<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, 1998
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Stockholders' Meeting in Charlotte, North Carolina on Friday, May 8,
1998 at 10:00 a.m. The meeting will be held in the Caldwell Room of The Hilton
Hotel (formerly The Westin Hotel) located at 222 East Third 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 David A. Finley and William G. Seymour to be reelected
to the Board.
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,
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
TIME.............................. 10:00 a.m. on Friday, May 8, 1998
PLACE............................. The Hilton Hotel (formerly The Westin Hotel)
Caldwell Room
222 East Third Street
Charlotte, North Carolina 28202
ITEMS OF BUSINESS................. 1. To elect two directors.
2. To ratify the appointment of Price
Waterhouse LLP as independent
accountants of the Company for the
period through the annual meeting to be
held in 1999.
RECORD DATE....................... Holders of Common Stock of record at the
close of business on March 16, 1998 are
entitled to vote at the meeting.
ANNUAL REPORT..................... The annual report of the Company for the
year ended December 31, 1997 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.
By order of the Board of Directors:
Alan C. Stanford
Chairman and Chief Executive Officer
Charlotte, North Carolina
April 2, 1998
<PAGE> 4
BROADWAY & SEYMOUR, INC.
128 South Tryon Street
Charlotte, North Carolina 28202
PROXY STATEMENT
Annual Meeting of Stockholders
May 8, 1998
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 Caldwell Room of the The Hilton
Hotel (formerly The Westin Hotel) located at 222 East Third Street, Charlotte,
North Carolina at 10:00 a.m. on Friday, May 8, 1998. 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, 1998.
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 16, 1998 will be entitled to notice of and to
vote at the Annual Meeting of Stockholders or any adjournment thereof. On
March 16, 1998 there were outstanding 9,229,983 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 of directors. 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:
Name and address Amount and nature of Percent
of beneficial owner beneficial ownership of class(1)
------------------- -------------------- -----------
Rockefeller & Co., Inc. 944,280(2) 10.2%
30 Rockefeller Plaza, Room 5425
New York, New York 10012
Pioneering Management Corporation 891,600(3) 9.7%
60 State Street
Boston, Massachusetts 02109
PAR Investment Partners, L.P. 781,000(4) 8.5%
One Financial Center
Suite 1600
Boston, Massachusetts 02111
- ----------------
(1) Based on the shares of Common Stock outstanding as of March 16, 1998.
(2) Based upon Amendment No. 1 to Schedule 13G of Rockefeller & Co., Inc.
dated March 9, 1998 filed by Rockefeller & Co., Inc. on behalf of
certain clients for which it is the investment manager. As reported,
each of these clients individually owns less than 5% of the Company's
outstanding Common Stock, with the exception of Pocantico Fund, a New
York limited partnership, which owns 461,630 shares.
(3) Based upon a Schedule 13G of Pioneering Management Corporation dated
January 5, 1998.
(4) Based upon a Schedule 13D of PAR Investment Partners, L.P. dated
January 21, 1998.
PROPOSAL 1
ELECTION OF TWO DIRECTORS
The Company's Bylaws provide that the number of directors constituting
the Company's Board of Directors shall be not less than three nor more than
twenty-one as may be fixed or changed by the Board of Directors or by the
stockholders from time to time. The Board of Directors has fixed the number of
directors constituting the Board at seven. The 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 II directors will expire at the current annual meeting of stockholders.
The term of the three Class III directors will expire at the annual meeting to
be held in 1999 and the term of the two Class I directors will expire at the
annual meeting to be held in 2000. The three current classes are set forth
below:
Class I Class II Class III
------- -------- ---------
Steven S. Elbaum David A. Finley Robert J. Kell
Roger Noall William G. Seymour George L. McTavish
Alan C. Stanford
2
<PAGE> 6
Nominees
The Board of Directors has nominated David A. Finley and William G.
Seymour for reelection as directors. If elected, Messrs. Finley and Seymour
would serve three-year terms as members of Class II. 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.
Directors
Listed below are the names of the two nominees to serve as directors
and the other five 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 and the years
during which their current consecutive terms as directors of the Company first
commenced (including terms with the Company's predecessor).
<TABLE>
<CAPTION>
Principal occupation Director
Name and age and certain other directorships since
------------ ------------------------------- --------
<S> <C> <C>
Steven S. Elbaum, Age 49 Chairman and Chief Executive Officer, 1997
The Alpine Group, Inc., and President
and Chief Executive Officer, Superior
Telecom Inc. (1)
Director: The Alpine Group, Inc.,
Superior Telecom Inc., Polyvision
Corporation and Interim Services, Inc.
David A. Finley, Age 65 President, Investment Management 1990
Partners, Inc. (2)
Director: Intelligroup, Inc. and
Hungarian Telephone & Cable Corp.
Robert J. Kelly, Age 56 Co-Chairman (Retired), 1996
Ernst & Young LLP(3)
George L. McTavish, Age 56 Chairman and Chief Executive Officer, 1993
Aurora Electronics, Inc. (4)
Director: Seer Technologies, Inc. and
Aurora Electronics, Inc.
Roger Noall, Age 62 Executive, KeyCorp (5) 1996
Director: Alleghany Corp.
William G. Seymour, Age 56 President, PRIMax Properties, LLC (6) 1981
Alan C. Stanford, Age 57 Chairman and Chief Executive Officer, 1995
Broadway & Seymour, Inc. (7)
</TABLE>
3
<PAGE> 7
- --------------
(1) 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.
(2) Mr. Finley served as Executive Vice President and Chief Financial Officer
of the Company from January 1996 to July 1997 and again served as
Executive Vice President on a temporary basis from mid-September 1997 to
mid-November 1997 while Mr. Stanford was recovering from heart surgery.
Prior to joining the Company, 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. Since leaving the Company,
Mr. Finley has resumed his work as a consultant, private investor and
President of Investment Management Partners, Inc. From September 1986
until August 1989, Mr. Finley served as Treasurer of International
Business Machines Corporation.
(3) From 1966 until his retirement in 1994, Mr. Kelly served in various
capacities at Ernst & Young LLP, an accounting firm, and ultimately
served as Co-Chairman and Chief Operating Officer.
(4) Mr. McTavish has served as Chairman and Chief Executive Officer of
Aurora Electronics, Inc., a provider of personal computer parts and
repair services, since January 1, 1998. Mr. McTavish 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, from March 1992 until its acquisition by Ceridian Corporation
in December 1997. Mr. McTavish was President and Chief Executive
Officer of Comdata Holdings Corp. from October 1986 to February 1992.
(5) Mr. Noall has been an Executive of KeyCorp since January 1, 1997. Mr.
Noall served as Senior Executive Vice President and Chief Administrative
Officer of KeyCorp from March 1, 1994 to December 31, 1996 and served in
the additional positions of General Counsel and Secretary of KeyCorp from
September 1, 1995 to June 14, 1996. Prior to March 1, 1994, Mr. Noall
served as Vice Chairman of the Board and Chief Administrative Officer of
Society Corporation (banking). Mr. Noall joined KeyCorp on that date upon
the merger of Society Corporation and KeyCorp.
(6) 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, a co-founder of the Company, 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.
(7) Mr. Stanford served as managing member of 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, most recently as its National Director of
Information Technology Consulting Services.
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. McTavish and Seymour) was granted options to purchase 5,000
shares of Common Stock at the fair market value of the shares 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 (i.e. Messrs. Noall, Kelly and Elbaum) 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.
To date, no options have been awarded pursuant to such formula grant. All such
options awarded to non-employee
4
<PAGE> 8
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 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 each committee meeting
attended. No fee is paid for telephonic meetings. Directors who do not reside in
Charlotte, North Carolina are reimbursed for travel and lodging expenses. The
Board of Directors held ten meetings during the year ended December 31, 1997 and
took action on three occasions by unanimous written consent. During 1997, no
director attended less than 75% of the total number of meetings of the Board of
Directors during his term of service or the total number of meetings of
committees of the Board on which he served. In addition to regular and special
meetings of the Board, the Board confers with management by conference call from
time to time.
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 and the 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. Noall, Kelly and McTavish currently serve on the
Compensation Committee, and Messrs. Finley, Elbaum and Seymour currently serve
on the Audit Committee. During the year ended December 31, 1997, the
Compensation Committee met five times and the Audit Committee met three times.
The Board of Directors does not have a nominating committee.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of March 16, 1998 the beneficial
ownership of Common Stock by each director and executive officer named in the
Summary Compensation Table below, and by all directors and executive officers as
a group.
<TABLE>
<CAPTION>
Shares beneficially owned (1)
-----------------------------
Name of Beneficial Owner Number Percent
------------------------ ------ -------
<S> <C> <C>
Steven S. Elbaum 2,000 *
David A. Finley 82,001 *
Keith B. Hall 0 *
Robert J. Kelly 12,000 *
George L. McTavish 18,670 *
Roger Noall 22,000 *
William G. Seymour 435,622 4.7%
Alan C. Stanford 137,483 1.5%
All directors and executive officers as a 709,776 7.5%
group (8 in number)
</TABLE>
5
<PAGE> 9
- ----------
*Less than one percent.
(1) Included in the calculation of the number of shares of Common Stock
owned beneficially are the following shares purchasable under options
exercisable on April 1, 1998 or within 60 days thereafter by the
directors and executive officers indicated and by all the directors and
executive officers as a group: Mr. Elbaum -- 2,000 shares;
Mr. Finley -- 80,001 shares; Mr. Kelly -- 2,000 shares;
Mr. McTavish -- 18,670 shares; Mr. Noall -- 2,000 shares;
Mr. Seymour -- 2,000 shares; Mr. Stanford -- 133,333 shares; and
members of the group (including the foregoing) -- 240,004 shares.
EXECUTIVE OFFICERS, COMPENSATION AND OTHER INFORMATION
As of the date of this Proxy Statement, Messrs. Stanford and Hall are
the only executive officers of the Company. David A. Finley served as Executive
Vice President and Chief Financial Officer during a portion of the year ended
December 31, 1997. Because Mr. Finley served as Executive Vice President and
Chief Financial Officer of the Company during the fiscal year ended December 31,
1997, he has been included in the following compensation tables.
The following table sets forth a summary, for fiscal years ended
December 31, 1997, December 31, 1996 and December 31, 1995, of the compensation
of the employees serving as executive officers on December 31, 1997 and Mr.
Finley, who served as Executive Vice President and Chief Financial Officer for a
portion of 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
Annual Compensation -------------------
------------------- Securities All Other
Name and Principal Position Year Salary($) Bonus($) Underlying Options(#) Compensation($)(1)
--------------------------- ---- --------- -------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
Alan C. Stanford 1997 300,000 100,000(2) 0 4,750
Chairman and Chief Executive 1996 300,000 100,000(3) 400,000 4,750
Officer 1995 100,075 350,000(3) 0 4,620
Keith B. Hall(4) 1997 100,000 25,000 20,000 147,022(5)
Vice President and 1996 -- -- -- --
Chief Financial Officer 1995 -- -- -- --
David A. Finley(6) 1997 219,025 0 5,000 4,750
Executive Vice President and 1996 248,565 0 70,000 5,164
Chief Financial Officer 1995 -- -- -- --
</TABLE>
- ---------------
(1) Represents matching contributions made by the Company under the Company's
401(k) retirement plan.
(2) A portion of Mr. Stanford's 1997 bonus was in lieu of reimbursement of
certain travel expenses incurred by Mr. Stanford.
(3) Mr. Stanford received 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. Of such amount, $350,000 was
paid in October 1995 and $100,000 was paid in March 1996.
(4) Mr. Hall's employment with the Company commenced July 1, 1997.
(5) Also includes $80,000, adjusted for potential tax liability to $144,772,
paid to Mr. Hall for relocation expenses.
6
<PAGE> 10
(6) Mr. Finley was employed by the Company from January 1996 to August 1997
and again on a temporary basis from mid-September 1997 to mid-November
1997 while Mr. Stanford was recovering from heart surgery.
The following table sets forth certain information with regard to
options granted during the year ended December 31, 1997 to the executive
officers named in the Summary Compensation Table.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of Percent of Potential
Securities Total Options Realizable Value at Assumed
Underlying Granted To Exercise or Annual Rates of Stock Price
Options Employees in Base Price Expiration Appreciation for Option Term (1)
Name Granted (#) Fiscal Year ($/SH) Date 5%($) 10%($)
---- ----------- ----------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Alan C. Stanford 0 -- -- -- -- --
Keith B. Hall 20,000(2) 71.4% 12.6875 7/1/2007 159,582 404,412
David A. Finley 5,000(3) 17.9% 14.00 7/24/2007 44,023 111,562
- -----------------
</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.
(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 as a result of death or disability or termination by the Company
without cause. Options expire six months 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.
(3) Options awarded to Mr. Finley became exercisable in full on August 31,
1997 upon Mr. Finley's retirement from employment and continue to be
exercisable 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 held at December 31, 1997 by each of the executive officers named in the
Summary Compensation Table. No options were exercised by any of the executive
officers named in the Summary Compensation Table in the year ended December 31,
1997.
FY-end Option Values
<TABLE>
<CAPTION>
Value of securities
Number of securities underlying unexercised
underlying unexercised in-the-money
options at FY-end(#) options at FY-end($)
Name Exercisable/ unexercisable Exercisable/ unexercisable
---- -------------------------- --------------------------
<S> <C> <C>
Alan C. Stanford 133,333/266,667 0/0
Keith B. Hall 0/20,000 0/0
David A. Finley 80,001/1,665 48,135/16,026
</TABLE>
7
<PAGE> 11
EMPLOYMENT AGREEMENTS
On September 1, 1995, the Company entered into an employment agreement
with Alan C. Stanford in connection with Mr. Stanford's acceptance of employment
with the Company. The employment agreement was amended on February 19, 1998 and
is described herein as amended. Pursuant to the employment agreement, Mr.
Stanford is to be paid a minimum base salary of $300,000, subject to increases
upon approval of the Compensation Committee of the Board of Directors. Under the
employment agreement, commencing with the year beginning January 1, 1997, Mr.
Stanford became eligible to receive an annual bonus for the prior fiscal year to
be determined by the Compensation Committee. Mr. Stanford was paid a $100,000
bonus for 1997, a portion of which was in lieu of reimbursement of certain
travel expenses incurred by Mr. Stanford.
The employment agreement provided that the Company award to Mr.
Stanford, as an inducement for his acceptance of employment, options to purchase
400,000 shares of Common Stock. 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 also provides for other employee
benefits and perquisites customary for executive employment agreements. In
addition, Mr. Stanford is to be reimbursed for reasonable travel expenses from
his residence in Indiana and for relocation expenses if Mr. Stanford moves his
residence.
The current term of Mr. Stanford's employment agreement expires on
September 1, 1999 and will automatically 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. In addition, 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 upon such termination the Company shall pay
Mr. Stanford the amount of Mr. Stanford's most recent annual base salary and
bonus for two years. In the event Mr. Stanford is not able to perform his duties
for six months as a result of disability, the Company may terminate the
agreement after such six month period, provided that Mr. Stanford shall continue
to be an employee for all purposes (including employee benefit plans and the
1996 Stock Option Plan) for an additional two-year period and the Company shall
pay Mr. Stanford any portion of his base salary not paid by the disability
insurance carrier then providing coverage for the Company's executives. During
the term of employment and for a period of two years thereafter, the employment
agreement requires 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 June 1, 1997, the Company entered into an employment agreement with
Keith B. Hall in connection with Mr. Hall's acceptance of employment as the
Company's Chief Financial Officer. The employment agreement was amended on
February 19, 1998 and is described herein as amended. Pursuant to the employment
agreement, Mr. Hall is to be paid a minimum base salary of $200,000, subject to
increase upon approval of the Compensation Committee of the Board of Directors.
Under the employment agreement, commencing with the year beginning January 1,
1997, Mr. Hall became eligible to participate in any annual bonus compensation
program for executives of the Company generally that may be approved by the
Compensation Committee. In addition, the Company shall pay Mr. Hall a guaranteed
bonus of $25,000 on each of December 30, 1997 and June 30, 1998, which in the
discretion of the Compensation Committee may be in addition to or in lieu of any
bonus compensation payable under the bonus compensation program. Mr. Hall was
paid only the guaranteed bonus of $25,000 for 1997.
8
<PAGE> 12
Pursuant to the employment agreement, the Company awarded to Mr. Hall,
as an inducement for his acceptance of employment, options to purchase 20,000
shares of Common Stock. The employment agreement also provides for other
employee benefits and perquisites customary for executive employment agreements.
In addition, the Company agreed to pay Mr. Hall $80,000, adjusted for potential
tax liability, for expenses in connection with his relocation to Charlotte,
North Carolina.
In the event of a change of control of the Company, as defined in the
employment agreement, prior to the time as Mr. Hall shall have been granted
options to purchase an additional 80,000 shares of the Company's Common Stock
and in the further event Mr. Hall is not offered employment in the same or a
comparable position with the Company or the Company's successor following such
change of control, the Company shall pay to Mr. Hall in cash, upon consummation
of such change in control transaction, an amount equal to the gain, if any, that
would have been realized by Mr. Hall upon such change of control had Mr. Hall
been granted options to purchase such additional 80,000 shares (less any
additional options granted to Mr. Hall prior to the change of control, other
than the 20,000 options awarded to Mr. Hall upon his acceptance of employment),
at $12.6875 per share, such gain to be determined by subtracting the option
price(s) from the net per share price paid for Mr. Hall's Common Stock in the
change of control transaction, provided that such amount shall not exceed
$750,000.
The initial term of Mr. Hall's employment agreement will expire on June
30, 1999 and will automatically 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. The Company may terminate Mr. Hall's employment on substantially the
same terms as contained in Mr. Stanford's employment agreement described above.
During the term of employment and for a period of two years thereafter, the
employment agreement requires Mr. Hall to refrain from certain activities in
competition with the Company. Mr.
Hall may resign at any time.
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. Pursuant to
the employment agreement, Mr. Finley was paid a base salary during his
employment of $250,000 per annum. In addition, Mr. Finley was eligible to
receive annual bonuses to be determined by the Compensation Committee. Mr.
Finley did not receive a bonus for 1996 or 1997. Pursuant to the employment
agreement, the Company awarded to Mr. Finley options to purchase 70,000 shares
of Common Stock. Mr. Finley's employment agreement also provided for other
employee benefits and perquisites customary for executive employment agreements.
In addition, the employment agreement provided for reimbursement for reasonable
travel expenses from his residence and offices in New York to the Company's
principal offices in Charlotte and for reasonable lodging expenses while in
Charlotte. Mr. Finley retired from employment on August 31, 1997 and the
employment agreement was terminated.
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PERFORMANCE GRAPH
The following graph compares the Company's cumulative total shareholder
return for five fiscal years through the end of the most recent fiscal year,
December 31, 1997, assuming the investment on January 31, 1993, 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 January 31, 1993, of $100 in
securities that are the components of these indices.
[PERFORMANCE GRAPH TO GO HERE]
1/31/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- -------- --------
Nasdaq 100.000 111.61 109.10 154.30 189.78 232.94
Peer 100.000 101.30 122.98 187.35 231.19 284.05
Company 100.000 75.42 164.15 122.64 79.24 72.64
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executive officers generally
are made by the Compensation Committee of the Board. Set forth below is a report
of the Board's Compensation Committee addressing the Company's compensation
policies for 1997 for its executive officers.
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. To motivate executive personnel to
perform at their full potential, the Committee believes a significant portion of
compensation should be incentive-based. Consistent with these objectives, it is
the policy of the Committee to make a portion of executive
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<PAGE> 14
compensation, both cash compensation and stock options, dependent upon total
corporate performance and enhancing stockholder value.
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 and strategic goals with a significant portion of
compensation linked to overall corporate results. 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.
The Committee also believes it is essential that the Committee retain
the flexibility to evaluate not only the overall performance of the individual
executive officers, and the Company's performance as a whole, but also all other
circumstances and challenges facing the Company and the respective executive
officer. Consequently, the Committee relies on subjective evaluation rather than
objective formulas in setting and adjusting the base salary of the Chief
Executive Officer and the other executive officers and in awarding bonuses and
other incentive compensation.
Base Salaries; Options; and Annual Bonuses
Mr. Stanford is currently employed pursuant to an employment agreement
that established his minimum level of salary for 1997 at $300,000, subject to
increases upon approval by the Compensation Committee. The Committee did not
increase Mr. Stanford's salary for 1997. Mr. Hall is employed pursuant to an
employment agreement that established his level of salary for 1997 at $200,000.
Mr. Finley, who is no longer an executive officer, was employed for most of 1997
pursuant to an employment agreement that established his salary at $250,000. The
agreements for Messrs. Stanford and Hall provide that the Committee may increase
compensation for future periods.
On July 1, 1997, Mr. Hall was awarded options for 20,000 shares under
the 1996 Stock Option Plan and on July 24, 1997, Mr. Finley was awarded options
for 5,000 shares under the 1996 Stock Option Plan. The Committee awarded such
options to Mr. Hall in satisfaction of the Company's contractual obligations
under Mr. Hall's employment agreement and in order 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. In
determining to award such options to Mr. Finley, the Committee considered Mr.
Finley's performance as Executive Vice President and Chief Financial Officer
during the past year.
Under the terms of the employment agreements, Messrs. Stanford, Hall
and Finley were eligible to receive annual bonuses for 1997 to be determined by
the Compensation Committee, provided that Mr. Hall was to receive a guaranteed
bonus of $25,000 on December 30, 1997 which, in the discretion of the
Compensation Committee, may be in addition to or in lieu of any other bonus
awarded by the Compensation Committee. For 1997, Mr. Stanford was awarded a
bonus of $100,000. A portion of Mr. Stanford's bonus was paid in lieu of
reimbursement of certain travel expenses incurred by Mr. Stanford. Mr. Hall was
awarded the $25,000 bonus in satisfaction of the guaranteed bonus obligations
under his employment agreement and in recognition of his performance as Chief
Financial Officer during the second half of 1997. Mr. Finley received no bonus.
In general, it has been the Company's policy to pay bonuses to its
executive officers based upon its subjective assessment of overall performance,
achievement of individualized performance objectives, and the Company's overall
performance, including stock performance. In determining 1997 bonuses, the
Committee used its subjective assessment of the overall performance of the
individual executive officer in terms of responsibility, experience and breadth
of knowledge and the performance of the Company as a whole. No specific weights
were assigned to these factors.
With respect to Mr. Stanford, the Committee also considered how well he
performed in the following areas: development and implementation of a strategic
vision for the Company; management of
11
<PAGE> 15
the Company's financial affairs; positioning the Company in its markets;
recruitment and retention of qualified employees; capitalization on business
opportunities; and exhibition of leadership in achieving the Company's
financial, strategic and long-term goals. No specific weights were assigned to
these factors. In addition, the Committee considered the Company's actual
results for 1997 in the areas of product development, overall financial
strength, perceived customer satisfaction and the Company's prospects for
long-term growth.
The Committee believed that Mr. Stanford's contribution to the
Company's 1997 performance was significant, and in determining the amount of
bonus for 1997, as well as with the other executive officers, the Committee
awarded a bonus similar to what the Committee believed to be appropriate to be
in the mid-range for competitive companies, using the Committee's subjective
assessment.
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 from January 1996 to February 1998 during the
terms of service of William G. Seymour and Robert J. Levenson 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:
Roger Noall
Robert J. Kelly
George L. McTavish
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 a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the year ended
December 31, 1997, 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 January 1997, Mr. William W. Neal III, the
former Chairman and Chief Executive Officer of the Company, was late in
reporting sales of securities that occurred on December 27, 30 and 31, 1996,
which were subsequently reported on a Form 5 filed on February 14, 1997, and Mr.
Kelly was late in reporting his ownership of 5,000 shares on his initial report
on Form 3, which was amended on June 10, 1997 to include such shares.
12
<PAGE> 16
PROPOSAL 2
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, 1998,
subject to ratification of this appointment by the stockholders of the Company.
Price Waterhouse LLP has served as the Company's independent accountants for
seven 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 1999 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, 1998. 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.
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.
13
<PAGE> 17
FORM 10-K
A copy of the Annual Report on Form 10-K for the year ended December
31, 1997, as filed with the Securities and Exchange Commission may be obtained
upon request and without charge by writing:
Keith B. Hall
Chief Financial Officer
Broadway & Seymour, Inc.
128 South Tryon Street
Charlotte, North Carolina 28202
or by contacting Mr. Hall via electronic mail at [email protected].
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<PAGE> 18
[COMPANY LOGO]
<PAGE> 19
APPENDIX A
BROADWAY & SEYMOUR, INC.
ANNUAL MEETING OF STOCKHOLDERS
to be held on May 8, 1998
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Alan C. Stanford, Keith B. Hall and Lillian N.
Wilson as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote, as designated on the reverse
side, all the shares of common stock of Broadway & Seymour, Inc. (the
"Company"), held of record by the undersigned on March 16, 1998, at the annual
meeting of stockholders to be held on May 8, 1998, or any adjournment thereof.
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 2, 1998, and revokes all proxies heretofore given by the
undersigned.
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as name(s) appear(s) on the reverse. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________________ _____________________________________
______________________________________ _____________________________________
______________________________________ _____________________________________
<PAGE> 20
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
----------------------------------
BROADWAY & SEYMOUR, INC.
----------------------------------
RECORD DATE SHARES:
1. Election of two Directors.
David A. Finley
William G. Seymour
[ ] For All [ ] Withheld [ ] For All
Nominees Except
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name of the nominee.
Your shares will be voted for the remaining nominee.
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.
Please be sure to sign and date this Proxy. Date
------------------------
- ----------------------------------- -----------------------------------
Shareholder sign here Co-owner sign here
Mark box at right if an address change or comment
has been noted on the reverse side of this card. [ ]
DETACH CARD DETACH CARD
