<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
NATIONAL DATA CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, If Other Than The Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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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<PAGE>
[LOGO]
NATIONAL DATA CORPORATION
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
To the Stockholders:
The 2000 Annual Meeting of Stockholders (the "Annual Meeting") of National
Data Corporation (the "Company") will be held at the Company's offices at
National Data Plaza, Atlanta, Georgia, 30329-2010 on October 26, 2000, at 11:00
A.M., Atlanta time, for the following purposes:
1. To elect one director in Class II to serve until the annual meeting of
stockholders in 2003, or until his successor is duly elected and
qualified; and
2. To adopt the Company's 2000 Employee Stock Purchase Plan; and
3. To transact any other business that may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on August 28, 2000 are
entitled to vote. You may vote your shares by completing and returning the
enclosed proxy card or you may vote via the Internet or by telephone.
Instructions for voting via the Internet or by telephone are in the enclosed
Proxy Statement.
YOUR VOTE IS IMPORTANT!
Submitting your proxy does not affect your right to vote in person if you
attend the meeting. Instead, it benefits the Company by reducing the expenses
of additional proxy solicitation. Therefore, you are urged to submit your proxy
as soon as possible, regardless of whether or not you expect to attend the
Annual Meeting. You may revoke your proxy at any time before its exercise by
delivering written notice to the Company's Secretary, Suellyn P. Tornay, at the
above address, by submitting a later dated proxy, or by appearing at the Annual
Meeting to vote in person.
When you submit your proxy, you authorize Robert A. Yellowlees or Suellyn P.
Tornay or either one of them, each with full power of substitution, to vote your
shares at the meeting in accordance with your instructions, and to vote on any
adjournments or postponements of the Annual Meeting.
By Order of the Board of Directors
/s/ Suellyn P. Tornay
-------------------------------------
SUELLYN P. TORNAY, Secretary
Dated: August 30, 2000
<PAGE>
August 30, 2000
NATIONAL DATA CORPORATION
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
PROXY STATEMENT
---------------
Introduction
This Proxy Statement is being furnished to solicit proxies on behalf of the
Company's Board of Directors for use at the Annual Meeting, and at any
adjournments or postponements thereof. The Annual Meeting will take place at
the Company's offices at National Data Plaza, Atlanta, Georgia 30329-2010 on
October 26, 2000, at 11:00 A.M., Atlanta time for the following purposes:
1. To elect one director in Class II to serve until the annual meeting of
stockholders in 2003, or until his successor is duly elected and
qualified; and
2. To adopt the Company's 2000 Employee Stock Purchase Plan; and
3. To transact any other business that may properly come before the
Annual Meeting, or any adjournments thereof.
This Proxy Statement and the accompanying materials are being mailed to
stockholders on or about September 5, 2000.
Quorum and Voting
Voting Stock. Pursuant to the Company's Certificate of Incorporation, only
the common stock, $.125 par value per share, (the "Common Stock") may be voted
at the meeting.
Record Date. Only those holders of Common Stock of record at the close of
business on August 28, 2000 are entitled to vote at the Annual Meeting. On that
date, there were 32,791,273 shares of Common Stock issued and outstanding, held
by approximately 3721 stockholders of record. These holders are entitled to one
vote per share.
Quorum. In order for any business to be conducted, the holders of a
majority of the shares entitled to vote at the Annual Meeting must be present (a
"Quorum"), either in person or represented by proxy. For the purpose of
determining the presence of a Quorum, abstentions and broker non-votes (which
occur when shares held by brokers or nominees for beneficial owners are voted on
some matters but not on others) will be counted as present.
<PAGE>
Voting Options. Proposal 1, the election of one director in Class II, 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 nominee, or (ii) "withhold authority" to vote for the nominee. 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 the Annual Meeting at
which a quorum is present, an abstention will have the same effect as a vote to
"withhold authority," while a broker non-vote will have no effect on the outcome
of the election of the director.
With respect to Proposal 2, the approval of the 2000 Employee Stock Purchase
Plan, stockholders may (i) vote "for," (ii) vote "against," or (iii) "abstain"
from voting on the proposal. Because Proposal 2 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, an
abstention will have the same effect as a vote "against," while a broker non-
vote will have no effect on the outcome of the approval of the 2000 Employee
Stock Purchase Plan.
Internet and Telephone Voting. Again this year, stockholders of record can
simplify their voting and reduce the Company's costs by voting their shares via
telephone or the Internet. The telephone and Internet voting procedures are
designed to authenticate stockholders' identities, allow stockholders to vote
their shares and to confirm that their instructions have been properly recorded.
If your shares are held in the name of a bank or broker, the availability of
telephone and Internet voting will depend on the voting processes of the
applicable bank or broker; therefore, it is recommended that you follow the
voting instructions on the form you receive. If you do not choose to vote by
telephone or the Internet, please date, sign and return the proxy card.
Default Voting. When a proxy is timely executed and not revoked, the shares
represented by the proxy will be voted in accordance with the instructions
indicated in the proxy. IF NO INSTRUCTIONS ARE INDICATED, HOWEVER, PROXIES
WILL BE VOTED (1) FOR THE ELECTION OF THE DIRECTOR NOMINEE AND (2) FOR THE
APPROVAL OF THE COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN; AND (3) IN THE BEST
JUDGMENT OF THE PROXIES AS TO ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE
THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
Revocation of a Proxy. A stockholder who has given a proxy may revoke it at
any time prior to its exercise at the Annual Meeting by (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
should be addressed as follows: National Data Corporation, National Data Plaza,
Atlanta, Georgia 30329-2010, Attention: Suellyn P. Tornay, Secretary.
Adjourned Meeting. If a Quorum is not present, the meeting may be adjourned
or postponed by those stockholders who are represented. The Annual Meeting may
be rescheduled at the time of the adjournment with no further notice of the
rescheduled time, unless the adjournment delays the Annual Meeting by more than
thirty days from its intended date, in which case timely notice of the new date
will be provided to the stockholders. An adjournment will have no effect on
the business to be conducted.
2
<PAGE>
1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of five members
and is divided into three classes, with the term of office of each class ending
in successive years. The terms of office of directors in Class III and Class I
expire at the 2001 and 2002 annual meetings of stockholders, respectively. The
terms of the directors in Class II expire with this Annual Meeting. Class II
currently consists of two members, Mr. Neil Williams and Mr. Edward L. Barlow;
however, due to Mr. Barlow's retirement, as discussed below, only Mr. Williams
is nominated for re-election. Mr. Edward L. Barlow is retiring from the Board of
Directors effective at this Annual Meeting of Stockholders following 32 years of
service. Mr. Barlow has served the Company with great leadership, energy,
insight, and commitment. The Company greatly appreciates his many contributions
over the years and will miss his wise counsel.
The stockholders are being asked to vote on the election to Class II of Mr.
Neil Williams. Mr. Barlow's position will remain unfilled until such time as a
successor is appointed. Proxies cannot be voted for a greater number of persons
than the number of nominees named. The Class II director will be elected to hold
office until the 2003 Annual Meeting of Stockholders or until a successor has
been duly elected and qualified. In the event that the nominee is unable to
serve (which is not anticipated), the persons designated as proxies will cast
votes for such other person(s) as they may select.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE FOR ELECTION AS
A DIRECTOR. 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 NOMINEE. 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
NOMINEE.
3
<PAGE>
Certain Information Concerning the Nominee and Directors
The following table sets forth the name of the nominee 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. As discussed above, Mr. Edward L. Barlow, a
member of the Board since January 1969, is retiring from the Board effective at
this Annual Meeting of Stockholders.
NOMINEE FOR DIRECTOR
<TABLE>
<CAPTION>
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
------------ ----------------- -------------------------------------
<S> <C> <C>
Class II
Term Expiring Annual Meeting 2000
Neil Williams April 1977 Director of the Company
(64) General Counsel and a Global Partner, AMVESCAP PLC,
Atlanta, since September 30, 1999; Partner, Alston &
Bird LLP, Atlanta (prior to October, 1999; Managing
Partner from 1989-1996); Director of Printpack, Inc.
and National Service Industries, Inc. and Trustee of
The Duke Endowment.
</TABLE>
MEMBERS OF THE BOARD OF DIRECTORS
CONTINUING IN OFFICE
<TABLE>
<CAPTION>
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
------------ ----------------- -------------------------------------
<S> <C> <C>
Class I
Term Expiring Annual Meeting 2002
Robert A. Yellowlees April 1985 Chairman of the Board (since June 1992), Chief
(61) Executive Officer (since May 1992), and Director of
the Company; Director of Protective Life
Corporation.
James F. McDonald June 2000 Director of the Company
(60) President and Chief Executive Officer, Scientific-
Atlanta, Inc. (since July 1993); Director of
Scientific Atlanta, Inc., Burlington Resources, Inc.
and Global Crossing Ltd
Class III
Term Expiring Annual Meeting 2001
J. Veronica Biggins October 1995 Director of the Company
(53) Senior Partner, 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
Health Plan of Georgia, Inc. and Avnet, Inc.
</TABLE>
4
<PAGE>
Other Information About the Board and its Committees
Meetings and Compensation. During the fiscal year ended May 31, 2000, the
-------------------------
Company's Board of Directors held 14 (5 regular and 9 special) 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, part of which was paid in shares of Common Stock of the Company 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.
1995 Non-Employee Director Compensation Plan. The Company 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 the 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, 2000, each of Mr. Barlow, Mr. Williams, and Ms. Biggins was issued 543 shares
of Common Stock based on the fair market value of the Common Stock on that date
of $22.12 per share.
Non-Employee Director Retirement Benefits. 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, 2000, the non-employee directors eligible for retirement benefits, Messrs.
Barlow and Williams, had 31-8/12 and 23-5/12 years of service as directors for
purposes of the retirement plan.
1984 Non-Employee Director Stock Option Plan. The Company also
maintains the 1984 Non-Employee Director Stock Option Plan (the "Director Option
Plan"). The Director Option Plan currently provides for the total grant of
stock options for all non-employee directors of up to 545,000 shares of Common
Stock, with each such director automatically entitled to receive an option to
purchase 5,000 shares of Common Stock for each completed year of service as a
director after 1995, up to five such options. Since 1995, options granted under
the Director Option Plan have been 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 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. During the fiscal year ended May 31, 2000, options were granted
under the Director Option Plan to Messrs. Barlow and Williams and Ms. Biggins
for 5,000 shares each of Common Stock at an exercise price per share of $23.87.
5
<PAGE>
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 Mr. Williams (Chairman), Mr. Barlow, and Ms. Biggins. 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, 2000, the Audit Committee held 4 meetings,
each of which was separate from regular Board meetings. Mr. Barlow will be
retiring from the Board and the Audit Committee effective as of the 2000 Annual
Meeting following 32 years of service as a director of the Company.
Compensation Committee Interlocks and Insider Participation. The Board
of Directors also has a Compensation Committee composed of Ms. Biggins
(Chairman) and Mr. Barlow. This Committee reviews and determines 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"), the 1987 Stock Option Plan (the "1987 Plan"), the
1997 Stock Option Plan (the "1997 Plan"), and the 2000 Long-Term Incentive Plan
(the "2000 Plan"). During the last fiscal year, the Compensation Committee held
3 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, 2000. Mr. Barlow will be retiring
from the Board and the Compensation Committee effective as of the 2000 Annual
Meeting.
6
<PAGE>
Common Stock Ownership of Management
The following table sets forth information as of July 30, 2000, with respect
to the beneficial ownership of Common Stock by the nominee to the Board,
directors of the Company, by each of the persons named in the Summary
Compensation Table, and by the 11 persons, as a group, who were directors and/or
executive officers of the Company on July 30, 2000.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership (1) Class (1)
---- ------------------------ ---------
<S> <C> <C>
Edward L. Barlow 121,553 (2) *
Neil Williams 54,517 (3) *
Robert A. Yellowlees 1,286,845 (4) 3.92%
J. Veronica Biggins 9,478 (5) *
James F. McDonald --- *
Walter M. Hoff 85,352 (6) *
Paul R. Garcia 66,928 (7) *
Thomas M. Dunn 74,862 (8) *
William H. McCahan 31,171 (9) *
All Directors and Executive Officers on 1,748,486 (10) 5.33%
7/30/00, which included 11 persons as a group
</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. Shares underlying stock options that are
exercisable within 60 days are deemed to be outstanding for the purpose of
computing the outstanding shares owned by that particular person and by the
group but are not deemed outstanding for other purposes.
(2) This amount includes 29,250 shares of Common Stock of which Mr. Barlow has
the right to acquire beneficial ownership.
(3) This amount includes 29,250 shares of Common Stock of which Mr. Williams
has the right to acquire beneficial ownership.
(4) This amount includes 815,825 shares of Common Stock of which Mr. Yellowlees
has the right to acquire beneficial ownership, 40,000 shares held by The
Yellowlees Charitable Trust, of which Mr. Yellowlees is the Trustee, 48,660
shares of restricted stock over which he currently has sole voting power
only and 7,839 shares held by Mr. Yellowlees' wife as to which he disclaims
all beneficial ownership.
(5) This amount includes 6,750 shares of Common Stock of which Ms. Biggins has
the right to acquire beneficial ownership.
(6) This amount includes 14,780 shares of Common Stock of which Mr. Hoff has
the right to acquire beneficial ownership and 33,302 shares of restricted
stock over which Mr. Hoff currently has sole voting power only.
(7) This amount includes 56,928 shares of restricted stock over which Mr.
Garcia currently has sole voting power only.
(8) This amount includes 34,160 shares of Common Stock of which Mr. Dunn has
the right to acquire beneficial ownership and 28,099 shares of restricted
stock over which he currently has sole voting power only.
(9) This amount consists of 23,870 shares of restricted stock over which Mr.
McCahan currently has sole voting power only.
(10) This amount includes 935,985 shares of Common Stock of which the directors
and executive officers, as a group, have the right to acquire beneficial
ownership and 194,759 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 Class
------------------- ---- --------- -----
<S> <C> <C> <C>
Massachusetts Financial Services Company (1) May 11, 2000 3,349,939 10.2%
500 Boylston Street
Boston, MA 02116
Wanger Asset Management, Ltd., February 11, 2000 3,139,500 9.5%
Wanger Asset Management L.P., and
Acorn Investment Trust (2)
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
T. Rowe Price Associates, Inc. (3) June 9, 2000 1,720,950(4) 5.2%
100 E. Pratt Street
Baltimore, MD 21202
</TABLE>
____________________
(1) This information is contained in a Schedule 13G dated May 11, 2000 filed by
Massachusetts Financial Services Company with the Securities and Exchange
Commission (the "Commission"), a copy of which was received by the Company.
Such Schedule 13G states that Massachusetts Financial Services has sole
voting power with respect to 2,738,479 shares and sole dispositive power
with respect to 3,349,939 shares.
(2) This information is contained in a Schedule 13G dated February 11, 2000
filed by Wanger Asset Management Ltd. ("WAM"), Wanger Asset Management L.P.
("WAM L.P.") and Acorn Investment Trust with the Commission, a copy of
which was received by the Company. Such Schedule 13G states that WAM, WAM
L.P. and Acorn have shared voting and shared dispositive power with respect
to all shares.
(3) This information is contained in a Schedule 13G dated June 9, 2000 filed by
T. Rowe Price 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 311,750 shares and sole dispositive power with respect to
1,720,950 shares.
(4) 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
Compensation Committee. All decisions by the Compensation Committee relating to
the compensation of the Company's executive officers are made by the
Compensation Committee and then presented to 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
key employee 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 key employees 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. 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 individual's potential to contribute to future growth of the
Company. The frequency and size of
9
<PAGE>
individual grant amounts vary. The number of options required to
achieve target grant values is 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,
leaves the Company prior to expiration of the restricted period.
Currently, restricted periods are generally four years.
Bonus Deferral Program. A bonus deferral program was approved by
the Board of Directors effective in fiscal year 1996 which allows
certain 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. 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%. Mr. Yellowlees, Mr. Hoff, Mr.
Garcia and Mr. Dunn elected participation in the plan for the 2000
fiscal year.
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 target 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 0.8 to 5 times annual salary amounts. Executives were encouraged to achieve
these guidelines by building stock ownership over a period of years. As of May
31, 2000, all participating senior executives are at stock ownership levels in
excess of plan targets.
Chief Executive Officer's Compensation
--------------------------------------
Mr. Yellowlees' fiscal year 2000 compensation derived primarily from
commitments under Mr. Yellowlees' employment agreement (see "Employment
Agreements -- Robert A. Yellowlees" below) entered into as of June 1, 1997. The
decisions affecting compensation made after that date relate to Mr. Yellowlees'
specific annual performance goals, results evaluation, and resulting fiscal year
2000 incentive bonus payment.
Mr. Yellowlees' annual bonus opportunity 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 performance factors included in this plan for fiscal year 2000
included goals for revenue, EBIT, operating margin, and earnings per share. The
balance of his fiscal year 2000 bonus was determined by other factors including
alternate organization structure definition and management development. Mr.
Yellowlees' base compensation was increased by 6.5% during the 2000 fiscal year,
the first such increase in three years.
The Compensation Committee's general approach in setting Mr. Yellowlees'
annual compensation opportunity is to seek to be competitive with other
companies in the Company's industry, and for his compensation plan to be
consistent with the Company's business, strategy, and operating results. The
Compensation Committee also seeks to have a large percentage of Mr. Yellowlees'
compensation opportunity 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.
10
<PAGE>
As an incentive to sustained growth in stockholder value, the Compensation
Committee awarded Mr. Yellowlees a non-qualified multi-year stock option
effective September 29, 1998. This option grant was for fiscal years 1999 and
2000 and fully vests in fiscal year 2004. 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
J. Veronica Biggins, Chairman
Edward L. Barlow
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, 2000 ("2000 fiscal year"),
May 31, 1999 ("1999 fiscal year"), and May 31, 1998 ("1998 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
$100,000. Each person listed in (i), and (ii) above are hereinafter referred to
as the "Named Executive Officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
----------------------- ---------------------------
Restricted Securities
Stock Underlying All Other
Name and Fiscal Award(s) Options Compensation
--------
Principal Position Year Salary ($) Bonus ($) ($)(2) (#)(3) ($)(4)
------------------ ---- ---------- --------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Yellowlees 2000 565,846 125,000 1,037,400 --- 67,617
Chairman and 1999 540,990 115,000 1,262,550 105,200(1) 79,671
Chief Executive Officer 1998 539,290 112,500 804,498 --- 91,287
Walter M. Hoff 2000 400,000 100,000 --- --- 8,308
President and Chief Executive Officer 1999 346,158(5) 100,000 800,700(1) 73,900(1) ---
NDC Health 1998 --- --- --- --- ---
Paul R. Garcia 2000 369,039(6) 127,500(6) 2,555,530(1) (7) 1,095
President and Chief Executive Officer 1999 --- --- --- --- ---
NDC eCommerce 1998 --- --- --- --- ---
Thomas M. Dunn 2000 300,000 80,000 585,000 --- 6,934
Chief Operating Officer 1999 232,308 140,000 190,585 9,200 6,264
NDC eCommerce 1998 180,000 120,000 40,505 20,000(1) 11,786
William H. McCahan 2000 266,346 135,000 301,600 --- 6,254
Chief Marketing Officer 1999 248,077 110,000 458,591 --- 10,431
NDC Health 1998 186,845 75,000 218,750 --- ---
</TABLE>
_______________
(1) Such awards are intended to be awards for more than one year.
(2) 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. The restrictions on
1,132; 1,132; 1,133; 6,167; 12,333; 1,992; 1,992; 8,334; 16,666; 1,405;
2,810; 8,733; 8,733; 8,744; 6,850; and 6,850 shares awarded to Mr.
Yellowlees expired or shall expire on 8/1/98; 8/1/99; 8/1/00; 5/31/99;
5/31/00; 5/31/99; 5/31/00; 5/31/99; 5/31/00; 5/31/99; 5/31/00; 9/30/00;
9/30/01; 9/30/02; 8/1/00; and 5/31/01, respectively. The restrictions on
27,200 shares awarded to Mr. Hoff shall expire on 10/01/01. The
restrictions on 55,555 shares awarded to Mr. Garcia shall expire on 6/2/03.
The restrictions on 339; 340; 340; 354; 354; 355; 3,330; and 22,500 shares
awarded to Mr. Dunn
12
<PAGE>
expired or shall expire on 8/1/98; 8/1/99; 8/1/00; 8/25/99; 8/25/00;
8/25/01, 7/1/03; and 9/30/03 respectively. The restrictions on 5,000;
12,270 and 11,600 shares awarded to Mr. McCahan expired or shall expire on
7/1/00; 8/25/00 and 9/30/03, respectively. The value of the restricted
stock held by the Named Executive Officers at May 31, 2000 was $905,187,
$600,032, $1,225,543, $592,950, and $526,572 for Messrs. Yellowlees, Hoff,
Garcia, Dunn, and McCahan, respectively. The numbers of shares of
restricted stock held by Messrs. Yellowlees, Hoff, Garcia, Dunn and
McCahan, respectively at May 31, 2000 were 41,033; 27,200; 55,555; 26,879;
and 23,870 respectively.
(3) All option awards granted to the Named Executive Officers were made under
the 1987 and 1997 Plans.
(4) For the 2000 fiscal year, includes amounts representing (i) Company
contributions to the Company's Employee Savings Plan on behalf of Mr.
Yellowlees ($8,400), Mr. Hoff ($8,308), Mr. Dunn ($6,059); and Mr. McCahan
($6,254); (ii) insurance premiums paid by the Company for life insurance
for the benefit of Mr. Yellowlees ($54,036); (iii) financial planning
expenses paid by the Company for Mr. Yellowlees ($5,181) and Mr. Dunn
($875); and (iv) moving expenses paid by the Company for Mr. Garcia
($51,095).
(5) The Company hired Mr. Hoff in August, 1998.
(6) The Company hired Mr. Garcia in June, 1999. He began full time employment
in July of 1999 with a first year bonus guarantee.
(7) Stock options were granted to Mr. Garcia during fiscal year 2000 but were
voluntarily surrendered on 5/31/00.
Option Grants. There were no options or stock appreciation rights granted
-------------
to the Named Executive Officers in the 2000 fiscal year other than the options
which were granted to Mr. Garcia but were voluntarily surrendered on 5/31/00.
Option Exercises and Fiscal Year-End Values. The following table sets
-------------------------------------------
forth information concerning each exercise of options during the 2000 fiscal
year and the number and value of unexercised options held by the Named Executive
Officers as of May 31, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised Options In-the-Money Options
on Value at Fiscal Year-End (#) at Fiscal Year-End ($)
Exercise Realized --------------------------------- ---------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Yellowlees 200,000 3,570,239 794,785 232,700 6,429,254 0
Walter M. Hoff --- --- 0 73,900 0 0
Paul Garcia --- --- 0 0 0 0
Thomas M. Dunn 12,750 438,296 23,620 31,180 141,962 1,912
William H. McCahan --- --- 0 0 0 0
</TABLE>
______________________
13
<PAGE>
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. Effective
July 31, 1998, entry into the Retirement Plan would no longer be permitted.
Thus, an employee who was not a participant by that date will not become a
participant in the plan. Prior to July 31, 1998, the Retirement Plan covered
eligible employees of the Company and its affiliates. Eligible employees became
participants in the Retirement Plan on the first June 1 or December 1 after
meeting the minimum age and service requirements. The benefits provided under
the Retirement Plan upon normal retirement at age 65 are calculated under a
formula based on the participant's earnings and years of continuous service
preceding his retirement, but not counting any years of service that accrue
after July 31, 1998, reduced by an amount equal to a percentage of the
approximate social security benefit 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, but excluding the cost of
certain employee benefits (as defined) and excluding amounts that become taxable
to the employee under a stock option or other stock plan. A participant must
be credited with five years of service to earn a vested benefit under the
Retirement Plan. Years of service after July 31, 1998 count for vesting
purposes. Participants continue to be credited with certain earnings for
periods after July 31, 1998. Under current law the benefit for an employee
retiring in the 1998 calendar year at age 65 cannot exceed $130,000 per year
under the Retirement Plan. For plan years beginning in 1998, federal law limits
the amount of earnings taken into account under the Retirement Plan to $160,000
per year.
Supplemental Executive Retirement Plan. Effective June 1, 1997, the
--------------------------------------
Company adopted a pilot Supplemental Executive Retirement Plan ("SERP").
Certain executives participating in the pilot program remain eligible to
participate in this plan as a part of the participant's total compensation
package. Benefits payable under the SERP are based upon each participant's
highest three consecutive years of earnings during the participant's last ten
years of employment with the Company. The term earnings for purposes of the
SERP means compensation of any kind paid by the Company to the participating
employee, 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. Retirement benefits under the SERP are reduced by a portion
of the participant's annual social security benefits and any retirement benefits
under the Company's tax-qualified or non-qualified defined benefit plans.
Participants may begin to receive payments under the SERP upon retirement after
either (i) 5 years service and attaining age 60 or (ii) 10 years of service and
attaining age 55, with a .416667% reduction for each month before age 60. In
the event of a change in control of the Company, participants will be credited
with an additional 3 years of service (not to exceed a total of 35 years
service) and vested 100% in the SERP benefits. Benefits earned under the SERP
are fully vested after five years of service. The Named Executive Officers
currently participating in the SERP are Messrs. Yellowlees and Dunn.
14
<PAGE>
The following table shows estimated annual retirement benefits payable to
participants in the Retirement Plan and the SERP on a straight life annuity
basis upon retirement in specified years of continuous service and remuneration
classes.
ESTIMATED ANNUAL RETIREMENT BENEFITS
Years of Continuous Service (1)
-------------------------------
<TABLE>
<CAPTION>
Three-Year Average
Earnings 10 15 20 25 30 35
-------- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$200,000 48,000 72,000 83,000 94,000 105,000 116,000
250,000 60,000 90,000 103,750 117,500 131,250 145,000
300,000 72,000 108,000 124,500 141,000 157,500 174,000
350,000 84,000 126,000 145,250 164,500 183,750 203,000
400,000 96,000 144,000 166,000 188,000 210,000 232,000
450,000 108,000 162,000 186,750 211,500 236,250 261,000
500,000 120,000 180,000 207,500 235,000 262,500 290,000
550,000 132,000 198,000 228,250 258,500 288,750 319,000
600,000 144,000 216,000 249,000 282,000 315,000 348,000
650,000 156,000 234,000 269,750 305,500 341,250 377,000
700,000 168,000 252,000 290,500 329,000 367,500 406,000
750,000 180,000 270,000 311,250 352,500 393,750 435,000
800,000 192,000 288,000 332,000 376,000 420,000 464,000
850,000 204,000 306,000 352,750 399,500 446,250 493,000
900,000 216,000 324,000 373,500 423,000 472,500 522,000
950,000 228,000 342,000 394,250 446,500 498,750 551,000
</TABLE>
__________________
(1) The average annual earnings for the highest three years over the last 10-
year period and the eligible years of credited service as of May 31, 2000 for
each of the Named Executive Officers participating in the SERP was as follows:
Mr. Yellowlees (15-2/12 years) $939,342 and Mr. Dunn (11-10/12 years) $316,487.
The amounts shown in the columns "Salary" and "Bonus" in the Summary
Compensation Table above are substantially equal to the compensation of the
individuals named in such table for purposes of the SERP and the Retirement
Plan. Federal regulations, however, cap the total compensation that may be
considered in providing benefits under the Retirement Plan.
Employment Arrangements
-----------------------
Robert A. Yellowlees. During fiscal year 2000, Mr. Yellowlees was employed
pursuant to an agreement which became effective as of June 1, 1997. The
Agreement provides for Mr. Yellowlees' continued employment as Chairman and
Chief Executive Officer of the Company for a term expiring May 31, 2001, unless
extended by mutual agreement. The Agreement also provides that during its term
the Company will use its best efforts to cause Mr. Yellowlees to be nominated
and elected as a director of the Company.
The Agreement provides for a minimum annual base salary of $540,000,
subject to yearly review, and additional annual bonus opportunity 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 opportunity
amount and is 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 may be
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. 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 disability
insurance coverage.
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
15
<PAGE>
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) all 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. 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.
Paul R. Garcia and Walter M. Hoff. Mr. Garcia and Mr. Hoff entered into
employment agreements with the Company in 2000, the material terms of which are
summarized below.
The executive is entitled to a minimum annual salary, subject to yearly
review, plus an annual at-risk incentive bonus opportunity, which is determined
annually based on a range of specific financial and non-financial objectives
reflecting his area and scope of responsibility. The executive is also entitled
to participate in all incentive, savings and welfare benefit plans generally
made available to executive officers of the Company. The current annual salary
of both Mr. Hoff and Mr. Garcia is $400,000.
Mr. Garcia and Mr. Hoff have each agreed in his employment agreement not to
disclose confidential information or compete with the Company, and not to
solicit the Company's customers or recruit its employees, for a period of 24
months following the termination of his employment.
Each of the employment agreements may be terminated by the Company at any
time for "cause" or "poor performance" (as defined therein) or for no reason, or
by the executive with or without "good reason" (as defined therein). The
agreement will also be terminated upon the death, disability or retirement of
the executive. Depending on the reason for the termination and when it occurs,
the executive will be entitled to certain severance benefits, as described
below.
If, prior to a change in control of the Company, the executive's employment
is terminated by the Company without cause (but not for poor performance) or he
resigns for good reason, the Company will be required to pay him his accrued
salary and benefits through the date of termination plus a portion of his target
annual bonus for the current year. For up to 18 months, or until he is employed
elsewhere or he violates certain restrictive covenants, the Company will
continue to pay the executive his base salary and will provide him with health
insurance coverage. In addition, all of the executive's restricted stock awards
will vest, and those stock options that would have vested in the next 24 months
will vest and remain exercisable for 90 days after the end of the salary
continuation period, as described above.
If, prior to a change in control of the Company, the executive's employment
is terminated by the Company for poor performance, the Company will be required
to pay him his accrued salary and benefits through the date of termination plus
a portion of his target annual bonus for the current year. For up to 12 months,
or until he is employed elsewhere or he violates certain restrictive covenants,
the Company will continue to pay the executive his base salary and will provide
him with health insurance coverage. In addition, all of the executive's
restricted stock awards and stock options that would have vested in the next 24
months will vest, and the options will remain exercisable for 90 days after the
earlier of six months or the end of the salary continuation period, as described
above.
If, after a change in control of the Company, the executive's employment is
terminated by the Company without cause (including for poor performance) or he
resigns for good reason, the Company will be required to pay him his accrued
salary and benefits through the date of termination plus 100% of his
16
<PAGE>
target annual bonus for the current year. For 24 months or unless he violates
certain restrictive covenants, the Company will continue to pay the executive
his base salary and will provide him with health insurance coverage. In
addition, all of the executive's restricted stock awards and stock options will
vest, and the options will remain exercisable for 90 days after the end of the
salary continuation period, as described above.
Whether or not a change in control shall have occurred, if the employment
of the executive is terminated by reason of his death, disability or retirement,
he will be entitled to his accrued salary and benefits through the date of
termination and any death, disability or retirement benefits that may apply, but
no additional severance amount. If the Company terminates the executive for
cause, or if he resigns from the Company without good reason, he will be
entitled to his accrued salary and benefits through the date of termination, but
no additional severance amount.
For purposes of these employment agreements, a change in control of the
Company is generally defined as the acquisition by a third party of 35% or more
of the voting power of the Company, or the consummation of certain mergers,
asset sales or other major business combinations. A restructuring or separation
of any line of business of the Company will not, of itself, constitute a change
in control. Each of these employment agreements provides that the executive
will be entitled to a tax gross-up payment from the Company to cover any excise
tax liability he may incur as a result of payments or benefits contingent on a
change in control, but such gross-up payment will be made only if the after-tax
benefit to the executive of such tax gross-up is at least $50,000. If not, the
benefits would be reduced to an amount that would not trigger the excise tax.
17
<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, 1995 (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).
[GRAPH]
Research Data Group Peer Group Total Return Worksheet
NATIONAL DATA CORP
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------------------------------
5/95 5/96 5/97 5/98 5/99 5/00
<S> <C> <C> <C> <C> <C> <C>
NATIONAL DATA CORP 100.00 184.03 215.48 185.65 234.68 111.08
S & P 500 100.00 128.44 166.22 217.23 262.90 290.45
S & P COMPUTERS (SOFTWARE & SERVICES) 100.00 139.84 233.86 303.46 516.38 556.06
</TABLE>
18
<PAGE>
2. ADOPTION OF THE COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN
On June 28, 2000, the Board of Directors adopted, subject to stockholder
approval at the Annual Meeting, the National Data Corporation 2000 Employee
Stock Purchase Plan (the "Plan"). The Plan will become effective as of the last
to occur of (i) the date the Plan is approved by the stockholders, (ii) the
first trading day after the effective date of that certain spin-off by the
Company to its stockholders of its eCommerce line of business, or (iii) the
effective date of the Corporation's registration statement on Form S-8 filed
under the Securities Act of 1933, as amended, covering the shares to be issued
under the Plan.
A summary of the Plan is set forth below. The summary is qualified in its
entirety by reference to the full text of the Plan, which is attached to this
Proxy Statement as Appendix A.
Purpose. The purpose of the Plan is to enhance the proprietary interest,
through ownership of Common Stock of the Company, among the employees of the
Company and its subsidiaries designated by the Company as eligible to
participate in the Plan.
Administration. The Plan will be administered by the Compensation Committee
of the Board of Directors (the "Committee"). Subject to the express provisions
of the Plan, the Committee has authority to interpret and construe the
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations necessary or advisable for
administering the Plan. The Committee will select from time to time an
administrator to operate and perform the day-to-day administration of the Plan
and maintain records of the Plan.
Stock Subject to the Plan. A maximum of 1,500,000 shares of Common Stock
will be made available for purchase by participants under the Plan, subject to
appropriate adjustment for stock dividends, stock split or combination of
shares, recapitalization or other changes in the Company's capitalization. The
shares issuable under the Plan may be issued out of authorized but unissued
shares or may be shares issued and later acquired by the Company. All cash
received or held by the Company under the Plan may be used by the Company for
any corporate purpose.
Eligibility; Grant and Exercise of Options. All employees of the Company or
its participating subsidiaries who are regularly scheduled to work at least 20
hours each week and at least five months each calendar year are eligible to
participate in the Plan. As of August 30, 2000, there were approximately 3076
persons eligible to participate in the Plan.
An eligible employee may elect to become a participant in the Plan by
filing with the Administrator a request form which authorizes a regular payroll
deduction from the employee's paycheck. A participant's request form authorizing
a payroll deduction will remain effective from offering period to offering
period until amended or canceled. Offering periods are the three-month periods
beginning January 1, April 1, July 1 and October 1 of each year during which
options to purchase Common Stock are outstanding under the Plan; provided that
the first offering period will begin on the effective date and will end on March
31, 2001. A participant's payroll deduction must be in any whole dollar amount
or percentage from one to 20 percent of such participant's base compensation
payable each pay period, and at any other time an element of base compensation
is payable. A participant may not make cash contributions or payments to the
Plan.
A book account will be established for each participant, to which the
participant's payroll deductions will be credited, until these amounts are
either withdrawn, distributed or used to purchase Common Stock, as described
below. No interest will be credited on these cash amounts. Whole shares of
Common Stock will be held in the participant's account until distributed as
described below.
On the first day of each offering period each eligible employee is granted
an option to purchase on the last day of the offering period (the "Purchase
Date") at the price described below (the "Purchase Price") the number of full
shares of Common Stock which the cash credited to the participant's account at
that time will purchase at the Purchase Price. An employee may not be granted an
option for an offering period if
19
<PAGE>
immediately after the grant, he or she would own five percent or more of the
total combined voting power or value of all classes of stock of the Company or
any of its subsidiaries. A participant cannot receive options that, in
combination with options under other plans qualified under Section 423 of the
Code, would result during any calendar year in the purchase of shares having an
aggregate fair market value of more than $25,000. The maximum number of shares
of Common Stock that may be purchased by any participant in the Plan during any
one offering period is 2,000 shares.
Unless the cash credited to a participant's account is withdrawn or
distributed, his or her option to purchase shares of Common Stock will be deemed
to have been exercised automatically on the Purchase Date. The cash balance, if
any, remaining in the participant's account at the end of an offering period
will be refunded to the participant, without interest. The Purchase Price will
be the lesser of (i) 85% of the fair market value of the Common Stock on the
first trading day of the offering period; or (ii) 85% of the fair market value
of the Common Stock on the last trading day of the offering period. Since the
shares will be purchased at less than market value, employees will receive a
benefit from participating in the Plan.
Options granted under the Plan are not transferable by the participant
other than by will or by the laws of descent and distribution and are
exercisable only by the participant during his or her lifetime.
No Employment Rights. Neither the establishment of the Plan, nor the grant
of any options thereunder, nor the exercise thereof will be deemed to give to
any employee the right to be retained in the employ of the Company or any of its
subsidiaries or to interfere with the right of the Company or any such
subsidiary to discharge any employee or otherwise modify the employment
relationship at any time.
Termination of Employment. If a participant terminates employment, the
cash balance in the participant's account will be returned to the participant
(or his or her beneficiary in the case of the participant's death) in cash,
without interest, as soon as practicable, and certificates for the shares of
Common Stock credited to the participant's account will be distributed as soon
as practicable or other appropriate evidence of ownership effected.
Amendment and Termination of the Plan. The Committee may amend the Plan,
in whole or in part, at any time; provided, however, that no amendment may (a)
affect any right or obligation with respect to any grant previously made, unless
required by law, or (b) unless previously approved by the stockholders of the
Company, where such approval is necessary to satisfy the Code, the rules of any
stock exchange on which the Common Stock is listed, or the requirements
necessary to meet any exemption from the application of federal securities laws,
(i) materially affect the eligibility requirements, or (ii) increase the number
of shares of Common Stock eligible for purchase under the Plan. The Plan may be
terminated by the Committee at any time, in which event the administrator will
terminate all contributions to the Plan. Cash balances then credited to
participants' accounts will be distributed as soon as practicable, without
interest.
Federal Income Tax Consequences to the Company and to Participants. The
Plan is designed to qualify as an Employee Stock Purchase Plan under Section 423
of the Code. A general summary of the federal income tax consequences regarding
the Plan is stated below.
Neither the grant nor the exercise of options under the Plan will have a
tax impact on the participant or the Company. If a participant disposes of the
Common Stock acquired upon the exercise of his options after at least two years
from the date of grant and one year from the date of exercise, then the
participant must treat as ordinary income the amount by which the lesser of (i)
the fair market value of the Common Stock at the time of disposition, or (ii)
the fair market value of the Common Stock at the date of grant, exceeds the
Purchase Price. Any gain in addition to this amount will be treated as a
capital gain. If a participant holds Common Stock at the time of his or her
death, the holding period requirements are automatically deemed to have been
satisfied and he or she will realize ordinary income in the amount by which the
lesser of (i) the fair market value of the Common Stock at the time of death, or
(ii) the fair market value of the Common Stock at the date of grant exceeds the
Purchase Price. The Company will not be allowed a deduction if the holding
period requirements are satisfied. If a participant disposes of Common Stock
before expiration of two years from the date of grant and one year from the date
of
20
<PAGE>
exercise, then the participant must treat as ordinary income the excess of the
fair market value of the Common Stock on the date of exercise of the option over
the Purchase Price. Any additional gain will be treated as long-term or short-
term capital gain or loss, as the case may be. The Company will be allowed a
deduction equal to the amount of ordinary income recognized by the participant.
The above discussion is intended to summarize the applicable provisions of
the Code which are in effect as of August 1, 2000. The tax consequences of
participating in the Plan may vary with respect to individual situations.
Accordingly, participants should consult with their tax advisors in regard to
the tax consequences of participating in the Plan as to both federal and state
income tax considerations.
Benefits to Named Executive Officers and Others. Participation in the Plan
is voluntary. Consequently, it is not presently possible to determine either
the benefits or amounts that will be received by any person or group pursuant to
the Plan, or that would have been received if the Plan had been in effect during
the last fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PLAN. 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"
APPROVAL OF THE PLAN. 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 APPROVAL OF THE PLAN.
21
<PAGE>
Additional Information
Auditors. The independent public accounting firm of Arthur Andersen LLP
--------
served as the Company's auditors for the six fiscal years ended May 31, 2000 and
is serving as auditors for the Company for the current fiscal year which began
June 1, 2000. 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, however, stockholders voting electronically (via phone or the
Internet) should understand that there may be costs associated with electronic
access, such as usage charges from Internet service providers or telephone
companies and the like. 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 Corporate Investor Communications, Inc. to solicit
proxies on behalf of the Company and it is estimated that the fees for such
services will not exceed $10,000.
Other Matters. Neither Management nor the Board of Directors is aware 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.
Stockholder Proposals. Only proper proposals under Rule 14a-8 of the
---------------------
Securities Exchange Act of 1934 (the "Exchange Act") which are timely received
will be included in the Proxy Statement and Proxy for the 2001 Annual Meeting of
Stockholders. Notice of stockholder proposals will be considered untimely if
received by the Company after May 14, 2001. If the Company does not receive
notice of any matter that a stockholder wishes to raise at the 2001 Annual
Meeting by July 27, 2001 and a matter is properly raised at such meeting, the
proxies granted in connection with that meeting will have discretionary
authority whether or not to vote on the matter.
Stockholder List. The Company will maintain a list of stockholders entitled
----------------
to vote at the Annual Meeting at its corporate offices at National Data Plaza,
Atlanta, Georgia 30329-2010. The list will be available for examination by any
stockholder for any purpose germane to the Annual Meeting during normal
business hours for a period of ten days prior to the meeting. The list will
also be available for examination at the Annual Meeting.
Annual Report on Form 10-K. A copy of the Company's Annual Report on Form
--------------------------
10-K, including the financial statements and financial statement schedules (but
without exhibits) for fiscal year ended May 31, 2000 will be provided, free of
charge, upon written request of any stockholder addressed to National Data
Corporation, National Data Plaza, Atlanta, Georgia 30329-2010, Attention:
Investor Relations. Additionally, the EDGAR version of the Company's 10-K is
available on the Internet on the Securities and Exchange Commission's web site
(www.sec.gov).
Closing Price. The closing price of the Common Stock, as reported by the
-------------
New York Stock Exchange on August 28, 2000, was $29.25.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
except as set forth below, the Company believes that, during the 2000 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), except that a late Form 5
was filed on behalf of William H. McCahan, Chief Marketing Officer, NDC Health.
22
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Appendix A
NATIONAL DATA CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I - BACKGROUND....................................................................... 1
1.1 Establishment of the Plan......................................................... i
1.2 Applicability of the Plan......................................................... i
1.3 Purpose........................................................................... i
Article II - DEFINITIONS..................................................................... i
2.1 Administrator..................................................................... i
2.2 Board............................................................................. i
2.3 Code.............................................................................. i
2.4 Committee......................................................................... i
2.5 Common Stock...................................................................... i
2.6 Compensation...................................................................... i
2.7 Contribution Account.............................................................. ii
2.8 Corporation....................................................................... ii
2.9 Direct Registration System........................................................ ii
2.10 Effective Date.................................................................... ii
2.11 Eligible Employee................................................................. ii
2.12 Employee.......................................................................... ii
2.13 Employer.......................................................................... ii
2.14 Fair Market Value................................................................. ii
2.15 Offering Date..................................................................... ii
2.16 Offering Period................................................................... ii
2.17 Option............................................................................ ii
2.18 Participant....................................................................... ii
2.19 Plan.............................................................................. ii
2.20 Purchase Date..................................................................... ii
2.21 Purchase Price.................................................................... iii
2.22 Request Form...................................................................... iii
2.23 Spin-off.......................................................................... iii
2.24 Stock Account..................................................................... iii
2.25 Subsidiary........................................................................ iii
2.26 Trading Date...................................................................... iii
Article III - ELIGIBILITY AND PARTICIPATION.................................................. iii
3.1 Eligibility....................................................................... iii
3.2 Initial Participation............................................................. iv
3.3 Leave of Absence.................................................................. iv
Article IV - STOCK AVAILABLE................................................................. iv
4.1 In General........................................................................ iv
4.2 Adjustment in Event of Changes in Capitalization.................................. iv
4.3 Dissolution, Liquidation, or Merger............................................... iv
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Article V. - OPTION PROVISIONS............................................................... v
5.1 Purchase Price.................................................................... v
5.2 Calendar Year $25,000 Limit....................................................... v
5.3 Offering Period Limit............................................................. v
Article VI - PURCHASING COMMON STOCK......................................................... v
6.1 Participant's Contribution Account................................................ v
6.2 Payroll Deductions, Dividends..................................................... v
6.3 Discontinuance.................................................................... vi
6.4 Leave of Absence; Transfer of Ineligible Status................................... vi
6.5 Automatic Exercise................................................................ vi
6.6 Listing, Registration, and Qualification of Shares................................ vii
Article VII - WITHDRAWALS, DISTRIBUTIONS..................................................... vii
7.1 Discontinuance of Deductions; Leave of Absence; Transfer to Ineligible Status..... vii
7.2 In-Service Withdrawals............................................................ vii
7.3 Termination of Employment for Reasons Other Than Death............................ vii
7.4 Death............................................................................. vii
7.5 Registration...................................................................... viii
Article VIII - AMENDMENT AND TERMINATION..................................................... viii
8.1 Amendment......................................................................... viii
8.2 Termination....................................................................... viii
Article IX - MISCELLANEOUS................................................................... viii
9.1 Employment Rights................................................................. viii
9.2 Tax Withholding................................................................... ix
9.3 Rights Not Transferable........................................................... ix
9.4 No Repurchase of Stock by Corporation............................................. ix
9.5 Governing Law..................................................................... ix
9.6 Stockholder Approval; Registration................................................ ix
</TABLE>
<PAGE>
NATIONAL DATA CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
BACKGROUND
1.1 Establishment of the Plan. National Data Corporation (the
"Corporation") hereby establishes a stock purchase plan to be known as the
"National Data Corporation 2000 Employee Stock Purchase Plan" (the "Plan"), as
set forth in this document. The Plan is intended to be a qualified employee
stock purchase plan within the meaning of Section 423 of the Internal Revenue
Code of 1986, as amended, and the regulations and rulings thereunder.
1.2 Applicability of the Plan. The provisions of this Plan are applicable
only to certain individuals who, on or after the Effective Date (as defined
herein), are employees of the Corporation and its Subsidiaries participating in
the Plan. The Committee shall indicate from time to time which of its
Subsidiaries, if any, are participating in the Plan.
1.3 Purpose. The purpose of the Plan is to enhance the proprietary
interest among the employees of the Corporation and its participating
subsidiaries through ownership of Common Stock of the Corporation.
ARTICLE II
DEFINITIONS
Whenever capitalized in this document, the following terms shall have the
respective meanings set forth below.
2.1 Administrator. Administrator shall mean the person or persons (who
may be officers or employees of the Corporation) selected by the Committee to
operate the Plan, perform day-to-day administration of the Plan, and maintain
records of the Plan.
2.2 Board. Board shall mean the Board of Directors of the Corporation.
2.3 Code. Code shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations thereunder.
2.4 Committee. Committee shall mean a committee which consists of members
of the Board and which has been designated by the Board to have the general
responsibility for the administration of the Plan. Unless otherwise designated
by the Board, the Compensation Committee of the Board of Directors of the
Corporation shall serve as the Committee administering the Plan. Subject to the
express provisions of the Plan, the Committee shall have plenary authority in
its sole and absolute discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations necessary or advisable for
administering the Plan. The Committee's determinations on the foregoing matters
shall be conclusive and binding upon all persons.
2.5 Common Stock. Common Stock shall mean the common stock, par value
$.125, of the Corporation.
2.6 Compensation. Compensation shall mean, for any Participant, for any
Offering Period, the Participant's gross wages for the respective period,
including without limitation salary, bonus, and commission, but subject to
appropriate adjustments that would exclude items such as non-cash compensation
and reimbursement of moving, travel, trade or business expenses.
<PAGE>
2.7 Contribution Account. Contribution Account shall mean the
bookkeeping account established by the Administrator on behalf of each
Participant, which shall be credited with the amounts deducted from the
Participant's Compensation pursuant to Article VI. The Administrator shall
establish a separate Contribution Account for each Participant for each Offering
Period.
2.8 Corporation. Corporation shall mean National Data Corporation, a
Delaware corporation.
2.9 Direct Registration System. Direct Registration System shall mean a
direct registration system approved by the Securities and Exchange Commission
and by the New York Stock Exchange, Inc. or any securities exchange on which the
Common Stock is then listed, whereby shares of Common Stock may be registered in
the holder's name in book-entry form on the books of the Corporation.
2.10 Effective Date. Effective Date shall mean the effective date of the
Plan, which shall be the last to occur of (i) the date the Plan is approved by
the stockholders of the Corporation, (ii) the first trading day after the
effective date of the Spin-off, or (iii) the effective date of the Corporation's
registration statement on Form S-8 filed under the Securities Act of 1933, as
amended, covering the shares to be issued under the Plan.
2.11 Eligible Employee. An Employee eligible to participate in the Plan
pursuant to Section 3.1.
2.12 Employee. Employee shall mean an individual employed by an Employer
who meets the employment relationship described in Treasury Regulation Sections
1.423-2(b) and Section 1.421-7(h).
2.13 Employer. Employer shall mean the Corporation and any Subsidiary
designated by the Committee as an employer participating in the Plan.
2.14 Fair Market Value. Fair Market Value of a share of Common Stock, as
of any designated date, shall mean the closing sales price of the Common Stock
on the New York Stock Exchange on such date or on the last previous date on
which such stock was traded.
2.15 Offering Date. Offering Date shall mean the first Trading Date of
each Offering Period.
2.16 Offering Period. Offering Period shall mean the quarterly periods
beginning January 1, April 1, July 1, and October 1 respectively, of each year
during which offers to purchase Common Stock are outstanding under the Plan;
provided, however, that the initial Offering Period shall be the period
beginning on the Effective Date and ending on March 31, 2001. No payroll
deductions shall be taken until the Effective Date.
2.17 Option. Option shall mean the option to purchase Common Stock
granted under the Plan on each Offering Date.
2.18 Participant. Participant shall mean any Eligible Employee who has
elected to participate in the Plan under Section 3.2.
2.19 Plan. Plan shall mean the National Data Corporation 2000 Employee
Stock Purchase Plan, as amended and in effect from time to time.
2.20 Purchase Date. Purchase Date shall mean the last Trading Date of
each Offering Period.
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2.21 Purchase Price. Purchase Price shall mean the purchase price of
Common Stock determined under Section 5.1.
2.22 Request Form. Request Form shall mean an Employee's authorization
either in writing on a form approved by the Administrator or through electronic
communication approved by the Administrator which specifies the Employee's
payroll deduction in accordance with Section 6.2, and contains such other terms
and provisions as may be required by the Administrator.
2.23 Spin-off. Spin-off shall mean the contribution by the Corporation to
a wholly-owned subsidiary of the business, assets and liabilities of the
Corporation's eCommerce operations and the subsequent distribution to the
shareholders of the Corporation of all of the issued and outstanding shares of
capital stock of such subsidiary, all as contemplated in that certain proposed
Distribution Agreement (Plan of Reorganization and Distribution) to be entered
into between the Corporation and such subsidiary and the related agreements
between the parties referred to therein.
2.24 Stock Account. Stock Account shall mean the account established by
the Administrator on behalf of each Participant, which shall be credited with
shares of Common Stock purchased pursuant to the Plan and dividends thereon
until distributed in accordance with the terms of the Plan.
2.25 Subsidiary. Subsidiary shall mean any present or future corporation
which is a "subsidiary corporation" of the Corporation as defined in Code
Section 424(f).
2.26 Trading Date. Trading Date shall mean a date on which shares of
Common Stock are traded on a national securities exchange (such as the New York
Stock Exchange), the Nasdaq National Market or in the over-the-counter market.
Except when otherwise indicated by the context, the definition of any term
herein in the singular may also include the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Each Employee who is an Employee regularly scheduled to
work at least 20 hours each week and at least five months each calendar year
shall be eligible to participate in the Plan as of the later of:
(a) the Offering Date immediately following the Employee's last date of
hire by an Employer; or
(b) the Effective Date.
On each Offering Date, Options will automatically be granted to all
Employees then eligible to participate in the Plan; provided, however, that no
Employee shall be granted an Option for an Offering Period if, immediately after
the grant, the Employee would own stock, and/or hold outstanding options to
purchase stock, possessing five percent or more of the total combined voting
power or value of all classes of stock of the Corporation or any Subsidiary.
For purposes of this Section, the attribution rules of Code Section 424(d) shall
apply in determining stock ownership of any Employee. If an Employee is granted
an Option for an Offering Period and such Employee does not participate in the
Plan for such Offering Period, such Option will be deemed never to have been
granted for purposes of applying the $25,000 annual limitation described in
Section 5.2.
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3.2 Initial Participation. An Eligible Employee having been granted an
Option under Section 3.1 may submit a Request Form to the Administrator to
participate in the Plan for an Offering Period. The Request Form shall
authorize a regular payroll deduction from the Employee's Compensation for the
Offering Period, subject to the limits and procedures described in Article VI.
A Participant's Request Form authorizing a regular payroll deduction shall
remain effective from Offering Period to Offering Period until amended or
canceled under Section 6.3.
3.3 Leave of Absence. For purposes of Section 3.1, an individual on a
leave of absence from an Employer shall be deemed to be an Employee for the
first 90 days of such leave. For purposes of this Plan, such individual's
employment with the Employer shall be deemed to terminate at the close of
business on the 90th day of the leave, unless the individual has returned to
regular employment with an Employer before the close of business on such 90th
day. Termination of any individual's leave of absence by an Employer, other
than on account of a return to employment with an Employer, shall be deemed to
terminate an individual's employment with the Employer for all purposes of the
Plan.
ARTICLE IV
STOCK AVAILABLE
4.1 In General. Subject to the adjustments in Sections 4.2 and 4.3, an
aggregate of 1,500,000 shares of Common Stock shall be available for purchase by
Participants pursuant to the provisions of the Plan. These shares may be
authorized and unissued shares or may be shares issued and subsequently acquired
by the Corporation. If an Option under the Plan expires or terminates for any
reason without having been exercised in whole or part, the shares subject to
such Option that are not purchased shall again be available for subsequent
Option grants under the Plan. If the total number of shares of Common Stock for
which Options are exercised on any Purchase Date exceeds the maximum number of
shares then available under the Plan, the Committee shall make a pro rata
allocation of the shares available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable; and the balance of the
cash credited to Participants' Contribution Accounts shall be distributed to the
Participants as soon as practicable.
4.2 Adjustment in Event of Changes in Capitalization. In the event of a
stock dividend, stock split or combination of shares, recapitalization or other
change in the Corporation's capitalization, or other distribution with respect
to holders of the Corporation's Common Stock other than normal cash dividends,
an automatic adjustment shall be made in the number and kind of shares as to
which outstanding Options or portions thereof then unexercised shall be
exercisable and in the available shares set forth in Section 4.1, so that the
proportionate interest of the Participants shall be maintained as before the
occurrence of such event. This adjustment in outstanding Options shall be made
without change in the total price applicable to the unexercised portion of such
Options and with a corresponding adjustment in the Purchase Price per share;
provided, however, that in no event shall any adjustment be made that would
cause any Option to fail to qualify as an option pursuant to an employee stock
purchase plan within the meaning of Section 423 of the Code.
4.3 Dissolution, Liquidation, or Merger. Upon the dissolution or
liquidation of the Corporation, or upon a reorganization, merger, or
consolidation of the Corporation with one or more corporations in which the
Corporation is not the surviving corporation (or survives as a direct or
indirect subsidiary of other such other constituent corporation or its parent),
or upon a sale of substantially all of the property or stock of the Corporation
to another corporation, the holder of each Option then outstanding under the
Plan shall be entitled to receive at the next Purchase Date upon the exercise of
such Option for each share as to which such Option shall be exercised, as nearly
as reasonably may be determined, the cash, securities, or property which a
holder of one share of the Common Stock was entitled to receive upon and at the
time of such transaction. The Committee shall take such steps in connection
with these transactions as the Committee deems necessary or appropriate to
assure that the provisions of this Section shall
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<PAGE>
thereafter be applicable, as nearly as reasonably may be determined, in relation
to the cash, securities, or property which the holder of the Option may
thereafter be entitled to receive. In lieu of the foregoing, the Committee may
terminate the Plan in accordance with Section 8.2.
ARTICLE V
OPTION PROVISIONS
5.1 Purchase Price. The Purchase Price of a share of Common Stock
purchased for a Participant pursuant to each exercise of an Option shall be the
lesser of:
(a) 85 percent of the Fair Market Value of a share of Common Stock on the
Offering Date; or
(b) 85 percent of the Fair Market Value of a share of Common Stock on the
Purchase Date.
5.2 Calendar Year $25,000 Limit. Notwithstanding anything else contained
herein, no Employee may be granted an Option for any Offering Period which
permits such Employee's rights to purchase Common Stock under this Plan and any
other qualified employee stock purchase plan (within the meaning of Code Section
423) of the Corporation and its Subsidiaries to accrue at a rate which exceeds
$25,000 of Fair Market Value of such Common Stock for each calendar year in
which an Option is outstanding at any time. For purposes of this Section, Fair
Market Value shall be determined as of the Offering Date.
5.3 Offering Period Limit. Notwithstanding anything else contained
herein, the maximum number of shares of Common Stock that an Eligible Employee
may purchase in any Offering Period is 2,000 shares.
ARTICLE VI
PURCHASING COMMON STOCK
6.1 Participant's Contribution Account. The Administrator shall establish
a book account in the name of each Participant for each Offering Period. As
discussed in Section 6.2 below, a Participant's payroll deductions shall be
credited to the Participant's Contribution Account, without interest, until such
cash is withdrawn, distributed, or used to purchase Common Stock as described
below.
During such time, if any, as the Corporation participates in a Direct
Registration System, shares of Common Stock acquired upon exercise of an Option
shall be directly registered in the name of the Participant. If the Corporation
does not participate in a Direct Registration System, then until distribution is
requested by a Participant pursuant to Article VII, stock certificates
evidencing the Participant's shares of Common Stock acquired upon exercise of an
Option shall be held by the Corporation as the nominee for the Participant.
These shares shall be credited to the Participant's Stock Account. Certificates
shall be held by the Corporation as nominee for Participants solely as a matter
of convenience. A Participant shall have all ownership rights as to the shares
credited to his or her Stock Account, and the Corporation shall have no
ownership or other rights of any kind with respect to any such certificates or
the shares represented thereby.
All cash received or held by the Corporation under the Plan may be used by
the Corporation for any corporate purpose. The Corporation shall not be
obligated to segregate any assets held under the Plan.
6.2 Payroll Deductions; Dividends.
(a) Payroll Deductions. By submitting a Request Form at any time before an
Offering Period in accordance with rules adopted by the Committee, an Eligible
Employee may authorize a payroll deduction to purchase Common Stock under the
Plan for the Offering Period. The payroll deduction shall
-v-
<PAGE>
be effective on the first pay period during the Offering Period commencing after
receipt of the Request Form by the Administrator. The payroll deduction shall be
in any whole dollar amount or percentage up to a maximum of twenty percent (20%)
of such Employee's Compensation payable each pay period, and at any other time
an element of Compensation is payable. A Participant's payroll deduction shall
not be less than one percent (1%) of such Employee's Compensation payable each
payroll period.
(b) Dividends. Cash or stock dividends paid on Common Stock which is
credited to a Participant's Stock Account as of the dividend payment date shall
be credited to the Participant's Stock Account and paid or distributed to the
Participant as soon as practicable.
6.3 Discontinuance. A Participant may discontinue his or her payroll
deductions for an Offering Period by filing a new Request Form with the
Administrator. This discontinuance shall be effective on the first pay period
commencing at least 15 days after receipt of the Request Form by the
Administrator. A Participant who discontinues his or her payroll deductions for
an Offering Period may not resume participation in the Plan until the following
Offering Period.
Any amount held in the Participant's Contribution Account for an Offering
Period after the effective date of the discontinuance of his or her payroll
deductions will either be refunded or used to purchase Common Stock in
accordance with Section 7.1.
6.4 Leave of Absence; Transfer to Ineligible Status. If a Participant
either begins a leave of absence, is transferred to employment with a Subsidiary
not participating in the Plan, or remains employed with an Employer but is no
longer eligible to participate in the Plan, the Participant shall cease to be
eligible for payroll deductions to his or her Contribution Account pursuant to
Section 6.2. The cash standing to the credit of the Participant's Contribution
Account shall become subject to the provisions of Section 7.1.
If the Participant returns from the leave of absence before being deemed to
have ceased employment with the Employer under Section 3.3, or again becomes
eligible to participate in the Plan, the Request Form, if any, in effect
immediately before the leave of absence or disqualifying change in employment
status shall be deemed void and the Participant must again complete a new
Request Form to resume participation in the Plan.
6.5 Automatic Exercise. Unless the cash credited to a Participant's
Contribution Account is withdrawn or distributed as provided in Article VII, his
or her Option shall be deemed to have been exercised automatically on each
Purchase Date, for the purchase of the number of full shares of Common Stock
which the cash credited to his or her Contribution Account at that time will
purchase at the Purchase Price. If there is a cash balance remaining in the
Participant's Contribution Account at the end of an Offering Period representing
the exercise price for a fractional share of Common Stock, such balance may be
retained in the Participant's Contribution Account for the next Offering Period,
unless the Participant requests that it be refunded, without interest. Any
other cash balance remaining in the Participant's Contribution Account at the
end of an Offering Period shall be refunded to the Participant, without
interest. The amount of cash that may be used to purchase shares of Common
Stock may not exceed the Compensation restrictions set forth in Section 6.2 or
the applicable limitations of Sections 5.2.or 5.3.
Except as provided in the preceding paragraph, if the cash credited to a
Participant's Contribution Account on the Purchase Date exceeds the applicable
Compensation restrictions of Section 6.2 or exceeds the amount necessary to
purchase the maximum number of shares of Common Stock available during the
Offering Period under the applicable limitations of Section 5.2.or Section 5.3,
such excess cash shall be refunded to the Participant. Except as provided in
the preceding paragraph, the excess cash may not be used to purchase shares of
Common Stock nor retained in the Participant's Contribution Account for a future
Offering Period.
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<PAGE>
Each Participant shall receive a statement on an annual basis indicating
the number of shares credited to his or her Stock Account, if any, under the
Plan.
6.6 Listing, Registration, and Qualification of Shares. The granting of
Options for, and the sale and delivery of, Common Stock under the Plan shall be
subject to the effecting by the Corporation of any listing, registration, or
qualification of the shares subject to that Option upon any securities exchange
or under any federal or state law, or the obtaining of the consent or approval
of any governmental regulatory body deemed necessary or desirable for the
issuance or purchase of the shares covered.
ARTICLE VII
WITHDRAWALS; DISTRIBUTIONS
7.1 Discontinuance of Deductions; Leave of Absence; Transfer to Ineligible
Status. In the event of a Participant's complete discontinuance of payroll
deductions under Section 6.3 or a Participant's leave of absence or transfer to
an ineligible status under Section 6.4, the cash balance then standing to the
credit of the Participant's Contribution Account shall be:
(a) returned to the Participant, in cash, without interest, as soon as
practicable, upon the Participant's written request received by the
Administrator at least 30 days before the next Purchase Date; or
(b) held under the Plan and used to purchase Common Stock for the
Participant under the automatic exercise provisions of Section 6.5.
7.2 In-Service Withdrawals. During such time, if any, as the Corporation
participates in a Direct Registration System, shares of Common Stock acquired
upon exercise of an Option shall be directly registered in the name of the
Participant and the Participant may withdraw certificates in accordance with the
applicable terms and conditions of such Direct Registration System. If the
Corporation does not participate in a Direct Registration System, a Participant
may, while an Employee of the Corporation or any Subsidiary, withdraw
certificates for some or all of the shares of Common Stock credited to his or
her Stock Account at any time, upon 30 days' written notice to the
Administrator. If a Participant requests a distribution of only a portion of
the shares of Common Stock credited to his or her Stock Account, the
Administrator will distribute the oldest securities held in the Participant's
Stock Account first, using a first in-first out methodology. The Administrator
may at any time distribute certificates for some or all of the shares of Common
Stock credited to a Participant's Stock Account, whether or not the Participant
so requests.
7.3 Termination of Employment for Reasons Other Than Death. If a
Participant terminates employment with the Corporation and the Subsidiaries for
reasons other than death, the cash balance in the Participant's Contribution
Account shall be returned to the Participant in cash, without interest, as soon
as practicable. Certificates for the shares of Common Stock credited to his or
her Stock Account shall be distributed to the Participant as soon as
practicable, unless the Corporation then participates in a Direct Registration
System, in which case, the Participant shall be entitled to evidence of
ownership of such shares in such form as the terms and conditions of such Direct
Registration System permit.
7.4 Death. In the event a Participant dies, the cash balance in his or her
Contribution Account shall be distributed to the Participant's estate, in cash,
without interest, as soon as practicable. Certificates for the shares of Common
Stock credited to the Participant's Stock Account shall be distributed to the
estate as soon as practicable, unless the Corporation then participates in a
Direct Registration System,
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<PAGE>
in which case, the estate shall be entitled to evidence of ownership of such
shares in such form as the terms and conditions of such Direct Registration
System permit.
7.5 Registration. Whether represented in certificate form or by direct
registration pursuant to a Direct Registration System, shares of Common Stock
acquired upon exercise of an Option shall be directly registered in the name of
the Participant or, if the Participant so indicates on the Request Form, (a) in
the Participant's name jointly with a member of the Participant's family, with
the right of survivorship, (b) in the name of a custodian for the Participant
(in the event the Participant is under a legal disability to have stock issued
in the Participant's name), (c) in a manner giving effect to the status of such
shares as community property, or (d) in street name for the benefit of any of
the above with a broker designated by the Participant. No other names may be
included in the Common Stock registration. The Corporation shall pay all issue
or transfer taxes with respect to the issuance or transfer of shares of such
Common Stock, as well as all fees and expenses necessarily incurred by the
Corporation in connection with such issuance or transfer.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendment. The Committee shall have the right to amend or modify the
Plan, in full or in part, at any time and from time to time; provided, however,
that no amendment or modification shall:
(a) affect any right or obligation with respect to any grant previously
made, unless required by law, or
(b) unless previously approved by the stockholders of the Corporation,
where such approval is necessary to satisfy federal securities laws, the Code,
or rules of any stock exchange on which the Corporation's Common Stock is
listed:
(1) in any manner materially affect the eligibility requirements set
forth in Sections 3.1 and 3.3, or change the definition of Employer as set
forth in Section 2.13, or
(2) increase the number of shares of Common Stock subject to any
options issued to Participants (except as provided in Sections 4.2 and
4.3).
8.2 Termination. The Committee may terminate the Plan at any time in its
sole and absolute discretion. The Plan shall be terminated by the Committee if
at any time the number of shares of Common Stock authorized for purposes of the
Plan is not sufficient to meet all purchase requirements, except as specified in
Section 4.1.
Upon termination of the Plan, the Administrator shall give notice thereof
to Participants and shall terminate all payroll deductions. Cash balances then
credited to Participants' Contribution Accounts shall be distributed as soon as
practicable, without interest.
ARTICLE IX
MISCELLANEOUS
9.1 Employment Rights. Neither the establishment of the Plan, nor the
grant of any Options thereunder, nor the exercise thereof shall be deemed to
give to any Employee the right to be retained in the employ of the Corporation
or any Subsidiary or to interfere with the right of the Corporation or any
Subsidiary to discharge any Employee or otherwise modify the employment
relationship at any time.
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<PAGE>
9.2 Tax Withholding. The Administrator may make appropriate provisions
for withholding of federal, state, and local income taxes, and any other taxes,
from a Participant's Compensation to the extent the Administrator deems such
withholding to be legally required.
9.3 Rights Not Transferable. Rights and Options granted under this Plan
are not transferable by the Participant other than by will or by the laws of
descent and distribution and are exercisable only by the Participant during his
or her lifetime.
9.4 No Repurchase of Stock by Corporation. The Corporation is under no
obligation to repurchase from any Participant any shares of Common Stock
acquired under the Plan.
9.5 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware except to the extent such laws
are preempted by the laws of the United States.
9.6 Stockholder Approval; Registration. The Plan was adopted by the Board
of Directors of the Corporation on June 28, 2000 to be effective as of the
Effective Date, provided that no payroll deductions may begin until a
registration statement on Form S-8 filed under the Securities Act of 1933, as
amended, covering the shares to be issued under the Plan, has become effective.
The Plan is subject to approval by the stockholders of the Corporation within 12
months of approval by the Board of Directors.
* * * * * * * * * * * * * *
The foregoing is hereby acknowledged as being the National Data Corporation
2000 Employee Stock Purchase Plan as adopted by the Board of Directors of the
Corporation on June 28, 2000.
NATIONAL DATA CORPORATION
By: ______________________________________
Its: ______________________________________
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<PAGE>
PROXY
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
Suellyn P. Tornay 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 October 26, 2000, at 11:00 A.M., Atlanta time, (the "Annual
Meeting"), or at any adjournments thereof, upon the proposals described in the
Notice of Annual Meeting of Stockholders and Proxy Statement, both dated
August 30, 2000, 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 the nominee named herein
becomes unable to 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.
1. ELECTION OF DIRECTORS.
On the proposal to elect the following director to serve until the 2003
Annual Meeting of Stockholders of the Company or until his successor is
elected and qualified:
Neil Williams
FOR [_] WITHHOLD AUTHORITY [_]
2. ADOPTION OF THE 2000 EMPLOYEE STOCK PURCHASE PLAN.
On the proposal to adopt the Company's 2000 Employee Stock Purchase Plan:
FOR [_] AGAINST [_] ABSTAIN [_]
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<PAGE>
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 election of the director nominee, FOR the adoption of the 2000 Employee
Stock Purchase Plan and with discretionary authority on all other matters that
may properly come before the Annual Meeting and any adjournments thereof.
Shares Held: ______________________
___________________________________
Signature of Stockholder
___________________________________
Signature of Stockholder (If
Held Jointly)
Dated: ____________________________
Month Day
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.
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.
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Please detach proxy at perforation before mailing.
DETACH CARD YOU MAY VOTE BY TELEPHONE OR THE INTERNET.
If you are voting by telephone or the internet, please do not mail your
proxy.
--------------------------------------------------------------------------------
Vote By Telephone Vote By Internet Vote By Mail
Call Toll-Free using a Access the Website and Return your proxy in the
Touch-Tone phone cast your vote postage-paid envelope
1-800-250-9081 http://www.votefast.com provided.
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Vote 24 hours a day, 7 days a week!
Your telephone or internet vote must be received by 5:00 p.m. eastern daylight
time on October 25, 2000, to be counted in the final tabulation.
__________________
Your control number is
__________________
Vote By Telephone
Have your proxy card available when you call the Toll-Free number 1-800-250-
9081 using a Touch-Tone phone. You will be prompted to enter your control
number and then you can follow the simple prompts that will be presented to
you to record your vote.
Vote By Internet
Have your proxy card available when you access the website
http://www.votefast.com. You will be prompted to enter your control number and
then you can follow the simple prompts that will be presented to you to record
your vote.
Vote By Mail
Please mark, sign and date your proxy card and return it in the postage paid
envelope provided or return it to: SunTrust Bank, Atlanta, P.O. Box 4625,
Atlanta, GA 30302.
To Change Your Vote
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a subsequent internet vote will change your vote. The
last vote received before 5:00 p.m. eastern daylight time, October 25, 2000,
will be the one counted. You may also revoke your proxy by voting in person at
the Annual Meeting.
