<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:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[_] 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
NATIONAL DATA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO] PRELIMINARY COPIES
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders (the "Annual Meeting") of National Data
Corporation, a Delaware corporation (the "Company"), will be held at the
Company's offices at National Data Plaza, Atlanta, Georgia, on October 24, 1996,
at 11:00 A.M., Atlanta time, for the following purposes:
1. To elect two directors in Class I to serve until the annual meeting of
stockholders in 1999, or until their successors are duly elected and
qualified;
2. To vote on a proposal to amend the Certificate of Incorporation of the
Company to increase the number of shares of Common Stock of the Company
authorized for issuance from 60,000,000 to 100,000,000; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only stockholders of record at the close of business on August 26, 1996 are
entitled to notice of, and to vote at, the Annual Meeting. The transfer books
will not be closed. A complete list of stockholders entitled to vote at the
Annual Meeting will be available for inspection by stockholders at the offices
of the Company during the ten days prior to the Annual Meeting.
By Order of the Board of Directors
E. MICHAEL INGRAM, Secretary
Dated: August 29, 1996
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING IN PERSON, PLEASE
VOTE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
BUSINESS REPLY ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
PRELIMINARY COPIES
NATIONAL DATA CORPORATION
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
August 29, 1996
PROXY STATEMENT
FOR COMMON STOCK
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 24, 1996
INTRODUCTION
This Proxy Statement is furnished to holders of the $.125 par value per share
Common Stock ("Common Stock") of National Data Corporation, a Delaware
corporation (the "Company" or "NDC"), in connection with the solicitation of
proxies by the Company's Board of Directors from holders of the outstanding
shares of Common Stock for use at the Annual Meeting of Stockholders to be held
at 11:00 A.M. local time at the Company's offices at National Data Plaza,
Atlanta, Georgia, on Thursday, October 24, 1996, and at any adjournments thereof
(the "Annual Meeting").
The Annual Meeting will be held for the following purposes: (1) to elect two
directors in Class I to serve until the 1999 Annual Meeting of Stockholders and
until their successors are elected and qualified; (2) to adopt an amendment to
the Company's Certificate of Incorporation (the "Certificate") to increase the
number of shares of Common Stock authorized for issuance from 60,000,000 to
100,000,000; and (3) to transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Company's mailing address and the location of its principal offices are
National Data Plaza, Atlanta, Georgia 30329-2010. This Proxy Statement and the
accompanying Proxy are first being mailed to stockholders of the Company on or
about August 29, 1996.
STOCKHOLDERS ENTITLED TO VOTE
Only stockholders of record of the Company at the close of business on August
26, 1996 (the "Record Date") will be entitled to notice of, and to vote at, the
Annual Meeting. On the Record Date, there were ______________ shares of the
Common Stock issued and outstanding held by approximately _______ stockholders
of record. The Company's stock transfer books will not be closed and shares may
be transferred subsequent to the Record Date. However, all votes must be cast
in the names of stockholders of record on the Record Date. Pursuant to the
Certificate of the Company, holders of Common Stock are entitled to one vote per
share.
QUORUM AND VOTING REQUIREMENTS
The holders of Common Stock are entitled to one vote per share of Common
Stock. Pursuant to the Company's Bylaws, the holders of a majority of the
shares of Common Stock issued and outstanding and entitled to vote at the Annual
Meeting, present in person or represented by proxy, shall constitute a quorum.
For the purpose of determining the presence of a quorum, abstentions and broker
nonvotes will be counted as present.
Proposal 1, the election of two directors in Class I, will require the
affirmative vote of the holders of a majority of the shares of Common Stock
represented and entitled to vote at the Annual Meeting at which a quorum is
present. With respect to Proposal 1, stockholders may (i) vote "for" the
nominees, (ii) "withhold authority" to vote for the nominees or (iii) withhold
authority to vote for any individual nominee or nominees but vote for all other
nominees. Because Proposal 1 will require the affirmative vote of the holders
of a majority of the shares of Common Stock represented and entitled to vote at
<PAGE>
the Annual Meeting at which a quorum is present, an abstention and a broker
nonvote (which occurs when shares held by brokers or nominees for beneficial
owners are voted on some matters but not on others) will have the same effect as
a vote to "withhold authority" although they would be counted as present for
purposes of determining the existence of a quorum.
With respect to Proposal 2, the amendment to the Company's Certificate,
stockholders may (i) vote "for," (ii) vote "against," or (iii) "abstain" from
voting on the proposal. Proposal 2 will require the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote thereon,
and, therefore, an abstention and a broker nonvote will have the same effect as
a vote "against."
PROXIES
If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE
VOTED FOR (1) THE ELECTION OF ALL DIRECTOR NOMINEES; (2) THE AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION; AND (3) IN THE BEST JUDGMENT OF SUCH
PROXIES AS TO ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENTS THEREOF.
A stockholder who has given a Proxy may revoke it at any time prior to its
exercise at the Annual Meeting by either (i) giving written notice of revocation
to the Secretary of the Company, (ii) properly submitting to the Company a duly
executed Proxy bearing a later date, or (iii) appearing at the Annual Meeting
and voting in person. All written notices of revocation of Proxies should be
addressed as follows: National Data Corporation, National Data Plaza, Atlanta,
Georgia 30329-2010, Attention: E. Michael Ingram, Secretary.
-2-
<PAGE>
1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six members and is
divided into three classes, with the term of office of each class ending in
successive years. The terms of directors of Class I expire with this Annual
Meeting. The terms of office of directors in Class II and Class III expire at
the 1997 and 1998 annual meetings of stockholders, respectively. The
stockholders are being asked to vote on the election to Class I of Robert A.
Yellowlees and James B. Edwards.
Each Class I director will be elected to hold office until the 1999 annual
meeting of stockholders and thereafter until a successor has been duly elected
and qualified. The persons named in the enclosed proxy intend to vote the
shares represented thereby in favor of the election to the Board of the Class I
nominees whose names appear below, unless authority to vote for the nominees is
withheld or such proxy has previously been revoked. It is anticipated that
management stockholders of the Company will grant authority to vote for the
election of the nominees. In the event that the nominees are unable to serve
(which is not anticipated), the persons designated as proxies will cast votes
for such other persons as they may select.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR ELECTION AS
DIRECTORS. IF A CHOICE IS SPECIFIED ON THE PROXY BY THE STOCKHOLDER, THE SHARES
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED "FOR" THE NOMINEES. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF
THE SHARES OF COMMON STOCK REPRESENTED AND ENTITLED TO VOTE AT THE ANNUAL
MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR THE ELECTION OF THE
NOMINEES.
CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following table sets forth the names of the nominees and the directors
continuing in office, their ages, the month and year in which they first became
directors of the Company, their positions with the Company, their principal
occupations and employers for at least the past five years, and any other
directorships held by them in companies that are subject to the reporting
requirements of the Securities Exchange Act of 1934 or any company registered as
an investment company under the Investment Company Act of 1940. For information
concerning membership on committees of the Board, see "Other Information About
the Board and its Committees" below.
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
<S> <C> <C>
MONTH AND POSITIONS WITH THE COMPANY, PRINCIPAL
YEAR FIRST OCCUPATIONS DURING AT LEAST THE PAST FIVE
NAME AND AGE BECAME A DIRECTOR YEARS, AND OTHER DIRECTORSHIPS
- -------------- ----------------- -----------------------------------------
</TABLE>
CLASS I
TERM EXPIRING ANNUAL MEETING 1999
<TABLE>
<S> <C> <C>
Robert A. Yellowlees April 1985 Chairman of the Board (since June 1992), and President, Chief Executive Officer
(57) and Chief Operating Officer (since May 1992) and Director of the Company
Chairman, Spectrum Research Group, Inc. (consultants on the management of
technology), Atlanta; Director of John H. Harland Co.
James B. Edwards January 1989 Director of the Company
(69) President, The Medical University of South Carolina (since November 1982);
Director of the Harry Frank Guggenheim Foundation, Phillips Petroleum Company,
SCANA Corporation, Imo Industries, Inc., WMX Technologies, Inc.,
Norfolk-Southern Corporation Advisory Board, GS Industries, Inc. and the Gaylord
and Dorothy Donnelley Foundation.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
MEMBERS OF THE BOARD OF DIRECTORS
CONTINUING IN OFFICE
MONTH AND POSITIONS WITH THE COMPANY, PRINCIPAL
YEAR FIRST OCCUPATIONS DURING AT LEAST THE PAST
NAME AND AGE BECAME A DIRECTOR FIVE YEARS, AND OTHER DIRECTORSHIPS
- -------------- ----------------- -------------------------------------
CLASS II
TERM EXPIRING ANNUAL MEETING 1997
<S> <C> <C>
Edward L. Barlow January 1969 Director of the Company
(61) General Partner, Whitcom Partners (an investment partnership), New York.
Neil Williams April 1977 Director of the Company
(60) Managing Partner, Alston & Bird (Attorneys and Counsel for the Company), Atlanta;
Director of PrintPack, Inc.
CLASS III
TERM EXPIRING ANNUAL MEETING 1998
Don W. Sands September 1989 Director of the Company
(70) Member of the Board of Directors, Georgia World Congress Center, Atlanta (since
1985); Chief Executive Officer Emeritus and Counselor to the Board of Directors
of Gold Kist, Inc. (a diversified agricultural cooperative association), Atlanta
(since November 1991); President, Chief Executive Officer, and Chairman of the
Management Executive Committee of Gold Kist, Inc. (1988-1991); Director of Golden
Poultry Company, Inc.
J. Veronica Biggins October 1995 Director of the Company
(49) Consultant, Heidrick & Struggles (since 1995); Assistant to the President of the
United States (1994-1995); Executive Vice President, NationsBank of Georgia
(1973-1994); Director, of Kaiser Foundation HealthPlan of Georgia, Inc. and
Morrison Fresh Cooking, [Inc.]
</TABLE>
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Meetings and Compensation. During the fiscal year ended May 31, 1996, the
Company's Board of Directors held 15 meetings. All directors attended 75% or
more of the combined total of the Board of Directors meetings and meetings of
the committees on which they served. During the last fiscal year, the Company's
policy regarding the compensation of directors was to pay directors who are not
also employees of the Company an annual retainer of $24,000 paid under the terms
of the 1995 Non-Employee Director Compensation Plan described below plus $1,000
per meeting attended. Each member of the Audit and Compensation Committees
received $1,000 per Audit or Compensation Committee meeting attended in addition
to his other compensation as a director.
The Company also maintains the 1995 Non-Employee Director Compensation Plan
(the "1995 Director Plan"), which entitles each of the Company's non-employee
directors to receive on June 1 of each year, in lieu of 50% of their annual cash
retainer described above, that number of shares of Common Stock, rounded up to
the next whole share, with a fair market value equal to 50% of such annual
retainer. Fair market value is defined in the 1995 Director Plan to be the
closing sales price of the Common Stock on the New York Stock Exchange on June 1
of each year, or the first trading day thereafter. For purposes of the 1995
Director Plan, the annual retainer of non-employee directors is defined to
exclude any fees paid for attending meetings of the Board of Directors or
committees thereof, and also excludes reimbursement for travel or other out-of-
pocket expenses. As of June 1, 1996, each of Messrs. Barlow, Edwards, Sands and
-4-
<PAGE>
Williams and Ms. Biggins was issued 325 shares of Common Stock based on the fair
market value of the Common Stock on that date of $37.00 per share and the
current annual retainer for the non-employee directors of $24,000.
Non-employee directors who were initially elected to the Board of Directors
prior to January 1, 1995, are also eligible for certain retirement benefits.
Each such non-employee director with five or more years of service to the
Company as a director is entitled to receive a retirement benefit on the later
of (a) the first day of the month on or after his seventieth birthday, or (b)
his retirement date. The retirement benefit will generally continue annually
thereafter for the lesser of (i) the number of years equal to the number of
years the individual served as a director or (ii) ten years. In the case of
non-employee directors with greater than ten years service as a director on the
effective date of the retirement plan (December 18, 1991), however, the
retirement benefit will continue for fifteen years. Retirement benefits may be
paid to a retired director prior to his attaining age 70 if the retired director
is at least age 60, with not less than ten years of service as a director. The
retirement benefit will be calculated from a base amount equal to the annual
retainer for non-employee directors in effect on the date of a director's
retirement. The retired director would receive as the retirement benefit 50% of
the base amount plus 10% for each year of service up to 100% of the base amount
for ten years' service. As of August 1, 1996, Messrs. Sands, Edwards, Barlow,
and Williams had 7, 7-8/12, 27-8/12, and 19-5/12 years of service as directors
for purposes of the retirement plan. In the event of a change in control of the
Company, each eligible non-employee director will be deemed to have completed 10
years of service as a director and will be paid the retirement benefit if his
service as a director of the Company is terminated, with his benefit commencing
upon his termination as a director.
The Company also maintains the 1984 Non-Employee Director Stock Option Plan
(the "Director Option Plan"). The Director Option Plan initially provided for
the grant of stock options to non-employee directors for up to a total of
157,500 shares of Common Stock, with each such director automatically entitled
to receive an option to purchase 4,500 shares of Common Stock for each completed
year of service as a director after his or her election by the stockholders, up
to five such options. As amended in 1989, the Director Option Plan provided for
the grant of stock options to non-employee directors for up to a total of
345,000 shares of Common Stock, with each such director automatically entitled
to receive an option to purchase 7,500 shares of Common Stock for each completed
year of service as a director after his or her election by the stockholders, up
to five such options. The Director Option Plan was further amended in 1995 to
provide that non-employee directors shall receive up to five options each to
purchase 5,000 shares, one for each year of service as a director. Options
granted under the Director Option Plan are exercisable immediately at a price
equal to the fair market value (as defined in the Director Option Plan) of
Common Stock at the date of grant. Options granted under the Director Option
Plan will be granted at a price equal to the fair market value (as defined in
the Director Option Plan) of Common Stock at the date of grant and will vest 20%
two years after the date of grant, an additional 25% after three years, an
additional 25% after four years, and the remaining 30% after five years. The
fair market value of the Common Stock subject to options outstanding under the
Director Option Plan was $41.50 per share as of August 8, 1996. During the
fiscal year ended May 31, 1996, options were granted under the Director Option
Plan to Messrs. Barlow, Edwards, Sands and Williams and Ms. Biggins for 5,000
shares of Common Stock at an exercise price per share of $25.125.
Committees. The Company's Board of Directors has an Audit Committee and a
Compensation Committee. The Company does not have a nominating committee. The
full Board of Directors performs the function which would be performed by a
nominating committee. Certain information regarding the functions of the
Board's Committees and their present membership is provided below.
Audit Committee. The Company's Board of Directors has an Audit Committee
composed of Messrs. Barlow (Chairman), Sands and Williams. The Audit Committee
annually reviews and recommends to the Board the firm to be engaged as
independent auditors for the next fiscal year, reviews with the independent
auditors the plan and results of the auditing engagement, reviews the scope and
results of the Company's procedures for internal auditing, and inquires as to
the adequacy of the Company's internal accounting controls. During the fiscal
year ended May 31, 1996, the Audit Committee held 2 meetings, each of which was
separate from regular Board meetings.
-5-
<PAGE>
Compensation Committee Interlocks and Insider Participation. The Board of
Directors also has a Compensation Committee composed of Messrs. Sands (Chairman)
and Edwards and Ms. Biggins. This Committee reviews and recommends to the Board
levels of compensation and performance criteria for the Company's executive
officers and administers the Company's 1982 Incentive Stock Option Plan, 1983
Restricted Stock Plan (the "1983 Plan") and the 1987 Stock Option Plan (the
"1987 Plan"). During the last fiscal year, the Compensation Committee held 2
meetings, all of which were separate from regular Board meetings. None of the
members of the Compensation Committee served as an officer or an employee of the
Company during the fiscal year ended May 31, 1996.
-6-
<PAGE>
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of July 1, 1996, with respect to
the beneficial ownership of Common Stock by the nominees to the Board, directors
of the Company, by each of the executive officers named in the Summary
Compensation Table, and by the 13 persons, as a group, who were directors and/or
executive officers of the Company on July 1, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP (1) CLASS (1)
- ---- ------------------------ ----------
<S> <C> <C>
Edward L. Barlow 113,397(2) *
Neil Williams 67,551(3) *
Robert A. Yellowlees 655,126(4) ___%
James B. Edwards 38,847(5) *
Don W. Sands 49,647(6) *
J. Veronica Biggins 605 *
J. David Lyons 18,501(7) *
Richard S. Cohan 26,508(8) *
Jerry W. Braxton 25,241(9) *
Kevin C. Shea 52,986(10) *
All Directors and Executive Officers
(13 persons) as a Group 1,080,452(11) _____%
</TABLE>
* Less than one percent.
(1) The amounts and percentages of Common Stock beneficially owned are reported
on the basis of regulations of the Securities and Exchange Commission
governing the determination of beneficial ownership of securities. The
beneficial owner has both voting and investment power over the shares,
unless otherwise indicated.
(2) This amount includes 51,000 shares of Common Stock of which Mr. Barlow has
the right to acquire beneficial ownership.
(3) This amount includes 46,500 shares of Common Stock of which Mr. Williams has
the right to acquire beneficial ownership.
(4) This amount includes 524,000 shares of Common Stock of which Mr. Yellowlees
has the right to acquire beneficial ownership, 30,000 shares held by The
Yellowlees Charitable Trust, of which Mr. Yellowlees is the Trustee, 22,500
shares of restricted stock over which he currently has sole voting power
only and 2,839 shares held by Mr. Yellowlees' wife as to which he disclaims
all beneficial ownership.
(5) This amount includes 37,500 shares of Common Stock of which Mr. Edwards has
the right to acquire beneficial ownership.
(6) This amount includes 37,500 shares of Common Stock of which Mr. Sands has
the right to acquire beneficial ownership.
(7) This amount includes 17,001 shares of Common Stock of which Mr. Lyons has
the right to acquire beneficial ownership and 1,500 shares of restricted
stock over which he currently has sole voting power only.
(8) This amount consists of 20,125 shares of Common Stock of which Mr. Cohan has
the right to acquire beneficial ownership and 3,750 shares of restricted
stock over which he currently has sole voting power only.
(9) This amount includes 20,376 shares of Common Stock of which Mr. Braxton has
the right to acquire beneficial ownership and 3,750 shares of restricted
stock over which he currently has sole voting power only.
(10) This amount includes 37,729 shares of Common Stock of which Mr. Shea has
the right to acquire beneficial ownership and 3,750 shares of restricted
stock over which he currently has sole voting power only.
(11) This amount includes 813,780 shares of Common Stock of which the directors
and executive officers, as a group, have the right to acquire beneficial
ownership and 36,750 shares of restricted stock over which the beneficial
owners have sole voting power only.
-7-
<PAGE>
COMMON STOCK OWNERSHIP BY CERTAIN OTHER PERSONS
The following table sets forth information as of the date indicated with
respect to the only persons who are known by the Company to be the beneficial
owners of more than 5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER DATE OWNERSHIP(1) CLASS
- ------------------- ------------- ----------------- -----------
<S> <C> <C> <C>
T. Rowe Price Associates, Inc. (2) July 10, 1996 2,407,850(3) 10.4%
100 E. Pratt Street
Baltimore, MD 21202
</TABLE>
- -----------------
(1) Adjusted to give effect to a three-for-two stock split on March 20, 1995.
(2) This information is contained in a Schedule 13G dated July 10, 1996 filed
by T. Rowe Price Associates, Inc. ("Price Associates") with the Securities
and Exchange Commission (the "Commission"), a copy of which was received by
the Company. Such Schedule 13G states that Price Associates has sole
voting power with respect to 248,750 shares and sole dispositive power with
respect to 2,407,850 shares.
(3) These securities are owned by various individual and institutional
investors which Price Associates serves as investment adviser with power to
direct investments and/or sole power to vote the securities. For purposes
of the reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
-8-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
Decisions on compensation and stock-based plans are made by the three-member
Compensation Committee. All decisions by the Compensation Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board. Decisions of the Compensation Committee related to stock-based plans are
made solely by that committee in order for awards or grants under the Company's
equity-based plans to satisfy Rule 16b-3 pursuant to the Securities Exchange Act
of 1934, as amended.
The Company's primary objective in designing and implementing its compensation
programs is to maximize stockholder value over time through alignment of
employee performance with business goals and strategies that serve stockholders'
interests. The overall goal of the Compensation Committee is to develop
executive compensation and equity-based programs which are consistent with and
linked to the Company's strategic and annual business objectives.
Compensation Philosophy
The Compensation Committee has adopted certain principles which are applied in
structuring the compensation opportunity for executive officers. These are:
LONG TERM AND AT-RISK FOCUS. A significant percentage of total
compensation for executive officers should be composed of long term,
at-risk rewards to focus senior management on the long term interests
of stockholders. Equity-based plans should comprise a major part of
the long term, at-risk portion of total compensation to encourage
stockholder value-based management decisions, and to link compensation
to Company performance and stockholder interests.
SHORT TERM AND AT RISK FOCUS. A significant portion of cash
compensation for executives is linked to achievement of annual business
plans or performance objectives. This includes cash bonuses that may
be approved by the Compensation Committee relating to those objectives.
There is real risk in bonuses paid under this plan, recognizing
variability in individual, unit and overall company performance.
COMPETITIVENESS. Base pay and total compensation should be
competitive with other similar companies based upon size, products and
markets. A proxy survey of peer group companies is conducted
periodically. The peer group surveyed includes appropriate companies
contained in the Standard and Poor's Computer Software and Services
Index used in the stockholder return analysis shown later, in addition
to other firms in the Company's business sectors.
Stock Option Awards and Restricted Stock Grants
Equity-based compensation comprises a significant portion of the Company's
executive officer compensation programs. These plans are administered solely by
the Compensation Committee. There are two Company plans utilized for this
component of executive officer, long term, equity-oriented compensation. These
involve Stock Options and Restricted Stock grants:
STOCK OPTIONS. Options provide executive officers with the
opportunity to achieve an equity interest in the Company. Stock
options are granted at 100% of fair market value on the date of grant
and have 10-year terms. Effective with grants after May 31, 1994,
stock options vest two years after the date of grant with respect to
20% of the shares granted, an additional 25% after three years, an
additional 25% after four years, and the remaining 30% after five
years. The objective is to emphasize a long term focus by key
employees in the acquisition and holding of Common Stock. The number
of stock options granted to an individual is based upon the
responsibility level of the individual's position and the individual's
potential to contribute to future growth of the Company as evidenced by
current performance, with an objective of fostering broad-based equity
-9-
<PAGE>
participation. Annual grant amounts vary as a result of the Company's
prior year and potential future performance and the number of options
required to achieve target grant values based on the prevailing fair
market value of the Common Stock.
RESTRICTED STOCK. Restricted stock grants are designed to be granted
on a selective basis to key employees to further focus them on the
longer term performance of the Company. Grants of restricted shares
are subject to forfeiture if a grantee, among other conditions, fails
to perform or leaves the Company prior to expiration of the restricted
period. Restricted periods are generally from two to three years.
Target Stock Ownership
The Company's Board of Directors and management believe that significant stock
ownership is a major incentive in building stockholder value and aligning the
interests of executives and stockholders. The Board has therefore adopted
guidelines for minimum stock ownership by senior executives.
To encourage this growth in stockholder wealth, the Company believes that
senior executives who are in a position to make a significant contribution to
the long term success of the Company should have a significant stake in its
ongoing success. Guidelines are based upon a multiple of base salary and range
from .8 to 3 times annual salary amounts. Executives are encouraged to achieve
these guidelines by building stock ownership over a period of approximately five
years beginning with fiscal year 1995. As of May 31, 1996, all participating
senior executives are at stock ownership levels well in excess of plan targets.
Chief Executive Officer's Compensation
Mr. Yellowlees' fiscal year 1996 compensation derived primarily from
commitments under Mr. Yellowlees' employment agreement (see "Employment
Agreements - Robert A. Yellowlees" below) entered into prior to fiscal year 1996
and the renewal agreement effective May 18, 1995. The decisions affecting
compensation made after that date relate to Mr. Yellowlees' specific annual
performance goals, results evaluation, and resulting fiscal year 1996 incentive
bonus payment.
Mr. Yellowlees' target annual bonus was set in his employment agreement, based
upon quantitative and qualitative performance factors. Starting in fiscal year
1996, the stockholders approved a new Performance-Based Executive Officer Bonus
Plan which provides for performance-based awards for achieving business
objectives. Mr. Yellowlees agreed to have a portion of his bonus at risk under
this plan to preserve deductibility by the Company under Code Section 162(m).
The two performance factors included in this plan for fiscal year 1996 were
earnings per share, up 35%, and operating income as a percentage of revenue, up
13%. The balance of his fiscal year 1996 bonus was determined by other factors
including 16% growth in revenue, 82% increase in market valuation, and the
successful execution of merger and acquisition strategies and other qualitative
initiatives to maximize shareholder value.
A bonus deferral program was approved by the Board of Directors in fiscal year
1996 which allows certain key executives to defer a portion of their cash bonus
in the form of a restricted stock grant. This program is consistent with the
Company's objectives to increase executives' stock ownership and at risk
compensation. Mr. Yellowlees and three other executives made a deferral
election for fiscal year 1996 under this plan. Since participating executives
are deferring earned cash in the form of stock at risk of forfeiture over three
years, the amount deferred is increased by 35%. The restricted stock income
reported for Mr. Yellowlees [and Mr. Shea] in the Summary Compensation Table
included herein represents the full amount of their respective fiscal year 1996
deferral elections.
Effective June 1, 1995, Mr. Yellowlees received a base compensation increase
of 5.3%. This increase was based upon the Compensation Committee's evaluation
of Mr. Yellowlees' performance for fiscal year 1995.
-10-
<PAGE>
The Compensation Committee's general approach in setting Mr. Yellowlees target
annual compensation is to seek to be competitive with other companies in the
Company's industry, but to have a large percentage of his target compensation
based upon current year performance as well as actions to provide sustained long
term growth in stockholder value. To accomplish this a mix of cash, restricted
stock and stock options are provided to Mr. Yellowlees, which include a
significant element of risk that is based upon the Company's performance.
As an incentive to sustained growth in stockholder value, the Compensation
Committee awarded Mr. Yellowlees a non-qualified stock option effective May 18,
1995, at the outset of the three year period of his renewal employment agreement
in lieu of determining a separate grant in each year. There are three separate
components to the grant, each subsequent annual component having a 12% higher
exercise price or premium over the prior year. See "Compensation and Other
Benefits -- Option Grants" and "Compensation and Other Benefits -- Employment
Agreements" below. This option grant is for fiscal years 1996, 1997 and 1998.
In addition, on July 1, 1996, the Compensation Committee awarded Mr. Yellowlees
a performance based restricted stock grant of 12,000 shares based on goals for
net income growth for fiscal years 1997 and 1998. The Compensation Committee
believes that it is in the continuing best interests of the Company's
stockholders to ensure that Mr. Yellowlees remains highly incented to sustain
the long term growth of the Company.
COMPENSATION COMMITTEE
Don W. Sands, Chairman
James B. Edwards
J. Veronica Biggins
-11-
<PAGE>
COMPENSATION AND OTHER BENEFITS
The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during the fiscal years ended May 31, 1996 ("1996 fiscal year"), 1995
("1995 fiscal year") and 1994 ("1994 fiscal year"), for (i) the Chief Executive
Officer of the Company; and (ii) each of the four other most highly compensated
executive officers of the Company (determined as of the end of the last fiscal
year) whose total annual salary and bonus exceeded $100,000 (collectively, the
"Named Executive Officers"). Share numbers for all fiscal years shown have been
adjusted to give effect to a three-for-two stock split effected on March 20,
1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------------
Annual Compensation Awards
------------------- ----------------------------------------
Securities
Underlying
Name and Fiscal Restricted Stock Options All Other
Principal Position Year Salary ($) Bonus ($) Award(s) ($)(1) (#)(2) Compensation ($)(3)
- ---------------------- ------ --------- -------- ---------------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Yellowlees 1996 513,258 495,000 344,250 --- 59,750
Chairman and Chief 1995 458,354 690,000 240,001 600,000 67,283
Executive Officer, 1994 427,806 175,000 396,500 174,000 66,488
President and Chief
Operating Officer
Jerry W. Braxton 1996 181,731 125,000 --- 19,500 4,942
Chief Financial 1995 175,834 70,000 40,000 26,250 6,038
Officer 1994 158,077 20,000 45,750 15,001 5,321
J. David Lyons 1996 192,115 65,000 --- 16,700 4,413
General Manager, 1995 185,000 55,000 16,000 22,500 7,846
Payment Services 1994 168,635 55,917(4) --- 37,501 1,440
Richard S. Cohan 1996 175,961 100,000 --- 16,700 ---
General Manager, 1995 149,317 40,300 40,000 22,500 330
Health Care 1994 137,538 35,000 45,750 15,000 ---
Information Network
Services
Kevin C. Shea 1996 171,346 [95,000] 35,375 16,700 ---
General Manager, 1995 159,975 55,000 40,000 22,500 663
Integrated Payment 1994 144,200 19,000 45,750 15,001 488
Systems
</TABLE>
- --------------
(1) All awards of restricted shares to the Named Executive Officers have been
made under the 1983 Plan and are valued in the table based upon the closing
market prices of the Common Stock on the grant dates. Grantees have the
right to vote and dividends are payable to the grantees with respect to all
awards of restricted shares reported in this column. As of May 31, 1996,
the shares listed in the table were the only outstanding grants of
restricted shares. The restrictions on 54,501, 54,498, 54,498 and 39,000
shares awarded to Mr. Yellowlees expired on June 1, 1993, June 1, 1994,
June 1, 1995 and May 17, 1995, respectively. The restrictions on 4,500
shares awarded to each of Messrs. Braxton, Cohan and Shea expired on June
28, 1995. The value of the restricted stock held by the Named Executive
Officers at May 31, 1996 was $849,375, $141,563, $56,625, $141,563 and
$141,563 for Messrs. Yellowlees, Braxton, Lyons, Cohan, and Shea,
respectively. The numbers of shares of restricted stock held by Messrs.
Yellowlees, Braxton, Lyons, Cohan, and Shea at May 31, 1996 were 22,500,
3,750, 1,500, 3,750 and 3,750, respectively.
(2) All option awards granted to the Named Executive Officers were made under
the 1987 Plan.
(3) For the 1996 fiscal year, includes for each of the indicated individuals
the following amounts representing (i) Company contributions to the
Company's Employee Savings Plan: Mr. Yellowlees - $4,750, Mr. Braxton -
$4,942 and Mr. Lyons - $4,413 and (ii) insurance premiums paid by the
Company for term life insurance policies for the benefit of the Named
Executive Officer: Mr. Yellowlees - $55,000; Mr. Braxton - $____________;
Mr. Lyons - $____________; Mr. Cohan - $____________ and Mr. Shea -
$____________.
(4) Mr. Lyons received $47,917 of his bonus amount as a one-time award made
pursuant to the terms of his initial employment arrangements.
Option Grants. The following table sets forth information on options granted
to the Named Executive Officers in the 1996 fiscal year.
-12-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise
Granted Fiscal Year or Base Expiration Grant Date
Name (#)(1)(2) ------------ Price($/Sh) Date Present Value (3)
---- --------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Robert A. Yellowlees --- --- --- --- ---
Jerry W. Braxton 19,500 6.4 21.00 June 1, 2005 (4)
J. David Lyons 16,700 5.5 21.00 June 1, 2005 (5)
Richard S. Cohan 16,700 5.5 21.00 June 1, 2005 (6)
Kevin C. Shea 16,700 5.5 21.00 June 1, 2005 (7)
</TABLE>
_____________
(1) The total number of shares covered by options granted to employees in the
1996 fiscal year was 305,008.
(2) These options were granted under the 1987 Plan. The option agreements
governing these grants provide that during each of the four successive
twelve-month periods of continued employment commencing on the date two
years after the grant date the option becomes exercisable on a cumulative
basis as to 20%, 45%, 70% and 100%, respectively, of the total shares
covered by such option grant. Pursuant to the 1987 Plan, the Compensation
Committee of the Company's Board of Directors at any time before the
termination of an option may accelerate the time or times at which such
option may be exercised, in whole or in part.
(3) These grant date values, based on the Black-Scholes option pricing model,
are for illustrative purposes only, and are not intended to be a forecast
of what future performance will be.
(4) This value is based upon the following assumptions: (i) an expected stock
price volatility of %; (ii) a risk-free rate of return of %;
(iii) a current dividend yield of %; and (iv) a term of grant of
years.
(5) This value is based upon the following assumptions: (i) an expected stock
price volatility of %; (ii) a risk-free rate of return of %;
(iii) a current dividend yield of %; and (iv) a term of grant of
years.
(6) This value is based upon the following assumptions: (i) an expected stock
price volatility of %; (ii) a risk-free rate of return of %;
(iii) a current dividend yield of %; and (iv) a term of grant of
years.
(7) This value is based upon the following assumptions: (i) an expected stock
price volatility of %; (ii) a risk-free rate of return of %;
(iii) a current dividend yield of %; and (iv) a term of grant of
years.
-13-
<PAGE>
Option Exercises and Fiscal Year-End Values. The following table sets forth
information concerning each exercise of options during the 1996 fiscal year and
the number and value of unexercised options held by the Named Executive Officers
as of May 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Shares Value at Fiscal Year-End (#) at Fiscal Year-End (#)
Acquired on Realized --------------------------------- ------------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Yellowlees --- --- 524,000 628,000 15,628,587 11,619,857
Jerry W. Braxton 35,376 588,845 20,376 45,499 580,661 1,025,264
J. David Lyons 12,501 208,870 17,001 47,199 464,444 1,102,988
Richard S. Cohan 14,750 281,354 20,125 39,700 575,614 898,641
Kevin C. Shea 46,775 933,334 37,729 39,600 1,092,402 898,640
</TABLE>
Retirement Plan. The Company maintains the National Data Corporation
Employees' Retirement Plan (the "Retirement Plan"), which provides monthly
benefits upon retirement to eligible employees, including officers. Most
employees become participants in the Retirement Plan after meeting certain
minimal eligibility requirements. The benefits provided upon normal retirement
at age 60 are equal to the sum of (i) a basic benefit based solely on the number
of the employee's completed years of continuous service at his normal retirement
date and (ii) a supplemental benefit calculated under a formula based on years
of continuous service and the employee's average earnings during the five years
of highest compensation during the ten years preceding his retirement, reduced
by an amount equal to 75% of the primary social security benefits to which the
employee is entitled. The term "earnings" for purposes of the Retirement Plan
means compensation of any kind paid by the Company to the participating employee
as reported on Internal Revenue Service Form W-2, but excluding the cost of
certain employee benefits (as defined) and excluding amounts which become
taxable to the employee under a stock option or other stock plan. The
Retirement Plan covers all eligible employees retiring after its effective date.
The following table shows estimated annual retirement benefits payable to
participants in the Retirement Plan on a straight life annuity basis upon
retirement in specified years of continuous service and remuneration classes.
The annual benefit amounts have been computed by multiplying the monthly benefit
payable under the Retirement Plan by 12. Also, under current law the retirement
benefit for an employee at age 65 cannot exceed $112,221 per year.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
------------------------------------------------
HIGHEST YEARS OF CONTINUOUS SERVICE (1)
FIVE-YEAR AVERAGE ------------------------------------------------
ANNUAL EARNINGS 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$144,000 $33,120 $ 44,160 $ 55,200 $ 66,240 $ 77,280
192,000 43,620 58,560 73,200 87,840 102,480
240,000 54,720 72,960 91,200 109,440 112,221
288,000 65,520 87,360 109,200 112,221 112,221
336,000 76,320 101,760 112,221 112,221 112,221
384,000 87,120 112,221 112,221 112,221 112,221
432,000 97,920 112,221 112,221 112,221 112,221
</TABLE>
- ---------------
(1) The average annual earnings for the highest five years over the last 10-
year period and the eligible years of credited service as of May 31, 1996 for
each of the Named Executive Officers was as follows: Mr. Yellowlees (4-1/12
years) $919,806; Mr. Braxton (4-4/12 years) $_____________; Mr. Lyons (2-
10/12 year) $_____________; Mr. Henderson (3-8/12 years) $_____________ and
Mr. Shea (9-2/12 years) $_____________. The amounts shown in the column
"Salary" in the Summary Compensation Table above are substantially equal to
the compensation of the individuals named in such table for purposes of the
Retirement Plan.
-14-
<PAGE>
Employment Agreements.
Robert A. Yellowlees. The Company entered into an employment agreement with
Robert A. Yellowlees, effective as of May 18, 1992, providing for his employment
as Chief Executive Officer, President and Chief Operating Officer for a term
continuing through May 17, 1995, subject to earlier termination in certain
events, which agreement was renewed effective May 18, 1995 for an additional
three year term ending May 17, 1998. The agreement provides for subsequent
three year renewal terms upon mutual agreement. The agreement also provides
that Mr. Yellowlees will serve as Chairman of the Board and that during the term
of the agreement the Company will use its best efforts to cause him to be
nominated and elected as a director of the Company.
The agreement initially provided for a minimum annual base salary of $395,000,
subject to yearly review, and additional annual bonus targets equal to Mr.
Yellowlees' base salary for each year for which the bonus is to be paid. The
actual bonus paid for any year may range from none to 150% of the target amount
and will be based upon qualitative and quantitative standards agreed upon by Mr.
Yellowlees and the Company, upon recommendation by the Compensation Committee of
the Board of Directors and approval by the Board. The bonus is paid, at Mr.
Yellowlees' election, in whole or in part in shares of Common Stock. Mr.
Yellowlees is also entitled to participate in all other benefit plans maintained
by the Company for executive officers, and his years of service as a director
while an employee will be included in his years of service for purposes of
determination of eligibility for benefits under and computation of the amount of
benefits payable under the Retirement Plan for Non-Employee Directors described
above. See "Retirement Plan for Non-Employee Directors." In addition, the
Company is required to maintain on behalf of Mr. Yellowlees, or reimburse Mr.
Yellowlees for the premiums paid for, specified life insurance and additional
disability insurance coverage, with the Company's payments not to exceed $55,000
per year.
Pursuant to the agreement, Mr. Yellowlees also was granted an initial option
for 135,000 shares of Common Stock at an option price of $6.17 per share under
the 1987 Plan and was awarded 163,500 shares of Common Stock as restricted stock
under the 1983 Plan. Of the shares of restricted stock, 54,500 were released
from escrow on each of June 1, 1993, June 1, 1994 and June 1, 1995.
Upon termination of the agreement prior to expiration of its term (including
any renewals) (i) as a result of Mr. Yellowlees' physical or mental incapacity,
(ii) by the Company other than as a result of specified misconduct by Mr.
Yellowlees, or (iii) by Mr. Yellowlees following a significant change in his
employment duties or conditions within three years after a change in control of
the Company (as defined in the agreement), (a) the Company will be required to
pay Mr. Yellowlees a severance benefit equal to three times the greater of (A)
his average annual compensation during the preceding three years or (B) his
current year compensation plus a bonus amount equal to 75% of his current year
salary, (b) the Restricted Stock awarded to him will be fully and immediately
vested, (c) all stock options held by Mr. Yellowlees will be fully and
immediately vested, and (d) the Company will pay Mr. Yellowlees 75% of the
target amount of the bonus for the fiscal year in which his employment was
terminated. For purposes of this provision of the agreement, Mr. Yellowlees'
average annual compensation is currently $919,806. Also, upon termination of
the agreement by the Company other than as a result of specified misconduct by
Mr. Yellowlees or by Mr. Yellowlees following a significant change in his
employment duties or conditions within three years after a change in control of
the Company, the Company is required to maintain Mr. Yellowlees' participation
in existing employee benefit plans until the earlier of three years after his
termination of employment or commencement of his full-time employment with a new
employer. The agreement also provides that upon its termination as a result of
Mr. Yellowlees' death, the restricted stock awarded to him and all stock options
granted to him will be fully vested.
The Company, during fiscal year 1994, entered into a first renewal employment
agreement with Mr. Yellowlees, as contemplated in the initial employment
agreement described above. The renewal agreement became effective as of May 18,
-15-
<PAGE>
1995, and provides for Mr. Yellowlees' continued employment as chairman and
chief executive officer and president and chief operating officer of the Company
for a second three year term continuing through May 17, 1998. The renewal
agreement provides for subsequent three-year renewal terms upon mutual
agreement. The renewal agreement also provides that during the term of the
renewal agreement the Company will use its best efforts to cause him to be
nominated and elected as a director of the Company.
The renewal agreement is essentially identical to the original employment
agreement, except as follows. The renewal agreement provides for a minimum
annual base salary of $470,000. Under the renewal agreement, the Company
granted Mr. Yellowlees an additional non-qualified stock option effective May
18, 1995, at the outset of the three-year period of the renewal agreement in
lieu of three separate grants. The grant contains a premium grant price feature
that provides added incentive to increase stockholder value. A total of 450,000
shares of Common Stock under the 1987 Plan were allocated to this grant. The
option agreement includes the following provisions:
(A) One-third of the shares subject to the option have an exercise price
equal to $20.125 per share, the closing price of the Common Stock on the
date the grant was approved by the Board. The shares subject to this grant
will vest as follows: 20% on May 17, 1997, an additional 25% on May 17,
1998, an additional 25% on May 17, 1999, and an additional 30% on May 17,
2000.
(B) One-third of the shares subject to the option have an exercise price
equal to $22.54 per share, 112% of the exercise price for the shares
described in (A) above. The shares subject to the grant under this
paragraph will vest as follows: 20% on May 17, 1998, an additional 25% on
May 17, 1999, an additional 25% on May 17, 2000, and an additional 30% on
May 17, 2001.
(C) One-third of the shares subject to the option have an exercise price
equal to $25.245 per share, 124% of the exercise price for the shares
described in (A) above. The shares subject to the grant under this
paragraph will vest as follows: 20% on May 17, 1999, an additional 25% on
May 17, 2000, an additional 25% on May 17, 2001, and an additional 30% on
May 17, 2002.
The option agreement also provides for the immediate and full vesting of the
options in the event of (i) a change in control of the company, (ii) the death
or physical or mental incapacity of Mr. Yellowlees, (iii) the termination of
employment of Mr. Yellowlees or (iv) non-renewal of his employment agreement for
an additional three year term upon the expiration of the renewal agreement on
May 17, 1998.
Executive Severance Agreements. In addition to Mr. Yellowlees' employment
agreement described above, the Company has entered into compensation agreements
with Messrs. Braxton and Shea and certain other key Company officers. The
agreements provide that in the event that the executive officer is terminated
other than for cause (as defined in the agreements), by reason of death or by
reason of disability (as defined in the agreements), or if the officer resigns
after a significant change in his employment conditions as specified by the
agreements during the three year period following a change in control (as
defined in the agreements) of the Company, the officer would be entitled to
payment of a severance benefit. The severance benefit would be equal to
approximately three times the officer's average annual taxable compensation from
the Company during the five year period immediately preceding the officer's
termination as described above, with such multiple of three reduced by the
number of years, if any, that the officer remained employed by the Company
following such change of control. In addition, the Company would be required to
maintain the officer's participation in existing group life, medical, accident,
and equivalent plans for a period of three years (reduced by the number of years
the officer remained employed by the Company following the change of control) or
until the executive had earlier taken other full time employment. The amounts
of the average annual taxable compensation during the five fiscal years ended
May 31, 1996, for the Named Executive Officers who are parties to such
agreements were approximately the following: Mr. Braxton $144,782 and Mr. Shea
$150,288.
-16-
<PAGE>
STOCKHOLDER RETURN ANALYSIS.
The following line-graph presentation compares cumulative stockholder returns
of the Company with Standard & Poor's Computer Software and Services Index and
Standard and Poor's 500 Stock Index for the five year period beginning on May
31, 1991 (assuming the investment of $100 in the Company's Common Stock,
Standard & Poor's Computer Software and Services Index and Standard and Poor's
500 Stock Index and reinvestment of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NATIONAL DATA CORPORATION, THE S&P 500 INDEX
AND THE S&P COMPUTER SOFTWARE & SERVICES INDEX
Cumulative Total Return
---------------------------------------------
5/91 5/92 5/93 5/94 5/95 5/96
National Data Corp NDC 100 92 121 141 268 493
S & P 500 1500 100 110 123 128 154 197
S & P CMPTR SOFTWR & SVCS ICFS 100 118 158 189 266 372
- -------------------------------------------------------------------------------
* $100 invested on 5/31/91 in stock or index - including reinvestment of
dividends. Fiscal year ending May 31.
-17-
<PAGE>
2. AMENDMENT OF CERTIFICATE OF INCORPORATION
On July 11, 1996, the Board of Directors adopted a resolution approving an
amendment to the Company's Certificate to increase the number of authorized
shares of Common Stock from 60,000,000 to 100,000,000. The amendment is subject
to stockholder approval, and is presented to the holders of the Common Stock at
the Annual Meeting for consideration and approval. If approved by the
stockholders, the proposed amendment will become effective upon the filing of an
amendment to the Company's Certificate with the Secretary of State of Delaware,
which will occur as soon as reasonably practicable.
As of August ___, 1996, the Company had _______________ shares of Common Stock
issued and outstanding, and the Board of Directors of the Company has
recommended the amendment to the Certificate in order to provide the Company
with a sufficient number of authorized shares of Common Stock for the Company's
general corporate needs. The Board of Directors believes that the availability
of additional shares will provide the Company with the flexibility to issue
Common Stock for possible future financings, stock dividends or distributions,
acquisitions, stock option plans or other proper corporate purposes which may be
identified in the future by the Board of Directors, without the possible expense
and delay of a special stockholders' meeting. The issuance of additional shares
of Common Stock may have a dilutive effect on earnings per share and, for
persons who do not purchase additional shares to maintain their pro rata
interest in the Company, on such stockholders' percentage voting power.
The authorized shares of Common Stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable, without further action by the Company's
stockholders, except as may be required by applicable law or by the rules of the
New York Stock Exchange or other stock exchange or national securities
association trading system on which the securities may be listed or traded.
Upon issuance, such shares will have the same rights as the outstanding shares
of Common Stock. Holders of Common Stock have no preemptive rights.
The Company has no arrangements, agreements, understandings or plans at the
present time for the issuance or use of the additional shares of Common Stock
proposed to be authorized. The Board of Directors does not intend to issue any
Common Stock except on terms which the Board deems to be in the best interests
of the Company and its then existing stockholders. Any future issuance of
Common Stock will be subject to the rights of holders of outstanding shares of
any preferred stock which the Company may issue in the future.
Although the Company has no present intention to issue shares of Common Stock
in the future in order to make acquisition of control of the Company more
difficult, future issuances of Common Stock could have that effect. For
example, the acquisition of shares of the Common Stock by an entity in order to
acquire control of the Company might be discouraged through the public or
private issuance of additional shares of Common Stock, since such issuance would
dilute the stock ownership of the acquiring entity. Common Stock also could be
issued to existing stockholders as a dividend or privately placed with
purchasers who might side with the Board of Directors in opposing a takeover
bid, thus discouraging such a bid. The Board of Directors also is authorized to
issue preferred stock in one or more series and to fix the rights, preferences
and privileges thereof without any further vote or action by the stockholders.
The issuance of preferred stock also may have the effect of delaying, deferring
or preventing a change in control of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS GRANT AUTHORITY TO
VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF
INCORPORATION. IF A CHOICE IS SPECIFIED ON THE PROXY BY THE STOCKHOLDER, THE
SHARES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL
BE VOTED "FOR" THE PROPOSAL. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY
OF THE OUTSTANDING SHARES OF COMMON STOCK IS REQUIRED FOR THE APPROVAL OF
PROPOSAL 2.
-18-
<PAGE>
AUDITORS
Arthur Andersen LLP served as the Company's auditors for the five fiscal years
ended May 31, 1996, and that firm of independent public accountants is serving
as auditors for the Company for the current fiscal year which began June 1,
1996. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation of stockholders of record by mail, telephone, or personal contact,
arrangements will be made with brokerage houses to furnish proxy materials to
their principals, and the Company may reimburse them for mailing expenses.
Custodians and fiduciaries will be supplied with proxy materials to forward to
beneficial owners of Common Stock. The Company has also engaged Georgeson & Co.
to solicit proxies on behalf of the Company, and it is estimated that Georgeson
& Co.'s fees for its services will not exceed $10,000.
OTHER MATTERS
Management does not know of any matters to be brought before the Annual
Meeting other than those referred to above. If any other matters properly come
before the meeting, the persons designated as proxies will vote on such matters
in accordance with their best judgment.
Whether or not you expect to be present at the meeting in person, please vote,
sign, date, and return promptly the enclosed proxy in the enclosed envelope. No
postage is necessary if the proxy is mailed in the United States.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented for consideration at the
1997 Annual Meeting of Stockholders of the Company must be received by the
Company at its principal executive offices on or before May 2, 1997, in order to
be included in the Company's proxy statement and form of proxy relating to the
1997 Annual Meeting of Stockholders.
SECTION 16(A) REPORTING
Based solely on a review of the copies of reporting forms furnished to the
Company, or written representations that no annual forms (Form 5) were required,
the Company believes that, during the 1996 fiscal year, all of its officers,
directors and 10% stockholders complied with the reporting requirements of the
Securities and Exchange Commission regarding their ownership and changes in
ownership of Common Stock (as required pursuant to Section 16(a) of the
Securities Exchange Act of 1934).
-19-
<PAGE>
PROXY PRELIMINARY COPIES
NATIONAL DATA CORPORATION
ATLANTA, GEORGIA
ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of National Data Corporation (the "Company"),
Atlanta, Georgia, hereby constitutes and appoints Robert A. Yellowlees or E.
Michael Ingram or either one of them, each with full power of substitution, to
vote the number of shares of Common Stock which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders to
be held at the Company's offices at National Data Plaza, Atlanta, Georgia
30329-2010, on Thursday, October 24, 1996, at 11:00 A.M., or at any adjournments
thereof (the "Annual Meeting"), upon the proposals described in the Notice of
Annual Meeting of Stockholders and Proxy Statement, both dated August 29, 1996,
the receipt of which is acknowledged, in the manner specified below. The
proxies, in their discretion, are further authorized to vote for the election of
a person to the Board of Directors if any nominee named herein becomes unable to
serve or for good cause will not serve, are further authorized to vote on
matters which the Board of Directors does not know a reasonable time before
making the proxy solicitation will be presented at the Annual Meeting, and are
further authorized to vote on other matters which may properly come before the
Annual Meeting and any adjournments thereof. The Board of Directors recommends
a vote FOR Proposals 1 and 2.
1. ELECTION OF DIRECTORS. On the proposal to elect the following slate of
directors to serve until the 1999 Annual Meeting of Stockholders of the
Company and until their successors are elected and qualified:
Robert A. Yellowlees James B. Edwards
For [ ] Withhold Authority [ ]
To withhold authority for any individual nominee(s), write the name of the
nominee(s) in the space provided:
_______________________________
2. AMENDMENT OF CERTIFICATE OF INCORPORATION. On the proposal to amend the
Company's Certificate of Incorporation:
For [ ] Against [ ] Abstain [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears on your stock certificate and date.
Where shares are held jointly, each stockholder should sign. When signing as
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Shares Held:
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Signature of Stockholder
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Signature of Stockholder (If Held Jointly)
Dated: , 1996
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Month Day
THIS PROXY IS SOLICITED ON BEHALF OF NATIONAL DATA CORPORATION'S
BOARD OF DIRECTORS AND MAY BE REVOKED BY THE STOCKHOLDER PRIOR TO ITS EXERCISE.
