<PAGE> 1
POLICY MANAGEMENT SYSTEMS CORPORATION
POST OFFICE BOX TEN
COLUMBIA, SOUTH CAROLINA 29202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 22, 1994
TO THE STOCKHOLDERS OF
POLICY MANAGEMENT SYSTEMS CORPORATION:
NOTICE IS HEREBY GIVEN to the stockholders that the Annual
Meeting of Stockholders ("Meeting") of Policy Management Systems
Corporation ("Company") will be held at the offices of the
Company at One PMS Center, Blythewood, South Carolina, at 11:00
a.m., on Thursday, September 22, 1994, for the following
purposes:
(1) To elect three Directors of the Company to hold office
for a term of three years and one director for a term
of two years and until their successors shall be duly
elected and qualified or until earlier resignation,
removal from office, or death;
(2) To consider and act upon the ratification of the
selection of independent auditors;
(3) To consider and act upon the proposed amendment to the
Company's Articles of Incorporation ("Articles") to
remove the mandatory retirement age for members of
the Board of Directors; and
(4) To take such other action and transact such other
business which may properly and lawfully come before
the Meeting or any adjournment thereof; all as set
forth in the Proxy Statement accompanying this Notice.
The transfer books of the Company were closed as of the end of
business on August 5, 1994, the record date, for purposes of
determining stockholders entitled to notice of and to vote at the
Meeting ("Stockholders"), but were not closed for any other
purpose.
STOCKHOLDERS ARE URGED TO COMPLETE AND EXECUTE THE ENCLOSED PROXY
AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED WHEN MAILED IN THE UNITED STATES. YOUR ATTENDANCE AT
THE MEETING IS URGED. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE COMPLETE AND EXECUTE THE ENCLOSED PROXY. IF YOU
ATTEND THE MEETING AND DECIDE THAT YOU WANT TO VOTE IN PERSON,
YOU MAY REVOKE YOUR PROXY. YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE IN FAVOR OF THE NOMINEES FOR DIRECTORS AND ALL
OTHER PROPOSALS DESCRIBED HEREIN TO BE CONSIDERED AT THE MEETING.
By Order of the Board of Directors
Stephen G. Morrison
Secretary
August ___, 1994
<PAGE> 2
POLICY MANAGEMENT SYSTEMS CORPORATION
POST OFFICE BOX TEN
COLUMBIA, SOUTH CAROLINA 29202
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 22, 1994
GENERAL: This Proxy Statement is furnished to the stockholders
of the $.01 par value common stock ("Stockholders" and "Common
Stock," respectively) of Policy Management Systems Corporation
("Company") in connection with the solicitation of proxies by the
Board of Directors of the Company to be voted at its Annual
Meeting of Stockholders ("Meeting") to be held at the offices of
the Company, One PMS Center, Blythewood, South Carolina, on
Thursday, September 22, 1994 at 11:00 a.m. It is anticipated
that this Proxy Statement will be mailed to Stockholders on or
about August __, 1994.
A proxy card is enclosed. Any Stockholder sending the enclosed
proxy to the Company has the power to revoke it at any time
before it is exercised. Proxies may be revoked by: (1) executing
and delivering a valid proxy bearing a later date; (2) sending
written notice of revocation to Stephen G. Morrison, Secretary,
Policy Management Systems Corporation, Post Office Box Ten,
Columbia, South Carolina 29202; or (3) appearing at the Meeting
and voting in person. When proxies in the accompanying form are
returned properly executed, the shares represented by proxies
which have not been revoked will be voted according to the
instructions noted thereon.
Unless otherwise specified, the proxies will be voted in favor of
the three nominees for election to the Board of Directors for a
term of three years, in favor of the one nominee for election to
the Board of Directors for a term of two years, in favor of the
ratification of the selection of Coopers & Lybrand as independent
auditors, and in favor of the proposed amendment to the Company's
Articles of Incorporation ("Articles"). The Board of Directors
is not aware at this date of any other matters that will come
before the Meeting. If, however, any other matters should
properly come before the Meeting, it is the intention of the
persons named in the proxy to vote thereon in accordance with
their judgment.
EXPENSES OF SOLICITATION: The cost of soliciting proxies will be
borne by the Company. Officers, Directors and employees of the
Company may solicit proxies by telephone, telegram or personal
interview. The Company has entered into an agreement with D.F.
King & Company, Inc. to assist with solicitation of proxies for
the Meeting for a fee estimated at $6,000 plus expenses.
VOTING: Only holders of record of outstanding shares of Common
Stock as of August 5, 1994, the record date, will be entitled to
notice of and to vote at the Meeting. On the record date, there
were 20,358,484 shares of Common Stock outstanding. A majority
of the outstanding shares of Common Stock present in person or
represented by proxy will constitute a quorum of the Meeting.
Abstentions and broker non-votes are counted as being present for
purposes of attaining a quorum. The Articles provide that the
vote of the holders of a majority of the shares having voting
power, present in person or represented by proxy, shall decide
questions before the Meeting, unless the question is one which by
express provisions of applicable law, the Articles or the Bylaws
of the Company, a higher vote is required in
<PAGE> 3
which case the express provision shall govern. As such,
abstaining shares are included in the determination of the total
number of shares having voting power, and therefore, have the
same effect as no votes on such proposals. Broker non-votes are
not considered as shares having voting power and are therefore
not counted as votes cast in such proposals nor are they counted
as votes for or against such proposals. Broker non-votes occur
when a nominee holding shares for a beneficial owner votes on at
least one proposal but does not have authority to vote on certain
other proposals.
Each share is entitled to one vote and matters before the Meeting
shall be decided by a majority of the votes cast, except with
respect to the election of Directors and approval of the proposed
amendment to the Articles. In the election of Directors, each
Stockholder has the right to cumulate its votes and cast as many
votes as the number of shares held multiplied by the number of
Directors to be elected for the specified term, the same to be
cast for any one nominee or distributed among any two or more
nominees for election for the specified term. To exercise the
right of cumulative voting a Stockholder must declare the intent
to do so prior to the beginning of voting and, once having done
so, all Stockholders shall automatically have the right to
cumulate their votes without any further notice. In the event of
cumulative voting, the persons appointed proxies shall have
authority to vote the shares represented by each proxy to
maximize the number of Board of Directors' nominees elected. The
three nominees for the three-year term receiving the largest
number of votes shall be elected to the three-year term and the
one nominee for the two-year term receiving the largest number of
votes shall be elected to the two-year term. With respect to
approving the proposed amendment to the Articles, the Articles
require the affirmative vote of two-thirds of the total number of
shares outstanding as of the record date. Consequently, approval
of the amendment to the Articles requires the affirmative vote of
13,572,323 shares.
If the amendment to the Articles eliminating retirement age is
not approved by the Stockholders, Mr. Karl will be deemed to have
retired from the Board of Directors on the date of the Meeting
since he has reached age seventy prior to the Meeting and only
the other two nominees to the class of Directors having a
three-year term shall be eligible to be re-elected to such class.
PRINCIPAL STOCKHOLDERS: The following table sets forth certain
information filed with the Securities and Exchange Commission as
of June 30, 1994 regarding beneficial owners of more than five
percent of the Company's Common Stock.
<TABLE>
PRINCIPAL STOCKHOLDERS
<CAPTION>
Name Common Stock Percentage
and Address Beneficially Owned of Class
<S> <C> <C>
The Capital Group, Inc. 2,281,500 (1) 11.2%
("Capital")
333 South Hope Street
Los Angeles, California 90071
Wellington Management Company 2,024,640 (2) 9.9
("Wellington")
75 State Street
Boston, Massachusetts 02109
GAP Coinvestment PartnerS 1,519,024 (3) 7.5
("GAP Coinvestment")
General Atlantic Partners 14 L.P.
("General Atlantic")
125 East 56th Street
New York, New York 10022
<PAGE> 4
The Regents of the University 1,353,200 (4) 6.6%
of California ("Regents")
Office of the Treasurer
300 Lakeside Drive
Oakland, California 94612
Government of Singapore Investment 1,264,800 (5) 6.2
Corporation Pte Ltd. ("Singapore")
250 North Bridge Road
#33-00 Raffles City Tower
Singapore 0617
<FN>
(1) Of the shares reported, Capital has sole voting power for
1,111,400 of the shares, shared voting power for none of the shares,
and sole dispositive power for all of the shares.
(2) Of the shares reported, Wellington has sole voting power for
none of the shares, shared voting power for 1,131,140 of the shares
and shared dispositive power for all of the shares.
(3) GAP Coinvestment and General Atlantic (collectively "General
Atlantic Investors") are members of a group, as defined in Rule
13d-5 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended. Each of GAP Coinvestment and
General Atlantic has shared voting and shared dispositive power for
all of the shares.
(4) Of the shares reported, Regents has sole voting and dispositive
power for all of the shares.
(5) Of the shares reported, Singapore has shared voting and
dispositive power for all of the shares.
</TABLE>
ELECTION OF DIRECTORS
(PROXY ITEM NO. 1): Subject to the Stockholders approving
elimination of the mandatory retirement provision in the Articles
as discussed below, Stockholders will vote on the election of
three Directors to serve a term of three years and one Director
to serve a term of two years and until their successors have been
elected and qualified or until earlier resignation, removal from
office, or death. Mr. Denning was elected to the Board of
Directors effective on June 20, 1994 to fill a vacancy on the
Board in the class of Directors whose term expires in 1996 and is
nominated for a term of two years in order to preserve the
evenly-staggered terms of the Directors. All of the nominees are
currently members of the Board of Directors.
The shares represented by the proxies solicited hereby will be
voted in favor of the election of the persons named below unless
authorization to do so is withheld by proxy. In the event any of
the nominees should be unable to serve as Director, it is the
intention of the persons named in the proxies to cast the votes
represented by the proxies for the election of such other person
or persons as the Board of Directors may nominate. If the
amendment to the Articles eliminating the mandatory retirement
age is not approved by the Stockholders, Mr. Karl will be deemed
to have retired from the Board of Directors on the date of the
Meeting since he has reached age seventy prior to the Meeting and
only the other two nominees to the class of Directors having a
three-year term shall be eligible to be re-elected to such class.
Nominees for election to the Board of Directors are considered
and recommended by the Nominating Committee of the Board of
<PAGE> 5
Directors (see "Committees of the Board of Directors"). The
Board of Directors considers the recommendations of the Committee
and recommends the nominees to the Stockholders. The Company has
no formal procedure whereby nominations are solicited from
Stockholders other than General Atlantic Investors' right to
cause the Nominating Committee to recommend a nominee for
Director pursuant to the Shareholders Agreement dated April 26,
1994 (see "Certain Transactions").
The following information is set forth with respect to the four
nominees for Director to be elected at the Meeting:
Principal Occupation for Past Five
Name and Age Years and Certain Other Directorships
NOMINEES TO BE ELECTED FOR THREE-YEAR TERM:
Roy L. Faulks (68) Vice Chairman of the Board of the
Company since 1981; prior to retirement
in April, 1986, Executive Vice President
and Treasurer of The Seibels Bruce
Group, Inc. ("Seibels") and certain
subsidiaries; Director of Seibels and
certain subsidiaries.
Frederick B. Karl (70) Director of the Company since 1981;
Attorney at Law and Chief Executive
Officer of Hillsborough County, Florida
since 1990; prior thereto, Senior
Partner of Karl, McConnaughhay, Roland
and Maida, P.A., a law firm in
Tallahassee, Florida from 1978 through
1990; Justice of the Florida Supreme
Court from 1977 to 1978. The nomination
of Mr. Karl is contingent upon the
Stockholders approving the amendment to
the Articles (see "Proxy Item No. 3").
Richard G. Trub (64) Director of the Company since 1981;
Chairman and Treasurer of Trubco, Inc.,
West Simsbury, Connecticut, since June,
1992; prior thereto, Senior Vice
President of Connecticut National Bank,
Hartford, Connecticut; Director of
Riverfront Recapture, Inc., Hartford,
Connecticut.
NOMINEE TO BE ELECTED FOR TWO-YEAR TERM:
Steven A. Denning (46) Director of the Company since June 20,
1994; Managing General Partner of
General Atlantic Partners, a New York
based private investment firm, and
President of General Atlantic Service
Corporation, Greenwich, Connecticut;
Director of LEGENT Corporation, Herndon,
Virginia; Director of Davidson
Associates, Torrance, California;
Director of General Atlantic Resources,
Inc., Denver, Colorado; Director of
Compuware Corporation, Farmington Hills,
Michigan.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1995:
Dr. John M. Palms (59) Director of the Company since 1992;
President of the University of South
Carolina since March, 1991; President of
Georgia State University, 1989 to March
1991; prior thereto, various teaching
and administration positions at Emory
University; Director of Peco Energy,
Inc., Philadelphia, Pennsylvania;
Director of Fortis Holding, Inc., New
York, New York; Director of NationsBank
of South Carolina, N.A., Columbia, South
Carolina; Trustee, Institute of Defense
Analysis, Alexandria, Virginia.
<PAGE> 6
Principal Occupation for Past Five
Name and Age Years and Certain Other Directorships
Joseph D. Sargent (65) Director of the Company since 1986;
Chairman, Treasurer and Chief Financial
Officer of Connecticut Surety
Corporation and Vice Chairman of Conning
& Company, Hartford, Connecticut;
Chairman of the Board and Treasurer of
S.K.I., Ltd., Killington, Vermont;
Director of Trenwick Group, Inc.,
Stamford, Connecticut; Director of
Mutual Risk Management, Ltd., Hamilton,
Bermuda; Director of EW Blanch Holdings,
Inc., Minneapolis, Minnesota; Director
of Executive Risk Inc., Simsbury,
Connecticut; Director of MMI Companies,
Inc., Deerfield, Illinois.
G. Larry Wilson (48) Director of the Company since 1981;
Chairman of the Board, President and
Chief Executive Officer of the Company;
Director of LEGENT Corporation, Herndon,
Virginia. Employed by the Company since
its inception.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1996:
Donald W. Feddersen (60) Director of the Company since 1983;
General Partner of Charles River
Ventures, Boston, Massachusetts;
Director of Network Systems Corporation,
Brooklyn Park, Minnesota; Director of
Parametric Technology Corporation,
Waltham, Massachusetts; Director of
Sybase, Inc., Emeryville, California.
John P. Seibels (52) Director of the Company since 1981;
Investor, Columbia, South Carolina;
Director of Seibels and certain
subsidiaries.
COMMITTEES OF THE BOARD OF DIRECTORS: Among the standing
committees of the Board of Directors are the Audit, Compensation
and Nominating Committees.
The AUDIT COMMITTEE is composed of Richard G. Trub - Chairman,
Donald W. Feddersen, John P. Seibels and Joseph D. Sargent. The
Committee's functions include recommending independent auditors
to be employed by the Company. The Committee also reviews with
the independent and internal auditors their planned activities,
audits and findings and reports to the Board of Directors. The
Audit Committee met fourteen times during 1993.
The COMPENSATION COMMITTEE is composed of Donald W. Feddersen -
Chairman, Frederick B. Karl and Joseph D. Sargent. The
Committee's functions include reviewing and recommending
remuneration arrangements for senior officers and members of the
Board of Directors, adopting compensation plans in which
employees, officers and Directors are eligible to participate and
approving compensation guidelines for employees of the Company.
The Compensation Committee met once during 1993.
The NOMINATING COMMITTEE is composed of John P. Seibels -
Chairman, Frederick B. Karl, Dr. John M. Palms and G. Larry
Wilson. The Committee's functions include selecting and
recommending nominees for election as new, additional and
replacement Directors and officers and reviewing the performance
of incumbent Directors and officers as to whether to nominate
them for re-election. The Nominating Committee will consider
candidates for the Board recommended by Stockholders if such
recommendations are delivered to the Company no later than: (a)
with respect to an election to be held at an annual meeting of
Stockholders, ninety days in advance of such meeting; and (b)
with respect to an election to be held at a special meeting of
Stockholders for the election of directors, the close of busi-
<PAGE> 7
ness on the seventh day following the date on which notice of
such meeting is first given. Each such recommendation shall set
forth: (a) the name and address of the Stockholder who intends to
make the nomination and of the person or persons to be nominated;
(b) a representation that the Stockholder is a holder of record
of stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the recommendation;
(c) a description of all arrangements or understandings between
the Stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination
or nominations are to be made by the Stockholder; (d) such other
information regarding each nominee proposed by such Stockholder
as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be
nominated, by the Board of Directors; and (e) the consent of each
nominee to serve as a director of the Company if so elected. The
Nominating Committee met once during 1993.
The Board of Directors met fifteen times during 1993 and all of
the Directors attended at least 75% of the aggregate of all
meetings of the Board and all Committees of which they were
members.
STOCK OWNERSHIP OF DIRECTORS AND OFFICERS: Except as noted
below, the following table sets forth as of June 30, 1994
beneficial ownership of Common Stock by each Director, each of
the executive officers named in the Summary Compensation Table
below, and by all Directors and all executive officers as a
group.
<TABLE>
<CAPTION>
Amount and Nature
Name Of Beneficial Shares Subject Percentage
Of Beneficial Owner Ownership (1) To Option (2) Of Class (3)
<S> <C> <C> <C>
Steven A. Denning 1,523,024 (4) -0- 7.5%
Roy L. Faulks 5,666 5,166 *
Donald W. Feddersen 10,033 10,033 *
Frederick B. Karl 4,667 4,167 *
Dr. John M. Palms 1,666 1,666 *
Joseph D. Sargent 4,167 4,167 *
John P. Seibels 15,166 10,000 *
Richard G. Trub 4,367 4,167 *
G. Larry Wilson 224,770 (5) 183,333 1.1%
David T. Bailey 67,483 (6) 66,666 *
Charles E. Callahan 48,651 (7) 48,333 *
Donald A. Coggiola 107,010 (8) 101,666 *
Robert L. Gresham 73,775 (9) 66,666 *
Directors & all executive
officers as a group 2,124,080 (10) 538,364 10.4%
<FN>
(1) Except where noted below, each individual has sole voting and sole
dispositive power.
(2) These shares, which are included in the "Amount and Nature of
Beneficial Ownership" column, are subject to option on or before September
22, 1994 pursuant to the Company's various stock option plans.
(3) Less than one percent where indicated by asterisk.
(4) Mr. Denning is deemed to beneficially own 122,635 of these shares by
virtue of his status as a general partner in GAP Coinvestment which
beneficially owns these shares. Mr. Denning is also deemed to own
1,396,389 of these shares by virtue of his status in the general partner of
General Atlantic which beneficially owns these shares (see "Principal
<PAGE> 8
Stockholders"). Mr. Denning disclaims beneficial ownership of the shares
of Common Stock held by GAP Coinvestment and General Atlantic, except to
the extent of his pecuniary interest in GAP Coinvestment and General
Atlantic.
(5) Based on the Form 5 submitted for 1993, 1,437 of these shares are held
in the Company's 401(k) Retirement Savings Plan for which Mr. Wilson has
sole dispositive power but no voting power.
(6) Based on the Form 5 submitted for 1993, 151 of these shares are held
in the Company's 401(k) Retirement Savings Plan for which Mr. Bailey has
sole dispositive power but no voting power.
(7) Based on the Form 5 submitted for 1993, 318 of these shares are held
in the Company's 401(k) Retirement Savings Plan for which Mr. Callahan has
sole dispositive power but no voting power.
(8) Based on the Form 5 submitted for 1993, 452 of these shares are held
in the Company's 401(k) Retirement Savings Plan for which Mr. Coggiola has
sole dispositive power but no voting power. Mr. Coggiola is deemed to
beneficially own 100 of these shares by virtue of a power of attorney from
his father providing him with sole voting and sole disposition power for
these shares. Mr. Coggiola disclaims beneficial ownership of the 100
shares. In April of 1994, the Company was informed by Mr. Coggiola that a
gift of 380 shares of Common Stock was erroneously reported as a gift of
400 shares in a Form 4 which was filed in April of 1991. This error was
reflected only in this single Form 4.
(9) Based on the Form 5 submitted for 1993, 345 of these shares are held
in the Company's 401(k) Retirement Savings Plan for which Mr. Gresham has
sole dispositive power but no voting power.
(10) Based on the Form 5 for 1993 for each of the executive officers, an
aggregate of 3,774 of these shares are held in the Company's 401(k)
Retirement Savings Plan for which the respective executive officer has sole
disposition power but no voting power for the shares allocated to his
account.
</TABLE>
COMPENSATION PLANS AND ARRANGEMENTS
COMPENSATION OF DIRECTORS: Directors who are not full-time
employees of the Company receive an annual fee of $2,000, plus
$2,000 for each Board meeting attended and $750 for each
committee meeting attended on other than a regular Board meeting
date. Directors participating in any meeting by telephone
receive a $250 fee for such meeting. Directors who do not reside
in Columbia, South Carolina, are reimbursed for travel expenses.
COMPENSATION OF EXECUTIVE OFFICERS: The following table sets
forth information regarding compensation earned, including stock
options granted, during 1991, 1992 and 1993 by the executive
officers named in the table (the "Executive Group").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
Awards Payouts
Number of
Name Securities Long-Term All
and Underlying Incentive Other
Principal Annual Compensation Options Plan Compen-
Position Year Salary Bonuses (1) Granted Payouts sation (2)
<S> <C> <C> <C> <C> <C> <C>
G. Larry Wilson 1993 $496,930 $ 50,000 100,000 $ -0- $7,284
President 1992 456,940 234,000 50,000 1,196,000 6,198
1991 417,312 218,000 50,000 -0- -
<PAGE> 9
David T. Bailey 1993 $280,482 $ -0- 50,000 $ -0- $7,075
Executive Vice 1992 260,540 98,250 25,000 777,400 8,700
President 1991 241,615 83,835 25,000 -0- -
Charles E. Callahan 1993 245,538 -0- 50,000 -0- 6,641
Executive Vice 1992 213,538 86,400 25,000 598,000 6,075
President 1991 183,307 73,600 25,000 -0- -
Donald A. Coggiola 1993 279,546 -0- 50,000 -0- 7,075
Executive Vice 1992 260,540 86,329 25,000 777,400 8,700
President 1991 241,615 60,750 25,000 -0- -
Robert L. Gresham 1993 265,326 -0- 50,000 -0- 6,805
Executive Vice 1992 243,308 98,000 25,000 777,400 6,198
President 1991 221,615 89,200 25,000 -0- -
<FN>
(1) Reflects amount earned in year indicated even though actually paid in
following year and for Mr. Wilson includes amounts earned under his Executive
Compensation Agreement (see "Executive Compensation Agreement").
(2) Disclosure under this column is not required for 1991 under the rules of
the Securities and Exchange Commission. Amounts shown are matching
contributions from the Company under its 401(k) Retirement Savings Plan.
</TABLE>
The following table sets forth certain information regarding
options for Common Stock granted to the Executive Group during
1993. The table includes the potential realizable value which
would exist based on assumed annual compounded rates of stock
price appreciation of five and ten percent over the full ten-year
term of the options.
<TABLE>
OPTIONS GRANTED IN 1993
<CAPTION>
Individual Grants
Percent Potential Realizable Value
Number of of Total at Assumed Annual Rates
Securities Options Exercise of Stock Price Appreciation
Underlying Granted to Price Expiration for Option Term
Options Employees Per Date Of
Granted (1) in 1993 Share Options 5% 10%
<S> <C> <C> <C> <C> <C> <C>
All Stockholders (2) - - - - $1,154,116,972 $2,924,939,465
G. Larry Wilson 100,000 16.8% $81.90 January 19, 2003 $ 4,515,000 $ 12,041,000
David T. Bailey 50,000 8.4 81.90 January 19, 2003 2,257,500 6,020,500
Charles E. Callahan 50,000 8.4 81.90 January 19, 2003 2,257,500 6,020,500
Donald A. Coggiola 50,000 8.4 81.90 January 19, 2003 2,257,500 6,020,500
Robert L. Gresham 50,000 8.4 81.90 January 19, 2003 2,257,500 6,020,500
<FN>
(1) All option grants shown in this table are pursuant to the Company's 1993 Long-Term
Incentive Plan for Executives. Options granted under the plan in 1993 have an exercise price of
$81.90, which is 105% of the fair market value of the Common Stock on January 19, 1993 (the date
of grant) and become exercisable as follows: 25% on January 1, 1995;
<PAGE> 10
25% on January 1, 1997; and 50% on January 1, 1999. If there is a change in control of the
Company, as defined in this plan, then each option granted under the plan shall become
immediately exercisable in full regardless of whether there is a change in office or employment
of the participant. In addition, in the event of dissolution or liquidation of the Company or
any merger or combination in which the Company is not the surviving entity, then each option
granted shall terminate, but not before each participant is permitted to exercise his options to
the extent they are exercisable, without regard to any installment exercise provisions in the
plan.
(2) The potential realizable value for all Stockholders is based on the number of shares of
Common Stock outstanding on January 19, 1993 (the date these options were granted) and assumes
the Stockholders purchased the Common Stock for $78.00 (which was the fair market value of the
Common Stock on January 19, 1993) and held the Common Stock until January 19, 2003. The Company
has included this information to illustrate how the Stockholders will have fared compared to
each of the named executives if the assumed appreciation is achieved.
</TABLE>
The following table sets forth information regarding the value of
"in-the-money" options, which are options having a positive
difference between the exercise price of such stock option and
the 1993 year-end market price of Common Stock. None of the
officers in the Executive Group exercised options during 1993.
<TABLE>
AGGREGATED YEAR-END OPTION VALUES
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at December 31, 1993 at December 31, 1993 *
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
G. Larry Wilson 149,999 150,001 $ -0- $ -0-
David T. Bailey 49,999 75,001 -0- -0-
Charles E. Callahan 31,666 75,001 -0- -0-
Donald A. Coggiola 84,999 75,001 75,000 -0-
Robert L. Gresham 49,999 75,001 -0- -0-
<FN>
* Value represents the aggregate excess of the market price of the
Common Stock on December 31, 1993, which was $31.00, over the exercise
price for the options. All options included in the table have an exercise
price equal to the fair market value of the Common Stock on the dates of
grant, except those granted pursuant to the Company's 1993 Long-Term
Incentive Plan for Executives, which are described in the Options Granted
in 1993 Table.
</TABLE>
EXECUTIVE COMPENSATION AGREEMENT: The Company has an Executive
Compensation Agreement with Mr. Wilson whereby the Company is to
pay, subject primarily to his continued employment, certain
specified amounts over a five-year period. This Agreement is
renewable annually at the option of the Company. A payment of
$50,000 for 1993 was paid in early 1994.
DEFERRED COMPENSATION AGREEMENT: Mr. Wilson is covered by a
Deferred Compensation Agreement providing annual remuneration of
$25,000 upon the event of a qualifying retirement, death or total
disability. The Agreement, which provides for monthly payments
over a
<PAGE> 11
fifteen-year period, is contingent primarily upon his continued
employment until such an event occurs, and the deferred benefits
are not vested until that time. The Company owns life insurance
contracts covering Mr. Wilson, of which it is the beneficiary, in
an aggregate amount equal to or in excess of the total benefit.
EMPLOYMENT AGREEMENTS: The Company had Employment Agreements
with Messrs. Wilson, Bailey, Callahan, Coggiola and Gresham which
provided for payments to be made to the individuals in certain
circumstances following a change of control of the Company.
During 1993, there were no events which would entitle any of the
individuals to any post-termination benefits. All of these
Employment Agreements expired at the end of 1993.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION:
Decisions on compensation of the Company's executive officers
generally are made by the Compensation Committee of the Board and
reviewed with the full Board. Set forth below is a report of the
Board's Compensation Committee addressing the Company's
compensation policies for 1993 for its executive officers.
COMPENSATION PHILOSOPHY. The Committee believes that the Company
must pay competitively to attract and retain qualified
executives. To motivate executive personnel to perform at their
full potential, the Committee believes a significant portion of
compensation should be incentive-based. In addition, the
Committee believes it is important to reward not only individual
performance and achievement, but also to focus on overall
corporate results. This latter objective serves the dual
purposes of encouraging teamwork among executives and also
supports the Company's objective of increasing Stockholder value.
The Committee also believes it is essential that the Committee
retain the flexibility to evaluate not only the overall
performances of the individual executive officers and the Company
as a whole, but also all other circumstances and challenges
facing the Company and the respective executive officers.
Consequently, the Committee uses its subjectivity rather than
objective formulas in setting and adjusting the base salary of
the executive officers.
ELEMENTS OF COMPENSATION. Compensation earned during 1993, as
reflected in the foregoing tables, consisted primarily of three
parts: salary, annual bonus and award of stock options pursuant
to the 1993 Long-Term Incentive Plan for Executives. (The
executive officers were also eligible for other benefits such as
perquisites standard for executives and those offered under the
Company-sponsored broad-based plans.) Each of these elements
is described in more detail below.
BASE SALARIES FOR EXECUTIVE OFFICERS. For 1993, although no
formal studies were conducted, base salaries for all executive
officers were targeted at slightly below the base salaries which
the Company's peers might offer their executive officers for
performing similar functions in an equally challenging and
complex environment. In addition, the Committee uses its
subjective assessment of the overall performance of the
individual executive officer in terms of responsibility,
experience and breadth of knowledge and the Company as a whole.
No specific weight was assigned to these factors.
In addition to the above factors, the Committee also considered
how well Mr. Wilson performed the following factors in
determining his base salary increase: development and
implementation of a strategic vision for the Company integrating
insurance industry knowledge, technology trends, product
directions, and customers' needs; management of the Company's
financial affairs; recruitment and retention of qualified
executives; delegation of responsibility and authority to
qualified managers; capitalization on business opportunities; and
exhibition of leadership in achieving the Company's goals. No
specific weight was assigned to these factors. In addition, the
Committee considered the Company's
<PAGE> 12
actual results for 1992 in the areas of product development, new
business acquisitions, overall financial strength, perceived
customer satisfaction and the Company's prospects for long-term
growth. The Committee believed that Mr. Wilson's contribution to
the Company's 1992 performance was significant, and thus
increased his base salary by 8.7%.
ANNUAL BONUS PROGRAM. The annual bonus program for executive
officers is intended to provide short-term incentives and rewards
based on the Company's short-term goals that are consistent with
its long-term goals, as well as to promote the Company's
philosophy of having a substantial portion of executive
compensation "at risk." It was the Committee's subjective
assessment that for the named executive officers, 40% of base
salary was an appropriate percentage to have at risk on an annual
basis.
The annual bonus for executive officers with profit and loss
responsibility reporting to the CEO (a "P&L Executive Officer")
is generally comprised of two distinct parts. One part, which
can be up to 25% of the P&L Executive Officer's salary, is based
on the Company's performance, as measured by targeted
earnings-per-share. When actual earning-per-share is less than
the target, there is a corresponding reduction in the percentage
of bonus earned. The other part, which can be up to 15% of the
P&L Executive Officer's salary, is based on the profit
contribution of the group for which he is responsible, as
measured against the business plan established in the prior year
for such profit center. Where the actual profit contribution
exceeds a threshold level of the targeted profit contribution,
the bonus is increased by a stated percentage of base salary, up
to the maximum, for every such increment in excess of the
threshold.
For Mr. Wilson and those executive officers other than P&L
Executive Officers, the annual bonus is based solely on the
Company's performance, as measured by earnings-per-share. Of the
named executive officers, Mr. Gresham is the only one without
profit and loss responsibility.
The annual bonuses earned for 1992, as reflected in the Summary
Compensation Table, were based on the Company achieving the
previously-set targeted earnings-per-share. Deviations within
each of the respective executive officer's profit and loss center
resulted in deviations of percentages paid to the respective
executive officer. Based on the Company's performance during
1993, no bonuses were earned for 1993 by any of the executive
officers, including Mr. Wilson, pursuant to the annual bonus
program.
Pursuant to his Executive Compensation Agreement (see "Executive
Compensation Agreement"), Mr. Wilson was paid a bonus of $50,000
for 1993. Under this Agreement, the Company is to pay Mr. Wilson
$50,000 annually, subject primarily to his continued employment
with the Company.
STOCK OPTION PLANS. The 1989 Stock Option Plan ("1989 Plan"),
was designed for option grants to key employees, including the
executive officers. The Plan is intended to provide incentives
and rewards for a relatively short-term (3 years). Based on the
Common Stock's performance during the first half of 1993, stock
options pursuant to the 1989 Plan, which have historically been
granted to executive officers at the July meeting of the
Committee, were not granted during 1993.
Under the 1993 Long-Term Incentive Plan for Executives ("1993
LTIP"), which was approved by the Stockholders in 1993, options
were granted to certain key managers, including the executive
officers. This plan is intended to provide incentives and
rewards over a longer-term (6 years). The 1993 LTIP sets the
number of options granted to participants based on the
participant's position with the Company at the time of grant.
Options granted
<PAGE> 13
in 1993 have a premium exercise price of 105% of the fair market
value on the date of grant. (All options granted under the 1993
LTIP during 1993 have an exercise price of $81.90.) These
options become exercisable over a six-year period in increments
of 25% on January 1, 1995 and January 1, 1997 and 50% on January
1, 1999.
In determining the number of options to be granted pursuant to
the schedule in the 1993 LTIP, including the number for the Chief
Executive Officer, the Committee considered the historical
pattern of granting options under the 1989 Plan. In the
Committee's subjective assessment, the number and exercise price
for options historically granted annually to the executive
officers has provided the appropriate short-term incentive and
rewards. Consequently, the Committee determined that increasing
the number of options, setting the exercise price higher than the
stock price at the time of grant, and lengthening the vesting
schedule provided the appropriate level of longer-term incentive
and reward for the executive officers. In setting the number and
exercise price of options in the 1993 LTIP, the Committee
believed that the number of previously granted options held by
each executive officer at the time of the grant was not relevant
and therefore did not factor this into setting the schedule
containing the number of options granted to the participants.
COMPENSATION DEDUCTION LIMITATION. In 1993, Section 162(m) was
added to the Internal Revenue Code. This section generally
disallows the corporate tax deduction for certain compensation
paid in excess of $1,000,000 annually to executive officers of
publicly-held companies. An exception to the deduction limit is
for "performance-based compensation." The Company believes that
the 1989 Plan and 1993 LTIP satisfy the requirements for
qualifying stock options as performance-based compensation under
the exception. Therefore, the Company expects that any stock
option compensation realized upon the exercise of stock options
granted at a fair market value or higher exercise price under
these plans will not be subject to such compensation deduction
limit. For this reason, and because the Company's annual cash
compensation to each of its executive officers is currently below
the $1,000,000 limit, the Company does not at this time
anticipate any loss of deductibility for 1994 under the new law
for compensation paid to its executive officers. Had the law
been in effect during 1993, the Company would not have been
denied a deduction with respect to any amount of compensation
paid to its executive officers.
Compensation Committee
Donald W. Feddersen
Frederick B. Karl
Joseph D. Sargent
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION: The
Compensation Committee of the Board of Directors of the Company
consists of Messrs. Feddersen (Chairman), Karl and Sargent, none
of whom are or were previously employees or officers of the
Company or any of the Company's subsidiaries. Mr. Sargent is a
director and executive officer of Connecticut Surety Corporation,
which received software licenses and data processing and
information services from the Company for which it paid the
Company approximately $256,000 during 1993. The Company
considers such transactions with Connecticut Surety Corporation
to have been on substantially similar terms as those prevailing
at the time for comparable transactions with unrelated third
parties.
STOCK PERFORMANCE: The following graph compares the cumulative
total Stockholder return on the Company's Common Stock during the
five years ended December 31, 1993 with the cumulative total
return on the Standard & Poor 500 Index and the Standard & Poor
Computer Software and Services Index. The comparison assumes
$100 was invested on the last trading day of 1988 in the
Company's Common Stock and also in each of the indices
<PAGE> 14
and assumes reinvestment of all dividends which may have been
paid. The performance shown in the graph is not necessarily
indicative of future performance.
<TABLE>
STOCK PERFORMANCE
<CAPTION>
Standard &
Poor
Policy Standard & Computer
Management Poor Software and
Measurement Period Systems 500 Services
(Fiscal Year Covered) Corporation Index Index
Measurement Point - December 31, 1988
<S> <C> <C> <C>
December 31, 1988 $100.00 $100.00 $100.00
December 31, 1989 140.21 131.69 121.89
December 31, 1990 171.13 127.60 95.15
December 31, 1991 273.20 166.47 145.05
December 31, 1992 338.66 179.15 171.77
December 31, 1993 127.84 197.21 219.23
CERTAIN TRANSACTIONS
On April 26, 1994, International Business Machines Corporation
("IBM") entered into a Stock Purchase Agreement with the Company
pursuant to which IBM agreed to sell to the Company 2,278,537
shares of the Company's Common Stock which IBM purchased in 1989.
The purchase price for the Company's repurchase of this Common
Stock was $24.71 per share. On the same date, IBM entered into a
Stock Purchase Agreement with General Atlantic Investors pursuant
to which IBM agreed to sell to the General Atlantic Investors the
remaining 1,519,024 shares of Common Stock owned by IBM for a
purchase price of $24.77 per share. IBM's sale to the Company
closed on May 16, 1994. IBM's sale to the General Atlantic
Investors closed on June 20, 1994 and upon such closing the
General Atlantic Investors owned approximately 7.5% of the
Company's outstanding Common Stock.
The General Atlantic Investors and the Company entered into a
Shareholders' Agreement (the "Shareholders' Agreement") and a
Registration Rights Agreement (the "Registration Rights
Agreement"), each dated April 26, 1994. Pursuant to the
Shareholders' Agreement, the General Atlantic Investors are
entitled to cause the Nominating Committee of the Company's Board
of Directors to recommend a nominee to the Company's Board of
Directors. The General Atlantic Investors' initial designee is
Mr. Steven A. Denning. The Shareholders' Agreement imposes
restrictions on the ability of the General Atlantic Investors and
certain of their affiliates to increase their ownership interest
in the Company beyond 14.99% (or, in certain circumstances,
19.99%), to dispose of shares of Common Stock except
<PAGE> 15
pursuant to a right of first offer in favor of the Company or in
other specified circumstances, and to influence the management
and affairs of the Company. Pursuant to the Registration Rights
Agreement, the General Atlantic Investors and certain of their
affiliates are entitled to certain registration rights with
respect to the Common Stock owned by them including the right to
demand that the Company register such Common Stock under the
Securities Act of 1933, as amended, and the right to participate
in certain registrations initiated by the Company.
During calendar year 1993 the Company and its subsidiaries paid
to IBM and its subsidiaries $6.6 million for computer hardware,
programs and services and received $10.4 million from IBM and its
subsidiaries for computer software and services. In addition,
during 1993, Connecticut Surety Corporation, of which Mr. Sargent
is a director and an executive officer and of which Mr. Trub was
during 1993 a director, received software licenses and data
processing and information services from the Company for which it
paid the Company approximately $256,000. The Company considers
such transactions with IBM and Connecticut Surety Corporation to
have been on substantially similar terms as those prevailing at
the time for comparable transactions with unrelated third
parties.
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
(PROXY ITEM NO. 2): Stockholders will vote on the ratification
of the selection by the Board of Directors of Coopers & Lybrand
as independent auditors to audit the books, records and accounts
of the Company and its subsidiaries for the years ending December
31, 1992 through 1994. Coopers & Lybrand was retained by the
Company to conduct a special audit of the Company's financial
statements for the six-month period ended June 30, 1993 and to
recertify the Company's financial statements as of and for the
fiscal years ended December 31, 1992 and December 31, 1993. The
restated financial statements for the year ended December 31,
1992 and the financial statements for the year ended December 31,
1993 have been completed and have received an unqualified audit
opinion from Coopers & Lybrand and are contained in the 1993
Annual Report provided to Stockholders with this Proxy Statement.
A series of adjustments were made in connection with the
restatement. As a result of those adjustments, stockholders'
equity as of December 31, 1992 was increased to $579.1 million
from $574.0 million, a net increase of $5.1 million. See Note 2
of Notes to the consolidated financial statements contained in
the 1993 Annual Report to Stockholders. A representative from
Coopers & Lybrand is expected to be present at the Meeting and
will have the opportunity to make a statement and will be
available to answer questions.
The circumstances relating to the withdrawal by the Company's
previous independent auditors of their respective audit reports
for the years ended December 31, 1992 and 1993 are as follows.
By letter dated August 10, 1993, Arthur Andersen & Co. ("Arthur
Andersen") informed the Company of its withdrawal of its
auditors' report on the Company's financial statements for the
year ended December 31, 1992 due to significant uncertainty
related to the outcome of the internal investigation then being
conducted by the Company concerning certain of the Company's
business and accounting practices and the effect of those
practices on the financial statements. Arthur Andersen indicated
that the outcome of the internal investigation was likely to
require a restatement of the Company's 1992 financial statements.
At a meeting on August 10, 1993, in connection with the
withdrawal of its auditors' report, Arthur Andersen advised the
Board of Directors of the Company that subsequent to the issuance
of Arthur Andersen's report and after the first quarter of 1993,
certain information had come to its attention relating to the
following matters. Arthur Andersen advised the Board that it
believed that there were material weaknesses in the internal
controls of the Company, that
<PAGE> 16
information had come to its attention that had led it to question
certain of the Company's business practices and whether it would
have been any longer able to rely on management's representations
and that information had come to its attention that, if further
investigated, might have materially impacted the fairness and
reliability of the Company's financial statements for prior
periods. In its comments to the Board of Directors, Arthur
Andersen raised questions regarding the Company's accounting
practices related to revenue recognition and certain other
matters which had not been resolved at the time of its
termination. The Company, through its representatives, has
discussed each of these matters with Arthur Andersen.
By letter dated August 13, 1993, Ernst & Young, the independent
auditors of the Company prior to Arthur Andersen, informed the
Company that its February 20, 1992 auditors' report should no
longer be associated with the Company's financial statements for
the years ended December 31, 1991 and 1990 due to the internal
investigation then being conducted by the Company into certain of
the Company's business and accounting practices which was likely
to result in revision of its financial statements for periods
prior to 1992 and due to the significant uncertainty which thus
existed as to the effect on the Company's 1991 and 1990 financial
statements. By letter dated August 16, 1993, Ernst & Young
further advised the Company that its review reports on interim
financial statements during the years ended December 31, 1992,
1991 and 1990 should no longer be associated with those financial
statements.
The Company and certain of its officers and directors have been
named as defendants in a lawsuit alleging violation of the
federal securities laws and purporting to be a class action.
Among the allegations are that the Company's financial statements
for the year ended December 31, 1992 are materially false and
misleading. Because Arthur Andersen audited those financial
statements, the Company believed that there existed the potential
for conflicts between the Company and Arthur Andersen. As a
result, the Company concluded that a change in its outside
auditors was appropriate. On August 17, 1993, the Board of
Directors, acting on the Audit Committee's recommendation,
engaged the firm of Coopers & Lybrand as its independent
accountants to audit the Company's financial statements for the
six months ended June 30, 1993, including a review of the
Company's internal control structure, replacing Arthur Andersen.
Coopers & Lybrand also agreed to work with the Company's previous
independent accountants to resolve any adjustments that could
impact prior periods. The Company has authorized Arthur Andersen
to respond fully to inquiries of Coopers & Lybrand concerning
these matters, based upon information that had come to Arthur
Andersen in its capacity as principal accountant to audit the
Company's financial statements.
Neither the previously issued auditors' report of Arthur Andersen
on the Company's financial statements for the year ended December
31, 1992 nor the previously issued auditors' report of Ernst &
Young on the Company's financial statements for the year ended
December 31, 1991 contained any adverse opinion or disclaimer,
nor was either report qualified as to uncertainty, audit scope,
or accounting principles.
There have been no disagreements within the meaning of Item
304(a) of Regulation S-K between the Company and either Arthur
Andersen or Ernst & Young in connection with the audits for the
fiscal years ended December 31, 1992 and 1991, respectively, or
subsequently, on any matter of accounting principles or
practices, financial statements disclosure, or audit-
ing scope or procedure, which disagreements, if not resolved to
the satisfaction of such former principal accountants, would have
caused either firm to make reference to the subject matter of the
disagreements in connection with its report.
<PAGE> 17
The Company has furnished each of Arthur Andersen and Ernst &
Young a copy of this Proxy Statement and requested that they each
furnish a letter addressed to the Securities and Exchange
Commission stating whether it agrees with the statements made
herein.
UNAVAILABILITY OF AUDITED
FINANCIAL STATEMENTS FOR 1991
As indicated under "Ratification of Independent Auditors" above,
Coopers & Lybrand has completed the audit of the Company's
December 31, 1992 and December 31, 1993 financial statements,
however, re-audited financial statements for the year ended
December 31, 1991 were not available when the Annual Report and
this Proxy Statement were mailed to Stockholders. Notwithstanding
the absence of such audited financial information, the Company
believes that the proxy solicitation material to be used in
connection with the Meeting is adequate to enable Stockholders to
make informed decisions regarding the proposals contemplated by
this Proxy Statement.
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
(PROXY ITEM NO. 3): Stockholders will vote on a proposal to
amend the Articles to delete existing Article 9.e. in its
entirety. The text of Article 9.e. now reads as follows:
Retirement of Directors. Any member of the board or
directors who shall attain his seventieth birthday during
his term shall retire from the board on the last day of his
term and shall be deemed to retire from the board on such
day. No person shall be elected to serve upon the board of
directors who has attained the age of seventy years.
The Board of Directors believes that the ability of an individual
to contribute to the deliberative process of the Board of
Directors is dependent upon that individual's judgment, insight,
business acumen and experience. The Board of Directors believes,
therefore, that in determining whether to nominate and elect a
particular individual as a Director, both the Board and the
Stockholders should take into account all relevant factors in
evaluating the individual, not limited solely to such person's
age. Age alone should not foreclose the opportunity of having a
person serve as a Director. A maximum age restriction precludes
the Board and the Stockholders from exercising their discretion
in favor of a qualified candidate who happens to be seventy years
old or older.
The Board of Directors has particularly noted its desire to
retain the services of Frederick B. Karl who will be disqualified
from serving as a Director at the end of his current three-year
term unless the proposed amendment is adopted. Mr. Karl's
eligibility to serve as a Director is contingent upon the
Stockholders' approval of the proposed amendment.
The Articles require the affirmative vote of two-thirds of the
total number of shares outstanding as of the record date to
approve amendments to the Articles. Consequently, the proposal
to delete Article 9.e. from the Articles requires the affirmative
vote of 13,572,323 shares. The proposal to delete existing
Article 9.e. from the Articles of Incorporation of the Company
will be presented to the meeting in the form of the following
resolution:
RESOLVED, That Article 9.e. is deleted in its entirety from the
Articles of Incorporation of the Company and the remaining
provisions of Article 9 are relettered accordingly.
The Board of Directors recommends a vote FOR this proposal.
<PAGE> 18
OTHER PROPOSALS
There is no reason to believe that any other business will be
presented at the Meeting; however, if any other business should
properly and lawfully come before the Meeting, the persons named
in the proxy will vote in accordance with their best judgment.
For a Stockholder proposal to be presented at the next annual
meeting, it must be received by the Company not later than
December 20, 1994, in order to be included in the Proxy Statement
and proxy for the 1995 annual meeting. Any such proposal should
be addressed to the Company's Secretary and mailed to Post Office
Box Ten, Columbia, South Carolina 29202.
Stephen G. Morrison
Secretary
</TABLE>
<PAGE> 19
PROXY
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS
September 22, 1994
POLICY MANAGEMENT SYSTEMS CORPORATION
ONE PMS CENTER
BLYTHEWOOD, SOUTH CAROLINA 29016
The undersigned hereby appoints G. Larry Wilson and John P.
Seibels proxies with full power of substitution and revocation to
vote on the undersigned's behalf at the Annual Meeting of the
Stockholders of Policy Management Systems Corporation, to be held
at 11:00 a.m., September 22, 1994, in the offices of the Company,
One PMS Center, Blythewood, South Carolina, and at all
adjournments thereof, upon all business as may properly come
before the Meeting, including the following as more fully
described in the Notice of Annual Meeting and Proxy Statement,
receipt of which is hereby acknowledged. PROXIES WILL BE VOTED
IN ACCORDANCE WITH ANY INSTRUCTIONS INDICATED BELOW. IF NO
SPECIFICATION IS MADE, PROXIES WILL BE VOTED FOR THE NOMINEES FOR
DIRECTORS AND PROPOSAL 2 AND IN FAVOR OF THE PROPOSED AMENDMENT
TO THE ARTICLES OF INCORPORATION. THIS PROXY IS REVOCABLE ANY
TIME PRIOR TO ITS USE.
1. ELECTION OF DIRECTORS [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for all
as marked to the nominees listed
contrary below) below
NOMINEES: (1) Roy L. Faulks; (2) Frederick B. Karl; (3) Richard
G. Trub; (4) Steven A. Denning
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee write that nominee's name in the space provided below.)
2. RATIFICATION OF THE SELECTION [ ] FOR [ ] AGAINST [ ] ABSTAIN
OF COOPERS & LYBRAND AS
INDEPENDEND AUDITORS for
the Company
3. APPROVAL OF THE AMENDMENT TO [ ] FOR [ ] AGAINST [ ] ABSTAIN
THE ARTICLES OF INCORPORATION
to eliminate the mandatory
retirement age for members
of the Board
In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Date
X
(Signature should agree with name on stock, as shown hereon.
Officers, fiduciaries, etc., so indicate. When shares are held
in the names of more than one person, each person should sign the
proxy.)
