<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[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
FIRST FINANCIAL MANAGEMENT CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FIRST FINANCIAL MANAGEMENT CORPORATION
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
FIRST FINANCIAL MANAGEMENT
CORPORATION
3 Corporate Square
Suite 700
Atlanta, Georgia 30329
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 26, 1995
The Annual Meeting of the Shareholders of First Financial Management
Corporation will be held at Hotel Nikko Atlanta, 3300 Peachtree Road, Atlanta,
Georgia, on Wednesday, April 26, 1995, at 10:00 a.m., local time, for the
following purposes:
1. To elect eight directors.
2. To transact such other business as may properly come before the meeting.
March 10, 1995, is the record date for the determination of shareholders
entitled to notice of and to vote at such meeting or any adjournment thereof.
Only shareholders of record at the close of business on that date are entitled
to notice of and to vote at the meeting.
Whether or not you expect to be present in person at the meeting, please sign
and date the accompanying proxy and return it promptly to our transfer agent in
the enclosed postage-paid reply envelope. This will assist us in preparing for
the meeting.
By order of the Board of Directors.
March 27, 1995 STEPHEN D. KANE
Secretary
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE
UNITED STATES. IF A SHAREHOLDER RECEIVES MORE THAN ONE PROXY BECAUSE HE OR SHE
OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE
COMPLETED AND RETURNED. YOUR COOPERATION WILL BE APPRECIATED. YOUR PROXY WILL
BE VOTED WITH RESPECT TO THE MATTERS IDENTIFIED THEREON IN ACCORDANCE WITH ANY
SPECIFICATIONS ON THE PROXY.
<PAGE>
FIRST FINANCIAL MANAGEMENT CORPORATION
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 26, 1995
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Financial Management Corporation
("FFMC") to be used at the Annual Meeting of Shareholders of FFMC (R) to be
held at Hotel Nikko Atlanta, 3300 Peachtree Road, Atlanta, Georgia, on
Wednesday, April 26, 1995, at 10:00 a.m., local time, and any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders. This Proxy Statement and accompanying form of proxy
and FFMC's 1994 Annual Report to Shareholders were first sent or given to
shareholders on or about March 27, 1995.
SOLICITATION OF PROXIES
This proxy solicitation will be conducted principally by mail, and the cost
will be paid by FFMC. Proxies may also be solicited by officers and regular
employees of FFMC personally or by telephone, but such persons will not be
specifically compensated for such services. In addition, FFMC has retained
Wachovia Bank of North Carolina, N.A., of Winston-Salem, North Carolina
("Wachovia"), to assist in soliciting proxies. For these services, FFMC will
pay Wachovia $1,825, plus reimbursement of expenses. Banks, brokers, nominees
and other custodians and fiduciaries will be requested to forward proxy
solicitation material to their principals and customers where appropriate, and
FFMC will reimburse such banks, brokers, nominees, custodians and fiduciaries
for their reasonable out-of-pocket expenses in sending the proxy material to
beneficial owners of the shares.
ACTIONS TO BE TAKEN UNDER THE PROXY
In voting by proxy, shareholders may vote in favor of all nominees or
withhold their votes as to some or all nominees. Unless other instructions are
contained in the spaces provided in the proxy form, all properly executed
proxies received by FFMC will be voted "FOR" the election of the eight nominees
for director set forth below under the heading "Election of Directors." The
election of directors will require the affirmative vote of a plurality of the
shares of FFMC Common Stock voting in person or by proxy at the Annual Meeting.
Any proxy authorized to be voted at the meeting, including on routine matters
pursuant to the discretionary authority granted in management's proxy, whether
or not votes are withheld, will be counted in establishing a quorum. Broker
nonvotes (proxies submitted by a broker marked to indicate that the shares are
not voted on a proposal) are not anticipated because brokers are authorized to
vote on all matters covered by management's proxy. Broker nonvotes will not be
included in vote totals for director nominees and will have no effect on the
outcome of the vote.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by giving written notice of revocation or delivering a duly executed
proxy bearing a later date to FFMC's Secretary. In order to be effective, such
notice or later dated proxy must be received by FFMC prior to the exercise of
the earlier proxy. A shareholder may attend the meeting, revoke his or her
proxy and vote in person.
VOTING SECURITIES
The only class of securities entitled to vote at the meeting is FFMC's Common
Stock, $.10 par value ("FFMC Common Stock"). The close of business on March 10,
1995, has been fixed as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting or at any adjournment thereof.
At March 10, 1995, there were 61,794,879 shares of FFMC Common Stock
outstanding, each of which is entitled to one vote at the meeting. A quorum
will require a majority of the outstanding shares of FFMC Common Stock to be
represented at the meeting, in person or by proxy.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and related notes set forth certain information
concerning persons nominated as directors and the Named Officers (as that term
is hereinafter defined), including their beneficial ownership, as defined in
Rule 13d-3, of shares of FFMC Common Stock, and beneficial ownership of FFMC
Common Stock by all executive officers and directors as a group. All such
ownership is based on information furnished by these individuals as of March
13, 1995. As of March 13, 1995, there were 62,389,379 shares of FFMC Common
Stock outstanding.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP/1/,/2/,/3/ PERCENT OF CLASS
---------------- ------------------------------- ----------------
<S> <C> <C>
Patrick H. Thomas 1,023,580 1.62%
George L. Cohen 15,601 *
Robert E. Coleman 17,344 *
Jack R. Kelly, Jr. 17,540 *
Henry A. Leslie 8,416 *
M. Tarlton Pittard 135,635 *
Charles B. Presley 7,134 *
Virgil R. Williams 504,096 *
Richard D. Jackson 78,887 *
Stephen D. Kane 84,352 *
Randolph L. M. Hutto 33,713 *
All Executive Officers and Di-
rectors as a Group (12 per-
sons) 1,996,822 3.16%
</TABLE>
----------------
*Less than 1%
/1Except/as otherwise indicated in Note 2, the persons included in the table
have sole voting and investment power with respect to the shares listed as
beneficially owned by them.
/2The/shares of FFMC Common Stock beneficially owned include: shares subject
to options exercisable currently or within 60 days (Mr. Thomas--241,700, Mr.
Pittard--84,483, Messrs. Cohen, Coleman and Kelly--7,500 each, Mr. Leslie--
4,500, Mr. Presley--3,000, Mr. Williams--1,500, Mr. Jackson--49,500, Mr.
Kane--46,825, Mr. Hutto--13,000 and the Group--477,088); shares issued
pursuant to restricted share awards under the Incentive Stock Plans (as
hereinafter defined), as to which the holders have voting rights, but not
the right to transfer until expiration of the applicable restrictions (Mr.
Thomas--594,500, Mr. Pittard--18,848, Mr. Jackson--19,761, Mr. Kane--18,848,
Mr. Hutto--18,777 and the Group--685,535); restricted shares issued under
the Directors' Restricted Stock Award Plan to each director not employed by
FFMC, as to which the participants have voting rights, but not the right to
transfer until expiration of applicable restrictions (Messrs. Cohen,
Coleman, Kelly and Leslie;--1,416 each; Mr. Presley--1,533, Mr. Williams--
1,180 and the Group--8,377); shares held by wives or children (Mr. Thomas--
300, Mr. Cohen--451, Mr. Kane--10 and the Group--761); 2,250 shares held by
one member of the Group as trustee of a trust benefiting his minor children;
and shares held by the trustee of the FFMC Savings Plus Plan as to which the
participants have voting rights and limited withdrawal rights (Mr. Thomas--
7,693, Mr. Pittard--2,888, Mr. Jackson--1,301, Mr. Kane--7,622, Mr. Hutto--
167 and the Group--19,958).
/3None/of FFMC's executive officers or directors owns any warrants to purchase
FFMC Common Stock or any of FFMC's 5% Senior Convertible Debentures.
2
<PAGE>
ELECTION OF DIRECTORS
It is the intention of the persons named in the accompanying proxy to vote
for the election of the nominees identified below to serve for a term of one
year and until their successors are elected and qualified.
<TABLE>
<CAPTION>
POSITIONS WITH FFMC DIRECTOR OF
NAME AGE AND PRINCIPAL OCCUPATION FFMC SINCE
---- --- ------------------------ -----------
<S> <C> <C> <C>
Patrick H. Thomas 52 Chairman of the Board, President and 1973
Chief Executive Officer
George L. Cohen 64 Director; Partner, Sutherland, Asbill & 1983
Brennan (attorneys and counsel for
FFMC) (Atlanta, Georgia)
Robert E. Coleman 70 Director; Consultant (Retired Chairman 1986
and Chief Executive Officer of Riegel
Textile Corporation) (Greenville, South
Carolina)
Jack R. Kelly, Jr. 60 Director; General Partner, Noro-Moseley 1990
Partners (venture capital firm)
(Atlanta, Georgia)
Henry A. Leslie 73 Director; Attorney-at-Law (Retired 1992
President and Chief Executive Officer,
Union Bank & Trust Co.) (Montgomery,
Alabama)
M. Tarlton Pittard 55 Director; Vice Chairman and Chief 1992
Financial Officer
Charles B. Presley 72 Director; Consultant (Retired Chairman 1993
of the Board, First Union National Bank
of Georgia) (Augusta, Georgia)
Virgil R. Williams 55 Director; Chairman, Williams Group 1993
International, Inc. (industrial, civil
and environmental engineering firm) and
President, Williams Communications,
Inc. (publishing and information
services) (Atlanta, Georgia)
</TABLE>
All of the nominees were elected as directors at the 1994 Annual Meeting of
FFMC's shareholders. If any nominee for the office of director is unable or
fails to accept nomination or election, which is not anticipated, it is the
intention of the persons named in the proxy, unless otherwise specifically
instructed in the proxy, to vote for the election in his stead of such other
person as management may recommend. If any shareholder desires to nominate
another person for election as director at the Annual Meeting, such person must
be named in a written notice by such shareholder delivered to the Secretary of
FFMC at FFMC's principal executive office not less than five days prior to the
date of the Annual Meeting, in accordance with Section 2.7 of FFMC's Bylaws, a
copy of which may be obtained from the Secretary.
Each nominee for director has been principally employed in his present
capacity (or substantially similar capacities with the same or predecessor
organizations) for at least five years except as indicated below.
Prior to his retirement in March 1991, Mr. Leslie had served for more than
four years as President and Chief Executive Officer of Union Bank & Trust Co.,
Montgomery, Alabama. He served as a director of FFMC's then-subsidiary Basis
Information Technologies, Inc., from 1990 to 1992.
From 1986 through his retirement in August 1992, Mr. Presley served as
Chairman of the Executive Committee of the Board of Directors of First Union
National Bank of Georgia, as well as serving as Chairman of the Board of such
bank until February 1988. During such time Mr. Presley also held the same
positions with the bank's holding company, First Union Corporation of Georgia.
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<PAGE>
The nominees for director of FFMC who serve as directors of unaffiliated
public corporations are Mr. Coleman, who is a director of Boise Cascade
Corporation, Mr. Kelly, who is a director of ADESA Corporation, and Mr.
Williams, who is a director of BankSouth Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS
In addition to an Executive Committee, presently composed of Messrs. Thomas,
Cohen, Coleman and Presley, the Board of Directors has standing Audit,
Compensation and Nominating Committees.
The Audit Committee, presently composed of Messrs. Kelly, Leslie and Presley
met four times in 1994. The functions of the Audit Committee are to recommend
each year the firm to be employed as FFMC's independent auditor, to consult
with the auditor regarding the plan of audit, the report of the audit and the
adequacy of internal accounting controls, to monitor the independence of the
auditor, to conduct a review of all FFMC transactions with related parties and
potential conflict of interest transactions and to report to the Board of
Directors at least annually.
The Compensation Committee, presently composed of Messrs. Coleman, Kelly,
Leslie and Williams, met eight times in 1994. The functions of the
Compensation Committee are as described in the "Report On Executive
Compensation By The Compensation Committee Of The Board Of Directors" set
forth below.
COMPENSATION RELATED MATTERS
REPORT ON EXECUTIVE COMPENSATION BY THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS/1/
The Compensation Committee (the "Committee") of the Board of Directors of
FFMC is composed entirely of directors who are not employees of FFMC. The
Board of Directors has delegated to the Committee the authority:
1. To approve compensation arrangements for Patrick H. Thomas, Chairman of
the Board, President and Chief Executive Officer of FFMC ("Mr. Thomas"),
including discretionary awards under FFMC's incentive compensation plans;
2. To approve, upon recommendations by the Chief Executive Officer, the
compensation arrangements for Senior Executive Officers/2/ of FFMC and
executive compensation plans and to review generally the compensation of
FFMC's other executive officers, as determined by the Chief Executive Officer;
and
3. To administer FFMC's Incentive Stock Plans (as defined elsewhere in this
Proxy Statement) and make awards thereunder to FFMC employees and to carry out
the duties and responsibilities of the Board of Directors regarding FFMC's
other compensation and savings plans.
----------------
/1Pursuant/to Item 402(a)(9) of Regulation S-K, as promulgated by the
Securities and Exchange Commission (the "SEC"), the material in this report
shall not be deemed to be "soliciting material," to be "filed" with the SEC
or to be subject to Regulations 14A or 14C, other than as provided in Item
402, or to the liabilities of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); and no general incorporation of such
material by reference thereto, whether made before or after the date hereof,
shall be deemed specifically to request that it be treated as soliciting
material or specifically incorporate it by reference into a filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act within the meaning of Item 402(a)(9).
/2Senior/Executive Officers are those executive officers of FFMC who report
directly to the Chief Executive Officer. In 1994, Senior Executive Officers
were Messrs. Kane, Jackson and Pittard, who are included in the Named
Officers, as defined in this Proxy Statement under "Executive Compensation."
With the establishment in January 1995 of the Office of the Chairman, the
Senior Executive Officers now consist of the Named Officers and Robert J.
Amman, Vice Chairman and Chief Operations Officer.
4
<PAGE>
Pursuant to the proxy rules promulgated by the SEC, this report describes the
compensation policies of the Committee applicable to the executive officers of
FFMC including the specific relationship of corporate performance to executive
compensation for 1994. The report also discusses the 1994 compensation of Mr.
Thomas.
COMPENSATION POLICIES
FFMC's compensation policies for executive officers are designed to allow
FFMC to attract and retain highly qualified executive officers whose
contributions are necessary for the continued growth and success of FFMC.
FFMC's compensation policies for executive officers have two principal
components: (1) a significant portion of an executive officer's compensation
depends on the performance of the individual and FFMC; and (2) compensation in
the form of stock options, restricted stock awards and similar awards is
contingent upon continued employment of the executive officer over a specified
period of time up to five years. The Committee believes that ownership of FFMC
stock by its executive officers is desirable, and FFMC's compensation policies
and plans are designed to encourage such stock ownership. Specific information
concerning the implementation of these policies in connection with the
compensation arrangements of Mr. Thomas and the executive officers is provided
below.
Based on the advice of counsel, the Committee believes that all compensation
paid to FFMC's executive officers for 1994 is deductible for federal income tax
purposes notwithstanding the provisions of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Committee's policy with
respect to compensation to be paid to FFMC's executive officers is to implement
its compensation policies taking into account any potential limitations on the
deductibility of compensation in excess of $1,000,000 per year imposed by
Section 162(m), but not requiring that all compensation qualify for exemption
from such limitation.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Since 1986, Mr. Thomas's compensation as Chief Executive Officer has been
based on long-term employment agreements made with Mr. Thomas by the Committee
and ratified by the Board of Directors. The agreement in effect for 1994,
entered into in 1989, provided for a minimum annual salary (subject to annual
review for increases) and a formula incentive bonus equal to the lesser of the
market value of 94,500 shares of FFMC Common Stock (subject to adjustment for
stock dividends, stock splits, etc.) following the public announcement of
FFMC's earnings for the year, or 21/2% of FFMC's "pre-tax income," but not less
than $1,800,000. For 1994, Mr. Thomas's annual salary was $875,000, unchanged
from the 1993 amount. Mr. Thomas' incentive bonus for 1994 was $5,965,313,
equal to the value of 94,500 shares of FFMC Common Stock based on the average
closing price for the ten business days after the announcement of FFMC's 1994
earnings ($63.125).
As described elsewhere in this Proxy Statement, during 1994 the Committee
entered into a new employment agreement with Mr. Thomas covering the five year
period 1995-1999 and made incentive awards to him for that period of restricted
shares, which were rescinded later in the year. New awards of restricted shares
were made in March 1995 pursuant to a revised incentive compensation
arrangement for 1995-1999. As also described, in 1994 the Committee awarded to
Mr. Thomas an option to purchase 500,000 shares of FFMC stock under the 1988
Plan at an exercise price of $57.25 per shares (the market price on the date of
grant) and becoming exercisable at the rate of 100,000 shares at the end of
each year beginning with 1995. In granting this option, the Committee took into
consideration options and restricted shares previously awarded to Mr. Thomas.
ANNUAL SALARIES
The annual salaries of executive officers are fixed initially at amounts that
are deemed by the Chief Executive Officer in his discretion as necessary and
appropriate to attract (or, in the case of executives of
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<PAGE>
acquired companies, to retain) executives of outstanding ability and
experience. The base salary of each of the Named Officers was initially set
pursuant to a negotiated employment agreement with such officer. Salaries of
executive officers are reviewed annually, and increases are made based on a
subjective evaluation by the Chief Executive Officer of the individual's
overall performance. Salaries and salary increases of Senior Executive Officers
are subject to approval by the Committee, based on recommendations of the Chief
Executive Officer.
INCENTIVE COMPENSATION
The compensation of FFMC's executive officers for 1994 included incentive
compensation in the form of cash bonuses and awards of restricted shares and
stock options. The amounts of such incentive compensation for key executives
other than Senior Executive Officers were established pursuant to FFMC's
Executive Incentive Program, which provides opportunities for incentive
compensation for such key executives to earn incentive compensation if certain
performance targets are met or exceeded. The performance targets and amounts
and form of incentive compensation pursuant to the Executive Incentive Program
are set by a committee consisting of the Chief Executive Officer and the Senior
Executive Officers. Performance targets for 1994 were based on pre-tax income,
net revenue growth or other performance criteria of the executive's specific
business unit or, in the case of corporate staff executives, pre-tax income of
FFMC and subjectively evaluated job performance levels.
Incentive compensation of Senior Executive Officers for 1994 was based on
recommendations of the Chief Executive Officer, subject to approval by the
Committee. The Chief Executive Officer's recommendations were based primarily
on the growth in 1994 in FFMC's pre-tax income and earnings per share and a
general subjective evaluation by the Chief Executive Officer of the
individual's performance during the year (including his contributions to the
successful completion of the acquisition of Western Union Financial Services,
Inc.). Such recommendations included in each case the amount and composition of
the recommended incentive compensation for the Senior Executive Officer. Pre-
tax income rose 22% over the previous year and earnings per share increased
21%. Amounts of cash bonuses and awards of restricted shares and stock options
awarded to Senior Executive Officers are set forth in the Summary Compensation
Table included in this Proxy Statement.
RESTRICTED SHARES
Under the Incentive Stock Plans, the Committee has awarded to executive
officers from time to time restricted shares of FFMC stock that ordinarily vest
only upon the expiration of a specified period. When such awards are made, the
number of shares awarded to each executive officer is based upon a specific
recommendation of the Chief Executive Officer for the executive officer, taking
into account a subjective evaluation of the individual's performance, the
amount of any cash bonus and awards of restricted shares and options previously
and contemporaneously granted to the individual under the Incentive Stock
Plans. If the executive officer's employment terminates before vesting,
generally the shares are forfeited. The vesting period generally has been five
years, so that the executive officer's continued employment over the specified
period of time is required in order to obtain the shares. Because the value of
all restricted stock awards is dependent upon the market value of FFMC Common
Stock as of the future date on which the restrictions on the awarded shares
lapse, the potential value of the award fluctuates with changes in the per
share value of FFMC Common Stock. This aligns the interests of the executive
officers in regard to that element of compensation with the interests of
shareholders during the period of the restrictions.
STOCK OPTIONS
Under the Incentive Stock Plans, the Committee has awarded to executive
officers from time to time options to purchase FFMC Common Stock. When such
grants are made, the number of shares covered by the option granted to each
executive officer is based upon a specific recommendation of the Chief
Executive Officer for the executive officer, taking into account a subjective
evaluation of the individual's performance,
6
<PAGE>
the amount of any cash bonus and awards of options and restricted shares
previously and contemporaneously granted to the individual under the Incentive
Stock Plans. Exercisability of the options has generally vested at the rate of
20% of the underlying shares at the end of six months following grant and an
additional 20% each twelve months thereafter. The options are exercisable for
ten years, generally at a price equal to 100% of fair market value at the date
of grant. Options granted have not had performance contingencies, but
realization of the value provided through the options has required the option
holder to remain employed by FFMC until the options vest. The value of the
amounts realizable through exercise of the options depends on increases in the
per share value of FFMC Common Stock, which aligns the interests of the
executive officers in regard to that element of compensation with the interests
of the shareholders over the life of the option.
OTHER COMPENSATION PLANS
FFMC has a number of other broad-based employee benefit plans in which
executive officers participate on the same terms as other employees meeting the
eligibility requirements, subject to any legal limitations on amounts that may
be contributed to or benefits payable under the plans. The matching
contribution by FFMC to the savings account portion of the Savings Plus Plan
under Section 401(k) of the Code is invested in FFMC Common Stock, which
further aligns the employees' and shareholders' long-term financial interests.
Mr. Thomas and FFMC's executive officers participate in a life insurance plan
that provides death benefits generally equal to three times the executive's
annual salary or larger amounts where required by employment agreements, until
the executive dies or reaches normal retirement age. Both FFMC and the
participants share in the payment of the premiums, except as otherwise provided
in certain employment agreements. FFMC will receive from the cash value of the
policy or the proceeds an amount equal to its total premiums paid plus the cost
of funds invested in premiums during the policy period. The executive (or the
executive's beneficiary) then receives the remainder of the proceeds or cash
value. FFMC's premium outlay is always exceeded by the increasing cash values
of the policies.
Submitted by the Compensation Committee of the Board of Directors:
ROBERT E. COLEMAN, Chairman
JACK R. KELLY, JR.
HENRY A. LESLIE
VIRGIL A. WILLIAMS (committee member since April
27, 1994)
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is presently comprised
of Messrs. Coleman, Kelly, Leslie and Williams. Mr. Williams and his brother,
James M. Williams, Jr. (collectively, the "Williamses"), each owned 50% of the
outstanding capital stock of International Banking Technologies, Inc. ("IBT"),
and each was an executive officer of both IBT and Prime Consulting Group, Inc.
("Prime"), at the time of IBT's and Prime's acquisition by FFMC in 1993. IBT
and Monolith Construction Company, Inc. ("Monolith") are parties to an
agreement, dated August 17, 1993, pursuant to which Monolith agrees to provide
certain prefabricated minibranch banking units and related services to IBT for
a period of ten years from the date of the contract. Monolith is the preferred
supplier of such units and the contract calls for a fixed price per unit,
subject to adjustment only to reflect annual changes in a specified
construction cost index. The contract with IBT represented approximately 63% of
Monolith's revenues in 1994. Each of the Williamses is an executive officer of
Monolith and each holds 50% of Monolith's outstanding capital stock.
IBT and Prime lease the space for their executive offices from FWA
Associates, L.P. Both of the Williamses are limited partners in FWA Associates,
L.P., each holding a 24% direct and a 3.33% indirect interest in the
partnership. The IBT lease covers approximately 14,000 square feet and has a
term which commenced on May 1, 1988, and which is scheduled to expire on April
30, 1998. The IBT lease calls for an
7
<PAGE>
initial annual rental of $132,000, with annual escalation over the term of the
lease equal to the rate of annual increase in the Consumer Price Index
multiplied by the previous year's rent, such increases not to exceed 6% per
annum on a cumulative basis. The Prime lease is for approximately 2,850 square
feet contiguous to that of IBT, and has a term which commenced on December 1,
1988, and which is also scheduled to expire on April 30, 1998. Neither lease
contains any renewal options. The Prime lease provides for an initial annual
rental of $42,750, with annual escalations over the term of the lease at the
same rate as that discussed above for the IBT lease.
IBT had an agreement with Equipment Technologies, Inc. ("ETI"), the stock of
which is owned 50% by each of the Williamses, pursuant to which IBT agreed to
loan ETI funds under a working capital line of credit in the principal amount
of up to $2,000,000, with interest at prime plus 1%. During 1994, the highest
outstanding principal balance under the loan was $1,425,000. No further
advances under the line of credit were made to ETI by IBT during 1994. The
outstanding principal balance of $1,425,000 was repaid in full on February 28,
1994, and the line of credit was terminated.
At the time of the acquisition of IBT and Prime, IBT was in possession of
notes receivable (the "Notes") from its then shareholders, the Williamses. The
Notes are demand notes, bearing interest at 8%, and relate to funds withdrawn
by the shareholders for purposes unrelated to IBT. The Notes are now currently
held by FFMC. During 1994, the highest outstanding principal balance on the
Notes was $1,773,490 in the aggregate (Virgil Williams--$1,405,990; James
Williams--$367,500). As of March 13, 1995, the outstanding principal balance on
the Notes was $1,773,490 in the aggregate (Virgil Williams--$1,405,990; James
Williams--$367,500).
8
<PAGE>
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long-term compensation
for services rendered in all capacities to FFMC and its subsidiaries for the
fiscal years ended December 31, 1994, 1993 and 1992, respectively, for those
persons who were, at December 31, 1994, (i) FFMC's Chief Executive Officer and
(ii) its four other most highly compensated executive officers (such five
individuals being hereinafter collectively referred to as the "Named
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------------------------- ----------------------- ---------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
LONG-TERM ALL
RESTRICTED INCENTIVE OTHER
OTHER ANNUAL STOCK PLAN COMP-
NAME AND COMPENSATION AWARDS OPTIONS/SARS PAYOUTS ENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) ($)/1/ (#)/2/ ($)/3/ ($)/4/
---------------------- ---- ---------- --------- ------------ ---------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PATRICK H. THOMAS
Chairman of the Board, 1994 875,000 5,965,313/5/ 69,338/6/ 0 500,000 0 16,014
President & Chief 1993 875,000 5,410,125/5/ 0 0 0 0 15,836
Executive Officer 1992 825,000 3,920,525/5/ 0 0 0 0 16,012
M. TARLTON PITTARD
Vice Chairman & Chief 1994 442,656 300,000 0 303,043 10,000 0 12,654
Financial Officer 1993 424,000 250,000 0 0 10,000 0 12,696
1992 400,000 200,000 0 142,515 0 51,353 13,314
RICHARD D. JACKSON
Vice Chairman & Chief 1994 445,200 300,000 0 353,030 10,000 0 80,047
Operations Officer 1993 424,000 300,000 0 0 10,000 0 51,331
1992 400,000 290,000 0 0 0 0 51,268
STEPHEN D. KANE
Vice Chairman, Chief 1994 365,400 300,000 0 303,043 10,000 0 8,187
Administrative Officer 1993 350,000 250,000 0 0 10,000 0 8,521
& Secretary 1992 300,000 150,000 0 142,515 0 35,947 7,651
RANDOLPH L. M. HUTTO
Senior Executive Vice 1994 240,000 200,000 0 63,019 0 0 5,299
President & General 1993 225,000 100,000 0 0 10,000 0 4,987
Counsel 1992 200,000 100,000 0 510,000 15,000 0 3,266
</TABLE>
----------------
/1All/awards of restricted shares to the Named Officers have been made under
the 1988 Plan (as hereinafter defined) and are valued in the table based
upon the closing market prices of FFMC Common Stock on the grant dates.
Dividends are payable with respect to all awards of restricted shares
reported in this column. As of December 31, 1994, each individual held the
following aggregate number of restricted shares of FFMC Common Stock having
the following values, based upon the closing market price of $61.875 per
share of FFMC Common Stock on such date (Mr. Thomas--0 shares/$0; Mr.
Pittard--13,067 shares/$808,521; Mr. Jackson--13,980 shares/$865,012; Mr.
Kane--13,067 shares/$808,521 and Mr. Hutto--16,183 shares/$1,001,323). Does
not include restricted stock awards made under the 1988 Plan totalling
594,500 shares made to Mr. Thomas on March 13, 1995 (See "Employment
Agreements").
/2FFMC/has no outstanding awards of Stock Appreciation Rights ("SARs"), thus
this column lists only options. All option awards granted to the Named
Officers in 1994 were made under the Incentive Stock Plans (See "Options and
Stock Appreciation Rights").
/3/All sums listed in this column were paid in cash pursuant to FFMC's
Performance Units Incentive Plan.
/4Includes/for each of the indicated individuals the following amounts for
1994, 1993 and 1992 representing (i) contributions by FFMC to the FFMC
Savings Plus Plan (for 1994: Messrs. Thomas, Pittard, Jackson and Kane--
9
<PAGE>
$2,250 each, and Mr. Hutto--$1,800; for 1993: Messrs. Thomas, Pittard,
Jackson and Kane--$2,973 each, and Mr. Hutto--$1,716; for 1992: Messrs.
Thomas, Pittard, Jackson and Kane--$2,182 each, and Mr. Hutto--$0), (ii) the
dollar value of the benefit to the Named Officer of the premium paid by or on
behalf of FFMC under its Key Executive Life Insurance Plan (or by or on
behalf of a subsidiary of FFMC with respect to a policy held by it on such
individual) for the year in question on split-dollar life insurance policies
for the benefit of the individual, determined for the period, projected on an
actuarial basis, between payment of the premium and the refund, as
hereinafter described (for 1994: Mr. Thomas--$13,764; Mr. Pittard--$10,404;
Mr. Jackson --$19,066; Mr. Kane--$5,937 and Mr. Hutto--$3,499; for 1993: Mr.
Thomas--$12,863; Mr. Pittard--$9,723; Mr. Jackson--$17,819; Mr. Kane--$5,548
and Mr. Hutto--$3,271; for 1992: Mr. Thomas--$13,830; Mr. Pittard--$11,132;
Mr. Jackson--$18,900; Mr. Kane--$5,469 and Mr. Hutto--$3,226), and (iii) for
Mr. Jackson, the annual calendar-year dollar-value increase in the
accumulated cash value of the life insurance policy required to be carried by
FFMC pursuant to his employment agreement as discussed below, representing
accrued deferred compensation to Mr. Jackson for the years in question (for
1994: $58,731; for 1993: $30,539; and for 1992: $30,186). As previously
discussed under "Other Compensation Plans," FFMC will receive from the cash
value of such policies or the proceeds thereof an amount equal to the total
premiums paid by FFMC plus the cost of funds invested in premiums during the
policy period. The Named Officer (or the Named Officer's beneficiary) then
receives the remainder of the proceeds or cash value. Each of the Named
Officers paid the amount of the premium associated with the portion of the
term life component of the insurance coverage in question in excess of the
minimum coverage required, if any, to be maintained at FFMC's expense
pursuant to existing employment agreements, and FFMC paid the remainder of
the premium associated with the required minimum term life component, if any,
and the whole life component of such coverage. Specifically, the amounts
listed in this footnote are the dollar values (as determined above) of the
respective benefits to the Named Officers of the 1994, 1993 and 1992 premiums
actually paid by FFMC (or a subsidiary thereof) on such split-dollar life
insurance policies for the respective Named Officers and for which FFMC was
not reimbursed by the Named Officers. These amounts constitute the company-
paid portion of such premiums. The balances of the premiums on these
policies, while also paid directly to the carrier by FFMC, were fully
reimbursed to FFMC by payroll withholding on the respective Named Officers,
and are equal to the annual premium which the Named Officer would pay for a
policy of equal coverage amount under the carrier's group term life insurance
product, based upon the group term rates supplied by the carrier to FFMC. As
these amounts constitute the employee-paid portion of the premiums on these
policies, and thus are not compensation to the Named Officer, such amounts
are not listed herein. In addition, Mr. Jackson's employment agreement with
FFMC provides in part that in the event his employment is terminated other
than due to his death, he will receive deferred compensation equal to the
accumulated cash value of such policy ($281,680 as of December 31, 1994) (See
"Employment Agreements").
/5Incentive/compensation for Mr. Thomas was set by his Employment Agreement
with FFMC (See "Employment Agreements") and neither the award nor the amount
thereof was discretionary on the part of the Compensation Committee.
/6The/amount shown is the total dollar value of all perquisites and personal
benefits received by Mr. Thomas during 1994 which are not properly
categorized as salary or bonus. The only such perquisite or other personal
benefit exceeding 25% of Mr. Thomas's total perquisites and other personal
benefits was his personal use of company aircraft, having a value of
$59,073. No amounts are shown for previous years (or for the other Named
Officers) since such amounts do not meet the minimum threshold for
disclosure under SEC regulations.
10
<PAGE>
OPTIONS AND STOCK APPRECIATION RIGHTS
All options to purchase FFMC Common Stock granted to the Named Officers have
been made under either the 1988 Incentive Stock Plan (the "1988 Plan") or the
1982 Incentive Stock Plan (the "1982 Plan") (collectively, the "Incentive
Stock Plans"), or, in the case of Mr. Kane, were options assumed by FFMC under
the Endata Stock Option Plan (the "Subsidiary Stock Plan") upon FFMC's
acquisition of Endata, Inc., in 1987. Upon such acquisition, FFMC converted
options outstanding under the Subsidiary Stock Plan into options to acquire
FFMC Common Stock. (All options granted under the Incentive Stock Plans or
assumed by FFMC under the Subsidiary Stock Plan being hereinafter collectively
referred to as "Options.") No stock appreciation rights ("SARs") were granted
or outstanding under the Incentive Stock Plans or the Subsidiary Stock Plan in
1994.
GRANTS IN 1994
Shown below is information concerning grants of Options during 1994 to the
Named Officers. As no SARs were granted in 1994, all numbers shown reference
only Options.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
------------------------------------------------------- -------------------------------
NUMBER % OF TOTAL
OF SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)/1/ YEAR ($/SHARE) DATE GRANT DATE PRESENT VALUE ($)/2/
---- ------------- ---------- --------- ---------- -------------------------------
<S> <C> <C> <C> <C> <C>
Patrick
H.
Thomas 500,000 89.69 57.25 3/22/04 14,730,000
M.
Tarlton
Pittard 10,000 1.79 54.75 1/26/04 273,100
Richard
D.
Jackson 10,000 1.79 54.75 1/26/04 273,100
Stephen
D. Kane 10,000 1.79 54.75 1/26/04 273,100
Randolph
L. M.
Hutto 0 0 N/A N/A N/A
</TABLE>
----------------
/1These/Options were granted under the 1988 Plan. The option agreements
governing these Options provide that during each of the five successive
twelve-month periods of continued employment commencing six months after the
date of grant, an Option becomes exercisable as to cumulative amounts equal
to one-fifth of the total shares covered by such Option. Pursuant to the
1988 Plan, the Compensation Committee of the FFMC Board of Directors at any
time beforethe complete termination of an Option may accelerate the time or
times at which such Option may be exercised, in whole or in part.
/2These/estimated values have been developed solely for purposes of
comparative disclosure pursuant to the rules and regulations of the SEC. The
Black-Scholes option pricing methodology, on which the present values of the
Options granted to the Named Officers are based, attempts to portray the
value of an Option at the time of grant. In computing these values by
application of the Black-Scholes model, the following assumptions were used
for the Options granted on January 26, 1994 (the "January Options"):
expected exercise period --10 years; risk-free rate of return--5.719%;
dividend yield--.18%; and expected volatility--.2524; and for the Options
granted on March 22, 1994 (the "March Options"): expected exercise period--
10 years; risk-free rate of return--6.406%; dividend yield--.17%; and
expected volatility--.2384). The resulting present value per Option share is
$27.31 for the January Options and $29.46 for the March Options. The actual
value, if any, that may be realized from these Options will depend solely
upon the increase in stock price over the respective exercise prices of
$54.75 for the January Options and $57.25 for the March Options when such
Options are exercised.
11
<PAGE>
EXERCISES OF OPTIONS AND STOCK APPRECIATION RIGHTS IN 1994 AND AGGREGATE YEAR-
END OPTION VALUES
Shown below is information with respect to exercises of Options in 1994 by
the Named Officers and the year-end values of all Options held by the Named
Officers. No SARs were outstanding or exercised in 1994, and accordingly all
numbers shown reference only Options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING VALUE OF
NUMBER OF UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT OPTIONS AT FY-END
FY-END (#) ($)/1/
SHARES
ACQUIRED
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ------------ --------------- --------------------
<S> <C> <C> <C> <C>
Patrick H.
Thomas N/A N/A 241,700/500,000 10,648,679/2,312,500
M. Tarlton
Pittard N/A N/A 84,483/15,500 3,964,098/239,063
Richard D.
Jackson N/A N/A 49,500/15,500 2,176,563/239,063
Stephen D. Kane N/A N/A 46,825/14,750 2,142,268/210,656
Randolph L. M.
Hutto N/A N/A 13,000/12,000 356,125/307,000
</TABLE>
----------------
/1Equal/to the net value of the Option as of December 31, 1994, if the Option
at such time had a per-share exercise price less than the per-share closing
market price of FFMC Common Stock (i.e., closing market price of $61.875 per
share of FFMC Common Stock on December 31, 1994, less the applicable per
share exercise price of the Option, multiplied by the number of outstanding
Options).
REPRICINGS OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Options were repriced during 1994. As stated above, no SARs were
outstanding in 1994.
LONG-TERM INCENTIVE PLAN AWARDS IN 1994
FFMC's only "long-term incentive plan" as defined by applicable SEC
regulations (which excludes the Incentive Stock Plans) that was in effect in
1994 was its Performance Units Incentive Plan (the "Units Plan"). However, no
awards of performance units or any other type of rights have been made under
the Units Plan since 1990, and no payments have been made pursuant to the
Units Plan since 1992.
PENSION PLAN
FFMC has no defined benefit or actuarial pension plan.
12
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN TO SHAREHOLDERS ON FFMC COMMON STOCK
OVER PREVIOUS FIVE YEARS
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on FFMC Common Stock against the
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Computer Software and Services Index at year-end for the
calendar years 1990 through 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN/1/
Among FFMC, The S&P 500 Index And The
S&P Computer Software & Services Index/2/
[Donnelley--insert graph here]
----------------
/1Pursuant/to Item 402(a)(9) of Regulation S-K, as promulgated by the SEC, the
material in this report shall not be deemed to be "soliciting material," to
be "filed" with the SEC or to be subject to Regulations 14A or 14C, other
than as provided in Item 402, or to the liabilities of Section 18 of the
Exchange Act; and no general incorporation of such material by reference
thereto, whether made before or after the date hereof, shall be deemed
specifically to request that it be treated as soliciting material or
specifically incorporate it by reference into a filing under the Securities
Act or the Exchange Act within the meaning of Item 402(a)(9).
/2Assuming/(i) $100 invested in the applicable stock or index on December 31,
1989, (ii) 100% reinvestment of dividends, and (iii) respective fiscal years
ending December 31.
13
<PAGE>
DIRECTOR COMPENSATION
Each member of the Board of Directors who is not employed by FFMC (an
"Outside Director") receives compensation in the amount of $8,000 as an annual
retainer plus $1,500 for attendance at each meeting of the Board and $1,000 for
attendance at each committee meeting. In addition, the Directors' Restricted
Stock Award Plan provides for each Outside Director to receive 708 shares of
FFMC Common Stock (subject to adjustment to reflect future stock dividends or
stock splits) annually, or a prorated number of shares for any partial year of
service commencing with the director's initial election or appointment, subject
to restrictions expiring on the date of the second annual meeting of FFMC
shareholders following the award. If a director's service terminates, other
than for death or disability, before the expiration of restrictions on any
shares, the shares are forfeited. Each Outside Director is entitled to receive
under the 1990 Directors' Stock Option Plan (the "Directors' Stock Option
Plan") an annual grant of a stock option to purchase 1,500 shares of FFMC
Common Stock (subject to adjustment to reflect future stock dividends, stock
splits, other changes in FFMC Common Stock, or in the event of a merger,
consolidation or similar transaction). The Directors' Stock Option Plan
provides for each option to be granted automatically on the date of the annual
organizational meeting of the Board held following FFMC's annual meeting of
shareholders. The option becomes exercisable twelve months after the grant at
an exercise price for each such option equal to 75% of the mean between the
highest and lowest selling prices of FFMC Common Stock on the New York Stock
Exchange composite tape on the date of grant. In order to exercise an option,
the Outside Director must pay the exercise price and any applicable withholding
taxes. If a director's service terminates during the twelve months following a
grant, other than through death or disability, a prorata portion of the option
is cancelled. Options expire 20 years after the date of grant, or sooner in the
event of the director's death. Director's options become exercisable and
restrictions on director's restricted shares lapse upon a change in control of
FFMC as defined in the applicable plan. No director received any compensation
for his services as a director with respect to 1994 other than pursuant to
these standard arrangements.
EMPLOYMENT AGREEMENTS
Mr. Thomas's employment by FFMC during 1994 was governed by an employment
agreement entered into in 1989 (the "1989 Agreement") that provided for: (a)
salary at an initial annual rate of $700,000, subject to annual review for
increases ($875,000 in 1994); (b) annual additional cash incentive compensation
equal to the lesser of 2 1/2% of FFMC's income before income taxes (computed
without deduction of such bonus) or the market value of 94,500 shares of FFMC
Common Stock (subject to adjustment for stock dividends, stock splits, etc.)
following public announcement of FFMC's earnings for the year, but not less
than $1,800,000; (c) continued participation in stock option and other
incentive plans; (d) life insurance in the amount of $5,000,000 payable to his
beneficiary or estate; and (e) various perquisites, in addition to health
insurance and other benefits available generally to FFMC employees. The
agreement was for five years through December 31, 1993, and thereafter from
year to year until notice of termination was provided by FFMC or Mr. Thomas.
The agreement continued in effect through 1994.
Mr. Thomas executed a new employment agreement with FFMC (the "New
Agreement") in 1994 (which has been amended in 1994 and 1995) covering the
years 1995 through 1999 containing essentially the same provisions as the 1989
Agreement, except that, in lieu of an annual cash bonus equal to the lesser of
the value of 94,500 shares of FFMC Common Stock or 2 1/2% of pre-tax income for
the year, he received an award of restricted shares under the 1988 Plan
providing that up to 94,500 shares may be earned for each year of the New
Agreement, depending on a formula established by the Compensation Committee
similar to the cash bonus formula in the 1989 Agreement, and also subject to
his continued employment until December 31, 1999. As consideration for
execution of the New Agreement, Mr. Thomas also received an award under the
1988 Plan of 500,000 restricted shares, subject to FFMC's meeting a performance
goal established for 1994 by the Compensation committee and to Mr. Thomas's
continued employment until December 31, 1999. Mr. Thomas was also granted an
option to purchase 500,000 shares of FFMC Common Stock under the
14
<PAGE>
1988 Plan exercisable at an option price of $57.25 per share (the market price
on the date of grant). The New Agreement is terminable by either party and
provides for severance pay based on a multiple of current annual compensation
(the greater of the previous year's salary or current salary, plus the amount
of additional incentive compensation, in cash or restricted shares, for the
preceding calendar year), plus a tax equalization amount to place Mr. Thomas in
the same after-tax position as if there were no excise taxes on compensation
and awards pursuant to the New Agreement (including any acceleration of Options
or restricted shares pursuant to the awards described herein) attributable to
"excess parachute payments" under the Code, and continuation of group insurance
benefits for five years. The applicable multiples are: (a) 300% in the event of
termination by either party within three years after a "change in control" of
FFMC as defined in the agreement; (b) 200% in the event of termination by FFMC
at any other time, termination for disability or termination by Mr. Thomas
following certain changes in his compensation, authority or responsibilities,
other than following a change in control of FFMC; and (c) 100% in the event of
other voluntary termination by Mr. Thomas, in which case he is subject to
certain noncompetition provisions for one year. As an inducement to Mr. Thomas
to execute the New Agreement, the Compensation Committee agreed that it is in
the best interests of FFMC and Mr. Thomas for him to be able to make limited
sales of FFMC Common Stock in the market at appropriate times in compliance
with Rule 144 under the Securities Act, in order to provide him with liquidity
and opportunity for investment diversification, while at the same time
retaining a substantial equity interest in FFMC. Mr. Thomas agreed that, until
the termination of the New Agreement, he will not make any such sales without
prior approval of the Compensation Committee, except for sales not in excess of
100,000 shares during each year of the term of the New Agreement made during
the period of ten business days beginning on the third business day following
the release for publication of FFMC's report of sales and earnings for a
quarter or year. With prior consent of the Committee, Mr. Thomas sold a total
of 200,000 shares during such period in 1995.
In December 1994, pursuant to an amendment to the New Agreement, Mr. Thomas
and the Committee rescinded the awards of restricted shares made during 1994,
although it was then clear that the 1994 performance goal relating to the
500,000 share award would be satisfied. The awards were rescinded because of
concerns about the adverse impact on 1994 results of the required amortization
of a portion of the awards in 1994, even though the awards related to services
during the five year period (1995-1999) of the New Agreement and 1994
compensation expense already included Mr. Thomas' incentive compensation for
1994. As contemplated at the time of rescission of the 1994 awards, during 1995
the Committee and Mr. Thomas developed and agreed upon a revised incentive
arrangement for the 1995-1999 period. The Committee in March 1995 awarded to
Mr. Thomas 94,500 restricted shares as incentive compensation for 1995, subject
to forfeiture (a) to the extent that 2 1/2% of FFMC's pre-tax income for 1995
(before any deductions for amortization of his restricted shares) divided by
the market price per share of FFMC's stock at the end of 1995 is less than
94,500, or (b) if Mr. Thomas' employment does not continue until December 31,
1995, except for death, disability or a change of control (as defined) of FFMC.
The Committee in March 1995 also awarded to Mr. Thomas 500,000 restricted
shares as incentive compensation for the years 1995-1999 containing the
following provisions: (a) all of the restricted shares will be forfeited unless
FFMC meets a performance goal for 1995 established by the Committee, (b) the
500,000 restricted shares will be forfeited unless Mr. Thomas' employment
continues until December 31, 1999, except that all of the restricted shares
will vest earlier upon his death or disability or a change of control (as
defined) of FFMC and except that a ratable number of the shares will vest
earlier if Mr. Thomas is involuntarily terminated or he voluntarily terminates
for specified reasons (including a reduction in the level of his total
compensation).
FFMC also entered into employment agreements with Mr. Pittard initially for
the years 1989 through 1993, and now extended at least through 1995, with Mr.
Jackson for the years 1991 through 1995, and withMr. Kane for the years 1992
through 1996, in each case continuing for successive one-year periods absent
notice of termination of the agreement in advance of the expiration of the
initial or any successive term, and providing for: (a) a salary at an initial
annual rate of $300,000 for Mr. Pittard, $375,000 for Mr. Jackson, and $300,000
for Mr. Kane, subject to annual review for increases; (b) annual additional
incentive compensation; (c) participation in stock option and other incentive
plans; (d) participation in employee benefit plans; (e) reimbursement of dues
and costs of club memberships; and (f) an automobile allowance. Each agreement
is terminable by either the officer or FFMC and provides for severance pay
based on a multiple of
15
<PAGE>
current annual compensation (the greater of the previous year's salary or
current salary, plus the amount of additional incentive compensation for the
preceding calendar year, plus the amount then most recently earned under the
Units Plan), plus a tax equalization amount to place the officer in the same
after-tax position as if there were no excise taxes on such severance pay
attributable to "excess parachute payments" under the Code, and continuation of
group insurance benefits for three years. The applicable multiples are: (a)
300% in the event of termination by either party within three years after a
"change in control" of FFMC as defined in the agreements; and (b)200% in the
event of termination of the officer's employment by FFMC other than for cause,
in the event of death or disability of the individual (except in the event of
the death of Mr. Jackson), or in the event of termination by the officer
following certain changes in his authority or responsibilities, except that no
payment is to be made with respect to the death of Messrs. Pittard or Kane
provided that their respective estates or beneficiaries receive a specified
amount as proceeds of a life insurance policy on each such individual, with
premiums thereon to be paid by FFMC during such individual's life. If
employment is terminated for any other reason, the severance payment shall be
equal to unpaid salary through the termination date. Mr. Jackson's agreement
also provides for FFMC to maintain a $900,000 life insurance policy on Mr.
Jackson, which policy currently provides for death benefits payable equally to
FFMC and Mr. Jackson. The agreement further provides that upon Mr. Jackson's
termination of employment other than due to his death, he will receive deferred
compensation equal to the accumulated cash value of the policy ($281,680 as of
December 31, 1994). Mr. Jackson is also subject to certain noncompetition
provisions upon the termination of his employment, unless such termination is
the result of (i) his voluntary resignation following a change in control of
FFMC, or (ii) his election to terminate his employment for "good reason," as
defined in the agreement.
FFMC entered into an employment agreement with Mr. Hutto for the years 1992
through 1994, and now extended at least through 1995, providing for: (a) a
salary at an initial rate of $200,000, subject to annual review for increases;
(b) annual additional incentive compensation; (c) participation in stock option
and other incentive plans; (d) participation in employee benefit plans; (e)
reimbursement of dues and costs of club memberships; and (f) an automobile
allowance. The agreement is terminable by either party and provides for
severance pay equal to Mr. Hutto's then-current monthly salary multiplied by
the number of months remaining in the initial or extended term of the
agreement, unless the agreement is terminated by FFMC for cause. Mr. Hutto is
also a party to a change-in-control agreement providing that in the event of
termination of his employment following a change in control of FFMC, by FFMC
except for cause, or by him for good reason, he will receive severance pay
equal to 300% (in addition to a tax equalization amount to place Mr. Hutto in
the same after-tax position as if there were no excise taxes on such severance
pay attributable to "excess parachute payments" under the Code) of current
annual compensation (as described above) plus continuation of group insurance
benefits for three years.
CERTAIN TRANSACTIONS
George L. Cohen, a member of the Board of Directors, is a partner in the law
firm of Sutherland, Asbill & Brennan, which receives fees for acting as primary
outside legal counsel to FFMC.
Virgil R. Williams, a member of the Board of Directors, was engaged in
certain transactions with FFMC during 1994 as discussed above under the heading
"Compensation Committee Interlocks and Insider Participation."
SECURITIES OWNERSHIP REPORTS
Section 16(a) of the Exchange Act requires FFMC's officers (as defined in
Section 16 (a)) and directors, and persons who own more than 10% of a
registered class of FFMC's equity securities, to file reports of ownership and
changes in ownership with the SEC and the New York Stock Exchange. Officers,
directors and greater than 10% shareholders are required by SEC regulation to
furnish FFMC with copies of all Section 16(a) forms they file.
16
<PAGE>
Based solely on a review of the copies of such forms furnished to FFMC, or
written representations that no Forms 5 were required, FFMC believes that
during or with respect to the year ended December 31, 1994, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
selected Deloitte & Touche as independent accountants of FFMC for 1995.
Deloitte & Touche, as successor by merger to Touche Ross & Co., has been FFMC's
independent public accountants since 1972.
Representatives of Deloitte & Touche are expected to be present at the
meeting and will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
A shareholder who wishes to submit a proposal for action at the 1996 Annual
Meeting and have the proposal included in the proxy statement for such meeting
must send his or her proposal sufficiently in advance so that it is received at
FFMC's principal executive offices by December 15, 1995. The shareholder should
also notify FFMC in writing regarding his or her intention to appear personally
at the meeting to present such proposal at the time such proposal is submitted.
OTHER MATTERS
Management of FFMC is not aware of any other matters to be presented for
action at the Annual Meeting other than those mentioned herein. If any other
matters come before the meeting, it is the intention of the persons named in
the enclosed proxy to vote on such matters in accordance with their judgment.
If any shareholder desires to present a matter of business for action at the
1995 Annual Meeting, such matter must be described in a written notice by such
shareholder delivered to the Secretary of FFMC at FFMC's principal executive
offices not less than five days prior to the date of the Annual Meeting, in
accordance with Section 2.7 of FFMC's Bylaws, a copy of which may be obtained
from the Secretary.
By Order of the Board of Directors
STEPHEN D. KANE
Secretary
17
<PAGE>
PROXY
FIRST FINANCIAL MANAGEMENT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Patrick H. Thomas and M. Tarlton Pittard, and
each of them, as Proxies, each with the power to appoint a substitute, and
hereby authorizes both or either of them to represent and to vote, as designated
below, all the shares of common stock of First Financial Management Corporation
held of record by the undersigned on March 10, 1995, at the annual meeting of
shareholders to be held on April 26, 1995, or any adjournment thereof.
1) ELECTION OF DIRECTORS (Check applicable box.)
[_] FOR ALL NOMINEES listed below [_] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below.
contrary below).
Patrick H. Thomas, George L. Cohen, Robert E. Coleman, Jack R. Kelly, Jr.,
Henry A. Leslie, M. Tarlton Pittard, Charles B. Presley and Virgil R.
Williams
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.
--------------------------------------------------------------------------------
2) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR the election of all of the nominees for Director set
forth above.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED PREPAID
ENVELOPE
(Continued and to be signed and dated on the reverse side)
(Continued from other side)
PROXY--SOLICITED BY THE BOARD OF DIRECTORS
Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give 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 the partnership name by an
authorized person.
----------------------------------
Signature
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Signature if held jointly
Dated: ,1995
-----------------------
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope which requires no postage if mailed in the United States.
<PAGE>
VOTING INSTRUCTIONS
FIRST FINANCIAL MANAGEMENT CORPORATION
Savings Plus Plan
This card requests voting instructions for the Plan Trustee. It is not a proxy
solicited on behalf of the Board of Directors, but the Board of Directors has
recommended a vote for the nominees listed below.
The undersigned participant in the Savings Plus Plan (the "Plan") of First
Financial Management Corporation ("FFMC") hereby instructs Wachovia Bank of
Georgia, N.A. (the "Trustee") to vote all shares of FFMC Common Stock credited
to the undersigned's account(s) under the Plan as of March 10, 1995 as
designated below at the annual meeting of shareholders to be held on April 26,
1995, or any adjournment thereof.
1) ELECTION OF DIRECTORS (Check applicable box.)
[_] FOR ALL NOMINEES listed below [_] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below.
contrary below).
Patrick H. Thomas, George L. Cohen, Robert E. Coleman, Jack R. Kelly, Jr.,
Henry A. Leslie, M. Tarlton Pittard, Charles B. Presley and Virgil R.
Williams
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.
--------------------------------------------------------------------------------
2) DISCRETIONARY AUTHORITY (Check applicable box)
[_] The Trustee is authorized to [_] WITHHOLD AUTHORITY to vote on
exercise its discretion to vote any other business.
upon such other business as may
properly come before the meeting.
When this voting instruction card is properly executed and returned, the shares
covered hereby will be voted in the manner directed herein by the undersigned
Plan participant. If this voting instruction card is signed and returned
without otherwise specifying how the Trustee should vote, the Trustee will vote
the shares held in the participant's account(s) under the Plan FOR the election
of all of the nominees for Director set forth above and the Trustee may exercise
its discretion to vote on any other business that may properly come before the
meeting. If no voting instruction card is returned, the shares held in the
participant's account(s) under the Plan will be voted with respect to the above
nominees in the same proportion as the shares held in the Plan for which voting
instructions are received from Plan participants.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS VOTING INSTRUCTION CARD IN THE
ENCLOSED PREPAID ENVELOPE
(Continued and to be signed and dated on the reverse side)
(Continued from the other side)
THE TRUSTEE'S VOTE WITH RESPECT TO THE TOTAL NUMBER OF SHARES HELD FOR ALL PLAN
PARTICIPANTS WILL BE REPORTED TO FFMC ON AN AGGREGATE BASIS FOR ALL SUCH SHARES.
EACH PARTICIPANT'S VOTING INSTRUCTION CARD WILL BE TREATED AS CONFIDENTIAL AND
WILL NOT BE MADE KNOWN TO ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF FFMC.
Please sign exactly as your name appears below. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
----------------------------------
Signature
----------------------------------
Signature if held jointly
Dated: ,1995
-----------------------
Please mark, sign, date and return this voting instruction card promptly using
the enclosed envelope which requires no postage if mailed in the United States.
It should be received by the Trustee no later than 5 p.m., April 24, 1995.
