<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 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Keane, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(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>
KEANE, INC.
TEN CITY SQUARE BOSTON, MASSACHUSETTS 02129
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 29, 1996
----------------
The Annual Meeting of Stockholders of Keane, Inc. (the "Company") will be
held on Wednesday, May 29, 1996 at 4:30 p.m., Boston Time, at the Hale and
Dorr Conference Center, 26th Floor, 60 State Street, Boston, Massachusetts, to
consider and act upon the following matters:
1. To fix the number of directors at four and to elect a Board of
Directors for the ensuing year;
2. To approve amendments to the Company's 1992 Employee Stock Purchase
Plan;
3. To ratify and approve the selection by the Board of Directors of
Coopers & Lybrand L.L.P. as the Company's independent accountants for the
current year; and
4. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
Stockholders of record at the close of business on April 1, 1996 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
The stock transfer books of the Company will remain open.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Norman B. Asher, Clerk
April 19, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED
IN THE UNITED STATES.
<PAGE>
KEANE, INC.
TEN CITY SQUARE BOSTON, MASSACHUSETTS 02129
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 29, 1996
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Keane, Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held on May 29, 1996, and at any
adjournment of that meeting. All proxies will be voted in accordance with the
instructions contained therein, and if no choice is specified, the proxies
will be voted in favor of the proposals set forth in the accompanying Notice
of Meeting. Any proxy may be revoked by a stockholder at any time before it is
exercised by giving written notice to that effect to the Clerk of the Company.
The Board of Directors has fixed April 1, 1996 as the record date for
determining stockholders who are entitled to vote at the meeting. At the close
of business on April 1, 1996, there were outstanding and entitled to vote
15,957,093 shares of Common Stock of the Company, $.10 par value per share
("Common Stock"), and 288,258 shares of Class B Common Stock of the Company,
$.10 par value per share ("Class B Common Stock"). Each share of Common Stock
is entitled to one vote, and each share of Class B Common Stock is entitled to
ten votes.
THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995 IS BEING
MAILED TO THE COMPANY'S STOCKHOLDERS WITH THIS NOTICE AND PROXY STATEMENT ON
OR ABOUT APRIL 19, 1996. THE COMPANY WILL, UPON WRITTEN REQUEST OF ANY
STOCKHOLDER, FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1995, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WITHOUT EXHIBITS. PLEASE ADDRESS ALL SUCH REQUESTS TO THE
COMPANY, ATTENTION OF WALLACE A. CATALDO, VICE PRESIDENT--FINANCE AND
ADMINISTRATION, TEN CITY SQUARE, BOSTON, MASSACHUSETTS 02129. EXHIBITS WILL BE
PROVIDED UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
As used in this Proxy Statement, the terms "Keane" and "the Company" refer
to Keane, Inc. and its wholly-owned and majority-owned subsidiaries, unless
the context otherwise requires.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 1, 1996, the beneficial
ownership of the Company's outstanding Common Stock and Class B Common Stock
of (i) each person known by the Company to own beneficially more than 5% of
the Company's outstanding Common Stock and Class B Common Stock, (ii) each
executive officer named in the Summary Compensation Table under the heading
"Executive Compensation" below, and (iii) all current directors and executive
officers as a group:
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
--------------------------------------------------
SHARES PERCENTAGE
SHARES PERCENTAGE OF OF CLASS B
OF OF COMMON CLASS B COMMON PERCENTAGE
NAME AND ADDRESS OF COMMON STOCK OUT- COMMON STOCK OUT- OF TOTAL
BENEFICIAL OWNERS STOCK STANDING STOCK STANDING VOTES
- ------------------- --------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John F. Keane............... 2,096,312 13.2% 127,800 44.3% 17.9%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
John Francis Keane
Irrevocable Children's
Trusts (2).................. 838,750 5.3 140,000 48.6 11.9
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Albert O. Nicholas
Nicholas Company, Inc.
Nicholas II, Inc. (3)....... 2,460,000 15.4 -- -- 13.1
700 North Water St.
Milwaukee, WI 53202
Janus Capital Corporation
Thomas H. Bailey
Janus Venture Fund (4)...... 1,223,750 7.7 -- -- 6.5
100 Fillmore Street
Suite 300
Denver, CO 80206-4923
State of Wisconsin
Investment Board (5)....... 1,211,000 7.6 -- -- 6.4
P.O. Box 7842
Madison, WI 53707
Edward Longo (6)............ 13,993 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Raymond W. Paris (7)........ 90,250 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Edward Sugrue (8)........... 11,107 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Wallace Cataldo (9)......... 73,036 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
All directors and officers
as a group
(9 persons) (10)........... 2,947,612 18.4 224,242 77.8 27.5
</TABLE>
2
<PAGE>
- --------
* Less than 1% of outstanding stock of the respective class, or less than 1%
of aggregate voting power, as the case may be.
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of February 1, 1996
through the exercise of any stock option or other right. The inclusion
herein of such shares, however, does not constitute an admission that the
named stockholder is a direct or indirect beneficial owner of such shares.
Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares such power with his
spouse) with respect to all shares of capital stock listed as owned by
such person or entity.
(2) The trustees have sole voting and investment power with respect to these
shares, but disclaim any beneficial interest in such shares.
(3) The information reported is based on a Schedule 13G, dated January 26,
1996, filed with the Securities and Exchange Commission by Albert O.
Nicholas, Nicholas Company, Inc. and Nicholas II, Inc. Mr. Nicholas is the
president, a director and majority shareholder of Nicholas Company, Inc.,
in which capacity he exercises dispositive power over the shares reported
by Nicholas Company, Inc. and Nicholas II, Inc. Mr. Nicholas disclaims any
beneficial interest in such shares.
(4) The information reported is based on a Schedule 13G, dated February 13,
1996, filed with the Securities and Exchange Commission by Janus Capital
Corporation, Thomas H. Bailey and Janus Venture Fund. Mr. Bailey is the
president and chairman of the board of directors of Janus Capital
Corporation and may be deemed to be the beneficial owner of the shares
reported by Janus Capital Corporation and Janus Venture Fund. Mr. Bailey
disclaims any beneficial interest in such shares.
(5) The information reported is based on a Schedule 13G, dated February 1996,
filed with the Securities and Exchange Commission by the State of
Wisconsin Investment Board.
(6) Includes options to purchase, within 60 days following February 1, 1996,
9,000 shares of Common Stock held by Mr. Longo.
(7) Includes options to purchase, within 60 days following February 1, 1996,
24,750 shares of Common Stock held by Mr. Paris.
(8) Includes options to purchase, within 60 days following February 1, 1996,
5,000 shares of Common Stock held by Mr. Sugrue.
(9) Includes options to purchase, within 60 days following February 1, 1996,
21,000 shares of Common Stock held by Mr. Cataldo.
(10) Includes options to purchase, within 60 days following February 1, 1996,
88,750 shares of Common Stock held by all directors and officers as a
group.
VOTES REQUIRED
The affirmative vote of the holders of a majority of the aggregate voting
power represented by the shares of Common Stock and Class B Common Stock,
voting together as a single class, present or represented at the meeting is
required for the election of directors and for the approval of each of the
other matters which are to be submitted to the stockholders at the meeting.
Shares of Common Stock and Class B Common Stock represented by executed
proxies received by the Company will be counted for purposes of establishing a
quorum at the meeting, regardless of how or whether such shares are voted on
any specific proposal. With respect to the required vote on any particular
matter, abstentions will be treated as shares present and represented, while
votes withheld by nominee recordholders who did not receive specific
instructions from the beneficial owners of such shares (so called "broker non-
votes") will not be treated as shares present or represented. Thus, for
matters that require the affirmative vote of the holders of a majority of the
aggregate voting power represented by the shares of Common Stock and Class B
Common Stock, voting together as a single class, present or represented at the
meeting, abstentions will have the same effect as a vote against, and broker
non-votes will have no effect.
3
<PAGE>
ELECTION OF DIRECTORS
The persons named in the enclosed proxy (John F. Keane and Norman B. Asher)
will vote to fix the number of directors at four and to elect as directors the
four nominees named below, unless authority to vote for the election of
directors is withheld by marking the proxy to that effect or the proxy is
marked with the name of nominees as to whom authority to vote is withheld. The
proxy may not be voted for more than four directors. All of the nominees are
currently directors of the Company.
Each director will be elected to hold office until the next annual meeting
of stockholders and until his successor is duly elected and qualified. If a
nominee becomes unavailable, the persons acting under the proxy may vote the
proxy for the election of a substitute. The Company does not anticipate that
any of the nominees will be unavailable.
The following table sets forth the name of each nominee for director and
each current director, the positions and offices held by him, his age, the
year in which he became a director of the Company, his principal occupation(s)
and business experience for the past five years, the number of shares of
Common Stock and Class B Common Stock of the Company owned by him at February
1, 1996, and the percentage of all outstanding shares of Common Stock and
Class B Common Stock owned by him on such date:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)(2)
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL
OCCUPATION, BUSINESS PERCENTAGE SHARES OF PERCENTAGE
EXPERIENCE AND YEAR SHARES OF OF COMMON CLASS B OF CLASS B PERCENTAGE
IN WHICH HE FIRST COMMON STOCK COMMON COMMON STOCK OF TOTAL
BECAME A DIRECTOR STOCK OUTSTANDING STOCK OUTSTANDING VOTES
-------------------- --------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
John F. Keane(3)........ 2,096,312 13.2% 127,800 443% 17.9%
Age 65. Chief Executive
Officer and President.
Mr. Keane has been Chief
Executive Officer and
President and a
director of the Company
since its
incorporation (1967).
Winston Hindle.......... 1,000 * -- -- --
Age 65. Mr. Hindle is
currently retired. From
September 1962 to July
1994, Mr. Hindle served
as a Vice President and,
subsequently, Senior
Vice President of
Digital Equipment
Corporation, a computer
systems and services
firm. Mr. Hindle has
served as a director of
the Company since
February 1995.
John F. Rockart(4)...... 21,262 * -- -- *
Age 64. Dr. Rockart is
a Senior Lecturer of
the Center for
Information Systems
Research at the Alfred
J. Sloan School of
Management of the
Massachusetts Institute
of Technology. Dr.
Rockart became a Senior
Lecturer at the Center
in 1974 and was named as
the Director in 1976.
Dr. Rockart has served
as a director of the
Company since its
incorporation (1967).
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL
OCCUPATION, BUSINESS PERCENTAGE SHARES OF PERCENTAGE
EXPERIENCE AND YEAR SHARES OF OF COMMON CLASS B OF CLASS B PERCENTAGE
IN WHICH HE FIRST COMMON STOCK COMMON COMMON STOCK OF TOTAL
BECAME A DIRECTOR STOCK OUTSTANDING STOCK OUTSTANDING VOTES
-------------------- --------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Robert A. Shafto........ -- -- -- -- --
Age 60. Mr. Shafto is
the Chairman, Chief
Executive Officer and
President of The New
England, an insurance
and investment firm,
which he joined in
1972. Mr. Shafto has
served as a director of
the Company since
February 1994.
</TABLE>
- --------
* Less than 1% of outstanding stock of the respective class, or less than 1%
of aggregate voting power, as the case may be.
(1) Mr. Hindle serves as a director of CP Clare Corporation and Mestech, Inc.
Dr. Rockart serves as a director of ComShare, Inc. and Renaissance
Solutions, Inc. Mr. Shafto serves as a director of The New England and
Fleet Bank of Massachusetts, N.A.
(2) Except as otherwise indicated, each nominee or director has sole voting
and investment power with respect to the shares of Common Stock and Class
B Common Stock listed.
(3) Does not include 838,750 shares of Common Stock or 140,000 shares of Class
B Common Stock (approximately 11.9% of the aggregate voting power) held of
record by Mr. Keane's wife and one other individual as trustees of three
trusts of which Mr. Keane's children are the beneficiaries. With regard to
these shares, Mrs. Keane and the other trustee have sole voting and
investment power, but disclaim any beneficial interest in such shares.
(4) Includes 10,000 shares of Common Stock (less than 1% of the aggregate
voting power) held of record by Dr. Rockart's wife. Dr. Rockart disclaims
any beneficial interest in such shares.
The Company has a standing Audit Committee comprised of Messrs. Keane,
Hindle, Rockart and Shafto, which held one meeting during the year ended
December 31, 1995. The Audit Committee makes recommendations to the Board of
Directors relative to the appointment of the independent auditors, reviews the
scope and results of the independent audit, and establishes and monitors
policy relative to non-audit services provided by the independent auditors in
order to ensure that the auditors are in fact independent.
The Company has a standing Compensation Committee comprised of Messrs.
Hindle, Rockart and Shafto. The Compensation Committee held one meeting during
the year ended December 31, 1995. The Compensation Committee annually reviews
and approves the compensation of the Company's senior executives and
administers the Company's 1992 Stock Option Plan and 1992 Employee Stock
Purchase Plan.
The Company does not have a standing nominating committee.
During the year ended December 31, 1995, the Board of Directors of the
Company held six meetings, including written actions in lieu of meetings. Each
of the directors attended at least 75% of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the Board on which he served, in each case
during the periods that he served.
DIRECTORS' COMPENSATION
Compensation of the Company's non-employee directors currently consists of
an annual director's fee of $4,000 plus $1,000 and expenses for each meeting
of the Board of Directors attended. Directors who are officers or employees of
the Company do not receive any additional compensation for their services as
directors.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the
Company for the three years ended December 31, 1995 (such executive officers
are sometimes collectively referred to herein as the "named executive
officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------- ---------------------------------
AWARDS PAYOUTS
------------------------- -------
SECURITIES
NAME AND OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) AWARDS($)(1) (#) ($) ($)(2)
--------- ---- ------- ----- ------------ ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Keane........... 1995 341,641 -- -- -- -- -- 2,329
President and Chief 1994 303,020 -- -- -- -- -- 3,160
Executive Officer 1993 277,475 -- -- -- -- -- 4,497
Edward Longo............ 1995 257,402 -- -- 20,650 -- -- 3,078
Senior Vice President 1994 223,156 -- -- -- -- -- 3,212
--Information 1993 209,831 -- -- -- -- -- 3,597
Services Division
Raymond W. Paris........ 1995 198,117 -- -- -- -- -- 2,917
Vice President and 1994 182,527 -- -- -- -- -- 2,922
General Manager-- 1993 155,486 -- -- -- -- -- 2,869
Healthcare Services
Division
Edward C. Sugrue........ 1995 177,765 -- -- 20,650 -- -- 2,900
Vice President 1994 161,588 -- -- -- -- -- 3,000
--Human Resources 1993 141,401 -- -- -- -- -- 2,339
Wallace A. Cataldo...... 1995 177,524 -- -- -- -- -- 2,892
Vice President 1994 157,584 -- -- -- -- -- 2,215
--Finance and 1993 131,905 -- -- -- -- -- 2,302
Administration
</TABLE>
- --------
(1) Shares of restricted stock vest in three equal annual installments
commencing on the first anniversary of the date of grant. As of December
31, 1995, the value of all such shares (whether vested or unvested) held
by each of Mr. Longo and Mr. Sugrue was $22,030.
(2) "All Other Compensation" consists of contributions to the Company's 401(k)
Plan on behalf of each of the named executive officers.
6
<PAGE>
OPTION GRANTS DURING 1995
The following table sets forth the number of shares of the Company's Common
Stock underlying options granted, the exercise price per share and the
expiration date of all options granted to each of the named executive officers
during 1995:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE OR PRICE APPRECIATION
UNDERLYING GRANTED TO BASE PRICE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION ----------------------
EXECUTIVE OFFICER GRANTED(#)(1) FISCAL YEAR $/SH DATE 5% ($) 10% ($)
- ----------------- ------------- ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
John F. Keane........... -- -- -- -- -- --
Edward Longo............ 12,000 7.1% 20.75 2/7/00 68,880 152,160
Raymond W. Paris........ 9,000 5.3 20.75 2/7/00 51,660 114,120
Edward C. Sugrue........ 7,500 4.5 20.75 2/7/00 43,050 95,100
Wallace Cataldo......... 7,500 4.5 20.75 2/7/00 43,050 95,100
</TABLE>
- --------
(1) Options become exercisable in three equal annual installments commencing
on the second anniversary of the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
options if exercised at the end of the option terms. These gains are based
on assumed rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted. Actual gains, if any,
on stock option exercises will depend on the future performance of the
Common Stock and the date on which the options are exercised.
OPTION EXERCISES DURING 1995 AND YEAR END OPTION VALUES
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1995, by each of the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR END (#) AT FISCAL YEAR END ($)
EXECUTIVE SHARES ACQUIRED VALUE ------------------------------- ----------------------------
OFFICER ON EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- --------- --------------- -------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
John F. Keane........... -- -- -- /-- -- /--
Edward Longo............ 9,000 143,010 -- /30,000 -- /214,716
Raymond W. Paris........ -- -- 18,000/22,500 252,216/161,037
Edward C. Sugrue........ 7,125 118,309 -- /18,750 -- /106,496
Wallace Cataldo......... -- -- 17,250/15,000 230,457/ 92,902
</TABLE>
- --------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
(2) The closing price for the Company's Common Stock as reported by the
American Stock Exchange on December 30, 1995 (the last day of trading in
1995) was $22.13. Value is calculated on the basis of the difference
between the option exercise price and $22.13, multiplied by the number of
shares of Common Stock underlying the option.
7
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company is not aware of any executive officer, director or principal
stockholder who failed to comply with filing requirements under Section 16 of
the Securities Exchange Act of 1934 during the year ended December 31, 1995,
except that a Statement of Changes in Beneficial Ownership on Form 4 relating
to a certain transaction by Mr. Paris was filed late.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Hindle and Shafto and Dr.
Rockart. No member of the Compensation Committee was at any time during 1995,
or formerly, an officer or employee of the Company or any subsidiary of the
Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Company's compensation policy for executive officers has been to offer
competitive compensation based on the individual's performance as well as the
overall performance of the Company. The Company's compensation program is
intended to attract and retain executives whose abilities are critical to the
long-term success and competitiveness of the Company.
The compensation of the Company's senior executives (other than the Chief
Executive Officer) is reviewed and approved annually by the Compensation
Committee based upon the recommendations of the Chief Executive Officer and
the evaluation of the members of the Compensation Committee. Each of the named
executive officers regularly makes presentations to the Board of Directors. As
a result, the members of the Compensation Committee are personally familiar
with the performance of each senior executive. The key components of executive
compensation are salary, which is based on factors such as the individual's
level of responsibility in comparison to similar positions in comparable
companies in the industry, and stock option awards, which are intended to
align the interest of such individual with the Company's long-term success as
measured by the Company's share price and book value per share.
The compensation of the Company's Chief Executive Officer is determined
annually by the Compensation Committee. The Chief Executive Officer's salary
in 1995 was based on a variety of factors including those described above and
a comparison of the compensation of the chief executive officers of comparable
companies in the industry. Mr. Keane did not participate in any decisions
regarding his own compensation. The Compensation Committee believes that,
although the compensation of the Chief Executive Officer is not directly
related to financial performance, his compensation may be more modest than
that paid to comparable industry executives. In addition, the Compensation
Committee did not award any equity-based incentive compensation to the Chief
Executive Officer, recognizing that his family ownership of the controlling
stock interest in the Company provides sufficient motivation.
The Compensation Committee expects that compensation levels will continue to
depend primarily on each individual's personal performance as well as on the
overall performance of the Company.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. The Company is currently considering
whether to structure the performance-based portion of the compensation of its
executive officers (which currently consists almost entirely of stock option
grants) in a manner that complies with this statute.
Winston R. Hindle, Jr. John F. Rockart Robert A. Shafto
8
<PAGE>
STOCK PERFORMANCE CHART
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 1995 with the cumulative total return on (i) the Standard &
Poor's 500 Composite Index and (ii) a peer group index* selected by the
Company which includes six publicly traded companies within the Company's
industry. The comparison assumes $100 was invested on December 31, 1990 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Keane, Inc. 100 119 186 287 378 352
Broad Market 100 130 140 155 157 216
Peer Group 100 147 159 188 282 419
- -------------------------------------------------------------------------
</TABLE>
- --------
* The peer group index reflects the stock performance of the following
companies: American Management Systems, Inc., Analysts International Corp.,
Computer Horizons Corp., Computer Sciences Corp., Computer Tax Group, Inc.
and Techanalysis Corp.
9
<PAGE>
CERTAIN RELATED PARTY TRANSACTIONS
In February 1985, the Company entered into a lease, which subsequently was
extended to a term of 20 years, with City Square Limited Partnership ("City
Square"), pursuant to which the Company leased approximately 34,000 square
feet of office and development space in a building located in Boston,
Massachusetts. The Company now leases approximately 88% of this building and
the remaining 12% is occupied by other tenants. John F. Keane, Chief Executive
Officer, President and a director of the Company, and Wallace A. Cataldo, the
Vice President-Finance and Administration of the Company, are limited partners
of City Square. Based upon its knowledge of rental payments for comparable
facilities in the Boston area, the Company believes that the rental payments
under this lease, approximately $682,000 per year ($20.06 per square foot)
until February 1996, and at prevailing market rates for the remainder of the
lease term (until February 2006), plus specified percentages of any annual
increases in real estate taxes and operating expenses, were, at the time the
Company entered into the lease, as favorable to the Company as those which
could have been obtained from an independent third party.
APPROVAL OF AMENDMENT TO 1992 EMPLOYEE STOCK PURCHASE PLAN
In the opinion of the Board of Directors, the future success of the Company
depends, in large part, on its ability to attract, retain and motivate key
employees with experience and ability. Under the Company's 1992 Employee Stock
Purchase Plan (the "1992 Purchase Plan"), the Company is currently authorized
to offer up to 337,500 shares of Common Stock to its employees. On December
31, 1995, 125,335 shares were available for future purchases under the 1992
Purchase Plan. Accordingly, on February 20, 1996, the Board of Directors
adopted, subject to stockholder approval, an amendment (the "Purchase Plan
Amendment") to the 1992 Purchase Plan increasing the number of shares of
Common Stock available for purchase under the 1992 Purchase Plan by 300,000
shares to 637,500 shares and extending the Offering Date (as defined in the
1992 Purchase Plan) until the date on which a total of 637,500 shares of
Common Stock have been issued under the 1992 Purchase Plan.
The following is a summary of the material provisions of the 1992 Purchase
Plan:
ADMINISTRATION AND ELIGIBILITY
The 1992 Purchase Plan is administered by the Board of Directors. Employees
of the Company who have completed one year of continuous service are eligible
to participate. Employees who are directors of the Company, who are
customarily employed for 20 hours or less per week, who are customarily
employed for not more than five months in any calendar year or who own more
than 5% of the voting stock of the Company are not eligible to participate in
the 1992 Purchase Plan.
As of December 31, 1995, a total of 2,627 employees were eligible to
participate in the 1992 Purchase Plan.
PURCHASE PRICE AND TERMS
The price of shares purchased pursuant to the 1992 Purchase Plan is 85% of
the fair market value of the Company's Common Stock on the purchase date.
In order to exercise an option to purchase shares of Common Stock under the
1992 Purchase Plan, an employee must complete a "Payroll Deduction
Authorization for Purchase of Stock" form which indicates the
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amount to be deducted from his or her salary and applied to the purchase of
Common Stock on the last business day of each month (the "Purchase Date"). The
payroll deduction may not exceed in any year the lesser of (a) 10% of the
employee's compensation during the period within which he or she elects to
become a participant in the 1992 Purchase Plan or (b) $5,000. So long as the
form is in effect, the aggregate number of shares which the amount deducted
will pay for on the last business day of each month will automatically be
purchased on such date and issued in multiples of five.
AMENDMENT AND TERMINATION
The 1992 Purchase Plan may at any time or from time to time be terminated,
modified or amended by a majority vote of the stockholders of the Company. The
Board of Directors may at any time or from time to time amend the 1992
Purchase Plan, except that, without the approval of a majority of the shares
of stock of the Company then issued and outstanding and entitled to vote, no
amendment may (a) materially increase the benefits accruing to participants
under the 1992 Purchase Plan, (b) materially increase the number of shares
which may be issued under the 1992 Purchase Plan, or (c) materially modify the
requirements as to eligibility for participation under the 1992 Purchase Plan.
FEDERAL TAX CONSEQUENCES
The 1992 Purchase Plan is intended to be an "employee stock purchase plan"
as defined in Section 423 of the Code, which provides that the employee does
not have to pay any federal income tax when he or she joins the 1992 Purchase
Plan or when an offering ends and he or she receives shares of the Company's
Common Stock. The employee is, however, required to pay a federal income tax
on the difference, if any, between the price at which he or she sells the
shares and the price he or she paid for them.
If the employee has owned the shares for more than one year and disposes of
them at least two years after the day the offering commenced, then he or she
will be taxed as follows. If the market price of the shares on the date they
are sold is equal to or less than the price paid for the shares under the 1992
Purchase Plan, the employee will incur a long-term capital loss in the amount
equal to the price paid over the sale price. If the sale price is higher than
the price paid under the 1992 Purchase Plan, the employee will have to
recognize ordinary income in an amount equal to the lesser of (a) the excess
of the market price of the shares on the day the offering commenced over the
price paid or (b) the excess of the sale price over the price paid. Any
further gain is treated as a long-term capital gain.
If the employee sells the shares before he or she has owned them for more
than one year or before the expiration of a two-year period beginning on the
day the offering period commenced, then the employee will have to recognize
ordinary income on the amount of the difference between the purchase price and
the market price of the shares on the Purchase Date and the Company will
receive an expense deduction for the same amount, subject to the limitations
of Section 162(m) of the Code. The employee will recognize a long-term capital
gain or loss for the difference between the sale price and the market price on
the Purchase Date if the stock has been held for more than one year, and a
short-term capital gain or loss if it has been held for a shorter period.
Except as described above, the Company will generally not be entitled to a tax
deduction upon the purchase or sale of shares under the 1992 Purchase Plan.
AWARDS GRANTED UNDER THE 1992 PURCHASE PLAN
During 1995, a total of 79,045 shares of the Company's Common Stock were
purchased under the 1992 Purchase Plan at prices ranging from $20.19 to
$24.55. None of the executive officers of the Company purchased shares under
the 1992 Purchase Plan during the last three years.
BOARD RECOMMENDATION
The Board of Directors believes that the Purchase Plan Amendment is in the
best interest of the Company and its stockholders and recommends a vote FOR
this proposal.
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SELECTION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors has
selected the firm of Coopers & Lybrand L.L.P., as the Company's independent
accountants for the year ending December 31, 1996. If the stockholders do not
ratify the selection of Coopers & Lybrand L.L.P., the Board of Directors will
reconsider the matter. Representatives of Coopers & Lybrand L.L.P. are
expected to be present at the Annual Meeting of Stockholders. They will have
an opportunity to make a statement if they desire to do so, and will also be
available to respond to appropriate questions from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to
the meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names, and the Company will reimburse them for
reasonable out-of-pocket expenses in connection with the distribution of proxy
solicitation material.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by the Company at its principal
office in Boston, Massachusetts not later than December 19, 1996 for inclusion
in the proxy statement for that meeting.
By order of the Board of Directors,
Norman B. Asher, Clerk
April 19, 1996
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. YOUR PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING, AND WE APPRECIATE YOUR
COOPERATION.
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KEANE, INC.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 29, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints John F. Keane
and Norman B. Asher, and each of them, with full power of substitution, as
Proxies to represent and vote as designated hereon all shares of stock of Keane,
Inc. (the "Company") which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on Wednesday, May 29, 1996, at 4:30 p.m., Boston Time, at the Hale and Dorr
Conference Center, 26th Floor, 60 State Street, Boston, Massachusetts and at any
adjournment thereof with respect to the matters set forth on the reverse side
hereof.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POST-PAID RETURN ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS SET
FORTH BELOW.
1. To fix the number of directors 2. To increase by 300,000
at four and to elect a Board the number of shares
of Directors for the ensuing issuable pursuant to the
year. Company's 1992 Employee
Nominees: John F. Keane, Winston Stock Purchase Plan (the
Hindle, John F. Rockart "Plan") and to extend the
and Robert A. Shafto Offering Date (as defined
in the Plan) until the
FOR WITHHELD date on which a total of
/ / / / 637,500 shares have been
issued under the Plan.
/ / FOR AGAINST ABSTAIN
/ / / / / /
_________________________
For all nominees except as 3. To ratify and approve the
noted above selection by the Board of
Directors of Coopers &
Lybrand L.L.P. as the
Company's independent
accountants for the
current year.
FOR AGAINST ABSTAIN
/ / / / / /
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT / /
LEFT
In their discretion, the
Proxies are authorized to vote
upon such other business as may
properly come before the
meeting or any adjournment
thereof.
Please sign exactly as your
name appears hereon. If the
stock is registered in the
names of two or more persons,
each should sign. Executors,
administrators, trustees,
guardians, attorneys and
corporate officers should add
their titles.
Signature:___________________ Date:_____ Signature:__________________ Date:_____
