CONCORD EFS, INC.
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
To the Stockholders of
Concord EFS, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of Concord
EFS, Inc. ("Concord" or the "Company") will be held at Colonial Country Club,
2736 Countrywood Parkway, Memphis Tennessee on May 25, 2000 beginning at 9:30
a.m. CST, for the following purposes:
1. To elect directors to serve for the ensuing year;
2. 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 17, 2000 as
the record date for determination of the stockholders 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 7, 2000
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
April 7, 2000
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 Stockholders to be held on May 25, 2000
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. A
majority in interest of the outstanding shares represented at the meeting in
person or by proxy shall constitute a quorum for the transaction of business.
Votes withheld from any nominee, abstentions and broker "non-votes" are counted
as present or represented for purposes of determining the presence or absence of
a quorum for the meeting. A "non-vote" occurs when a nominee holding shares for
a beneficial owner votes on one proposal, but does not vote on another proposal
because the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner. Abstentions are included in the
number of shares present or represented and voting on each matter. Broker
"non-votes" are not so included.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The Company's only issued and outstanding class of voting securities is its
Common Stock, par value $0.33 1/3 per share. Each stockholder of record on March
17, 2000 is entitled to one vote for each share registered in such stockholder's
name. As of that date, the Company's Common Stock was held by approximately
33,700 stockholders.
The following table sets forth, as of March 17, 2000, 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 & CEO 4,387,807 2.1%
Edward A. Labry III (4), President 3,091,099 1.5%
Vickie Brown (5), Sr. Vice-President 153,702 0.1%
Christopher Reckert (6), Sr. Vice-President 82,101 0.0%
Edward T. Haslam (7), Sr. Vice-President 41,500 0.0%
Joyce Kelso (8), Director 397,347 0.2%
Richard P. Kiphart (8), Director 5,239,282 2.5%
Richard M. Harter (9), Director 134,550 0.1%
<PAGE>
Jerry D. Mooney (9), Director 60,612 0.0%
David C. Anderson (9), Director 64,389 0.0%
J. Richard Buchignani (9), Director 40,274 0.0%
Paul Whittington (9), Director 34,593 0.0%
Douglas C. Altenbern (10), Director 44,750 0.0%
All officers, directors and nominees
as a group (13 persons) (11) 13,772,006 6.5%
William Blair & Company, LLC (12) 24,554,352 11.6%
222 West Adams Street
Chicago, IL 60606
AMVESCAPP PLC and Subsidiaries (13) 16,193,312 7.6%
11 Devonshire Square
London EC2M 4YR England
Putnam Investment Management, Inc. (14) 13,654,658 6.4%
One Post Office Square
Boston, MA 02109
(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 212,194,961 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 4,367,807 shares covered by unexercised stock options.
(4) Shares owned include 3,056,482 shares covered by unexercised stock options.
(5) Shares owned include 153,701 shares covered by unexercised stock options.
(6) Shares owned include 77,101 shares covered by unexercised stock options.
(7) Shares owned include 37,500 shares covered by unexercised stock options.
(8) Shares owned include 13,500 shares covered by unexercised stock options.
(9) Shares owned include 28,000 shares covered by unexercised stock options.
(10) Shares owned include 6,750 shares covered by unexercised stock options.
(11) Shares owned include 7,866,341 shares covered by unexercised stock options.
<PAGE>
(12) Based on a Schedule 13G/A dated as of June 11, 1999, filed by William Blair
& Company, LLP ("Blair"). Includes 2,693,420 shares as to which Blair has
sole voting power and 24,554,352 shares as to which Blair has sole
dispositive power. Blair disclaims beneficial ownership as to 16,113,746 of
such shares.
(13) Based on a Schedule 13G/A dated as of February 4, 2000, filed by AMVESCAP
PLC and Subsidiaries.
(14) Based on a Schedule 13G/A dated as of February 11, 2000, filed by Putnam
Investment Management, Inc.
ELECTION OF DIRECTORS
Nine directors are to be elected to hold office until the next annual
meeting of stockholders 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 stockholder 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 (57) 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
<PAGE>
of EFS when it was acquired by Concord in March
1985.
Joyce Kelso (58) Mrs. Kelso has been a Director since May 1991. She
was Vice President in charge of Customer Service
when 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 (37) 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 (63)* Mr. Harter has been the Company's Secretary and a
Director since the Company's formation. He is a
partner of Bingham Dana LLP, legal counsel to the
Company.
Jerry D. Mooney (47)* + Mr. Mooney has been a Director of the Company since
August 1992. He was the founder, President and
Chief Executive Officer of VHA Long Term Care and
its predecessor company from 1981 through 1995. He
also served as a Senior Board Advisor from 1994 to
April 1998 to The Service Master Company and as
President of its Healthcare New Business Initiatives
section or PEO division during this time. He retired
in 1998.
Richard Buchignani (51)* Mr. Buchignani has been a Director of the Company
since August 1992. He is a partner in the Memphis,
Tennessee office of the law firm of Wyatt, Tarrant &
Combs, 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 (64)* + 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 (57)* Mr. Kiphart has been a Director of the Company since
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
<PAGE>
head of that department in January 1995.
Douglas C. Altenbern (63)* Mr. Altenbern has been a Director of the Company
since February 1998. Mr. Altenbern served as Vice
Chairman of First Financial Management Corporation
until 1989, at which time he resigned to found
Argosy Network Corporation, of which he served as
Chairman and CEO. In 1992 he sold his interest in
Argosy and in 1993 founded Pay Systems of America,
of which he served as Chairman and CEO through
December 1996. He currently is a private investor
and serves as a Director on the Boards of The
Bradford Funds, Inc., OPTS, Inc., Interlogics, Inc.
CSM, Inc. and Equitas.
* Member of the Board's Audit Committee.
+ Member of the Board's Compensation Committee.
Compensation of Directors
The Company currently pays to each non-employee director of the Company
$8,000 cash director fee each year for attending scheduled board meetings. Each
non-employee director receives $1,000 for any special teleconference meetings
attended. In addition, non-employee directors are granted options to purchase
10,875 shares of the Company's common stock at market value on the date of the
annual meeting of stockholders. One director receives an annual fee of $8,000
plus $2,000 for each meeting attended. This director is granted options to
purchase only 9,000 shares of the Company's stock in the same manner as the
other non-employee directors. Directors are reimbursed for expenses incurred in
attending meetings of the Board of Directors. Two of the nine nominees are
employees of the Company and are not separately compensated for serving as
directors.
<PAGE>
Executive Compensation
The following summary compensation table is intended to provide a
comprehensive overview of the Company's executive pay practices. It includes the
cash compensation paid or accrued by the Company and its subsidiaries for
services in all capacities during the fiscal year ended December 31, 1999, to or
on behalf of each of the Company's named executives. Named executives include
the Chief Executive Officer and the President of the Company.
Summary Compensation Table
<TABLE> <S> <C>
Annual Compensation
Name and Salary Bonus Other Long-Term Compensation
Principal Position Year ($) ($) ($) Options Awarded*
- ------------------------ ---- -------- ------- ------- ----------------------
<S> <C> <C> <C> <C> <C>
Dan M. Palmer 1999 538,750 393,750 1,687,500
Chairman of the Board 1998 466,538 331,250 1,687,500
Chief Executive Officer 1997 427,392 262,000 1,800,000
of the Company and
EFS National Bank
Edward A. Labry III 1999 538,750 393,750 1,687,500
President of the Company 1998 466,538 331,250 1,687,500
and EFS National Bank 1997 417,777 262,000 1,800,000
Christopher Reckert 1999 225,481 40,000 160,000
Senior Vice President 1998 163,942 20,000 56,250
of the Company and 1997 132,693 15,000 56,250
EFS National Bank
Vickie Brown 1999 203,462 40,000 77,500
Chief Operations Officer 1998 184,519 20,000 56,250
of the Company and 1997 165,770 15,000 67,498
EFS National Bank
Edward T. Haslam 1999 186,200 237,500 11,313 185,000
Chief Administrative 1998 178,150 85,000 7,005 55,363
Officer of the Company 1997 155,950 76,000 5,000 31,636
</TABLE>
* Options awarded have been restated to reflect all stock splits.
<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 1999
<TABLE> <S> <C>
Individual Grants
---------------------------------------------- Potential Realizable
% 0f Total Value at Assumed
Options Annual Rates of Stock
Granted to Exercise Price Appreciation
Options Employees in price Expiration for Option Term
Name Granted 1999 ($/Share) Date 5% ($) 10% ($)
- ------------------- ---------- ------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Dan M. Palmer 1,687,500 37.5% $21.14 1/4/2009 22,435,030 56,854,770
Edward A. Labry III 1,687,500 37.5% $21.14 1/4/2009 22,435,030 56,854,770
Christopher Reckert 160,000 3.6% $21.34 2/18/2009 2,147,675 5,442,630
Vickie Brown 77,500 1.7% $21.73 2/18/2009 1,059,106 2,683,982
Edward T. Haslam 185,000 4.1% $21.50 2/18/2009 2,501,428 6,339,111
</TABLE>
<PAGE>
Table II
Options Exercised in 1999 and 1999 Year End Option Values
Value of
Number of Unexercised
Shares Acquired Value ($) Unexercised In-the-Money
Name on Exercise (#) Realized(1) Options(#) Options($)(2)
- ------------------- --------------- ----------- ----------- -------------
Dan M. Palmer -0- -0- 3,473,432(E) 63,159,967(E)
3,722,344(U) 36,250,363(U)
Edward A. Labry III -0- -0- 2,775,232(E) 46,779,921(E)
3,722,344(U) 36,250,363(U)
Christopher Reckert -0- 1,883,853 -0-(E) -0-(E)
224,530(U) 1,739,628(U)
Vickie Brown -0- -0- 98,856(E) 1,632,849(E)
166,093(U) 1,577,682(U)
Edward T. Haslam -0- 2,309,253 -0-(E) -0-(E)
185,000(U) 793,745(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, 1999.
(E) Exercisable at December 31, 1999.
(U) Unexercisable at December 31, 1999.
Committees; Attendance
The Board of Directors held four regular meetings during the fiscal year
ended December 31, 1999. 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, Whittington and Kiphart met three times during the fiscal year ended
December 31, 1999. 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 Audit Committee also monitored the Company's
compliance with the Year 2000 computer issues.
The Board of Directors has no Nominating Committee.
<PAGE>
Compensation Committee Report on Executive Compensation
Committee Composition
The Board of Directors has a Compensation Committee of Messrs. Anderson,
Mooney and Whittington (the "Committee"), 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.
General Policy
It is the policy of the Committee to establish base salaries, award bonuses
and grant stock options to executive officers 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 higher than
average for comparable companies in order to give the executives significant
incentive to improve the revenue 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 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 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 stockholders.
Specific Arrangements for CEO and President
During 1998, Concord entered into five-year incentive agreements with its
Chief Executive Officer and with its President. Each incentive agreement
provides for base salary of $550,000 with annual reviews, for a bonus
opportunity equal to 50% of base salary with growth in earnings per share being
a significant factor in awarding the bonuses and for option grants of 562,500
shares per year. In addition, each incentive agreement provided for a one-time
option grant for 1,125,000 shares with a "reload" feature: after the stock
market price reaches $21.33 per share for a stated period, a new option for
562,500 shares will be granted at $21.33; and after the stock market price
reaches $28.45, a new option for 281,250 shares will be granted at $28.45. The
first of these milestones has already been reached.
The Chief Executive Officer and President's base salary, cash bonus and
option grants were established by the Committee based upon its members' own
experience in their companies and in other companies which they serve as
directors or advisors. In addition, the Committee received advice from a
compensation consulting firm in setting compensation levels for executive
<PAGE>
officers. In setting the base salary, bonus and option grants for 1998 for the
Chief Executive Officer and President, the Committee considered the 39% increase
in revenues and the 50% increase in diluted earnings per share in 1998 over
1997. Additionally, the Committee noted that for the preceding three years the
Company's revenue growth averaged approximately 44% per year, that its market
capitalization growth averaged approximately 71% per year and that these
individuals were responsible for past growth and uniquely situated to contribute
to the future growth of the Company.
David C. Anderson
Jerry D. Mooney
Paul L. Whittington
Five Year Cumulative Stockholder Return
Below is a performance table which compares the Company's cumulative total
stockholder return during the previous five years with the NASDAQ stock market,
and the NASDAQ financial stocks (the Company's peer group).
NASDAQ NASDAQ
Date Concord EFS, Inc. Stock Market Financial Stocks
- -------- ----------------- ------------ ----------------
12/31/94 100.00 100.00 100.00
12/31/95 253.52 141.34 150.97
12/31/96 381.41 173.90 193.82
12/31/97 335.84 213.07 296.48
12/31/98 858.14 300.43 287.78
12/31/99 782.20 555.99 284.64
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 judgment pursuant to the discretionary authority
conferred by the proxy.
CERTAIN TRANSACTIONS
Bingham Dana 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.
<PAGE>
STOCKHOLDERS PROPOSALS
Stockholder proposals to be submitted for vote at the 2001 Annual Meeting
must be delivered to the Company on or before December 8, 2000.
EXPENSES OF SOLICITATION
Solicitations of proxies by mail is expected to commence on April 7, 2000,
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 stockholders, 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.
<PAGE>
EXHIBIT 1 - 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. (Concord) held by the undersigned on March 17,
2000, at the Annual Meeting of Stockholders to be held on Thursday, May 25, 2000
at Colonial Country Club, 2735 Countrywood Parkway, Memphis, Tennessee beginning
at 9:30 a.m. local time, or any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING,
PLEASE SIGN AND RETURN THIS PROXY.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVLELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title, as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person
and state title.
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
This proxy, when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
the actions described in Item 1. In their direction, the Proxies are authorized
to vote upon such other business as may properly come before the Annual Meeting
or any adjournment thereof
1. To elect directors to serve for the ensuing year.
For all With- For All
Nominees hold Except
Douglas C. Altenbern Richard P. Kiphart [ ] [ ] [ ]
Joyce Kelso Edward A. Labry
J. Richard Buchignani Jerry D. Mooney
Richard M. Harter Dan M. Palmer
Paul L. Whittington
<PAGE>
NOTE: If you do not wish your shares voted "For" a particular nominee mark the
"For All Except" box and strike a line through the nominee(s) name(s). Your
shares will be voted "For" the remaining nominee(s).
2. To transact such other business as may properly come before the annual
meeting and any adjournments thereof.
CONCORD EFS, INC.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date:
-----------------------
- ----------------------------------------- --------------------------------------
Stockholder sign here Co-Owner sign here
DETACH CARD DETACH CARD
