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
PAYCHEX, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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PAYCHEX
August 28, 2000
Dear Paychex Stockholder:
The Board of Directors cordially invites you to attend our Annual Meeting of
Stockholders on Tuesday, October 10, 2000 at the Rochester Riverside Convention
Center, 123 East Main Street, Rochester, New York.
This booklet includes the formal notice of the meeting and the proxy statement.
The proxy statement tells you about the agenda items and the procedures for the
meeting. It also provides certain information about the Company, its Board of
Directors and its senior management.
You may vote by Internet, telephone, written proxy, or written ballot at the
meeting. We encourage you to use the Internet because it is the most
cost-effective way to vote.
We hope you will be able to attend the Annual Meeting and would like to take
this opportunity to remind you that your vote is important. If you need
special assistance at the meeting, please contact the Secretary of the Company
at (716) 385-6666, or write to Paychex, Inc., c/o Secretary, 911 Panorama Trail
South, Rochester, New York 14625-0397.
Sincerely,
B. Thomas Golisano
Chairman, President &
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
PAYCHEX, INC.
911 Panorama Trail South
Rochester, New York 14625-0397
To our Stockholders:
The Annual Meeting of Stockholders of Paychex, Inc. will be held at the
Rochester Riverside Convention Center, 123 East Main Street, Rochester, New
York on Tuesday, October 10, 2000. A continental breakfast will be available
from 8:00 a.m. to 10:00 a.m. The Annual Meeting will begin at 10:00 a.m. for
the following purposes:
1. To elect nine directors; and
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on August
11, 2000, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting.
The Board of Directors extends a cordial invitation to all stockholders to
attend the meeting. However, whether or not you plan to attend the meeting,
please vote by proxy in accordance with the instructions on the proxy card (if
you received the proxy materials in paper form), or voting instruction form (if
you received the proxy materials in paper form from a broker or bank), or that
you have received through electronic mail. You can vote over the Internet, by
using a toll-free telephone number, or by mail using the postage paid envelope
provided.
Signing and returning the proxy card or submitting your proxy via Internet or
by telephone does not affect your right to vote in person if you attend the
Annual Meeting and your shares are registered in your name.
By order of the Board of Directors,
John M. Morphy
Secretary
Rochester, New York
August 28, 2000
Page 1
<PAGE>
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS OF PAYCHEX, INC.
TO BE HELD ON OCTOBER 10, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Paychex, Inc. (the
"Company"), a Delaware corporation, to be used at the Annual Meeting of
Stockholders to be held on Tuesday, October 10, 2000 at 10:00 a.m. for the
purposes set forth in the foregoing Notice of Annual Meeting.
The Board has fixed the close of business on August 11, 2000, as the record
date for determining the holders of common stock entitled to notice of, and to
vote at, the meeting. The Company had outstanding on that date 372,207,983
shares of common stock, each of which is entitled to one vote. A majority of
the outstanding shares (186,103,993 shares) present in person or by proxy will
constitute a quorum.
If the enclosed Proxy is properly executed and returned, the shares represented
will be voted by the proxies in accordance with the stockholder's directions.
If the Proxy is signed and returned without choices having been specified, the
shares will be voted FOR the nine nominees described in the following pages.
The Proxy may be revoked by the person giving it at any time prior to its use
by a written revocation, submission of a later-dated Proxy, or in person at the
meeting.
With regard to the election of directors, who are elected by a plurality of the
votes cast, votes may be cast for nominees or withheld. Votes that are
withheld will be excluded entirely from the vote and will have no effect.
Abstention may not be specified on the proposal relating to the election of
directors. Under applicable Delaware law, a broker non-vote will have no
effect on the outcome of the election of directors.
The 2000 Annual Report, Proxy Statement and Proxy are being mailed to
stockholders on or about August 28, 2000. You may also obtain a copy of the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission without charge upon written request submitted to Paychex, Inc., c/o
Secretary, 911 Panorama Trail South, Rochester, New York 14625-0397.
All applicable information provided in this Proxy Statement has been restated
to reflect the three-for-two stock split effected in the form of 50% stock
dividend distributed in May 2000.
Page 2
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
Nine directors are to be elected to the Board of Directors. The Board of
Directors has nominated for election the persons listed below. If elected,
each nominee will hold office until the Annual Meeting to be held in 2001, and
until his successor is elected and shall qualify.
The Board of Directors recommends the election of the nine nominees and it is
intended that the proxies named (unless otherwise directed) will vote the Proxy
FOR the election of these nominees. Although the Board of Directors believes
that all of the nominees will be available to serve, the proxies may exercise
discretionary authority to vote for substitutes proposed by the Board of
Directors of the Company. However, the enclosed Proxy cannot be voted for more
than nine nominees.
The following biographies set forth certain information with respect to the
nominees for election as directors of the Company, none of whom is related to
any other nominee or executive officer.
B. Thomas Golisano, 58, a director since 1979, founded Paychex, Inc., in 1971
and is Chairman, President, and Chief Executive Officer of the Company. He
serves on the Board of Trustees of the Rochester Institute of Technology and is
a member of the Board of Directors of Iron Mountain Corporation and several
privately held companies. He is former chairman of Greater Rochester Fights
Back (a coalition to combat illegal drugs and alcohol abuse), has served as a
member of the Board of Directors of numerous non-profit organizations, and is
founder of the B. Thomas Golisano Foundation.
Steven D. Brooks, 49, a director since 1995, joined Broadview Capital Partners,
a private equity firm focused on investments in the technology sector, in
February 1999, as Managing Director. From 1997 to 1999, he served as Managing
Director of Donaldson, Lufkin & Jenrette Securities Corporation. From 1996 to
August 1997, he was a private investor and a consultant to technology
companies. From 1994 to 1996, he served as Managing Director and head of
Global Technology Investment Banking at Union Bank of Switzerland Securities
LLC. He is a member of the Board of Directors of QRS, Inc., an electronic
commerce company, and VERITAS Software Corporation, a storage management
software company, as well as several privately held companies.
G. Thomas Clark, 62, a director since 1980, retired as Senior Vice President of
Finance, Secretary, and Treasurer of Paychex, Inc., in October 1996. He joined
Paychex in 1979 after spending eighteen years in the commercial banking
business. He is a member of the Board of Directors of Unity Health Systems,
the Rochester School of the Holy Childhood, the Heritage Christian Home
Foundation, and Harris Interactive, Inc., as well as several privately held
companies. Mr. Clark is a Trustee of the B. Thomas Golisano Foundation.
David J. S. Flaschen, 44, a director since 1999, is currently a private
investor and consultant. From 1997 to 1999, he was the President and Chief
Executive Officer of Thomson Financial, an information services company focused
on the financial industry. Previously, he served as Chairman and Chief
Executive Officer of Donnelley Marketing, Inc., a consumer information services
company. Prior to 1995, he was with Dun & Bradstreet for ten years as the
President and Chief Operating Officer of A.C. Nielson, North America, and held
senior management positions at IMS and DataQuest. Mr. Flaschen is a member of
the Board of Directors of Buyerzone.com and a member of the Board of Advisors
of SI Ventures.
Phillip Horsley, 61, a director since 1982, is the founder and Managing
Director of Horsley Bridge Partners, a financial services firm formed in 1983.
Horsley Bridge manages private equity investments for institutional investors.
Page 3
<PAGE>
Grant M. Inman, 58, a director since 1983, is the founder and President of
Inman Investment Management, a private venture capital investment company
formed in 1998. Prior to 1998, he co-founded and was general partner of Inman
& Bowman, a private venture capital partnership formed in 1985. He is a member
of the Board of Directors of the Lam Research Corporation, Wind River Systems,
Inc., and several privately held companies. Mr. Inman is a trustee of the
University of California, Berkeley Foundation and the University of Oregon
Foundation.
Harry P. Messina, Jr., 67, a director since 1985, has been a partner for more
than thirty years in the law firm of Woods Oviatt Gilman LLP, the Company's
general counsel. He serves on the Advisory Board of M & T Bank, the Board of
Trustees of St. Joseph's Villa, and is a member of the Board of Directors of
Rochester Management, Inc., as well as several privately held companies.
J. Robert Sebo, 64, a director since 1979, retired as Senior Vice
President/Director of Eastern Operations of Paychex, Inc., in December 1994,
where he also held many sales and operations positions within the Company. In
1974, he started his own Paychex franchise operation in Cleveland, Ohio. For
fourteen years prior to that he held sales, marketing, and business management
positions in the Cadillac Motor Car Division of General Motors Corporation.
Joseph M. Tucci, 52, a director since January 2000, is the President and Chief
Operating Officer of EMC Corporation, a leading provider of intelligent
enterprise storage systems, software, networks, and services. From June 1999
through December 1999, he served as Deputy CEO of GetronicsWang. From 1993 to
June 1999, he served as Chairman and CEO of Wang Global, a leader in networked
technology services and solutions, which was acquired by Getronics NV in June
1999. Mr. Tucci is a member of the Board of Directors of Telecom Italia S.p.A.
and SmartDisk Corporation.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company met four times during the fiscal year
ended May 31, 2000 ("fiscal 2000"). No director, other than Mr. Tucci, who was
elected to the Board in January, attended fewer than 75% of all meetings held
of the Board of Directors and of the committees on which such director served
during fiscal 2000. Non-employee directors are paid $6,000 annually plus
$1,000 for each Board meeting attended and $500 for each Committee meeting
attended. The Board has four standing committees.
The Executive Committee is comprised of Messrs. Golisano, Clark, and Horsley
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company except as limited by law.
The Committee held one meeting during fiscal 2000.
The Audit Committee is comprised of Messrs. Brooks, Clark, Flaschen, and Inman.
The Committee is responsible for monitoring management's standards and
practices for financial reporting and the effectiveness of the Company's system
of internal control. The Committee held two meetings during fiscal 2000.
The Compensation Committee is comprised of Messrs. Flaschen, Horsley, and
Inman. The Committee makes recommendations with respect to officers' salaries
and grants of stock options to the Company's employees. The Committee met once
during fiscal 2000.
The Investment Committee is comprised of Messrs. Brooks, Horsley, and Inman.
The Committee is responsible for setting and reviewing investment policies and
reviewing the investment portfolio's performance, market risks and credit
risks. The Committee met once during fiscal 2000.
The Board does not have a nominating committee.
PAGE 4
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for making recommendations regarding the compensation of the Chief
Executive Officer and other executive officers of the Company. The Committee's
recommendations are presented to the Board for discussion and decision.
The compensation for executive officers is designed to be competitive with
companies of similar size and performance, reward exceptional individual
performance, tie compensation to overall Company objectives, and align the
interest of executive officers with the interests of shareholders. The
components of the compensation program are base salary, annual incentive bonus
and stock option awards under the Company's Stock Incentive Plan.
Base Salary and Annual Incentive Plan (Bonus)
Annual compensation is composed primarily of base salary and an annual
incentive bonus. The salaries of the executive officers are determined based
on their performance and comparisons with base salaries paid to executive
officers having similar responsibilities in comparable companies. The
Committee and the Board have instituted an Officer Incentive Program, which
provides for annual cash bonuses of up to 40% of base salary based on the
component of the officers' annual compensation tied directly to overall Company
financial performance. For fiscal 2000, the maximum bonus was paid.
Stock Incentive Plan
The Company's Stock Incentive Plan is designed to align executive officers'
compensation with long-term performance of the Company's stock. Stock options
are granted to executive officers, with the exception of Mr. Golisano, in
amounts based upon their individual performance. Stock options are granted at
fair market value as of the date of the grant, and have a term of up to ten
years. These options vest as to one-third each year commencing two years after
the date of grant. The grant of stock options provide incentive for the
executive officers to create shareholder value over the long-term.
Compensation of Chief Executive Officer
The Committee meets annually without the Chief Executive Officer to evaluate
his performance and recommends to the Board the compensation to be paid to him.
In performing that function, the Committee reviews the range and components of
compensation paid to CEOs of other public companies. In particular, the
Committee looks to those public companies whose size and performance are
similar to those of Paychex, Inc.
Mr. Golisano's substantial stock position in the Company assures the Committee
of his close identification with the interests of its stockholders. In view of
his substantial stock position, Mr. Golisano has chosen not to receive any
stock option grants. His compensation is reflective in part of the Committee's
evaluation of the Company's performance in the areas of revenue, profitability,
return on stockholders' equity and other areas. Salary adjustments reflect the
Committee's opinion of the impact, both short- and long-term, which Mr.
Golisano's creativity, strategic focus, and leadership had on these and other
factors.
Mr. Golisano's fiscal 2000 compensation (including base salary and bonus under
the Officer Incentive Program) increased 8% over his compensation for fiscal
1999. Mr. Golisano's bonus was based on the Officer Incentive Program
described above. In fiscal 2000, the Company's service revenues increased 22%
and net income increased 37% over the prior year's figures, while return on
stockholders' equity was 38%.
Page 5
<PAGE>
Compensation of Other Executive Officers
Recommended compensation for executive officers other than the CEO is
determined by the Committee after the CEO provides the Committee with his
evaluation of the performance of each executive officer and his recommendation
with respect to base salary, bonus, and stock options. Committee members
discuss his recommendations in light of their own experiences and familiarity
with levels and components of compensation for persons with similar
responsibilities in other public companies. The goal of the Committee is to
compensate fairly for the job done, to reward extraordinary performance or
promise, and to encourage long-term identification with stockholder interest
through the award of stock options under the Company's Stock Incentive Plan.
Company performance is also considered.
Impact of Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally limits the tax
deductibility of annual compensation paid to certain executive officers to $1
million, unless specified requirements are met. The Committee has carefully
considered the impact of this provision. At this time, it is the Committee's
intention to continue to compensate all officers based on overall performance.
The Committee expects that most, if not all compensation paid to officers will
qualify as a tax-deductible expense. However, it is possible that at some
point in the future, circumstances may cause the Committee to authorize
compensation that is not deductible.
Respectively submitted,
The Compensation Committee
David J. S. Flaschen
Phillip Horsley
Grant M. Inman
OTHER EXECUTIVE OFFICERS OF THE COMPANY
Daniel A. Canzano, 46, was elected Vice President, Information Technology in
April 1993. Mr. Canzano has been with the Company since 1989 and has served as
a Zone Sales Manager and Director of Information Technology.
William G. Kuchta, Ed. D., 53, joined the Company in February 1995 and was
elected Vice President, Organizational Development in April 1996. From 1993 to
1995, Mr. Kuchta was principal of his own consulting firm, and from 1989 to
1993, he served as Vice President of Human Resources of Fisons Corporation.
John M. Morphy, 53, joined the Company in October 1995 and was elected Vice
President, Director of Finance in July 1996 and elected Chief Financial Officer
and Secretary in October 1996. Prior to joining the Company, Mr. Morphy served
as Chief Financial Officer and in other senior management capacities for over
10 years at Goulds Pumps, Incorporated.
Eugene R. Polisseni, 60, has served as Vice President, Marketing since April
1989, and for the past several years, has managed the Company's HRS-PEO
division. Mr. Polisseni has been with the Company since 1977 and during that
period served in various capacities.
Diane Rambo, 49, was elected Vice President, Electronic Network Services in
October 1994. Ms. Rambo has been with the Company since August 1980 and has
served as Director of Electronic Network Services and as a Branch Manager.
Page 6
<PAGE>
Walter Turek, 48, has served as Vice President, Sales since April 1989. Mr.
Turek has been with the Company since 1979 and has served in various sales
management capacities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
officers and beneficial owners of more than 10% of the Company's common stock
to file with the Securities and Exchange Commission (SEC) reports of
transactions in the stock. Because of the complexity of the rules, the Company
provides assistance with filing such reports for those reporting persons who so
requested and agreed to advise the Company promptly of changes in the ownership
of the Company's equity securities.
Based solely on the filings made with the SEC, the Company believes that during
the fiscal year ended May 31, 2000, Section 16(a) filing requirements
applicable to its executive officers, directors, and greater than ten percent
beneficial owners were complied with.
Page 7
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following table sets forth all compensation received by the Company's Chief
Executive Officer and the Company's four other most highly compensated
executive officers during the last three fiscal years ended May 31, 2000, 1999
and 1998, respectively.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------
Long-term
Annual Compensation Compensation
---------------------------------------------------- -------------
Number of
Common Shares
Underlying
Name and Principal Options All Other
Position Year Salary Bonus Granted Compensation(1)
------------------------ ----- -------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
B. Thomas Golisano 2000 $644,230 $260,000 - $5,100
Chairman, President & 1999 $594,230 $240,000 - $4,800
Chief Executive Officer 1998 $531,250 $165,000 - $4,600
Walter Turek 2000 $289,910 $116,480 9,000 $4,929
Vice President, Sales 1999 $274,810 $112,000 20,250 $4,534
1998 $228,250 $112,100 50,625 $4,300
Eugene R. Polisseni 2000 $263,285 $106,000 13,500 $4,973
Vice President, Marketing 1999 $248,270 $100,000 20,250 $4,702
1998 $228,250 $ 70,500 30,375 $4,978
John M. Morphy 2000 $254,840 $102,800 22,500 $5,020
Vice President, Chief 1999 $235,925 $ 95,200 40,500 $4,754
Financial Officer & 1998 $214,375 $ 66,000 67,500 $4,940
Secretary
Daniel A. Canzano 2000 $236,965 $ 95,400 13,500 $4,956
Vice President, Infor- 1999 $223,615 $ 90,000 20,250 $4,693
mation Technology 1998 $207,000 $ 63,900 30,375 $4,953
===============================================================================
</TABLE>
(1) The amounts reported in this column consist solely of the Company's
matching contributions under the Paychex, Inc. 401(k) Incentive Retirement
Plan.
Page 8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted to the Company's Chief
Executive Officer and the Company's four other most highly compensated
executive officers during fiscal 2000. Under SEC regulations, companies are
required to project an estimate of appreciation of the underlying shares of
stock during the option term. The Company has chosen the 5% - 10% formula
approved by the SEC. However, the ultimate value will depend on the market
value of the Company's stock at a future date, which may or may not correspond
to the projections below.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Individual Grants
-------------------------------------------------------- Potential Realizable
Number of % of Total Value at Assumed
Common Options Annual Rates of Stock
Shares Granted to Price Appreciation
Underlying Employees Exercise for Option Term (2)
Options in Fiscal Price Expiration ---------------------
Name Granted (1) 2000 Per Share Date 5% 10%
-------------- ------------ -------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
B. T. Golisano - -% $ - - $ - $ -
W. Turek 9,000 0.3% $21.46 7/8/2009 $121,455 $307,791
E. R. Polisseni 13,500 0.5% $21.46 7/8/2009 $182,183 $461,687
J. M. Morphy 22,500 0.8% $21.46 7/8/2009 $303,638 $769,478
D. A. Canzano 13,500 0.5% $21.46 7/8/2009 $182,183 $461,687
================================================================================
</TABLE>
(1) Non-qualified stock options were granted under the Paychex, Inc. 1998 Stock
Incentive Plan. Options are granted at prices not less than 100% of the
fair market value of the common stock at the date of grant. The options
granted are exercisable after two years in cumulative annual installments
of 33 1/3% and expire after a term of ten (10) years from the date of
grant.
(2) In accordance with SEC rules, these columns show potential realizable
values net of the option exercise price, but before any potential income
taxes, assuming the market price of the Company's common stock appreciates
from the date of grant over a period of ten years at the annualized rates
of five (5) and ten (10) percent, respectively. If the common stock price
does not increase above the exercise price at the time of the exercise,
realized value to the named executives from these stock options will be
zero.
Page 9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth stock options exercised by the Company's Chief
Executive Officer and the Company's four other most highly compensated
executive officers during fiscal 2000, and the number and value of all
unexercised options at May 31, 2000. The value of "in-the-money" options
refers to options having an exercise price that is less than the market price
of the Company's stock at May 31, 2000.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Number Number of
Of Common Shares
Common Underlying Unexercised Value of Unexercised
Shares Options at In-The-Money Options at
Acquired Net Value May 31, 2000 May 31, 2000 (2)
On Realized ------------------------- --------------------------
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
-------------- --------- ----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
B. T. Golisano - $ - - - $ - $ -
W. Turek 254,410 $4,156,971 319,458 71,438 $9,888,334 $1,428,250
E. R. Polisseni 154,918 $3,662,987 63,282 54,000 $1,779,237 $ 980,033
J. M. Morphy 45,000 $ 608,013 5,625 133,313 $ 129,094 $2,585,233
D. A. Canzano 115,339 $3,601,130 311,346 64,125 $9,527,188 $1,212,401
=============================================================================================
</TABLE>
(1) Represents market value of the Company's common stock at exercise date less
the exercise price.
(2) Represents the difference between the exercise price of the stock options
and the $35.00 per share closing price of the Company's common stock on May
31, 2000 for all in-the-money options held by each named executive. The
in-the-money stock option exercise prices range from $1.68 per share to
$21.46 per share. These stock options were granted at exercise prices
equal to the fair market value of the stock on the date of grant.
Page 10
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of the total cumulative
returns of investing $100 on May 31, 1995, in Paychex, Inc. common stock, the
S&P Services (Data Processing) Super Composite (the "S&P S(DP)") Index, the S&P
Midcap 400 Index, and the S&P 500 Index. The S&P S(DP) Index includes a
representative peer group of companies, and includes Paychex, Inc. The S&P
Midcap 400 Index represents a broad market group of companies with an average
market capitalization, which included Paychex, Inc. until September 1998.
Since September 1998, the Company has been a participant in the S&P 500 Index,
a market group of companies with a larger than average market capitalization.
The S&P Midcap 400 Index is shown for transitional purposes. All comparisons
of stock price performance shown assume reinvestment of dividends.
[Graph omitted. Data shown below.]
<TABLE>
<CAPTION>
May 31, 1995 1996 1997 1998 1999 2000
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paychex, Inc. $100 $225 $284 $420 $523 $934
S&P S(DP) $100 $139 $138 $158 $190 $227
S&P Midcap 400 $100 $128 $152 $197 $221 $268
S&P 500 $100 $128 $166 $217 $263 $290
</TABLE>
Page 11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
The following table sets forth information, based upon reports filed by such
persons with the Securities and Exchange Commission (SEC) as of July 31, 2000,
with respect to the beneficial ownership of common stock of the Company by each
beneficial owner of more than 5% of the common stock, by each director and
nominee for director of the Company, by each of the executive officers of the
Company named in the Summary Compensation Table and by all directors and
executive officers of the Company as a group. Under the rules of the SEC,
"beneficial ownership" is deemed to include shares for which the individual,
directly or indirectly, has or shares voting or investment power, whether or
not they are held for the individual's benefit.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Of Shares Of Shares
Amount of Beneficially Beneficially
Beneficial Owned, Shares Owned, Shares
Ownership of That May Be Disclaimed as
Common Percent of Acquired Within To Beneficial
Name Stock Class (1) 60 Days Ownership (2)
---------------------- ------------ ---------- --------------- -------------
<S> <C> <C> <C> <C>
More than 5% owners:
B. Thomas Golisano 40,043,773 10.7% - -
911 Panorama Trail
South
Rochester, NY 14625
Janus Capital Corp-
oration(4) 38,598,316 10.3% - -
100 Fillmore Street
Denver, CO 80206
Directors:
B. Thomas Golisano 40,043,773 10.7% - -
Steven D. Brooks 92,814 (3) 89,438 -
G. Thomas Clark 526,425 (3) 16,875 258,474
David J. S. Flaschen 2,250 (3) - -
Phillip Horsley 285,223 (3) 40,923 -
Grant M. Inman 318,875 (3) 63,423 -
Harry P. Messina, Jr. 513,849 (3) 126,356 320,323
J. Robert Sebo 4,948,162 1.3% 16,875 18,480
Joseph Tucci - (3) - -
Named Executive
Officers:
Walter Turek 1,101,912 (3) 326,208 -
Eugene R. Polisseni 7,795,503 2.1% 70,032 931,519
John M. Morphy 2,720 (3) 25 -
Daniel A. Canzano 340,891 (3) 318,096 337
All Directors and
Officers of the
Company As a Group
(15 persons) 56,110,407 15.0% 1,174,395 1,529,133
================================================================================
</TABLE>
Page 12
<PAGE>
(1) Based upon the number of shares of common stock outstanding and deemed
outstanding as of July 31, 2000, including shares that may be acquired
within 60 days by exercise of options.
(2) Included in this column are shares with respect to each individual which
are directly owned by certain relatives and entities with whom they are
presumed to share voting and/or investment power, and as to which the
individual disclaims beneficial ownership.
(3) Indicates percentage is less than 1%.
(4) As reported on schedule 13F-HR filed with the Securities and Exchange
Commission on August 15, 2000 which reported shares beneficially owned as
of June 30, 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountant since 1983 has been Ernst & Young
LLP. Management expects to re-appoint this firm for fiscal year 2001.
Representatives of Ernst & Young LLP are expected to be present at the
stockholders' meeting and will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
OTHER MATTERS AND INFORMATION
As of the date of this Proxy Statement, management does not intend to present,
and has not been informed that any other person intends to present, any matter
for action at the meeting other than those described in this Proxy Statement.
If any other matters properly come before the meeting, the persons named in the
enclosed Proxy will vote the Proxy on such matters in accordance with their
judgment.
The Company will pay the cost of solicitation of Proxies. The Company will
reimburse any banks, brokers and other custodians, nominees and fiduciaries for
their expenses in forwarding Proxies and Proxy solicitation material to the
beneficial owners of the shares held by them.
PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
The Company must receive stockholder proposals for inclusion in the Proxy
Statement for the next Annual Meeting of Stockholders at its executive offices
on or before April 30, 2001.
By order of the Board of Directors,
John M. Morphy
Secretary
Rochester, New York
August 28, 2000
Page 13
<PAGE>
PAYCHEX, INC.
PROXY
The undersigned hereby appoints B. THOMAS GOLISANO and JOHN M. MORPHY, or
either one of them, with full power of substitution, attorneys and proxies to
represent the undersigned at the Annual Meeting of Stockholders of the Company
to be held on October 10, 2000 at 10:00 a.m., and at any adjournment thereof,
with all the powers which the undersigned would possess if personally present
to vote all shares of stock which the undersigned may be entitled to vote at
said meeting.
I. ELECTION OF DIRECTORS
[ ] FOR all Nominees [ ] WITHHOLD all Nominees
B. Thomas Golisano, Steven D. Brooks, G. Thomas Clark, David J. S. Flaschen,
Phillip Horsley, Grant M. Inman, Harry P. Messina, Jr., J. Robert Sebo, and
Joseph M. Tucci.
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CIRCLE SUCH
NOMINEE'S NAME. YOUR PROXY WILL BE VOTED FOR THE REMAINDER.)
2. In accordance with their judgement in connection with such other business,
if any may come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS. PLEASE
DATE, SIGN AND RETURN IT IN THE ENCLOSED ENVELOPE. IF NOT OTHERWISE MARKED,
THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED "FOR" THE NINE NOMINEES.
Dated: ______________________________, 2000
Signed: ______________________________
(Name of Stockholder to be signed exactly as it appears on this proxy)
