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SECURITIES AND EXCHANGE COMMISSION
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[_] Preliminary Proxy Statement | [_] Confidential, for Use of the |
[X] Definitive Proxy Statement | Commission Only (as permitted by |
[_] Definitive Addition Materials | Rule 14a-6(e)(2)) |
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
ELECTRONIC CLEARING HOUSE, INC. Payment of Filing Fee (Check the appropriate box): |
[x] | No fee required. |
[_] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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of each class of securities to which transaction applies: |
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(3) | Per
unit price or other underlying value of transaction computed pursuant to Exchange Act
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[_] | 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. |
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ELECTRONIC CLEARING HOUSE, INC.NOTICE OF ANNUAL MEETING OF SHAREHOLDERSFebruary 2, 2001To the Shareholders of Electronic Clearing House, Inc.: You are cordially invited to attend the Annual Meeting of Shareholders of Electronic Clearing House, Inc. (the Company) which will be held at the Renaissance Hotel, Agoura Hills, California on Friday, February 2, 2001 at 10:30 a.m. for the following purposes: |
1. | To elect one Director to serve on the Board of Directors; |
2. | To ratify or reject the selection of PricewaterhouseCoopers LLP as independent public accountants of the Company for the fiscal year ending September 30, 2001; and |
3. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
The Board of Directors has fixed the close of business on December 8, 2000, as the record date for determining those shareholders who will be entitled to vote at the Meeting or any adjournment thereof. Shareholders who do not expect to attend the Meeting in person are requested to complete, date and sign the enclosed Proxy and return it by January 30, 2001 in the envelope provided for that purpose. The enclosed Proxy is being solicited on behalf of the Board of Directors of the Company. |
By Order of the Board of Directors, DONNA L. REHMAN Corporate Secretary |
Agoura Hills, California |
On December 8, 2000, the record date for determining shareholders entitled to vote at the Annual Meeting, the Company had outstanding and entitled to vote at the Meeting 21,888,036 shares of Common Stock, par value $.01 per share (the Common Stock). Each share of Common Stock is entitled to one vote on any matter brought before the Meeting, including election of the directors. The Articles and By-Laws of the Company do not contain any provision for cumulative voting. The required quorum for the transaction of business at the Annual Meeting is a majority of the shares of Common Stock outstanding on the record date. Shares that are voted for, against, or withheld from a matter are treated as being present at the meeting for purposes of establishing a quorum and are also treated as votes eligible to be cast by the Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter with respect to such matter. While abstentions will be counted for purposes of determining both the presence or absence of a quorum for the transaction of business and the total number of votes cast with respect to a particular matter, broker non-votes with respect to proposals set forth in this Proxy Statement will not be considered votes cast and, accordingly, will not affect the determination as to whether the requisite majority of votes cast has been obtained with respect to a particular matter. A majority of votes cast is required to pass a proposal. PERFORMANCE GRAPHThe following graph shows a five-year comparison of the total cumulative returns of investing $100 on September 30, 1995, in Electronic Clearing House, Inc. Common Stock, the NASDAQ-Composite Index, and the NASDAQ-Finance Index. The NASDAQ-Composite Index represents a broad market group in which the Company participates. The NASDAQ-Finance Index was chosen as having a representative peer group of companies for the 2000 Proxy Statement, and includes Electronic Clearing House, Inc. All comparisons of stock price performance shown assumes reinvestment of dividends.
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September 30, |
Measurement Point 1995 |
1996 |
1997 |
1998 |
1999 |
2000 | |||||||
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ECHO | $100.00 | $192.25 | $330.77 | $261.66 | $261.66 | $369.23 | |||||||
NASDAQ-Composite | $100.00 | $118.68 | $162.92 | $165.50 | $270.38 | $358.96 | |||||||
NASDAQ-Finance | $100.00 | $123.80 | $195.14 | $179.96 | $195.55 | $207.49 |
PRINCIPAL OWNERS OF COMMON STOCKTo the Companys knowledge, no individual has beneficial ownership or control over 5% or more of the Companys outstanding Common Stock. The following table sets forth the number of shares of Common Stock owned beneficially by the Companys officers and directors as of the record date, December 8, 2000: |
Name & Address |
Number of Shares Beneficially Owned |
Percentage of Common Stock[1] | |||
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Joel M. Barry | 1,023,250 | [2] | 4.50 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Lawrence Brown | 100,000 | [2] | 0.45 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Alice L. Cheung | 180,000 | [2] | 0.82 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Jesse Fong | 55,110 | [2] | 0.25 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
R. Marshall Frost | 5,000 | [2] | 0.02 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Aristides W. Georgantas | 11,314 | 0.05 | % | ||
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
David Griffin | 167,747 | [2] | 0.76 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Herbert L. Lucas, Jr | 385,081 | [3,4] | 1.74 | % | |
12011 San Vicente Blvd | |||||
Los Angeles, CA 90049 | |||||
Donna Rehman | 60,000 | [2] | 0.27 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Carl W. Schafer | 315,247 | [3] | 1.42 | % | |
66 Witherspoon St., #1100 | |||||
Princeton, NJ 08542 | |||||
Rick Slater | 224,000 | [2] | 1.01 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Patricia Williams | 100,000 | [2] | 0.45 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
Jack Wilson | 144,300 | [2][6] | 0.66 | % | |
28001 Dorothy Drive | |||||
Agoura Hills, CA 91301 | |||||
All officers and directors | |||||
as a group (13 persons) | 2,771,049 | [1] | 11.43 | % |
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[1] | Outstanding common shares with effect given to individual shareholders exercise of stock options described in footnotes 2 through 5. |
[2] | Includes options according to the terms of the Incentive Stock Option Plan. |
[3] | Includes options granted to outside directors. |
[4] | Includes 71,889 shares indirectly owned by Mr. Lucas through a trust for his wife. |
[5] | Includes 2,120 shares indirectly owned by Mr. Wilson through his wife. |
ELECTION OF DIRECTORS One director is proposed to be elected at the Annual Meeting. The director will be elected to hold office until the conclusion of his respective three-year term and thereafter until the election and qualification of his successor. Nominees The nominee for election to the Board of Directors is Carl W. Schafer. Directors The current members of the Board of Directors are: |
Name |
Age |
Director Since |
Position with the Company |
Term Ending February: | |||||
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Joel M. Barry | 50 | 1986 | Chairman, President and CEO | 2002 | |||||
Aristides W. Georgantas | 56 | 1999 | Director | 2002 | |||||
Herbert L. Lucas, Jr | 74 | 1991 | Director | 2003 | |||||
Carl W. Schafer | 64 | 1986 | Director | 2001 |
JOEL M. BARRY, age 50, has been a Director of the Company since July 8, 1986, and Chairman of the Board since December 26, 1986. Mr. Barry served as Chief Financial Officer from May 1, 1987 to June 9, 1990, and Executive Vice President from October 12, 1987 to June 29, 1990, when he was designated Chief Executive Officer of the Company. In May, 1999, Mr. Barry assumed the role of President. Mr. Barry is also a Director and Chief Executive Officer of the NCCR, CBC, and XpressCheX, Inc. (formerly Magic Software Development) wholly-owned subsidiaries. From August 1981 to June 1991, Mr. Barry was a lecturer and investment counselor for Dynamic Seminars, a firm he founded in 1981, and Basics Financial Planning and Investments, a firm he founded in 1983. From 1972 to 1974, Mr. Barry owned and operated a recording business and from 1975 to 1981 was employed as the Director of Marketing and Sales with Financial Dynamics, a financial planning firm located in Covina, California. Mr. Barry attended Oklahoma State University from 1969 to 1970, majoring in Accounting and Ozark Bible College from 1970 to 1972, majoring in music. |
ARISTIDES W. GEORGANTAS, age 56, has served as a Director since February, 1999. Mr. Georgantas was Executive Vice President and Chief Operating Officer, Global Asset Management/Private Banking and Chairman and Chief Executive Officer of Chemical Bank New Jersey, NA. He had also served as President and Chief Operating Officer of Horizon Bancorp and subsidiaries and Princeton Bank. His affiliations include Director of Blue Cross Blue Shield of New Jersey; Director of Glenmede Trust Company; Chairman of the Foundation for New Jersey Public Broadcasting; and Director of Mathematica Policy Research, Inc. Mr. Georgantas is a graduate of the University of Massachusetts and Columbia University Graduate School of Business. HERBERT L. LUCAS, age 74, has been a Director since 1991. Mr. Lucas received a BA degree in History in 1950 from Princeton University and an MBA degree in 1952 from Harvard University Graduate School of Business Administration. He served as President from 1972 to 1981 of Carnation International in Los Angeles and as a member of the Board of Directors of the Carnation Company. Since 1982, Mr. Lucas has managed his family investment business. He has served on the Board of Directors of various financial and business institutions including Wellington Trust Company, Arctic Alaska Fisheries, Inc., Nutraceutix, and Sunworld International Airways, Inc. Mr. Lucas has served as a Trustee of The J. Paul Getty Trust, the Los Angeles County Museum of Art, and Winrock International Institute for Agricultural Research and Development. He was formerly a member of the Board of Trustees of Princeton University. CARL W. SCHAFER, age 64, has been a Director since July 1986. Mr. Schafer was Financial Vice President and Treasurer (Chief Financial Officer) of Princeton University from July 1976 to October 1987. From October 1987 to April 1990, Mr. Schafer was a Principal of Rockefeller & Co., Inc. of New York, an investment management firm. He is a Director of The Atlantic Foundation and Harbor Branch Institution and became President of the Atlantic Foundation in April 1990. Mr. Schafer also holds the following positions: Director/Trustee of the Paine Webber and Guardian Families of Mutual Funds; Director of Roadway Express, Inc., a trucking company; Director of Frontier Oil Corporation, an oil refiner; Director of Nutraceutix, Inc., a bio technology company; Director of Labor Ready, Inc., a provider of temporary labor; and Chairman of The Johnson Atelier and School Of Sculpture. He graduated from the University of Rochester in 1958, and served with the U.S. Bureau of the Budget, successively, as Budget Examiner, Legislative Analyst, Deputy Director and Director of Budget Preparation. He resides in Princeton, New Jersey. Board of Directors Meetings During fiscal year 2000, there were five regular meetings and one special meeting of the Board of Directors. Mr. Lucas attended each meeting; Mr. Schafer attended five regular meetings; and Mr. Georgantas attended four regular meetings and one special meeting. Officers Officers of the Company are appointed by the Board of Directors and serve at the discretion of the Board of Directors. EXECUTIVE COMPENSATIONCash Compensation of Officers The following table sets forth the total compensation paid and stock options offered by the Company to its Chief Executive Officer and to each of its most highly compensated executive officers, other than the Chief Executive Officer, whose compensation exceeded $100,000 during the fiscal years ended September 30, 2000, 1999, and 1998. |
SUMMARY COMPENSATION TABLE |
Annual Compensation |
Long Term Compensation | ||||||||||
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Name |
Capacities in Which Served |
Year |
Salary[1] |
Bonus |
Securities Bonus Underlying Options[2] | ||||||
Joel M. Barry | Chairman/Chief | 2000 | $190,000 | $ 50,000 | 50,000 | ||||||
Executive Officer/ | 1999 | 159,166 | 52,500 | 300,000 | |||||||
President | 1998 | 148,616 | [3] | 14,000 | 0 | ||||||
Alice Cheung | Chief Financial | 2000 | $ 99,500 | 14,250 | 10,000 | ||||||
Officer/Treasurer | 1999 | 94,416 | 12,000 | 20,000 | |||||||
1998 | 89,333 | 11,000 | 0 | ||||||||
Rick Slater | Vice President | 2000 | $113,300 | 13,200 | 20,000 | ||||||
1999 | 110,000 | 10,000 | 20,000 | ||||||||
1998 | 100,000 | 5,000 | 0 | ||||||||
Lawrence Brown | Vice President | 2000 | $100,000 | 12,750 | 40,000 | ||||||
1999 | 88,600 | 0 | 20,000 | ||||||||
1998 | 78,951 | 3,000 | 20,000 | ||||||||
David Griffin | Vice President | 2000 | 90,910 | 9,100 | 10,000 | ||||||
1999 | 88,682 | 7,500 | 20,000 | ||||||||
1998 | 69,981 | 3,000 | 0 |
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[1] | The Company provides Mr. Barry with an automobile. Mr. Barry, Ms. Cheung, Mr. Slater, Mr. Brown and Mr. Griffin are participants of a Company sponsored 401(K) plan. There has been no compensation paid other than that indicated in the above table. |
[2] | None of these options have been exercised. See Stock Option Plan. |
[3] | Mr. Barrys salary includes a $1,117 vacation paydown. |
Fiscal 2000 Option Grants TableThe following table sets forth the stock options granted to the Companys Chief Executive Officer and each of its executive officers, other than the Chief Executive Officer whose compensation exceeded $100,000 during fiscal 2000. Under applicable Securities and Exchange Commission regulations, companies are required to project an estimate of appreciation of the underlying shares of stock during the option term. The Company has chosen to project this estimate using the potential realizable value at assumed annual rates of stock price appreciation for the option term at assumed rates of appreciation of 5% and 10%. However, the ultimate value will depend upon the market value of the Companys stock at a future date, which may or may not correspond to the following projections. |
Potential Realization Value at Assumed Annual Rates of Stock Price Appreciation for Option Term | |||||||||||||
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Name |
Options Granted |
Percent of Total Granted to Employees in Fiscal Year |
Exercise Price per share |
Expiration Date |
5% |
10% | |||||||
Joel M. Barry | 50,000 | 11.76 | % | $2.56 | 02/04/10 | $36,000 | $78,000 | ||||||
Alice Cheung | 10,000 | 2.35 | % | $1.75 | 12/23/09 | $4,800 | $11,000 | ||||||
Rick Slater | 20,000 | 4.71 | % | $1.75 | 12/23/09 | $9,600 | $22,000 | ||||||
Lawrence Brown | 10,000 | 2.35 | % | $1.75 | 12/23/09 | $4,800 | $11,000 | ||||||
30,000 | 7.06 | % | $2.56 | 02/04/10 | $21,000 | $47,000 | |||||||
David Griffin | 10,000 | 2.35 | % | $1.75 | 12/23/09 | $4,800 | $11,000 |
The following table sets forth the number of unexercised options held by the Companys Chief Executive Officer and each of its executive officers, other than the Chief Executive Officer whose compensation exceeded $100,000 during fiscal 2000. Aggregated
Option/SAR Exercises and
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Name |
Shares acquired on exercise # |
Value realized |
Number of unexercised options/SARS FY-end # |
Value of unexercised in-the-money Options/SARS at FY-end[1] | |||||
---|---|---|---|---|---|---|---|---|---|
Joel M. Barry | 130,000 | $143,000 | 870,000 | $722,000 | |||||
Alice Cheung | -0- | $ -0- | 180,000 | $ 98,000 | |||||
Rick Slater | 4,000 | $ 8,000 | 222,000 | $192,000 | |||||
Lawrence Brown | -0- | $ -0- | 100,000 | $ 11,200 | |||||
David Griffin | 10,000 | $ 36,200 | 165,000 | $119,000 |
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[1] | Based on the closing sales price of the Common Stock on September 30, 2000 of $1.50 per share, less the option exercise price. |
Compensation of Directors Each outside director received $15,000 and 5,859 shares of Common Stock in fiscal 2000; $15,000 and 5,455 shares of Common Stock in fiscal 1999; and $20,000 and 33,333 three-year options, exercisable at $0.91 per share in fiscal 1998. Directors are compensated for all reasonable expenses and are not compensated for special meetings. Stock Option Plan On May 13, 1992, the Companys Board of Directors authorized adoption of an Incentive Stock Option Plan (Plan), ratified by the shareholders at the Annual Meeting held July 10, 1992. The Plan provided for the issuance of up to 325,000 stock options, each to purchase one share of the Common Stock for $0.85 per share, subject to adjustment in the event of stock splits, combinations of shares, stock dividends or the like. |
On November 18, 1996, the Companys Board of Directors authorized an increase in the Plan to 3,375,000 options and was ratified by the shareholders at the Annual Meeting held in February 1997. On February 4, 1999, the Companys Board of Directors authorized an increase in the Plan to 5,375,000 options and was ratified by the shareholders at the Annual Meeting held in February 1999. Employee Benefit Plans The Company does not presently have a formal stock option plan for employees. Employment Agreements None. Bonus, Profit Sharing
and Other Remuneration Plans and Pension and Retirement Plans The Committee has also established a bonus program to reward extraordinary performance that exceeds pre-set goals established for executive officers and key personnel. The Company believes that such a bonus program provides the incentive to exceed such goals, thereby building shareholder value. The Company has a contributory 401(K) Retirement Pension Plan which covers all employees who are qualified under the plan provisions. DESCRIPTION OF PROPOSALPROPOSAL 1PROPOSAL TO ELECT ONE DIRECTOR TO SERVE FOR THE RESPECTIVE TERM SPECIFIED On November 28, 2000, the members of the Nominating Committee passed a motion to nominate Mr. Carl W. Schafer for election to the Board of Directors for a three-year term. PROPOSAL 2PROPOSAL TO RATIFY AND APPROVE THE SELECTION OF AUDITORS The Board of Directors has appointed PricewaterhouseCoopers LLP, independent certified public accountants, as auditors of the Company for the current fiscal year. PricewaterhouseCoopers LLP has audited the financial statements of the Company since 1984, and has no other relationship with or interest in the Company. |
THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF
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By order of the Board of Directors, DONNA L. REHMAN Corporate Secretary |
Dated: January 2, 2001 |
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder(s). If no choice is specified, this proxy will be voted for proposals 1 through 3. ELECTRONIC CLEARING
HOUSE, INC.
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[_] | For the Nominee listed or, if needed Nominee is unable to serve, for a substitute Nominee. |
[_] | Withhold Authority to vote for Nominee listed in the Proxy Statement. |
For [_] |
Against [_] |
Abstain [_] |
2. | PROPOSAL TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS. |
[_] | [_] | [_] | 3. | IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. |
Please sign exactly as name appears on stock. 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. |
Name/Signature in which Stock is Held |
Name/Signature if Held Jointly |
Date |
Please mark, sign, date and return this Proxy by January 30, 2001. With your cooperation, we can be ensured of a quorum.
PLEASE INDICATE ANY CHANGES IN ADDRESS ON REVERSE OF THIS PROXY FORM. THANK YOU.
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