CONCORD EFS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
To Be Held on May 15, 1997
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 15, 1997
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 Number of Authorized Shares of Common Stock;
3. 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 10,
1997 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
April 11, 1997
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.
CONCORD EFS, INC.
PROXY STATEMENT
April 11, 1997
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 15, 1997 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 10, 1997 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 11,500 shareholders.
The following table sets forth, as of March 10, 1997, 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), Chairman 679,688 1.1%
Edward A. Labry III (4), Director 407,288 0.7%
Joyce Kelso (5), Director 338,099 0.6%
Richard P. Kiphart, (6) Director 2,477,830 4.1%
Richard M. Harter (6), Director 59,386 0.1%
Jerry D. Mooney (6), Director 13,896 0.0%
David C. Anderson (6), Director 5,458 0.0%
J. Richard Buchignani (6), Director 5,502 0.0%
Paul Whittington (6), Director 3,771 0.0%
All officers, directors and nominees
as a group (9 persons) (7) 3,990,918 6.4%
William Blair & Company, LLC
222 West Adams Street
Chicago,IL 60606 (8)(9) 8,230,283 13.5%
Pilgrim Baxter & Associates, Ltd.
1255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087 (10) 3,509,347 5.8%
(1) The address of each beneficial owner that is also a director, is the
same as the Company's.
(2) Percentage ownership is based on 60,826,291 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 are unexercised stock options.
(4) Shares owned include 405,236 shares covered by unexercised stock
options.
(5) Shares owned include 337,501 shares covered by unexercised stock
options.
(6) Shares owned include 396 shares covered by unexercised stock options.
(7) Shares owned include 1,424,405 shares covered by unexercised stock
options.
(8) Based on a Schedule 13G dated as of February 14, 1997, filed by Blair.
Includes 759,722 shares as to which Blair has sole voting power and
8,230,283 shares as to which Blair has sole dispositive power.
(9) Blair disclaims beneficial ownership as to 7,470,561 of such shares.
(10) Based on a Schedule 13G dated as of February 14, 1997, filed by Pilgrim
Baxter & Associates.
ELECTION OF DIRECTORS
Nine 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 nine 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 nine 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 nine 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 (54) 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
Joyce Kelso (55) 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. January 1, 1995, Mrs. Kelso semi-
retired and on January 1, 1997, she became
fully retired.
Edward A. Labry III (34) 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.
He became President of the Company in October
1994, and President of EFS National Bank in
December 1994.
Richard M. Harter (60)* Mr. Harter has been the Company's Secretary
and a Director since the Company's formation.
He is a partner of Bingham, Dana and Gould,
LLP, legal counsel to the Company.
Jerry D. Mooney (44)* 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 (54)* Mr. Anderson has been a Director of the Company
since August 1992. Mr. Anderson was with
Federal Express in Memphis, Tennessee for seven
years as Senior Vice President and Chief
Financial Officer and Burlington Northern, Fort
Worth, Texas as Executive Vice President and
Chief Financial Officer for three years prior
to his retirement in 1995.
J. Richard Buchignani (48)* 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 & Combs in Memphis, Tennessee 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 18 years joined Wyatt, Tarrant & Combs.
Paul L. Whittington (61)* Mr. Whittington has been a Director of the
Company since May 1993. Mr. Whittington had
been the Managing Partner of the Memphis,
Tennessee and Jackson, Mississippi offices of
Ernst & Young from 1988 until his retirement in
1991. Since 1979, he had been the partner in
charge of consulting at various Ernst & Young
offices.
Richard P. Kiphart (55)* Mr. Kiphart was voted a Director of the Company
in November 1996 to assume responsibilities in
March 1997. In 1972 he became a General Partner
of William Blair & Company, LLC. He served as
head of Equity Trading from 1972 to 1980. He
joined the Corporate Finance Department in
1980, and was made head of that department in
January 1995.
* Member of the Board's Compensation and Audit Committees.
Compensation of Directors
The Company currently pays an annual fee of $8,000 plus $2,000 for each
meeting attended to each non-employee Director of the Company. There are
normally four meetings per year. In addition, non-employee directors are
granted options to purchase Company common stock. Directors are reimbursed
for expenses incurred in attending meetings of the Board of Directors.
Two of the nine nominees are employees of the Company and are not separately
compensated for serving as directors.
Executive Compensation
The following summary compensation table is intended to provide a
comprehensive overview of the Company's executive pay practices. It
includes the cash compensation paid or accrued by the Company and its
subsidiaries for services in all capacities during the fiscal year ended
December 31, 1996, to or on behalf of each of the Company's named
executives. Named executives include the Chief Executive Officer and the
President of the Company.
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------------ ----------------
Name and Principal Salary Bonus
Position Year ($) ($) Options Awarded*
- --------------------------- ----- ------- ------- ----------------
Dan M. Palmer 1996 425,000 125,000 237,500
Chairman of the Board, 1995 363,738 80,000 202,500
Chief Executive Officer 1994 342,335 70,000 177,188
of the Company and
EFS National Bank
Edward A. Labry III 1996 392,308 125,000 237,500
President of the Company 1995 279,315 100,000 168,750
and EFS National Bank 1994 255,912 50,000 151,875
* Options awarded have been restated to reflect stock splits issued
through June 28, 1996.
STOCK OPTIONS
The following tables present the following types of information for
options granted to the Company's named executives under the Company's 1993
Incentive Stock Option Plan. Table I - options granted and the potential
realizable value of such options, and Table II - options exercised in the
latest fiscal year and the number of unexercised options held.
Table I
Options Granted in 1996
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------------------------------- ---------------------
% of Total
Options
Granted to Exercise
Options Employees in price Expiration
Name Granted 1996 ($/Share) Date 5% ($) 10% ($)
- --------------- ------- ------------ --------- ---------- --------- ---------
Dan M. Palmer 187,500 28% $19.50 4/13/2007 2,299,396 5,827,121
50,000 50% $28.75 11/20/2007 904,036 2,291,005
Edward A. Labry 187,500 28% $19.50 8/18/2007 2,299,396 5,827,121
50,000 50% $28.75 11/20/2007 904,036 2,291,005
Table II
Options Exercised in 1996 and 1996 Year End Option Values
Value of
Number of Unexercised
Shares Acquired Value ($) Unexercised In-the-money
Name on Exercise (#) Realized(1) Options (#) Options($)(2)
- --------------- --------------- ----------- ----------- -------------
Dan M. Palmer 354,375 6,582,187 582,188(E) 13,429,938(E)
515,938(U) 7,478,371(U)
Edward A. Labry 150,000 1,971,008 316,173(E) 7,180,064(E)
471,641(U) 6,549,673(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, 1996.
(E) = Exercisable at December 31, 1996
(U) = Unexercisable at December 31, 1996
Committees; Attendance
The Board of Directors held five meetings during the fiscal year
ended December 31, 1996. 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, and Whittington met twice during the fiscal year ended
December 31, 1996. 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 and President,
the Committee receives bonus award recommendations 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 requirement 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 and President'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 1996, the compensation, bonus and options
for the Chief Executive Officer and the President were believed by the
Committee to be, in the aggregate, lower than the aggregate value of such
arrangements for similar officers of comparable companies.
David C. Anderson
J. Richard Buchignani
Richard M. Harter
Jerry D. Mooney
Paul L. Whittington
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 NASDAQ
Date Concord EFS, Inc. Stock Market Financial Stocks
- -------- ----------------- ------------ ----------------
09/30/91 100.00 100.00 100.00
12/31/92 110.28 116.38 143.03
12/31/93 82.73 133.60 166.23
12/31/94 140.19 130.59 166.62
12/31/95 355.37 184.67 242.62
12/31/96 534.64 227.16 311.08
AMEND CERTIFICATE OF INCORPORATION TO INCREASE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Company's authorized capital stock consists of 80,000,000 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 100,000,000
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. 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 100,000,000 shares. The Board of Directors recommends that you vote
"FOR" the proposal.
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.
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 1998 Annual
Meeting must be delivered to the Company on or before December 8, 1997.
EXPENSES OF SOLICITATION
Solicitations of proxies by mail is expected to commence on April 11,
1997, 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
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.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(This is the front side of the proxy card.)
CONCORD EFS, Inc.
2525 Horizon Lake Drive, Suite 120
Memphis, Tennessee 38133
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Dan M. Palmer and Thomas J. Dowling
or either of them as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote as
designated below, all the shares of Common Stock of Concord EFS, Inc. held
of record by the undersigned on March 10, 1997, at the Annual Meeting of
Shareholders to be held on May 15, 1997 or any adjournment thereof.
1. To elect directors.
___ FOR all nominees (except as marked to the contrary below)
___ WITHHOLD AUTHORITY for all nominees listed below
Dan M. Palmer Edward A. Labry III
Richard M. Harter Joyce Kelso
David C. Anderson Jerry D. Mooney
J. Richard Buchignani Paul L. Whittington
Richard P. Kiphart
(Instruction: To withhold authority to vote for any individual(s), write
the name(s) of such nominee(s) on the space provided below.)
_____________________________________________________________________
2. To approve the Amendment of the Certificate of Incorporation to
Increase Number of Authorized Shares of Common Stock.
____FOR ____AGAINST ____ABSTAIN
- --------------------------------------------------------------------------
(This is the back side of the proxy card.)
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this
proxy will be voted FOR all nominees for director and FOR the action
described in Item No. 2. In their discretion, the Proxies are authorized
to vote upon such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Please sign exactly as the name appears. When shares are held by
joint tenants, both should sign.
Dated___________________________________
Signature_______________________________
Signature_______________________________
