<PAGE> 1
COMDATA HOLDINGS CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 22, 1994
---------------------
The Annual Meeting of Stockholders of Comdata Holdings Corporation (the
"Company") will be held at the Company's corporate headquarters, 5301 Maryland
Way, Brentwood, Tennessee 37027 on June 22, 1994 at 10:30 a.m. for the following
purposes:
1. To elect nine directors to the Company's Board of Directors;
2. To consider and vote upon a proposal to amend the Company's Stock
Option and Restricted Stock Purchase Plan to increase the number of shares
of Common Stock reserved for issuance upon exercise of options or awards
granted thereunder;
3. To consider and vote upon a proposal to approve the selection of
independent auditors for the Company's fiscal year ending December 31,
1994;
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 6, 1994 as
the record date for determination of the stockholders of the Company entitled to
notice and to vote at the Annual Meeting of Stockholders. Each share of the
Company's Common Stock is entitled to one vote on all matters presented at the
Annual Meeting.
ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO ATTEND
THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN
PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
PETER D. VOYSEY
Secretary
May 20, 1994
<PAGE> 2
COMDATA HOLDINGS CORPORATION
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 22, 1994
---------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders of record of
Comdata Holdings Corporation (the "Company") as of May 6, 1994 in connection
with the solicitation by the Board of Directors of the Company of proxies for
the Annual Meeting of Stockholders to be held at the Company's Corporate
Headquarters, 5301 Maryland Way, Brentwood, Tennessee 37027 on June 22, 1994 at
10:30 a.m., or at any adjournments thereof, for the purposes stated in the
Notice of Annual Meeting. The approximate date of mailing of this Proxy
Statement and enclosed form of proxy to stockholders is May 20, 1994.
As of the close of business on May 6, 1994, the Company had outstanding
14,759,598 shares of Common Stock, $.01 par value ("Common Stock"), entitled to
vote. Each share of Common Stock is entitled to one vote on all matters
presented at the Annual Meeting.
If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof, at the pleasure of the
stockholder signing it, either by a written notice of revocation received by the
person or persons named in the proxy or by voting the shares covered thereby in
person or by another proxy dated subsequent to the date thereof.
Proxies in the accompanying form will be voted in accordance with the
instructions indicated thereon and, if no such instructions are indicated, will
be voted in favor of the nominees for election as directors named below and for
the other proposals referred to below.
The shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the nine nominees for the Board of
Directors named below. If any of such persons should be unable to serve, the
persons named in the enclosed proxy will vote such shares for such substitute
nominee or nominees as the Board of Directors may select. Stockholders may
withhold authority to vote for any nominee by entering the name of such nominee
in the space provided for such purpose on the proxy card.
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of
Directors consisting of between three and nine members. The Board of Directors
currently is comprised of nine directors. These nine directors have been
nominated for election at the Annual Meeting of Stockholders for terms of one
year each and until their respective successors are elected and qualified.
MEETINGS OF THE BOARD
The Board meets on a regular basis during the year to review significant
developments affecting the Company and to act on maters requiring Board
approval. It also holds special meetings when an important matter requires Board
action between scheduled meetings.
In 1993 there were five meetings of the Board. All of the directors
attended more than 75% of the meetings of the Board and of the Committees on
which they serve.
<PAGE> 3
COMPENSATION OF DIRECTORS
Directors who are not also employees of the Company receive compensation
consisting of an annual director's fee of $10,000 plus a fee of $1,000 and
reimbursement of expenses incurred for each Board meeting attended.
COMMITTEES OF THE BOARD
The Board has established three committees: the Audit Committee (Welsh,
O'Brien, Hanson and Haberman), the Compensation Committee (Anderson, McTavish
and Welsh), and the Operating Committee (all directors).
The duties of the Audit Committee are (a) to review with the Company's
independent accountants and with the Chief Financial Officer the proposed scope
of the annual audit, past audit experience, the Company's internal audit
program, recently completed audits and other matters bearing upon the scope of
the audit; (b) to review with the independent accountants and with the Chief
Financial Officer significant matters revealed in the course of the audit of the
annual financial statements of the Company; (c) to review with the Chief
Financial Officer any suggestions and recommendations of the independent
accountants concerning the internal control standards and accounting procedures
of the Company; (d) to meet on a regular basis with a representative or
representatives of the Internal Audit function of the Company and to review the
Internal Audit function's Reports of Operations; and (e) to report its
activities and actions to the Board at least once each fiscal year.
The duties of the Compensation Committee include: (a) administration of the
Company's stock option plans; (b) adoption and review of major compensation
plans; and (c) approval and recommendation to the Board of compensation for
certain Executive Officers of the Company.
The Operating Committee reviews the financial performance of the Company's
businesses and discusses current issues respecting competitive, operating,
regulatory and other developments affecting the Company.
During calendar year 1993 the committees of the Board held a total of nine
meetings: the Audit Committee met two times, the Compensation Committee met two
times and the Operating Committee met five times.
DIRECTOR NOMINEES
Following are the nominees for election as Directors of the Company:
<TABLE>
<CAPTION>
SERVED AS
PRINCIPAL DIRECTOR
NAME OCCUPATION SINCE
- - - ----------------------------- ------------------------------------------------------ ---------
<S> <C> <C>
Bruce K. Anderson General partner of sole general partner of Welsh, 1987
Carson, Anderson & Stowe IV, a New York investment
firm engaged in venture capital and leveraged buyout
investing.
Patrick J. Welsh General partner of sole general partner of Welsh, 1987
Carson, Anderson & Stowe IV, a New York investment
firm engaged in venture capital and leveraged buyout
investing.
George L. McTavish Chairman and Chief Executive Officer of the Company 1987
Dana J. O'Brien Vice President of Prudential Equity Investors, Inc. 1990
Louis P. Buglioli President of Benton International, Inc. 1991
Stephen E. Raville President of First Southeastern Corp. 1991
Edward A. Barbieri President and Chief Operating Officer of the Company 1992
Dennis R. Hanson Executive Vice President and Chief Financial Officer 1992
of the Company
Phyllis Haberman Vice President of Charterhouse Group International, 1993
Inc.
</TABLE>
2
<PAGE> 4
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to each of the nominees
for the office of director and each other executive officer of the Company:
NOMINEES
Bruce K. Anderson, age 54, who was Chairman of the Board of Directors of
the Company since it was acquired by Holdings in March 1987 through March 1992,
has been a general partner of the sole general partner of Welsh, Carson,
Anderson & Stowe IV, a New York limited partnership ("WCAS IV"), since it was
formed in 1985 and of the sole general partner of WCAS Venture Partners, a New
York limited partnership ("Venture Partners"), since it was formed in 1986 and
of the sole general partner of WCAS Capital Partners, L.P., a Delaware limited
partnership ("Capital Partners"), since it was formed in 1987. WCAS IV, Venture
Partners and Capital Partners are major stockholders of the Company and are
investment partnerships engaged in venture capital and leveraged buyout
investing. Mr. Anderson has been a general partner of the sole general partners
of associated limited partnerships since 1979. Mr. Anderson is also general
partner of the sole general partner of WCAS V, WCAS VI and WCAS Information
Partners. Prior to 1979, Mr. Anderson was Executive Vice President and a
director of Automatic Data Processing, Inc., a data processing company. Mr.
Anderson also serves as director of The Continuum Company, Inc., FIserv, Inc.,
Genicom Corporation, Broadway & Seymour, Inc., American Residential Mortgage
Corp. and several privately-held companies.
Patrick J. Welsh, age 50, who has been a Director of the Company since it
was acquired by Holdings in March 1987, has been a general partner of the sole
general partner of each of WCAS IV, Venture Partners and Capital Partners since
their formation. Mr. Welsh has been a general partner of the sole general
partner of associated limited partnerships since 1979. Prior to 1979, Mr. Welsh
was President and a director of Citicorp Venture Capital, Ltd., an affiliate of
Citicorp engaged in venture capital investing. Mr. Welsh serves as a director of
The Continuum Company, Inc., Syntellect, Inc., Pharmaceutical Marketing
Services, Inc. and several privately-held companies.
George L. McTavish, age 52, was elected to the Board of Directors of
Holdings in November 1987. From November 1987 through March 1992, he served as
President and Chief Executive Officer of Holdings and as Chief Executive Officer
of the Company. In March 1992, Mr. McTavish was elected to the office of
Chairman of the Board of Directors of each of the Company and Holdings. From
September 1984 to July 1987, Mr. McTavish was Chairman and Chief Executive
Officer of Hogan Systems, Inc., a provider of computer software products to the
banking industry based in Dallas, Texas. Prior thereto, Mr. McTavish was
Executive Vice President and Chief Operating Officer of SEI Corporation, also a
provider of computer software products to the banking industry, based in Wayne,
Pennsylvania.
Dana J. O'Brien, age 38, was elected to the Board of Directors of Holdings
and the Company in April 1990. He is Vice President of Prudential Equity
Investors, Inc. ("PVP"), an investment firm engaged in venture capital and
leveraged buyout investing. He has been employed by PVP or its affiliates since
1982. Prior thereto, he was employed in the National Banking Division of Morgan
Guaranty Trust Company. Mr. O'Brien was nominated to serve on the Board of
Directors of the Company and Network by PVP. Subject to certain conditions, the
Company has agreed to use its best efforts to nominate and use its best efforts
to cause to be elected to the Board of Directors of the Company and Network one
individual nominated by PVP. Mr. O'Brien also serves as a director of several
privately-held companies.
Louis P. Buglioli, age 45, was elected to the Board of Directors of
Holdings and the Company in June 1991. Mr. Buglioli has been President of Benton
International, Inc., a management consulting firm in the financial and payment
systems industry, since 1986. From 1983 to 1985, he was President and Chief
Operating Officer and a director of Telecredit, Inc., a company engaged
primarily in the third-party processing of credit card, check authorization and
point-of-sale debit card transactions. Prior thereto, he served as Senior Vice
President of Crocker National Bank.
3
<PAGE> 5
Stephen E. Raville, age 47, was elected to the Board of Directors of
Holdings and the Company in September 1991. Mr. Raville is President of First
Southeastern Corp. in Atlanta, Georgia. From 1985 until December 1992, he was
Chairman and Chief Executive Officer of ATC. Mr. Raville has also served as a
director of ATC, First Union National Bank of Georgia and Wellington Leisure
Products, Inc. Mr. Raville's election as a Director of the Company occurred when
ATC purchased shares of Preferred Stock of Holdings and entered into a
Telecommunications Services Agreement with the Company, pursuant to which ATC
provides long distance telecommunications services.
Edward A. Barbieri, age 52, was elected President and Chief Operating
Officer of the Company and Holdings in March 1992. Prior to joining the Company,
Mr. Barbieri held various positions with TRW, Inc. ("TRW") from 1977, and most
recently served as Vice President and General Manager of TRW's National Accounts
Division, Information Systems and Services. Mr. Barbieri was elected to the
Board of Directors of the Company and of Holdings in June 1992.
Dennis R. Hanson, age 48, was elected Executive Vice President and Chief
Financial Officer of the Company and Holdings in March 1992. Before joining
Comdata, Mr. Hanson held various positions with NationsBank (formerly C&S/Sovran
Corporation) in Norfolk, Virginia, or its predecessors, from 1981, most recently
as Group Executive Vice President. Mr. Hanson was elected to the Board of
Directors of the Company and of Holdings in June 1992.
Phyllis Haberman, age 45, was elected a Director of Holdings in January
1993. Ms. Haberman is Vice President of Charterhouse Group International, Inc.
("Charterhouse"), a privately-owned investment banking firm making equity
investments in a broad range of U.S. companies. Ms. Haberman joined Charterhouse
in September 1985 and was promoted to her present position in August 1988. Ms.
Haberman also serves as a director of Wundies Industries, Inc. Ms. Haberman was
nominated to serve on the Board of Directors of Holdings by Charterhouse.
Subject to certain conditions, Holdings has agreed to nominate and use its best
efforts to cause to be elected to the Board of Directors one individual
nominated by Charterhouse.
EXECUTIVE OFFICERS
In addition to Messrs. McTavish, Barbieri and Hanson, the following
individuals are executive officers of the Company:
Henry P. Cincere, age 43, was named a Senior Vice President of Holdings in
February 1991. Prior thereto, he served as a Vice President of Holdings
beginning in June 1989. Mr. Cincere has been employed by Comdata since March
1984 and has served in various other positions including President of the
Network Services Division since January 1993, in which capacity he continues to
serve, and President of the Transportation Services Division from February 1991
to January 1993. Prior to joining the Company, Mr. Cincere was General Manager
of Triangle Fleet Service, Inc., a subsidiary of North American Van Lines, Inc.,
from March 1983 until March 1984.
Michael Czwornog, age 41, was named Senior Vice President and General
Manager of Network's Retail Services Division in January 1993, and was elected a
Senior Vice President of the Company in June 1993. From September 1990 to
September 1992, Mr. Czwornog was employed by TeleCheck Services, Inc., a leading
national provider of check guarantee and collection services, most recently as
President and Chief Executive Officer. TeleCheck was previously a wholly-owned
subsidiary of McDonnell Douglas Corporation, where Mr. Czwornog had been
employed since 1980.
Charles P. Harris, age 49, joined the Company in January 1992 as Senior
Vice President of Sales for Network's Transportation Services Division. He was
named Senior Vice President and General Manager of the Transportation Services
Division in January 1993 and was elected a Senior Vice President of the Company
in June 1993. Prior to joining Comdata, Mr. Harris was employed by Diebold
Incorporated for 17 years, most recently as Corporate Vice President, United
States Sales Group.
Peter D. Voysey, age 49, was elected Vice President, General Counsel and
Secretary of Holdings and the Company in May 1992. Mr. Voysey was most recently
General Counsel and Corporate Secretary for Citicorp Services Inc., a Citicorp
affiliate engaged in worldwide funds transfer and payment systems. Prior to
joining
4
<PAGE> 6
Citicorp in 1980, Mr. Voysey served as Group Legal Counsel for Emhart
Corporation from 1976 to 1980, and as an Associate Attorney for Winston & Strawn
from 1971 to 1976.
COMPLIANCE WITH REPORTING REQUIREMENTS OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of a registered class of
the Company's securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "SEC").
Based solely on a review of copies of reports filed with the SEC, the
Company believes that all persons subject to the reporting requirements pursuant
to Section 16(a) filed the required reports on a timely basis with the SEC.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 15, 1994 certain information
with respect to the shares of Common Stock of the Company beneficially owned by
stockholders known to the Company to own beneficially more than 5% of the shares
of such class and the shares of Common Stock beneficially owned by the Company's
directors and Named Executive Officers and by all of its executive officers and
directors as a group. The shares listed below and the percentage of ownership
for each person named below have been calculated assuming that all outstanding
shares of preferred Stock have been converted into shares of Common Stock and
that all exercisable options and options becoming exercisable within 60 days
from March 15, 1994 that have been issued pursuant to the Comdata Holdings
Corporation Stock Option and Restricted Stock Purchase Plan, have been
exercised.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS(A) OWNED OF CLASS
- - - ------------------------------------------------------------------------------------ ------------- --------
<S> <C> <C>
Welsh, Carson, Anderson & Stowe IV(b)............................................... 2,889,840(c) 9.0%
One World Financial Center
200 Liberty Street, Suite 3601
New York, New York 10281
WCAS Venture Partners(b)............................................................ 75,000 .2%
One World Financial Center
200 Liberty Street, Suite 3601
New York, New York 10281
WCAS Capital Partners, L.P.(b)...................................................... 5,655,127(d) 17.7%
One World Financial Center
200 Liberty Street, Suite 10281
New York, New York 10281
New York Life Insurance Company..................................................... 2,530,958(e) 7.9%
51 Madison Avenue, Room 203
New York, New York 10010
New York Life Insurance and Annuity Corporation..................................... 2,530,958(f) 7.9%
51 Madison Avenue, Room 203
New York, New York 10010
Northwestern Mutual Life Insurance Company.......................................... 2,274,450(g) 7.1%
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Prudential Venture Partners II...................................................... 1,500,905(h) 4.7%
717 Fifth Avenue
New York, New York 10022
Advanced Telecommunications Corporation............................................. 1,822,020(i)(j) 5.7%
945 East Paces Ferry Road, Suite 2100
Atlanta, Georgia 30326
Charterhouse Equity Partners, L.P................................................... 3,848,966(k) 12.0%
535 Madison Avenue
New York, New York 10022
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS(A) OWNED OF CLASS
- - - ------------------------------------------------------------------------------------ ------------- --------
<S> <C> <C>
Bruce K. Anderson(b)................................................................ 8,668,209(c)(d)(l) 27.1%
Patrick J. Welsh(b)................................................................. 8,668,209(c)(d)(m) 27.1%
Dana J. O'Brien(n).................................................................. 1,500,905(n) 4.7%
Louis P. Buglioli................................................................... -- --
Phyllis Haberman(o)................................................................. 3,848,966(k) 12.0%
Stephen E. Raville.................................................................. -- --
George L. McTavish.................................................................. 283,334 .9%
Edward A. Barbieri.................................................................. 28,334 .1%
Dennis R. Hanson.................................................................... 25,000 .1%
Henry P. Cincere.................................................................... 30,840 .1%
Charles P. Harris................................................................... 1,667 *
All directors and executive officers as a group (13 persons)(p)..................... 475,659 1.5%
</TABLE>
- - - ---------------
* Less than 0.1%
<TABLE>
<S> <C>
(a) Except as otherwise noted below, the persons named in the table have sole voting powers and investment power
with respect to all shares set forth in the table.
(b) Messrs. Anderson and Welsh, Directors of Holdings, may be deemed to own beneficially the shares of Common
Stock owned by WCAS IV, Venture Partners and Capital Partners because they are general partners of the sole
partner of each of WCAS IV, Venture Partners and Capital Partners. The shares listed opposite the names of
Messrs. Anderson and Welsh include shares owned or, upon conversion of shares of Preferred Stock, will be
owned, by WCAS IV, Venture Partners and Capital Partners, respectively.
(c) Includes the shares of Common Stock issuable upon conversion of the 12,525 shares of Series C Convertible
Preferred Stock owned by WCAS IV and accrued dividends thereon through March 15, 1994.
(d) Includes the shares of Common Stock issuable upon conversion of 254,999 shares of Series B Convertible
Preferred Stock owned by Capital Partners and accrued dividends thereon through March 15, 1994.
(e) Includes the shares of Common Stock issuable upon conversion of the 96,901 shares of Series B Convertible
Preferred Stock owned by New York Life Insurance Company and accrued dividends thereon through March 15, 1994.
New York Life Insurance Company controls New York Life Insurance and Annuity Corporation and may be deemed to
own beneficially the securities held by it.
(f) Includes the shares of Common Stock issuable upon conversion of the 96,901 shares of Series B Convertible
Preferred Stock owned by New York Life Insurance and Annuity Corporation and accrued dividends thereon through
March 15, 1994.
(g) Includes the shares of Common Stock issuable upon conversion of the 103,024 shares of Series B Convertible
Preferred Stock owned by Northwestern Mutual Life Insurance Company and accrued dividends thereon through
March 15, 1994.
(h) Includes the shares of Common Stock issuable upon conversion of the 20,200 shares of Series C Convertible
Preferred Stock owned by PVP and accrued dividends thereon through March 15, 1994.
(i) Includes the shares of Common Stock issuable upon conversion of the 666,086 shares of Series A Convertible
Preferred Stock owned by ATC as of March 15, 1994.
(j) Includes the shares of Common Stock issuable upon conversion of the 7,500 shares of Series C Convertible
Preferred Stock owned by ATC and accrued dividends thereon through March 15, 1994.
(k) Includes the shares of Common Stock issuable upon conversion of the 199,462 shares of Series C Convertible
Preferred Stock owned by Charterhouse and accrued dividends thereon through March 15, 1994.
(l) Includes the shares of Common Stock issuable upon conversion of 2,500 shares of Series C Convertible Preferred
Stock owned by Mr. Anderson and accrued dividends thereon through March 15, 1994.
(m) Includes the shares of Common Stock issuable upon conversion of 2,500 shares of Series C Convertible Preferred
Stock owned by Mr. Welsh and accrued dividends thereon through March 15, 1994.
(n) Mr. O'Brien may be deemed to own beneficially the shares of Common Stock owned by or issuable to PVP because
he is a Vice President of the sole general partner of PVP. The shares listed opposite Mr. O'Brien's name are
owned by or issuable to PVP.
(o) Ms. Haberman may be deemed to own beneficially the shares of Common Stock issuable to Charterhouse, because
Ms. Haberman is a Vice President of Charterhouse.
(p) The shares beneficially owned by WCAS IV, Venture Partners, Capital Partners, PVP and Charterhouse, which are
deemed to be beneficially owned by Messrs. Anderson, Welsh, O'Brien, and Ms. Haberman, respectively, are not
included in shares owned by all directors and executive officers as a group.
</TABLE>
6
<PAGE> 8
COMPENSATION AND BENEFITS
The Company's compensation and benefits programs are designed to help the
Company attract, motivate and retain highly qualified individuals to operate and
manage the Company.
In general, all U.S. based employees receive a base salary, are eligible
for a Company supported 401(k) Plan after one year of service and are provided
with medical and other welfare benefit coverages. Canada based employees receive
a base salary, the health and welfare benefits provided by the Canadian
government's national health care program and certain supplemental health and
welfare coverages provided by Comdata.
In addition, the Company maintains specific executive compensation programs
designed to provide incentives for, to reward, and to retain outstanding
executives who bear the responsibility for achieving the demanding business
objectives necessary to ensure the Company's leadership position in its
businesses. The executive compensation programs are based upon a
pay-for-performance philosophy to provide incentives to achieve both short-term
and long-term objectives and to reward exceptional performance, gains in
productivity and contributions to the Company's growth and success.
EXECUTIVE OFFICER COMPENSATION
The following Table summarizes the compensation paid or accrued by the
Company during the three years ended December 31, 1993 to those persons who, as
of December 31, 1993, were the Company's Chief Executive Officer and the four
most highly compensated Executive Officers other than the Chief Executive
Officer (collectively the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-----------
ANNUAL COMPENSATION SECURITIES
--------------------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS(18) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- - - ---------------------------------------- ---- -------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C>
George L. McTavish...................... 1993 $325,000 -- 94,667(15) $ 4,814(1)
Chairman and Chief 1992 325,000 $95,566 -- 3,985(2)
Executive Officer, Director 1991 275,000 -- -- (3)
Edward A. Barbieri...................... 1993 254,687(6) -- 87,334(13) 5,294(4)
President and Chief Operating Officer, 1992 194,231 74,125 133,333 100,750(5)
Director 1991 -- -- --
Dennis R. Hanson........................ 1993 203,750(6) -- 53,000(14) 11,097(7)
Executive Vice President and Chief 1992 151,538 51,875 100,000 55,720(8)
Financial Officer, Director 1991 -- -- --
Henry P. Cincere........................ 1993 167,785 -- 21,668(16) 3,215(9)
Senior Vice President 1992 165,000 54,331 -- 2,736(10)
1991 148,625 -- 16,667 (3)
Charles P. Harris....................... 1993 132,000 -- 33,834(17) 35,052(11)
Senior Vice President 1992 120,000 18,000 -- 40,382(12)
1991 -- -- 16,667 --
</TABLE>
- - - ---------------
(1) Amount includes $3,086 for contributions by the Company to a 401(k) Plan
and $1,728 for term life insurance premiums paid by the Company.
(2) Amount includes $2,257 for contributions by the Company to a 401(k) Plan
and $1,728 for term life insurance premiums paid by the Company.
(3) Other compensation is not required to be disclosed for this period.
(4) Amount includes $3,566 for contributions by the Company to a 401(k) Plan
and $1,728 for term life insurance premiums paid by the Company.
7
<PAGE> 9
(5) Amount includes $78,534 of relocation cost reimbursements, $20,920 of
reimbursement for related income taxes, and $1,296 for term life insurance
premiums paid by the Company.
(6) This executive was not employed by the Company prior to 1992.
(7) Amount includes $6,701 of relocation cost reimbursements, $803 of
reimbursement for related income taxes, $2,549 for contributions by the
Company to a 401(k) Plan, and $1,044 for term life insurance premiums paid
by the Company.
(8) Amount includes $42,565 of relocation cost reimbursements, $12,372 of
reimbursement for related income taxes, and $783 for term life insurance
premiums paid by the Company.
(9) Amount includes $2,632 for contributions by the Company to a 401(k) Plan
and $583 for term life insurance premiums paid by the Company.
(10) Amount includes $2,175 for contributions by the Company to a 401(k) Plan
$561 for term life insurance premiums paid by the Company.
(11) Amount includes $25,008 of relocation cost reimbursements, $6,724 of
reimbursement for related income taxes, $2,575 for contributions by the
Company to a 401(k) Plan, and $745 for term life insurance premiums paid by
the Company.
(12) Amount includes $29,114 of relocation cost reimbursements, $10,607 of
reimbursement for related income taxes, and $661 for term insurance
premiums paid by the Company.
(13) Amounts granted in 1993 include the repricing of 83,334 options previously
granted.
(14) Amounts granted in 1993 include the repricing of 50,000 options previously
granted.
(15) Amounts granted in 1993 include the repricing of 66,667 options previously
granted.
(16) Amounts granted in 1993 include the repricing of 16,668 options previously
granted.
(17) Amounts granted in 1993 include the repricing of 16,667 options previously
granted.
(18) Amounts with respect to options have been adjusted to reflect a 1-for-3
reverse split effective November 16, 1993.
OPTION GRANTS
Shown below is information concerning stock option grants to the Named
Executive Officers who were granted stock options during the 1993 Fiscal Year.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(4)
- - - --------------------------------------------------------------------------------------------------- -----------------------
NUMBER OF
SECURITIES % OF TOTAL MARKET
UNDERLYING OPTIONS EXERCISE PRICE ON
OPTIONS GRANTED TO OR BASE DATE OF
GRANTED EMPLOYEES PRICE GRANT EXPIRATION
NAME(1) (#) IN 1993 ($/SHARE) ($/SHARE) DATE 5% ($) 10% ($)
- - - ----------------------------- ---------- ---------- --------- -------- ----------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
George L. McTavish........... 66,667(2) 7.8% $8.25 $ 8.25 July 26, 1999 $187,334 $ 424,669
28,000(3) 3.3% 8.25 8.25 August 3, 2003 145,320 368,200
Edward A. Barbieri........... 83,334(2) 9.7% 8.25 8.25 March 23, 2002 415,837 1,045,842
4,000(3) 0.5% 8.25 8.25 August 3, 2003 20,760 52,600
Dennis R. Hanson............. 50,000(2) 5.8% 8.25 8.25 March 30, 2002 249,500 627,500
3,000(3) 0.4% 8.25 8.25 August 3, 2003 15,570 39,450
Henry P. Cincere............. 8,334(2) 1.0% 8.25 8.25 February 26, 2001 30,836 73,089
8,334(2) 1.0% 8.25 8.25 January 1, 2001 29,919 70,422
5,000(3) 0.6% 8.25 8.25 August 3, 2003 25,950 65,750
Charles P. Harris............ 17,167(3) 2.0% 8.25 8.25 August 3, 2003 89,097 225,746
16,667(2) 1.9% 8.25 8.25 December 19, 2001 68,668 165,837
</TABLE>
- - - ---------------
(1) All share and price data has been adjusted to reflect a 1 for 3 reverse
stock split effective November 16, 1993.
(2) Represents options repriced on August 3, 1993.
8
<PAGE> 10
(3) Represents options granted on August 3, 1993 that vest over a five year
period at the rate of 20% per year.
(4) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's Common Stock price.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to exercises by the Named Executive
Officers during the 1993 Fiscal Year of options to purchase Common Stock
pursuant to the Company's stock option plans and information with respect to
unexercised options to purchase Common Stock held by the Named Executive
Officers as of the end of the 1993 Fiscal Year.
AGGREGATED OPTION EXERCISES IN 1993
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED DECEMBER 31, DECEMBER 31,
ON VALUE 1993 1993
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE(1)
- - - ------------------------------------------------- -------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
George L. McTavish............................... -- -- 160,001 $266,668
68,000 --
Edward A. Barbieri............................... -- -- 18,334 20,000
119,000 80,000
Dennis R. Hanson................................. -- -- 15,000 20,000
88,000 80,000
Henry P. Cincere................................. -- -- 30,001 53,334
18,334 --
Charles P. Harris................................ -- -- 1,667 --
32,167 --
</TABLE>
- - - ---------------
(1) This amount represents the aggregate of the number of options multiplied by
the difference between the closing price of the Common Stock on the NASDAQ
National Market on December 31, 1993 and the exercise price for that
option.
The Company has not awarded stock appreciation rights to any employee and
has no long-term incentive plans, as that term is defined in SEC regulations.
The Company has a stock option plan. The Company presently has no defined
benefit or actuarial plans covering any employees of the Company.
BOARD REPORT ON REPRICING OF OPTIONS
During 1993, the Company repriced stock options issued under the Plan in
order to reinstate the incentive value of these options. Due to declines in the
market value of the Common Stock, outstanding options were exercisable at prices
ranging from $2 to $6.13 per share, which, in most instances, substantially
exceeded the then-current market value of the Common Stock. On August 3, 1993,
the Board of Directors approved the repricing, on a voluntary basis, of all
options granted to current employees prior to that date, to a price of $2.75 per
share (the fair market value of the Common Stock on that date. Adjusted for the
subsequent 1-for-3 reverse split, the price was $8.25 per share). A total of
1,898,500 options were repriced to 62 option holders. (Adjusted for the reverse
split, 632,833 options were repriced.) The repriced options are exercisable and
vest according to the same vesting schedule as the options that they replaced.
(Previously vested options for which repricing was elected by the holder were
made subject to an additional vesting period.) This repricing was intended as an
incentive for Executive Officers and other employees to stimulate the active
interest of such persons in the development and financial success of the
Company.
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<PAGE> 11
The following table summarizes this repricing with respect to options held
by the Named Executive Officers. All such information has been adjusted to
reflect a 1-for-3 reverse stock split effective November 16, 1993.
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
MARKET PRICE EXERCISE OPTION TERM
NUMBER OF OF STOCK AT PRICE AT NEW REMAINING AT
OPTIONS TIME OF TIME OF EXERCISE DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING
- - - ---------------------------- --------------- --------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
George L. McTavish.......... August 3, 1993 66,667 $ 8.25 $12.00 $ 8.25 6 Years
Edward A. Barbieri.......... August 3, 1993 83,334 8.25 10.50 8.25 9.7 Years
Dennis R. Hanson............ August 3, 1993 50,000 8.25 11.25 8.25 9.7 Years
Henry P. Cincere............ August 3, 1993 8,334 8.25 10.50 8.25 7.6 Years
8,334 8.25 10.13 8.25 7.4 Years
Charles P. Harris........... August 3, 1993 16,667 8.25 9.19 8.25 8.3 Years
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for administering the Company's
compensation program for executive officers. The Committee is composed of
outside directors plus the Chairman and Chief Executive Officer; however, the
Chairman does not participate in the determination of his own compensation.
The Company's executive compensation program includes three elements: base
salary, annual incentive (bonus) awards and long-term incentives in the form of
stock option grants.
The Company has no defined benefit retirement plan, no supplemental
executive retirement plan and no long-term incentive plan other than stock
options.
Compensation is determined based upon the following guiding principles:
- Compensation should be competitive with the marketplace, so that
quality personnel can be attracted and retained.
- Compensation should promote the Company's objective of increasing
stockholder value.
- Compensation determinations should be influenced by individual
performance against objectives and the individual's level of
responsibility.
- The financial cost of increases in compensation must be affordable
based upon the Company's operating results.
In 1993, section 162(m) was added to the Internal Revenue Code pursuant to
the Omnibus Budget Reconciliation Act of 1993. This section generally limits the
corporate deduction for compensation paid to the Company's chief executive
officer and each of the four other highest paid executive officers to $1 million
per year unless certain requirements are met. The provisions of this section did
not apply to executive compensation discussed in this report for 1993 and prior
years, and the Company had no policy on qualifying executive compensation for
deductibility under that section during the applicable time periods. Because the
Company's policy is to increase earnings and stockholder value, in the future
compensation awards will be structured to maximize the Company's federal tax
deduction for executive compensation above the threshold level.
Compensation of Executives -- General. An executive's base salary is
determined based upon an assessment of his or her individual performance,
experience and ability. Periodically, the Company retains outside experts to
review the pay grades and salary ranges in effect throughout the Company,
including executive compensation. The most recent such outside review was
conducted in January 1993.
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<PAGE> 12
Each year, the Board of Directors approves an operating income goal for the
Company. If at least 90% of this goal is attained, the Compensation Committee
and the Board may approve incentive (bonus) awards. For 1993, no awards were
approved because less than 90% of the applicable goal was attained.
The Company utilizes stock options in recognition of an employee's future
value to the Company. The Compensation Committee believes that stock options
have been and remain an excellent vehicle for compensating employees. Because
the option exercise price for the employee is the price of stock on the date of
grant, employees recognize a gain only if the value of the stock increases.
Thus, employees with stock options are rewarded for their efforts to improve
long-term stock market performance. In this way, the financial interests of
management are directly aligned with those of the Company's shareholders. Also,
share ownership gives employees a greater personal stake in the Company. Stock
options have been used to reward employees of the Company not just at the
officer level, but down to the junior officer level. As of year-end 1993, there
were 1,624,000 shares under option grants outstanding to 139 employees. The
option prices range from $6 to $15 per share, and vesting occurs ratably over a
five-year period following the date of grant.
When making decisions on executive compensation, the Committee reviews
individual and Company performance. When 1993-94 compensation decisions were
made, the Committee closely reviewed individual and Company performance against
objectives.
Compensation of Chief Executive Officer. Mr. McTavish's compensation
results from his participation in the same compensation program as the other
executives in the Company. His compensation is set by the Committee applying the
principles outlined above in the same manner as they were applied to the other
executives of the Company, and Mr. McTavish does not participate in any way in
the decisions affecting his own compensation.
Because the Company's executive compensation program rewards long-term
performance, the majority of Mr. McTavish's compensation is based upon incentive
(bonus) awards and stock option grants. In August 1993 Mr. McTavish received a
stock option grant for a total of 28,000 shares. Mr. McTavish did not receive a
bonus for 1993.
The Committee believes that the current executive compensation program with
an emphasis on long-term compensation, incents the Company's executives towards
the attainment of the growth and profitability desired for the Company and its
stockholders.
Compensation Committee
Bruce K. Anderson, Chairman
George L. McTavish
Patrick J. Welsh
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, the Board's Compensation Committee was composed of Bruce K.
Anderson, Patrick J. Welsh, and George L. McTavish. Mr. Anderson is a former
Chairman of the Board, and Mr. McTavish is the current Chairman and Chief
Executive Officer of the Company. Messrs. Welsh and Anderson are general
partners of the sole general partner of each of WCAS IV, Venture Partners and
Capital Partners, which are collectively the largest stockholder of the Company.
WCAS IV, Venture Partners and Capital Partners are affiliates of WCAS.
Pursuant to the terms of the Common Stock Purchase Agreement dated as of
March 1990 among the Company, WCAS IV and PVP, and subject to certain
conditions, the Company has agreed to use its best efforts to nominate and to
cause to be elected to the Board of Directors of the Company one individual
nominated by PVP. WCAS IV and Capital Partners have agreed, under certain
conditions, to vote their respective shares of Common Stock to cause such
nominee to be so elected. Mr. O'Brien is the nominee of PVP to the Board of
Directors of the Company.
11
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the performance of the Company for the periods
indicated with the performance of the Standard & Poor's 500 Stock Index (S&P
500) and the average performance of a group consisting of the Company's peer
corporations on a line-of-business basis. The corporations making up the peer
companies group are Automatic Data Processing Inc., CUC International Inc.,
Concord EFS, Inc., Equifax Inc., First Data Corp., First Financial Management
Corp., FIserv Inc., Policy Management Systems Corp. and Shared Medical Systems
Corp.
[Graph is filed under cover of Form SE.]
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Pursuant to the terms of the Common Stock Purchase Agreement dated as of
March 1990 among the Company, WCAS IV and PVP, and subject to certain
conditions, the Company has agreed to use its best efforts to nominate and to
cause to be elected to the Board of Directors of the Company one individual
nominated by PVP. WCAS IV and Capital Partners have agreed, under certain
conditions, to vote their respective shares of Common Stock to cause such
nominee to be so elected. Mr. O'Brien is the nominee of PVP to the Board of
Directors of the Company.
In September and October 1991, ATC purchased an aggregate 560,000 shares of
Series A Preferred Stock at a price per share of $25 or an aggregate purchase
price of $14.0 million. Concurrently with the purchase of the Series A Preferred
Stock by ATC, Comdata Network entered into a Services Agreement with ATC
pursuant to which ATC provides long distance telecommunications services to
Comdata Network and its affiliates. This agreement expires on January 22, 1999
and provides that Comdata Network will purchase a
12
<PAGE> 14
minimum $7.75 million of service for each year after the first year. As of March
15, 1994, ATC held approximately 5.7% of the outstanding Common Stock (on a
fully diluted basis).
Commencing in the fourth quarter of 1991, Benton International, Inc.
("Benton") has rendered certain consulting services to Comdata Network. During
1993, Comdata Network paid $33,000 to Benton in connection with such services.
Louis P. Buglioli, a director of the Company and Comdata Network, is President
of Benton.
During 1993, the Company purchased data processing equipment and computer
software at a cost of approximately $3,326,000 from an affiliate of a
significant stockholder of the Company on an arm's length basis.
The transactions with PVP and ATC described above were negotiated on an
arm's-length basis at a time when such parties were not affiliated with Comdata
Network. In the judgment of the Board of Directors, the terms of the other
transactions described above are fair and reasonable and are not less favorable
than those that could have been obtained from independent third parties.
AMENDMENT OF STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN
At the Annual Meeting, the stockholders will be asked to approve an
amendment (the "Amendment") to the Company's Stock Option and Restricted Stock
Purchase Plan (the "Plan") to increase the number of shares of the Company's
Common Stock available for the grant of options and rights to purchase Common
Stock under the Plan from 2,000,000 shares to 2,750,000 shares. The Amendment
was approved by the unanimous vote of the Board of Directors at its meeting held
on April 26, 1994. Adoption of the Amendment is subject to stockholder approval.
The primary features of the Amendment and of the Plan are summarized below.
A copy of the Plan is available upon a stockholder's written request to the
Company, 5301 Maryland Way, Brentwood, Tennessee 37027, Attention: Peter D.
Voysey.
Description of Amendment
The Plan was approved in September 1987 and subsequently amended in May
1989 and October 1993. The Plan provides an opportunity for employees, officers
and directors of the Company or any of its subsidiaries to purchase Common
Stock. By encouraging such stock ownership, the Company seeks to attract, retain
and motivate such employees and persons and to encourage such employees and
persons to devote their best efforts to the business and financial success of
the Company.
The Plan provides for the granting of "non-qualified stock options" and
"incentive stock options" to acquire Common Stock and/or the granting of rights
to purchase Common Stock on a "restricted stock" basis. The terms and conditions
of individual option agreements may vary, subject to the following guidelines:
(i) the option price of incentive stock options may not be less than market
value on the date of grant; the option price of non-qualified stock options may
be less than market value on the date of grant, (ii) the term of all incentive
stock options may not exceed ten years from the date of grant; the term of all
non-qualified stock options may exceed ten years, and (iii) no options may be
granted after September 9, 1997. If the proposed amendment is approved by the
stockholders, the Company will seek to register the additional shares reserved
under the Plan under the Securities Act of 1933, as soon as practicable.
The Plan is administered by a committee of the Board of Directors. The
committee recommends: (i) which directors, officers and employees of the Company
and its subsidiaries shall be granted an option or the right (each, an "Award")
to purchase Common Stock under the Plan; (ii) the number of shares subject to
each such Award; (iii) the amount to be paid by a grantee upon exercise of an
Award; (iv) the time or times and the conditions subject to which Awards may be
made and become exercisable; and (v) the form of consideration that may be used
to pay for shares issued upon exercise of such Award. The committee is
responsible for questions involving the administration and interpretation of the
Plan. The committee recommends when Awards granted under the Plan become
exercisable.
13
<PAGE> 15
The Board of Directors has the authority to amend the Plan at any time,
provided that stockholder approval is required (i) to increase the aggregate
number of shares of Common Stock as to which Awards may be granted (except for
increases due to certain adjustments), (ii) to decrease the minimum exercise
price specified by the Plan in respect of incentive stock options or (iii) to
change the class of employees eligible to receive stock options under the Plan.
The Board of Directors may terminate the plan at any time. The Plan will
terminate on, and Awards may not be granted after, September 9, 1997, unless
terminated by the Board of Directors prior thereto. The termination of the Plan
will not alter or impair any rights or obligations under any Award previously
granted under the Plan.
As of April 20, 1994, options to purchase 1,521,273 shares of Common Stock
with exercise prices ranging from $6 to $15 have been granted under the Plan
with vesting dates ranging from September 1988 to August 1998. The average per
share exercise price of the outstanding options is approximately $8.25. At April
20, 1994, 391,552 of the options granted under the Plan had been exercised. No
shares of Common Stock have been purchased on a restricted stock basis under the
Plan since its inception.
The market value of the Company's Common Stock as of the close of business
on April 20, 1994 as reflected by the closing price of the Common Stock of the
NASDAQ National Market, was $8 per share.
Federal Income Tax Consequences
The consequences of incentive stock options, nonqualified options and
restricted stock options are quite complex. Therefore, the description of tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change, as
are their interpretations, and their application may vary in individual
circumstances. Finally, the tax consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.
Incentive stock options granted pursuant to the Plan are intended to
qualify as "Incentive Stock Options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). If an optionee makes no
disposition of the shares acquired pursuant to exercise of an incentive stock
option within one year after the transfer of shares to such optionee and within
two years from grant of the option, such optionee will realize no taxable income
as a result of the grant or exercise of such option; any gain or loss that is
subsequently realized may be treated as long-term capital gain or loss, as the
case may be. Under these circumstances, the Company will not be entitled to a
deduction for federal income tax purposes with respect to either the issuance of
such incentive stock options or the transfer of shares upon their exercise.
If shares subject to incentive stock options are disposed of prior to the
expiration of the above time periods, the optionee will recognize ordinary
income in the year in which the disqualifying disposition occurs, the amount of
which will generally be the lesser of (i) the excess of the market value of the
shares on the date of exercise over the option price, or (ii) the gain
recognized on such disposition. Such amount will ordinarily be deductible by the
Company for federal income tax purposes in the same year, provided that the
Company satisfies certain federal income tax withholding requirements. In
addition, the excess, if any, of the amount realized on a disqualifying
disposition over the market value of the shares on the date of exercise will be
treated as capital gain.
Non-qualified options may also be granted under the Plan. An optionee who
exercises a non-qualified option will recognize as taxable ordinary income, at
the time of exercise, an amount equal to the excess of the fair market value of
the shares on the date of exercise over the exercise price. Such amount will
ordinarily be deductible by the Company in the same year, provided that the
Company satisfies certain federal income tax withholding requirements that may
be applicable.
Restricted stock purchase awards may also be granted pursuant to the Plan.
A recipient of a restricted stock purchase award generally will not recognize
taxable income upon the purchase of shares of restricted stock, unless he or she
makes a timely election under Section 83(b) of the Code. Such a recipient,
however, would recognize ordinary income at the time that such shares become
vested in an amount equal to the excess of the fair market value of the shares
at that time over the purchase price paid for such shares. If, on the other
14
<PAGE> 16
hand, the recipient makes a timely election under Section 83(b), he or she would
recognize ordinary income equal to the excess of the fair market value of the
shares at the time of purchase (determined without regard to any transfer
restrictions imposed on the shares, the vesting provisions or any restrictions
imposed by the securities laws) over the purchase price paid for such shares. In
either case, the Company should be entitled to a deduction of an amount equal to
the amount of ordinary income recognized by the recipient in the same year that
the recipient recognized such ordinary income, provided that the Company
satisfies certain federal income tax withholding requirements that may be
applicable.
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
adopted in 1993 under the Omnibus Budget and Reconciliation Act, generally
limits the deduction allowed publicly-held companies for compensation paid to
certain executive officers of $1 million per annum for taxable years beginning
on or after January 1, 1994. Under this section, compensation may include the
value of restricted stock upon vesting, dividends on restricted stock, gain
realized on non-qualified stock options under certain circumstances and gain
realized on certain dispositions of stock acquired through the exercise of
incentive stock options. However, compensation payable under a written binding
contract in effect on February 17, 1993 is not affected by the deduction
limitation and performance-based compensation which meets the requirements
specified in Section 162(m) is not included in the $1 million limit. To the
extent that compensation paid under the Plan to the Chief Executive Officer or
any of the other Named Executive Officers (except such compensation which either
falls within the grandfather provisions of Section 162(m) or meets the criteria
for performance-based compensation) when aggregated with all other compensation
paid to any such Named Executive Officer exceeds $1 million per annum, the
Company will not be entitled to a deduction for federal income tax purposes.
Accounting Treatment
Under current accounting rules, option grants or issuances of restricted
stock at exercise or issue prices equal to the fair market value of the Common
Stock on the date of grant or issuance do not result in compensation expense to
the Company for financial reporting purposes. To the extent that exercise or
issue price is less than such fair market value, compensation expense arises
that must be amortized against the Company's earnings over the vesting period
applicable to the option grant or stock issuance. In addition, outstanding
options are taken into account in the calculation of earnings per share.
Should the new Financial Accounting Standards Board exposure draft on the
treatment of stock option grants become effective, all stock options granted
during the three-year phase-in period (which, under the current draft, would
begin retroactively at January 1, 1994) with an exercise price equal to the fair
market value of the Common Stock on the grant date would be subject to footnote
disclosure in the Company's financial statements. Such footnote would reflect
the reduction to the Company's reported earnings that would have arisen had the
fair market value of the shares subject to the option been recorded as
compensation expense. Options with a below-market exercise price would continue
to be treated in accordance with the current rules. If the exposure draft is
adopted in its current form, all stock options granted after January 1, 1997,
when the phase-in period would end, would result in a direct compensation
expense against the Company's reported earnings.
Vote Required for Approval
The amendment to the Plan will be submitted to stockholders for their
approval at the Annual Meeting. The proposal to adopt the amendment to the Plan
must be approved by the holders of a majority of the shares of Common Stock
present or represented and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO ADOPT THE
AMENDMENT TO THE PLAN.
15
<PAGE> 17
APPROVAL OF AUDITORS
The Board of Directors proposes that Arthur Andersen & Co. serve as
independent auditors for the Company for the fiscal year ending December 31,
1994, subject to approval by the stockholders. Arthur Andersen & Co. has served
as the Company's independent auditors since 1987.
Representatives of Arthur Andersen & Co. are expected to be present at the
Annual Meeting. Such representatives will have the opportunity to make a
statement if they desire to do so, and they will be available to respond to
appropriate questions.
The Company's Board of Directors is seeking stockholder approval of its
independent auditors in order to conform to the general practice of
publicly-held corporations. In the event of a negative vote, which the Board
does not anticipate, the Company would be willing to reassess its relationship
with its auditors in light of the reasons underlying any such vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE SELECTED INDEPENDENT AUDITORS.
GENERAL
OTHER MATTERS
The Board of Directors does not know of any matters that are to be
presented at the Annual Meeting other than those stated in the Notice of Annual
Meeting and referred to in this Proxy Statement. If any other matters should
properly come before the meeting, it is intended that the proxies in the
accompanying form will be voted in accordance with the judgement of the persons
voting such proxies.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. Arrangements have also been made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of stock held of record by such persons, and
the Company may reimburse them for reasonable out-of-pocket expenses incurred by
them in connection therewith.
Each holder of the Company's Common Stock who does not expect to be present
at the Annual Meeting or who plans to attend but who does not wish to vote in
person is urged to fill in, date and sign the proxy and return it promptly in
the enclosed return envelope.
TABULATION OF VOTES
Directors will be elected by a favorable vote of a plurality of the shares
of Common Stock present or represented by proxy at the Annual Meeting.
Accordingly, votes "withheld" from director-nominees will not count against the
election of such nominees. Passage of the proposal to amend the Company's Stock
Option and Restricted Stock Purchase Plan requires the affirmative vote of a
majority of the shares present or represented at the Annual Meeting. Abstentions
and broker non-votes as to this proposal will be included in calculating the
number of votes required for approval and will have the same effect as votes
"against" the proposal. Passage of the proposal to approve the appointment of
Arthur Andersen & Co. as independent auditors for 1994 requires the approval of
a majority of the votes cast on the proposal. Abstentions as to this proposal
will not count as either votes "for" or "against" the proposal, and will not be
included in calculating the number of votes necessary for approval. Brokers will
have discretionary authority, in the absence of instructions from their
customers, to vote on the election of directors and the approval of the
appointment of auditors, but may not have discretionary authority to vote on the
proposal to amend the Stock Option and Restricted Stock Purchase Plan.
16
<PAGE> 18
STOCKHOLDER PROPOSALS
If any stockholder of the Company intends to present a proposal for
consideration at the 1995 Annual Meeting of Stockholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposals must be
received at the Company's principal executive offices, 5301 Maryland Way,
Brentwood, Tennessee 37027, Attention: Corporate Secretary, not later than
January 21, 1995.
ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1993 WAS FILED ELECTRONICALLY BY THE COMPANY WITH THE SECURITIES AND
EXCHANGE COMMISSION. A HARD COPY VERSION OF THAT REPORT WILL BE FURNISHED
WITHOUT CHARGE TO ANY PERSON REQUESTING THE SAME IN WRITING AND STATING THAT
SUCH PERSON WAS A BENEFICIAL HOLDER OF SHARES OF COMMON STOCK OF THE COMPANY ON
THE RECORD DATE FOR THE ANNUAL MEETING OF STOCKHOLDERS. REQUESTS AND INQUIRIES
SHOULD BE ADDRESSED TO COMDATA HOLDINGS CORPORATION, 5301 MARYLAND WAY,
BRENTWOOD, TENNESSEE 37027, ATTENTION: CORPORATE SECRETARY.
By Order of the Board of Directors
PETER D. VOYSEY
Secretary
17
<PAGE> 19
COMDATA HOLDINGS CORPORATION
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, JUNE 22, 1994
The undersigned stockholder of COMDATA HOLDINGS CORPORATION, a Delaware
corporation, hereby appoints George L. McTavish, Edward A. Barbieri, Dennis R.
Hanson and Peter D. Voysey, or any of them voting singly in the absence of the
others, attorneys and proxies, with full power of substitution and revocation,
to vote, as designated below, all shares of Common Stock of Comdata Holdings
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of said Corporation to be held at the Company's corporate
headquarters, 5301 Maryland Way, Brentwood, Tennessee 37027, on June 22, 1994 at
10:30 a.m. (local time) or any adjournment thereof, in accordance with the
instructions on the reverse side.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
stockholder. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED "FOR" ALL NOMINEES
IN PROPOSAL NO. 1, "FOR" PROPOSAL NO. 2 AND "FOR" PROPOSAL NO. 3.
1. Election of the following Nominees as Directors:
Bruce K. Anderson, Patrick J. Welsh, George L. McTavish, Dana J. O'Brien,
Louis P. Buglioli, Stephen E. Raville, Edward A. Barbieri, Dennis R. Hanson
and Phyllis Haberman. To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below:
/ / FOR ALL NOMINEES / / WITHHOLD AUTHORITY to vote for all nominees
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY USING THE
ENCLOSED ENVELOPE.
2. The proposal to amend the Company's Stock Option and Restricted Stock
Purchase Plan to increase the number of shares of Common Stock reserved for
issuance upon exercise of options or awards granted thereunder.
/ / FOR / / AGAINST / / ABSTAIN
3. The proposal to approve Arthur Andersen & Co. as independent auditors for
the Company for the fiscal year ending December 31, 1994.
/ / FOR / / AGAINST / / ABSTAIN
Date:__________________, 1994
_____________________________
Signature
_____________________________
Signature (if held jointly)
PLEASE SIGN EXACTLY AS NAME
APPEARS TO THE LEFT.
When shares are held in the
name of joint holders, each
should sign. When signing as
attorney, executor, trustee,
guardian, etc., please so
indicate. If a corporation,
please sign in full corporate
name by an authorized officer.
If a partnership, please sign
in partnership name by an
authorized person.
