<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BROADWAY & SEYMOUR, 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[COMPANY LOGO]
BROADWAY & SEYMOUR, INC.
128 South Tryon Street
Charlotte, North Carolina 28202
(704) 372-4281
April 2, 1997
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Stockholders' Meeting in Charlotte, North Carolina on Thursday, May
1, 1997 at 10:00 a.m. The meeting will be held in the Oak Room of the Radisson
Plaza Hotel located at 1 Radisson Plaza, 101 South Tryon Street in Charlotte,
North Carolina.
The attached notice and proxy statement describe the business to be
conducted at the meeting, including the election of two directors. The Board of
Directors has nominated Steven S. Elbaum and Roger Noall, current members of the
Board appointed since the last annual meeting, to be elected.
The Board of Directors appreciates and encourages stockholder
participation. Whether or not you plan to attend the meeting, it is important
that your shares be represented. Please take a moment now to sign, date and
return your proxy in the envelope provided even if you plan to be present. We
hope you will be able to attend the meeting.
Sincerely,
/s/ Alan C. Stanford
- ------------------------------------
Alan C. Stanford
Chairman and Chief Executive Officer
<PAGE> 3
BROADWAY & SEYMOUR, INC.
128 South Tryon Street
Charlotte, North Carolina 28202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
TIME.................. 10:00 a.m. on Thursday, May 1, 1997
PLACE................. Radisson Plaza Hotel
Oak Room
1 Radisson Plaza
101 South Tryon Street
Charlotte, North Carolina 28280
ITEMS OF BUSINESS..... 1. To elect two directors.
2. To ratify the appointment of Price Waterhouse LLP as inde-
pendent accountants of the Company for the period through the
annual meeting to be held in 1998.
RECORD DATE........... Holders of Common Stock of record at the close of business on
March 14, 1997 are entitled to vote at the meeting.
ANNUAL REPORT......... The annual report of the Company for the year ended December 31,
1996 accompanies this proxy statement.
IMPORTANT............. In order to avoid additional soliciting expense to the Company,
please SIGN, DATE and MAIL your proxy PROMPTLY in the return
envelope provided even if you plan to attend the meeting. If you
attend the meeting and wish to vote your shares in person,
arrangements will be made for you to do so.
</TABLE>
By order of the Board of Directors:
/s/ Alan C. Stanford
- ------------------------------------
Alan C. Stanford
Chairman and Chief Executive Officer
Charlotte, North Carolina
April 2, 1997
<PAGE> 4
BROADWAY & SEYMOUR, INC.
128 South Tryon Street
Charlotte, North Carolina 28202
PROXY STATEMENT
Annual Meeting of Stockholders
May 1, 1997
VOTING SECURITIES, PRINCIPAL HOLDERS AND PROXIES
The accompanying proxy is solicited by the Board of Directors of
Broadway & Seymour, Inc. (the "Company") in connection with the Annual Meeting
of Stockholders of the Company to be held in the Oak Room of the Radisson Plaza
Hotel located at 1 Radisson Plaza, 101 South Tryon Street, Charlotte, North
Carolina at 10:00 a.m. on Thursday, May 1, 1997. The accompanying form of proxy
is for use at the Annual Meeting if a stockholder does not attend the meeting in
person or wishes to vote shares by proxy even if the stockholder plans to attend
the meeting. All valid proxies received prior to the meeting will be voted.
Unless marked to the contrary, such proxies will be voted in favor of Proposals
1 and 2 listed in the accompanying proxy card and described below. If any other
business is brought before the meeting, the proxies will be voted in accordance
with the judgment of the persons voting the proxies.
A stockholder who has given a proxy may revoke it at any time prior to
such proxy being voted at the meeting by filing with the Secretary of the
Company an instrument revoking it or a duly executed proxy bearing a later date
or by attending the meeting and giving notice of such revocation. Attendance at
the meeting does not by itself constitute revocation of a proxy. This proxy
statement and the accompanying form of proxy are being mailed to the Company's
stockholders on or about April 3, 1997.
The only class of voting securities of the Company is its common stock,
$.01 par value per share (the "Common Stock"). Only stockholders of record as of
the close of business on March 14, 1997 will be entitled to notice of and to
vote at the Annual Meeting of Stockholders or any adjournment thereof. On March
14, 1997 there were outstanding 9,013,430 shares of Common Stock. Each share of
Common Stock is entitled to one vote.
A majority of the shares entitled to vote at the Annual Meeting,
represented in person or by proxy, will constitute a quorum. The two nominees
receiving the highest vote totals will be elected as Directors of the Company.
Accordingly, abstentions and broker non-votes will not affect the outcome of the
election. All other matters to be voted on will be decided by the affirmative
vote of a majority of the shares present or represented at the meeting and
entitled to vote. On any such matter, an abstention will have the same effect as
a negative vote but, because shares held by brokers will not be considered
entitled to vote on matters as to which the brokers withhold authority, a broker
non-vote will have no effect on the vote.
The Company will bear the cost of preparing the proxy statement and of
soliciting proxies in the accompanying form. The Company expects to solicit
proxies primarily by mail and through the use of Georgeson & Company, Inc., a
professional proxy solicitation firm. Proxies may be solicited personally and by
telephone by directors, officers and employees of the Company without additional
compensation and by employees of the professional proxy solicitation firm. The
Company anticipates that fees and expenses to be paid to the professional proxy
solicitation firm will be approximately $7,000. Arrangements also may be made
with brokerage firms or other custodians, nominees and fiduciaries who hold the
voting securities of record for the forwarding of solicitation material to the
beneficial owners thereof. The Company will reimburse such brokers, custodians,
nominees and fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection therewith.
<PAGE> 5
PRINCIPAL STOCKHOLDERS
The following table sets forth the names and addresses of, and the
number and percentage of shares beneficially owned by, the persons known to the
Company to beneficially own five percent or more of the Company's outstanding
Common Stock as of March 31, 1997:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
<S> <C> <C>
Pioneer Management Corporation 897,400(1) 9.9%
60 State Street
Boston, Massachusetts
Okabena Partnership K 451,065(2) 5.0%
5140 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4139
</TABLE>
- -----------------
(1) Based upon a Schedule 13G of Pioneer Management Company dated
January 21, 1997.
(2) Based upon a Schedule 13D of Okabena Partnership K dated
September 10, 1996.
ELECTION OF TWO DIRECTORS
The Company's Board of Directors is divided into three classes, as
nearly equal in number as possible, each of whose members serve for a staggered
three-year term. The term of the two directors designated Class I directors will
expire at the current annual meeting of stockholders. The term of the three
Class II directors will expire at the annual meeting to be held in 1998 and the
term of the three Class III directors will expire at the annual meeting to be
held in 1999. The three current classes are set forth below:
CLASS I CLASS II CLASS III
------- -------- ---------
Steven S. Elbaum David A. Finley George L. McTavish
Roger Noall William G. Seymour Robert J. Kelly
Alan C. Stanford Robert J. Levenson
NOMINEES
The Board of Directors has nominated Steven S. Elbaum and Roger Noall
for election as directors. Messrs. Elbaum and Noall were appointed as directors
to serve the remaining terms of John A. Tate and Bruce K. Anderson, who retired
from the Board since the last annual meeting of stockholders. If elected,
Messrs. Elbaum and Noall would serve three-year terms as members of Class I.
Directors will be elected by a plurality of the votes cast. Although the Board
of Directors does not expect that any of the nominees named will be unavailable
for election, in the event that any nominee is unable to serve as a director, it
is intended that the shares represented by proxies will be voted for the
election of such substitute as the Board of Directors may nominate.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
NOMINEES. PROXIES, UNLESS INDICATED TO THE CONTRARY, WILL BE VOTED "FOR" THE
NOMINEES TO THE BOARD OF DIRECTORS.
2
<PAGE> 6
DIRECTORS
Listed below are the names of the two nominees to serve as directors and
the other six directors who will be continuing in office following the Annual
Meeting, together with their ages, their principal occupations during the past
five years, any other directorships they hold with companies having securities
registered under the Securities Exchange Act of 1934, the years during which
their current consecutive terms as directors of the Company first commenced
(including terms with the Company's predecessor) and the number of shares of
Common Stock and percentage of the outstanding shares of Common Stock they
beneficially owned as of March 31, 1997.
<TABLE>
<CAPTION>
Shares beneficially owned (1)
Name, age, principal occupation Director -----------------------------
and certain other directorships since Number Percent
------------------------------- ----- ------ -------
<S> <C> <C> <C>
STEVEN S. ELBAUM, Age 48 1997 1,000 *
Chairman and Chief Executive Officer,
The Alpine Group, Inc., and President and
Chief Executive Officer, Superior Telecom
Inc.(2)
Director: The Alpine Group, Inc., Superior
Telecom Inc., Polyvision Corporation,
Interim Services, Inc. and Humascan, Inc.
DAVID A. FINLEY, Age 64 1990 5,334 *
Executive Vice President and Chief Finan-
cial Officer, Broadway & Seymour, Inc.(3)
Director: Intelligroup, Inc. and Hungarian
Telephone & Cable Corp.
ROBERT J. KELLY, Age 55 1997 6,000 *
Co-chairman (Retired), Ernst & Young
LLP(4)
ROBERT J. LEVENSON, Age 55 1996 1,000 *
Executive Vice President, First Data
Corp.(5)
Director: First Data Corp. and Superior
Telecom Inc.
GEORGE L. McTAVISH, Age 55 1993 14,336 *
Chairman and Chief Executive Officer,
Comdata Holdings Corp.(6)
Director: Comdata Holdings Corp. and
Seer Technologies, Inc.
ROGER NOALL, Age 62 1996 11,000 *
Vice Chairman (Retired), KeyCorp(7)
Director: Alleghany Corp. and KeyCorp
WILLIAM G. SEYMOUR, Age 55 1981 434,622 4.8%
President, PRIMax Properties, LLC(8)
ALAN C. STANFORD, Age 56 1995 3,500 *
Chairman and Chief Executive Officer,
Broadway & Seymour, Inc.(9)
</TABLE>
- --------------
3
<PAGE> 7
* Less than one percent.
(1) The directors and executive officers of the Company beneficially owned a
total of 471,792 shares, or approximately 5.2% of the outstanding shares
of Common Stock as of March 31, 1997. Included in the calculation of the
number of shares of Common Stock so owned are the following shares
purchasable under options exercisable on March 31, 1997, or within 60
days thereafter, by the directors indicated, and by the directors and
executive officers as a group: Mr. Elbaum - 1,000 shares; Mr. Finley -
3,334 shares; Mr. Kelly - 1,000 shares; Mr. Levenson - 1,000 shares; Mr.
McTavish - 14,336 shares; Mr. Noall - 1,000 shares; Mr. Seymour - 1,000
shares; and members of the group (including the foregoing) - 22,670
shares.
(2) Mr. Elbaum has served as Chairman and Chief Executive Officer of The
Alpine Group, Inc., a holding company, since 1984 and as President and
Chief Executive Officer of Superior Telecom Inc., a telecommunications
firm, since October 1996.
(3) Prior to joining the Company in January 1996 as Executive Vice President
and Chief Financial Officer, Mr. Finley worked as a consultant and was a
private investor and the President, since 1992, of Investment Management
Partners, Inc., an investment management firm. From September 1986 until
August 1989, Mr. Finley served as Treasurer of International Business
Machines Corporation.
(4) From 1966 until his retirement in 1994, Mr. Kelly served in various
capacities at Ernst & Young LLP, an accounting firm, and ultimately
served as a partner and chief operating officer.
(5) Mr. Levenson has served as an Executive Vice President of First Data
Corp., a provider of information processing and related services, since
May 1993. Prior to joining First Data Corp., Mr. Levenson served as the
Senior Executive Vice President, Chief Operating Officer, Member of the
Office of the President and a director of Medco Containment Services,
Inc., a provider of managed care prescription benefits (now a part of
Merck & Co., Inc.).
(6) Mr. McTavish has served as Chairman and Chief Executive Officer of
Comdata Holdings Corp., a provider of transaction processing and other
services to the trucking and gaming markets, since March 1992. From
October 1986 to February 1992 Mr. McTavish was President and Chief
Executive Officer of Comdata Holdings Corp.
(7) From 1995 until his retirement in February 1997, Mr. Noall served as
Senior Executive Vice President, Chief Administrative Officer, General
Counsel and Secretary of KeyCorp, a bank holding company. From 1994
until 1995, he served as Senior Executive Vice President and Chief
Administrative Officer of KeyCorp, and from 1987 to 1994 he served as
Vice Chairman of the Board and Chief Administrative Officer of Society
Corporation.
(8) Mr. Seymour has served as President of PRIMax Properties, LLC, a real
estate investment company, since his retirement from the Company in
January 1995. Mr. Seymour has served as Vice Chairman of the Board since
June 1993 and from September 1985 to November 1989 and as Secretary of
the Company from June 1993 to May 1996. Mr. Seymour also served as
Senior Vice President of the Company from November 1989 to June 1993.
(9) Mr. Stanford has served as a consultant for Stanford Associates LLC, an
information technology consulting firm, from October 1994 until joining
the Company as its President and Chief Operating Officer in 1995. In
1996, Mr. Stanford was named the Company's Chairman and Chief Executive
Officer. From December 1983 to October 1994, Mr. Stanford served as a
partner with Ernst & Young LLP, including as its National Director of
Information Technology Consulting Services.
The Board of Directors has a Compensation Committee, which makes
recommendations concerning salaries and incentive compensation for employees of
the Company and administers the Company's 1996 Stock Option Plan, the Restated
1985 Employee Stock Option Plan and 1995 Employee Stock Purchase Plan; and an
Audit Committee, which reviews the results and scope of the audit and other
services provided by the Company's independent accountants. Messrs. Levenson,
Kelly and Seymour serve on the Compensation Committee, and Messrs. Elbaum,
McTavish and Noall serve on the Audit Committee. During the year ended December
31, 1996, the Compensation Committee met twice and the Audit Committee met five
times. The Board of Directors does not have a nominating committee.
The Company pays its non-employee directors a fee of $2,500 for each
directors' meeting attended and pays an additional $500 fee to each member of
the Audit Committee and Compensation Committee for
4
<PAGE> 8
each committee meeting attended. During fiscal 1992, the Company granted Mr.
Finley options to purchase 10,000 shares of Common Stock at the exercise price
of $4.75 per share. Such option is exercisable as to 20% of the total number of
shares covered by the option during any 12-month period beginning on the date of
grant. During the year ended December 31, 1993, the Company granted each of
Messrs. Finley and McTavish options to purchase 10,000 shares of Common Stock at
an exercise price of $7.75 per share. During the year ended December 31, 1994,
the Company granted to Mr. McTavish an option to purchase 10,000 shares of
common stock at an exercise price of $11.75 per share. Such 1993 and 1994
options are exercisable with respect to one-sixth of the total number of shares
covered by the option during any 12- month period beginning on the date of
grant. To the extent any option is not exercised during any 12-month period,
installments accumulate and may be exercised, in whole or in part, at any time
thereafter until expiration of the option (ten years from the date of grant).
Upon adoption of the 1996 Stock Option Plan on June 25, 1996, each director who
was not also an officer or employee of the Company on that date (i.e., Messrs.
Levenson, McTavish and Seymour) was granted options to purchase 5,000 shares of
Common Stock at the fair market value of the shares ($11.125 per share) on that
date. In addition, under the 1996 Stock Option Plan, any individual who is not
an employee or officer of the Company and who is first elected to the Board
after June 25, 1996 shall receive upon the date of such election an option to
purchase 5,000 shares of Common Stock at an exercise price per share equal to
the fair market value of a share of Common Stock on such date. The 1996 Stock
Option Plan further provides for awards of options to purchase 5,000 shares of
Common Stock on each January 5 after the adoption of the 1996 Stock Option Plan
if the average daily value of a share of Common Stock for the immediately
preceding month of December is ten percent greater than the average daily value
of a share for the month of December of the immediately prior year. In the event
that the total exercise price of such options for 5,000 shares exceeds $100,000,
the number of shares purchasable under such option are to be reduced so that the
total exercise price of the options granted equals $100,000, and in the event
that the number of shares authorized under the 1996 Stock Option Plan are not
sufficient to make an award to outside directors, options for the remaining
authorized shares shall be awarded pro rata to the outside directors then
entitled to receive such options. All such options awarded to such directors
under the 1996 Stock Option Plan become exercisable over a period of four years,
with 20% of the total award being exercisable on the date of grant and an
additional 20% becoming exercisable on each of the next four anniversaries.
There are no family relationships among the executive officers or
directors of the Company.
The Board of Directors held 13 meetings during the year ended December
31, 1996. All of the directors attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors during their term of service
and the total number of meetings of committees of the Board on which they
served.
EXECUTIVE OFFICERS, COMPENSATION AND OTHER INFORMATION
The executive officers of the Company are generally elected to their
offices for one-year terms at the meeting of the Board of Directors in May of
each year. The terms of any executive officers elected after such date expire at
the same time as the terms of executive officers elected on such date. As of the
date of this Proxy Statement, Messrs. Stanford and Finley are the only executive
officers of the Company. William W. Neal, III served as Chairman and Chief
Executive Officer during a portion of the year ended December 31, 1996. Because
Mr. Neal served as the Chief Executive Officer of the Company during the fiscal
year ended December 31, 1996, he has been included in the following compensation
tables.
The following table sets forth a summary, for fiscal years ended
December 31, 1996, December 31, 1995 and December 31, 1994, of the compensation
of the employees serving as executive officers on December 31, 1996 and Mr. Neal
who served as Chief Executive Officer for a portion of 1996.
5
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
---------------------- ----------------------
Securities Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options(#) Compensation($)(1)
--------------------------- ---- --------- -------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Alan C. Stanford(2) 1996 301,290 0 400,000 4,750
Chairman and Chief 1995 100,075 450,000 - 4,620
Executive Officer 1994 - - - -
David A. Finley(3) 1996 248,565 0 70,000 9,640
Executive Vice 1995 - - - -
President and Chief 1994 - - - -
Financial Officer
William W. Neal, III 1996 271,124 - - 4,562
Former Chief 1995 221,853 - 20,000 4,917
Executive Officer 1994 202,100 80,000 25,000 -
</TABLE>
- ---------------
(1) Represents matching contributions made by the Company under the
Company's 401(k) retirement plan.
(2) Mr. Stanford's employment with the Company commenced in September 1995.
Mr. Stanford earned an initial bonus of $450,000 upon his acceptance of
employment with the Company, of which $350,000 was paid in October 1995
and $100,000 was paid in March 1996.
(3) Mr. Finley's employment with the Company commenced in January 1996.
The following table sets forth certain information with regard to
options granted during the year ended December 31, 1996 to the executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Price Appreciation
Underlying Granted To Exercise or for Option Term (1)
Options Granted Employees in Base Price Expiration ------------------------------
Name (#) Fiscal Year ($/SH) Date 5%($) 10%($)
------ ----- ------------- -------- ------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan C. Stanford 400,000(2) 52.7% 11.00 7/18/2006 2,767,136 7,012,467
David A. Finley 70,000(2) 9.2% 11.00 7/18/2006 484,249 1,227,182
William W. Neal, III 0 - - - - -
</TABLE>
- -----------------
(1) These amounts, based on the assumed 5% and 10% appreciation rates
prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the price
of the Common Stock and may not reflect the actual value ultimately
realized by recipients of the options.
6
<PAGE> 10
(2) Options become exercisable with respect to one-third of the total number
of shares each year beginning on the first anniversary of the date of
grant. The options expire ten years after the date of grant. In
addition, the options expire immediately upon the termination of
employment, other than termination by the Company without cause or as a
result of death or disability. Options expire 30 days after termination
of employment without cause, one year after permanent disability and
from three months to one year after death depending on the length of
time the option had been held; provided that options awarded to Mr.
Finley shall continue to be exercisable after termination of employment
for so long as he remains a member of the Board of Directors.
The following table sets forth certain information with regard to stock
options exercised in the year ended December 31, 1996 by each of the executive
officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Value of securities
Number of securities underlying unexercised
underlying unexercised in-the-money options
options at FY-end(#) at FY-end($)
Shares acquired Value Exercisable/ Exercisable/
Name on exercise (#) realized ($) unexercisable unexercisable
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Alan C. Stanford - - 0/400,000 0/0
David A. Finley 2,000 9,500 3,334/73,332 9,169/9,163
William W. Neal, III 36,740 334,701 69,165/51,835 101,200/10,500
</TABLE>
EMPLOYMENT AGREEMENTS
On September 1, 1995, the Company entered into an employment agreement
with Alan C. Stanford upon Mr. Stanford's accepting employment with the Company.
Pursuant to his employment agreement Mr. Stanford is to be paid a base salary
for his first year of employment of $300,000, subject to adjustment thereafter
upon approval of the Compensation Committee of the Board of Directors.
Commencing with the year beginning January 1, 1997, Mr. Stanford will be
eligible to receive an annual bonus for the prior fiscal year to be determined
by the Compensation Committee after reviewing the Company's financial
performance (including earnings per share) and operational performance during
the year, Mr. Stanford's satisfaction or progress toward goals established by
the Compensation Committee and other factors, though it need not give any
particular weight to any such factor or articulate its rational by reference to
such factors. In addition, under the employment agreement, Mr. Stanford was paid
an initial bonus of $450,000 as an inducement for his acceptance of employment
with the Company and to partially defray the costs of exiting his existing
businesses.
The employment agreement provided that the Company award to Mr.
Stanford, as an inducement for his acceptance of employment, immediately
exercisable options to purchase 400,000 shares of Common Stock at an exercise
price per share equal to the fair market value of a share of Common Stock on
September 1, 1995, subject to the approval by the stockholders of a stock option
plan that had been adopted by the Board of Directors. Stockholder approval of
such stock option plan was not obtained. The Board of Directors subsequently
adopted the 1996 Stock Option Plan, which was approved by the stockholders in
August 1996. Pursuant to the 1996 Stock Option Plan, Mr. Stanford was granted
options to purchase 400,000 shares of Common Stock on July 18, 1996 at an
exercise price per share equal to the fair market value of a share on that date.
Such options become exercisable with respect to one-third of such amount each
year beginning on the first anniversary of the date of grant and have a term of
ten years. The employment agreement provides for other employee benefits and
perquisites customary for executive
7
<PAGE> 11
employment agreements. In addition, Mr. Stanford is to be reimbursed for
reasonable travel expenses from his offices in Indiana and New York to the
Company's principal offices in Charlotte and for relocation expenses if Mr.
Stanford moves his residence to facilitate the performance of his duties under
the employment agreement.
The initial term of Mr. Stanford's employment agreement will expire on
September 1, 1997, but will renew for successive two-year terms unless either
party provides the other with written notice of its intention to cancel the
agreement at least 180 days prior to the scheduled expiration of the agreement.
As of the date of this Proxy Statement, neither party had given notice of its
intention to terminate the agreement. The Company may terminate Mr. Stanford's
employment at any time for any reason. In the event that the Company terminates
Mr. Stanford's employment other than for "cause" (as defined in the employment
agreement), the employment agreement provides that the Company shall pay Mr.
Stanford in a lump sum the amount of base salary that would have been paid to
Mr. Stanford over the remaining term of the agreement and the amount of annual
bonuses Mr. Stanford would have received for the remaining term of the agreement
on the assumption that such bonuses would have been of an amount equal to the
amount of Mr. Stanford's most recent annual bonus. During such period, the
employment agreement would require Mr. Stanford to refrain from certain
activities in competition with the Company. Mr. Stanford may resign at any time.
Mr. Stanford's employment agreement requires that upon the expiration of
Mr. Stanford's current term as a director of the Company, the Company's Board of
Directors or a nominating committee thereof shall, subject to fiduciary duties,
nominate him for re-election as a director. In addition, the agreement provides
that Mr. Stanford serve as chief executive officer of the Company.
On January 19, 1996, the Company and David A. Finley entered into an
employment agreement in connection with Mr. Finley's acceptance of employment as
the Company's Executive Vice President and Chief Financial Officer. The initial
term of Mr. Finley's employment agreement was for six months with renewals for
successive six-month terms unless either party provides the other with written
notice of its intention to cancel the agreement at least 60 days prior to the
scheduled expiration of the agreement. As of the date of this Proxy Statement,
neither party had given notice of its intention to terminate the agreement.
Pursuant to his employment agreement, Mr. Finley is to be paid a base salary for
his first year of employment of $250,000, subject to adjustment thereafter upon
approval of the Compensation Committee. Mr. Finley will be eligible to receive
annual bonuses to be determined by the Compensation Committee in the same manner
as set forth in Mr. Stanford's employment agreement described above.
Pursuant to the employment agreement, the Company awarded to Mr. Finley
immediately exercisable options to purchase 75,000 shares of Common Stock at an
exercise price per share equal to the fair market value on January 22, 1996,
subject to the approval by the stockholders of a stock option plan that had been
adopted by the Board of Directors. Stockholder approval of such stock option
plan was not obtained. The Board of Directors subsequently adopted the 1996
Stock Option Plan, which was approved by the stockholders in August 1996.
Pursuant to the 1996 Stock Option Plan, Mr. Finley was granted options to
purchase 70,000 shares of Common Stock on July 18, 1996 at an exercise price per
share equal to the fair market value of a share on that date. Such options
become exercisable with respect to one-third of such amount each year beginning
on the first anniversary of the date of grant. Such options have a term of ten
years, and continue to become exercisable following termination of Mr. Finley's
employment, but only for so long as he continues to serve as a director of the
Company.
Mr. Finley's employment agreement provides for other employee benefits
and perquisites customary for executive employment agreements. In addition, Mr.
Finley is to be reimbursed for reasonable travel expenses from his residence and
offices in New York to the Company's principal offices in Charlotte, for
reasonable lodging expenses while in Charlotte and for relocation expenses if
Mr. Finley moves his residence to facilitate the performance of his duties under
the employment agreement.
8
<PAGE> 12
The Company may terminate Mr. Finley's employment at any time for any
reason. In the event that the Company terminates Mr. Finley's employment other
than for "cause" (as defined in the employment agreement), the employment
agreement provides that the Company shall pay to Mr. Finley in a lump sum the
amount of base salary that would have been paid to Mr. Finley over the remaining
term of the agreement and the amount of annual bonuses Mr. Finley would have
received for the remaining term of the agreement on the assumption that such
bonuses would have been an amount equal to the amount of Mr. Finley's most
recent bonus. During such period, the employment agreement would require Mr.
Finley to refrain from certain activities in competition with the Company. Mr.
Finley may resign at any time upon 60 days' prior notice to the Company.
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total shareholder
return from the date of its initial public offering of Common Stock, June 16,
1992, to the end of its most recent fiscal year, December 31, 1996, assuming the
investment on June 16, 1992, of $100 in Common Stock, along with the cumulative
total returns of a broad-based equity market index -- the Center for Research in
Securities Prices (CRSP) Total Return Index for the Nasdaq Stock Market (U.S.
Companies) -- and of a published industry peer index -- the CRSP Nasdaq Computer
& Data Processing Services Index -- over the same period assuming the investment
on June 16, 1992, of $100 in securities that are the components of these
indices.
[PERFORMANCE GRAPH HERE]
<TABLE>
<CAPTION>
6/19/92 1/31/93 12/31/93 12/31/94 12/31/95 12/31/96
------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq 100.000 126.655 141.367 138.184 195.419 240.381
Peer 100.000 123.183 124.785 151.488 230.708 284.915
Company 100.000 165.625 125.000 271.875 203.125 131.250
</TABLE>
9
<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Company determines
executive compensation annually. Executive salaries and bonus targets are
established at the beginning of each fiscal year. The Committee is composed of
three non-employee directors.
OBJECTIVES AND POLICIES
The Committee seeks to provide rewards that are closely linked to
Company and individual performance, align the interests of the executive
officers with those of its stockholders through potential stock ownership, and
ensure that compensation and benefits are at levels that enable the Company to
attract and retain the executives it needs. Consistent with these objectives, it
is the policy of the Committee to make a high proportion of executive
compensation, both cash compensation and stock options, dependent upon
performance and enhancing stockholder value.
In establishing the compensation of executive management, the Committee
reviews compensation of executives of companies of similar size and type of
business. Both the amount of compensation and the mix between salary and bonuses
or other compensation are examined. The Committee believes the compensation of
the Company's executive management should be closely tied to the success of the
Company in meeting its financial objectives with a major portion of compensation
linked to attainment of predetermined financial goals and the performance of the
stock of the Company. Accordingly, the Committee believes that stock options
should constitute a significant portion of an executive's overall compensation
package. The Committee believes that stock options also serve as an incentive to
management to remain with the Company. Awards of stock options under the
Company's plans are based upon the Committee's evaluation of the officer's
performance and level of responsibility.
EMPLOYMENT AGREEMENTS
The Company's executive officers are currently employed pursuant to
employment agreements that established the level of salary for 1996--$300,000
for Mr. Stanford and $250,000 for Mr. Finley. The agreements provide that the
Committee may increase compensation for future periods.
Pursuant to such employment agreements, Messrs. Stanford and Finley were
to receive options to purchase 400,000 and 75,000 shares, respectively. Such
options were to be immediately exercisable and were to be made pursuant to a
stock option plan that had been adopted by the Board of Directors but was
subject to the approval of the stockholders. Stockholder approval of such plan
was not obtained. The Board of Directors subsequently adopted the 1996 Stock
Option Plan, which was approved by the stockholders in August 1996. The
Committee awarded options to Messrs. Stanford and Finley for 400,000 shares and
70,000 shares, respectively, in July 1996 pursuant to the 1996 Stock Option
Plan. The options become exercisable over three years. The exercise price per
share for such options is the fair market value on the date of grant. In
determining whether to award such options, the Committee evaluated the Company's
contractual obligations under the employment agreements and the need to provide
incentives to its executive officers sufficient to continue to retain their
service and to provide appropriate financial incentives linked to the Company's
performance.
Such employment agreements provide that Messrs. Stanford and Finley will
be eligible to receive bonus compensation as determined by the Committee. In
general, it has been the Company's policy to pay bonuses to its executive
officers based upon achievement of individualized performance objectives. At the
beginning of each fiscal year, the Committee adopts individual objectives for
each executive officer keyed to the performance of the Company's operations for
which the executive officer is responsible. Cash bonuses are determined at the
end of the fiscal year in proportion to the Company's actual performance in
relation to these objectives up to a maximum amount. For 1996, however, the
Company's financial performance outweighed these considerations. No performance
bonuses were awarded to executive officers for 1996.
10
<PAGE> 14
TAX POLICY
Section 162(m) of the Internal Revenue Code limits deductions for
certain executive compensation in excess of $1 million. Certain types of
compensation, including compensation pursuant to stock option plans, are
deductible only if performance criteria are specified in detail and are
contingent on stockholder approval of the compensation arrangement. The
Committee anticipates that certain option awards may be made as qualified
incentive stock options for which the Company generally would not be able to
claim a deduction for compensation expense. In addition, compensation expense
arising under option awards made during Messrs. Seymour and Levenson's service
on the Committee may not qualify for the exemption from Section 162(m) due to
Mr. Seymour's prior service as an officer of the Company and the level of
transactions between Mr. Levenson's employer, First Data Corp., and the Company.
While the Committee will consider deductibility under Section 162(m) with
respect to future compensation arrangements with executive officers,
deductibility will not be the sole factor used in ascertaining appropriate
levels or modes of compensation. Since corporate objectives may not always be
consistent with the requirements for full deductibility, it is conceivable that
the Company may authorize compensation arrangements under which payments may not
be deductible under Section 162(m). The Committee believes that due to the level
of current salary and maximum cash bonus compensation, and anticipated levels of
future stock option awards, the Company will be able to claim full deductibility
of amounts paid under existing executive compensation arrangements.
For the Compensation Committee:
Robert J. Kelly
Robert J. Levenson
William G. Seymour
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Pursuant to an agreement dated as of December 22, 1995 between the
Company and First Data Resources, Inc., a subsidiary of First Data Corp. ("First
Data"), the Company provides certain systems analysis, integration and other
services to First Data. During 1996, the Company was paid approximately $6.6
million by First Data pursuant to this agreement, and the Company anticipates
that a similar amount will be paid in 1997. The agreement with First Data
expires December 31, 2000, but may be terminated by First Data upon the
occurrence of certain events. The agreement also provides that during the term
of the agreement the Company will include an individual designated by First Data
in the slate of directors recommended by the Company's management for election
or continued service on the Company's Board of Directors in connection with each
annual meeting of the Company's stockholders. Robert J. Levenson, Executive Vice
President of First Data, is currently serving on the Board as First Data's
designee. In addition, the Company agreed to use its best efforts to elect a
replacement selected by First Data in the event that the First Data designee
resigns or is removed from the Company's Board of Directors. Finally, the
agreement with First Data requires that the Company permit a representative of
First Data to attend all meetings of the Board of Directors during any period
that First Data's designee does not serve on the Board.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Executive officers, directors and greater than ten-percent shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the
11
<PAGE> 15
copies of such reports furnished to the Company and written representations that
no other reports were required, during the year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten-percent beneficial owners were complied with,
except that in June 1996, Mr. Levenson was late in reporting his initial report
upon his election as a director.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company, upon the recommendation of the
Audit Committee, has appointed the firm of Price Waterhouse LLP to serve as
independent accountants of the Company for the year ending December 31, 1997,
subject to ratification of this appointment by the stockholders of the Company.
Price Waterhouse LLP has served as the Company's independent accountants for six
years and is considered by management of the Company to be well qualified.
One or more representatives of Price Waterhouse LLP will be present at
this year's Annual Meeting and will have an opportunity to make a statement if
he or she desires to do so and will be available to respond to appropriate
questions.
Ratification of the appointment of the independent accountants requires
the affirmative vote of a majority of the shares of Common Stock of the Company
voting in person or by proxy at the Annual Meeting. If the stockholders should
not ratify the appointment of Price Waterhouse LLP, the Board of Directors will
reconsider the appointment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS. PROXIES, UNLESS
INDICATED TO THE CONTRARY, WILL BE VOTED "FOR" RATIFICATION OF THE APPOINTMENT
OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS.
STOCKHOLDERS' PROPOSALS
Stockholders' proposals intended for inclusion in the Company's proxy
statement and the form of the proxy for the Annual Meeting in 1998 should be
sent by certified mail, return receipt requested, and must be received by the
Company at its principal executive offices (Attention: General Counsel) by
December 4, 1997. Such proposals may be made only by persons who are
stockholders, beneficially or of record, on the date the proposal is submitted
and who continue in such capacity through the meeting date, of at least 1% or
$1,000 in market value of securities entitled to be voted at the meeting, and
have held such securities for at least one year. In addition, the Company's
Bylaws prescribe the procedure a stockholder must follow to make nominations for
director candidates or to propose any business to be considered at an annual
meeting. Stockholder nominations for director or other proposals will be
considered at an annual meeting if the stockholder delivers to the Secretary of
the Company at its principal executive offices, no less than 60 nor more than 90
days prior to the meeting (or in the event that public disclosure of the date of
the annual meeting is first made less than 70 days in advance of the meeting
date, no later than the close of business on the tenth day after public
disclosure of the date of the annual meeting is made), a written notice setting
forth the information specified in the Company's Bylaws. Any stockholder
desiring a copy of the Company's Bylaws will be furnished one without charge
upon written request to the Secretary of the Company at 128 South Tryon Street,
Charlotte, North Carolina 28202.
12
<PAGE> 16
OTHER BUSINESS
The Board of Directors is aware of no other matter that will be
presented for action at the meeting. If any other matter requiring a vote of the
stockholders properly comes before the meeting, the persons authorized under
management proxies will vote and act according to their best judgment.
FORM 10-K
A copy of the Annual Report on Form 10-K for the year ended December
31, 1996, as filed with the Securities and Exchange Commission may be obtained
upon request and without charge by writing:
David A. Finley
Executive Vice President and Chief Financial Officer
Broadway & Seymour, Inc.
128 South Tryon Street
Charlotte, North Carolina 28202
or by contacting Mr. Finley via electronic mail at [email protected].
13
<PAGE> 17
[COMPANY LOGO]
<PAGE> 18
APPENDIX A
REVOCABLE PROXY BROADWAY & SEYMOUR, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Alan C. Stanford and David A. Finley as
Proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
common stock of Broadway & Seymour, Inc. (the "Company") held of record by the
undersigned on March 14, 1997 at the annual meeting of stockholders to be held
on May 1, 1997 or any adjournment thereof.
1. ELECTION OF TWO DIRECTORS:
<TABLE>
<S> <C>
[ ] FOR all nominees (except as marked to the contrary [ ] WITHHOLD AUTHORITY to vote for all nominees listed
below) below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.)
Roger Noall and Steven S. Elbaum
2. PROPOSAL TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP as the Company's
independent auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on the reverse)
(Continued from other side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS AND THIS
PROXY WILL BE VOTED FOR THE PROPOSALS AND FOR THE ELECTION OF THE DIRECTOR
NOMINEES NAMED HEREIN UNLESS THE STOCKHOLDER DIRECTS OTHERWISE, IN WHICH CASE IT
WILL BE VOTED AS DIRECTED.
The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement dated April , 1997, and revokes all proxies heretofore given by the
undersigned.
PLEASE SIGN EXACTLY AS NAME
APPEARS BELOW. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH SHOULD
SIGN. WHEN SIGNING AS ATTORNEY, AS
EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME
BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP PLEASE
SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
Dated: , 1997
-------------------
----------------------------------
Signature
----------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
