program designed to (1) align
compensation more closely to long-term and short-term
profitability and other financial goals and (2)
encourage long-term stock ownership of senior
management. The Compensation Committee believes that
these objectives will enhance shareholder value.
The discussion below describes the Compensation
Committee's compensation process for 1997 and its
1998 strategies for compensation.
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. Since 1992, the
Committee has minimized base salary increases for
senior management and, in general, base salaries have
not increased from 1992 to 1997 except in connection
with promotions or increased responsibilities of
certain individuals. The Committee expects to
continue to minimize base salary increases with
incentive compensation tied to performance objectives
becoming a larger portion of overall compensation.
Base salaries, however, may be adjusted if an officer
is promoted to a higher level management position or
is given increased responsibilities.
13
<PAGE>
As discussed above, in 1997 the Company retained
an independent compensation consulting firm to
provide competitive compensation information which
was used by the Compensation Committee in reviewing
base salaries and total compensation for senior
management. Based upon this information, other
compensation data reviewed by the Committee and its
overall compensation objectives, the Company believes
the base salaries for senior management are set at
appropriate levels.
Incentive Bonuses
During the beginning of each year, the Compensation
Committee reviews target performance goals 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 performance
goals 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.
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. 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. 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
14
<PAGE>
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 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.
In December 1997, the Compensation Committee
reviewed the financial performance of the Company for
1997 and the achievement of the non-financial goals.
Based on its conclusion that the Company met
substantially all of its financial and non-financial
goals, the Compensation Committee approved the full
amount of incentive bonuses for senior management
that were established during the year.
For 1998, the Compensation Committee adopted a
corporate compensation plan that is based on
assigning each employee an individual potential
compensation award. The actual award is then based on
the achievement of (1) corporate goals, (2) the
employee's business unit goals and (3) the employee's
individual goals. The individual potential
compensation award assigned at the beginning of the
year replaces business unit compensation pools which
were used in prior years. The Compensation Committee
believes that the individual potential awards will
give employees more predictability as to the
incentive compensation to be achieved.
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 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. To
15
<PAGE>
this end more options were granted in 1997 than 1996,
but the vesting provisions were changed so that the
options are not exercisable for seven years unless
the Company achieves certain earnings targets which
would accelerate the vesting schedule. Prior grants
vested equally over four years. In addition, the
Compensation Committee approved and recommended to
the Board of Directors the 1998 Equity Compensation
Plan (described in Proposal No. 2), and modifications
to the Company's stock purchase plan (described in
Proposal No. 3) and the Company's Capital
Accumulation Plan to facilitate stock ownership.
Application of Section 162(m)
Payments during 1997 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.
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, 1997. The Company
proposes to retain the services of such firm in 1998.
16
<PAGE>
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, 1997. The graph assumes a $100
investment on January 1, 1993 and the reinvestment of
all dividends.
Comparison of Cumulative Total Return of SEI Investments,
Industry Index, and NASDAQ Market Index
[LINE GRAPH APPEARS HERE]
17
<PAGE>
(Proposal No. 2)
APPROVAL OF SEI INVESTMENTS COMPANY 1998 EQUITY
COMPENSATION PLAN
At the 1998 Annual Meeting, there will be presented
to shareholders a proposal to approve the adoption of
the SEI Investments Company 1998 Equity Compensation
Plan (the "1998 Equity Compensation Plan"). The Board
of Directors adopted the 1998 Equity Compensation
Plan on April 23, 1998, subject to shareholder
approval. If approved by shareholders at the 1998
Annual Meeting, the 1998 Equity Compensation Plan
will be effective on May 21, 1998. The 1998 Equity
Compensation Plan is intended to replace the
Company's Stock Option Plan and 1997 Stock Option
Plan. The Board of Directors believes the 1998 Equity
Compensation Plan will help the Company attract,
retain and motivate employees, directors and key
advisors, and will encourage participants to devote
their best efforts to the business and financial
success of the Company. The Board of Directors
believes that providing employees, directors and key
advisors with the opportunity to acquire an equity
interest in the Company, will serve to align their
interests closely with other shareholders. The
principal terms of the 1998 Equity Compensation Plan
are discussed below.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES
CAST AT THE 1998 ANNUAL MEETING BY THE HOLDERS OF
OUTSTANDING SHARES IS REQUIRED TO APPROVE THE 1998
EQUITY COMPENSATION PLAN. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THIS PROPOSAL.
DESCRIPTION OF THE 1998 EQUITY COMPENSATION PLAN
The 1998 Equity Compensation Plan provides for grants
of stock options, restricted stock and stock
appreciation rights to selected employees (including
employees who are also directors) of the Company or
its subsidiaries, key advisors (including
consultants) who perform valuable services to the
Company or its subsidiaries and directors who are not
employees of the Company. In addition, the 1998
Equity Compensation Plan provides for grants of
performance units to employees and key
18
<PAGE>
advisors. Grants of stock options, restricted stock,
stock appreciation rights and performance units are
referred to collectively as "Grants." The Company
intends to file a registration statement on Form S-8
to register the Shares issuable under the 1998 Equity
Compensation Plan if the 1998 Equity Compensation
Plan is approved by the shareholders.
General. Subject to adjustment in certain
circumstances as discussed below and to shareholder
approval of the 1998 Equity Compensation Plan, the
1998 Equity Compensation Plan provides that the total
number of Shares that may be issued or transferred
under the 1998 Equity Compensation Plan is the sum of
(i) 1.5 million Shares, and (ii) the number of Shares
reserved for issuance, but not subject to outstanding
or previously exercised stock options granted, as of
May 21, 1998, under the Company's Stock Option Plan
and 1997 Stock Option Plan, plus any Shares that, but
for the termination of such plans, would have again
become available for grants after May 21, 1998,
because of the termination, expiration, cancellation,
forfeiture, or surrender of options previously
granted under such plans. The maximum number of
Shares that may be subject to incentive stock options
granted under the 1998 Equity Compensation Plan is
1.5 million Shares. If, and to the extent, Grants
under the 1998 Equity Compensation Plan expire, or
are canceled, forfeited, exchanged, surrendered, or
terminated for any reason without being exercised, or
the shares subject to a Grant are forfeited, the
Shares subject to such Grant again will be available
for grant under the 1998 Equity Compensation Plan. In
addition, any Shares delivered to the Company to
exercise a stock option granted under the 1998 Equity
Compensation Plan, or to satisfy the Company's
withholding obligations with respect to any Grants
made under the 1998 Equity Compensation Plan will
also be available for Grant under the 1998 Equity
Compensation Plan.
Administration of the 1998 Equity Compensation
Plan. The 1998 Equity Compensation Plan will be
administered and interpreted by a committee (the
"Committee") of the Board of Directors consisting of
not less than two persons appointed by the Board of
Directors from among its members, each of whom may,
but is not required to, be a "non-employee" director
as defined in Rule 16b-3 under the Exchange Act and
an "outside director" as defined by Section 162(m) of
the Internal Revenue Code of
19
<PAGE>
1986, as amended (the "Code"). The Stock Option
Committee will serve as the Committee required by the
1998 Equity Compensation Plan.
The Committee has the authority to determine (i)
the persons to whom Grants may be made under the 1998
Equity Compensation Plan, (ii) the type, size and
other terms and conditions of each Grant, (iii) the
time when the Grants will be made and the duration of
any applicable exercise or restriction period,
including the criteria for vesting and the
acceleration of vesting, and (iv) any other matters
arising under the 1998 Equity Compensation Plan. In
addition to any Grants made at the discretion of the
Committee, directors who are not employees of the
Company will, as discussed below, receive automatic
grants of stock options under the 1998 Equity
Compensation Plan.
The Committee has full power and authority to
administer and interpret the 1998 Equity Compensation
Plan, to make factual determinations and to adopt or
amend such rules, regulations, agreements and
instruments for implementing the 1998 Equity
Compensation Plan and for conduct of its business as
it deems necessary or advisable, in its sole
discretion. Notwithstanding the foregoing, the Board
of Directors may ratify or approve Grants, in which
case references to the "Committee" shall be deemed to
include the Board of Directors.
Grants. Grants under the 1998 Equity Compensation
Plan may consist of (i) options intended to qualify
as incentive stock options ("ISOs") within the
meaning of section 422 of the Code, (ii) nonqualified
stock options that are not intended to so qualify
("NQSOs", and together with ISOs, "Options"), (iii)
restricted stock, (iv) stock appreciation rights
("SARs") or (v) performance units.
20
<PAGE>
Eligibility for Participation. Grants may be made
to any employees (including officers and directors)
of, or key advisors or consultants to, the Company or
its subsidiaries and to directors who are not
employees of the Company. As of April 7, 1998, 1,088
employees (including 4 employee directors) and 2
directors who are not employees of the Company would
have been eligible for Grants under the 1998 Equity
Compensation Plan. One key advisor would have been
eligible for Grants under the 1998 Equity
Compensation Plan. During any calendar year, no
participant may receive Grants under the 1998 Equity
Compensation Plan for more than 100,000 Shares.
Options. The exercise price of any Option granted
under the 1998 Equity Compensation Plan will not be
less than the fair market value of the underlying
Shares on the date of grant. However, the exercise
price of an ISO granted to an employee who owns more
than 10% of the total combined voting power of all
classes of the stock of the Company or its
subsidiaries may not be less than 110% of the fair
market value of the underlying Shares on the date of
grant and the exercise price of an NQSO may be less
than the fair market value of the underlying Shares
on the date of grant, if the Grant is conditioned on
the satisfaction of performance goals, which may, but
are not required to be, designed to meet the
requirements of "qualified performance-based
compensation" under Section 162(m) of the Code.
The Committee will 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 total voting power of
all outstanding stock of the Company or its
subsidiaries may not exceed five years from the date
of grant. A participant may pay the exercise price
(i) in cash, (ii) with the approval of the Committee,
by delivering Shares owned by the participant and
having a fair market value on the date of exercise
equal to the exercise price or (iii) by any other
method approved by the Committee. The Committee may
permit a participant to instruct the Company to
deliver the Shares due upon the exercise to a
designated broker instead of to the participant.
21
<PAGE>
Automatic NQSO Grants to Directors who are not
Employees of the Company. In addition to any other
Grants made under the 1998 Equity Compensation Plan,
a director who is not an employee of the Company will
be granted an NQSO to purchase 8,000 Shares as of the
date of the director's initial appointment to the
Board of Directors (or at such other time as the
Committee may determine), and an NQSO to purchase
4,000 Shares on each December 31st thereafter (or the
date of any year-end Grants to employees or such
other time as the Committee may determine), if the
individual qualifies as a director who is not an
employee of the Company on such date. The exercise
price of such NQSOs will be equal to the fair market
value of the underlying Shares on the date of grant.
The term of the NQSOs will be ten years and the NQSOs
will become exercisable in four equal installments on
the first, second, third and fourth anniversaries of
the date of grant, unless the Committee determines
otherwise. No portion of any NQSO will become
exercisable after an individual ceases to be a
director, unless the individual is an employee of the
Company at such time.
Restricted Stock. The Committee may issue Shares
to participants pursuant to the 1998 Equity
Compensation Plan. Shares may be issued for cash
consideration or for no cash consideration, as the
Committee determines. The number of Shares granted to
each participant shall be determined by the
Committee, subject to the maximum individual limit
described above. Grants of restricted stock will be
made subject to such performance requirements,
vesting provisions, transfer restrictions or other
restrictions and conditions as the Committee may
determine.
Stock Appreciation Rights. The Committee may grant
SARs alone or in tandem with any stock option
pursuant to the 1998 Equity Compensation Plan. Unless
the Committee determines otherwise, the base price of
an SAR will be the exercise price of the related
stock option or, if there is no related option, the
fair market value of a Share on the date of grant of
the SAR. When the participant exercises an SAR, the
participant will receive the amount by which the fair
market value of a Share on the date of exercise
exceeds the base price of the SAR. The Committee will
determine whether the appreciation will be paid in
cash or in Shares, or in
22
<PAGE>
a combination of the two. To the extent a participant
exercises a tandem SAR, the related option will
terminate. Similarly, upon exercise of a stock
option, the related SAR, if any, will terminate.
Performance Units. The Committee may grant
performance units to employees or key advisors.
Performance units may be payable in cash or Shares at
the end of a specified performance period. Payment
will be contingent upon achieving performance goals
by the end of the performance period. The measure of
a performance unit may be based on the fair market
value of a Share or such other measurement base as
the Committee may determine. The Committee will
determine the performance criteria, the length of the
performance period, the maximum payment value of an
award, and the minimum performance goals required
before payment will be made.
Section 162(m). Under Section 162(m) of the Code,
the Company may be precluded from claiming a federal
income tax deduction for total remuneration in excess
of $1,000,000 paid to the chief executive officer or
to any of the other four most highly compensated
officers in any one year. Total remuneration includes
amounts received upon the exercise of stock options
and SARs granted under the 1998 Equity Compensation
Plan, amounts received in connection with the grant
of performance units and the value of Shares received
when the Shares of restricted stock became
transferable (or such other time when income is
recognized). An exception exists, however, for
"qualified performance-based compensation." The 1998
Equity Compensation Plan is intended to allow Grants
to meet the requirements of "qualified performance-
based compensation."
Stock options and SARs should generally meet the
requirements of "qualified performance-based
compensation," if the exercise price is at least
equal to the fair market value of the Shares on the
date of grant. In addition, the Committee may
determine that performance units, NQSOs granted with
an exercise price that is less than the fair market
value of the underlying Shares on the date of grant
("Discounted Options") and restricted stock are
intended to be "qualified performance-based
compensation" under Section 162(m) of the Code.
23
<PAGE>
With respect to grants of Discounted Options,
restricted stock and performance units intended to be
"qualified performance-based compensation," the
Committee will establish in writing the objective
performance goals that must be met and other
conditions of the award before the beginning of the
performance period or during a period permitted by
Section 162(m) of the Code. The performance goals may
relate to the employee's business unit or the
performance of the Company and its subsidiaries as a
whole, or any combination of the two. The Committee
will use objectively determinable performance goals
based on one or more of the following criteria: stock
price, earnings per share, net earnings, operating
earnings, return on assets, shareholder return,
return on equity, growth in assets, unit volume,
sales, market share, or strategic business criteria
consisting of one or more objectives based on meeting
specified revenue goals, market penetration goals,
geographic business expansion goals, cost targets or
goals relating to acquisitions or divestitures. The
Committee will not have discretion to increase the
amount of compensation that is payable upon
achievement of performance goals.
If Discounted Options, restricted stock or
performance units measured with respect to the fair
market value of Shares are granted as "qualified
performance-based compensation," not more than
100,000 Shares may be granted to an employee under
the Discounted Options, performance units or
restricted stock for any year of a performance
period. If performance units are measured with
respect to other criteria, the maximum amount that
may be paid to an employee with respect to each year
of a performance period is $1,000,000. At the end of
each performance period, the Committee will certify
the results of the performance goals and the extent
to which the performance goals have been met.
Transferability. Grants are generally not
transferable by the participant, except in the event
of death. However, the Committee may grant NQSOs that
allow the participant to transfer the NQSOs on
certain conditions.
24
<PAGE>
Amendment and Termination of the 1998 Equity
Compensation Plan. The Board of Directors may amend
or terminate the 1998 Equity Compensation Plan at any
time; provided, however, that the Board of Directors
may not, without shareholder approval, make any
amendment that requires shareholder approval pursuant
to Section 162(m) or 422 of the Code (and the Board
of Directors has determined that compliance with
Section 422 of the Code is desirable). The 1998
Equity Compensation Plan will terminate on the date
immediately preceding the tenth anniversary of its
effective date, unless terminated earlier by the
Board of Directors or extended by the Board of
Directors with approval of the shareholders.
Adjustment Provisions. In the event of certain
transactions identified in the 1998 Equity
Compensation Plan, the Committee may appropriately
adjust: (i) the maximum number of Shares available
for Grants and the individual Share limits, (ii) the
number of Shares covered by outstanding Grants, (iii)
the kind of Shares issued under the 1998 Equity
Compensation Plan and (iv) the price per share or
market value of Grants, and such adjustments will be
effective and binding for all purposes of the 1998
Equity Compensation Plan.
Change of Control of the Company. In the event of
a change of control, unless the Board of Directors
determines otherwise, all Options, restricted stock
and SARs will become fully vested, and grantees
holding performance units will receive a pro-rata
payment in settlement of the units based on the
target payment for the performance period and the
portion of the performance period that precedes the
change of control.
A change of control occurs if (i) any person
(other than Alfred P. West, Jr.) becomes a beneficial
owner of more than 30% of the voting power of the
Company's securities, (ii) the shareholders of the
Company approve (or, if shareholder approval is not
required, the Board approves) an agreement providing
for the liquidation or the sale of substantially all
the Company's assets, (iii) the shareholders of the
Company approve (or, if shareholder approval is not
required, the Board approves) an agreement providing
for the merger or consolidation of the Company with
any other corporation where the shareholders of the
Company immediately before
25
<PAGE>
the transaction will not own more than 50% of the
voting power of all securities of the Company
immediately after the merger, (iv) any person (other
than the Company) has commenced a tender offer or
exchange offer for 30% or more of the voting power of
the then outstanding Shares of the Company, or (v) at
least a majority of the Board does not consist of
individuals who were elected, or nominated for
election, by the directors in office at the time of
such election or nomination.
Federal Income Tax Consequences. The current
federal income tax treatment of Grants under the 1998
Equity Compensation Plan is generally described
below. Local and state tax authorities may also tax
incentive compensation awarded under the 1998 Equity
Compensation Plan, and tax laws are subject to
change. Participants are urged to consult with their
personal tax advisors concerning the application of
the general principles discussed below to their own
situations and the application of state and local tax
laws.
There are no federal income tax consequences to a
participant or to the Company upon the grant of an
NQSO under the 1998 Equity Compensation Plan.
Generally, upon the exercise of an NQSO, 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 the exercise of an NQSO, a participant
will have a capital gain or loss 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). The capital gain tax
rate will depend on the length of time the shares are
held and certain other factors.
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. However, for purposes of the alternative minimum
tax imposed under the Code, in the year in which an
ISO is exercised, the amount by which the fair market
value of the shares acquired upon
26
<PAGE>
exercise exceeds the exercise price will be treated
as an item of adjustment and included in the
computation of the recipient's alternative minimum
taxable income in the year of exercise. 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 or her upon exercise of the
ISO will recognize capital gain or loss in the amount
of the difference between the amount realized on the
sale and the exercise 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. The capital gain tax
rate will depend on the length of time the shares are
held and certain other factors.
As a general rule, if a participant disposes of
the shares acquired 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 exercise 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 capital gain, depending upon the
length of time the participant held his or her shares
prior to the disposition and certain other factors.
A participant normally will not recognize taxable
income upon receiving restricted stock, and the
Company will not be entitled to a deduction, until
such stock is transferable by the participant or no
longer subject to a substantial risk of forfeiture
for federal tax purposes, whichever occurs earlier.
When the stock is either transferable or is no longer
subject to a substantial risk of forfeiture, the
participant will recognize ordinary compensation
income in an amount equal to the fair market value of
the shares (less any amounts paid for such shares) at
that time, and the Company will be entitled to a
deduction in the same amount. A participant may,
however, elect to recognize ordinary compensation
income in the year the restricted stock is awarded in
an amount equal to the fair market value of the
shares subject to the restricted stock Grant
27
<PAGE>
(less any amounts paid for such shares) at that time,
determined without regard to the restrictions. In
such event, the Company generally will be entitled to
a corresponding deduction in the same year. Any gain
or loss recognized by the participant upon subsequent
disposition of the shares will be capital gain or
loss.
There are no federal income tax consequences to a
participant or to the Company upon the grant of an
SAR under the 1998 Equity Compensation Plan. Upon the
exercise of an SAR, if the participant receives the
appreciation inherent in the SAR in cash, the
participant will recognize ordinary compensation
income in an amount equal to the cash received. If
the participant receives the appreciation in shares,
the participant will recognize ordinary compensation
income in an amount equal to the fair market value of
the shares received. The Company generally will be
entitled to a corresponding federal income tax
deduction at the time of the exercise of the SAR.
Upon the sale of any shares acquired by the exercise
of an SAR, a participant will have a capital gain or
loss (the capital gain tax rate will depend on the
length of time the shares were held and certain other
factors) 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
amount of ordinary income recognized by the
participant at the time of exercise of the SAR).
There are no federal income tax consequences to a
participant or to the Company upon the grant of
performance units under the 1998 Equity Compensation
Plan. If the participant receives payment of the
performance units in cash, the participant will
recognize ordinary compensation income in an amount
equal to the cash received. If the participant
receives payment of the performance units in shares,
the participant will recognize ordinary compensation
income in an amount equal to the fair market value of
the shares received. The Company generally will be
entitled to a corresponding federal income tax
deduction at the time of the payment of the
performance units. Upon the sale of any shares
acquired upon payment of the performance units, a
participant will have a capital gain or loss (the
capital gain tax rate will depend upon the
28
<PAGE>
length of time the shares were held and certain other
factors) 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
amount of ordinary income recognized by the
participant at the time of the payment of the
performance units).
The Company's income tax deduction in any of the
foregoing cases may be limited by the $1,000,000
limit of Section 162(m) of the Code if the Grant does
not qualify as "qualified performance-based
compensation" under Section 162(m) of the Code (see
"Section 162(m)" above).
Tax Withholding. The Company has the right to
deduct from all Grants paid in cash or from other
wages paid to an employee of the Company, any
federal, state or local taxes required by law to be
withheld with respect to Grants, and the participant
or other person receiving shares under the 1998
Equity Compensation Plan will be required to pay to
the Company the amount of any such taxes which the
Company is required to withhold with respect to such
shares. A participant may elect to satisfy the
Company's income tax withholding obligation by
withholding shares received from the exercise of a
stock option or SAR or a restricted stock or
performance unit Grant.
1998 Equity Compensation Plan Benefits. The
following table sets forth certain benefits related
to the 1998 Equity Compensation Plan. Other than
automatic grants of NQSOs to directors who are not
employees of the Company as set forth below, future
awards under the 1998 Equity Compensation Plan are
not determinable because grants are made at the
discretion of the Committee. No grants have been made
as of the date hereof under the 1998 Equity
Compensation Plan. As of April 7, 1998, the closing
price of the Company's Shares reported on the Nasdaq
National Market System was $66.00 per share.
29
<PAGE>
NEW PLAN BENEFITS
SEI INVESTMENTS COMPANY 1998 EQUITY COMPENSATION PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO
NONQUALIFIED
NAME AND POSITION STOCK OPTIONS
---------------------------------------------------------------
<S> <C>
Non-Executive Director Group/(1)/............. 8,000
---------------------------------------------------------------
</TABLE>
(1) Assumes election to the Board of Directors at the
1998 Annual Meeting of the individuals nominated
by the Board of Directors.
(Proposal No. 3) APPROVAL OF THE SEI INVESTMENTS COMPANY EMPLOYEE
STOCK PURCHASE PLAN, AS AMENDED AND RESTATED
At the Annual Meeting, there will be presented to the
shareholders a proposal to approve the adoption of
the SEI Investments Company Employee Stock Purchase
Plan, as amended and restated (the "Employee Stock
Purchase Plan") (formerly the SEI Corporation
Employee Stock Purchase Plan). On October 15, 1997
and on April 23, 1998, subject to shareholder
approval as indicated below, the Board of Directors
amended the Employee Stock Purchase Plan to reflect
the changes described below. The Board of Directors
also approved the Employee Stock Purchase Plan, as
amended and restated, to reflect such changes.
Under the proposal, changes to the Employee Stock
Purchase Plan that are subject to shareholder
approval are: (i) an increase in the number of Shares
available under the Employee Stock Purchase Plan,
from 800,000 Shares to 1,300,000 Shares; (ii) a
change in the definition of "compensation" from that
of base pay to total compensation and the elimination
of the 10% cap (in favor of a 100% cap) on
compensation that may be subject to purchases of
Shares under the Employee Stock Purchase Plan
(however, the $25,000 annual cap on purchases under
the Plan continues to apply); (iii) the elimination
of the shareholder approval requirement for
amendments to the Employee Stock Purchase Plan that
materially increase benefits for participants; and
(iv) the extension of the expiration date of the
Employee Stock Purchase Plan from January 1, 2001 to
May 20, 2008. Other changes to the Employee Stock
Purchase Plan
30
<PAGE>
include: (i) the addition of a lump sum payment
option to purchase Shares under the Employee Stock
Purchase Plan and (ii) changes in the name of the
Employee Stock Purchase Plan and any references to
the Company in the Employee Stock Purchase Plan to
reflect the change in the name of the Company.
The Board of Directors believes that the foregoing
changes will enable the Employee Stock Purchase Plan
to better fulfill its stated purpose of providing
eligible employees of the Company and its
participating subsidiaries who wish to become
shareholders or to increase their existing share
holdings, an opportunity to purchase Shares, to the
mutual benefit of both the employees and the Company.
The principal terms of the Employee Stock Purchase
Plan are discussed below.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES
CAST AT THE 1998 ANNUAL MEETING BY THE HOLDERS OF
OUTSTANDING SHARES IS REQUIRED TO APPROVE THE AMENDED
AND RESTATED EMPLOYEE STOCK PURCHASE PLAN. THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THIS PROPOSAL.
DESCRIPTION OF THE EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan provides eligible
employees of the Company and participating
subsidiaries with a means to purchase, through
payroll deductions, Shares at a discount, consistent
with the provisions of the Code. Beginning on October
15, 1997, the Employee Stock Purchase Plan also
permitted eligible employees to purchase Shares with
a lump sum payment. The Company intends to file a
registration statement on Form S-8 to register the
additional Shares reserved for issuance pursuant to
the Employee Stock Purchase Plan if the Employee
Stock Purchase Plan, as amended and restated, is
approved by the shareholders.
General. The Employee Stock Purchase Plan, as
amended and restated, increases the number of Shares
available under the Employee Stock Purchase Plan from
800,000 to 1,300,000, subject to adjustment in the
event of a reclassification, subdivision, split-up,
spin-off, stock dividend, exchange, or other increase
or decrease in the number of issued Shares.
31
<PAGE>
Eligible Participants. Employees of the Company
and participating subsidiaries are eligible to
participate in the Employee Stock Purchase Plan, if
their customary employment is for more than 20 hours
per week and for more than five months per year. An
employee who owns five percent (5%) or more of the
total combined voting power or value of all classes
of stock of the Company or a participating subsidiary
will not be eligible to participate in the Employee
Stock Purchase Plan. As of April 7, 1998, 1,088
employees were eligible to participate in the
Employee Stock Purchase Plan. It is not possible to
determine how many eligible employees will
participate in the Employee Stock Purchase Plan in
the future or the level of any such participation.
Share Purchases. Pursuant to an eligible
employee's election, Shares are purchased through
payroll deductions at a stated dollar amount or
percentage of compensation elected by the eligible
employee that is not less than 1% of his or her
compensation per pay period and currently, is not
more than 10% of such compensation. The amended and
restated Employee Stock Purchase Plan eliminates the
10% cap on an eligible employee's compensation and
permits an eligible employee to make one lump sum
payment of not less than $25 per purchase period to
purchase Shares under the Employee Stock Purchase
Plan.
Compensation is currently defined under the
Employee Stock Purchase Plan as regular salary,
wages, and commissions paid, during the period of
reference, to an employee by the Company or a
participating subsidiary, including the employee's
401(k) plan elective deferrals, but excluding
bonuses, overtime payments, shift differential
payments, other special compensation, and any amounts
accrued for the benefit of an employee but not paid
during the period of reference. The Employee Stock
Purchase Plan, as amended and restated, defines
compensation as wages and other compensation paid
during the period of reference that is reported on
Form W-2, and the employee's 401(k) plan and 125 plan
elective deferrals.
32
<PAGE>
Shares are purchased in whole shares at a price
equal to 85% of the market value of a Share on the
last business day of each purchase period. The market
value of a Share is the last reported sale price of a
Share on the Nasdaq National Market System. No
employee is permitted to purchase Shares under the
Employee Stock Purchase Plan which in the aggregate
exceed $25,000 of the market value of such Shares
determined on the last day of each purchase period in
any calendar year.
Each eligible employee who elects to participate
in the Employee Stock Purchase Plan will, without any
action on his or her part, automatically be deemed to
have exercised his or her right to purchase Shares on
the last day of each purchase period, to the extent
that the amount withheld through payroll deduction
throughout the purchase period or paid through a lump
sum is sufficient to purchase, at the purchase price,
one or more whole Shares. A right to purchase Shares
under the Employee Stock Purchase Plan is not
transferable by an employee other than by will or by
the laws of descent and distribution and is
exercisable during his or her lifetime only by the
employee.
Suspension and Changes in Participation. An
employee may voluntarily suspend his or her
participation in the Employee Stock Purchase Plan
within the timeframe established by the
Administrative Committee (as defined below), but in
any event within a reasonable time prior to the last
business day of a purchase period. Within 60 days
after such suspension, the employee will be paid the
amount of any payroll deductions or lump sum payments
credited to the employee under the Employee Stock
Purchase Plan. An employee may resume participation
effective as of the first day of the first purchase
period reasonably possible after the date the
Administrative Committee receives the eligible
employee's notice of participation. An employee may
change the rate or amount of his or her payroll
deductions within the timeframe established by the
Administrative Committee, but in any event within a
reasonable time prior to the first day of a purchase
period.
Generally, if an employee terminates his or her
employment with the Company or ceases to be an
eligible employee, the total amount of the
33
<PAGE>
employee's payroll deductions and lump sum payments
made under the Employee Stock Purchase Plan up to the
date of his or her termination of employment or
cessation of eligibility will be used to purchase
whole Shares under the Plan as of the last business
day of the current or next purchase period, as
applicable, and any balance will be refunded to the
employee.
Since the purpose of the Employee Stock Purchase
Plan is to enable eligible employees to become
shareholders of the Company, Shares purchased under
the Employee Stock Purchase Plan are intended to be
held by the employee as a long-term investment. The
Administrative Committee, in its sole discretion, may
exclude from participation any employee who purchases
Shares and, other than in isolated cases, sells the
Shares in violation of this purpose of the Employee
Stock Purchase Plan. Once excluded from participation
under these circumstances, an eligible employee will
only be readmitted with the consent of the
Administrative Committee.
All funds received or held by the Company under
the Employee Stock Purchase Plan are general assets
of the Company, free of any trust or other
restriction, and may be used for any corporate
purpose. No interest on such funds will be credited
to or paid to any participant under the Employee
Stock Purchase Plan.
Plan Administration and Termination. The Employee
Stock Purchase Plan provides for administration of
the Plan by a committee appointed by the Board of
Directors (the "Administrative Committee"). The Board
of Directors may terminate, suspend or amend the Plan
in any respect at any time, except that the approval
of the Company's shareholders is required for any
amendment that increases the number of Shares
available for purchase under the Plan, allows any
person who is not an eligible employee (as described
above) to become a participant in the Employee Stock
Purchase Plan or materially increases the benefits
accruing to participants under the Employee Stock
Purchase Plan. The Employee Stock Purchase Plan, as
amended and restated, eliminates the requirement that
the Board of Directors seek shareholder approval
prior to amending
34
<PAGE>
the Employee Stock Purchase Plan to otherwise
materially increase the benefits accruing to
participants or to provide for purchase periods of
less than one calendar month or longer than 12
calendar months or provide for overlapping purchase
periods.
If approved by shareholders, the Employee Stock
Purchase Plan, as amended and restated, will
generally be effective on May 21, 1998 and, unless
earlier terminated, will continue in effect through
May 20, 2008, except that if at the end of any
purchase period the aggregate funds available for the
purchase of Shares would purchase a greater number of
Shares than is available for purchase, the number of
Shares that would otherwise be purchased by each
participant at the end of the purchase period will be
proportionately reduced in order to eliminate the
excess. The Employee Stock Purchase Plan would then
automatically terminate after such purchase period.
Tax Treatment. The current federal income tax
treatment of Shares purchased under the Employee
Stock Purchase Plan is generally described below.
Local and state tax authorities may also tax Shares
purchased under the Employee Stock Purchase Plan, and
tax laws are subject to change. Participants are
urged to consult with their personal tax advisors
concerning the application of the general principles
discussed below to their own situations and the
application of state and local tax laws.
The Employee Stock Purchase Plan is intended to
qualify as an employee stock purchase plan within the
meaning of Section 423 of the Code, and it is
intended to comply also with the provisions of
Section 421 of the Code and the rules and regulations
issued thereunder.
Under the Code as currently in effect, a
participant will not be deemed to have recognized
income, nor will the Company be entitled to a
deduction, upon the participant's acquisition of
Shares pursuant to the Employee Stock Purchase Plan.
A participant who acquires shares under
35
<PAGE>
the Employee Stock Purchase Plan will recognize
income when he or she sells or otherwise disposes of
such shares.
If a participant sells shares acquired under the
Employee Stock Purchase Plan more than two years
after the date on which the right to purchase the
shares was granted and more than one year after the
purchase of the shares (the "statutory holding
period"), a portion of the participant's gain will be
ordinary income and a portion will be capital gain.
The participant will be taxed at ordinary income tax
rates on the excess of the value of the shares when
the option was granted over the purchase price, or,
if less, the entire gain on the sale. The participant
will have additional capital gain or loss equal to
the difference, if any, between the proceeds of the
sale and the participant's basis in the shares (the
purchase price plus any ordinary income realized).
The capital gain rate will depend on how long the
stock is held by the participant and certain other
factors. The Company will not be entitled to any tax
deduction with respect to a sale by a participant
after the statutory holding period.
If a participant sells shares before the
expiration of the statutory holding period, the
participant generally will be taxed at ordinary
income tax rates to the extent that the value of the
shares when the shares were purchased exceeded the
purchase price. The Company will be entitled to a
corresponding deduction. The participant will have
additional capital gain or loss on the difference
between the proceeds of the sale and the
participant's basis in the shares (the purchase price
plus any ordinary income realized). The capital gain
rate will depend on how long the stock is held by the
participant and certain other factors.
The estate of a participant who dies while holding
shares acquired under the Employee Stock Purchase
Plan will recognize ordinary income in the year of
the participant's death equal to the excess of the
value of the shares when the option was granted over
the purchase price, or, if less, the amount by which
the fair market value of the shares at the date of
death exceeds the purchase price.
36
<PAGE>
(Proposal No. 4)
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed Arthur Andersen
LLP, independent public accountants, to be the
Company's auditors for 1998. Although not required to
do so, the Board of Directors 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 of
Directors will reconsider the appointment.
Representatives of Arthur Andersen LLP are expected
to be available at the 1998 Annual Meeting to respond
to appropriate questions and to make a statement if
they so desire.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES
CAST AT THE 1998 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 1998 Annual Meeting. However, if any further
business should properly come before the 1998 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.
37
<PAGE>
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 26, 1998.
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 1997 Annual Report on Form
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.
38
<PAGE>
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 Lydia A. Gavalis, 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 7, 1998, at the Annual Meeting of
Shareholders to be held on May 21, 1998, 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 21, 1998
Please Detach and Mail in the Envelope Provided
[X] Please mark your
votes as in this
example.
Please mark, sign, date, and return the proxy card promptly using the enclosed
envelope.
(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: Alfred P. West, Jr.
Directors William M. Doran
2. Approval of the SEI Investments Company 1998 [_] [_] [_]
Equity Compensation Plan.
3. Approval of the SEI Investments Company Employee
Stock Purchase Plan, as amended and restated. [_] [_] [_]
4. Ratification of the selection of Arthur Andersen [_] [_] [_]
LLP as the Company's auditors for 1998.
5. 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,
3 and 4.
CHECK HERE FOR ADDRESS CHANGE [_]
CHECK HERE IF YOU PLAN TO ATTEND [_]
THE MEETING
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.
