JACK HENRY & ASSOCIATES, INC.
663 Highway 60, P. O. Box 807
Monett, Missouri 65708
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF JACK HENRY & ASSOCIATES, INC.:
PLEASE TAKE NOTICE that the 1999 Annual Meeting of Stockholders of Jack Henry &
Associates, Inc., a Delaware corporation, will be held at the Monett City Park
Casino, Monett, Missouri, on Friday, October 29, 1999, 11:00 a.m., local time,
for the following purposes:
(1) To elect seven (7) directors to serve until the 2000 Annual Meeting
of Stockholders;
(2) To amend the 1996 Stock Option Plan to increase the number of shares
available for issuance under the plan by an aggregate of 1,000,000
shares, to 3,250,000;
(3) To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
The close of business on September 24, 1999, has been fixed as the record date
for the Annual Meeting. Only stockholders of record as of that date will be
entitled to notice of and to vote at said meeting and any adjournment or
postponement thereof.
The accompanying form of Proxy is solicited by the Board of Directors of the
Company. Reference is made to the attached Proxy Statement for further informa-
tion with respect to the business to be transacted at the Annual Meeting.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
EXPECT TO ATTEND, PLEASE DATE AND SIGN THE ENCLOSED PROXY. IF YOU DECIDE TO
ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
Janet E. Gray
Secretary
Monett, Missouri
September 20, 1999
JACK HENRY & ASSOCIATES, INC.
663 Highway 60
P.O. Box 807
Monett, Missouri 65708
PROXY STATEMENT
FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held Friday, October 29, 1999
This Proxy Statement and the enclosed proxy card (the Proxy) are furnished to
the stockholders of Jack Henry & Associates, Inc., a Delaware corporation (the
Company), in connection with the solicitation of Proxies by the Company s Board
of Directors for use at the Company s 1999 Annual Meeting of Stockholders, and
any adjournment or postponement thereof (the Annual Meeting), to be held at the
Monett City Park Casino, Monett, Missouri, at 11:00 a.m., local time, on Friday,
October 29, 1999. The mailing of this Proxy Statement, the Proxy, the Notice of
Annual Meeting and the accompanying 1999 Annual Report to Stockholders is
expected to commence on or about September 28, 1999.
The Board of Directors does not intend to bring any matters before the Annual
Meeting except those indicated in the Notice and does not know of any matter
which anyone else proposes to present for action at the Annual Meeting. If any
other matters properly come before the Annual Meeting, however, the persons
named in the accompanying form of Proxy, or their duly constituted substitutes,
acting at the Annual Meeting, will be deemed authorized to vote or otherwise to
act thereon in accordance with their judgment on such matters.
If the enclosed Proxy is properly executed and returned prior to voting at the
Annual Meeting, the shares represented thereby will be voted in accordance with
the instructions marked thereon. Each proposal, including the election of
directors, will require the affirmative vote of a majority of the shares of
common stock voting in person or by Proxy at the Annual Meeting.
Any stockholder executing a Proxy retains the power to revoke it at any time
prior to the voting of the Proxy. It may be revoked by a stockholder personally
appearing at the Annual Meeting and casting a contrary vote, by filing an
instrument of revocation with the Secretary of the Company, or by the
presentation at the Annual Meeting of a duly executed later dated Proxy.
VOTING
At the 1999 Annual Meeting, Stockholders will consider and vote upon:
(1) The election of seven (7) directors;
(2) Amendment of the 1996 Stock Option Plan; and
(3) Such other matters as may properly come before the Annual Meeting.
Only stockholders of record at the close of business on September 24, 1999, the
record date for the Annual Meeting, are entitled to notice of and to vote at
such meeting. Stockholders are entitled to one vote for each share of Common
Stock on each matter to be considered at the Annual Meeting.
The Company s authorized capital stock currently consists of 50,000,000 shares
of common stock, par value $.01 per share (the Common Stock), and 500,000 shares
of preferred stock, par value $1.00 per share (the Preferred Stock). As of
August 17, 1999, there were 20,117,855 shares of Common Stock outstanding and no
shares of Preferred Stock outstanding. At such date, the Company s executive
officers and directors were entitled to vote, or to direct the voting of
6,377,997 shares of Common Stock, representing 31.7% of the shares entitled to
vote at the 1999 Annual Meeting. Unless otherwise specified, all share numbers
and other share data have been adjusted to reflect all prior stock splits.
All shares represented by Proxy and all Proxies solicited hereunder will be
voted in accordance with the specifications made by the stockholders executing
such Proxies. If a stockholder does not specify how a Proxy is to be voted, the
shares represented thereby will be voted: (1) FOR the election as directors of
the seven (7) persons nominated by management; and (2) FOR amendment of the 1996
Stock Option Plan; and (3) FOR and in accordance with the discretion of the
persons to whom the Proxy is granted upon other matters that may properly come
before the Annual Meeting.
STOCK OWNERSHIP OF CERTAIN STOCKHOLDERS
The following table sets forth information as of August 17, 1999, concerning the
equity ownership of those individuals who are known to be the beneficial owners,
as defined in Rule 13d-3 of the Securities Exchange Act of 1934, of 5% or more
of the Company s Common Stock, and by all of the Company s directors and
executive officers as a group:
<TABLE>
<S><C>
<PAGE>
Number of Percentage
Shares of Shares
Name and Address of Beneficially Outstanding
Title of Class Beneficial Owner Owned (1)
(1)
$.01 par value John W. Henry, 4,402,134 21.57%
Common Stock Michael E. Henry, (2)
Vicki Jo Henry
and JKHY Partners
663 Highway 60
Monett, MO
Jerry D. Hall 1,620,603 8.06%
663 Highway 60 (3)
Monett, MO
Eddina F. Henry 1,425,000 7.08%
411 Lincoln Road South (4)
Monett, MO
All directors and exec-
utive officers as a 7,207,596 34.41%
group (10 persons) (5)
</TABLE>
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
except as noted below. With respect to shares held in the Company s 401(k)
Employee Stock Ownership Plan (the 401(k) ESOP), a participant has the right to
direct the voting and disposition of shares allocated to his account.
(2) Reflects information in filings with the Securities and Exchange
Commission (the SEC) by members of the Henry family reporting for JKHY Partners
(the Partnership), a family partnership of which the listed individuals are
partners. John W. Henry separately may be deemed to beneficially own 1,014,356
shares, including 917,064 shares held individually, 41,878 shares allocated to
his 401(k) ESOP account, and 55,414 shares held by JKHY Partners. Michael E.
Henry separately may be deemed to beneficially own 3,443,192 shares, including
37,209 shares held individually, 15,983 shares allocated to his 401(k) ESOP
account, 290,000 shares currently acquirable by exercise of outstanding stock
options, 1,675,000 shares held by the Partnership, 1,325,000 shares held in a
living trust and 100,000 shares held by the Henry Family Limited Partnership,
both established by his mother, Eddina F. Henry. Michael E. Henry may be deemed
to share beneficial ownership in the shares held by the JKHY Partners, by the
Eddina F. Henry Trust and by the Henry Family Limited Partnership because he has
been granted proxies to vote such shares. Vicki Jo Henry does not beneficially
own any shares of common stock in her individual capacity and her business
address is 6851 South Holly Circle, Suite 270, Englewood, Colorado, 80112. The
business address of John W. Henry, Michael E. Henry and the Partnership is
reflected in the table.
(3) Includes 48,222 shares held in the Company s 401(k) ESOP for Mr. Hall s
account.
(4) Reflects information in filings with the SEC by Eddina F. Henry to report
shares held in a revocable trust for her benefit and shares held by the Henry
Family Limited Partnership. As described above in Footnote (2), beneficial
ownership of these shares is shared with Michael E. Henry.
(5) Includes 829,599 shares which are or will be acquirable within 60 days
under outstanding stock options, and 185,121 shares held in the Company s 401(k)
ESOP for the accounts of all officers and directors as a group.
PROPOSAL 1
ELECTION OF DIRECTORS
Procedure
At the meeting, the stockholders will elect seven (7) directors to hold office
for one-year terms ending at the Company s 2000 Annual Meeting of Stockholders
or until their successors are elected and qualified. The Company s Board of
Directors has nominated the Company s seven (7) current directors for reelection
at the Annual Meeting.
The stockholders are entitled to one vote per share on each matter submitted to
vote at any meeting of the Stockholders. Unless contrary instructions are given,
the persons named in the enclosed Proxy or their substitutes will vote FOR the
election of the nominees named below.
Each of the nominees has consented to serve as director for a one-year term.
However, if any nominee at the time of election is unable to serve or is
otherwise unavailable for election, and as a result other nominees are
designated by the Board of Directors, the persons named in the enclosed Proxy or
their substitutes intend to vote for the election of such designated nominees.
Nominees For Election
The directors and nominees for election as directors of the Company, as well as
certain information about them, are as follows:
<TABLE>
<S><C>
Number of Percentage of
Position Shares Bene- Shares Out-
Name with Company Director ficially standing (1)
Since Owned (1)
Michael E. Chairman, 1986 3,443,192 16.87%
Henry Chief Execu- (2)
tive Officer
and Director
Michael R. Wallace President, 1991 338,590 1.66%
Chief Oper- (3)
ating Offi-
cer
and Director
John W. Henry Vice Chair- 1977 1,014,356 5.04%
man, Senior (2)
Vice Presi-
dent and
Director
Jerry D. Hall Executive 1977 1,620,603 8.06%
Vice (4)
President
and Director
James J. Ellis Director 1985 138,570 *
(5)
Burton O. George Director 1987 87,659 *
(6)
George R. Curry Director 1989 169,319 *
(7)
</TABLE>
<PAGE>
_____________________
* Less than 1%
(1) Information is set forth as of August 17, 1999. The persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, except as noted below. With respect
to shares held in the Company s 401(k) Employee Stock Ownership Plan (the 401(k)
ESOP), a participant has the right to direct the voting and disposition of
shares allocated to his account.
(2) See Stock Ownership of Certain Stockholders - Footnote (2), above. The
number of shares beneficially owned by John W. Henry and Michael E. Henry are
separately listed in the table.
(3) Includes 260,000 shares currently acquirable by exercise of outstanding
options and 31,153 shares held in the Company s 401(k) ESOP for Mr. Wallace s
account.
(4) Includes 48,222 shares held in the Company s 401(k) ESOP for Mr. Hall s
account.
(5) Includes 49,999 shares that are currently acquirable.
(6) Includes 30,000 shares that are currently acquirable.
(7) Includes 139,319 shares held as trustee for self, shares held as trustee
for family members, shares held in trust with spouse as co-trustee for her
benefit, and 30,000 shares that are currently acquirable.
The following information relating to the Company s directors and nominees for
director, all of whom are United States citizens, is with respect to their
principal occupations and positions during the past five years:
Michael E. Henry, age 38, Chairman of the Board, Chief Executive Officer and
Director. Mr. Henry, the son of John W. Henry and a director of the Company
since 1986, has served as the Company s Chairman of the Board and Chief
Executive Officer since October, 1994. He previously served as Vice Chairman and
Senior Vice President since 1993. Previous to that he served as Manager of
Research and Development since 1983. He joined the Company in 1979.
Michael R. Wallace, age 37, President, Chief Operating Officer and Director. Mr.
Wallace, a director of the Company since 1991, has served as President since
1993 and as the Chief Operating Officer since October, 1994. He previously
served as Manager of Installation Services since 1986. He joined the Company in
1981.
John W. Henry, age 64, Vice Chairman, Senior Vice President and Director. Mr.
Henry, a founder and principal stockholder of the Company, has served as Vice
Chairman since October, 1994. He previously served as Chairman of the Board from
1977 through 1994. He also has been a director since the Company s inception in
1977. He previously served as Chief Executive Officer from 1977 through 1988 and
as President until 1989.
Jerry D. Hall, age 56, Executive Vice President and Director. Mr. Hall, a
principal stockholder of the Company, has served as Executive Vice President
since October, 1994. He previously served as Chief Executive Officer from 1990
through 1994. He also has been a director since the Company s inception in 1977.
He previously served as President from 1989 through 1993 and as Vice President-
Operations from 1977 through 1988.
James J. Ellis, age 65, Director. Mr. Ellis, a director of the Company since
1985, has been Managing Partner of Ellis/Rosier Financial Services since 1992.
Mr. Ellis served as general manager of MONY Financial Services, Dallas, Texas,
from 1979 until his retirement in 1992. Mr. Ellis also serves as a director of
Merit Medical Systems, Inc.
Burton O. George, age 72, Director. Mr. George, a director of the Company since
1987, is retired. He previously had been in the banking business since 1958, and
most recently served as Chairman of the Board and Chief Executive Officer of
First National Bank of Berryville, Berryville, Arkansas from 1985 through 1989.
George R. Curry, age 74, Director. Mr. Curry, a director of the Company since
1989, is Chairman of Central Bank, Lebanon, Missouri, with which he has been
affiliated since 1949, as well as President of Central Shares, Inc., a bank
holding company.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Company s Board of Directors held four (4) meetings during the last fiscal
year. The Company maintains an Audit Committee and a Compensation Committee of
which Messrs. Curry, George and Ellis are members. The Company does not maintain
a standing Nominating Committee. The functions of the Audit Committee are to
provide direct communication between the Board of Directors and the Company s
auditors and to recommend the selection of the Company s auditors to the Board
of Directors. The functions of the Compensation Committee are to recommend
salaries for executives and key employees to the Board of Directors for approval
and to review and make recommendations to the Board of Directors on compensation
plans for the other employees. The Compensation Committee also administers the
Company s 1996 Stock Option Plan. The Audit Committee met four times and the
Compensation Committee met twice during the last fiscal year. Each director
attended at least 75% of all meetings of the Board of Directors and all
committees on which they served.
Directors Compensation
The Company s directors who are employed by the Company do not receive any
separate compensation for service on the Board of Directors. Each non-employee
director receives $1,200 for each meeting attended and is reimbursed for out-of-
pocket expenses incurred in attending such meetings. Under the 1995 Non-
Qualified Stock Option Plan, each non-employee director is also compensated by
the annual grant of non-statutory stock options to purchase 7,500 shares of
Common Stock of the Company, subject to an overall grant limitation under the
plan of 75,000 shares to each individual director.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The executive officers and significant employees of the Company, as well as
certain biographical information about them, are as follows:
Officer/
Significant
Name Position with Company Employee Since
Michael E. Henry Chairman of the Board and 1983
Chief Executive Officer
Michael R. Wallace President and 1991
Chief Operating Officer
John W. Henry Vice Chairman and Senior 1977
Vice President
Jerry D. Hall Executive Vice President 1977
Terry W. Thompson Vice President, 1990
Chief Financial Officer
and Treasurer
Marguerite P. Butterworth Vice President 1993
Tony L. Wormington Vice President 1998
The following information relating to the Company s executive officers and
significant employees, all of whom are United States citizens, not already
described herein, is with respect to their principal occupations and positions
during the past five years:
Terry W. Thompson, age 49, Vice President, Chief Financial Officer and
Treasurer. Mr. Thompson has served as Vice President, Chief Financial Officer
and Treasurer of the Company since 1990. Mr. Thompson beneficially owns 142,453
shares of Common Stock, including 6,598 shares held in the Company s 401(k) ESOP
for Mr. Thompson s account and 22,550 shares that are currently acquirable by
exercise of outstanding options.
Marguerite P. Butterworth, age 51, Vice President. Ms. Butterworth has served as
Vice President since February of 1993. Ms. Butterworth joined the Company in
1983 and has been Hardware Manager since 1984. Ms. Butterworth beneficially
owns 107,984 shares of Common Stock, including 14,298 shares held in the
Company s 401(k) ESOP for Ms. Butterworth s account and 51,000 shares that are
currently acquirable by exercise of outstanding options.
Tony L. Wormington, age 37, Vice President. Mr. Wormington has served as Vice
President since October 1998. Mr. Wormington joined the Company in 1980 and has
served as Research and Development Manager since 1993. Mr. Wormington
beneficially owns 200,284 shares of Common Stock, including 26,989 shares held
in the Company s 401(k) ESOP for Mr. Wormington s account and 96,000 shares that
are currently acquirable by exercise of outstanding options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to identify any director or officer who failed to timely
file with the Securities and Exchange Commission a report required under Section
16(a) of the Securities Exchange Act of 1934 relating to ownership and changes
in ownership of the Company s common stock. The required reports consist of
initial statements on Form 3, statements of changes on Form 4 and annual
statements on Form 5. During the fiscal year ended June 30, 1999, there were no
delinquent filings.
EXECUTIVE COMPENSATION
The following table sets forth certain information with regard to the
compensation paid by the Company to the Chief Executive Officer and to the
Company's other four most highly compensated executive officers for the year
ended June 30, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<S><C>
Name and Year Salary Bonus Ot Long-Term All Other
Principal $ $ her Compensa- Compensa-
Position An- tion tion
nu- Shares
al underly-
Co ing Op-
m- tions (2)
pe
n-
sa-
tio
n
($)
(1)
Michael E. 1999 $205,800 $ - - 50,000 -
Henry 1998 $205,000 $ - - - -
Chairman 1997 $190,417 $ - - - -
and Chief
Executive
Officer
Michael R. 1999 $205,800 $ - - 50,000 -
Wallace 1998 $205,000 $ - - - -
President 1997 $190,417 $ - - - -
and Chief
Operating
Officer
John W. 1999 $103,200 $ - - - -
Henry 1998 $102,400 $ - - - -
Vice Chair- 1997 $125,217 $ - - - -
man and Se-
nior Vice
President
Jerry D. 1999 $103,200 $ - - - -
Hall 1998 $135,733 $ - - - -
Executive 1997 $152,400 $ - - - -
Vice
President
Terry W. 1999 $120,271 $ - -
Thompson 1998 $104,166 $10,000 - 10,000 -
Vice 1997 $ 95,000 $ - - - -
President,
Chief
Financial
Officer,
Treasurer
</TABLE>
(1) For each listed officer, less than amount required to be reported.
(2) Adjusted for subsequent splits.
The following tables set forth information with respect to stock options granted
to and exercised by the executive officers named in the Summary Compensation
Table during the fiscal year ended June 30, 1999, together with the number of
options outstanding as of such date. Data, as appropriate, have been adjusted
for stock splits.
<PAGE>
Option Grants in Last Fiscal Year
<TABLE>
<S><C>
Number of Percent Potential
Shares of To- Realizable
under- tal Op- Value at As-
lying tions sumed Annual
Name Options Granted Rates of
Granted to Em- Exer- Stock price
(#) ployees cise or Appreciation
in Fis- base Expiration for Option
cal Price Date Term (1)
Year ($/Sh) 5% ($) 10% ($)
Michael E. 50,000 14.4% 43.00 09/04/08 $2,150,000 $4,300,000
Henry
Michael R. 50,000 14.4% 43.00 09/04/08 $2,150,000 $4,300,000
Wallace
</TABLE>
_____________________________
(1) The amounts in these columns are required to be disclosed by the SEC at
rates set by regulation and are not intended to forecast possible future
appreciation of Company stock or amounts that may ultimately be realized upon
exercise. The Company chose not to use an alternative formula for grant date
valuation.
Aggregated Option Exercises in Last Fiscal Year and June 30, 1999, Option Values
<TABLE>
<S><C>
Number of Shares Value of
Underlying Unexer- Unexercised In-
Shares cised the-Money
Acquired Options at 6/30/99 Options at
on 6/30/99
Value
Name Exercise Realized ($) Exercis- Unexerci Exercisable Un
able sable ex
er
ci
sa
bl
e
Jerry D. Hall - -- -- -- -- --
John W. Henry -- -- -- -- -- --
Michael E. Henry -- -- 290,000 -- $7,027,500 --
Michael R. Wallace 27,500 1,173,250 260,000 -- $5,955,000 --
Terry W. Thompson 1,100 36,713 22,550 4,000 $ 466,162 60
,5
00
</TABLE>
COMPENSATION COMMITTEE REPORT
The Company's executive officer compensation program is administered and
reviewed by the Compensation Committee. The Compensation Committee consists of
three independent, non-employee directors of the Company. There was no insider
participation on the Compensation Committee.
The objectives of the Company's executive officer compensation program are to:
Encourage continuation of JHA's entrepreneurial spirit;
Attract and retain highly qualified and motivated executives; and
Encourage esprit de corps and reward outstanding performance.
In meeting the foregoing objectives, the Compensation Committee strives for the
interests of management and stockholders to be the same - the maximumization of
stockholder value. The components of the executive compensation program which
are employed by the Committee to meet these goals include base salary,
discretionary bonuses, and stock options.
Salaries and bonuses are established at levels to compensate for the position
held and contributions made by each executive. Recommendations regarding
bonuses and increases in salary are based upon subjective evaluations of each
individual's performance and contribution.
Longer term incentives are provided by the award of stock options because the
ultimate value of options granted will be determined by long-term growth in the
Company stock price. Awards of options are believed to help focus executives
attention on managing the Company from the perspective of an owner with an
equity stake in the business. This component of executive compensation is
provided through the Company's 1996 Stock Option Plan, under which the executive
officers, and all other employees of the Company and its subsidiaries, are
eligible to receive options. The Committee has discretion to designate
optionees and to determine the terms of the options granted. However, option
prices shall be fixed at not less than 100% of fair market value of the stock at
the date of grant, and options may not be exercisable more than ten years after
the date of grant.
In employing the foregoing three elements of compensation, the Compensation
Committee considers the experience, prior compensation levels, personal
performance, number and value of previously granted options, and other
subjective factors relating to each individual and seeks to optimize the balance
between base salary, short-term and long-term incentives. Compensation is
generally weighted in favor of base salary.
The base salary of Chief Executive Officer, Michael E. Henry, did not materially
change, however, additional stock options for 50,000 shares were granted for
longer-term incentives.
The Compensation Committee notes that there is a $1,000,000 cap on the income
tax deduction which may be taken with respect to any individual officer's
compensation. While current cash compensation paid to the Company's executive
officers is substantially less than the cap, the ultimate value of stock options
is not now known, and thus the cap may be important in some future year. The
cap has been considered by the Committee and we intend to take the steps
necessary to conform the Company's compensation structure to comply with the cap
if the issue arises in a future period.
George R. Curry
Burton O. George
James J. Ellis
Members of the Compensation Committee
COMPANY PERFORMANCE
The following graph presents a comparison for the five-year period ended June
30, 1999, of the market performance of the Company's common stock with the S&P
500 Index and an index of peer companies selected by the Company:
The following information depicts a line graph with the following values:
<TABLE>
<S><C>
Description 1995 1996 1997 1998 1999
Jack Henry &
Associates,
Inc. $186.73 $438.68 $473.53 $ 676.72 $ 778.22
Peer Group
Only $143.94 $190.85 $208.34 $ 217.81 $ 252.53
S & P Only $126.07 $158.85 $213.97 $ 278.50 $ 341.52
</TABLE>
*This comparison assumes $100 was invested on July 1, 1994, and assumes
reinvestment of dividends. Total returns are calculated according to market
capitalization of peer group members at the beginning of each period. Peer
companies selected are in the business of providing specialized computer
software, hardware and related services to financial institutions and other
businesses. Companies in the peer group are Banctec, Bisys Group, Elite
Information, Cerner Corp., Crawford & Co., Electronic Arts, First Data, Fiserv,
Keane, National Data, PC Quote, Primark, Rainbow Technology, SEI Investments and
Sterling Software.
PROPOSAL 2
APPROVAL OF AMENDMENT TO
1996 STOCK OPTION PLAN
INTRODUCTION
At the Annual Meeting, the Company's stockholders are being asked to
approve an amendment to the 1996 Stock Option Plan (the Plan ) to increase the
number of shares of Common Stock reserved for issuance under the Plan by
1,000,000 shares, to an aggregate of 3,250,000 shares. The Board of Directors
adopted the amendment, subject to stockholder approval at the Annual Meeting.
The Company believes that long-term equity compensation in the form of
stock options is critical in order to attract qualified employees to the Company
and to retain and provide incentive to current employees, particularly in light
of the increasingly competitive environment for talented personnel. As of June
30, 1999, there were approximately 1,132,355 shares available for future grants
under the Plan. The Board of Directors believes that the number of shares
currently available under the Plan is likely to be insufficient in light of
potential continued growth in the Company's operations, including potential
increases in the number of employees if and to the extent the Company completes
acquisitions of other companies or businesses. For this reason, the Board of
Directors has determined that it is in the best interests of the Company to
increase the number of shares available for issuance under the Plan by 1,000,000
shares.
The Board of Directors believes that the Company and its stockholders have
benefitted substantially over the years from the use of stock options as an
effective means to secure, motivate and retain qualified and competent
employees of the Company and its subsidiaries. Accordingly, the Board of
Directors recommends that the stockholders vote FOR approval of the amendment
of the Plan. Unless otherwise directed therein, the Proxies solicited hereby
will be voted for approval of the amendment of the Plan.
Although the Company is only proposing to amend the number of shares
available for issuance under the Plan, set forth below is a summary of the
principal features of the Plan. The summary, however, does not purport to be a
complete description of all the provisions of the Plan. Any stockholder of the
Company who wishes to obtain a copy of the actual plan document may do so upon
written request to the Secretary at the Company's principal offices at 663
Highway 60, P.O. Box 807, Monett, Missouri 65708.
GENERAL
The purposes of the Plan are to obtain for the Company the benefits of the
incentive inherent in the ownership of the Company s Common Stock by employees
of the Company and its subsidiaries who are important to the success and the
growth of the business of the Company, to help the Company retain the services
of such persons, and to compensate such persons for their service to the Company
(or the Company s subsidiaries, as the case may be). The number of employees of
the Company and its subsidiaries which are eligible to participate in the Plan
is 977.
The aggregate number of shares which may be issued, and as to which stock
options may be granted under the Plan is 2,250,000 shares of Common Stock
(excluding any increase by the proposed amendment), subject to proportionate
adjustment by reason of merger, consolidation, reorganization, recapitalization,
or exchange of shares or by stock dividend, stock split, combination of shares,
or other changes in capital structure effected without receipt of consideration.
If any stock option granted under the Plan expires, is surrendered in whole or
in part, or terminates for any reason without being exercised in full, then the
number of shares subject to the stock option will again be available for
purposes of the Plan. The shares of Common Stock which may be issued under the
Plan may be either authorized but unissued shares or treasury shares, or both.
An option holder shall have none of the rights of a stockholder with
respect to any shares covered by the option until such individual shall have
exercised the option, paid the option price and been issued a stock certificate
for the purchased shares. Upon exercise of the option, payment of the option
price and issuance of the stock certificate, the option holder shall have all of
the rights of a stockholder with respect to such shares including voting and
dividend rights, subject only to the provisions of this Plan and other
instruments implementing the provisions hereof.
ADMINISTRATION
The Plan is to be administered by the Company s Board of Directors (the
Board ). The Board, however, may at any time appoint a committee (the
Committee ) of two (2) or more non-employee directors and delegate to such
Committee one or more of the administrative powers allocated to the Board under
the provisions of the Plan, including (without limitation) the power to
determine the person or persons to be granted options under the Plan, the number
of shares to be covered by such options, whether such options are to be
incentive stock options ( Incentive Options ) under Section 422A of the Internal
Revenue Code of 1986, as amended (the Code ) or nonqualified options
( Nonqualified Options ) not intended to meet the requirements of Section 422A,
and the time or times at which options are to be exercisable. The Board or the
Committee, as the case may be, has the power to interpret and amend the Plan,
subject to further approval by the stockholders for certain amendments relating
to option shares, grants, pricing, term and eligibility. All questions of
interpretation and application of the Plan, or as to stock options granted under
the Plan are subject to the determination of the Board or the Committee, which
will be final and binding.
ELIGIBILITY AND GRANT OF STOCK OPTIONS
The persons who shall be eligible to receive options pursuant to the Plan are
such employees of the Company, and subsidiary corporations of the Company
( Subsidiary Corporation ) or any affiliated entity of the Company ( Affiliated
Company ), as defined in the Plan, including employees who are also members of
the Board, as the Board or the Committee shall from time to time select.
The Board or the Committee shall have the full and absolute authority to
determine the number of shares to be covered by granted options, whether options
are to be Incentive Options or Nonqualified Options, as well as the time or
times at which options are to be exercisable and such other terms and conditions
as may be applicable to such options. However, no option granted under the Plan
shall have a term in excess of ten (10) years from the grant date. Provided,
further, that the aggregate fair market value of the Common Stock with respect
to which Incentive Options granted under the Plan are exercisable shall not
exceed $100,000 per grantee or such greater amount as may be permitted by later
amendments to Section 422A of the Code.
The option price per share shall be fixed by the Board or the Committee,
but in no event shall the option price per share be less than one hundred
percent (100%) of the fair market value of a share of Common Stock on the date
of the option grant. The Plan has specific provisions for determining the fair
market value of Common Stock for the purpose of determining the option price. As
of August 23, 1999, the last sale price of Common Stock, as reported on the
Nasdaq Stock Market, was $40.16 per share.
PERMITTED TRANSFERS
For the first six (6) months after the date of grant, no option granted under
the plan shall be transferable by the optionee other than by will or by the laws
of descent and distribution. Thereafter, options may be transferred during the
lifetime of an optionee to any Permitted Transferee , as defined under the
Plan. Permitted Transferees include members of the immediate family of the
optionee and any trust established for the benefit of the optionee or the
optionee s immediate family members. Immediate family member means the
optionee s spouse, children and grandchildren and any partnership, corporation,
limited liability company or other entity, all the beneficial interest in which
are held by the optionee or immediate family members. Permitted Transferees may
only transfer options to other Permitted Transferees of the optionee.
Notwithstanding any of the foregoing, Incentive Options shall be exercisable
only by the optionees and shall not be assignable or transferrable by the
optionee otherwise than by will or by the laws of decent and distribution.
ADJUSTMENT OF SHARES
If any changes made in the shares subject to the Plan or subject to any option
granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, split-up, combination of shares, exchange of
shares, issuance of rights to subscribe, or change in capital structure),
appropriate adjustments or substitutions shall be made by the Board or the
Committee in or for such shares (including adjustments in the maximum number of
shares subject to the Plan and the number of such shares and price per share
subject to the Plan and the number of such shares and price per share subject
outstanding options granted under the Plan) as the Board or the Committee, in
its sole discretion shall deem equitable to prevent dilution or enlargement of
option rights.
SURRENDER AND TERMINATION OF OPTIONS
In the event of a sale of all or substantially all of the assets of the Company
or fifty percent (50%) or more of the outstanding voting stock of the Company by
means of a sale, merger, reorganization or liquidation, the Board shall have
discretionary authority to authorize the surrender of all unexercised options in
exchange for a cash distribution equal in amount to the difference between (i)
the fair market value of the authorized surrender date of the shares for which
the surrender option or portion thereof is at the time excisable, and (ii) the
aggregate option price payable for such shares.
Further, if, in connection with any such sale, merger, reorganization or
liquidation, a provision is made for each outstanding option to either be
assumed by the successor corporation (or parent thereof) or be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof), each person holding unexercised options shall
be entitled to have such options assumed by the successor corporation (or parent
thereof) or replaced with a comparable option, as the case may be. The
determination of option comparability will be made by the Board, and its
determination shall be final, binding and conclusive.
AMENDMENT AND TERMINATION OF THE PLAN
The Board shall have the exclusive power and authority to amend or modify the
Plan in any or all respects, whatsoever; provided, however, that no such
amendment or modification shall, without the consent of the option holders,
adversely affect rights and obligations with respect to options at the time
outstanding under the Plan; and provided, further, that the Board shall not,
without the approval of the stockholders of the Company, (i) increase the
maximum number of shares issuable under the Plan, except for permissible
adjustments; (ii) materially modify the eligibility requirements for the grant
of options under the Plan; or (iii) make any other changes in the Plan which
require stockholder approval pursuant to Section 422A of the Code.
The Plan, unless sooner terminated, shall terminate at the close of
business on November 1, 2006. The Board shall have the authority to effect, at
any time and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than one hundred percent (100%) of fair market value on the new grant date.
PLAN BENEFITS
The Company cannot currently determine the number of shares subject to options
that may be granted in the future to executive officers, directors and employees
under the Plan. The following table sets forth information with respect to the
stock options granted under the Plan through June 30, 1999, to the named
executive officers, all current executive officers as a group and all employees
and consultants (including all current officers who are not executive officers)
as a group under the Plan. Additional stock options for 50,000 shares each were
granted to Michael E. Henry and Michael R. Wallace after June 30, 1999 and prior
to the date of this Proxy Statement.
<TABLE>
<S><C>
NUMBER OF SHARES SUBJECT Weighted
TO Average
NAME OPTIONS GRANTED EXERCISE PRICE
UNDER THE PLAN Per Share
Michael E. Henry 50,000 43.000
Michael R. Wallace 50,000 43.000
Terry W. Thompson 10,000 24.125
Marguerite P. Butterworth
10,000 24.125
Tony L. Wormington 10,000 24.125
All current executive
officers as a group (7
persons) 130,000 40.121
All current directors
(other than executive
officers) as a group (3
persons) 0 0
All employees (excluding
executive officers) as a
group (970 persons)
919,245 26.141
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of the grant and exercise of non-statutory and statutory stock
options under present law.
TAX TREATMENT - NON-STATUTORY STOCK OPTIONS
An optionee will not recognize any taxable income for federal income tax
purposes upon receipt of a non-statutory stock option.
Upon the exercise of a non-statutory stock option with cash, the amount by which
the fair market value of the shares received, determined as of the date of
exercise, exceeds the option price is generally treated as compensation received
in the year of exercise. If the option price is paid in whole or in part with
shares of Common Stock, no income, gain or loss is recognized on the receipt of
shares equal in value on the date of exercise to the shares delivered in payment
of the option price. The fair market value of the remainder of the shares
received upon exercise, determined as of the date of exercise, less the amount
of cash, if any, paid upon exercise, is generally treated as compensation
received on the date of exercise. Individuals are subject to special Federal
income tax rules upon the exercise of a non-statutory stock option (i) if the
exercise is within six months of the date of grant, or (ii) in the event the
fair market value of the shares acquired is less than the option price on the
date of exercise.
In each instance that an amount is treated as compensation received, the Company
generally is entitled to a corresponding deduction in the same amount for
compensation paid to the optionee in such taxable year.
TAX TREATMENT - STATUTORY STOCK OPTIONS
The grant of a statutory stock option pursuant to Section 422A of the Code has
no tax consequences to the optionee. Thus, optionees have no income from the
receipt of statutory stock options, and the Company will have no business
expense deductions from the grant of the statutory stock option.
When the statutory stock option is exercised, no income is attributed to the
optionee to whom stock is transferred. However, to obtain this tax deferred
treatment, the individual must maintain the shares he or she acquires through
the exercise of the statutory stock option for the required holding period. In
short, there must be no disposition of the stock: (i) within two (2) years after
the option is granted, or (ii) within one (1) year after the stock is
transferred to the optionee. This holding period requirements do not apply to
statutory options that are exercised after the employee's death. If an
individual fails to hold the stock for the requisite holding period, the tax
will be deferred only until the tax year in which the stock is disposed of, and
the gain will be treated as ordinary income. On the other hand, when the
requisite holding periods are met, an individual will be taxed at capital gains
rate when stock obtained pursuant to the exercise of the statutory stock option
is sold.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Common Stock present at
the Annual Meeting in person or by proxy and entitled to vote is required to
approve the proposed amendment of the Plan. An abstention from voting on a
matter by a stockholder present in person or represented by proxy and entitled
to vote has the same legal effect as a vote AGAINST the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AMENDMENT
TO THE 1996 STOCK OPTION PLAN.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, certified public accountants, served as independent
auditors for the Company for the year ended June 30, 1999. The Company has not
selected its auditors for the current year, because the Company does not select
its auditors until after the final Audit Committee meeting on the prior years
examination is held. Representatives of Deloitte & Touche LLP are expected to
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals at the Company s 2000 Annual
Meeting of Stockholders must submit their proposals to the Company s Secretary
on or before May 21, 2000.
COST OF SOLICITATION AND PROXIES
Proxy solicitation is being made by mail, although it may also be made by
telephone, telegraph or in person by officers, directors and employees of the
Company not specifically engaged or compensated for that purpose. The Company
will bear the entire cost of the Annual Meeting, including the cost of
preparing, assembling, printing and mailing the Proxy Statement, the Proxy and
any additional materials furnished to stockholders. Copies of the solicitation
materials will be furnished to brokerage houses, fiduciaries and custodians for
forwarding to the beneficial owners of shares held of record by them and, upon
their request, such persons will be reimbursed for their reasonable expenses
incurred in completing the mailing to such beneficial owners.
FINANCIAL STATEMENTS
Financial statements of the Company are contained in the 1999 Annual Report on
Form 10-K which accompanies this Proxy Statement, and are incorporated herein by
reference.
OTHER MATTERS
The Board of Directors knows of no matters that are expected to be presented for
consideration at the 1999 Annual Meeting which are not described herein.
However, if other matters properly come before the meeting, it is intended that
the persons named in the accompanying Proxy will vote thereon in accordance with
their best judgment.
By Order of the Board of Directors
/s/ Michael E. Henry
Michael E. Henry
Chairman of the Board
Monett, Missouri
September 20, 1999
A copy of the Company s Annual Report on Form 10-K is included herewith.
Exhibits to Form 10-K, listed on pages 27 and 28 thereof, have been omitted. The
Company will furnish a copy of any exhibit subject to charge upon written
request directed to Terry W. Thompson, Chief Financial Officer, Jack Henry &
Associates, Inc., 663 Highway 60, Post Office Box 807, Monett, Missouri, 65708.
PROXY
JACK HENRY & ASSOCIATES, INC. THIS PROXY IS SOLICITED
663 HIGHWAY 60 ON BEHALF OF THE BOARD
P.O. BOX 807 OF DIRECTORS
MONETT, MISSOURI 65708 The undersigned hereby
appoints Michael E. Henry
and Michael R. Wallace as
Proxies, each with the power
to appoint his or her substitute,
and hereby authorizes them to
represent and to vote, as designated
below, all the shares of common
stock of Jack Henry & Associates, Inc.
held of record by the undersigned on
September 24, 1999, at the annual
meeting of shareholders to be held on
October 29, 1999 or any adjournment
thereof.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(Except as marked to the to vote for all nominees listed
contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below)
J. Henry, J. Hall, M. Henry, J. Ellis, B. George, G. Curry, M. Wallace
2. To amend the 1996 Stock Option Plan to increase the number of shares
available for issuance under the plan by an aggregate of 1,000,000 shares,
to 3,250,000;
FOR AGAINST ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this
proxy will be voted FOR Proposal 1 and FOR Proposal 2.
Please sign exactly as name appears below. 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.
DATED 1999
Signature
Signature if held jointly
PLEASE MARK SIGN DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE
