<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / 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 Section 240.14a-11(c) or Section
240.14a-12
FOURTH SHIFT CORPORATION
- --------------------------------------------------------------------------------
(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>
FOURTH SHIFT CORPORATION
TWO MERIDIAN CROSSINGS
MINNEAPOLIS, MN 55423
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 9, 2000
TO THE SHAREHOLDERS OF FOURTH SHIFT CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of
Fourth Shift Corporation (the "Company") will be held on Tuesday, May 9, 2000,
at the Marriott City Center, 30 South Seventh Street, Minneapolis, Minnesota
55402 at 3:30 p.m., CST, for the following purposes:
1. To elect three directors.
2. To transact such other business as may properly come
before the meeting.
Only holders of record of the Company's Common Stock at the close of
business on March 31, 2000 will be entitled to receive notice of and to vote at
the meeting or any adjournment thereof.
You are cordially invited to attend the meeting. WHETHER OR NOT YOU
PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. If you
later desire to revoke your proxy, you may do so at any time before it is
exercised.
BY ORDER OF THE BOARD OF DIRECTORS
Marion Melvin Stuckey, Chairman of the Board
Minneapolis, Minnesota
April 4, 2000
-----------------------
IMPORTANT - PLEASE MAIL YOUR PROXY CARD PROMPTLY
IN ORDER THAT THERE MAY BE A PROPER REPRESENTATION
AT THE MEETING, YOU ARE URGED, WHETHER YOU OWN ONE
SHARE OR MANY, TO COMPLETE, SIGN AND MAIL YOUR PROXY.
-----------------------
<PAGE>
FOURTH SHIFT CORPORATION
Two Meridian Crossings
Minneapolis, MN 55423
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 9, 2000
This Proxy Statement is furnished in connection with the solicitation
of the enclosed proxy by the Board of Directors of Fourth Shift Corporation (the
"Company") for use at the Annual Meeting of Shareholders to be held on May 9,
2000, at 3:30 p.m., CST, at the Marriott City Center, 30 South Seventh Street,
Minneapolis, Minnesota 55402 and any adjournments thereof (the "Annual
Meeting"). Expenses in connection with the solicitation of proxies will be paid
by the Company. Proxies are being solicited primarily by mail or electronically
via the internet at http://www.eproxy.com/fsft/. In addition, officers and other
employees of the Company who will receive no additional compensation for their
services may solicit proxies by telephone, facsimile or in person. This Proxy
Statement and form of proxy enclosed are being mailed to shareholders on or
about April 4, 2000.
Those shares of the Company's Common Stock, $.01 par value ("Common
Stock"), represented by proxies in the form solicited will be voted in the
manner directed by the holder of such shares, and, if no direction is made, such
shares will be voted for the election of the nominees for director named in this
Proxy Statement. If a shareholder abstains from voting as to any matter, then
the shares held by such shareholder shall be deemed present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to such matter, but shall not be deemed to have been voted in favor of
such matter. If a broker returns a "nonvote" proxy, indicating a lack of
authority to vote on such matter, then the shares covered by such nonvote shall
be deemed present at the meeting for purposes of determining a quorum but shall
not be deemed to be represented at the meeting for purposes of calculating the
vote with respect to such matter. Proxies may be revoked at any time before
being exercised by delivery to the Secretary of the Company of a written notice
of termination of the proxies' authority or a duly executed proxy bearing a
later date.
A copy of the Company's Annual Report for the year ended December 31,
1999 is being furnished to each shareholder with this Proxy Statement.
Only the holders of the Common Stock whose names appear of record on
the Company's books at the close of business on March 31, 2000 will be entitled
to vote at the Annual Meeting. At the close of business on March 31, 2000, a
total of 10,650,286 shares of Common Stock was outstanding, each share being
entitled to one vote.
-2-
<PAGE>
ITEM 1--ELECTION OF DIRECTORS
NOMINEES
The Company's Articles of Incorporation provide for a "classified
board" of directors. The number of members of the Board of Directors is
currently set at seven, and the directors are divided into Class A (consisting
of two directors), Class B (consisting of two directors) and Class C (consisting
of three directors). Anton J. Christianson, Steve J. Lair and Robert M. Price
are the Class C directors whose terms expire at the Annual Meeting. The Board of
Directors has nominated Messrs. Christianson, Lair and Price for reelection to
the Board of Directors at the Annual Meeting for terms expiring at the annual
meeting in 2003. The other directors of the Company will continue in office for
their existing terms.
Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted to elect Messrs. Christianson, Lair and Price. If a
shareholder of record returns a proxy withholding authority to vote the proxy
with respect to any of the nominees, then the shares of the Common Stock covered
by such proxy shall be deemed present at the Annual Meeting for purposes of
determining a quorum and for purposes of calculating the vote with respect to
such nominee or nominees, but shall not be deemed to have been voted for such
nominee or nominees. The affirmative vote of a majority of the outstanding
shares of the Common Stock is necessary to elect each nominee. Cumulative voting
is not permitted in the election of directors. In the unlikely event that any of
the nominees is not a candidate for election at the Annual Meeting, the persons
named in the accompanying form of proxy will vote for such other persons as the
Board of Directors may designate. The Board of Directors has no reason to
believe that any nominee will not be a candidate for election.
The following information is furnished with respect to each nominee and
director as of February 29, 2000:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
NAME AGE EXPERIENCE FOR PAST FIVE YEARS
---- --- ------------------------------
INCUMBENT DIRECTORS: CLASS C - TERM EXPIRING 2000
<S> <C> <C>
Anton J. Christianson............ 47 Mr. Christianson has been a Director of the Company since 1984. He
has been a principal of Cherry Tree Investments, a venture capital
management firm, for more than five years. Mr. Christianson also
serves on the Board of Directors of Transport Corporation of America,
Fair Isaac and Company, Inc., and Peoples Educational Holdings.
Steve J. Lair.................... 53 Mr. Lair has been a director of the Company since April 1997. He has
been Senior Vice President of Sales and Marketing and Service of NEC
Computer Corporation since March 1998. He was Senior Vice President
Marketing and Sales of Acer America Corporation from March 1997 until
March 1998; Vice President, Worldwide Marketing and Sales, Personal
Productivity Products, of Texas Instruments, Inc. from April 1995 to
March 1997; Vice President of Marketing, Toshiba America Information
Systems from April 1992 to April 1995; and Vice President, Dataquest
Microcomputer Systems Group from April 1988 to April 1992.
-3-
<PAGE>
<S> <C> <C>
Robert M. Price.................. 69 Mr. Price has been a director of the Company since 1990. He has been
President of PSV, Inc., a technology consulting business located in
Burnsville, Minnesota, since 1990. From 1961 until 1990 he served in
various executive positions, including Chairman and Chief Executive
Officer, with Control Data Corporation ("CDC"). Mr. Price also serves
on the Board of Directors of International Multifoods Corporation,
Tupperware Incorporated, Affinity Technology, Inc., Data Link, Inc.,
and Public Service Company of New Mexico.
<CAPTION>
NOMINEE DIRECTORS: CLASS B - TERM EXPIRING 2002
<S> <C> <C>
Jimmie H. Caldwell............... 60 Mr. Caldwell has been President, Chief Operating Officer and a
Director of the Company since 1984. Prior to that time, Mr. Caldwell
served in various positions at CDC, a multinational computer hardware,
peripherals and services company, from 1964 to 1984 and held the
position of Vice President of Operations for CDC's Peripheral Products
Company when he left to join the Company.
Mark W. Sheffert................. 52 Mr. Sheffert has been a director of the Company since April 1998. He
is the founder, Chairman and Chief Executive Officer, of Manchester
Companies, Inc., a Minneapolis-based private investment banking and
management advisory firm, since January 1994. Mr. Sheffert also
serves on the Board of Directors of Telident Inc., Medical Graphics
Corporation, and LifeRate Systems, Inc.
<CAPTION>
INCUMBENT: CLASS A - TERM EXPIRING 2001
<S> <C> <C>
Marion Melvin Stuckey............ 61 Mr. Stuckey is the founder of the Company and has been the Chief
Executive Officer and Chairman of the Company since 1982. Prior to
forming the Company, Mr. Stuckey was an executive officer of CDC from
1975 to 1982. Prior to that Mr. Stuckey served in various sales,
marketing and management positions at IBM from 1960 to 1975.
Michael J. Adams................. 54 Mr. Adams has been a Director of the Company since 1984. He has been
a senior partner of Adams & Cesario, P.A., a law firm engaged in a
general business practice in Minneapolis, for more than five years.
</TABLE>
MEETINGS
During the fiscal year ended December 31, 1999, the Board of Directors
of the Company held four regular meetings and two special meetings. All
incumbent directors attended at least 75% of the meetings of the Board, and all
incumbent directors attended at least 75% of those meetings of the committees of
which they were members.
-4-
<PAGE>
COMMITTEES
The Board of Directors of the Company has an Audit Committee which met
four times and a Compensation Committee which met four times during 1999. The
Audit Committee reviews the Company's arrangements with its independent public
accountants, its internal accounting policies and the substance of its audits.
The Compensation Committee determines policy with respect to compensation of
executive management, specifically reviews the performance and establishes the
compensation of the Company's Chief Executive Officer, reviews compensation of
directors, and administers the Company's stock-based employee benefit plans.
Messrs. Christianson (Chairperson), Lair and Sheffert are members of the Audit
Committee. Messrs. Adams and Price (Chairperson) are members of the Compensation
Committee.
DIRECTOR COMPENSATION
For the fiscal year ended December 31, 1999, directors who were not
also officers or employees of the Company were entitled to receive an annual fee
of $4,000, payable in equal quarterly installments, plus $1,200 per Board
meeting and $500 per committee meeting attended. All directors are entitled to
participate in the Company's 1994 Employee Stock Purchase Plan and to contribute
all (subject to limitations in such plan), or any portion, of the directors fees
they receive to that plan. During 1999, Messrs. Adams, Christianson, Lair, Price
and Sheffert elected to participate in the Employee Stock Purchase Plan and
received 4,252, 4,252, 4,252, 4,252 and 3,700 shares, respectively, for
directors fees contributed to such plan.
Directors who are not also officers or employees of the Company also
receive stock options to purchase 3,500 shares of Common Stock under the
Company's 1993 Stock Incentive Plan at the time of the annual meeting of
shareholders. New directors receive an option to purchase 5,000 shares at the
first annual meeting after they are elected. In accordance with such plan, each
of Messrs. Adams, Christianson, Lair, Price and Sheffert received options to
purchase 3,500 shares of Common Stock at an exercise price of $4.25 per share on
May 4, 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS ELECT THE
NOMINEES NAMED HEREIN TO THE TERMS AS DIRECTORS OF THE COMPANY DESCRIBED ABOVE.
THE PERSONS NAMED IN THE ACCOMPANYING PROXY INTEND TO VOTE THE PROXIES HELD BY
THEM IN FAVOR OF SUCH NOMINEES, UNLESS OTHERWISE DIRECTED. IF NO INSTRUCTION IS
GIVEN, THE ACCOMPANYING PROXY WILL BE VOTED FOR SUCH ELECTION. THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK OUTSTANDING AS OF THE RECORD
DATE IS REQUIRED FOR THE ELECTION OF EACH DIRECTOR.
-5-
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation policies are recommended and
administered by the Compensation Committee of the Board of Directors. During
1999, the Compensation Committee consisted of Michael Adams and Robert Price,
independent, outside directors.
EXECUTIVE COMPENSATION POLICIES
The Board of Directors has adopted the following standards and policies
relative to setting executive compensation:
- Total compensation should include a significant performance
component in addition to salary.
- Salary should have a relationship to salaries in industry peer
groups.
- Total compensation should be adequate to attract, motivate and
retain quality talent.
- Performance measures should relate to key characteristics
accepted within the software/high technology industry.
- Performance should be measured over time periods adequate to
evaluate a particular executive's contribution to results.
- Stock options and other awards should be integrated with other
elements of compensation to formulate a package that helps to
align executive compensation with shareholder interests.
1999 EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company retained the services of a compensation consultant in late
1998 to establish a stock compensation program that provided significant
incentive to executive officers to improve the performance of the Company. It
also received input from such consultant regarding the level of compensation
appropriate for its officers. The resulting compensation program for executive
officers of the Company places significant weight on long-term equity based
compensation, as well as base salary and cash incentives designed to retain
executives.
BASE SALARY. Base salaries for executive officers during 1999 increased
only slightly over levels in 1998. Mr. Stuckey's base salary was $305,000 in
1999, which represents a 6.6% increase over 1998 compensation and an 8.9%
increase of 1997 compensation. The small increases in Mr. Stuckey's base salary
over the past few years reflect the Company's efforts to render more of the
compensation to executive officers incentive based.
CASH INCENTIVE COMPENSATION. The Compensation Committee established the
template for the 1999 cash bonus plan for executive officers during the fall of
1998. The 1999 bonus plan was tied to the Company's operating plan, focusing
primarily on operating income and cash flow. Bonuses are paid only if the
threshold financial objectives for the fiscal year are achieved. The
Compensation Committee also has the discretion to award bonuses based on other
performance objectives or criteria. With the downturn in the market for
enterprise resources management software, the Company's operating income did not
meet the base threshold for bonuses in 1999 and no bonuses were paid to Mr.
Stuckey or any other executive officer.
-6-
<PAGE>
STOCK INCENTIVE COMPENSATION. In order to further preserve cash, and to
provide significant incentive to executive management to meet projected
performance over the next four years, the Compensation Committee retained a
compensation consultant to provide advice on stock-based incentives for
executives in early Summer 1998. With the assistance of this consultant, the
Compensation Committee instituted a special stock-based compensation program in
October 1998. This program provided for the grant of both stock options and
restricted stock that vest in eight years (in the case of options) and five
years (in the case of restricted stock) but expires if the executive is
terminated prior to vesting. The vesting of both the options and the restricted
stock accelerate in the event the Company meets certain projected performance
goals, defined in terms of earnings per share, in 1999, 2000 and 2001. The
vesting was not accelerated in 1999 because the Company has not yet met the
performance goals.
The Compensation Committee believes that this program, which makes the
compensation realizable only if performance is generated that will likely be
reflected in the market value of the Company's Common Stock, directly ties the
executive's compensation to appreciation in share value. Mr. Stuckey received
options to purchase 93,750 shares and 31,250 shares of restricted stock as part
of this program.
Because of the large grants of options and restricted stock in the fall
of 1998, no additional options were granted or other long-term incentive
compensation provided to Executive Officers during the 1999 calendar year.
BENEFITS. The Company provides medical and retirement savings benefits
to executive officers on terms generally available to employees. No executive
officer received perquisites in excess of 10% of salary during 1999.
The Company instituted a special post-retirement health benefits
program for Mr. Stuckey in the summer of 1999. The program provides for lifetime
medical benefits under Fourth Shift's benefit plans for Mr. Stuckey and his
spouse, subject to premium limitations, and long-term care benefits funded by
defined premium contributions.
SUMMARY
The Compensation Committee believes that the compensation program for
executive officers during the 1999 fiscal year was comparable to compensation
programs for similarly situated companies and that the aggregate compensation
provided under the program was appropriate.
Michael Adams
Robert Price
-7-
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
the last three fiscal years awarded to or earned by the Chief Executive Officer
of the Company and the Company's two other executive officers for services
rendered.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- -----------------------------------
NAME AWARDS PAYOUTS
OTHER ---------------------- ------- ALL
AND ANNUAL RESTRICTED OTHER
PRINCIPAL COMPEN- STOCK LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS(1) OPTIONS PAYOUTS SATION(2)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MARION MELVIN STUCKEY 1999 $ 305,000 $18,333
Chairman and Chief 1998 286,000 $ 304,000 $ 78,125 143,750 18,333
Executive Officer 1997 280,000 15,000
JIMMIE H. CALDWELL 1999 230,000 18,333
President and Chief 1998 216,000 225,000 60,938 125,000 18,333
Operating Officer 1997 212,000 15,000 15,000
DAVID G. LATZKE 1999 165,000 3,333
Vice President, Secretary 1998 151,000 140,000 45,703 71,250 3,333
Chief Financial Officer 1997 148,000 10,000
and Treasurer
</TABLE>
- ---------------------
(1) The value of each restricted stock award was determined by multiplying the
closing market price of the Company's Common Stock on the date of grant by
the number of shares awarded. This represents a grant of 31,250 shares,
25,000 shares and 18,750 shares of restricted stock to Messrs. Stuckey,
Caldwell and Latzke, respectively, that vests five years from the date of
grant but accelerates upon achievement of certain performance targets. As
of December 31, 1998, the number and value (based on the closing market
price of the Company's Common Stock on December 31, 1998) of the aggregate
restricted stock holdings of each executive officer were as follows: 31,250
shares ($141,625) by Mr. Stuckey, 25,000 shares ($112,500) by Mr. Caldwell,
and 18,750 shares ($84,375) by Mr. Latzke.
(2) The amounts reported in this column include Company contributions to the
Company's 401(k) Plan of $3,333 in 1999 and 1998 for each of Messrs.
Stuckey, Caldwell and Latzke. The amounts reported for each of Messrs.
Stuckey and Caldwell for each of the three years also include $15,000 in
benefits from split-dollar life insurance policies.
-8-
<PAGE>
STOCK OPTIONS
The Company maintains a 1989 Stock Option Plan and a 1993 Stock Incentive
Plan. The Company may grant stock options, and other stock-based awards, to
executive officers and other employees and consultants of the Company under the
1993 Stock Incentive Plan. In 1999, no options were granted to Messrs. Stuckey,
Caldwell and Latzke.
The following table sets forth information with respect to the exercise of
options and the value of options held by executive officers as of December 31,
1999:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND FISCAL YEAR END OPTION VALUES
SHARES ACQUIRED NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ON EXERCISE VALUE OPTIONS AT END OF 1999(1) IN-THE-MONEY OPTIONS (2)
--------------------------- ------------------------
NAME OF OPTIONS REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Stuckey 0 $0 127,500 136,250 $146,250 $596,016
Mr. Caldwell 0 $0 69,000 125,000 239,984 530,391
Mr. Latzke 0 $0 53,750 75,500 146,906 319,719
</TABLE>
- ---------
(1) All of such options are exercisable at a price equal to the fair market
value of the Common Stock on the date of grant, except those issued to Mr.
Stuckey in 1995 for 100,000 shares, which were granted with an exercise
price of $6.50, which was in excess of fair market value.
(2) Represents the difference between the closing price of the Company's Common
Stock as reported on the Nasdaq National Market on December 31, 1999 ($6.94
per share) and the exercise price of the options.
LONG-TERM INCENTIVE PLAN AWARDS
Other than its 1993 Stock Incentive Plan, the Company does not maintain
any long-term incentive plans.
SEVERANCE AGREEMENTS
The Company has severance agreements with Messrs. Stuckey, Caldwell and
Latzke that provide for the payment to such executive officers of severance
benefits in the event such officers are terminated, or resign for "good reason,"
within two years after a "change of control" of the Company. Such severance
benefits range from one and one-half to three times annual compensation received
by such executives averaged over the five years prior to termination. Such
agreements define change of control as the acquisition by any person or persons
acting in concert of 30% or more of the Company's voting stock, a change of
control required to be reported under the Securities Exchange Act of 1934, or
certain changes in the Board composition in connection with a hostile contest
for control. Mr. Stuckey's severance agreement was amended during 1999 to
provide that he will also continue to receive health care benefits, subject to
limitations on the aggregate premium, and will receive long-term care benefits
after retirement. The Company does not have any other employment agreement with
any of the executive officers named in the Summary Compensation Table.
-9-
<PAGE>
TERMINATION OF SUBSIDIARY
During 1999, the Company incorporated a wholly owned subsidiary,
Manufacturers Exchange.com, Inc., to pursue development of Internet-based
auction services for manufacturing concerns. At the direction of the Board,
management of the Company was charged to find external financing for this new
subsidiary, primarily through corporate partnering arrangements by December 31,
1999 or terminate its operations. Management was unable to locate such financing
and terminated any further funding for the subsidiary at the end of the year. In
January 2000, all of the outstanding shares of Manufacturers Exchange.com were
transferred to Mr. Stuckey, the Company's founder and the originator of the idea
to develop this subsidiary. The Company believes that the subsidiary had no
appreciable value at the time of the transfer and the Company had determined not
to pursue its plan of operations.
SHAREHOLDER RETURN
The graph set forth below compares the cumulative total shareholder
return on the Common Stock of the Company since December 31, 1995 with the
cumulative total return on a broad market index (the Nasdaq NMS Index) and a
peer group index (the Nasdaq Computer and Data Processing Index). In each case,
the cumulative return is calculated assuming an investment of $100 on December
31, 1995, and reinvestment of all dividends.
[CHART]
-10-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 28, 2000, information
regarding the ownership of Common Stock by (i) each director, (ii) each
executive officer named in the Summary Compensation Table, (iii) all directors
and executive officers (including the named individuals) as a group, and (iv)
any other shareholder who is known by the Company to own beneficially more than
5% of the outstanding Common Stock of the Company. Except as otherwise
indicated, the shareholders listed in the table have sole voting and investment
powers with respect to the shares indicated.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER(1) PERCENT
------------------------------------ --------- -------
<S> <C> <C>
David R. Lamm (2)............................................. 871,850 8.2%
204 Marcin Lane
Burnsville, MN 55337
Hathaway & Associates, Ltd. (3)............................... 870,000 8.2%
119 Rowayton Avenue
Rowayton, CT 06853
Marion Melvin Stuckey (4)..................................... 842,601 7.9%
Two Meridian Crossings
Minneapolis, MN 55423
Oscar Capital Management, LLC (5)............................. 772,690 7.3%
Andrew K. Boszhardt, Jr.
900 Third Avenue, 10th Floor
New York, NY 10022
Perkins Capital Management, Inc.(6)........................... 750,088 7.1%
730 East Lake Street
Wayzata, MN 55391-1769
Benson Associates, LLC (7).................................... 546,784 5.1%
111 S.W. Fifth Avenue, Suite 1230
Portland, OR 97204
Austin W. Marxe and David M. Greenhouse (8)................... 475,040 4.5%
153 East 53 Street
New York, NY 10022
Michael J. Adams (9).......................................... 451,305 4.2%
Jimmie H. Caldwell(10)........................................ 363,359 3.4%
Anton J. Christianson(11)..................................... 133,240 1.3%
David G. Latzke(12)........................................... 87,843 *
Robert M. Price............................................... 35,076 *
Steve J. Lair................................................. 13,136 *
Mark W. Sheffert.............................................. 7,527 *
All executive officers and directors.......................... 1,934,087 17.7%
as a group (8 individuals)
</TABLE>
- --------------------
* Less than 1%
(1) Includes 8,750 shares for each of Messrs. Adams and Price, 2,625 shares for
each of Messrs. Christianson and Lair, 145,000 shares for Mr. Stuckey,
90,250 shares for Mr. Caldwell, 56,000 shares for Mr. Latzke and
-11-
<PAGE>
322,250 shares for all executive officers and directors as a group of
Common Stock issuable upon the exercise of stock options which are either
currently exercisable or become exercisable within 60 days.
(2) Based upon an amended Schedule 13D dated September 5, 1997; includes
664,700 shares held by a limited partnership for which Mr. Lamm serves as
general partner.
(3) Based upon information contained in the Schedule 13G of Hathaway &
Associates, Ltd. dated January 10, 1994.
(4) Includes 168,863 shares held by a corporation for which Mr. Stuckey is the
President, sole director and sole shareholder.
(5) Based upon an amended Schedule 13G dated February 14, 2000; includes 28,130
shares held by Oscar Capital Management, LLC, 630,260 shares held by Oscar
Investment fund, LP and 114,300 shares held by Oscar Fund (Cayman) Limited.
Oscar Capital management LLC may be deemed to beneficially own the shares
held by Oscar Investment Fund, LP and Oscar Fund (Cayman) Limited.
(6) Based upon an amended Schedule 13G of Perkins Capital Management, Inc.
("PCM") dated February 2, 2000; includes 404,500 shares over which PCM has
sole dispositive and voting powers. PCM has sole dispositive power, but not
voting power, over the remaining shares.
(7) Based upon information contained in the Schedule 13G of Benson Associates,
LLC dated February 16, 2000.
(8) Based upon an amended Schedule 13G dated December 31, 1999; includes
368,340 shares held by Special Situations Fund, III, L.P., and 106,700
shares held by Special Situations Cayman Fund, L.P., investment funds
managed by investment advisers for which Mr. Marxe and Mr. Greenhouse serve
as officers, directors and members or principal shareholders.
(9) Includes 21,000 shares owned by Mr. Adams' minor children, 9,600 shares
owned by Mr. Adams' spouse and 325,703 shares representing Mr. Adams' pro
rata interest in a limited partnership in which he is a limited partner.
Mr. Adams disclaims beneficial ownership of the shares held by his spouse
and such limited partnership.
(10) Includes 8,822 shares and options to purchase shares owned by Mr.
Caldwell's wife. Mr. Caldwell disclaims beneficial ownership of these
shares.
(11) Includes 118,711 shares held by a partnership for which Mr. Christianson is
a general partner.
(12) Includes 200 shares owned by Mr. Latzke's minor children.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors and officers,
and any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 1999. Based on
information contained in their Forms 3, 4 and 5, all directors, officers and
beneficial holders of 10% of the Company's securities timely filed such reports
during 1999.
-12-
<PAGE>
RELATIONSHIP WITH ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent public
accountants for more than six years and will serve as the Company's independent
public accountants for the year ending December 31, 2000. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting, will have
an opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions from shareholders.
GENERAL
The Board of Directors of the Company does not know of any matters
other than those described in this Proxy Statement which will be acted upon at
the Annual Meeting. In the event that any other matters properly come before the
meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment on such
other matters.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the annual meeting of
shareholders held in 2001 that is requested to be included in the Company's
Proxy Statement must be received at the Company's principal executive offices,
Two Meridian Crossings, Minneapolis, MN 55423, before December 1, 2000.
In accordance with the Company's bylaws, any other proposal by a
shareholder to be presented at the annual meeting of shareholders held in 2001,
and any nomination by a shareholder of a person to serve as a member of the
Board of Directors commencing with the 2001 meeting, must be given in writing
and received at the Company's principal executive offices before December 1,
2000. The proposal and any such nomination must contain the specific information
required by the Company's Bylaws, a copy of which may be obtained by writing to
the Secretary of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: April 4, 2000 Marion Melvin Stuckey, Chairman of the Board
-13-
<PAGE>
FOURTH SHIFT CORPORATION
Proxy for the 2000 Annual Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints M.M. Stuckey and J.H. Caldwell, and
each of them, with full power to appoint a substitute, to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Shareholders of Fourth
Shift Corporation to be held on May 9, 2000, and at all adjournments thereof, as
specified below on the matters referred to, and, in their discretion, upon any
other matters which may be brought before the meeting:
1. ELECTION OF CLASS C DIRECTORS:
/ / FOR all nominees (EXCEPT AS / / WITHHOLD AUTHORITY
MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
TO WITHHOLD AUTHORITY TO VOTE FOR A SPECIFIC NOMINEE, PLACE A LINE
THROUGH SUCH NOMINEE'S NAME BELOW:
Anton J. Christianson Steve J. Lair Robert M. Price
2. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER BUSINESS AS MAY PROPERLY BE
PRESENTED AT THE MEETING.
(CONTINUED ON REVERSE SIDE)
<PAGE>
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL DIRECTORS NAMED IN ITEM 1.
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.
- -------------------------------------------------------------------------------
Signature
---------------------------
Signature if held jointly
Dated:_____________, 2000
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
