<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
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Keane, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Keane, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the 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:
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Notes:
<PAGE>
KEANE, INC.
Ten City Square
Boston, Massachusetts 02129
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 26, 1999
----------------
The Annual Meeting of Stockholders of Keane, Inc. (the "Company") will be
held on Wednesday, May 26, 1999 at 4:30 p.m., Boston Time, at the offices of
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, to consider and act
upon the following matters:
1. To fix the number of directors at seven and to elect a Board of
Directors for the ensuing year;
2. To ratify and approve the selection by the Board of Directors of Ernst
& Young LLP as the Company's independent accountants for the current year;
and
3. 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, 1999 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 16, 1999
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 26, 1999
----------------
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 26, 1999, 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, 1999 as the record date for
determining stockholders who are entitled to vote at the meeting. At the close
of business on April 1, 1999, there were outstanding and entitled to vote
71,387,924 shares of Common Stock of the Company, $.10 par value per share
("Common Stock"), and 285,213 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, 1998 is being
mailed to the Company's stockholders with this Notice and Proxy Statement on
or about April 16, 1999. 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, 1998, as filed with the Securities and
Exchange Commission (the "SEC"), 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, 1999, 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)
-----------------------------------------------------
Percentage
Percentage Shares of of Class B
Shares of of Common Class B Common Percentage
Name and Address of Common Stock Out- Common Stock Out- of Total
Beneficial Owner Stock standing Stock standing Votes
- ------------------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John F. Keane(2)......... 11,463,031 16.1% 267,800 93.9% 19.1%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Marilyn T. Keane(3)...... 11,463,031 16.1% 267,800 93.9% 19.1%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Putnam Investments,
Inc.(4)................. 5,086,136 7.1% -- -- 6.9%
One Post Office Square
Boston, MA 02109
Edward Longo(5).......... 115,042 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Raymond W. Paris(6)...... 270,381 * -- -- *
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
John Francis Keane
Irrevocable Children's
Trusts;
John K. and Marilyn T.
Keane 1997
Children's Trusts(7)..... 3,704,143 5.2% 144,665 50.7% 7.0%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
Brian T. Keane(8)........ 1,375,282 1.9% 48,221 16.9% 2.5%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
John F. Keane, Jr.(9).... 1,267,609 1.8% 48,221 16.9% 2.4%
c/o Keane, Inc.
Ten City Square
Boston, MA 02129
All directors and
executive officers as a
group (11 persons)(10).. 12,366,428 17.3% 272,463 95.5% 20.3%
</TABLE>
- --------
* Less than 1% of outstanding stock of the respective class, or less than 1%
of aggregate voting power, as the case may be.
2
<PAGE>
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the SEC 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, 1998 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 or her spouse)
with respect to all shares of capital stock listed as owned by such
person or entity.
(2) Includes (i) 3,276,581 shares of Common Stock held of record by John F.
Keane and his wife, Marilyn T. Keane, as trustees of the John F. Keane
Qualified Annuity Trust, of which John F. Keane is the beneficiary, (ii)
3,276,581 shares of Common Stock held of record by John F. Keane and
Marilyn T. Keane, as trustees of the Marilyn T. Keane Qualified Annuity
Trust, of which Marilyn T. Keane is the beneficiary, (iii) 423,802
shares of Common Stock held of record by Marilyn T. Keane, and (iv)
3,524,000 shares of Common Stock and 140,000 shares of Class B Common
Stock held of record by Marilyn T. Keane and one other individual as
trustees of three trusts of which John and Marilyn Keane's adult
children are the beneficiaries. With regard to the children's trusts
shares, Marilyn T. Keane and the other trustee have sole voting and
investment power, but disclaim any beneficial interest in such shares.
John F. Keane disclaims beneficial ownership of the shares specified in
clauses (ii), (iii) and (iv) above.
(3) Includes (i) 3,276,581 shares of Common Stock held of record by Marilyn
T. Keane and her husband, John F. Keane, as trustees of the John F.
Keane Qualified Annuity Trust, of which John F. Keane is a beneficiary,
(ii) 3,276,581 shares of Common Stock held of record by Marilyn T. Keane
and John F. Keane, as trustees of the Marilyn T. Keane Qualified Annuity
Trust, of which Marilyn T. Keane is a beneficiary, (iii) 962,067 shares
of Common Stock and 127,800 shares of Class B Common Stock held of
record by John F. Keane, and (iv) 3,524,000 shares of Common Stock and
140,000 shares of Class B Common Stock held of record by Marilyn T.
Keane and one other individual as trustees of three trusts of which John
and Marilyn Keane's adult children are the beneficiaries. With regard to
the children's trusts shares, Marilyn T. Keane and the other trustee
have sole voting and investment power, but disclaim any beneficial
interest in such shares. Marilyn T. Keane disclaims beneficial ownership
of the shares specified in clauses (i), (iii) and (iv) above.
(4) Represents (i) 5,007,936 shares of Common Stock held of record by Putnam
Investments Management, Inc., and (ii) 78,200 shares of Common Stock
held of record by The Putnam Advisory Company, Inc. Putnam Investments,
Inc., which is a wholly-owned subsidiary of Marsh & McLennan Companies,
Inc., wholly owns two registered investment advisers: Putnam Investment
Management, Inc., which is the investment adviser to the Putnam family
of mutual funds and The Putnam Advisory Company, Inc., which is the
investment adviser to Putnam's institutional clients. Both subsidiaries
have dispository power over the shares as investment managers, but each
of the mutual fund's trustees have voting power over the shares held by
each fund, and The Putnam Advisory Company, Inc. has shared voting power
over the shares held by the institutional clients. The information
reported is based solely on a Schedule 13G, dated February 18, 1999,
filed with the SEC by Marsh & McLennan Companies, Inc., Putnam
Investments, Inc., Putnam Investment Management, Inc. and The Putnam
Advisory Company, Inc.
(5) Includes options to purchase, within 60 days following February 1, 1999,
45,002 shares of Common Stock held by Mr. Longo.
(6) Includes options to purchase, within 60 days following February 1, 1999,
53,254 shares of Common Stock held by Mr. Paris.
(7) Marilyn T. Keane and one other trustee hold sole voting and investment
power with respect to the shares held by the John Francis Keane
Irrevocable Children's Trusts, but disclaim any beneficial interest
therein. Brian T. Keane and one other trustee hold sole voting and
investment power with respect to the shares held by the John F. and
Marilyn T. Keane 1997 Children's Trust for Benefit of Victoire K. Lang,
the sister of Messrs. Brian Keane and John F. Keane, Jr., but disclaim
any beneficial interest therein. John F. Keane, Jr. and one other
trustee hold sole voting and investment power with respect to the shares
held by the John F. and Marilyn T. Keane 1997 Children's Trust for
Benefit of Brian T. Keane, but disclaim any beneficial interest therein.
(8) Includes (i) options to purchase, within 60 days following February 1,
1999, 44,168 shares of Common Stock held by Mr. Brian Keane, (ii)
1,137,330 shares of Common Stock and 46,666 shares of Class B Common
Stock held by the John Francis Keane Irrevocable Trust for Benefit of
Brian T. Keane, of which Mr. Brian Keane is the beneficiary, and (iii)
105,381 shares of Common Stock and 1,555 shares of Class B Common Stock
held by the John F. and Marilyn T. Keane 1997 Children's Trust for
Benefit of Brian T. Keane, of which Mr. Brian Keane is the beneficiary.
(9) Includes options to purchase, within 60 days following February 1, 1999,
24,562 shares of Common Stock held by Mr. John F. Keane, Jr., (ii)
1,193,330 shares of Common Stock and 46,666 shares of Class B Common
Stock held by
3
<PAGE>
the John Francis Keane Irrevocable Trust for Benefit of Mr. John F.
Keane, Jr., of which Mr. John F. Keane, Jr. is the beneficiary, and
(iii) 49,381 shares of Common Stock and 1,555 shares of Class B Common
Stock held by the John F. and Marilyn T. Keane 1997 Children's Trust for
Benefit of John F. Keane, Jr., of which Mr. John F. Keane, Jr. is the
beneficiary.
(10) Includes options to purchase, within 60 days following February 1, 1999,
215,444 shares of Common Stock held by all directors and executive
officers as a group.
Votes Required
The holders of a majority of the aggregate voting power represented by the
shares of Common Stock and Class B Common Stock, issued and outstanding and
entitled to vote at the meeting, together as a single class, shall constitute
a quorum for transacting business at the meeting. The shares of Common Stock
and Class B Common Stock present in person or 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.
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 each of the other matters which
are to be submitted to the stockholders at the meeting.
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.
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 seven and to elect as directors
the seven 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 names of nominees as to whom authority to vote is withheld.
The proxy may not be voted for more than seven directors.
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, 1999, and the percentage of all outstanding shares of Common Stock and
Class B Common Stock owned by him on such date:
4
<PAGE>
Amount and Nature of Beneficial Ownership (1)(2)
<TABLE>
<CAPTION>
Name, Age, Principal
Occupation, Business
Experience and Year Percentage Shares of Percentage
in Which He First Shares of of Common Class B of Class B Percentage
Became a Director Common Stock Common Common Stock of Total
(For Current Directors) Stock Outstanding Stock Outstanding Votes
----------------------- ---------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
John F. Keane(3)........ 11,463,031 16.1% 267,800 93.9% 19.1%
Age 67. Mr. Keane is
currently the Chief
Executive Officer and
President of the
Company. Mr. Keane has
been Chief Executive
Officer, President and
a director of the
Company since its
incorporation in 1967.
Philip J. Harkins....... 9,900 * -- -- *
Age 51. Mr. Harkins is
currently the Chief
Executive Officer and
President of Linkage,
Inc., an organizational
development company
founded by Mr. Harkins
in 1988. Prior to 1988,
Mr. Harkins was Vice
President of Human
Resources of the
Company. Mr. Harkins
has served as director
of the Company since
February 1997.
Winston Hindle.......... 6,668 * -- -- *
Age 68. 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.
Brian T. Keane(4)....... 1,375,282 1.9% 48,221 16.9% 2.5%
Age 38. Mr. Brian Keane
is currently Executive
Vice President of the
Company and a member of
the Office of the
President. From
December 1996 until
September 1997, Mr.
Brian Keane was Senior
Vice President of the
Company, and, from
December 1994 to
December 1996, he was
Area Vice President of
the Company's
Information Services
Division. From July
1992 to December 1994,
Mr. Brian Keane served
as an ISD Business Area
Manager of the Company,
and from January 1990
to July 1992, he served
as a Branch Manager.
Mr.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal
Occupation, Business
Experience and Year Percentage Shares of Percentage
in Which He First Shares of of Common Class B of Class B Percentage
Became a Director Common Stock Common Common Stock of Total
(For Current Directors) Stock Outstanding Stock Outstanding Votes
----------------------- --------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Brian Keane has served
as a director of the
Company since May 1998.
Mr. Brian Keane is a
son of John F. Keane,
the founder, President,
Chief Executive Officer
and a director of the
Company, and the
brother of John F.
Keane, Jr.
John F. Keane, Jr.(5)... 1,267,609 1.8% 48,221 16.9% 2.4%
Age 39. Mr. John Keane,
Jr., is currently
Executive Vice
President of the
Company and a member of
the Office of the
President. From
December 1996 until
September 1997, Mr.
John Keane, Jr. was
Senior Vice President
of the Company, and,
from December 1994 to
December 1996, he was
Area Vice President of
the Company's
Information Services
Division. From January
1994 to December 1994,
Mr. John Keane, Jr.
served as an ISD
Business Area Manager
of the Company. From
July 1992 to January
1994, Mr. John Keane,
Jr. acted as manager of
Software Reengineering,
and from January 1991
to July 1992, he served
as Director of
Corporate Development.
Mr. John Keane, Jr. has
served as a director of
the Company since May
1998. Mr. John Keane,
Jr. is a son of John F.
Keane, the founder,
President, Chief
Executive Officer and a
director of the
Company, and the
brother of Brian T.
Keane.
John F. Rockart......... 41,149 * -- -- *
Age 67. 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 in 1967.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal
Occupation, Business
Experience and Year Percentage Shares of Percentage
in Which He First Shares of of Common Class B of Class B Percentage
Became a Director Common Stock Common Common Stock of Total
(For Current Directors) Stock Outstanding Stock Outstanding Votes
----------------------- --------- ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Robert A. Shafto........ 12,000 * -- -- --
Age 63. Mr. Shafto is
currently retired. From
1993 until May 1998,
Mr. Shafto served as
the Chairman and Chief
Executive Officer of
New England Financial,
an insurance and
investment firm
formerly known as New
England Life Insurance
Company, 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. Keane serves as a director of Firstwave Technologies, Inc. and EG&G,
Inc. Mr. Hindle serves as a director of CP Clare Corporation and Mestek,
Inc. Dr. Rockart serves as a director of ComShare, Inc.
(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) Includes (i) 3,276,581 shares of Common Stock held of record by John F.
Keane and his wife, Marilyn T. Keane, as trustees of the John F. Keane
Qualified Annuity Trust, of which John F. Keane is the beneficiary, (ii)
3,276,581 shares of Common Stock held of record by John F. Keane and
Marilyn T. Keane as trustees of the Marilyn T. Keane Qualified Annuity
Trust, of which Marilyn T. Keane is the beneficiary, (iii) 423,802 shares
of Common Stock held of record by Marilyn T. Keane, and (iv) 3,524,000
shares of Common Stock and 140,000 shares of Class B Common Stock held of
record by Marilyn T. Keane and one other individual as trustees of three
trusts of which John and Marilyn Keane's adult children are the
beneficiaries. With regard to the children's trusts shares, Marilyn T.
Keane and the other trustee have sole voting and investment power, but
disclaim any beneficial interest in such shares. John F. Keane disclaims
beneficial ownership of the shares specified in clauses (ii), (iii) and
(iv) above.
(4) Includes (i) options to purchase, within 60 days following February 1,
1999, 44,168 shares of Common Stock held by Mr. Brian Keane, (ii)
1,137,330 shares of Common Stock and 46,666 shares of Class B Common Stock
held by the John Francis Keane Irrevocable Trust for Benefit of Brian T.
Keane, of which Mr. Brian Keane is the beneficiary, and (iii) 105,381
shares of Common Stock and 1,555 shares of Class B Common Stock held by
the John F. and Marilyn T. Keane 1997 Children's Trust for Benefit of
Brian T. Keane, of which Mr. Brian Keane is the beneficiary.
(5) Includes options to purchase, within 60 days following February 1, 1999,
24,562 shares of Common Stock held by Mr. John Keane, Jr., (ii) 1,193,330
shares of Common Stock and 46,666 shares of Class B Common Stock held by
the John Francis Keane Irrevocable Trust for Benefit of Mr. John F. Keane,
Jr., of which Mr. John Keane, Jr. is the beneficiary, and (iii) 49,381
shares of Common Stock and 1,555 shares of Class B Common Stock held by
the John F. and Marilyn T. Keane 1997 Children's Trust for Benefit of John
F. Keane, Jr., of which Mr. John Keane, Jr. is the beneficiary.
The Company has a standing Audit Committee, comprised of Messrs. Harkins,
Hindle and Shafto and Dr. Rockart, which held two meetings during the year
ended December 31, 1998. The Audit Committee makes recommendations to the
Board of Directors relative to the appointment of independent auditors,
reviews the
7
<PAGE>
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 and Shafto and Dr. Rockart, which held one meeting during the year
ended December 31, 1998. The Compensation Committee annually reviews and
approves the compensation of the Company's senior executives, administers the
Company's 1992 Stock Option Plan, the Company's 1992 Employee Stock Purchase
Plan, and the Company's 1998 Equity Incentive Plan.
The Company does not have a standing nominating committee.
During the year ended December 31, 1998, the Board of Directors of the
Company held six 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 $1,000 and expenses for each meeting
of the Board of Directors attended. Directors who are officers or employees of
the Company do not receive any additional compensation for their services as
directors.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the
Company for the three years ended December 31, 1998 (such executive officers
are sometimes collectively referred to herein as the "named executive
officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------- -------------------------------
Awards Payouts
----------------------- -------
Number of
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Awards Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($)(1) (1) ($) ($)(2)
--------- ---- ------- ------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Keane........... 1998 428,961 -- -- -- -- -- 2,000
President and Chief 1997 390,446 -- -- -- -- -- 2,000
Executive Officer 1996 363,850 -- -- -- -- -- 750
Edward Longo............ 1998 347,934 141,700 -- -- 20,000 -- 2,000
Senior Vice President-- 1997 300,039 75,000 -- -- 16,000 -- 2,000
Information Services 1996 283,988 62,500 -- -- 32,000 -- 750
Division
Brian T. Keane.......... 1998 308,472 105,000 -- -- 30,000 -- 2,000
Executive Vice 1997 210,758 60,000 -- -- 10,000 -- 2,000
President; member 1996 180,488 50,000 -- -- 20,000 -- 750
of the Office of the
President
John F. Keane, Jr....... 1998 308,472 105,000 -- -- 30,000 -- 1,412
Executive Vice 1997 209,598 60,000 -- -- 10,000 -- [--]
President; member 1996 170,011 57,939 -- -- 20,000 -- [--]
of the Office of the
President
Raymond W. Paris........ 1998 255,790 80,000 -- -- 5,000 -- 2,000
Vice President-- 1997 237,052 25,000 -- -- 8,000 -- 2,000
Healthcare Services 1996 223,369 -- -- -- 20,000 -- 750
Division
</TABLE>
- --------
(1) Options become exercisable in three or four equal installments commencing
on the first or second anniversary of the date of grant.
(2) "All Other Compensation" consists of contributions to the Company's
401(k) Plan on behalf of each of the named executive officers.
9
<PAGE>
Option Grants During 1998
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 1998:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
---------------------------------------------- Value at Assumed
Percent Annual Rates of
Number of of Total Stock Price
Securities Options/SARs Exercise or 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% ($)
- ----------------- ---------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John F. Keane........... -- -- -- -- -- --
Edward Longo............ 20,000 2.02% 38.38 1/16/03 212,000 468,600
Brian T. Keane.......... 30,000 3.03% 38.38 1/16/03 318,000 702,900
John F. Keane, Jr....... 30,000 3.03% 38.38 1/16/03 318,000 702,900
Raymond W. Paris........ 5,000 .5% 38.38 1/16/03 53,000 117,150
</TABLE>
- --------
(1) Options become exercisable in four equal installments commencing on the
first anniversary of the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
options if exercised at the end of the option terms. These gains are
based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted. Actual gains,
if any, on stock option exercises will depend on the future performance
of the Common Stock and the date on which the options are exercised.
10
<PAGE>
Option Exercises During 1998 and Year End Option Values
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1998, by each of the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities Underlying In-The-Money
Unexercised Options/SARs at Options/SARs
Number of Fiscal Year End at Fiscal Year End ($)
Shares Acquired Value ------------------------------- ----------------------------
Executive Officer on Exercise Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(2)
- ----------------- --------------- -------------- ------------------------------- ----------------------------
<S> <C> <C> <C> <C>
John F. Keane........... -- -- --/-- --/--
Edward Longo............ 34,668 1,654,256 --/81,332 --/1,987,288
Brian T. Keane.......... 45,000 2,124,900 35,001/59,999 1,219,284/979,766
John F. Keane, Jr....... 19,716 930,794 --/60,392 --/993,423
Raymond W. Paris........ 54,000 2,533,140 30,668/38,332 1,060,312/1,076,328
</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 31, 1998 (the last day of trading in
1998) was $39.94. Value is calculated on the basis of the difference
between the option exercise price and $39.94, multiplied by the number of
shares of Common Stock underlying the option.
Section 16(a) Beneficial Ownership Reporting Compliance
Raymond W. Paris inadvertently filed late a Form 4 for a sale transaction
that occurred in April 1998.
The Company is not aware of any other executive officer, director or
principal stockholder who failed to comply with filing requirements under
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act") during
the year ended December 31, 1998.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Messrs. Hindle and Shafto and Dr.
Rockart. No executive officer of the Company has served as a director or
member of the compensation committee (or other committee serving an equivalent
function) of any other entity, one of whose executive officers served as a
director or member of the Compensation Committee 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.
11
<PAGE>
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
executives 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
performance and 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 1998 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. The Chief Executive Officer did not participate in
any decisions regarding his own compensation. The Compensation Committee
believes that, although the base salary of the Chief Executive Officer is not
directly related to financial performance, his base salary may be more modest
than that paid to comparable industry executives.
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.
Winston R. Hindle, Jr. John F. Rockart Robert A. Shafto
12
<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, 1998 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 five publicly traded companies within the Company's industry.
The comparison assumes $100 was invested on December 31, 1993 in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Keane, Inc. 100 131.88 122.88 352.60 902.32 887.05
Broad Market 100 101.32 139.40 171.41 228.59 293.92
Peer Group 100 150.33 225.04 286.30 327.44 423.06
</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. and Computer Task Group,
Inc. Prior to its April 30, 1996 merger with and into Compuware Corporation,
Technalysis, Inc. was a member of the Company's peer group.
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, 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, Wallace A. Cataldo, the Vice President-Finance and Administration
of the Company, and Philip J. Harkins, a director 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, which will be approximately $850,000 per year
($25.00 per square foot) for the
13
<PAGE>
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.
SELECTION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors has
selected the firm of Ernst & Young LLP ("Ernst & Young") as the Company's
independent accountants for the year ending December 31, 1999. If the
stockholders do not ratify the selection of Ernst & Young, the Board of
Directors will reconsider the matter.
On April 2, 1999, the Company dismissed PricewaterhouseCoopers LLP ("PWC")
as its independent auditors and engaged Ernst & Young to fill such position.
The decision to change accountants was recommended by the Audit Committee and
approved by the Board of Directors of the Company. None of the reports of PWC
on the financial statements of the Company for either of the past two fiscal
years contained an adverse opinion or a disclaimer of opinion, or was
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company's two most recent fiscal years and the subsequent interim
period immediately preceding the date of the dismissal of PWC, the Company had
no disagreements with PWC on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement(s), if not resolved to the satisfaction of PWC, would have caused
PWC to make reference to the subject matter of the disagreement(s) in
connection with its reports on the financial statements of the Company. None
of the reportable events listed in Item 304(a)(1)(v) of Regulation S-K under
the Exchange Act occurred with respect to the Company's two most recent fiscal
years or the subsequent interim period preceding the dismissal of PWC.
Prior to making the decision to retain Ernst & Young, the Company had
consulted with Ernst & Young concerning certain tax matters. However, neither
the Company nor anyone on its behalf consulted Ernst & Young regarding the
application of accounting principles to a specific completed or contemplated
transaction, or the type of audit opinion that might be rendered on the
Company's financial statements, and no written or oral advice concerning the
same was provided to the Company that was an important factor considered by
the Company in reaching a decision as to any accounting, auditing or financial
reporting issue.
Representatives of Ernst & Young 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.
14
<PAGE>
Deadline for Submission of Stockholder Proposals
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company at its principal
office in Boston, Massachusetts not later than December 17, 1999 for inclusion
in the proxy statement for that meeting.
By order of the Board of Directors,
Norman B. Asher,
Clerk
April 16, 1999
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.
15
<PAGE>
PROXY BALLOT PROXY BALLOT
- ------------ ------------
KEANE, INC.
ANNUAL MEETING OF STOCKHOLDERS
------------------------------
May 26, 1999
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 26, 1999, at 4:30 p.m., Boston Time, at the offices of
Hale and Dorr LLP, 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 THE REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example.
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 at seven and to elect a Board of
Directors for the ensuing year.
NOMINEES: John F. Keane, Philip J. Harkins, Winston Hindle,
Brian T. Keane, John F. Keane, Jr., John F. Rockart
and Robert A. Shafto
[ ] FOR [ ] WITHHELD
[ ] ________________________________
For all nominees except as noted
2. To ratify and approve the selection by the Board of Directors of Enrst &
Young LLP as the Company's independent accountants for the current year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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______________________________
