<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:
[ X ] Preliminary Proxy Statement [ ] Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[ ] 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 ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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>
PRELIMINARY PROXY STATEMENT
[TO APPEAR ON SUNGARD LETTERHEAD]
April 2, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders of
SunGard Data Systems Inc., which will be held on Monday, May 11, 1998, 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 1997 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>
PRELIMINARY PROXY STATEMENT
SUNGARD DATA SYSTEMS INC.
1285 Drummers Lane
Wayne, Pennsylvania 19087
(610) 341-8700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1998
To Our Stockholders:
The 1998 Annual Meeting of Stockholders of SunGard Data Systems Inc. will be
held at 9:00 a.m. local time, on Monday, May 11, 1998, 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 an amendment to the Company's Restated Certificate
of Incorporation increasing the number of authorized shares of common stock
by 200,000,000.
3. To vote on approval of the Company's 1998 Equity Incentive 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 16,
1998 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 2, 1998
<PAGE>
PRELIMINARY PROXY STATEMENT
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 1998 Annual Meeting of Stockholders to be held at the Four Seasons Hotel,
One Logan Square, Philadelphia, Pennsylvania 19103 on Monday, May 11, 1998, 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 2, 1998.
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 16, 1998, the record date for the
determination of stockholders of the Company entitled to receive notice of and
to vote at the 1998 Annual Meeting, the Company's outstanding voting securities
consisted of 102,710,231 shares of common stock, held by approximately 3,500
stockholders of record. In order for a quorum to be present at the 1998 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 September 1997 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 the amendment to the
Company's Restated Certificate of Incorporation requires that the holders of a
majority of the outstanding shares vote "for" the amendment. Approval of the
Company's 1998 Equity Incentive Plan 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.
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PROPOSAL ONE
ELECTION OF DIRECTORS
Eight directors are to be elected at the 1998 Annual Meeting to serve for one-
year terms until the 1999 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 42 President and Chairman of the Board (since 1995) and Vice
Director (since 1991) President (1991 to 1995), Bentley Systems, Inc., Exton, PA
Member, Audit Committee (engineering software company); President (1983 to 1991),
SunGard Systems International Inc., a subsidiary of the
Company since 1987.
- ----------------------------------------------------------------------------------------------------------------------
Michael C. Brooks 53 General Partner (since 1985) and Managing Partner (1993-
Director (since 1985) 1997), J. H. Whitney & Co., Stamford, CT (venture capital
Chairman, Compensation Committee firm).
Member, Executive Committee
- ----------------------------------------------------------------------------------------------------------------------
Albert A. Eisenstat 67 General Partner (since 1996), Discovery Ventures, LLC,
Director (since 1991) Menlo Park, CA (venture capital firm); Private investor (1993
Member, Compensation Committee to 1996); Executive or Senior Vice President (1985 to 1993)
and Vice President and General Counsel (1980 to 1987),
Apple Computer, Inc., Cupertino, CA (computer and software
company).
- ----------------------------------------------------------------------------------------------------------------------
Bernard Goldstein 67 Director (since 1997) and Managing Director (1979 to 1996),
Director (since 1994) Broadview Associates LLC, Fort Lee, NJ (investment banking
Member, Compensation Committee firm).
- ----------------------------------------------------------------------------------------------------------------------
James L. Mann 63 Chairman of the Board (since 1987) and President and Chief
Director (since 1983) Executive Officer (since 1986) of the Company; President
Chairman, Executive Committee and Chief Operating Officer (1983 to 1985) of the Company.
Chairman of the Board, President
and Chief Executive Officer
- ----------------------------------------------------------------------------------------------------------------------
Michael Roth 66 Of Counsel (since 1989), Rosenman & Colin LLP, New York,
Director (since 1991) NY (law firm).
Member, Audit Committee
- ----------------------------------------------------------------------------------------------------------------------
Malcolm I. Ruddock 55 Treasurer (since 1989), Director of Finance (1988 to 1989)
Director (since 1983) and Director of Acquisitions and Divestments (1979 to
Chairman, Audit Committee 1988), Sun Company, Inc., Philadelphia, PA (independent
Member, Executive Committee refiner and marketer).
- ----------------------------------------------------------------------------------------------------------------------
Lawrence J. Schoenberg 65 Director of public companies (since 1990); Chairman (1967
Director (since 1991) to 1991) and Chief Executive Officer (1967 to 1990), AGS
Member, Audit Committee Computers, Inc., Mountainside, NJ (software and computer
services company).
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Mr. Brooks also is a director of Digital Television Services, Inc. and Nitinol
Medical Technologies, 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 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 Cellular Technical
Services, Inc., Government Technology Services Inc. and Merisel Inc.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1997, the Board of Directors held thirteen meetings, the Audit Committee
held five meetings, the Compensation Committee held four meetings, and the
Executive Committee held no meetings. The Board of Directors does not have a
standing Nominating Committee. During 1997, each director attended at least 82%
of the total number of meetings of the Board of Directors and Committees on
which he served. Meeting attendance averaged 96% 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 Equity Award Subcommittee of the Compensation
Committee, composed of Messrs. Brooks (chairman) and Eisenstat, 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. Directors who serve on subcommittees do not
receive additional compensation.
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 20,000 shares upon initial election to the
Board, and will automatically receive additional awards of 20,000 shares upon
reelection as an outside director every fifth year thereafter. At the 1998
Annual Meeting, if reelected, Mr. Bentley will receive an additional restricted
stock award for 20,000 shares of common stock.
The shares awarded are subject to transfer restrictions until they vest, at the
rate of 4,000 shares per year, on the dates of the Company's next five Annual
Meetings following the date of grant. If an
3
<PAGE>
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 16, 1998 (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>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNER OR GROUP ------------------------------------------------ PERCENT
DIRECT/(1)/ VOTING OR RIGHT TO OF
INVESTMENT POWER/(2)/ ACQUIRE/(3)/ CLASS/(4)/
====================================================================================================================
<S> <C> <C> <C> <C>
FMR Corp./(5)/ -- 10,129,400 /(6)/ -- 9.9%
Edward C. Johnson 3d, Chairman, FMR Corp.
Abigail P. Johnson, Director, FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
- --------------------------------------------------------------------------------------------------------------------
Provident Investment Counsel Inc. -- 5,499,642 /(7)/ -- 5.4%
300 North Lake Avenue
Pasadena, California 91101
- --------------------------------------------------------------------------------------------------------------------
T. Rowe Price Associates, Inc./(5)/ -- 7,332,000 /(8)/ -- 7.1%
100 E. Pratt Street
Baltimore, Maryland 21202
- --------------------------------------------------------------------------------------------------------------------
Gregory S. Bentley (director) 179,850 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Michael C. Brooks (director) 44,000 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Cristobal I. Conde (executive officer) 426,728 -- 65,041 --
- --------------------------------------------------------------------------------------------------------------------
Philip L. Dowd (executive officer) 178,432 -- 280,873 --
- --------------------------------------------------------------------------------------------------------------------
Albert A. Eisenstat (director) 44,000 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Bernard Goldstein (director) 38,000 2,000 -- --
- --------------------------------------------------------------------------------------------------------------------
Lawrence A. Gross (executive officer) 25,312 -- 92,870 --
- --------------------------------------------------------------------------------------------------------------------
James L. Mann (director and chief executive officer) 900,088 -- 1,125,000 2.0%
- --------------------------------------------------------------------------------------------------------------------
Michael Roth (director) 40,000 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Malcolm I. Ruddock (director) 33,000 11,000 -- --
- --------------------------------------------------------------------------------------------------------------------
Lawrence J. Schoenberg (director) 37,752 -- -- --
- --------------------------------------------------------------------------------------------------------------------
Richard C. Tarbox (executive officer) 7,792 -- 64,756 --
- --------------------------------------------------------------------------------------------------------------------
All 19 directors and executive officers 2,074,625 13,000 2,270,542 4.2%
- --------------------------------------------------------------------------------------------------------------------
</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 4,000, 16,000, 16,000, 8,000, 16,000, 16,000 and 16,000
restricted shares held by Messrs. Bentley, Brooks, Eisenstat, Goldstein,
Roth, Ruddock and Schoenberg, respectively, and 92,000 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. Includes 3,441, 25,041,
3,370, 500,000 and 5,600 unvested shares that may be acquired by Messrs.
Conde, Dowd, Gross, Mann and Tarbox, respectively, and 617,282 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 under the Company's option and equity plans.
(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. 4, filed by the beneficial owners
on February 11, 1998.
(7) Based upon a Schedule 13G, Amendment No. 2, filed by Provident Investment
Counsel Inc. on February 10, 1998.
(8) Based upon a Schedule 13G, Amendment No. 6, filed by T. Rowe Price
Associates, Inc. ("Price Associates") on February 12, 1998. 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
REPORT OF THE COMPENSATION COMMITTEE AND EQUITY AWARD SUBCOMMITTEE
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, and 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 many of the companies covered by this
analysis are included in the Nasdaq Computer and Data Processing Index (see
Performance Graph), the Index companies are not separately analyzed for
compensation purposes, because compensation data for the Index companies as a
group is not readily available to the Company.
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' 1997 annual cash incentive plans
were set at the beginning of the year and took into account the Company's
overall financial goals for 1997. For corporate officers, the incentive
payments depended solely upon the rate of increase in the Company's earnings per
share 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 8% to 19% 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 10% in 1997, and incentive payments at targeted goals constituted
40% of total cash compensation. Based upon actual 1997 results, all executive
officers met or exceeded their targeted goals, except for one group chief
executive officer.
EQUITY COMPENSATION. The Company provides equity compensation to its executive
officers principally through a program ("LTIP program") of annual long-term
incentive awards ("LTIP awards"). Each annual award covers a new three-year
performance period and allows the recipient to earn stock options if certain
financial performance goals are achieved during that three-year period (subject
to continued employment during that period). 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, similar to the
analysis described above with respect to cash compensation, and is subject to
subjective adjustments based upon individual factors. The financial performance
goals for each LTIP award are based upon the cumulative growth, during the
three-year period of the award, in the operating income of the business unit(s)
managed by the participant, with the growth targets for all LTIP awards, taken
together, being consistent with the Company's overall growth objectives. All
executive officers participate in the LTIP program, excluding Mr. Mann during
the four-year vesting period of option grants awarded to him in 1995 and 1996.
In addition, business unit presidents and certain other key executives of the
Company participate in the Company's LTIP program.
The Equity Award Subcommittee of the Compensation Committee, formed in 1996 to
comply with the new Section 16 rules under the Securities Exchange Act of
1934, as amended, has the authority to approve all grants of LTIP awards, stock
options and other equity awards. Accordingly, the Equity Award Subcommittee
administers the Company's LTIP program by approving, among other things, who
will participate in the LTIP program and the number of option shares that will
be subject to each LTIP award. Outside the scope of the LTIP program, stock
options or other equity compensation also may be awarded from time to time, at
the discretion of the Equity Award Subcommittee, to executive officers and other
key employees when they are hired, promoted or join the Company via acquisition,
or under other circumstances approved by the Equity Award Subcommittee in
accordance with the Company's equity incentive plans. In evaluating the share
levels for the Company's LTIP program and
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<PAGE>
other equity compensation awards, the Equity Award Subcommittee takes into
account 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, 1997, the Company's total overhang was 9.3% (taking into account
the acquisition of Infinity Financial Technology, Inc. on January 2, 1998), of
which 8.3% was represented by shares subject to outstanding stock options and
awards, and 1% was represented by shares available for future stock options and
awards.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. Mr. Mann's base salary for 1997 was
$500,000, the same as his base salary for 1996. Mr. Mann's 1997 annual cash
incentive payment depended solely upon the rate of increase in the Company's
earnings per share. If the Company's 1997 earnings per share had increased by
15%, then Mr. Mann's 1997 incentive payment would have been $325,000, yielding
total cash compensation at approximately the 65th percentile of competitive
compensation levels based upon the Company's analysis. The Company's actual
1997 earnings per share (excluding one-time charges for purchased in-process
research and development and merger costs) grew by 23%, yielding an incentive
payment to Mr. Mann of $612,499.
DEDUCTIBILITY OF CERTAIN COMPENSATION. Section 162(m) of the Internal Revenue
Code (the "Code") denies a deduction for certain compensation exceeding
$1,000,000 paid to the chief executive officer and four other highest paid
executive officers, excluding (among other things) certain performance-based
compensation. The Compensation Committee has attempted to structure
performance-based awards to executive officers under equity plans in a manner
that satisfies Section 162(m). The Compensation Committee also intends to
consider whether it is in the best interests of the Company to structure cash
incentive payments to be deductible under Section 162(m). Notwithstanding the
efforts of the Company in this area, no assurance can be given that compensation
intended by the Company to satisfy the requirements for deductibility under
Section 162(m) does in fact do so.
Compensation Committee: Equity Award Subcommittee:
---------------------- -------------------------
Michael C. Brooks, Chairman Michael C. Brooks, Chairman
Albert A. Eisenstat, Member Albert A. Eisenstat, Member
Bernard Goldstein, Member
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table contains certain information about compensation earned
during the last three fiscal years by the Company's chief executive officer and
four other executive officers who were most highly compensated during the most
recent fiscal year. The Company's fiscal year is the calendar year.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------------------------------
AWARDS/(2)/ PAYOUTS/(3)/
OTHER ----------------------------- ALL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ANNUAL SECURITIES LONG-TERM OTHER
($) ($) COMPENSA- UNDERLYING INCENTIVE COMPENSA-
TION ($)/(1)/ OPTIONS/SARS (#) PLANS ($) TION ($)/(4)/
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
JAMES L. MANN 1997 500,000 612,499 5,345 -- -- 6,333
Chairman of the Board, President 1996 500,000 450,000 8,314 200,000/(5)/ -- 5,429
and Chief Executive Officer 1995 400,000 449,806 73,490 800,000 -- 5,280
- -----------------------------------------------------------------------------------------------------------------------------------
CRISTOBAL I. CONDE 1997 332,000 794,722 -- -- 705,172 6,400
Chief Executive Officer, SunGard 1996 320,000 329,450 -- 36,000 369,036 6,000
Trading Systems Group 1995 300,000 425,100 -- -- -- 6,000
- -----------------------------------------------------------------------------------------------------------------------------------
PHILIP L. DOWD 1997 271,000 242,666 13,250 -- -- 6,400
Chief Executive Officer, SunGard 1996 260,000 -- 13,250 72,000 272,685 6,000
Trust & Shareholder Systems Group 1995 244,000 108,676 14,255 -- -- 6,000
- -----------------------------------------------------------------------------------------------------------------------------------
LAWRENCE A. GROSS 1997 236,000 214,591 6,895 -- -- 6,333
Vice President and General Counsel 1996 224,000 142,721 5,362 36,000 -- 6,000
1995 214,000 100,489 5,661 -- -- 6,000
- -----------------------------------------------------------------------------------------------------------------------------------
RICHARD C. TARBOX 1997 192,000 372,918 5,669 -- -- 6,400
Vice President-Corporate 1996 180,000 223,958 5,669 36,000 -- 6,000
Development 1995 153,000 202,868 5,566 -- -- 6,000
- ----------------------------------------------------------------------------------------------------------------------------------
</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.
(3) Payouts under LTIP awards were based upon the financial performance of the
business units managed by group chief executive officers. The payouts under
the 1995-1997 LTIP awards consisted of non-qualified stock options, earned
as of December 31, 1997 and granted on January 2, 1998, for 28,400 shares
having an exercise price of $6.045 share for Mr. Conde. The payouts under
the 1994-1996 LTIP awards consisted of non-qualified stock options, earned
as of December 31, 1996 and granted on January 2, 1997, for 27,200 and
27,032 shares, respectively, having an exercise price of $6.1825 and $9.6625
per share, respectively, for Messrs. Conde and Dowd. All option shares
earned under LTIP awards are fully vested on the date of grant and fully
exercisable six months thereafter. The value of the payouts equals the
difference between the market value of the option shares on the date earned
and the exercise price of the options shares.
(4) Consists of Company contributions to a defined contribution retirement plan.
(5) Consists of option shares that were authorized for issuance to Mr. Mann
during 1995, but were not issued until the beginning of 1996 due to
limitations in the Company's equity incentive plans.
8
<PAGE>
OPTION GRANTS
Excluding options granted as payouts under LTIP awards (see Summary Compensation
Table), no options were granted during 1997 to any of the Company's executive
officers named in the Summary Compensation Table.
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 1997, (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,
1997, and (d) the value of in-the-money options held on December 31, 1997, based
upon the last sale price on December 31, 1997, of $30.875 per share of common
stock.
<TABLE>
<CAPTION>
NAME SHARES VALUE NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED REALIZED ($) 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 -- -- 1,125,000 -- 20,896,875 --
- -----------------------------------------------------------------------------------------------------------------------
Cristobal I. Conde/(2)/ -- -- 59,094 24,106 1,406,395 338,991
- -----------------------------------------------------------------------------------------------------------------------
Philip L. Dowd/(2)/ 12,000 186,000 274,926 24,106 6,921,926 338,991
- -----------------------------------------------------------------------------------------------------------------------
Lawrence A. Gross -- -- 86,923 27,377 2,150,958 384,989
- -----------------------------------------------------------------------------------------------------------------------
Richard C. Tarbox -- -- 58,809 34,291 1,390,930 482,217
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Exercisable option shares include 550,000, 4,694, 33,494, 7,823 and 11,200
unvested, in-the-money option shares having year-end values of $9,556,250,
$66,009, $471,009, $156,611 and $237,300, respectively, which, if acquired
by Messrs. Mann, Conde, Dowd, Gross and Tarbox, respectively, would be
subject to transfer restrictions and repurchase by the Company under the
Company's stock option plans.
(2) The table includes options received by Messrs. Conde and Dowd as payouts
under LTIP awards (see Summary Compensation Table).
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 1997, (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 1997 through 1999 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.
9
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NUMBER OF ESTIMATED FUTURE PAYOUTS
SHARES PERFORMANCE OR OTHER UNDER NON-STOCK PRICE-BASED PLANS/(1)/
NAME UNDERLYING PERIOD UNTIL MATURATION ----------------------------------------
OPTIONS OR PAYOUT THRESHOLD TARGET MAXIMUM
AWARDED (#) (#OF SHARES) (# OF SHARES) (# OF SHARES)
=========================================================================================================
<S> <C> <C> <C> <C> <C>
James L. Mann -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Cristobal I. Conde 16,600 1/1/97 - 12/31/99 8,300 16,600 16,600
- ---------------------------------------------------------------------------------------------------------
Philip L. Dowd 24,000 1/1/97 - 12/31/99 12,000 24,000 24,000
- ---------------------------------------------------------------------------------------------------------
Lawrence A. Gross 14,200 1/1/97 - 12/31/99 7,100 14,200 14,200
- ---------------------------------------------------------------------------------------------------------
Richard C. Tarbox 9,400 1/1/97 - 12/31/99 4,700 9,400 9,400
- ---------------------------------------------------------------------------------------------------------
</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
$19.875 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 1997. 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 $0.99 per share.
CERTAIN TRANSACTIONS WITH MANAGEMENT
In December 1996, in connection with certain tax-related payments, Mr. Mann
received a short-term loan from the Company in the amount of $157,100, which was
repaid in January 1997.
Mr. Mann owns Hawk Flight, Inc., which operates a charter Learjet business. The
services of Hawk Flight, Inc. are used by the Company for business travel by Mr.
Mann and other Company executives at arms-length terms approved by the
disinterested members of the Board of Directors. During 1997, the Company paid
approximately $93,800 to Hawk Flight, Inc. for business travel by Company
executives.
Mr. Goldstein, a current director of the Company, is a Director of Broadview
Associates LLC, an investment banking firm engaged by the Company in connection
with acquisitions. During 1997, the Company paid approximately $555,000 to
Broadview Associates LLC in connection with an annual retainer, services related
to one 1997 acquisition and reimbursable expenses.
Mr. Roth, a current director of the Company, is Of Counsel to Rosenman & Colin
LLP, a law firm engaged by the Company from time to time for minor
representations.
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
1997 was a current or former officer or employee of the Company. Mr. Goldstein,
a current member of the Company's Compensation Committee, is a Director of
Broadview Associates LLC, an investment banking firm engaged by the Company in
connection with acquisitions (see Certain Transactions with Management).
10
<PAGE>
During 1997, 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 and the Nasdaq Computer & Data
Processing Index, assuming an investment of $100 in each on December 31, 1992.
The data points used for the performance graph are listed in the chart below.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PERFORMANCE GRAPH DATA POINTS 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
SunGard Data Systems Inc. Common Stock 100 139 129 192 266 415
- ----------------------------------------------------------------------------------------------------------
S&P 500 Index/(1)/ 100 110 112 153 189 252
- ----------------------------------------------------------------------------------------------------------
Nasdaq Computer & Data Processing Index/(1)/ 100 106 129 198 242 297
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Source: (1) Standard & Poor's Compustat
11
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1997, and based upon their written representations that they were
not required to file any other reports for 1997, the Company believes that,
except as noted below, 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 1997. Kenneth R. Adams, Chief Executive Officer of SunGard
Healthcare Information Systems Group, inadvertently failed to timely report the
purchase of 100 shares in June 1997 on the day the Company's common stock first
traded on the New York Stock Exchange. Philip L. Dowd, Chief Executive Officer
of SunGard Trust and Shareholder Systems Group, inadvertently failed to timely
report gifts of 6,000 and 20,000 shares in June 1996 and September 1997,
respectively, to an educational institution.
PROPOSAL TWO
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION INCREASING THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK BY 200,000,000
Under the Company's Restated Certificate of Incorporation, the Company currently
is authorized to issue up to 120,000,000 shares of common stock. During 1997,
approximately 43,342,000 shares of common stock were issued in connection with a
two-for-one stock split and 16,905,000 shares of common stock were issued in
connection with acquisitions, including the acquisition of Infinity Financial
Technology, Inc. on January 2, 1998. As of December 31, 1997 (taking into
account such acquisition), there were approximately 7,550,000 authorized shares
of the Company's common stock that were not issued or reserved for future
issuance. In addition, approximately 4,200,000 shares will be issued or
reserved for issuance if and when a pending acquisition closes. As a result,
only 3,350,000 shares remain available for future issuance.
In February 1998, the Board of Directors approved an amendment to the Company's
Restated Certificate of Incorporation that increases the maximum number of
authorized shares by 200,000,000 to a total of 320,000,000 shares, subject to
approval by the stockholders of the Company. The purpose of the amendment is to
provide sufficient shares for future stock splits, stock dividends,
recapitalizations, acquisitions and other corporate transactions. Although the
Company does not have any commitments or understandings that would require the
issuance of additional shares of common stock, the Company periodically
evaluates the issuance of additional shares in connection with acquisitions and
stock splits.
Once authorized, the additional shares of common stock may be issued with
approval of the Board of Directors but without further approval of the
stockholders unless stockholder approval is required by applicable law, rule or
regulation. Accordingly, this solicitation may be the only opportunity for
stockholders to approve such stock splits, stock dividends, recapitalizations,
acquisitions and other corporate transactions.
Stockholder approval of this proposal is required under Delaware law. Approval
of the amendment to the Company's Restated Certificate of Incorporation
increasing the number of authorized shares of common stock by 200,000,000
requires the affirmative vote of the holders of a majority of the outstanding
shares of common stock. If the stockholders do not approve the amendment, then
the number of authorized shares of the Company's common stock will remain at
120,000,000.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL TWO.
12
<PAGE>
PROPOSAL THREE
APPROVAL OF THE COMPANY'S 1998 EQUITY INCENTIVE PLAN
In February 1998, the Board of Directors adopted the Company's 1998 Equity
Incentive Plan ("1998 Incentive Plan"), subject to approval by the stockholders
of the Company. The primary reason for adopting the 1998 Incentive Plan is to
ensure that the Company will be able to continue providing equity compensation
to its key employees.
PURPOSES. The purposes of the 1998 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 employees with those of the Company's stockholders. To
achieve these purposes, the 1998 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 1998 Incentive Plan permits Awards to be granted for a
total of 3,000,000 shares of the Company's common stock (subject to automatic
increases described below), with an individual limit of 250,000 shares per
recipient per year (subject to appropriate adjustments to reflect stock splits
and other changes in the capitalization of the Company). Had the 1998 Incentive
Plan been in effect as of December 31, 1997 (taking into account the acquisition
of Infinity Financial Technology, Inc. on January 2, 1998), the number of shares
then available for future stock options and awards would have increased from
1,051,496 to 4,051,496, and the Company's total overhang (see definition in
Compensation Committee Report) would have increased from 9.3% to 11.7%. The
number of shares issuable under the 1998 Incentive Plan will increase
automatically each year in an amount equal to the number of option shares
exercised during the prior fiscal year under all of the Company's equity plans,
with a maximum annual increase of 2% of the Company's then outstanding common
stock. This automatic increase provision will have the effect of maintaining a
maximum total overhang of 11.7% except for the effect of any future
acquisitions. 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 1998 Incentive Plan.
ELIGIBILITY. All current and future employees of the Company and its
subsidiaries are eligible to receive Awards under the 1998 Incentive Plan.
ADMINISTRATION. The 1998 Incentive Plan is administered by the Compensation
Committee or a subcommittee thereof ("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 1998 Incentive Plan. The Committee has the
right to adopt rules for the administration of the 1998 Incentive Plan, settle
all controversies regarding the 1998 Incentive Plan and any Award, and construe
and correct defects and omissions in the 1998 Incentive Plan and any Award. The
1998 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
1998 Incentive Plan or when otherwise necessary for the 1998 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.
13
<PAGE>
STOCK OPTIONS. Recipients of stock options under the 1998 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 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
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 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 1998 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
Committee. In the case of restricted stock awards, the shares acquired are
subject to a vesting schedule and other possible conditions determined by the
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 1998 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 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 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 Committee. For a description of the Company's current LTIP program, see
Compensation Committee Report - Equity Compensation.
OTHER AWARDS. Under the 1998 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 Committee. In connection with any performance
award or any Award that depends in whole or in part upon the attainment of
performance goals, the Committee may grant a cash award to the Participant for
exceeding the performance goals set in such Award.
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 1998
Incentive Plan). Stock options and other Awards that are not exercisable at the
time of termination automatically terminate, and payments or
14
<PAGE>
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. Except as otherwise provided by the Committee, 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.
For purposes of the 1998 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 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, 1997, generally
summarizes certain federal income tax consequences associated with the 1998
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, and 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 1998 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
15
<PAGE>
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).
1998 AWARDS. In 1998, the Company granted LTIP awards to executive officers,
business unit presidents and certain other key employees in accordance with the
Company's compensation policies. Because there were insufficient shares
available under the Company's other equity plans to cover these awards, such
LTIP awards were granted under the 1998 Incentive Plan and are subject to
stockholder approval of the 1998 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, the number of option shares that may be earned under the LTIP awards
granted during 1998 under the 1998 Incentive Plan, if certain minimum and goal
targets for cumulative operating income growth during 1998 through 2000 are met.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NAME LTIP AWARDS/(1)/
------------------
NUMBER OF SHARES UNDERLYING OPTIONS THAT MAY BE EARNED
---------------------------------------------------------
MINIMUM GOAL
(#) (#)
======================================================================================================
<S> <C> <C>
James L. Mann -- --
- ------------------------------------------------------------------------------------------------------
Cristobal I. Conde 14,925 29,850
- ------------------------------------------------------------------------------------------------------
Philip L. Dowd 15,300 30,600
- ------------------------------------------------------------------------------------------------------
Lawrence A. Gross 13,500 27,000
- ------------------------------------------------------------------------------------------------------
Richard C. Tarbox 13,500 27,000
- ------------------------------------------------------------------------------------------------------
All 12 executive officers 113,175 226,350
- ------------------------------------------------------------------------------------------------------
All employees other than executive officers 181,575 363,150
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) 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 $29.31 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 1998. 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 $1.47 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.
16
<PAGE>
FUTURE AWARDS. If the 1998 Incentive Plan is approved by the stockholders, then
the Company currently plans, but will have no legal obligation or commitment, to
continue granting periodic options and annual LTIP awards, subject to approval
or discontinuation by the Committee. Like the LTIP awards granted in 1998, each
of these future annual LTIP awards would cover three-year performance periods.
No other option or LTIP awards under the 1998 Incentive Plan are currently
planned, but others may be granted as determined by the Committee.
STOCKHOLDER APPROVAL. There are two reasons for seeking stockholder approval of
the 1998 Incentive Plan. One is to satisfy a New York Stock Exchange rule that
requires companies whose shares are reported on the New York Stock Exchange 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. If the stockholders do not approve
the 1998 Incentive Plan, then the 1998 Incentive Plan will not be effective, and
the LTIP awards issued under the 1998 Incentive Plan also will not be effective.
The last sale price of the Company's common stock on March 16, 1998 (the record
date) was $34.125 per share.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL THREE.
INDEPENDENT ACCOUNTANTS
The accounting firm of Coopers & Lybrand L.L.P. has acted as the Company's
independent accountants since its inception in 1983 and has been recommended by
the Audit Committee and selected by the Board of Directors to serve as the
Company's independent accountants for 1998. Coopers & Lybrand's services to the
Company for 1997 included the audit of the Company's annual consolidated
financial statements, reviews of certain of the Company's income tax returns,
statutory audits of certain of the Company's foreign subsidiaries, audits or
reviews of many of the Company's data processing and disaster recovery centers,
and consultation on various accounting, tax, securities and other matters.
A representative of Coopers & Lybrand is expected to be present at the 1998
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.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1999 Annual
Meeting must be submitted by December 1, 1998 to receive consideration for
inclusion in the Company's 1999 proxy materials.
OTHER MATTERS
The Company currently knows of no other business that will be presented for
consideration at the 1998 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.
17
<PAGE>
EACH PERSON SOLICITED BY THIS PROXY STATEMENT MAY OBTAIN, WITHOUT CHARGE, A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1997, 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 2, 1998
Wayne, Pennsylvania
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SUNGARD DATA SYSTEMS INC.
1998 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of the SunGard Data Systems Inc. 1998 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 3,000,000 shares, with an individual limit of
250,000 shares per Participant (as defined in Section 3.1 below) per year,
subject to adjustment in accordance with this Section 2.1 and in accordance with
Section 2.2 below. 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 and such
individual limit 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 On January 1 of each year, commencing with January 1, 1999, the
aggregate number of shares of Common Stock for which Awards may be granted under
the Plan shall automatically be increased by the number of shares of Common
Stock exercised during the previous fiscal year pursuant to stock options
granted under the Company's stock option and award plans with a maximum annual
increase of two percent (2%) of the Company's outstanding shares of Common Stock
on that date; provided that no more than 3,000,000 shares (subject to adjustment
in accordance with Section 2.1) of the shares eligible for issuance under the
Plan shall be issued upon the exercise of ISOs (as defined in Section 5.1) under
the Plan.
2.3 Treasury shares, reacquired shares and unissued shares of Common Stock
may be used for purposes of the Plan, at SunGard's sole discretion.
2.4 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.
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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.
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. The Committee may
delegate all or any portion of its authority hereunder to a subcommittee
consisting of at least two Committee members (and references in this Plan to the
"Committee" shall thereafter be to the Committee or such subcommittee). The
Committee may consist solely of two or more "non-employee directors" within the
meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as
amended (the "1934 Act") or any future corresponding rule, provided that the
failure of the Committee or of the Board for any reason to be composed solely of
non-employee directors shall not prevent an Award from being considered granted
under this Plan. 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, other than as specifically
authorized herein, change the exercise price of an Award, and 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.
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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.
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.
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(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 vested and/or exercisable at such time or
times, and on such terms and conditions, as the Committee may determine, but in
no event shall an Option granted to a person subject to Section 16 of the 1934
Act be exercisable within the first six months after the date of grant except as
otherwise provided in the Award or the Plan. The Committee may at any time
accelerate the time at which all or any part of an Option becomes vested and/or
exercisable. Any exercise of an Option must be in writing, signed by the proper
person and delivered or mailed to the 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").
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(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.
(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. In the event of a Status Change, the Committee may 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 (which must be at least one year), 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
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other financial factors as the Committee may determine. Performance goals also
may be included as terms and conditions of other types of Awards.
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.
(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.
(c) In connection with any Performance Award or any Award that depends
in whole or in part upon the attainment of performance goals, the Committee may
grant a cash award to the Participant for exceeding the performance goals set
forth in such 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.
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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,
provided that no Option shall terminate earlier than three months after the date
the Option first becomes exercisable. After the expiration of such period, 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 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.
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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 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.
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(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.
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
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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, 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 27, 1998, subject to the
approval of SunGard's stockholders. The Plan shall be submitted to SunGard's
stockholders for approval at SunGard's 1998 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
10
<PAGE>
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 ISOs (unless the Board determines that
ISOs 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.
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. Notwithstanding the
foregoing, at the discretion of the Committee, an Award (other than an ISO) may
permit the transferability of such Award by a Participant solely to members of
the Participant's immediate family or trusts or family partnerships for the
benefit of the Participant and/or members of the Participant's immediate family
to the extent provided in such Award.
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
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<PAGE>
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 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 New York Stock Exchange 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 EQUITY AWARD
SUBCOMMITTEE OF 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 TWENTY-SEVENTH DAY OF FEBRUARY,
1998.
------------------------------------
LAWRENCE A. GROSS, SECRETARY
OF SUNGARD DATA SYSTEMS INC.
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If you would like to be on our stockholders mailing list to receive 1998
quarterly earnings information, please complete and return the adjacent card.
<PAGE>
- --------------------------------------------------------------------------------
SUNGARD (R)
DATA SYSTEMS INC.
Yes, I would like to be on your stockholders mailing list to receive 1998
quarterly earnings information.
Name ___________________________________________________________________________
Address ________________________________________________________________________
City, State, Zip _______________________________________________________________
(Please print clearly)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[Please affix Postage]
SunGard Data Systems Inc.
Investor Relations
1285 Drummers Lane - Suite 300
Wayne, PA 19087-1586
- --------------------------------------------------------------------------------
<PAGE>
SunGard(R) Data Systems Inc.
Form of Proxy for 1998 Annual Meeting
SunGard(R) Data Systems Inc.
1998 Annual Meeting of Stockholders--May 11, 1998
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 16, 1998, at the Company's 1998 Annual Meeting of Stockholders to be held
on May 11, 1998 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 an amendment to the
Company's Restated Certificate of Incorporation to increase the
number of authorized shares of common stock by 200,000,000.
PROPOSAL 3: [_] FOR [_] AGAINST [_] ABSTAIN the approval of the Company's 1998
Equity Incentive 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)
<PAGE>
(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 1997 Annual Report
to Stockholders, Notice of the Company's 1998 Annual Meeting of Stockholders,
and the Company's Proxy Statement dated March 31, 1998.
Date: , 1998
---------------------------
(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 1998 ANNUAL MEETING: [_]
