<PAGE> 1
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
MPSI Systems Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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> 2
MPSI SYSTEMS INC.
4343 SOUTH 118TH EAST AVENUE
TULSA, OKLAHOMA 74146
918 877-6774
FACSIMILE 918 877-6961
INTERNATIONAL COMPUTER SOFTWARE AND INFORMATION SERVICES
- --------------------------------------------------------------------------------
[MPSI LOGO]
January 4, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
MPSI Systems Inc. (the "Company") which will be held on Monday, February 1, 1999
at 11:00 a.m. CST at MPSI's corporate headquarters at 4343 South 118th East
Avenue, Tulsa, Oklahoma 74146.
The formal notices of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return the
enclosed Proxy as soon as possible in the envelope provided. YOUR SHARES CANNOT
BE VOTED UNLESS YOU SIGN AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL
MEETING IN PERSON.
A copy of the Company's Annual Report to Stockholders is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
/s/ RONALD G. HARPER
RONALD G. HARPER
Chairman and Chief
Executive Officer
Encls.
<PAGE> 3
MPSI SYSTEMS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 1, 1999
The Annual Meeting of Stockholders of MPSI Systems Inc. (the "Company")
will be held at the MPSI corporate headquarters at 4343 South 118th East Avenue,
Tulsa, Oklahoma 74146, on February 1, 1999 at 11:00 a.m. CST for the following
purposes:
1. To elect six (6) directors to hold office during the ensuing year.
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors.
3. To transact such other business as may properly come before the meeting
and any postponement or adjournment thereof.
The Board of Directors has fixed the close of business on December 7, 1998
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any postponement or adjournment thereof. A
complete list of stockholders entitled to vote will be available at the
Company's headquarters, 4343 South 118th East Avenue, Tulsa, Oklahoma, for ten
days prior to the meeting.
We hope that you will use this opportunity to take an active part in the
affairs of your Company by voting on the business to come before the meeting
either by executing and returning the enclosed Proxy or by casting your vote in
person at the meeting. The granting of such proxy will not affect your right to
vote in person should you decide to attend the meeting.
IF YOU DO NOT EXPECT TO ATTEND IN PERSON, IT WOULD BE APPRECIATED IF YOU
WOULD PROMPTLY SIGN AND RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY AND ON
BEHALF OF THE BOARD OF DIRECTORS. A PREPAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. IF A STOCKHOLDER RECEIVES MORE THAN ONE PROXY BECAUSE HE OR SHE
OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE
COMPLETED AND RETURNED.
By Order of the Board of Directors
/s/ LINDA K. WELLS
LINDA K. WELLS
Secretary
Tulsa, Oklahoma
January 4, 1999
<PAGE> 4
January 4, 1999
MPSI SYSTEMS INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 1, 1999
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
This Proxy Statement and the enclosed proxy are furnished in connection
with the solicitation by the Board of Directors of MPSI Systems Inc., a Delaware
corporation (the "Company"), with principal executive offices at 4343 South
118th East Avenue, Tulsa, Oklahoma 74146, of proxies in the accompanying form to
be used at the Annual Meeting of Stockholders to be held on February 1, 1999,
and any postponement or adjournment thereof. The shares represented by the
proxies received pursuant to this solicitation and not revoked will be voted at
the Annual Meeting. This Proxy Statement and the enclosed proxy are being first
sent to security holders on January 4, 1999.
A proxy may be revoked at any time before it is voted by filing with the
Secretary of the Company a written notice of revocation or by duly executing a
proxy bearing a later date. A proxy may also be revoked by any stockholder
present at the meeting who expresses a desire to vote his or her shares in
person. Subject to any such revocation, all shares represented by properly
executed proxies will be voted in accordance with the specification on the
enclosed proxy. If no choice is so specified, the shares will be voted FOR the
election of the six (6) nominees for director listed in this Proxy Statement,
and FOR ratification of the appointment of Ernst & Young LLP as independent
auditors, all as described in the Notice of Annual Meeting of Stockholders and
in this Proxy Statement.
The close of business on December 7, 1998 has been fixed as the record date
for determining the holders of shares entitled to receive notice of and to vote
at the meeting. On such date, the Company had 2,849,454 shares of Common Stock
outstanding and entitled to vote. The holders of a majority of the outstanding
shares of Common Stock present in person or represented by proxy shall
constitute a quorum for the transaction of business at the meeting. Each such
share is entitled to one vote on all matters. An abstained vote will count in
achieving a quorum for transaction of business, but not towards approval or
rejection of the matter under consideration.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, certain directors,
officers and other employees of the Company, may make solicitation by personal
interview, telephone, facsimile or telegraph, and no additional compensation
will be paid for such solicitation. The Company will reimburse brokers and
nominees for their reasonable out-of-pocket expenses in forwarding soliciting
material to beneficial owners of shares held of record by such brokers and
nominees.
<PAGE> 5
DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
Six directors are to be elected to serve until the next annual Meeting of
Stockholders and until their respective successors are fully elected or
appointed and qualified. All six of the nominees named below are presently
directors of the Company. In June 1998, Bryan D. Porto was named by the Board to
fill the vacancy left open upon the death of the former Board member, Herbert G.
Schiff, in 1994. Unless authority to vote for the directors is withheld, it is
intended that the shares represented by the enclosed Proxy will be voted FOR the
election of all six nominees. In the event that any such nominee is unable or
declines to serve for any reason, it is intended that proxies will be voted for
the election of the balance of those nominees named and for such other persons
as shall be designated by the present Board of Directors, or the Board of
Directors may be reduced in accordance with the Bylaws of the Company. The Board
of Directors has no reason to believe that any of the persons named will be
unable or unwilling to serve. An affirmative vote of a majority of the
outstanding shares of Common Stock present and voting at the meeting is required
for election of the six nominees to the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF ALL NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES
The following table sets forth the nominees, their ages, a brief
description of their recent business experience, including present occupations
and employment, certain directorships held by each and the year in which each
became a director of the Company. All but Bryan D. Porto were elected at the
Company's Annual Meeting of Stockholders held on March 5, 1998 and have
continued to serve since that time. Mr. Porto was named by the Board in June
1998 to fill a vacancy open since 1994.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AT PRESENT DIRECTOR
AND FOR THE PAST FIVE YEARS; DIRECTORSHIPS SINCE AGE
- ------------------------------------------ -------- ---
<S> <C> <C>
Ronald G. Harper(1)......................................... 1970 60
Mr. Harper, who founded the Company in 1970, has served as
its President, Chairman of the Board and Chief Executive
Officer since inception.
John C. Bumgarner, Jr.(1)(2)(3)............................. 1982 56
In 1979, Mr. Bumgarner was appointed to his present
position as Senior Vice President -- Corporate Development
and Planning of The Williams Companies, Inc., a
Tulsa-based conglomerate. He has been employed by The
Williams Companies, Inc. since 1977. He is also a director
of TRANSCO, James River Coal Company, and several
privately held companies.
Dr. David L. Huff(1)........................................ 1982 67
Since 1968, Dr. Huff has been a member of the faculty at
the University of Texas. He has been a Fulbright Lecturer
and has published numerous books and articles, including
Market Area Analysis, "A Graphical Index of Consumer
Expectation," "Measures of Market Area Overlap," and
"Retail Location Theory." He is an expert in computer
modeling techniques.
Joseph C. McNay(1)(2)(3).................................... 1982 64
Since November 1976, Mr. McNay has been the President, a
Director and the Chairman of the Board of Essex Investment
Management Company, Inc., a company engaged in investment
and advisory services. Mr. McNay is also a director of
Softech, Inc. and Alpha 1 Biomedical, Inc., which are
publicly held companies.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION AT PRESENT DIRECTOR
AND FOR THE PAST FIVE YEARS; DIRECTORSHIPS SINCE AGE
- ------------------------------------------ -------- ---
<S> <C> <C>
John J. McQueen(2)(3)....................................... 1982 77
Mr. McQueen has been in the private practice of law in the
Tulsa area since 1959. He has also served as a certified
public accountant with KPMG Peat Marwick, as a tax
specialist with Warren Petroleum Corp., and as controller
of Davis Investments, a company engaged in oil and real
estate activities.
Bryan D. Porto.............................................. 1998 49
Mr. Porto was appointed Executive Vice President of MPSI's
Petroleum Services Division in 1998. He previously served
as Sr. Vice President -- Retail Petroleum and has served
in marketing and network planning positions since joining
MPSI in the Rio de Janeiro office in 1985.
</TABLE>
- ---------------
(1) The individual identified is a member of the Compensation Committee.
(2) The individual identified is a member of the Audit Committee.
(3) The individual identified is a member of the Nominating Committee.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
During the fiscal year ended September 30, 1998, the Board of Directors
held four regular meetings. All of the directors attended at least 75% of the
meetings of the Board. To assist it in carrying out its duties, the Board of
Directors has standing Compensation, Audit and Nominating Committees.
The Audit Committee's functions are to recommend and approve, subject to
ratification by the Board of Directors and the stockholders, the Company's
independent auditors, to review the scope and results of audits by the
independent auditors, to represent the Board of Directors and stockholders in
ensuring that the legal, ethical and regulatory requirements for reporting and
public disclosure are met by the Company and to serve as the channel of
communication between the Board of Directors and Management on matters involving
financial reporting, public disclosure, reporting policy and relationships with
financial and regulatory entities. The Audit Committee held no separate meetings
during the fiscal year ended September 30, 1998, but conducted the necessary
business during the regular meetings of the Board.
The Compensation Committee's functions are to develop and monitor
compensation arrangements. In performing these functions, the Compensation
Committee approves salary ranges and actual salaries for all executive officers,
monitors the effectiveness of and adopts changes as appropriate for all
executive compensation programs, sets requirements for and evaluates performance
under the executive compensation plans and approves all awards under such plans,
and administers and makes awards, interpretations and other decisions under
certain other employee benefit and compensation plans. The Compensation
Committee held no separate meetings during the fiscal year ended September 30,
1998, but conducted the necessary business during the regular meetings of the
Board. See also "Board Compensation Committee Report on Executive Compensation"
below.
The Nominating Committee was created in September 1993 to seek qualified
individuals for consideration to serve as directors of the Company. The
committee functions to identify, investigate and obtain consents before any such
person's name is placed in nomination to serve as a director of the Company. The
Nominating Committee held no separate meetings during the fiscal year ended
September 30, 1998, but conducted the necessary business during the regular
meetings of the Board. At the June Board meeting, the committee recommended, and
the Board unanimously approved, the appointment of Bryan D. Porto to the Board
of Directors.
3
<PAGE> 7
INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS
The following table sets forth the executive officers currently serving the
Company, their ages, all positions and offices held with the Company and their
tenure in such office. If such officer has been employed by the Company for less
than five years, other background information and experience is listed. All
officers of the Company serve at the pleasure of its Board of Directors, and
there exists no arrangement or understanding among any of the Company's
executive officers with any other person pertaining to their selection to serve
in such position.
<TABLE>
<CAPTION>
SERVING IN
CURRENT
NAME AND ALL POSITIONS POSITION
AND OFFICES HELD WITH THE COMPANY SINCE AGE
- --------------------------------- ---------- ---
<S> <C> <C>
Ronald G. Harper............................................ 1970 60
Mr. Harper, who founded the Company in 1970, has served as
its President, Chairman of the Board and Chief Executive
Officer since inception.
Bryan D. Porto.............................................. 1998 49
Mr. Porto was appointed Executive Vice President of MPSI's
Petroleum Services Division in 1998. He previously served
as Sr. Vice President, Retail Petroleum and has served in
marketing and network planning positions since joining
MPSI in the Rio de Janeiro office in 1985.
James C. Auten.............................................. 1996 50
Mr. Auten was appointed Vice President and Chief Financial
Officer on January 1, 1996. Mr. Auten joined MPSI in 1984
as Corporate Controller and held such position until
December 1992 when he was appointed Principal Accounting
Officer.
Bill Webb................................................... 1996 58
Mr. Webb joined MPSI as General Manager, Corporate Human
Resources on April 8, 1996. Previously, Mr. Webb spent 14
years with Amerada Hess Corporation as Manager of
Personnel Administration.
</TABLE>
STOCK OWNERSHIP
The following table sets forth information as of December 7, 1998, as to
shares of Common Stock beneficially owned by the directors (all of whom are
nominees for another term), certain executive officers, the directors and
officers of the Company as a group, and certain persons known to the Company to
own beneficially more than five percent of the Common Stock. Except as otherwise
indicated, each person has sole investment and voting power with respect to the
shares shown. Ownership information is based upon information furnished by the
respective individuals.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-------------------------
NUMBER PERCENT
NAME OF COMMON STOCKHOLDER OF SHARES OF CLASS
- -------------------------- --------- --------
<S> <C> <C>
Ronald G. Harper(2)......................................... 1,185,873(1) 41.62%
4343 S. 118th East Avenue
Tulsa, Oklahoma 74146
John C. Bumgarner, Jr....................................... 222,322 7.80%
4900 Bank of Oklahoma Tower
One Williams Center
Tulsa, Oklahoma 74172
Joseph C. McNay............................................. 242,722 8.52%
125 High Street, 29th Floor
Boston, Massachusetts 02110
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-------------------------
NUMBER PERCENT
NAME OF COMMON STOCKHOLDER OF SHARES OF CLASS
- -------------------------- --------- --------
<S> <C> <C>
Bank of Oklahoma, N.A....................................... 285,714 10.03%
P. O. Box 2300
Tulsa, Oklahoma 74192
The Robertson Stephens Orphan Fund(3)....................... 244,888 8.59%
555 California Street, Suite 2600
San Francisco, California 94104
Sanford Orkin............................................... 222,222 7.80%
3414 Peachtree Road, N.E., Suite 236
Atlanta, Georgia 30326
James C. Auten(2)........................................... 5,354 .19%
Bryan D. Porto(2)........................................... 1,002 .04%
All officers and directors as a group (5 persons)........... 1,657,273 58.16%
</TABLE>
- ---------------
(1) Includes 381,614 shares of Common Stock held in trust for the benefit of Mr.
Harper's family and 424,209 shares held in trust for the benefit of certain
charities. Mr. Harper has sole voting and investment power over all of the
trust shares except for 105,637 shares over which he shares investment or
voting power and 250,977 shares over which he has no investment or voting
power. Mr. Harper disclaims beneficial ownership of these trust shares.
(2) The indicated individuals are executive officers of the Company.
(3) As reported in the Schedule 13G filed by the named person (among others),
voting and dispositive power over the listed shares may be deemed shared
among BankAmerica Corporation, Robertson Stephens Investment Management Co.,
Robertson Stephens & Company Investment Management, L.P. and the named
person by reason of corporate relationships. Each such beneficial owner has
the same address as that set forth above for the named person.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 4 furnished to the Company with respect to its
most recent fiscal year, the Company has determined that reports required
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
were filed on a timely basis.
5
<PAGE> 9
COMPENSATION OF DIRECTORS AND OFFICERS
Summary Compensation Table. The following table summarizes the compensation
paid over the last three completed fiscal years to the Company's CEO and the
other executive officers of the Company who received compensation of $100,000 or
more during the fiscal year ended September 30, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- --------------------- -------
OTHER ALL
ANNUAL OTHER
COMPEN- RESTRICTED LTIP COMPEN-
NAME AND BONUS SATION STOCK OPTIONS/ PAYOUTS SATION
PRINCIPAL POSITION YEAR SALARY($) ($) ($)(1) AWARDS SARS(#) ($) ($)(2)
- ------------------ ---- ---------- ------ ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald G. Harper................ 1998 205,863 -- 7,885 -- -- -- 10,121
Chairman of the Board, President 1997 194,158 -- 8,242 -- -- -- 9,657
And Chief Executive Officer 1996 196,961 -- 8,242 -- -- -- 8,085
Bryan D. Porto.................. 1998 156,856 14,541 -- -- -- -- 4,771
Executive Vice President, 1997 125,022 -- -- -- -- -- 12,200
Petroleum Services Division 1996 100,122 3,690 -- -- -- -- 672
James C. Auten.................. 1998 103,375 10,671 -- -- -- -- 2,035
Vice President and 1997 92,482 -- -- -- -- -- 12,365
Chief Financial Officer 1996 84,335 3,123 -- -- -- -- 1,666
</TABLE>
- ---------------
(1) Represents automobile lease paid to or on behalf of Mr. Harper.
(2) The components of "All Other Compensation" for the fiscal years ended
September 30, 1998, 1997, and 1996 include (a) Company matching
contributions to the Company's 401(k) defined contribution plan (Mr.
Harper -- $4,750, $4,750, and $3,278; Mr. Porto -- $3,961, $2,678 and $0;
Mr. Auten -- $1,387, $1,193, and $994, respectively), (b) supplemental life
insurance premiums paid by the Company (Mr. Harper -- $5,371, $4,907 and
$4,807; Mr. Porto -- $810, $822 and $672; and Mr. Auten -- $648, $672, and
$672, respectively), and (c) deferred compensation, accrued and payable in
1997 (Mr. Porto -- $8,700 and Mr. Auten -- $10,500). At September 30, 1995,
the Company approved discretionary employee performance awards in the form
of deferred compensation to a group of 19 employees including the indicated
executive officers. Such amounts were earned based on the employee's
performance during the year ended September 30, 1994. The Company agreed to
pay future cash awards to the specified employees upon the achievement, for
thirty consecutive business days, of a $6.00 per share market price for the
Company's Common Stock and upon the exercise of the underlying options. Such
payments could be made at any point after November 29, 1995, assuming stock
price and other vesting requirements have been met. The amounts reflected
above vested based upon the stock price at September 19, 1997, which
triggered the Company's obligation under the plan.
6
<PAGE> 10
OPTIONS EXERCISED TABLE
The following table sets forth information concerning each exercise of
stock options by the named executive officers during the last completed fiscal
year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-
UNEXERCISED MONEY
OPTIONS AT OPTIONS AT
FY END(#) FY END($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
James C. Auten........................... 3,500 $3,500 7,500/10,000 $ --
Bryan D. Porto........................... -- -- 22,400/26,900 $ --
</TABLE>
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
The Company maintains a severance policy applicable to all full-time
regular employees with at least one year of full-time service. Eligible
employees are those who are terminated as the result of (1) a reduction of the
Company's work force, (2) elimination of a job or position, (3) inability to
satisfactorily perform required responsibilities, or (4) relocation of
applicable Company facilities. The amount of severance paid is based upon the
employee's base salary and length of service, and includes payment for vested
but unused vacations and pro rated automobile allowances, if applicable. The
only named executive officer who would receive aggregate severance in excess of
$100,000 under the current policy is Mr. Ronald G. Harper. Mr. Harper's
aggregate severance would be approximately $130,000 at September 30, 1998.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") was
composed of Ronald G. Harper, President and Chief Executive Officer of the
Company, and independent outside directors, John C. Bumgarner, Jr., Joseph C.
McNay and Dr. David L. Huff. This Committee is responsible for overseeing and
administering the Company's executive compensation program described below.
The executive compensation program of the Company is reviewed and approved
annually by the Committee and is designed to serve the interest of the Company
and its stockholders by aligning executive compensation with stockholder
objectives and to encourage and reward management initiatives and good
performance. Specifically, the executive compensation program seeks to:
(i) implement compensation practices which allow the Company to
attract and retain highly qualified executives and maintain a competitive
position in the executive marketplace with employers of comparable size and
in similar lines of business;
(ii) enhance the compensation potential of executives who are in the
best position to contribute to the development and success of the Company
by providing the flexibility to compensate individual performance; and
(iii) directly align the interest of executives with the long-term
interest of stockholders through compensation opportunities in the form of
Common Stock ownership.
These objectives are met through a program comprised of base salary and
annual cash or stock incentive awards, which are tied to operating performance,
and long-term incentive opportunities primarily in the form of incentive stock
options.
Salary. The Committee considers annual salary adjustments for the Company's
executive officers, including those named in the Summary Compensation Table.
Salary adjustments are designed to reflect
7
<PAGE> 11
internal comparability, organizational considerations and competitive data
provided by outside surveys. As a general rule, salary ranges are targeted
toward the median of survey results.
Incentive Awards. Executives are eligible for cash awards annually based
upon financial and nonfinancial results relative to pre-established performance
targets and objectives.
Stock Options. The Company's 1988 Stock Option Plan, approved by the
stockholders in 1989, permitted the Committee to grant incentive or nonstatutory
stock options to executive officers. The plan provided for stock option awards
giving executives the right to purchase Common Stock over a five-year period at
the fair market value per share as of the date the option is granted. Options
generally become exercisable in three equal annual installments beginning one
year after grant. Neither Mr. Harper nor any other members of the Compensation
Committee were eligible to participate in the stock option plan. The 1988 Stock
Option Plan expired in November 1998, although options representing 37,567
shares under that Plan and its predecessor 1984 Plan and applicable to the named
executive officers remain outstanding until their expiration between May 1999
and April 2001. At the last Annual Meeting, stockholders approved the 1998 Stock
Plan, but no options under that Plan have been granted to any executive officer.
Chief Executive Officer Compensation. Mr. Harper's overall compensation
package has increased by approximately 5% during the three years ended September
30, 1998 reflecting normal economic factors.
THE COMPENSATION COMMITTEE
John C. Bumgarner, Jr.
Ronald G. Harper
Dr. David L. Huff
Joseph C. McNay
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ronald G. Harper, Chief Executive Officer of the Company, is the only
member of the Compensation Committee who is also an employee or officer of the
Company.
DIRECTORS' COMPENSATION
Members of the Board of Directors who are employees of the Company receive
no additional compensation as a result of their service as directors. Directors
who are not employees of the Company are compensated at the rate of $1,500 for
each board meeting attended and are reimbursed for any out-of-pocket expenses
incurred in attending meetings.
PERFORMANCE GRAPH
The following graph sets forth the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
preceding five fiscal years ended September 30, 1998 compared with the
cumulative total returns of the NASDAQ Stock Market -- U.S. index and an
industry peer group. The comparison assumes $100 was invested on September 30,
1993 in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.
8
<PAGE> 12
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MPSI SYSTEMS INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
[CHARISMA CHART]
<TABLE>
<CAPTION>
NASDAQ
STOCK
MEASUREMENT PERIOD MPSI MARKET
(FISCAL YEAR COVERED) SYSTEMS INC. PEER GROUP (U.S.)
<S> <C> <C> <C>
9/93 100 100 100
9/94 444.44 96.70 100.83
9/95 1333.33 111.50 139.28
9/96 172.22 127.21 165.24
9/97 1155.56 166.80 226.81
9/98 155.56 185.59 231.84
</TABLE>
* $100 invested on 9/30/93 in stock or index, including
reinvestment of dividends. Fiscal Year ending September 30.
For comparative purposes, the Company has identified a peer group including
companies who are competitors or who are known to provide services similar to
those provided by the Company. The peer group companies are CACI International
Incorporated, Information Resources Incorporated, MARC Incorporated, Equifax
Incorporated, Dun & Bradstreet, Acxiom Corporation, Market Facts Incorporated,
SEI Corporation, and Fair Issac & Company.
APPOINTMENT OF INDEPENDENT AUDITORS
The Company's Board of Directors has reappointed Ernst & Young LLP, the
independent auditors who examined the consolidated financial statements of the
Company for the fiscal year ended September 30, 1998, to act as the Company's
independent auditors for the current fiscal year, subject to ratification by the
stockholders. The decision of the Board of Directors to reappoint Ernst & Young
LLP is based on the recommendation of the Audit Committee. In making its
recommendation, the Audit Committee reviewed the auditor's independence, the
audit scope and audit fees. Representatives of Ernst & Young LLP will attend the
Annual Meeting and will be prepared to answer stockholders' questions but do not
plan to make a presentation.
An affirmative vote of a majority of the outstanding shares of Common Stock
present and voting at the meeting is required for ratification of the
appointment of the independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ITS
SELECTION OF INDEPENDENT AUDITORS
9
<PAGE> 13
STOCKHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Stockholders to
be held in 2000, a stockholder proposal must be received by the Secretary at the
offices of the Company at the address set forth in the first page of this Proxy
Statement, not later than October 31, 1999.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the meeting, it is the intention of the persons named in the accompanying form
of proxy to vote the shares represented thereby on such matters in accordance
with their best judgment.
Whether or not you intend to be present at this meeting, you are urged to
return your proxy promptly. If you are present at this meeting and wish to vote
your shares in person, your proxy may be revoked upon request.
By Order of the Board of Directors
/s/ LINDA K. WELLS
LINDA K. WELLS
Secretary
Tulsa, Oklahoma
January 4, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED PREPAID ENVELOPE.
10
<PAGE> 14
REVOCABLE PROXY
MPSI SYSTEMS, INC.
PLEASE MARK
VOTES AS
[X] IN THIS EXAMPLE
The undersigned hereby appoints Ronald G. Harper and Linda K. Wells
proxies, with power to act without the other and with power of substitution,
and hereby authorizes them to represent and vote, as designated hereon, all the
shares of stock of MPSI Systems Inc. standing in the name of the undersigned
with all powers which the undersigned would possess if present at the Annual
Meeting of Stockholders of the Company to be held at, MPSI Corporate
Headquarters, 4343 South 118th East Avenue, Tulsa, Oklahoma 74146 on February
1, 1999, at 11:00 a.m., Central Standard Time, or any adjournment thereof:
1. ELECTION OF DIRECTORS (except as marked FOR WITH- FOR ALL
to the contrary below). HOLD EXCEPT
[ ] [ ] [ ]
NOMINEES:
RONALD G. HARPER, JOHN C. BUMGARNER, JR., DR. DAVID L. HUFF, JOSEPH C.
MCNAY, JOHN J. MCQUEEN AND BRYAN D. PORTO
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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2. Ratification of Ernst & Young FOR AGAINST ABSTAIN
LLP as the independent
certified public accountants [ ] [ ] [ ]
of the corporation.
In their discretion, the Proxies are authorized to vote on such other business
that may properly come before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please be sure to sign and date this Proxy in the box below. Date
-----------
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Stockholder sign above Co-holder (if any) sign above)
- --------------------------------------------------------------------------------
-Detach above card, sign, date and mail in postage paid envelope provided.-
MPSI SYSTEMS INC.
4343 SOUTH 118TH EAST AVENUE
TULSA, OKLAHOMA 74146
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AGENDA
o Election of Directors
o Ratification of the Appointment of Independent Public Accountants
o Report on the Progress of the Corporation
o Discussion on Matters of Current Interest
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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