CONCORD EFS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
To Be Held on May 2, 1996
To the Shareholders of
Concord EFS, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of
Concord EFS, Inc. ("Concord" or the "Company") will be held at Colonial
Country Club, 2736 Countrywood Parkway, Memphis Tennessee on May 2, 1996
beginning at 9:30 a.m. local time, for the following purposes:
1. To elect directors to serve for the ensuing year;
2. To approve the Amendment to the Certificate of Incorporation to
increase the number of authorized shares of Common Stock;
3. To approve Amendment of 1993 Incentive Stock Option Plan to
change the formula grants to directors;
4. To transact such other business as may properly come before the
annual meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on March 1,
1996 as the record date for determination of the shareholders entitled to
notice of and to vote at the Annual Meeting. The By-Laws of the Company
require that the holders of a majority of all stock issued, outstanding and
entitled to vote be present in person or represented by proxy at the meeting
in order to constitute a quorum.
By Order of the Board of Directors
Richard M. Harter
Secretary
March 29, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING,
PLEASE SIGN AND RETURN THE ENCLOSED PROXY.
No postage is required if mailed in the United States.
<PAGE>
CONCORD EFS, INC.
PROXY STATEMENT
March 29, 1996
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Concord EFS, Inc. ("Concord" or the
"Company") of proxies for use at the Annual Meeting of Shareholders to be
held on May 2, 1996 and any adjournments thereof. Shares as to which
proxies have been executed will be voted as specified in the proxies. A
proxy may be revoked at any time by notice in writing received by the
Secretary of the Company before it is voted.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The Company's only issued and outstanding class of voting securities is
its Common Stock, par value $.33 1/3 per share. Each shareholder of record
on March 1, 1996 is entitled to one vote for each share registered in such
shareholders's name. As of that date, the Company's Common Stock was held
by approximately 274 shareholders of records or through nominee or street
name accounts with brokers.
The following table sets forth, as of March 1, 1996, the ownership of
the Company's Common Stock by each person who is known by the Company to own
beneficially more than 5% of the Company's outstanding Common Stock, by each
director who owns shares and by all directors and officers of the Company as
a group.
Percent of
Shares Outstanding
Beneficial Owner (1) Owned Shares (2)
- --------------------------- ------- -----------
Dan M. Palmer (3) 611,719 1.6%
Edward A. Labry III (4) 243,282 0.6%
Joyce Kelso 399 0.0%
Richard M. Harter 47,625 0.1%
Jerry D. Mooney 6,300 0.0%
David C. Anderson 3,375 0.0%
J. Richard Buchignani 3,405 0.0%
Paul Whittington 2,250 0.0%
William Blair &
Company, L.L.C.(5)(6) 3,661,107 10.0%
All officers, directors and nominees
as a group (8 persons) (7) 918,355 2.4%
-1-
<PAGE>
(1) The address of each beneficial owner is the same as the Company's except
for William Blair & Company L.L.C. ("Blair") whose address is: 222 West
Adams Street, Chicago, IL 60606.
(2) Percentage ownership is based on 37,760,165 shares issued and
outstanding, plus the number of shares subject to options exercisable
within 60 days from the record date by the person or the aggregation
of persons for which such percentage ownership is being determined.
(3) Shares owned include 409,219 shares covered by unexercised stock
options.
(4) Shares owned include 141,914 shares covered by unexercised stock
options.
(5) Based on a Schedule 13G dated as of March 6, 1996 filed by Blair.
Includes 297,034 shares as to which Blair has sole voting power and
3,661,107 shares as to which Blair has sole dispositive power.
(6) Blair disclaims benefial ownership as to 3,364,073 of such shares.
(7) Shares owned include 551,133 shares covered by unexercised stock
options.
ELECTION OF DIRECTORS
Eight directors are to be elected to hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified. Unless a proxy is executed to withhold authority for the
election of any or all of the directors, then the persons named in the
proxy will vote the shares represented by the proxy for the election of the
following eight nominees. If the proxy indicates that the shareholder
wishes to withhold a vote from one or more nominees for director, such
instruction will be followed by the persons named in the proxy. All eight
of the nominees are now members of the Board of Directors. The Board of
Directors has no reason to believe that any of the nominees will be unable
to serve. In the event that any nominee should not be available, the
persons named in the proxies will vote for the others and may vote for a
substitute for such nominee. An affirmative vote of a majority of the
Company's Common Stock represented in person or by proxy at the meeting is
necessary for the election of the individuals named below.
Recommended Vote
The Board of Directors recommends that you vote "FOR" the election of
these eight individuals as directors.
The following table lists the name of each proposed nominee; his/her
age; his/her business experience during at least the past five years,
including principal offices with the Company or a subsidiary of the Company;
and the year since which he/she has served as a director of the Company.
There are no family relationships among the nominees.
Office With the Company, Business
Nominees and Ages Experience and Year First Elected Director
----------------- ------------------------------------------
Dan M. Palmer (53) Mr. Palmer became Chairman of the Board in
February 1991. Mr. Palmer has been Chief
Executive Officer of the Company since August
1989, and a Director of the Company since May
1987. Mr. Palmer has been the Chief Executive
Officer of EFS National Bank (formerly EFS,
Inc.) since its inception in 1982. He joined
Union Planters National Bank in June 1982 and
founded the EFS operations within the bank. He
continued as President and Chief Executive
Officer of EFS when it was acquired by Concord
in March 1985.
-2-
<PAGE>
Joyce Kelso (54) Mrs. Kelso has been a Director since May 1991,
and Vice President in charge of Customer
Service since EFS began operations. In August
1990, she was elected Senior Vice President of
the Company. As of January 1, 1995,Mrs. Kelso
is semi-retired.
Edward A. Labry III (33) Mr. Labry joined EFS in 1984. He was made
Director of Marketing in March 1987 and Vice
President of Sales in February 1988. In August
1990, he was elected to Chief Marketing Officer
of the Company. In February 1991, he was
elected Senior Vice President of the Company,
President of the Company in October 1994, and
President of EFS National Bank in December
1994.
Richard M. Harter (59) Mr. Harter has been the Company's Secretary
and a Director since the Company's formation,
and he has been the Secretary of NEFTI since
its acquisition by the Company in 1981. He is
a partner of Bingham, Dana and Gould LLP,legal
counsel to the Company and NEFTI.
Jerry D. Mooney (43) Mr. Mooney has been a Director of the Company
since August 1992. He is President and CEO of
ServiceMaster Diversified Health Services,Inc.
formerly VHA Long Term Care since 1981.
David C. Anderson (53) Mr. Anderson has been a Director of the Company
since August 1992. He retired as Executive
Vice President and Chief Financial Officer of
Burlington Northern, Inc. in Fort Worth, Texas,
October 1995. Prior to that, Mr. Anderson was
with Federal Express in Memphis for seven years
as Senior Vice President and Chief Financial
Officer.
J. Richard Buchignani (47) Mr. Buchignani has been a Director of the
Company since August 1992. He is a partner in
the Memphis office of the law firm of Wyatt,
Tarrant and Comb, who also serves as local
counsel to the Company. Mr. Buchignani has
been affiliated with the law firm since 1995
when most of the members of his firm of
eighteen years joined Wyatt, Tarrant and Combs.
Paul L. Whittington (60) Mr. Whittington has been a Director since May
1993. He was Managing Partner of the Memphis,
Tennessee and Jackson, Mississippi offices of
Ernst & Young LLP from 1988 until his
retirement in 1991.
-3-
<PAGE>
Compensation of Directors
The Company currently pays an annual fee of $8,000 plus $2,000 for each
meeting attended to each non-employee Director of the Company. There are
normally four meetings per year. In addition, non employee directors are
granted options to purchase Company common stock. See page 8. Directors are
reimbursed for expenses incurred in attending meetings of the Board of
Directors. Three of the eight nominees are employees of the Company and are
not separately compensated for serving as directors.
Executive Compensation
The following summary compensation table is intended to provide a
comprehensive overview of the Company's executive pay practices. It
includes the cash compensation paid or accrued by the Company and its
subsidiaries for services in all capacities during the fiscal year ended
December 31, 1995, to or on behalf of each of the Company's named
executives. Named executives include the Chief Executive Officer and the
President of the Company.
Summary Compensation Table
Annual Compensation Long-Term Compensation
Name and Principal Salary Bonus
Position Year ($) ($) Options Awarded*
- -------- ---- ------- ------- ----------------------
Dan M. Palmer 1995 363,738 80,000 135,000
Chairman of the Board & 1994 342,335 70,000 118,125
Chief Executive Officer 1993 302,104 60,000 101,250
of the Company and EFS
National Bank
Edward A. Labry III 1995 279,315 100,000 112,500
President of the Company 1994 255,912 50,000 101,250
and EFS National Bank 1993 153,835 70,000 84,375
* Options awarded have been restated to reflect stock splits issued through
January 18, 1996.
-4-
<PAGE>
STOCK OPTIONS
The following tables present the following types of information for
options granted to the Company's named executives under the Company's 1993
Incentive Stock Option Plan. Table I - options granted and the potential
realizable value of such options, and Table II - options exercised in the
latest fiscal year and the number of unexercised options held.
Table I
Options Granted in 1995
Individual Grants
-----------------------------------------------
Options
Granted to Exercise
Options Employees in price Expiration
Name Granted 1995 ($/Share) Date
- ---- ------- ------------ --------- ----------
Dan M. Palmer 135,000 20.4% $13.33 4/18/2005
Edward A. Labry 112,500 17.0% $13.33 4/18/2005
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
for Option Term
Name 5% ($) 10% ($)
- ---- --------- ---------
Dan M. Palmer 1,131,277 2,867,569
Edward A. Labry 942,731 2,389,641
Table II
Options Exercised in 1995 and 1995 Year End Option Values
Value of
Number of Unexercised
Shares Acquired Value ($ Unexercised In-the-money
Name on Exercise (#) Realized(1) Options (#) Options($)(2)
- ---- --------------- ---------- ----------- ------------
Dan M. Palmer 182,025 4,601,211 577,969(E) 13,600,084(E)
299,531(U) 5,401,166(U)
Edward A. Labry 83,531 1,428,007 215,157(E) 4,507,438(E)
251,718(U) 4,544,124(U)
(1) Values are calculated by subtracting the exercise price from the fair
market value of the stock as of the exercise date.
(2) Values are calculated by subtracting the exercise price from the fair
market value of the stock on December 31, 1995.
(E) = Exercisable at December 31, 1995
(U) = Unexercisable at December 31, 1995
-5-
<PAGE>
Committees; Attendance
The Board of Directors held five meetings during the fiscal year ended
December 31, 1995. Each of the directors attended at least 75% of the total
number of meetings of the Board.
The Audit Committee, consisting of Messrs. Anderson, Buchignani,
Harter, Mooney, Rutherford and Whittington met twice during the fiscal year
ended December 31, 1995. The Audit Committee reviewed the results of the
audit conducted by outside auditors and management's response to the
management letter prepared by outside auditors.
The Board of Directors has no Nominating Committee.
The Board of Directors has a Compensation Committee consisting of
directors who are not employees of the Company or any of its affiliates and
have never been employees of the Company or any of its affiliates. It is
the policy of the Compensation Committee to establish base salaries, award
bonuses and grant stock options to such executives and in such amounts as
will assure the continued availability to the Company of the services of the
executives and will recognize the contributions made by the executives to
the success of the Company's business and the growth over time in the market
capitalization of the Company. To achieve these goals, the Committee
establishes base salaries at levels which it believes to be below the mid-
point for comparable executives in companies of comparable size and scope.
The Committee then awards cash bonuses reflecting individual performance
during the year for which the awards are made. For executives other than
the Chief Executive Officer, the Committee receives bonus award recom-
mendations from the Chief Executive Officer. The Committee grants stock
options to senior and middle management executives of the Company and its
affiliates at levels which it believes to be slightly higher than average
for comparable companies in order to give the executives significant
incentive to improve the business of the Company and its market
capitalization. Section 162(m) of the Internal Revenue Code limits the tax
deduction to $1 million for compensation paid to certain executives of
public companies. The Committee has considered these new requirements and
believes that the Company's 1993 Incentive Stock Option Plan meets the
requirements that it be "performance based", and therefore, exempt from the
limitations on deductibility. Historically, the combined salaries and
bonuses of the Company's executive officers have been well under the $1
million limit. The Committee's present intention is to comply with Section
162(m) unless the Committee feels that required changes would not be in the
best interest of the Company or its shareholders.
The Chief Executive Officer's base salary, cash bonus and option grants are
established by the Committee based upon its members' own experience in their
companies and in other companies which they serve as directors or advisors.
For 1995, the compensation, bonus and options for the Chief Executive
Officer were believed by the Committee to be, in the aggregate, lower than
the aggregate value of such arrangements for chief executive officers of
comparable companies.
David C. Anderson
J. Richard Buchignani
Richard M. Harter
Jerry D. Mooney
Paul L. Whittington
-6-
<PAGE>
Below is a performance table which compares the Company's cumulative
total shareholder return during the previous five years with NASDAQ stock
market, and NASDAQ financial stocks (the Company's peer group).
NASDAQ
Concord NASDAQ Financial
Date EFS,Inc. Stock Market Stocks
- -------- --------- ------------ ---------
9/30/90 100.00 100.00 100.00
9/30/91 373.26 157.33 152.95
12/31/92 411.63 205.15 238.69
12/31/93 308.79 235.50 277.42
12/31/94 523.26 230.20 278.07
12/31/95 1,326.45 325.30 405.13
-7-
<PAGE>
AMEND CERTIFICATE OF INCORPORATION TO INCREASE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, $.33 1/3 par value. The Board of Directors finds advisable
that the Company's Certificate of Incorporation be amended to increase the
number of authorized shares of Common Stock to 80,000,000 shares, $.33 1/3
par value.
The holders of Common Stock are not entitled to preemptive rights to
purchase Common Stock of the Company.
The authorized shares of Common Stock can be issued without shareholder
approval upon such terms and in consideration of such amounts as the Board
of Directors determines is in the best interest of the Company. Aside from
regular recurring grants of options under the Corporation's stock option
plan, the Board presently has no plans to issue any of the authorized shares
of Common Stock.
Recommended Vote
An affirmative vote of a majority of the Company's outstanding Common
Stock is necessary to adopt the amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock to
80,000,000 shares. The Board of Directors recommends that you vote "FOR"
the proposal.
APPROVE AMENDMENT OF 1993 INCENTIVE STOCK OPTION PLAN
TO CHANGE THE FORMULA GRANTS TO DIRECTORS
The Company's 1993 Incentive Stock Option Plan provides formula grants
of stock options to non-employee directors. Prior to amendment, the Plan
provided than an option would be automatically granted each year to each
non-employee director for the number of shares calculated by dividing
$10,000 by the fair market value of the stock on the date of the annual
Meeting. The Compensation Committee of the Board of Directors has recently
amended the Plan to provide that the annual formula grant would be for 2,000
shares, a fixed number of shares, at the fair market value on the date of
the annual Meeting. The Compensation Committee believes that this change in
the formula grant arrangements makes the Plan easier to administer and is
consistent with stock option arrangements made for non-employee directors of
comparable companies.
Recommended Vote
An affirmative vote of a majority of the Company's Common Stock voting
on the issue is necessary to approve the amendment to the Company's 1993
Incentive Stock Option Plan. The board of Directors recommends that you for
"FOR" the proposal.
-8-
<PAGE>
OTHER MATTERS
The Board of Directors knows of no matters which are likely to be
presented for action at the Annual Meeting other than the proposals
specifically set forth in the Notice and referred to herein. If any other
matter properly comes before the Annual Meeting for action, it is intended
that the persons named in the accompanying proxy and acting thereunder will
vote or refrain from voting in accordance with their best judgement pursuant
to the discretionary authority conferred by the proxy. If, in a proxy
submitted on behalf of a shareholder by a person acting solely in a
representative capacity, the proxy is marked clearly to indicate that the
shares represented thereby are not being voted with respect to one or more
proposals, then such proxies will not be counted as present at the meeting
with respect to such proposals, and such "non-votes" will have no effect on
the voting on such proposals. Proxies submitted with abstentions as to one
or more proposals will be counted as present for purposes of establishing a
quorum for such proposals, and such abstentions will have the affect of a
vote against such proposals.
CERTAIN TRANSACTIONS
Bingham, Dana & Gould LLP serves as legal counsel to the Company.
Richard M. Harter, Secretary and Director of the Company, is a partner of
that firm. Wyatt, Tarrant and Combs also serves as legal counsel to the
Company. J. Richard Buchignani, Director of the Company, is a partner of
that firm.
INFORMATION CONCERNING AUDITORS
Representatives of Ernst & Young LLP are expected to be at the Annual
Meeting and will have an opportunity to make a statement if they desire to
do so. Such representatives are also expected to be available to respond to
appropriate questions.
SHAREHOLDERS PROPOSALS
Shareholder proposals to be submitted for vote at the 1997 Annual
Meeting must be delivered to the Company on or before December 8, 1996.
EXPENSES OF SOLICITATION
Solicitations of proxies by mail is expected to commence on March 29,
1996, and the cost thereof will be borne by the Company. Copies of
solicitation materials will also be furnished to brokerage firms,
fiduciaries and custodians to forward to their principals, and the Company
will reimburse them for their reasonable expenses.
By Order of the Board of Directors
Richard M. Harter
Secretary
-9-
<PAGE>
ANNUAL REPORT ON FORM 10-K
The Company will deliver without charge to each of its shareholders,
upon their written request, a copy of the Company's most recent annual
report on Form 10-K and any information contained in any subsequent reports
filed with The Securities and Exchange Commission. Request for such
information should be directed to Investor Relations, Concord EFS, Inc.,
2525 Horizon Lake Drive, Suite 120, Memphis, Tennessee 38133.
-10-
<PAGE>
