<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SunGard Data Systems Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[TO APPEAR ON SUNGARD LETTERHEAD]
April 1, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders of
SunGard Data Systems Inc., which will be held on Friday, May 10, 1996,
beginning at 9:00 a.m., at the Four Seasons Hotel, One Logan Square,
Philadelphia, Pennsylvania. The official notice of the meeting, together with a
proxy statement and proxy card, is enclosed. Please give this information your
careful attention.
Your participation in the Company's affairs is important. To assure your
representation at the meeting, whether or not you expect to be present, please
date and sign the enclosed proxy card and return it as soon as possible in the
envelope provided. Also, please indicate on the proxy card whether you plan to
attend the meeting.
Your copy of the Company's 1995 Annual Report also is enclosed. We appreciate
your interest in the Company.
Sincerely,
/s/ James L. Mann
James L. Mann
Chairman, President and
Chief Executive Officer
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE AND SIGN YOUR PROXY
CARD AND PROMPTLY RETURN IT IN THE REPLY ENVELOPE PROVIDED (WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES). IF YOU RECEIVE MORE THAN ONE PROXY
CARD BECAUSE YOU OWN SHARES THAT ARE REGISTERED DIFFERENTLY, THEN PLEASE DATE,
SIGN AND RETURN ALL OF THEM. THANK YOU.
- --------------------------------------------------------------------------------
<PAGE>
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, Pennsylvania 19087
(610) 341-8700
----------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1996
----------------------------------------------------------
To Our Stockholders:
The 1996 Annual Meeting of Stockholders of SunGard Data Systems Inc. will be
held at 9:00 a.m. local time, on Friday, May 10, 1996, at the Four Seasons
Hotel, One Logan Square, Philadelphia, Pennsylvania 19103, for the following
purposes:
1. To elect directors.
2. To vote on approval of the Company's 1996 Equity Incentive Plan.
3. To vote on approval of the Company's 1996 Employee Stock Purchase Plan.
4. To act upon such other business as may properly come before the meeting.
Only holders of the Company's common stock at the close of business on March 15,
1996 are entitled to receive notice of the meeting and to vote at the meeting.
You are cordially invited to attend the meeting in person. Whether or not you
plan to attend the meeting, you are urged to date and sign the enclosed proxy
card and promptly return it in the enclosed reply envelope (which requires no
postage if mailed in the United States).
By Order of the Board of Directors,
/s/ LAWRENCE A. GROSS
Lawrence A. Gross
Vice President and General Counsel,
Secretary
April 1, 1996
<PAGE>
SunGard Data Systems Inc.
1285 Drummers Lane
Wayne, Pennsylvania 19087
(610) 341-8700
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being furnished to the
stockholders of SunGard Data Systems Inc. in connection with the solicitation of
proxies on behalf of the Board of Directors of the Company for use in voting at
the 1996 Annual Meeting of Stockholders to be held at the Four Seasons Hotel,
One Logan Square, Philadelphia, Pennsylvania 19103 on Friday, May 10, 1996, at
9:00 a.m., or at any adjournment or postponement of the meeting. These proxy
materials are first being mailed to stockholders on or about April 1, 1996.
Proxies in the form enclosed, if properly submitted and not revoked, will be
voted as directed on the proxies. Any proxy not directing to the contrary will
be voted "for" the election of the named nominees as directors and "for"
approval of each of the other proposals. Sending in a signed proxy does not
affect a stockholder's right to attend the meeting and vote in person, since the
proxy is revocable. Any stockholder who submits a proxy may revoke it at any
time before it is voted by delivering a later-dated proxy or a written notice of
revocation to the Secretary of the Company at the Company's headquarters or at
the meeting.
At the close of business on March 15, 1996, the record date for the
determination of stockholders of the Company entitled to receive notice of and
to vote at the 1996 Annual Meeting, the Company's outstanding voting securities
consisted of 42,000,220 shares of common stock, held by approximately 2,600
stockholders of record. In order for a quorum to be present at the 1996 Annual
Meeting, a majority of the outstanding shares of the Company's common stock as
of the close of business on the record date must be present in person or
represented by proxy at the meeting. All such shares that are present in person
or represented by proxy at the meeting will be counted in determining whether a
quorum is present, no matter how the shares are voted or whether they abstain
from voting or are broker non-votes. All information in this proxy statement
with respect to the Company's common stock reflects the July 1995 two-for-one
stock split.
Holders of common stock are entitled to one vote per share. The election of
directors will be determined by a plurality vote, with the eight nominees
receiving the most "for" votes being elected. Approval of each of the other
proposals requires that a majority of the quorum vote "for" the proposal. An
abstention or broker non-vote on any proposal other than the election of
directors, therefore, will have the same legal effect as an "against" vote,
although some persons analyzing the voting results may interpret these actions
differently.
The Company will pay the cost of this solicitation, which will be made primarily
by mail. Proxies also may be solicited in person, or by telephone, facsimile or
similar means, by directors, officers or employees of the Company without
additional compensation. In addition, D. F. King & Co., Inc. will provide
solicitation services to the Company for a fee of approximately $4,500 plus out-
of-pocket expenses. The Company will, on request, reimburse stockholders who
are brokers, dealers, banks or voting trustees, or their nominees, for their
reasonable expenses in sending proxy materials and annual reports to the
beneficial owners of the shares they hold of record.
1
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Eight directors are to be elected at the 1996 Annual Meeting to serve for one-
year terms until the 1997 Annual Meeting and until their respective successors
are elected and qualified. All of the nominees currently are serving as
directors of the Company. The Company knows of no reason why any nominee would
be unable to serve as a director. Each nominee has consented to being named in
this proxy statement and to serve if elected. If any nominee should for any
reason become unable to serve, then all valid proxies will be voted for the
election of such substitute nominee as the Board of Directors may designate, or
the Board may reduce the number of directors to eliminate the vacancy.
The following information about the Company's nominees for election as directors
is based, in part, upon information furnished by the nominees.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Nominee and Current Positions with the Company Age Principal Occupations and Employment
===================================================================================================================================
<S> <C> <C>
Gregory S. Bentley 40 President and Chairman of the Board (since 1995) and Vice President
Director (since 1991) (1991 to 1995), Bentley Systems, Inc., Exton, PA (engineering
Member, Audit Committee software company); President (1983 to 1991), SunGard Systems
International Inc., a subsidiary of the Company since 1987.
- -----------------------------------------------------------------------------------------------------------------------------------
Michael C. Brooks 51 Managing Partner (since 1993) and General Partner (since 1985),
Director (since 1985) J. H. Whitney & Co., New York, NY (venture capital firm).
Chairman, Compensation Committee
Member, Executive Committee
- -----------------------------------------------------------------------------------------------------------------------------------
Albert A. Eisenstat 65 Private investor (since 1993); Executive or Senior Vice President
Director (since 1991) (1985 to 1993) and Vice President and General Counsel (1980 to
Member, Compensation Committee 1987), Apple Computer, Inc., Cupertino, CA (computer and software
company).
- -----------------------------------------------------------------------------------------------------------------------------------
Bernard Goldstein 65 Managing Director (since 1979), Broadview Associates, L. P.,
Director (since 1994) Fort Lee, NJ (investment banking firm).
Member, Compensation Committee
- -----------------------------------------------------------------------------------------------------------------------------------
James L. Mann 61 Chairman of the Board (since 1987) and President and Chief
Director (since 1983) Executive Officer (since 1986) of the Company; President and Chief
Chairman, Executive Committee Operating Officer (1983 to 1985) of the Company.
Chairman of the Board, President
and Chief Executive Officer
- -----------------------------------------------------------------------------------------------------------------------------------
Michael Roth 64 Of Counsel (since 1989), Rosenman & Colin, New York, NY (law firm).
Director (since 1991)
Member, Audit Committee
- -----------------------------------------------------------------------------------------------------------------------------------
Malcolm I. Ruddock 53 Treasurer (since 1989), Director of Finance (1988 to 1989) and
Director (since 1983) Director of Acquisitions and Divestments (1979 to 1988), Sun
Chairman, Audit Committee Company, Inc., Philadelphia, PA (independent refiner and marketer).
Member, Executive Committee
- -----------------------------------------------------------------------------------------------------------------------------------
Lawrence J. Schoenberg 63 Director of public companies (since 1990); Chairman (1967 to 1991)
Director (since 1991) and Chief Executive Officer (1967 to 1990), AGS Computers, Inc.,
Member, Audit Committee Mountainside, NJ (software and computer services company).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Mr. Brooks also is a director of DecisionOne Corporation and P-COM, Inc. Mr.
Eisenstat also is a director of all funds in the Benham Mutual Fund Group,
Business Objects, S.A. and Commercial Metals Company. Mr. Goldstein also is a
director of Apple Computer, Inc., Enterprise Systems Inc., Franklin Electronic
Publishers Inc. and SPSS, Inc. Mr. Mann also is a director of Integrated
Systems Consulting Group and T-Netix, Inc. Mr. Schoenberg also is a director of
Forecross Corporation, Government Technology Services Inc., Merisel Inc. and
PennAmerica Group Inc.
Board of Directors and Committee Meetings
During 1995, the Board of Directors held eight meetings, the Audit Committee
held four meetings, the Compensation Committee held six meetings, and the
Executive Committee held two meetings. The Board of Directors does not have a
standing Nominating Committee. During 1995, each director attended at least 93%
of the total number of meetings of the Board of Directors and Committees on
which he served. Meeting attendance averaged 98% among all directors.
The Audit Committee reviews the Company's accounting and financial practices and
policies and the scope and results of the Company's external and internal
audits. The Audit Committee also recommends to the Board of Directors the
selection of the Company's independent public accountants and administers the
Company's business conduct, conflict of interest and related policies. Only
outside directors who are not employees of the Company may serve on the Audit
Committee.
The Compensation Committee establishes the compensation policies for executive
officers of the Company, evaluates and approves the compensation of the chief
executive officer and reviews his recommendations as to the compensation of the
other executive officers. The Compensation Committee also administers the
Company's stock option, purchase and award plans. Only outside directors who
are not employees of the Company may serve on the Compensation Committee.
The Executive Committee reviews certain aspects of transactions and policies
that have been generally approved by the Board of Directors. The Executive
Committee also is authorized to exercise the powers of the Board of Directors
during the intervals between Board meetings, except those powers that are
prohibited by law from being delegated.
Director Compensation
Directors who are employees of the Company do not receive additional
compensation for serving on the Board of Directors or Committees. Each outside
director receives an annual fee of $6,000, fees of $2,000 for each quarterly
meeting of the Board of Directors attended and $500 for each other Board meeting
attended, and reimbursement of applicable travel and other expenses. In
addition, each outside director Committee chairman receives an annual fee of
$2,000, and each outside director Committee member receives fees of $1,000 for
each Committee meeting attended.
Under the Company's Restricted Stock Award Plan for Outside Directors,
restricted stock awards are automatically granted to "outside directors" --
those who are not, and were not during the twelve months before election to the
Board, officers or employees of the Company. Each outside director
automatically receives an award of 10,000 shares upon initial election to the
Board, and will automatically receive additional awards of 10,000 shares upon
reelection as an outside director every fifth year thereafter. At the 1996
Annual Meeting, if reelected, Messrs. Brooks, Eisenstat, Roth, Ruddock and
Schoenberg each will receive an additional restricted stock award for 10,000
shares of common stock.
3
<PAGE>
The shares awarded are subject to transfer restrictions until they vest, at the
rate of 2,000 shares per year, on the dates of the Company's next five Annual
Meetings following the date of grant. If an outside director dies or is
permanently disabled, or if a change in control of the Company occurs, then all
remaining unvested shares immediately vest. If an outside director's
directorship terminates for any other reason, then all remaining unvested shares
are forfeited.
The Company has entered into indemnification agreements, in the form approved by
the stockholders, with the Company's directors and officers.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table contains certain information about the beneficial ownership
of the Company's common stock as of March 15, 1996 (the record date) by each
person who is known by the Company to beneficially own more than 5% of the
Company's common stock, by each of the Company's directors, by each of the
Company's executive officers named in the Summary Compensation Table below, and
by all of the Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Name of Beneficial Owner or Group Number of Shares Beneficially Owned Percent
--------------------------------------------------- of
Direct/(1)/ Voting or Right to Class/(4)/
Investment Power/(2)/ Acquire/(3)/
=============================================================================================================================
<S> <C> <C> <C> <C>
FMR Corp./(5)/ -- 4,892,600/(6)/ -- 11.6%
Edward C. Johnson 3d, Chairman, FMR Corp.
Abigail P. Johnson, Director, FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
- -----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Associates, Inc./(5)/ -- 3,807,400/(7)/ -- 9.1%
100 E. Pratt Street
Baltimore, Maryland 21202
- -----------------------------------------------------------------------------------------------------------------------------
Gregory S. Bentley (director) 124,878 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Michael C. Brooks (director) 12,000 -- 10,000 --
- -----------------------------------------------------------------------------------------------------------------------------
Cristobal I. Conde (executive officer) 217,149 -- 12,973 --
- -----------------------------------------------------------------------------------------------------------------------------
Philip L. Dowd (executive officer) 98,416 -- 108,973 --
- -----------------------------------------------------------------------------------------------------------------------------
Albert A. Eisenstat (director) 12,000 -- 10,000 --
- -----------------------------------------------------------------------------------------------------------------------------
Bernard Goldstein (director) 19,000 1,000 -- --
- -----------------------------------------------------------------------------------------------------------------------------
James L. Mann (director and chief executive officer) 491,744 -- 62,500 1.3%
- -----------------------------------------------------------------------------------------------------------------------------
Michael F. Mulholland (executive officer) 2,609 -- 38,608 --
- -----------------------------------------------------------------------------------------------------------------------------
Michael Roth (director) 10,000 -- 10,000 --
- -----------------------------------------------------------------------------------------------------------------------------
Malcolm I. Ruddock (director) 6,500 5,500 10,000 --
- -----------------------------------------------------------------------------------------------------------------------------
Lawrence J. Schoenberg (director) 8,876 -- 10,000 --
- -----------------------------------------------------------------------------------------------------------------------------
Richard C. Tarbox (executive officer) 3,896 -- 25,726 --
- -----------------------------------------------------------------------------------------------------------------------------
All 19 directors and executive officers 1,105,821 6,620 510,994 3.8%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
(1) Shares held in the beneficial owner's name or jointly with others, or in
the name of a broker, bank, nominee or trustee for the beneficial owner's
account, including shares held under the Company's Employee Stock Purchase
Plan. Includes 6,000, 2,000, 2,000, 8,000, 2,000, 2,000 and 2,000
restricted shares held by Messrs. Bentley, Brooks, Eisenstat, Goldstein,
Roth, Ruddock and Schoenberg, respectively, and 24,000 restricted shares
held by all directors as a group, that are subject to transfer restrictions
and forfeiture (see Director Compensation).
(2) Shares for which the beneficial owner has or may be deemed to have sole or
shared voting and/or investment power.
(3) Shares which the beneficial owner has the right to acquire within 60 days
after the record date by exercising stock options or by automatic grant of
restricted stock awards to outside directors. Includes 2,973, 2,973, 8,408
and 6,206 unvested shares that may be acquired by Messrs. Conde, Dowd,
Mulholland and Tarbox, respectively, and 53,976 unvested shares that may be
acquired by all executive officers as a group which, if acquired, would be
subject to transfer restrictions and repurchase by the Company. Includes
10,000 restricted shares that will be awarded to each of Messrs. Brooks,
Eisenstat, Roth, Ruddock and Schoenberg, if reelected at the 1996 Annual
Meeting, under the Company's Restricted Stock Award Plan for Outside
Directors (see Director Compensation).
(4) Unless otherwise indicated, the beneficial ownership of any named person
does not exceed one percent of the outstanding shares of common stock.
(5) Each of these beneficial owners, and/or one of its affiliates, is a
customer of the Company, having purchased the Company's software and/or
computer services in the ordinary course of business.
(6) Based upon a Schedule 13G, Amendment No. 2, dated February 14, 1996, filed
by the beneficial owners.
(7) Based upon a Schedule 13G, Amendment No. 4, dated February 14, 1996, filed
by T. Rowe Price Associates, Inc. ("Price Associates"). Includes shares
owned by various individual and institutional investors which Price
Associates serves as investment adviser with power to direct investments
and/or sole power to vote. Price Associates disclaims beneficial ownership
of these shares.
EXECUTIVE COMPENSATION
Compensation Committee Report
The Company's compensation policies for executive officers, as determined by the
Compensation Committee, are to (a) provide competitive compensation packages so
as to attract and retain superior executive talent, (b) link a significant
portion of compensation to financial results, so as to reward successful
performance, and (c) provide long-term equity compensation, so as to further
align the interests of executive officers with those of stockholders and further
reward successful performance. The principal components of the Company's
executive officer compensation program are base salary, annual cash incentive
payments, periodic stock options, and, beginning in 1994, long-term incentive
awards under which stock options may be earned if performance goals are met.
Cash Compensation. The primary factor used to set cash compensation for the
Company's executive officers is an analysis of competitive executive
compensation based upon general business compensation surveys as well as more
specific compensation surveys of companies of comparable business, size and
complexity to the Company. An independent compensation consultant, whose
services are available to the Compensation Committee, assists the Company with
this analysis of
5
<PAGE>
competitive compensation. Although the group of companies covered by this
analysis includes most of the companies contained in the S&P Computer Software
and Services Index (see Performance Graph), the Index companies are not
separately analyzed for compensation purposes because, by themselves, they do
not provide a large enough statistical sample. The Company believes that the new
Nasdaq Computer and Data Processing Index (see Performance Graph) may provide an
appropriate statistical sample for compensation analysis purposes, but the
Company has not yet had the opportunity to analyze this new Index for this
purpose.
The Company's policy is to pay its executive officers at or somewhat above
competitive compensation averages for comparable positions. Compensation levels
for individual executive officers, however, may be more or less than competitive
averages, depending upon a subjective assessment of individual factors such as
the executive's position, skills, achievements, tenure with the Company and
historical compensation levels. In applying the analysis of competitive
compensation, the Company focuses on total cash compensation. The split between
base salary and annual cash incentive payment also is based upon that analysis,
but it tends to be somewhat more influenced by individual factors such as the
executive's position and historical compensation levels. Generally, previously
granted stock options and other equity awards are not considered in setting cash
compensation levels.
The performance goals for executive officers' 1995 annual cash incentive plans
were set at the beginning of the year and took into account the Company's
overall financial goals for 1995. For corporate officers, the incentive
payments depended solely upon the rate of increase in the Company's net income
over the previous year, except that in one case an additional incentive payment
was based upon a performance goal specific to the executive's function. For
group chief executive officers, the incentive payments depended solely upon the
budgeted operating income of the operating business groups they manage, except
that from 9% to 23% of the incentive payment could be lost depending upon the
group's average number of days sales outstanding in accounts receivable.
On average, total cash compensation at targeted goals for executive officers
increased by 6% in 1995, and incentive payments at targeted goals constituted
28% of total cash compensation. Based upon actual 1995 results, all executive
officers met or exceeded their targeted goals, except for one group chief
executive officer who was slightly under his targeted goal and one former group
chief executive officer who did not meet his targeted goal.
Equity Compensation. Historically, the Company has granted stock options and
awards at irregular intervals at the discretion of the Compensation Committee.
In evaluating equity compensation for an executive officer, the Compensation
Committee considers primarily the executive's position, skills, achievements and
tenure with the Company, and the level and timing of previously granted stock
options and awards. The Compensation Committee also considers the Company's
total "overhang," which equals (a) the number of shares of common stock subject
to outstanding stock options and awards plus the number of shares of common
stock available for future stock options and awards, divided by (b) the number
of total outstanding shares of common stock plus the number of shares of common
stock described in clause (a), expressed as a percentage. As of December 31,
1995, the Company's total overhang was 6.3%, of which 4.2% was represented by
shares subject to outstanding stock options and awards, and 2.1% was represented
by shares available for future stock options and awards. Other than stock
options granted to Mr. Mann (as discussed below) and those granted to a new
group chief executive officer before he was promoted into that position, no
stock options were granted to executive officers during 1995.
In 1994, the Company began a program ("LTIP program") of granting annual long-
term incentive awards to the group chief executive officers ("LTIP awards").
Each LTIP award allows a group chief executive officer to earn stock options if
he achieves certain goals for cumulative growth in his group's operating income
during a three-year period, subject to continued employment during that period.
During 1995, LTIP awards covering 1995 through 1997 were granted to the group
chief executive officers (see Long-Term Incentive Plan Award Table).
6
<PAGE>
Changes for 1996. After consultations with the Company's independent
compensation consultant, the Company changed its incentive compensation programs
to more closely align the interests of its key executives with those of its
stockholders and to implement a performance-based equity compensation program
for more of its key executives. Beginning in 1996, annual cash incentive
payments for all corporate officers will be based upon growth in earnings per
share rather than net income. Also beginning in 1996, the LTIP program for group
chief executive officers will be extended to cover corporate officers (excluding
Mr. Mann as explained below), business unit presidents and other key executives.
The number of option shares that may be earned by each participant in the LTIP
program is determined on the basis of an analysis of competitive equity
compensation programs. This wider-scope LTIP program is intended to replace, for
most purposes, the Company's prior practice of granting stock options and awards
at irregular intervals, although the Company will continue this practice in
certain circumstances such as for key employees who do not participate in the
LTIP program, for newly hired or promoted executives, and for executives who
join the Company via acquisition. Since most participants in the new LTIP
program cannot earn any options until the beginning of 1999, and in view of the
Company's low overhang and the previous absence of a regular stock option grant
program, the Compensation Committee also approved the grant of stock options to
executive officers, business unit presidents and certain other key employees in
early 1996 (see Proposal Two--1996 Awards). The number of shares covered by the
stock options and LTIP awards granted in early 1996 required the adoption of a
new equity incentive plan (see Proposal Two).
Chief Executive Officer's Compensation. Mr. Mann's base salary for 1995 was
$400,000, an increase of $30,000 or 8.1% over his 1994 base salary. Mr. Mann's
1995 annual cash incentive payment depended solely upon the rate of increase in
the Company's net income. The Company's goal is to grow its net income by at
least 15% per year. If the Company's 1995 net income had increased by 15%, then
Mr. Mann's 1995 incentive payment would have been approximately $201,000,
yielding total cash compensation at the 50th percentile of competitive
compensation levels based upon the Company's analysis. The Company's actual
1995 net income (excluding one-time, after-tax merger costs associated with
acquisitions that were accounted for as poolings-of-interests) grew by 23%,
yielding an incentive payment to Mr. Mann of $449,806.
Because the restricted stock award granted to Mr. Mann in May 1990 became fully
vested in May 1995, the Compensation Committee determined that it was necessary
and appropriate to approve additional equity compensation for Mr. Mann.
After meeting with the Company's independent compensation consultant to review
an analysis of competitive equity compensation, and after considering Mr.
Mann's achievements and tenure with the Company and the Company's low overhang,
the Compensation Committee authorized the issuance of options to Mr. Mann to
purchase 500,000 shares of the Company's common stock, at an exercise price
equal to the market value on the date of grant, vesting ratably over a four-year
period. Due to limitations in the Company's equity incentive plans, options to
purchase 400,000 shares were issued to Mr. Mann during 1995, and options to
purchase 100,000 shares were issued to Mr. Mann at the beginning of 1996.
During the four-year vesting period of these options, Mr. Mann will not
participate in the Company's LTIP program.
Deductibility of Certain Compensation. Section 162(m) of the Internal Revenue
Code (the "Code") denies a deduction for certain compensation exceeding
$1,000,000 paid to the chief executive officer and four other highest paid
executive officers, excluding (among other things) certain performance-based
compensation. Through December 31, 1995, this provision has not affected the
Company's tax deductions, but the Company will continue to monitor the potential
impact of Section 162(m) on the Company's ability to deduct executive
compensation.
Michael C. Brooks, Chairman of Compensation Committee
Albert A. Eisenstat, Member of Compensation Committee
Bernard Goldstein, Member of Compensation Committee
7
<PAGE>
Summary Compensation Table
The following table contains certain information about compensation earned
during the last three fiscal years by the Company's chief executive officer and
four other executive officers who were most highly compensated during the most
recent fiscal year. The Company's fiscal year is the calendar year.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long -Term Compensation All
-------------------------------- ------------------------------------ Other
Compensa-
Name and Principal Position Year Salary Bonus Other Awards/(2)/ Payouts tion ($)/(3)/
($) ($) Annual ------------------------------------
Compensa- Securities Long-Term
tion ($)/(1)/ Underlying Incentive
Options/SARs (#) Plans ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
JAMES L. MANN 1995 400,000 449,806 73,490 400,000/(4)/ -- 5,280
Chairman of the Board, President 1994 370,000 389,492 55,578 -- -- 3,684
and Chief Executive Officer 1993 340,000 364,928 53,161 -- -- 8,929
- ------------------------------------------------------------------------------------------------------------------------------------
CRISTOBAL I. CONDE 1995 300,000 441,352 -- -- -- 6,000
Chief Executive Officer, SunGard 1994 297,250 104,013 -- -- -- 5,625
Trading Systems Group 1993 297,250 -- -- -- -- 4,891
- ------------------------------------------------------------------------------------------------------------------------------------
PHILIP L. DOWD 1995 244,000 108,676 14,255 -- -- 6,000
Chief Executive Officer, SunGard 1994 228,000 287,853 7,581 -- -- 5,625
Trust & Shareholder Systems Group 1993 210,000 132,839 3,997 -- -- 6,745
- ------------------------------------------------------------------------------------------------------------------------------------
MICHAEL F. MULHOLLAND/(5)/ 1995 200,000 149,588 9,321 33,000 -- 6,000
Chief Executive Officer, SunGard 1994 -- -- -- -- -- --
Recovery Services Group 1993 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
RICHARD C. TARBOX 1995 153,000 202,868 5,566 -- -- 6,000
Vice President-Corporate 1994 144,000 110,662 6,069 14,000 -- 5,625
Development 1993 126,000 147,291 6,013 -- -- 3,780
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of amounts reimbursed in connection with the payment of taxes.
The cost of perquisites is not disclosed for any executive officer named in
the table, because the disclosure threshold (the lower of $50,000 or 10% of
salary plus bonus) was not reached.
(2) Generally, the Company's stock option awards vest over a four- or five-year
period. Upon termination of employment, only vested stock option shares
may be purchased. Upon a change in control of the Company, all unvested
stock options vest six months later or upon an earlier involuntary
termination of employment without cause (see Proposal Two).
(3) Consists of Company contributions to a defined contribution retirement
plan.
(4) Excludes 100,000 option shares that were authorized for issuance to Mr.
Mann during 1995, but were not issued until the beginning of 1996 (see
Compensation Committee Report).
(5) Mr. Mulholland became Chief Executive Officer of the SunGard Recovery
Services Group in October 1995.
Option Grant Table
The following table contains, for each of the Company's executive officers named
in the Summary Compensation Table, (a) the number of shares of the Company's
common stock underlying options granted during 1995, (b) the percentage that
those options represent of total options granted to employees during 1995, (c)
the exercise price per share, which equals the market value on the date of
grant, (d) the expiration date, and (e) the potential realizable value, assuming
5% and 10% annual
8
<PAGE>
rates of appreciation (compounded annually) in the market value of the Company's
common stock throughout the option term.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Individual Grants Assumed Annual Rates of Stock
Price Appreciation for Option Term/(1)/
----------------------------------------------------------------------------------------------------------
Number of % of Total Exercise
Securities Options or Base Expiration 5% ($) 10% ($)
Name Underlying Granted to Price Date
Options Employees in ($/Sh)
Granted (#) Fiscal Year
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
James L. Mann/(2)/ 400,000 54.9% 26.250 10/31/05 6,603,394 16,734,296
- -----------------------------------------------------------------------------------------------------------------------------------
Cristobal I. Conde -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Philip L. Dowd -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Michael F. Mulholland/(3)/ 33,000 4.5% 20.625 2/18/05 428,041 1,084,741
- -----------------------------------------------------------------------------------------------------------------------------------
Richard C. Tarbox -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The actual value, if any, which an option holder may realize will depend
upon the amount by which the actual market value on the date of exercise
exceeds the exercise price and also on the option holder's continued
employment through the vesting period. The actual value to be realized by
the option holder may be greater or less than the potential realizable
values stated in this table.
(2) The table excludes 100,000 option shares that were authorized for issuance
to Mr. Mann during 1995, but were not issued until the beginning of 1996
(see Compensation Committee Report). The options granted to Mr. Mann are
non-qualified stock options which are exercisable in full one year after
the date of grant but are subject to repurchase until they vest over four
years in equal 25% increments.
(3) The options granted to Mr. Mulholland include 24,240 incentive stock
options which are exercisable and vest over five years in equal 20%
increments beginning one year after the date of grant, and 8,760 non-
qualified stock options which are exercisable in full one year after the
date of grant but are subject to repurchase until they vest over five years
in equal 20% increments.
Aggregated Option Exercises and Year-End Option Value Table
The following table contains, for each of the Company's executive officers named
in the Summary Compensation Table, (a) the number of shares of the Company's
common stock acquired upon the exercise of options during 1995, (b) the value
realized as a result of those exercises (based upon the last sale price on the
date of exercise less the option exercise price), (c) the number of shares of
the Company's common stock underlying unexercised options held on December 31,
1995, and (d) the value of in-the-money options held on December 31, 1995, based
upon the last sale price on December 29, 1995, of $28.50 per share of common
stock.
9
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Name Shares Value Number of Securities Underlying Value of Unexercised
Acquired Realized ($) Unexercised Options In-The-Money Options
on at Year-End (#) at Year-End ($)
Exercise (#) -------------------------------- ----------------------------------------------
Exercisable/(1)/ Unexercisable Exercisable/(1)/ Unexercisable
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
James L. Mann/(2)/ 65,500 1,638,500 71,640 405,360 1,598,260 1,015,240
- -----------------------------------------------------------------------------------------------------------------------------------
Cristobal I. Conde -- -- 10,000 -- 235,000 --
- -----------------------------------------------------------------------------------------------------------------------------------
Philip L. Dowd 20,000 525,000 106,000 -- 2,471,500 --
- -----------------------------------------------------------------------------------------------------------------------------------
Michael F. Mulholland 6,000 106,500 25,000 33,000 504,688 259,875
- ------------------------------------------------------------------------------------------------------------------------------------
Richard C. Tarbox 3,600 55,575 19,711 8,839 336,954 80,656
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Exercisable option shares include 7,140, 10,800 and 3,621 unvested, in-the-
money option shares having year-end values of $153,510, $219,075 and
$42,728, respectively, which, if acquired by Messrs. Mann, Mulholland and
Tarbox, respectively, would be subject to transfer restrictions and
repurchase by the Company under the Company's stock option plans.
(2) The table excludes 100,000 options that were authorized for grant to Mr.
Mann during 1995, but were not granted until early 1996 (see Compensation
Committee Report).
Long-Term Incentive Plan Award Table
The following table contains, for each of the Company's executive officers named
in the Summary Compensation Table, (a) the number of option shares underlying
LTIP awards granted in 1995, (b) the performance period for those LTIP awards,
and (c) the number of option shares that may be earned under those LTIP awards
if certain threshold, target and maximum performance goals for cumulative
operating income growth during 1995 through 1997 are met. Stock options earned
under these LTIP awards will be non-qualified options, will be granted as of the
first trading day after the end of the three-year performance period, will have
a term of ten years beginning on the date of grant, will be fully vested
beginning on the date of grant, and will be fully exercisable no later than six
months after the date of grant.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Number of Performance or Other Estimated Future Payouts
Shares Period Until Maturation under Non-Stock Price-Based Plans/(1)/
Name Underlying or Payout ---------------------------------------------------
Options Threshold Target Maximum
Awarded (#) (# of shares) (# of shares) (# of shares)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
James L. Mann -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Cristobal I. Conde 14,200 1/1/95 - 12/31/97 7,100 14,200 14,200
- ------------------------------------------------------------------------------------------------------------------------------------
Philip L. Dowd 21,800 1/1/95 - 12/31/97 10,900 21,800 21,800
- ------------------------------------------------------------------------------------------------------------------------------------
Michael F. Mulholland 14,533 1/1/95 - 12/31/97 7,267 14,533 14,533
- ------------------------------------------------------------------------------------------------------------------------------------
Richard C. Tarbox -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If the threshold is not achieved, then no options will be earned. If
actual results are between the threshold and target goals, then the number
of option shares earned will be prorated, and the exercise price will be
$19.05 per share, which is the average of the last reported sale prices of
the Company's common stock on the first ten trading days of 1995. If the
target is exceeded, then the number of option shares earned will be the
target amount, and, in lieu of additional cash compensation, the option
exercise price will be reduced depending upon the amount by which the
target was exceeded, but not below $12.09 per share.
10
<PAGE>
Certain Transactions with Management
Recipients of awards under the Company's 1990 restricted stock plan also
received non-recourse, balloon loans from the Company to help defray taxes due
as a result of the awards. These loans bore interest at the prime rate, and the
Company reimbursed recipients for their costs incurred in connection with the
interest due under the loans. In 1991, Mr. Mann received such a loan in the
amount of $499,750. This loan matured in May 1995 and was paid in full by Mr.
Mann in May 1995.
Mr. Goldstein, a current director of the Company, is Managing Director of
Broadview Associates, L. P., an investment banking firm engaged by the Company
in connection with acquisitions. During 1995, the Company paid approximately
$850,000 to Broadview Associates, L. P., for services related to two 1995
acquisitions and one 1994 acquisition.
Compensation Committee Interlocks and Insider Participation
Messrs. Brooks, Eisenstat and Goldstein have served on the Compensation
Committee since May 1994.
No person who served as a member of the Company's Compensation Committee during
1995 was a current or former officer or employee of the Company. Mr. Goldstein,
a current member of the Company's Compensation Committee, is Managing Director
of Broadview Associates, L. P., an investment banking firm engaged by the
Company in connection with acquisitions (see Certain Transactions with
Management).
During 1995, the Company had no compensation committee "interlocks"--meaning
that it was not the case that an executive officer of the Company served as a
director or member of the compensation committee of another entity and an
executive officer of the other entity served as a director or member of the
Compensation Committee of the Company.
Performance Graph
The following graph shows a comparison of the five-year cumulative total return
for the Company's common stock, the S&P 500 Index, the S&P Computer Software and
Services Index ("S&P Computer Index") and the Nasdaq Computer & Data Processing
Index ("Nasdaq Computer Index"), assuming an investment of $100 in each on
December 31, 1990. The Company has selected the new Nasdaq Computer Index to
replace the S&P Computer Index in the Company's performance graph, because the
Company believes that the Nasdaq Computer Index is more representative of the
Company's peers than the S&P Computer Index. The data points used for the
performance graph are listed in the chart below.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Performance Graph Data Points 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
SunGard Data Systems Inc. Common Stock 100 168 264 367 342 507
- ------------------------------------------------------------------------------------------------------------
S&P 500 Index/(1)/ 100 130 140 155 157 215
- ------------------------------------------------------------------------------------------------------------
S&P Computer Software & Services Index/(1)/ 100 152 181 230 273 383
- ------------------------------------------------------------------------------------------------------------
Nasdaq Computer & Data Processing Index/(2)/ 100 202 217 230 279 425
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Sources: (1) Zacks Investment Research, Inc.; (2) The Nasdaq Stock Market.
[PERFORMANCE GRAPH APPEARS HERE.]
11
<PAGE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's directors and officers (and possibly other
persons) to file reports about their beneficial ownership of the Company's
common stock. Based solely upon a review of the copies of such reports
furnished to the Company by its directors and officers during and with respect
to the year 1995, and based upon their written representations that they were
not required to file any other reports for 1995, the Company believes that none
of its directors or officers failed to file on a timely basis any reports
required by Section 16(a) of the Exchange Act with respect to the year 1995.
PROPOSAL TWO
APPROVAL OF THE COMPANY'S 1996 EQUITY INCENTIVE PLAN
In February 1996, the Board of Directors adopted the Company's 1996 Equity
Incentive Plan ("1996 Incentive Plan"), subject to approval by the stockholders
of the Company. The primary reasons for adopting the 1996 Incentive Plan are to
facilitate the Company's new equity compensation programs (see Compensation
Committee Report) and to ensure that the Company will be able to continue
providing equity compensation to its key employees.
Purposes. The purposes of the 1996 Incentive Plan are to promote the long-term
retention of the Company's key employees who are in a position to make
significant contributions to the success of the Company, to further reward these
employees for their contributions, to provide additional incentive to these
employees to continue making similar contributions, and to further align the
interests of these
12
<PAGE>
employees with those of the Company's stockholders. To achieve these purposes,
the 1996 Incentive Plan permits grants of incentive stock options ("ISOs"),
options not intended to qualify as ISOs ("non-qualified options"), restricted
stock awards, unrestricted stock awards, LTIP and other performance awards,
loans and supplemental cash awards, and combinations of the foregoing (all
referred to as "Awards").
Number of Shares. The 1996 Incentive Plan permits Awards to be granted for a
total of 1,750,000 shares of the Company's common stock, with an individual
limit of 200,000 shares per recipient per year (subject to appropriate
adjustments to reflect stock splits and other changes in the capitalization of
the Company). Had the 1996 Incentive Plan been in effect as of December 31,
1995, the number of shares then available for future stock options and awards
would have increased from 930,000 to 2,680,000, and the Company's total overhang
(see definition in Compensation Committee Report) would have increased from 6.3%
to 9.8%. Shares issued under the 1996 Incentive Plan may be treasury shares,
reacquired shares or newly-issued shares. Shares issuable under Awards that
terminate unexercised, shares issuable under Awards that are payable in stock or
cash but are paid in cash, and shares issued but later forfeited will be
available for future Awards under the 1996 Incentive Plan.
Eligibility. All current and future employees of the Company and its
subsidiaries are eligible to receive Awards under the 1996 Incentive Plan.
Administration. The 1996 Incentive Plan is administered by the Compensation
Committee, which determines, among other things and subject to certain
conditions, the persons eligible to receive Awards, the persons who actually
receive Awards, the type of each Award, the number of shares of common stock
subject to each Award, the date of grant, exercise schedule, vesting schedule
and other terms and conditions of each Award, whether to accelerate the exercise
or vesting schedule or waive any other term or condition of an Award, whether to
amend or cancel an Award, and the form of any instrument used under the 1996
Incentive Plan. The Compensation Committee has the right to adopt rules for the
administration of the 1996 Incentive Plan, settle all controversies regarding
the 1996 Incentive Plan and any Award, and construe and correct defects and
omissions in the 1996 Incentive Plan and any Award. The 1996 Incentive Plan may
be amended, suspended or terminated by the Board of Directors, subject to
certain conditions, provided that stockholder approval will be required in order
to increase the number of shares issuable under the 1996 Incentive Plan or when
otherwise necessary for the 1996 Incentive Plan to continue to satisfy the
requirements of certain securities and tax laws, rules and regulations. The
Compensation Committee may delegate all or any portion of its authority to a
subcommittee consisting of at least two members.
Stock Options. Recipients of stock options under the 1996 Incentive Plan will
have the right to purchase shares of the Company's common stock at an exercise
price, during a period of time and on such other terms and conditions determined
by the Compensation Committee. For ISOs, the exercise price must be at least
100% (110% if issued to a 10% stockholder) of fair market value on the date of
grant, and the term cannot exceed ten years (five years if issued to a 10%
stockholder) from the date of grant. For non-qualified options, the exercise
price must be at least 100% of fair market value on the date of grant, except
that (a) the exercise price of a non-qualified option may be equal to or greater
than 85% of the fair market value on the date of grant, if the discount is
granted in lieu of a reasonable amount of cash compensation, or (b) the exercise
price of a non-qualified option granted pursuant to an LTIP or other performance
award may be (i) 100% of fair market value determined either as of the date the
performance award is granted or as of the date the non-qualified option is
granted under the award, or (ii) an amount less than fair market value if the
discount is granted in lieu of a reasonable amount of cash compensation as
consideration for exceeding the goals set forth in the performance award. If
permitted by the Compensation Committee and subject to certain conditions, an
option exercise price may be paid by delivery of shares of the Company's common
stock that have been outstanding for at least six months, or a promissory note,
or a broker's undertaking to promptly deliver the necessary funds, or by a
combination of those methods. If permitted by the Compensation
13
<PAGE>
Committee, options may be settled by the Company paying to the recipient, in
cash or shares of common stock (valued at fair market value), an amount equal to
the fair market value minus the exercise price of the option shares.
Stock Awards. The 1996 Incentive Plan provides for restricted and unrestricted
stock awards. Stock awards allow the recipient to acquire shares of the
Company's common stock for their par value or any higher price determined by the
Compensation Committee. In the case of restricted stock awards, the shares
acquired are subject to a vesting schedule and other possible conditions
determined by the Compensation Committee. The restrictions will apply ratably
for at least three years unless the restricted stock award is subject to a
performance award, in which case restrictions will apply for at least one year.
In the case of unrestricted stock awards, any discount in the price below fair
market value on the date of grant must be in lieu of reasonable cash
compensation.
Performance Awards. The 1996 Incentive Plan provides for performance awards
entitling the recipient to receive stock options, stock awards or other types of
Awards conditional upon achieving performance goals determined by the
Compensation Committee. Performance goals may involve overall corporate
performance, operating group or business unit performance, personal performance
or any other category of performance determined by the Compensation Committee.
Financial performance may be measured by revenue, operating income, net income,
earnings per share, number of days sales outstanding in accounts receivable,
productivity, return on equity, common stock price, price-earnings multiple, or
other financial factors determined by the Compensation Committee.
Other Awards. Under the 1996 Incentive Plan, loans or supplemental cash awards
may be granted to recipients of Awards to help defray taxes due as a result of
the Awards. The terms and conditions of loans and supplemental cash awards,
including the interest rate which may be zero, and whether any loan will be
forgiven, are determined by the Compensation Committee.
Termination of Employment. Generally, upon termination of a recipient's
employment with the Company, stock options remain exercisable for a period of
three months (one year if termination is due to death or disability) to the
extent that they were exercisable at the time of termination, and unvested
shares under outstanding restricted stock awards vest immediately except in the
case of a voluntary resignation or termination for cause (as defined in the 1996
Incentive Plan). Stock options and other Awards that are not exercisable at the
time of termination automatically terminate, and payments or benefits under
deferred stock awards, performance awards and supplemental cash awards that are
not irrevocably due at the time of termination are forfeited.
Change in Control. Upon a change in control of the Company, all outstanding
options become fully exercisable, all unvested shares under outstanding
restricted stock awards vest, and all conditions on performance awards and
supplemental cash awards that relate only to the passage of time and continued
employment lapse, in all cases effective six months after the change in control
or upon an earlier involuntary termination of employment without cause. The
pre-change in control Board of Directors of the Company may elect, however, to
suspend operation of some or all of the change in control acceleration
provisions. Performance goals (and any other award conditions unrelated to the
passage of time or continued employment) will not lapse upon a change in control
unless so provided in particular awards (see 1996 Awards). For purposes of the
1996 Incentive Plan, a "change in control" means: (a) the occurrence of an
event that would be required to be reported by the Company under Item 1(a) of
Form 8-K pursuant to the Exchange Act; (b) the acquisition or receipt, in any
manner, by any person or any group of persons acting in concert, of direct or
indirect beneficial ownership of 20% or more of the combined voting securities
ordinarily having the right to vote for the election of directors of the
Company; (c) a change in the constituency of the Board of Directors of the
Company with the result that individuals (the "Incumbent Directors") who are
currently members of the Board cease for any reason to constitute at least a
majority of the Board, provided that any individual who is elected to the Board
subsequently and whose nomination for election was unanimously approved by the
Incumbent Directors shall be considered an Incumbent Director beginning
14
<PAGE>
on the date of his or her election to the Board; or (d) the sale, exchange or
other disposition of all or a significant portion of the Company's business or
assets, or the execution by the Company of a binding agreement providing for
such a transaction.
Summary of Federal Income Tax Consequences. This discussion, which is based
upon federal income tax law as in effect on December 31, 1995, summarizes
certain federal income tax consequences associated with the 1996 Incentive Plan.
The tax consequences to executive officers may be different from those
summarized below.
No taxable income is realized upon the grant of a stock option, nor upon the
exercise of an ISO except to the extent that the exercise may result in
alternative minimum tax liability. Upon the exercise of a non-qualified option,
the recipient realizes ordinary income equal to the fair market value on the
date of exercise minus the exercise price of the option shares. If restricted
shares of the Company's common stock are used to settle a stock option, however,
then the realization of income may be deferred. Upon a disposition of shares
acquired by exercise of a stock option, the gain or loss generally constitutes a
capital gain or loss. In the case of a disposition of ISO shares within one
year after the date of exercise or within two years after the date of grant, the
difference between the fair market value on the date of exercise and the
exercise price constitutes ordinary income, any additional gain or loss above or
below the fair market value on the date of exercise constitutes a capital gain
or loss.
Upon the grant of an unrestricted stock award, the recipient realizes ordinary
income equal to the fair market value on the date of grant minus the price paid
for the shares awarded. A recipient of a restricted stock award realizes
ordinary income only as of and when the shares vest. The ordinary income
realized on each vesting or transfer date equals the fair market value on that
date less the price paid for the shares. A recipient of a restricted stock
award may, however, choose or be required by the terms of the award to elect
under Section 83(b) of the Code to have the ordinary income associated with all
of the restricted shares realized and measured on the date of grant. A
recipient who makes such an election and later forfeits restricted shares may
not claim a loss for tax purposes.
The tax consequences of a performance award depend upon the nature of the
underlying Award earned if and when the performance goals are achieved.
Generally, loans made under the 1996 Incentive Plan do not result in taxable
income to the recipient. If the interest rate is lower than certain rates
specified under the Code, however, then ordinary income may be imputed to the
recipient. Forgiveness of all or part of a loan also results in ordinary income
to the recipient. The recipient of a supplemental cash award realizes ordinary
income equal to the amount received.
Generally, whenever a recipient realizes ordinary income, a corresponding
deduction is available to the Company. Under Section 162(m) of the Code,
however, the Company will be denied a deduction for certain compensation
exceeding $1,000,000 paid to its chief executive officer and four other highest
paid executive officers, excluding (among other things) certain performance-
based compensation (see Compensation Committee Report).
1996 Awards. The Company recently changed its equity compensation programs to
more closely align the interests of its key executives with those of its
stockholders and to implement a performance-based equity compensation program
for more of its key executives (see Compensation Committee Report). To
implement the new programs, in 1996, the Company granted stock options and LTIP
awards to executive officers, business unit presidents and certain other key
employees. Because there were insufficient shares available under the Company's
other equity plans to cover these options and awards, some of the stock options
and most of the LTIP awards granted in 1996 were granted under the 1996
Incentive Plan and are subject to stockholder approval of the 1996 Incentive
Plan.
The following table contains, for each of the Company's executive officers named
in the Summary Compensation Table, for all of the Company's executive officers
as a group, and for all of the Company's employees other than executive officers
as a group, (a) the number of shares of the
15
<PAGE>
Company's common stock underlying options granted during 1996, indicating
whether they were granted under the 1996 Incentive Plan or under other equity
plans, (b) the potential realizable value of those options, assuming 5% and 10%
annual rates of appreciation (compounded annually) in the market value of the
Company's common stock throughout the option term, and (c) the number of option
shares that may be earned under the LTIP awards granted during 1996 under the
1996 Incentive Plan, if certain minimum and goal targets for cumulative
operating income growth during 1996 through 1998 are met.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Stock Options/(1)/ LTIP Awards/(2)/
----------------------------------------------------------------------------------------
Number of Shares Potential Realizable Value at Number of Shares
Underlying Options Assumed Annual Rates of Stock Underlying Options that
Name Granted Price Appreciation for Option May be Earned
Term/(3)/
- -------------------------------------------------------------------------------------------------------------------------
1996 Other 5% 10% Minimum Goal
Incentive Equity ($) ($) (#) (#)
Plan (#) Plans (#)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
James L. Mann/(4)/ -- 100,000 1,823,794 4,621,853 -- --
- -------------------------------------------------------------------------------------------------------------------------
Cristobal I. Conde -- 18,000 380,638 964,613 6,100 12,200
- -------------------------------------------------------------------------------------------------------------------------
Philip L. Dowd -- 36,000 761,277 1,929,225 7,850 15,700
- -------------------------------------------------------------------------------------------------------------------------
Michael F. Mulholland -- 18,000 380,638 964,613 6,800 13,600
- -------------------------------------------------------------------------------------------------------------------------
Richard C. Tarbox -- 18,000 380,638 964,613 2,850 5,700
- -------------------------------------------------------------------------------------------------------------------------
All 12 executive officers/(5)/ -- 318,000 6,375,577 16,156,963 50,850 101,700
- -------------------------------------------------------------------------------------------------------------------------
All employees other than 639,970 323,750 20,928,217 53,036,211 66,000 132,000
executive officers/(6)/
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Each stock option has an exercise price equal to the fair market value of
the Company's common stock on the date of grant, and generally a ten-year
term and a five-year vesting schedule. Some of these options are ISOs with
varying exercise schedules, and some are non-qualified options with
exercise schedules that match the vesting schedules.
(2) Under each LTIP award, if the minimum target is not achieved, then no
options will be earned. If actual results are between the minimum and goal
targets, then the number of option shares earned will be prorated, and the
exercise price will be $28.54 per share, which is the average of the last
reported sale prices of the Company's common stock on the first ten trading
days of 1996. If the goal target is exceeded, then the number of option
shares earned will be the goal amount, and, in lieu of additional cash
compensation, the option exercise price will be reduced depending upon the
amount by which the goal target was exceeded, but not below $16.48 per
share. Stock options earned under the LTIP awards will be non-qualified
options, will be granted as of the first trading day after the end of the
three-year performance period, will have a term of ten years beginning on
the date of grant, will be fully vested beginning on the date of grant, and
will be fully exercisable no later than six months after the date of grant.
The LTIP awards provide, that, if a change in control occurs, a prorated
portion (based only upon elapsed time) of the option shares at goal will be
granted six months later or upon an earlier involuntary termination of
employment without cause.
(3) The actual value, if any, which an option holder may realize will depend
upon the amount by which the actual market value on the date of exercise
exceeds the exercise price and also on the option holder's continued
employment through the vesting period. The actual value to be realized by
the option holder may be greater or less than the potential realizable
values stated in this table.
16
<PAGE>
(4) These options were approved for issuance to Mr. Mann in 1995, but were not
issued to him until early 1996 (see Compensation Committee Report).
(5) The LTIP awards in the table do not include an award issued under the
Company's 1988 option plan to Kenneth R. Adams, the group chief executive
officer of the Company's new Healthcare Information Systems Group. Under
this award, Mr. Adams may earn from 15,000 to 60,000 option shares over a
three-year period if certain operating income goals are achieved and
possibly more option shares if the maximum goals are exceeded. During the
three-year term of this award, Mr. Adams will not participate in the
Company's regular LTIP program.
(6) The option shares issued under the 1996 Incentive Plan include up to 42,000
option shares that will not be issued unless certain operating income goals
for 1996 are met. If all or some of the option shares are earned, the
exercise price will equal the fair market value on the date of grant.
Future Awards. If the 1996 Incentive Plan is approved by the stockholders, then
the Company currently plans, but will have no legal obligation or commitment, to
continue granting annual LTIP awards similar to those granted in 1996, subject
to approval or discontinuation by the Compensation Committee. Like the LTIP
awards granted in 1996, each of these future annual LTIP awards would cover
three-year performance periods. This ongoing LTIP program is intended to
replace, for most purposes, the Company's prior practice of granting stock
options and awards at irregular intervals (see Compensation Committee Report).
No other awards under the 1996 Incentive Plan are currently planned, but others
may be granted as determined by the Compensation Committee.
Stockholder Approval. There are three reasons for seeking stockholder approval
of the 1996 Incentive Plan. One is to satisfy a NASD bylaw that requires
companies whose shares are reported on The Nasdaq Stock Market to obtain
stockholder approval of stock plans for directors, officers or key employees.
The second reason is to satisfy federal income tax law requirements relating to
ISOs and requirements relating to performance-based compensation, both of which
include stockholder approval. The third reason is to satisfy the requirements
of Rule 16b-3 under the Exchange Act, which include stockholder approval. If
the Rule 16b-3 requirements are satisfied, then neither the grant of stock
options or stock awards under the 1996 Incentive Plan, nor the transfer of
shares to pay an option exercise price under the 1996 Incentive Plan (subject to
certain conditions) will trigger the provisions of Section 16(b) of the Exchange
Act regarding "short-swing" profits. If the stockholders do not approve the
1996 Incentive Plan, then the 1996 Incentive Plan will not be effective, and the
stock options and LTIP awards issued under the 1996 Incentive Plan also will not
be effective. The last sale price of the Company's common stock on March 15,
1996 (the record date) was $35.00 per share.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL TWO.
PROPOSAL THREE
APPROVAL OF THE COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN
In February 1996, the Board of Directors adopted the Company's 1996 Employee
Stock Purchase Plan ("1996 ESPP"), subject to approval by the stockholders of
the Company. The 1996 ESPP allows virtually all employees to make quarterly
purchases of the Company's common stock at 85% of fair market value through
regular payroll deductions. The terms of the 1996 ESPP are substantially
similar to those of the Company's 1987 Employee Stock Purchase Plan ("1987
ESPP"). The primary reason for adopting the 1996 ESPP is that the 1987 ESPP
will expire as of the end of 1996.
The purpose of the 1996 ESPP is to allow employees to continue to have the
opportunity to purchase shares of the Company's common stock on favorable terms
and, thereby, acquire and enlarge their
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stake in the Company's growth and earnings. Under the 1996 ESPP, a total of
1,000,000 shares of the Company's common stock (subject to appropriate
adjustments to reflect stock splits and other changes in the capitalization of
the Company) may be issued.
All full-time employees of the Company and its subsidiaries are eligible to
participate in the 1996 ESPP through payroll deductions of up to ten percent of
gross compensation. The amounts withheld from payroll may be used by the
Company for any corporate purpose, are not segregated and do not earn interest.
On the last business day of each calendar quarter, each participant may use the
amounts withheld from his or her compensation to purchase shares of the
Company's common stock at 85% of its then market value. No employee may
purchase more than $25,000 in market value of common stock (determined on the
respective purchase dates) during any calendar year. Furthermore, no employee
may purchase common stock under the 1996 ESPP if, after the purchase, he or she
would own five percent or more of the total outstanding shares of the Company's
common stock. Executive officers are subject to certain additional restrictions
and holding periods under the 1996 ESPP.
The 1996 ESPP is administered by the Compensation Committee, which has the
exclusive right to construe the 1996 ESPP and to correct errors, rectify
omissions and reconcile inconsistencies to the extent necessary to effectuate
the 1996 ESPP. The Board of Directors may amend the 1996 ESPP, provided that
any amendment which increases the number of shares issuable under the 1996 ESPP
or changes the eligibility requirements for the plan requires stockholder
approval. The 1996 ESPP will remain in effect until termination by the Board of
Directors, purchase of all common stock issuable thereunder, or the expiration
of ten years after the date of its adoption.
The 1996 ESPP is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Code. As a result, the 15% purchase price
discount does not constitute taxable income to participants at the time they
purchase shares of common stock under the 1996 ESPP. Upon a later disposition
of shares, however, the 15% purchase price discount generally is recognized as
ordinary income, and any additional gain constitutes a capital gain. If the
shares are sold for less than the price paid, then the loss constitutes a
capital loss. If the shares are sold for an amount between the price paid and
the fair market value on the date of purchase, then (1) if the shares were held
for at least two years, the actual gain is taxed as ordinary income, and (2)
otherwise, the entire 15% purchase price discount is taxed as ordinary income
and the difference between the fair market value on the date of purchase and the
value on the date of disposition constitutes a capital loss. The tax
consequences to executive officers may be different from those summarized above.
During 1995, 1,002, 403, 4,623 and 151,675 shares of the Company's common stock
were purchased under the 1987 ESPP by Mr. Conde, Mr. Mulholland, all executive
officers as a group, and all employees other than executive officers as a group,
respectively, for which the 15% purchase price discount amounted to $3,750,
$1,510, $17,237 and $602,970, respectively. The benefits that will be received
under the 1996 ESPP are not determinable and may be more or less than the
benefits received during 1995 under the 1987 ESPP.
Stockholder approval of the 1996 ESPP is required under the terms of the 1996
ESPP and by the applicable provisions of the Code. If the stockholders do not
approve the 1996 ESPP, then the 1996 ESPP will not become effective.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL THREE.
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INDEPENDENT ACCOUNTANTS
The accounting firm of Coopers & Lybrand L.L.P. has acted as the Company's
independent accountants since its inception in 1983. A representative of
Coopers & Lybrand is expected to be present at the 1996 Annual Meeting, to have
the opportunity to make a statement if he desires to do so, and to be available
to respond to appropriate questions. The Audit Committee of the Board of
Directors has not yet selected independent accountants for 1996.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1997 Annual
Meeting must be submitted by December 4, 1996 to receive consideration for
inclusion in the Company's 1997 proxy materials.
OTHER MATTERS
The Company currently knows of no other business that will be presented for
consideration at the 1996 Annual Meeting. Nevertheless, the enclosed proxy
confers discretionary authority to vote with respect to those matters described
in Rule 14a-4(c) under the Exchange Act, including matters that the Board of
Directors does not know, a reasonable time before proxy solicitation, are to be
presented at the meeting. If any such matters are presented at the meeting,
then the proxy agents named in the enclosed proxy card will vote in accordance
with their judgment.
EACH PERSON SOLICITED BY THIS PROXY STATEMENT MAY OBTAIN, WITHOUT CHARGE, A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1995, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, BY SENDING A WRITTEN REQUEST TO THE
COMPANY'S HEADQUARTERS, ATTENTION: INVESTOR RELATIONS.
By Order of the Board of Directors,
/s/ LAWRENCE A. GROSS
Lawrence A. Gross
Vice President and General Counsel,
Secretary
April 1, 1996
Wayne, Pennsylvania
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SunGard(R) Data Systems Inc.
Form of Proxy for 1996 Annual Meeting
- --------------------------------------------------------------------------------
SunGard(R) Data Systems Inc.
1996 Annual Meeting of Stockholders--May 10, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints James L. Mann and Malcolm I. Ruddock, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, for and in the name, place and stead of the undersigned, to
represent the undersigned and to vote, as directed below, all shares of Common
Stock of SunGard Data Systems Inc. (the "Company") held by the undersigned as of
March 15, 1996, at the Company's 1996 Annual Meeting of Stockholders to be held
on May 10, 1996 or at any postponement or adjournment of the meeting.
PROPOSAL 1: [_] FOR the election of Gregory S. Bentley, Michael C. Brooks,
Albert A. Eisenstat, Bernard Goldstein, James L. Mann, Michael
Roth, Malcolm I. Ruddock and Lawrence J. Schoenberg as directors.
To withhold authority to vote for all nominees, check here: [_]
To withhold authority to vote for any individual nominee(s),
clearly print his or their names in this space:
__________________________________________________________________
PROPOSAL 2: [_] FOR [_] AGAINST [_] ABSTAIN the approval of the Company's
1996 Equity Incentive Plan.
PROPOSAL 3: [_] FOR [_] AGAINST [_] ABSTAIN the approval of the Company's
1996 Employee Stock Purchase
Plan.
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE.
UNLESS YOU DIRECT OTHERWISE, THIS PROXY WILL BE VOTED "FOR" ALL PROPOSALS.
(continued on reverse side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(continued from reverse side)
Both proxy agents present and acting in person or by their substitutes (or, if
only one is present and acting, then that one) may exercise all of the powers
conferred by this proxy. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY
WITH RESPECT TO CERTAIN MATTERS, AS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
The undersigned hereby acknowledges receipt of the Company's 1995 Annual Report
to Stockholders, Notice of the Company's 1996 Annual Meeting of Stockholders,
and the Company's Proxy Statement dated April 1, 1996.
Date:________________________, 1996
(please date this proxy)
___________________________________
___________________________________
signature(s)
Please sign your name exactly as it is printed on this proxy, indicating any
title or other representative capacity. If more than one name is printed on this
proxy, all must sign.
PLEASE DATE AND SIGN THIS PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-
PAID ENVELOPE.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE COMPANY'S 1996 ANNUAL MEETING: [_]
- --------------------------------------------------------------------------------
<PAGE>
SunGard Data Systems Inc.
1996 Equity Incentive Plan
- --------------------------------------------------------------------------------
1. Purpose
The purpose of the SunGard Data Systems Inc. 1996 Equity Incentive Plan
(the "Plan") is to promote the long-term retention of key employees of SunGard
Data Systems Inc., ("SunGard") and its current and future subsidiaries
(collectively, the "Company") who are in a position to make significant
contributions to the success of the Company, to further reward these employees
for their contributions to the Company's success, to provide additional
incentive to these employees to continue to make similar contributions in the
future, and to further align the interests of these employees with those of
SunGard's stockholders. These purposes will be achieved by granting to such
employees, in accordance with the provisions of this Plan, Options, Restricted
Stock or Unrestricted Stock Awards or Performance Awards, for shares of
SunGard's common stock, $0.01 par value per share ("Common Stock"), or Loans or
Supplemental Grants, or combinations thereof ("Awards").
2. Aggregate Number of Shares
2.1 The aggregate number of shares of Common Stock for which Awards may be
granted under the Plan will be 1,750,000 shares, with an individual limit of
200,000 shares per Participant (as defined in Section 3.1 below) per year.
Notwithstanding the foregoing, if there is any change in the capitalization of
SunGard, such as by stock dividend, stock split, combination of shares, exchange
of securities, recapitalization or other event which the Compensation Committee
(the "Committee") of the Board of Directors (the "Board") of SunGard deems, in
its sole discretion, to be similar circumstances, the aggregate number and/or
kind of shares for which Awards may be granted under the Plan shall be
appropriately adjusted in a manner determined by the Committee. No fractional
shares of Common Stock will be delivered under the Plan.
2.2 Treasury shares, reacquired shares and unissued shares of Common Stock
may be used for purposes of the Plan, at SunGard's sole discretion.
2.3 Shares of Common Stock that were issuable pursuant to an Award that
has terminated but with respect to which such Award had not been exercised,
shares of Common Stock that are issued pursuant to an Award but that are
subsequently forfeited, and shares of Common Stock that were issuable pursuant
to an Award that was payable in Common Stock or cash but that was satisfied in
cash, shall be available for future Awards under the Plan.
3. Eligible Employees and Participants
3.1 All current and future key employees of the Company, including
officers and directors who are employed by the Company ("Employees"), shall be
eligible to receive Awards under the Plan. Neither members of the Committee nor
any other directors who are not Employees shall be eligible to receive Awards.
No eligible Employee (a "Participant") shall have any right to receive an Award
except as expressly provided in the Plan.
<PAGE>
3.2 The Participants who shall actually receive Awards under the Plan shall
be determined by the Committee in its sole discretion. In making such
determinations, the Committee shall consider the positions and responsibilities
of eligible employees, their past performance and contributions to the Company's
growth and expansion, the value of their services to the Company, the difficulty
of finding qualified replacements, and such other factors as the Committee deems
pertinent in its sole discretion.
4. Administration
4.1 The Plan shall be administered by the Committee. Each member of the
Committee shall be a "disinterested person" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "1934 Act"). The
Committee may delegate all or any portion of its authority hereunder to a
subcommittee consisting of at least two Committee members. In addition to its
other authority and subject to the provisions of the Plan, the Committee shall
have the authority to determine, in its sole discretion, the Participants who
shall be eligible to receive Awards, the Participants who shall actually receive
Awards, the size of each Award, including the number of shares of Common Stock
subject to the Award, the type or types of each Award, the date on which each
Award shall be granted, the terms and conditions of each Award, whether to waive
compliance by a Participant with any obligations to be performed by the
Participant under an Award or waive any term or condition of an Award, whether
to amend or cancel an existing Award in whole or in part (except that the
Committee may not, without the consent of the holder of an Award or unless
specifically authorized by the terms of an Award, take any action under this
clause with respect to such Award if such action would adversely affect the
rights of such holder), and the form or forms of instruments that are required
or deemed appropriate under the Plan, including any written notices and
elections required of Participants.
4.2 The Committee may adopt such rules for the administration of the Plan
as it deems necessary or advisable, in its sole discretion. For all purposes of
the Plan, a majority of the members of the Committee shall constitute a quorum,
and the vote or written consent of a majority of the members of the Committee on
a particular matter shall constitute the act of the Committee on that matter.
The Committee shall have the exclusive right to construe the Plan and any Award,
to settle all controversies regarding the Plan or any Award, to correct defects
and omissions in the Plan and in any Award, and to take such further actions as
the Committee deems necessary or advisable, in its sole discretion, to carry out
the purpose and intent of the Plan. Such actions shall be final, binding and
conclusive upon all parties concerned.
4.3 No member of the Committee or the Board shall be liable for any act or
omission (whether or not negligent) taken or omitted in good faith, or for the
good faith exercise of any authority or discretion granted in the Plan to the
Committee or the Board, or for any act or omission of any other member of the
Committee or the Board.
4.4 All costs incurred in connection with the administration and operation
of the Plan shall be paid by the Company. Except for the express obligations of
the Company under the Plan and under Awards granted in accordance with the
provisions of the Plan, the Company shall have no liability with respect to any
Award, or to any Participant or any transferee of shares of Common Stock from
any Participant, including, but not limited to, any tax liabilities, capital
losses, or other costs or losses incurred by any Participant or any such
transferee.
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<PAGE>
5. Types of Awards
5.1 Options.
(a) An Option is an Award entitling the recipient on exercise thereof
to purchase Common Stock at a specified exercise price. Both "incentive stock
options," as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") (any Option intended to qualify as an incentive stock
option being hereinafter referred to as an "ISO"), and Options that are not
incentive stock options ("non-ISO"), may be granted under the Plan.
(b) The exercise price of an Option will be determined by the
Committee subject to the following:
(1) The exercise price of an ISO shall not be less than 100% (110%
in the case of an ISO granted to a ten percent shareholder) of the fair market
value (as defined in Section 11.9) of the Common Stock subject to the ISO,
determined as of the time the ISO is granted. A "ten-percent shareholder" is any
person who at the time of grant owns, directly or indirectly, or is deemed to
own by reason of the attribution rules of Section 424(d) of the Code, stock
possessing more than 10% of the total combined voting power of all classes of
stock of SunGard or of any of its subsidiaries.
(2) The exercise price of a non-ISO shall not be less than 100% of
the fair market value of the Common Stock subject to the non-ISO, determined as
of the time the non-ISO is granted, except that:
(A) the exercise price of a non-ISO may be equal to or greater
than 85% of the fair market value of the Common Stock subject to the non-ISO, if
the discount is granted in lieu of a reasonable amount of cash compensation; or
(B) the exercise price of a non-ISO granted pursuant to a
Performance Award may be (i) 100% of the fair market value of the Common Stock
subject to the non-ISO, determined either as of the time the Performance Award
is granted or as of the time the non-ISO is granted pursuant to the Performance
Award; or (ii) an amount less than such fair market value if the discount is
granted in lieu of a reasonable amount of cash compensation as consideration for
exceeding the goal(s) set forth in the Performance Award.
(3) In no case may the exercise price paid for Common Stock which
is part of an original issue of authorized Common Stock be less than the par
value per share of the Common Stock.
(c) The period during which an Option may be exercised will be
determined by the Committee, except that the period during which an ISO may be
exercised will not exceed ten years (five years, in the case of an ISO granted
to a ten-percent shareholder) from the day immediately preceding the date the
Option was granted.
(d) An Option will become exercisable at such time or times, and on
such terms and conditions, as the Committee may determine. The Committee may at
any time accelerate the time at which all or any part of the Option may be
exercised. Any exercise of an Option must be in writing, signed by the proper
person and delivered or mailed to the
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Company, accompanied by (1) any documents required by the Committee and (2)
payment in full in accordance with Section 5.1(e) below for the number of shares
for which the Option is exercised.
(e) Stock purchased on exercise of an Option must be paid for as
follows: (1) in cash or by check (acceptable to SunGard in accordance with
guidelines established for this purpose), bank draft or money order payable to
the order of SunGard or (2) if so permitted by the instrument evidencing the
Option (or in the case of an Option which is not an ISO, by the Committee at or
after grant of the Option), (i) through the delivery of shares of Common Stock
which have been outstanding for at least six months (unless the Committee
expressly approves a shorter period) and which have a fair market value on the
last business day preceding the date of exercise equal to the exercise price, or
(ii) by delivery of a promissory note of the Option holder to SunGard, payable
on such terms and conditions as the Committee may determine, or (iii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to SunGard sufficient funds to pay the exercise price, or (iv) by any
combination of the permissible forms of payment; provided, that if the Common
Stock delivered upon exercise of the Option is an original issue of authorized
Common Stock, at least so much of the exercise price as represents the par value
of such Common Stock must be paid other than by the Option holder's promissory
note.
(f) If the market price of shares of Common Stock subject to an Option
exceeds the exercise price of the Option at the time of its exercise, the
Committee may cancel the Option and cause SunGard to pay in cash or in shares of
Common Stock (at a price per share equal to the fair market value per share) to
the person exercising the Option an amount equal to the difference between the
fair market value of the Common Stock which would have been purchased pursuant
to the exercise (determined on the date the Option is canceled) and the
aggregate exercise price which would have been paid. The Committee may exercise
its discretion to take such action only if it has received a written request
from the person exercising the Option, but such a request will not be binding on
the Committee.
5.2 Restricted and Unrestricted Stock.
(a) A Restricted Stock Award entitles the recipient to acquire, for a
purchase price not less than the par value, shares of Common Stock subject to
the restrictions described in Section 5.2(d) below ("Restricted Stock").
(b) A Participant who is granted a Restricted Stock Award shall have
no rights with respect to such Award unless the Participant accepts the Award by
written instrument delivered or mailed to SunGard accompanied by payment in full
of the specified purchase price, if any, of the shares covered by the Award.
Payment may be by certified or bank check or other instrument acceptable to the
Committee.
(c) A Participant who receives Restricted Stock shall have all the
rights of a stockholder with respect to such stock, including voting and
dividend rights, subject to the restrictions described in paragraph (d) below
and any other conditions imposed by the Committee at the time of grant. Unless
the Committee otherwise determines, certificates evidencing shares of Restricted
Stock will remain in the possession of the Company until such shares are free of
all restrictions under the Plan.
4
<PAGE>
(d) Except as otherwise specifically provided by the Plan or the
Award, Restricted Stock may not be sold, assigned, exchanged, pledged, gifted or
otherwise disposed of, or transferred, and if a Participant suffers a Status
Change (as defined in Section 6.1 below) for any reason, must be offered to
SunGard for purchase for the amount of cash paid for the such stock, or
forfeited to the Company if no cash was paid. These restrictions will lapse and
the shares will become unrestricted ("Unrestricted Stock") at such time or
times, and on such terms and conditions, as the Committee may determine;
provided, however, that these restrictions will apply ratably for a minimum
period of three years, unless the Restricted Stock is subject to a Performance
Award, in which case these restrictions will apply for a minimum period of one
year. The Committee may at any time accelerate the time at which the
restrictions on all or any part of the shares will lapse.
(e) Any Participant making, or required by an Award to make, an
election under Section 83(b) of the Code with respect to Restricted Stock shall
deliver to SunGard, within 10 days of the filing of such election with the
Internal Revenue Service, a copy of such election.
(f) The Committee may, at the time any Award described in this Section
5 is granted, provide that any or all the Common Stock delivered pursuant to the
Award will be Restricted Stock.
(g) The Committee may, in its sole discretion, approve the sale to any
Participant of shares of Common Stock free of restrictions under the Plan for a
price which is not less than the par value of the Common Stock, provided that
the value of such Award, which equals the difference between the price and the
fair market value of such shares on the date of grant, is in lieu of a
reasonable amount of cash compensation.
5.3 Performance Awards. A Performance Award entitles the recipient to
receive, without payment, an Award or Awards described in this Section 5
following the attainment of such performance goals, during such measurement
period or periods, and on such other terms and conditions, all as the Committee
may determine. Performance goals may be related to overall corporate
performance, operating group or business unit performance, personal performance
or such other category of performance as the Committee may determine. Financial
performance may be measured by revenue, operating income, net income, earnings
per share, number of days sales outstanding in accounts receivable,
productivity, return on equity, common stock price, price-earnings multiple, or
such other financial factors as the Committee may determine.
5.4 Loans and Supplemental Grants.
(a) The Company may make a loan to a Participant ("Loan"), either in
connection with the purchase of Common Stock under the Award or the payment of
any Federal, state and local income tax with respect to income recognized as a
result of the Award. The Committee shall have the authority, in its sole
discretion, to determine whether to make a Loan, the amount, terms and
conditions of the Loan, including the interest rate (which may be zero), whether
the Loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the Loan is to be repaid and the terms and
conditions, if any, under which the Loan may be forgiven. In no event shall any
Loan have a term (including extensions) in excess of ten years.
5
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(b) In connection with any Award, the Committee may grant a cash award
to the Participant ("Supplemental Grant") not to exceed an amount equal to (1)
the amount of any Federal, state and local income tax on ordinary income for
which the Participant may be liable with respect to the Award, determined by
assuming taxation at the highest marginal rate, plus (2) an additional amount on
a grossed-up basis intended to make the Participant whole on an after-tax basis
after discharging all the Participant's income tax liabilities arising from all
payments under this Section 5. Any payments under this Section 5(b) shall be
made at the time the Participant incurs Federal income tax liability with
respect to the Award.
6. Events Affecting Outstanding Awards
6.1 Termination of Service by Death or Disability. If a Participant
ceases to be an Employee (such termination of employment being hereinafter
referred to as a "Status Change") by reason of death or permanent disability (as
determined by the Committee), the following rules shall apply, unless otherwise
determined by the Committee:
(a) All Options held by the Participant at the time of such Status
Change, to the extent then exercisable, will continue to be exercisable by the
Participant's heirs, executor, administrator or other legal representative, for
a period of one year after the Participant's Status Change. After the
expiration of such one-year period, all such Options shall terminate. In no
event, however, shall an Option remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section 6. All
Options held by a Participant at the time of such Status Change that are not
then exercisable shall terminate upon such Status Change.
(b) All Restricted Stock held by the Participant at the time of such
Status Change shall immediately become free of all restrictions and conditions.
(c) Any payment or benefit under a Performance Award or Supplemental
Grant to which the Participant was not irrevocably entitled at the time of such
Status Change shall be forfeited and the Award canceled as of the time of such
Status Change.
6.2 Termination of Service Other Than by Death or Disability. If a
Participant suffers a Status Change other than by reason of death or permanent
disability (as determined by the Committee), the following rules shall apply,
unless otherwise determined by the Committee at the time of grant of an Award:
(a) All Options held by the Participant at the time of such Status
Change, to the extent then exercisable, will continue to be exercisable by the
Participant for a period of three months after the Participant's Status Change.
After the expiration of such three-month period, all such Options shall
terminate. In no event, however, shall an Option remain exercisable beyond the
latest date on which it could have been exercised without regard to this Section
6. All Options held by a Participant at the time of such Status Change that are
not then exercisable shall terminate upon such Status Change.
(b) All Restricted Stock held by the Participant at the time of such
Status Change shall immediately become free of all restrictions and conditions,
unless such Status Change results from a voluntary resignation or termination
for Cause (as defined in Section 6.2(d)), in which event all Restricted Stock
held by the Participant at the time of the Status Change shall be transferred to
the Company (and, in the event the certificates representing
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<PAGE>
such Restricted Stock are held by the Company, such Restricted Stock shall be so
transferred without any further action by the Participant) in accordance with
Section 5.2 above.
(c) Any payment or benefit under a Performance Award or Supplemental
Grant to which the Participant was not irrevocably entitled at the time of such
Status Change shall be forfeited and the Award canceled as of the date of such
Status Change.
(d) A termination by the Company of a Participant's employment with or
service to the Company shall be for "Cause" only if: (1) at least 75% of the
members of the Board determined that the Participant (i) was guilty of gross
negligence or willful misconduct in the performance of his or her duties for the
Company, or (ii) breached or violated, in a material respect, any agreement
between the Participant and the Company or any of the Company's policy
statements regarding conflicts-of-interest, insider trading or confidentiality,
or (iii) committed a material act of dishonesty or breach of trust; (2) such
determination was made at a duly convened meeting of the Board with respect to
which the Participant received at least 10 days prior written notice, had a
reasonable opportunity to make a statement and answer the allegations against
him or her; and (3) either (i) the Participant was given a reasonable
opportunity to take remedial action but failed or refused to do so, or (ii) at
least 75% of the members of the Board also determined, at such meeting, that an
opportunity to take remedial action would not have been meaningful under the
circumstances.
(e) For all purposes of this Section 6.2 and Section 6.3, (1) if a
Participant is an Employee of a subsidiary of SunGard and such subsidiary ceases
to be a subsidiary of SunGard, then the Participant's employment with the
Company will be deemed to have been terminated by the Company without Cause,
unless the Participant is transferred to SunGard or another subsidiary of
SunGard; (2) the employment with the Company of a Participant will not be deemed
to have been terminated if the Participant is transferred from SunGard to a
subsidiary of SunGard, or vice versa, or from one subsidiary of SunGard to
another; and (3) if a Participant terminates his or her employment with the
Company following a reduction in his or her rate of compensation, then the
Participant's employment with the Company will be deemed to have been terminated
by the Company without Cause.
6.3 Change in Control
(a) In the event of a Change in Control (as defined in Section
6.3(b)), the following rules will apply, unless otherwise expressly provided by
the Committee at the time of the grant of an Award or unless otherwise
determined by the Board in accordance with Section 6.3(c):
(1) Each outstanding Option shall automatically become exercisable
in full six months after the occurrence of such Change in Control or, if sooner,
upon a termination by the Company of the Participant's employment with or
service to the Company for any reason other than for Cause (as defined in
Section 6.2(d)). This provision shall not prevent an Option from becoming
exercisable sooner as to Common Stock or cash that would otherwise have become
available under such Option or Right during such period.
(2) Each outstanding share of Restricted Stock shall automatically
become free of all restrictions and conditions six months after the occurrence
of such Change in Control or, if sooner, upon a termination by the Company of
the Participant's employment with or service to the Company for any reason other
than for Cause (as defined in Section
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6.2(d)). This provision shall not prevent the earlier lapse of any restrictions
or conditions on Restricted Stock that would otherwise have lapsed during such
period.
(3) Conditions on Performance Awards and Supplemental Grants
which relate only to the passage of time and continued employment shall
automatically terminate six months after the occurrence of such Change in
Control or, if sooner, upon a termination by the Company of the Participant's
employment with or service to the Company for any reason other than for Cause
(as defined in Section 6.2(d)). This provision shall not prevent the earlier
lapse of any conditions relating to the passage of time and continued employment
that would otherwise have lapsed during such period. Performance or other
conditions (other than conditions relating only to the passage of time and
continued employment) shall continue to apply unless otherwise provided in the
instrument evidencing the Awards or in any other agreement between the
Participant and the Company or unless otherwise agreed to by the Committee.
(b) A "Change in Control" means: (i) the occurrence of an event that
would, if known to SunGard's management, be required to be reported by SunGard
under Item 1(a) of Form 8-K pursuant to the 1934 Act; or (ii) the acquisition or
receipt, in any manner, by any person (as defined for purposes of the 1934 Act)
or any group of persons acting in concert, of direct or indirect beneficial
ownership (as defined for purposes of the 1934 Act) of 20% or more of the
combined voting securities ordinarily having the right to vote for the election
of directors of SunGard; or (iii) a change in the constituency of the Board with
the result that individuals (the "Incumbent Directors") who are members of the
Board on the Effective Date (as specified in Section 9) cease for any reason to
constitute at least a majority of the Board, provided that any individual who is
elected to the Board after the Effective Date and whose nomination for election
was unanimously approved by the Incumbent Directors shall be considered an
Incumbent Director beginning on the date of his or her election to the Board; or
(iv) the sale, exchange or other disposition of all or a significant portion of
the Company's business or assets, or the execution by the Company of a binding
agreement providing for such a transaction.
(c) The provisions of Section 6.3(a) shall not apply to the extent
expressly determined by at least 75% of the Incumbent Directors at a duly
convened meeting of the Board held before the occurrence of a Change in Control.
7. Grant and Acceptance of Awards
7.1 The Committee's approval of a grant of an Award under the Plan,
including the names of Participants and the size of the Award, including the
number of shares of Common Stock subject to the Award, shall be reflected in
minutes of meetings held by the Committee or the Board or in written consents
signed by members of the Committee or the Board. Once approved by the
Committee, each Award shall be evidenced by such written instrument, containing
such terms as are required by the Plan and such other terms, consistent with the
provisions of the Plan, as may be approved from time to time by the Committee.
7.2 Each instrument may be in the form of agreements to be executed by
both the Participant and the Company, or certificates, letters or similar
instruments, which need not be executed by the Participant but acceptance of
which shall evidence agreement to the terms thereof. The receipt of an Award
shall not impose any obligation on the Participant to accept the Award.
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7.3 Except as specifically provided by the Plan or the instrument
evidencing an Award, a Participant shall not become a stockholder of SunGard
until (i) the Participant makes any required payments in respect of the Common
Stock issued or issuable pursuant to the Award, (ii) the Participant furnishes
SunGard with any required agreements, certificates, letters or other
instruments, and (iii) the Participant actually receives the shares of Common
Stock. Subject to any terms and conditions imposed by the Plan or the
instrument evidencing an Award, upon the occurrence of all of the conditions set
forth in the immediately preceding sentence, a Participant shall have all rights
of a stockholder with respect to shares of Common Stock, including, but not
limited to, the right to vote such shares and to receive dividends and other
distributions paid with respect to such shares. The Committee may, upon such
conditions as it deems appropriate, provide that a Participant will receive a
benefit in lieu of cash dividends that would have been payable on any and all
Common Stock subject to the Participant's Award, had such Common Stock been
outstanding. Without limitation, the Committee may provide for payment to the
Participant of amounts representing such dividends, either currently or in the
future, or for the investment of such amounts on behalf of the Participant.
7.4 Notwithstanding any other provision of the Plan, the Company shall not
be obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove any restriction from shares of Common Stock previously delivered under
the Plan (a) until all conditions to the Award have been satisfied or removed,
(b) until, in the opinion of SunGard's General Counsel, all applicable Federal
and state laws and regulations have been complied with, (c) if the outstanding
Common Stock is at the time listed on any stock exchange or included for
quotation on an inter-dealer system, until the shares to be delivered have been
listed or included or authorized to be listed or included on such exchange or
system upon official notice of notice of issuance, (d) if it might cause SunGard
to issue or sell more shares of Common Stock than SunGard is then legally
entitled to issue or sell, and (e) until all other legal matters in connection
with the issuance and delivery of such shares have been approved by SunGard's
General Counsel. If the sale of Common Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of an Award, such representations or agreements as SunGard's General
Counsel may consider appropriate to avoid violation of such Act and may require
that the certificates evidencing such Common Stock bear an appropriate legend
restricting transfer. If an Award is exercised by the Participant's legal
representative, the Company shall be under no obligation to deliver Common Stock
pursuant to such exercise until the Company is satisfied as to the authority of
such representative.
8. Tax Withholding
The Company shall withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all Federal, state and local withholding tax
requirements (the "withholding requirements"). In the case of an Award pursuant
to which Common Stock may be delivered, the Committee shall have the right to
require that the Participant or other appropriate person remit to the Company an
amount sufficient to satisfy the withholding requirements, or make other
arrangements satisfactory to the Committee with regard to such requirements,
prior to the delivery of any Common Stock. If and to the extent that such
withholding is required, the Committee may permit a Participant to elect at such
time and in such manner as the Committee may determine to have the Company hold
back from the shares of Common Stock to be delivered, or to deliver to the
Company, Common Stock having a value calculated to satisfy the withholding
requirement. If at the time an ISO is exercised,
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<PAGE>
the Committee determines that the Company could be liable for withholding
requirements with respect to a disposition of the Common Stock received upon
exercise, the Committee may require as a condition of exercise that the person
exercising the ISO agree (a) to inform the Company promptly of any disposition
(within the meaning of Section 424(c) of the Code) of Common Stock received upon
exercise, and (b) to give such security as the Committee deems adequate to meet
the potential liability of the Company for the withholding requirements and to
augment such security from time to time in any amount reasonably deemed
necessary by the Committee to preserve the adequacy of such security.
9. Stockholder Approval, Effective Date and Term of Plan
The Plan was adopted by the Board on February 12, 1996, subject to the
approval of SunGard's stockholders. The Plan shall be submitted to SunGard's
stockholders for approval at SunGard's 1996 annual meeting of stockholders. If
such approval is not obtained at such meeting (or at any subsequent meeting at
which such approval is sought), then, at the discretion of the Board, this Plan
may be re-submitted to SunGard's stockholders for approval at any subsequent
annual meeting of stockholders or at any special meeting of stockholders
(including a special meeting that may be called solely for that purpose). The
Plan shall not become effective unless and until it is approved by the
affirmative vote of the holders of a majority of the outstanding shares of
SunGard's Common Stock represented and entitled to vote at a duly convened
meeting of SunGard's stockholders. If this Plan is so approved by SunGard's
stockholders, then the date of such approval shall be the effective date of this
Plan ("Effective Date"). No Award shall be granted more than ten years after
the Effective Date.
10. Effect, Amendment, Suspension and Termination
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Common Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Common Stock may
be issued to Employees or other persons or entities. The Board reserves the
right, at any time and from time to time, to amend the Plan in any way, or to
suspend or terminate the Plan, effective as of the date specified by the Board
when it takes such action, which date may be before or after the date the Board
takes such action; provided that any such action shall not affect any Awards
granted before the actual date on which such action is taken by the Board; and
further provided that the approval of SunGard's stockholders shall be required
whenever necessary for the Plan to continue to satisfy the conditions of Rule
16b-3 under the 1934 Act, Section 422 of the Code with respect to the award of
ISO (unless the Board determines that ISO shall no longer be granted under
the Plan), any bylaw, rule or regulation of the primary market system or stock
exchange on which SunGard's Common Stock is then listed or admitted to trading,
or any other applicable law, rule or regulation.
11. Other Provisions
11.1 Nothing contained in the Plan or any Award shall confer upon any
Employee or other Participant the right to continue in the employ of, or to
continue to provide service to, the Company or any affiliated corporation, or
interfere in any way with the right of the Company or any affiliated corporation
to terminate the employment or service of any Employee or other Participant for
any reason.
10
<PAGE>
11.2 Corporate action constituting an offer by SunGard of Common Stock to
any Participant under the terms of an Award shall be deemed completed as of the
date of grant of the Award, regardless of when the instrument, certificate, or
letter evidencing the Award is actually received or accepted by the Participant.
11.3 None of a Participant's rights under any Award or under the Plan may
be assigned or transferred in any manner other than by will or under the laws of
descent and distribution. The foregoing shall not, however, restrict a
Participant's rights with respect to Unrestricted Stock or the outright transfer
of cash, nor shall it restrict the ability of a Participant's heirs, estate,
beneficiaries, or personal or legal representatives to enforce the terms of the
Plan with respect to Awards granted to the Participant.
11.4 The Plan, and all Awards granted hereunder, shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania. The
headings of the Sections of the Plan are for convenience of reference only and
shall not affect the interpretation of the Plan. All pronouns and similar
references in the Plan shall be construed to be of such number and gender as the
context requires or permits. If any provision of the Plan is determined to be
unenforceable for any reason, then that provision shall be deemed to have been
deleted or modified to the extent necessary to make it enforceable, and the
remaining provisions of the Plan shall be affected.
11.5 All notices with respect to the Plan shall be in writing and shall be
hand delivered or sent by certified mail or reputable overnight delivery
service, expenses prepaid. Notices to the Company or the Committee shall be
delivered or sent to SunGard's headquarters to the attention of its General
Counsel. Notices to any Participant or holder of shares of Common Stock issued
pursuant to an Award shall be sufficient if delivered or sent to such person's
address as it appears in the regular records of the Company or SunGard's
transfer agent.
11.6 If there is any change in the capitalization of SunGard, such as by
stock dividend, stock split, combination of shares, exchange of securities,
recapitalization or other event which the Committee deems, in its sole
discretion, to be similar circumstances, the Committee may make such adjustments
to the number and/or kind of shares of stock or securities subject to Awards
then outstanding or subsequently granted, any exercise prices relating to such
Awards and any other provision of such Awards affected by such change, as the
Committee may determine in its sole discretion. The Committee may also make
such adjustments to take into account material changes in law or in accounting
practices or principles, mergers, consolidations, acquisitions, dispositions or
similar corporate transactions, or any other event, as the Committee may
determine in its sole discretion.
11.7 The Committee may agree at any time, upon request of a Participant, to
defer the date on which any payment under an Award shall be made.
11.8 In any case that a Participant purchases Common Stock under an Award
for a price equal to the par value of the Common Stock, the Committee may
determine, in its sole discretion, that such price has been satisfied by past
services rendered by the Participant.
11.9 For the purposes of the Plan and any Award granted hereunder, unless
otherwise determined by the Committee, the term "fair market value" of Common
Stock on or as of a specified date shall mean either (i) in the case of an
Option not granted under a Performance Award, the last sale price (as defined
below in this Section) for one share of Common Stock
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<PAGE>
on the last trading day on or before the specified date, or, if the foregoing
does not apply, the market value determined by the Committee; or (ii) in the
case of an Option granted under a Performance Award, the average of the last
sale prices during the first ten trading days beginning on or after the
specified date, or the average of the last sale prices during such other period
of time beginning on or after the specified date as is determined by the
Committee, or, if the foregoing does not apply, the market value determined by
the Committee. "Last sale price" means the last sale price reported on The
Nasdaq Stock Market or on such other primary market system or stock exchange on
which SunGard's Common Stock is then listed or admitted to trading.
THE UNDERSIGNED CERTIFIES THAT THIS PLAN WAS DULY APPROVED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS OF SUNGARD DATA SYSTEMS INC., AND WAS DULY
ADOPTED BY THE BOARD OF DIRECTORS OF SUNGARD DATA SYSTEMS INC., AT MEETINGS DULY
HELD ON THE TWELFTH DAY OF FEBRUARY, 1996.
/s/ Lawrence A. Gross
----------------------------
LAWRENCE A. GROSS, SECRETARY
OF SUNGARD DATA SYSTEMS INC.
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<PAGE>
SunGard Data Systems Inc.
1996 Employee Stock Purchase Plan
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1. Objective
---------
The objective of this Employee Stock Purchase Plan is to advance the
interests of SunGard Data Systems Inc., its stockholders and employees by
encouraging its employees and the employees of its subsidiaries to acquire a
stake in its growth and earnings.
It is intended that this Employee Stock Purchase Plan shall be an employee
stock purchase plan within the meaning of Section 423 of the Internal Revenue
Code of 1986, as amended.
2. Definitions
-----------
The following terms used in this Employee Stock Purchase Plan shall have
the meanings set forth below:
A. "Accumulation Period" shall mean the period ending on the day preceding
each Date of Exercise.
B. "Board" shall mean the Board of Directors of the Company.
C. "Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor revenue law of the United States.
D. "Compensation" shall mean the total earnings from the Company or any
Subsidiary which are subject to withholding of federal income taxes and
reportable on Form W-2 and such other amounts as would have been reportable on
Form W-2 which are contributed to the SunGard Data Systems Inc. Savings Plan or
the SunGard Investment Systems Inc. Profit-Sharing and Savings Plan. However,
"Compensation" shall not include the value of any non-cash compensation or
fringe benefits (whether or not taxable or reportable as income) provided by the
Company or any Subsidiary.
E. "Committee" shall mean the Employee Stock Purchase Plan Committee
established under this Plan.
F. "Company" shall mean SunGard Data Systems Inc.
G. "Date of Grant" shall mean the last business day of each calendar
quarter during which this Plan is in effect and the conditions of Paragraph 7C.
have been satisfied.
H. "Date of Exercise" in respect of any option granted under this Plan
shall mean the Date of Grant of such option.
I. "Eligible Employee" shall mean all employees of the Company and any
Parent or Subsidiary, other than employees whose customary employment is twenty
(20) hours or less per week, and employees whose customary employment is for not
more than five (5) months in any calendar year.
<PAGE>
J. "Parent" shall mean any corporation which is at the time in question
the parent of the Company within the meaning of Section 425(e) of the Code.
K. "Plan" shall mean this Employee Stock Purchase Plan.
L. "Shares" shall mean shares of the $0.01 par value common stock of the
Company.
M. "Subsidiary" shall mean any corporation which is at the time in
question a subsidiary of the Company within the meaning of Section 425(f) of the
Code.
N. "Total Allocated Shares" shall mean the maximum number of Shares
determined by the Committee for which options shall be granted on any Date of
Grant.
3. Number of Shares Subject to Option
----------------------------------
The maximum number of Shares for which options may be granted under the
Plan is 1,000,000, subject to adjustment in the event of a stock dividend, stock
split, reverse stock split, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances.
4. Administration and Interpretation
---------------------------------
A. This Plan shall be administered by a Committee appointed by the Board.
The Committee shall consist of a minimum of three members of the Board, each of
whom shall be a "disinterested person" as defined in Rule 16b-3(d)(3) under the
Securities Exchange Act of 1934, as amended, of the Securities and Exchange
Commission or any future corresponding rule.
B. The Committee shall adopt such rules for the conduct of its business
and administration of this Plan as it considers desirable. A majority of the
members of the Committee shall constitute a quorum for all purposes. The vote
or written consent of a majority of the members of the Committee on a particular
matter shall constitute the act of the Committee on such matter. The Committee
shall have the exclusive right to construe the Plan and the options issued
pursuant to it, correct defects, supply omissions and reconcile inconsistencies
to the extent necessary to effectuate the Plan and the options issued pursuant
to it, and such action shall be final, binding and conclusive upon all parties
concerned. No member of the Committee or the Board shall be liable for any act
or omission (whether or not negligent) taken or omitted in good faith, or for
the exercise of an authority or discretion granted in connection with this Plan
to the Committee or the Board, or for the acts or omissions of any other members
of the Committee or the Board. Subject to the numerical limitations on
Committee membership set forth in Paragraph A. above, the Board may at any time
appoint additional members of the Committee and may at any time remove any
member of the Committee with or without cause. Vacancies in the Committee,
however caused, may be filled by the Board if it so desires.
5. Payroll Deductions; Accumulation Period
---------------------------------------
A. Each Eligible Employee may elect that a portion of his Compensation be
accumulated by the Company, through payroll deduction, during any Accumulation
Period, and
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<PAGE>
applied to purchase Shares on the next Date of Exercise. The actual percentage
of Compensation, up to 10%, which each Eligible Employee may elect to apply to
purchase Shares shall be based upon his written election to be made in the
manner determined by the Committee. All Eligible Employees shall otherwise have
the same rights and privileges. The Committee shall otherwise have the same
rights and privileges. The Committee shall have the right, in its sole
discretion, to change the maximum percentage of Compensation which may be
elected by Eligible Employees to be used to purchase Shares; provided, however,
that such maximum percentage, as determined by the Committee, shall apply to all
Eligible Employees.
B. Prior to the due application of the accumulated payroll deductions to
the exercise of an option to purchase Shares, an Eligible Employee shall have no
interest in the Shares subject to the option. Accumulated payroll deductions
may be withdrawn and further payroll deductions terminated by an Eligible
Employee by giving written notice to the Treasurer of the Company, or such other
person designated by the Committee for such purpose, at any time prior to a Date
of Exercise. Payroll deductions credited to an Eligible Employee's account may
not be assigned, transferred, pledged or otherwise disposed of by the Eligible
Employee and the Company may treat any attempt to do so as an election to
withdraw the funds. No interest will be paid or allowed on accumulated payroll
deductions or on any other amounts credited to the account of any Eligible
Employee hereunder. All payroll deductions received or held by the Company may
be used by the Company for any corporate purpose and need not be segregated.
C. An option shall be exercisable only by an Eligible Employee and only if
he is an Eligible Employee on the Date of Exercise. All accumulated payroll
deductions of an individual who is not an Eligible Employee on the Date of
Exercise (such as by reason of death, termination of employment and change in
employment status) shall be returned to him (or to his estate, if not then
living).
6. Granting of Options and Limitations Thereon
-------------------------------------------
The Committee is authorized to grant options pursuant to this Plan only to
Eligible Employees, subject to the following rules and limitations:
A. On each Date of Grant, each Eligible Employee shall be granted an
option for, and may elect to purchase, the number of Shares, rounded down to the
nearest whole Share, which may be purchased with the amount of such Eligible
Employee's Compensation accumulated during the preceding Accumulation Period;
provided, however, that if the total number of whole Shares which is elected to
be purchased by all Eligible Employees with regard to any such Accumulation
Period, exceeds the Total Allocated Shares, then each Eligible Employee shall be
granted an option for such proportion of the Total Allocated Shares, rounded
down to the nearest whole Share, as the amount of Shares elected to be purchased
by such Eligible Employee (as determined above) bears to the total Shares
elected to be purchased by all Eligible Employees.
B. The number of Shares for which options may be granted to each Eligible
Employee shall be further subject to the following limitations:
(i) no option shall be granted to any Eligible Employee who, immediately
after the grant, would own stock possessing five percent (5%) or more of the
total combined
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<PAGE>
voting power or the value of all classes of stock of the Company, its Parent or
any Subsidiary. In computing the stock ownership of any Eligible Employee for
purposes of this limitation, the rules of Section 424(d) of the Code shall apply
and stock which an Eligible Employee may purchase under outstanding options
(whether or not such options are fully vested or entitled to special tax
treatment under the Code) shall be treated as stock owned by that Eligible
Employee.
(ii) no option shall be granted to any Eligible Employee which, at the
Date of Grant, would permit his rights to purchase stock under the Plan and all
other employee stock purchase plans (within the meaning of Section 423 of the
Code) of the Company, its Parent and Subsidiaries, to accrue at a rate exceeding
$25,000 of fair market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at any
time, as more fully defined in Section 423(b)(8) of the Code.
C. The option exercise price shall be 85% of the fair market value of the
Shares on the Date of Grant. Fair market value shall be the average of the bid
and the asked prices as reported by The Nasdaq Stock Market in the Wall Street
Journal, or, if the Shares are listed on an exchange, the closing price of the
Shares on the exchange on the Date of Grant (or on the preceding regular
business date on which Shares have been traded in the event that no Shares have
been traded on such Date).
7. Exercise; Delivery of Option Shares
-----------------------------------
A. The option belonging to any Eligible Employee shall be deemed exercised
on the Date of Grant by applying the accumulated payroll deductions toward the
option exercise price of the Shares to be purchased under the option. Any
accumulated payroll deductions not expended with respect to any Date of Exercise
will be returned to the Eligible Employee, except that any excess insufficient
to purchase a whole Share at the option exercise price on any particular Date of
Exercise will, for each Eligible Employee, be carried forward to the next
Accumulation Period.
B. Upon the deemed exercise of an option granted hereunder, or as soon
thereafter as is reasonably practicable, the Company may deliver either
unauthorized but unissued Shares or treasury Shares, at its option, to the
Eligible Employee or to a custodian to be held for the benefit of the Eligible
Employee. The Company shall be under no obligation to retain unissued any
particular number of Shares at any time and no particular Shares shall be
identified as those optioned. The Company may also, at its discretion, remit to
the custodian the amount of payroll deductions made by the Company, together
with such other funds as may be required for the custodian to make purchases of
as many full Shares as may be purchased on behalf of each Eligible Employee.
Upon receipt of the Shares so purchased, the custodian will allocate to the
credit of each Eligible Employee that number of full Shares to which that
Eligible Employee is entitled. Certificates representing the number of Shares
to which the Eligible Employee is entitled shall be issued to the Eligible
Employee at his written request. Unless otherwise requested, the certificate(s)
evidencing the Eligible Employee's Shares will be held by and in the name of, or
in the name of a nominee of, the custodian for the benefit of each Eligible
Employee, who shall thereafter be a beneficial stockholder of the Company.
4
<PAGE>
C. Notwithstanding anything to the contrary contained herein, no option
shall be granted under the Plan until all the following events occur and during
the following periods of time:
(i) Until this Plan is approved by the stockholders of the Company in
the manner prescribed by the Code and the regulations thereunder;
(ii) Until the Shares subject to option are approved and/or registered
with such federal, state and local regulatory bodies or agencies and securities
exchanges as the Company may deem necessary or desirable; or
(iii) During any period of time in which the Company deems that the
exercisability of any option, the offer to sell the Shares subject to option, or
the sale thereof, may violate a federal, state, local or securities exchange
rule, regulation or law, or may cause the Company to be legally obligated to
issue or sell more Shares than the Company is legally entitled to issue or sell.
8. Plan and Options Not to Affect Employment
-----------------------------------------
Neither the Plan nor any option granted hereunder shall confer on any
employee any right to continue in the employ of the Company, its Parent or any
Subsidiary or interfere in any way with the right of the Company, its Parent or
any Subsidiary to terminate his employment.
9. Modification, Amendment, Suspension and Termination
---------------------------------------------------
Options shall not be granted pursuant to this Plan after the expiration of
ten years from and after the date of the adoption of the Plan by the Board. The
Board reserves the right at any time, and from time to time, to modify or amend
this Plan in any way, or to suspend or terminate it, effective as of such date,
which date may be either before or after the taking of such action, as may be
specified by the Board; provided, however, that such action shall not affect
options granted under the Plan prior to the actual date on which such action
occurred. If a modification or amendment of this Plan is required by the Code
or the regulations thereunder to be approved by the stockholders of the Company
in order to permit the granting of options under an "employee stock purchase
plan" (as that term is defined in Section 423 of the Code and regulations
thereunder) pursuant to the modified or amended Plan, such modification or
amendment shall also be approved by the stockholders of the Company in such
manner as is prescribed by the Code and the regulations thereunder. If the
Board voluntarily submits a proposed modification, amendment, suspension or
termination for stockholder approval, such submission shall not require any
future modifications, amendments (whether or not relating to the same provision
or subject matter), suspensions or terminations to be similarly submitted for
stockholder approval.
10. Effective Date of Plan
----------------------
The Plan shall become effective on the date on which it is adopted by the
Board, provided the Plan is approved within one (1) year after the effective
date by the stockholders of the Company. The Company may commence payroll
deductions on behalf of Eligible Employees pursuant to the Plan prior to
approval by the stockholders of the Company, provided that the use of such
accumulated funds to purchase Shares pursuant to the exercise of options
hereunder is contingent upon satisfaction of the conditions of Paragraph 7C. of
the Plan.
5
<PAGE>
11. General Conditions
------------------
A. Corporate action constituting an offer of stock for sale to any
employee under the terms of the options to be granted hereunder shall be deemed
completed as of the date when the Committee authorizes the grant of the option
to the employee, regardless of when the option is actually delivered to the
employee or acknowledged or agreed to by him.
B. Each of the options granted pursuant to this Plan is intended, if
possible, to be an option granted under an employee stock purchase plan as that
term is defined in Section 423 of the Code and the regulations thereunder. In
the event this Plan or any option granted pursuant to this Plan is in any way
inconsistent with the applicable legal requirements of the Code or the
regulations thereunder for an option granted under an employee stock purchase
plan, this Plan and such option shall be deemed automatically amended as of the
date hereof to conform to such legal requirements, if such conformity may be
achieved by amendment.
C. Neither the Company nor any present or future Company affiliated with
or subsidiary of the Company, nor any of their officers, directors,
stockholders, stock option plan committees, employees or agents, shall have any
liability to any Eligible Employee in the event an option granted pursuant to
this Plan does not qualify as an option granted under an employee stock purchase
plan as the term is used in Section 423 of the Code and the regulations
thereunder, or in the event any Eligible Employee does not obtain the tax
benefits of such an option granted under an employee stock purchase plan.
D. References in this Plan to the Code shall be deemed to also refer to
the corresponding provisions of any future United States revenue law.
E. The use of the masculine pronoun shall include the feminine gender
whenever appropriate.
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If you would like to be on our stockholders mailing list to receive quarterly
earnings information, please complete and return the adjacent card.
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<PAGE>
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SUNGARD (R)
DATA SYSTEMS INC.
Yes, I would like to be on your stockholders mailing list to
receive quarterly earnings information.
________
Name _______________________________________________________
________
Address ____________________________________________________
________
City, State, Zip ___________________________________________
________ (Please print clearly)
________
________
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<PAGE>
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Please
affix
Postage
----------
SunGard Data Systems Inc.
Investor Relations
1285 Drummers Lane - Suite 300
Wayne, PA 19087-1586
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