<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>
ABR INFORMATION SERVICES, 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
(ABR Logo)
34125 U.S. HIGHWAY 19 NORTH
PALM HARBOR, FLORIDA 34684
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 22, 1998
---------------------
To the Shareholders of ABR Information Services, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of ABR Information Services, Inc. (the "Company") will be held at the
Westin Innisbrook Resort, 36750 U.S. Highway 19 North, Palm Harbor, Florida, on
Tuesday, December 22, 1998 at 3:00 p.m. Eastern Standard Time for the following
purposes:
1. To elect one director to hold office until the 2001 Annual Meeting
of Shareholders and until his successor is duly elected and qualified; and
2. To transact any other business as may properly come before the
Annual Meeting.
Shareholders of record as of the close of business on October 23, 1998 will
be entitled to vote at the Annual Meeting or any adjournment or postponement
thereof. Information relating to the matters to be considered and voted on at
the Annual Meeting is set forth in the proxy statement accompanying this Notice.
By Order of the Board of Directors,
SUZANNE M. MACDOUGALD
Secretary
November 16, 1998
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION
AT THE ANNUAL MEETING, PLEASE VOTE ON THE MATTERS TO BE CONSIDERED
AT THE ANNUAL MEETING BY COMPLETING THE ENCLOSED PROXY AND MAILING IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
(ABR LOGO)
34125 U.S. HIGHWAY 19 NORTH
PALM HARBOR, FLORIDA 34684
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection the solicitation with of
proxies on behalf of the Board of Directors of ABR Information Services, Inc.
(the "Company") for the Annual Meeting of Shareholders (the "Annual Meeting") to
be held on Tuesday, December 22, 1998 at 3:00 p.m. Eastern Standard Time, or any
adjournment thereof.
If the accompanying proxy form ("Proxy") is completed, signed and returned,
the shares represented thereby will be voted at the Annual Meeting. The giving
of the Proxy does not affect the right to vote in person should the shareholder
be able to attend the Annual Meeting. The shareholder may revoke the Proxy at
any time prior to the voting thereof.
The Company's annual report on Form 10-K for the fiscal year ended July 31,
1998, together with this Proxy Statement and accompanying Proxy, are first being
mailed on or about November 18, 1998 to shareholders entitled to vote at the
Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders of record as of the close of business on October 23, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
that date, there were 28,701,594 shares of voting Common Stock outstanding and
entitled to vote. Each outstanding share of voting Common Stock, $0.01 par value
per share ("Common Stock"), is entitled to one vote on all matters submitted to
a vote of shareholders.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector of elections appointed for the Annual Meeting, who will also
determine whether a quorum is present for the transaction of business. The
Company's Bylaws provide that a quorum is present if the holders of a majority
of the issued and outstanding shares of Common Stock entitled to vote at the
meeting are present in person or represented by proxy. Abstentions will be
counted as shares that are present and entitled to vote for purposes of
determining whether a quorum is present. Shares held by nominees for beneficial
owners will also be counted for purposes of determining whether a quorum is
present if the nominee has the discretion to vote on at least one of the matters
presented, even though the nominee may not exercise discretionary voting power
with respect to other matters and even though voting instructions have not been
received from the beneficial owner (a "broker non-vote"). Neither abstentions
nor broker non-votes are counted in determining whether a proposal has been
approved.
Under Florida law, if a quorum exists, directors are elected by a plurality
of the votes cast by the shares entitled to vote in the election.
Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be voted
in accordance with the directions given therein. Where no instructions are
indicated, signed Proxies will be voted FOR each of the proposals listed in the
Notice of Annual Meeting of Shareholders which are set forth more completely
herein. Returning your completed Proxy will not prevent you from voting in
person at the Annual Meeting should you be present and wish to do so.
<PAGE> 4
Any shareholder giving a Proxy has the power to revoke it at any time
before it is exercised by: (i) filing with the Secretary of the Company written
notice thereof; (ii) submitting a duly executed Proxy bearing a later date; or
(iii) appearing at the Annual Meeting and giving the Secretary notice of his or
her intention to vote in person. Proxies solicited hereby may be exercised only
at the Annual Meeting and any adjournment thereof and will not be used for any
other meeting. Proxies solicited hereby will be returned to the Board of
Directors and will be tabulated by inspectors of election designated by the
Board of Directors, who will not be employed by the Company or any of its
affiliates.
The cost of solicitation of Proxies by mail on behalf of the Board of
Directors will be borne by the Company. Proxies also may be solicited by
personal interview or by telephone, in addition to the use of the mails, by
directors, officers and regular employees of the Company without additional
compensation therefor. The Company also has made arrangements with brokerage
firms, banks, nominees and other fiduciaries to forward proxy solicitation
materials for shares of Common Stock held of record to the beneficial owners of
such shares. The Company will reimburse such record holders for their reasonable
out-of-pocket expenses.
ITEM 1: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEE FOR ELECTION AS A
DIRECTOR AND URGES EACH SHAREHOLDER TO VOTE "FOR" THE NOMINEE. PROXIES IN THE
ACCOMPANYING FORM WILL BE VOTED AT THE ANNUAL MEETING, UNLESS AUTHORITY TO DO SO
IS WITHHELD, IN FAVOR OF THE ELECTION AS A DIRECTOR OF THE NOMINEE NAMED BELOW.
The Company's Board of Directors is divided into three classes with the
members of each class serving three-year terms expiring at the third annual
meeting of shareholders after their elections. One director is to be elected at
the Annual Meeting to hold office for a term of three years expiring at the 2001
Annual Meeting of Shareholders, and until his successor shall have been duly
elected and qualified. In the event such nominee is unable to serve, the person
designated as proxy will cast votes for such other person in his discretion as a
substitute nominee. The Board of Directors has no reason to believe that the
nominee named below will be unavailable, or if elected, will decline to serve.
2
<PAGE> 5
Certain information is given for the nominee for director, as well as for
each director whose term of office will continue after the Annual Meeting.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND OTHER INFORMATION
- - ---- --- ---------------------
<S> <C> <C>
NOMINEE FOR DIRECTOR -- TERM TO EXPIRE 2001
Mark M. Goldman...................... 56 Mr. Goldman has served as a Director of the Company (and
its predecessors) since 1987. For the past five years,
Mr. Goldman has served as Vice Chairman and Chief
Financial Officer of Phone Programs Financial Corp.,
Boca Raton, Florida, a consulting and management
company.
DIRECTORS CONTINUING IN OFFICE -- TERMS TO EXPIRE 1999
James E. MacDougald.................. 55 Mr. MacDougald has served as Chairman of the Board,
President, Chief Executive Officer and a Director of the
Company (including its predecessors) since 1982. From
1965 to 1982, he served in various sales and sales
management positions, most recently as Group Vice
President of Sales with Home Life Insurance Company of
New York.
Thomas F. Costello................... 57 Mr. Costello has served as a Director of the Company
(including its predecessors) since 1989. For the past
five years, Mr. Costello has served as Chairman and
Chief Executive Officer of the Costello Group, New York,
New York, an insurance and real estate brokerage
company.
DIRECTORS CONTINUING IN OFFICE -- TERMS TO EXPIRE 2000
Suzanne M. MacDougald................ 54 Mrs. MacDougald has served as Senior Vice President,
Secretary and a Director of the Company (and its
predecessors) since 1982.
Peter A. Sullivan.................... 46 Mr. Sullivan has served as a director of the Company
since September 1997. Mr. Sullivan has served as
President of Arlen Corporation, Providence, Rhode
Island, an insurance-related financial products sale and
service company, since 1988.
</TABLE>
3
<PAGE> 6
STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Common Stock with the Nasdaq Stock Market (U.S.) Index
and the Nasdaq Computer and DP Index. This graph assumes that $100 was invested
on May 26, 1994, the date of the Company's initial public offering. The stock
price performance shown below is not necessarily indicative of future price
performance.
<TABLE>
<CAPTION>
NASDAQ
ABR NASDAQ Computer &
Measurement Period Information Stock Market Data
(Fiscal Year Covered) Services, Inc. (U.S.) Processing
<S> <C> <C> <C>
5/26/94 100 100 100
7/31/94 119 99 95
7/31/95 323 139 164
7/31/96 1171 151 184
7/31/97 1258 223 287
7/31/98 808 263 380
</TABLE>
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Acts, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the Acts.
4
<PAGE> 7
BOARD OF DIRECTORS
GENERAL
The Board of Directors has established Audit, Compensation and Stock Option
Committees. The Audit Committee, which is comprised of Messrs. Costello, Goldman
and Sullivan, is responsible for recommending to the Board of Directors the
appointment of independent auditors, reviewing with the independent auditors the
scope of the annual audit engagement, and establishing and reviewing the
Company's financial policies and control procedures. The Compensation Committee,
which is comprised of Messrs. Costello, Goldman, MacDougald and Sullivan, is
responsible for establishing the compensation of the Company's directors,
officers and other managerial personnel, including salaries, bonuses and other
forms of compensation. The Stock Option Committee, which is comprised of Messrs.
Costello, Goldman and Sullivan, is responsible for administering the Company's
stock option plans.
The Board of Directors held eight meetings during the fiscal year ended
July 31, 1998. The Board of Directors also took certain actions by unanimous
written consent in lieu of a meeting, as permitted by Florida law. The Audit
Committee met three times, the Compensation Committee met two times, and the
Stock Option Committee met three times. All directors attended all meetings of
the Board of Directors and all Committees on which they served during the fiscal
year ended July 31, 1998.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation
for service as members of either the Board of Directors or committees thereof.
Directors who are not executive officers of the Company receive an annual fee of
$15,000, plus $1,000 for each board meeting attended and $1,000 per committee
meeting attended.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended July 31, 1998, the executive officers and
directors of the Company filed with the Securities and Exchange Commission (the
"Commission") on a timely basis all required reports relating to transactions
involving equity securities of the Company beneficially owned by them, except
that a Form 5 reporting the grant to Peter A. Sullivan on September 12, 1997 of
options to purchase 5,000 shares under the Company's 1996 Non-Employee Director
Stock Option Plan was filed late. The Company has relied on the written
representation of its executive officers and directors and copies of the reports
they have filed with the Commission in providing this information.
5
<PAGE> 8
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the Record Date, with respect to: (i) each of
the Company's directors; (ii) each of the Company's executive officers named in
the Summary Compensation Table below; (iii) all directors and executive officers
of the Company as a group; and (iv) each person known by the Company to own
beneficially more than 5% of the Common Stock. Except as otherwise indicated,
each of the shareholders listed below has sole voting and investment power over
the shares beneficially owned.
<TABLE>
<CAPTION>
BENEFICIALLY OWNED
-------------------
NAME SHARES PERCENT
- - ---- --------- -------
<S> <C> <C>
James E. MacDougald(1)(2)(3)................................ 924,947 3.2%
James P. O'Drobinak(1)(4)................................... 28,613 *
Suzanne M. MacDougald(1)(5)(6).............................. 723,930 2.5
Thomas F. Costello(7)(8).................................... 671,374 2.3
Mark M. Goldman(9)(10)...................................... 281,274 1.0
Peter A. Sullivan(11)....................................... 45,000 *
Capital Research Company(12)................................ 3,340,000 11.6
Nationwide Investing Foundation III(13)..................... 1,883,000 6.6
Directors and executive officers as a group (six
persons)(14).............................................. 2,695,138 9.2
</TABLE>
- - ---------------
* Less than 1%.
(1) The business address of Messrs. MacDougald and O'Drobinak and Mrs.
MacDougald is 34125 U.S. Highway 19 North, Palm Harbor, Florida 34684.
(2) Excludes 723,930 shares beneficially owned by his spouse, Suzanne M.
MacDougald, and reported elsewhere in this table.
(3) Includes 244,786 shares issuable under currently exercisable options.
(4) Includes 27,500 shares issuable under currently exercisable options.
(5) Excludes 924,947 shares beneficially owned by her spouse, James E.
MacDougald, and reported elsewhere in this table.
(6) Includes 58,370 shares issuable under currently exercisable options.
(7) Includes 21,250 shares issuable under currently exercisable options.
(8) Includes 200,000 shares held by Mr. Costello's spouse.
(9) Includes 25,700 shares held by Mr. Goldman's spouse, and 5,000 shares held
by trusts over which Mr. Goldman has shared investment and voting power.
(10) Includes 21,250 shares issuable under exercisable options.
(11) Includes 5,000 shares issuable under currently exercisable options.
(12) The business address of Capital Research Company is 333 South Hope Street,
Los Angeles, California 90071.
(13) The business address of Nationwide Investing Foundation III is Three
Nationwide Plaza, Columbus, Ohio 43215-2220.
(14) See notes (2) to (11) above.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to or earned by the Company's President and Chief Executive Officer and
each of the Company's two other most highly compensated executive officers who
earned more than $100,000 for any of the fiscal years ended July 31, 1998, 1997
and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS COMPENSATION(1)
- - --------------------------- ------ -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
James E. MacDougald, 1998 $190,000 $110,000 100,000 $ 5,304
President and Chief Executive Officer 1997 190,000 310,000 80,000 4,750
1996 175,000 315,000 180,000 4,396
James P. O'Drobinak, 1998 134,000 100,000 30,000 $ 3,025
Senior Vice President and 1997 66,000 20,000 80,000 --
Chief Financial Officer(2) 1996 -- -- -- --
Suzanne M. MacDougald, 1998 40,000 -- -- $ 1,117
Senior Vice President and 1997 40,000 -- -- 1,000
Secretary 1996 67,000 58,000 30,000 11,686
</TABLE>
- - ---------------
(1) Includes allocations to the accounts of the executive officers under the
Company's defined contribution savings plan. See "-- Savings Plan."
(2) Mr. O'Drobinak became Senior Vice President and Chief Financial Officer of
the Company on January 30, 1997.
The following table sets forth information with respect to grants of stock
options during fiscal 1998 to the executive officers named in the Summary
Compensation Table.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERMS
------------------------------------------------------- -------------------------
% OF TOTAL
OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION
GRANTED(1) FISCAL 1998 SHARE DATE 5%(2) 10%(2)
---------- --------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
James E. MacDougald...... 11,000 2.0% $26.12 9/12/07 $ 180,694 $ 457,914
89,000 16.1 24.08 12/6/07 1,347,796 3,415,581
James P. O'Drobinak...... 30,000 5.4 26.12 9/12/07 492,802 1,248,857
Suzanne M. MacDougald.... -- -- -- -- -- --
</TABLE>
- - ---------------
(1) Options granted under the Company's 1987 Plan, 1993 Plan and 1997 Plan are
exercisable by the named executive officer to the extent of 25% of the
shares subject to such options each year beginning one year after the date
of grant subject to certain conditions.
(2) Assumes rates of Common Stock price appreciation that are prescribed by the
Commission.
7
<PAGE> 10
The following table sets forth information with respect to the aggregate
stock option exercises by the executive officers named in the Summary
Compensation Table during fiscal 1998 and the year-end value of unexercised
options held by such executive officers.
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT YEAR-END YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James E. MacDougald.......... -- -- 244,786 205,000 $1,466,977 $ 378,300
James P. O'Drobinak(2)....... -- -- 27,500 82,500 (2) (2)
Suzanne M. MacDougald........ -- -- 58,370 26,250 525,164 136,913
</TABLE>
- - ---------------
(1) Represents the number of shares of Common Stock that may be acquired upon
the exercise of options, multiplied by the difference between (i) the
closing sales price per share of the Common Stock as of the end of fiscal
1998 ($17.50 per share) and (ii) the exercise price per share.
(2) Exercise price per share exceeded the closing sales price per share of the
Common Stock as of the end of fiscal 1998.
EMPLOYMENT AND SEVERANCE AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
In March, 1994, the Company entered into one-year employment agreements
with each of James E. MacDougald and Suzanne M. MacDougald. These agreements
have been renewed annually, most recently in March, 1998 for an additional
one-year term, and currently provide for annual base salaries of $190,000 and
$40,000, respectively. Each employment agreement provides that, the executive
officer will not, in the event of any covered termination where the executive is
entitled to, and is granted by the Company's Board of Directors, accrued
benefits and the termination payment during a period of not less than one year
nor more than two years following termination of employment, as determined by
the Company's Board of Directors, in any area in which the Company's business is
then conducted, directly or indirectly compete with the Company, or participate
as an officer, employee, partner, director or otherwise, or have any financial
interest, in any business that is in competition with the business of the
Company, subject to certain limitations. Each employment agreement automatically
renews for successive one-year terms unless terminated by either party, and
provides that if the employment agreement is terminated for any reason other
than the executive officer's death or disability, or for cause (as defined
therein), the Company will pay the executive officer severance during the period
following termination of employment in which the executive officer is required
not to compete with the Company, based on the executive officer's annual base
salary during the year of termination. Such severance payment may, upon the
executive officer's election, be paid in one lump sum. Under each employment
agreement, the executive officer is entitled to participate in such bonus
programs and other benefit plans as are generally made available to senior
management of the Company.
The Company also has an employment and severance agreement with each of Mr.
MacDougald and James P. O'Drobinak. Each of these agreements provides, among
other things, that the executive officer is entitled to benefits if, within
three years after a "change in control of the Company," the officer's employment
is ended through (i) termination by the Company, other than by reason of death
or disability or for cause (as defined in the agreements), or (ii) termination
by the officer due to a material breach of the agreement by the Company or a
significant change in the officer's responsibilities. The benefits provided are:
(i) a cash termination payment of up to three times the sum of the executive
officer's annual salary at the time of termination and his average annual bonus
during the three years before the termination and (ii) continuation for up to
three years of equivalent hospital, medical, dental, accident, disability and
life insurance coverage as in effect at the time of termination. Among other
situations, a "change of control of the Company" will be deemed to have occurred
for purposes of the agreement if: (i) a person (other than with respect to an
employee benefit plan of the Company) becomes the beneficial owner of 50% or
more of the voting power of the Company's securities; (ii) at any time one-half
or more of the directors of the Company are not Continuing Directors (as defined
in the agreements); (iii) there is consummated any merger of the Company
8
<PAGE> 11
or share exchange involving the Company, whether or not the Company is the
surviving corporation and/or pursuant to which shares of Common Stock are
converted into cash, securities or other property, unless the holders of Common
Stock receive at least 50% of the voting power of the voting Common Stock of the
surviving corporation immediately after the merger or share exchange; (iv) the
Company sells or otherwise disposes of all or substantially all of its assets;
or (v) the shareholders of the Company approve a plan of liquidation or
dissolution for the Company. The agreement provides that if any portion of the
benefits under the agreement or under any other agreement for the officer would
constitute an "excess parachute payment" for purposes of the Internal Revenue
Code, benefits will be reduced so that the officer will be entitled to receive
$1 less than the maximum amount which he could receive without becoming subject
to the 20% excise tax imposed by the Code, or which the Company may pay without
loss of deduction under the Code. Any benefits payable under Mr. MacDougald's
employment and severance agreement are in lieu of the severance payments that
may be due under his employment agreement.
INCENTIVE BONUS PLAN
Effective August 1, 1993, the Company adopted an Incentive Bonus Plan (the
"Incentive Bonus Plan"), which provides for the discretionary payment of annual
incentive awards to key employees pursuant to a formula related to the Company's
pre-tax profits (income before income taxes), based on the attainment of
pre-established goals related to the Company's pre-tax margin (income before
income taxes divided by revenues) and its revenue growth (based on annual
increases in revenues). Payments under the Incentive Bonus Plan are
discretionary, based on the determination of the Board of Directors of the
Company, and are subject to certain limitations as provided in the Incentive
Bonus Plan. Quarterly advances against estimated annual payments may be made at
the Company's discretion. No bonus can be earned under the Incentive Bonus Plan
in any fiscal year unless the Company's revenues increase by at least 20% over
the prior fiscal year, and the Company's pre-tax margin is at least 16%,
including the effect of the bonus on pre-tax margin. The maximum amount of the
bonus pool in any fiscal year is limited to the amount that would be determined
if revenue growth were 50% over the prior fiscal year, and the pre-tax margin is
20%, including the effect of the bonus on pre-tax margin.
SAVINGS PLAN
Effective January 1, 1992, the Company established a defined contribution
savings plan (the "Savings Plan") covering substantially all employees. The
Savings Plan consists of an employee elective contribution and a company
matching contribution for each eligible participant. The Company's matching
contribution is determined by the Board of Directors on a discretionary basis.
The Company's contributions under the Savings Plan in fiscal 1998, 1997 and 1996
were approximately $357,054, $261,944 and $167,969, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
James E. MacDougald, the Company's Chairman of the Board, President and
Chief Executive Officer, is a member of the Compensation Committee of the Board
of Directors. As a result, Mr. MacDougald participated in deliberations
regarding the compensation to be paid to executive officers of the Company
during fiscal 1998, 1997 and 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under the rules of the Commission, the Company is required to provide
certain information concerning compensation provided to the Company's chief
executive officer and its executive officers. The disclosure requirements for
the executive officers include the use of tables and a report of the Committee
responsible for compensation decisions for the named executive officers,
explaining the rationale and considerations that led to those compensation
decisions. Therefore, the Compensation Committee of the Board of Directors has
prepared the following report for inclusion in this Proxy Statement.
9
<PAGE> 12
COMPENSATION COMMITTEE ROLE
The Compensation Committee of the Board of Directors and the Stock Option
Committee are responsible for separate aspects of the Company's compensation
program for its executive officers, including the named executive officers. The
Compensation Committee is responsible for making recommendations to the Board of
Directors concerning the salaries of executive officers. The Compensation
Committee is also responsible for overseeing other forms of cash compensation
and benefits to other senior officers. The Compensation Committee's
responsibilities include reviewing salaries, benefits and other compensation of
senior officers and making recommendations to the full Board of Directors with
respect to these matters. The Stock Option Committee is responsible for making
stock option grants under the Company's stock option plans to executive officers
of the Company.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms generally to
the compensation philosophy followed for all of the Company's employees. The
Company's compensation is designed to maintain executive compensation programs
and policies that enable the Company to attract and retain the services of
highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of discretionary cash bonuses and
periodic grants of stock options are designed to reward and provide incentives
for individual contributions as well as overall Company performance.
The Compensation Committee monitors the operation of the Company's
executive compensation policies. In August, 1993, the Company implemented the
recommendations of independent compensation consultants that were retained by
the Company to assess the effectiveness of the Company's executive compensation
programs by comparing the Company's compensation programs to various other
information services companies and other companies with similar growth
characteristics to those of the Company. Key elements of the Company's
compensation program consists of base salary, discretionary annual cash bonuses
and periodic grants of stock options. The Company's policies with respect to
these elements, including the basis for the compensation awarded the Company's
chief executive officer, are discussed below. While the elements of compensation
described below are considered separately, the Compensation Committee takes into
account the full compensation package offered by the Company to the individual,
including healthcare and other insurance benefits and contributions made by the
Company under the Company's Savings Plan. See "Executive Compensation -- Savings
Plan."
Base Salaries. The Company has established competitive annual base
salaries for all executive officers, including the named executive officers. The
Company has entered into one-year employment agreements with James E.
MacDougald, President and Chief Executive Officer, and Suzanne M. MacDougald,
Senior Vice President and Secretary. Each employment agreement automatically
renews for successive one-year terms unless terminated by either party. See
"Executive Compensation -- Employment Agreements." The annual base salaries for
each of the Company's executive officers, including the Company's chief
executive officer, reflect both the recommendations of the Company's
compensation consultants and the subjective judgment of the Compensation
Committee based on the consideration of the executive officer's position with
the Company, the executive officer's tenure, the Company's needs, and the
executive officer's individual performance, achievements and contributions to
the growth of the Company.
Mr. MacDougald's annual base salary as the Company's chief executive
officer is currently $190,000. The Compensation Committee believes that this
annual base salary is consistent with the salary range established for this
position based on the Company's discussions with outside consultants, the
factors noted above and Mr. MacDougald's prior experience and managerial
expertise, his knowledge of the Company's operations and the industry in which
it operates.
Annual Bonus. The Company's executive officers are eligible for an annual
cash bonus under the Company's Incentive Bonus Plan, which was implemented based
on its discussions with independent compensation consultants in August, 1993.
The Incentive Bonus Plan provides for the discretionary payment of annual
incentive awards to key employees, including executive officers of the Company,
pursuant to a formula related to the Company's pre-tax profits (income before
income taxes), based on the attainment of
10
<PAGE> 13
preestablished goals related to the Company's pre-tax margin (income before
income taxes divided by revenues) and its revenue growth (based on annual
increases in revenues). Payments under the Incentive Bonus Plan are
discretionary, and are subject to certain limitations as provided in the
Incentive Bonus Plan.
The amount of the cash bonus paid to Mr. MacDougald as the Company's chief
executive officer under the Incentive Bonus Plan was $110,000 for the fiscal
year ended July 31, 1998, and was determined in accordance with the provisions
of the Incentive Bonus Plan.
Stock Options. Under the Company's 1987 Stock Option Plan, 1993 Stock
Option Plan and 1997 Stock Option Plan (together, the "Plans"), stock options
may be granted to key employees, including executive officers of the Company.
The Plans are administered by the Stock Option Committee in accordance with the
requirements of Rule 16b-3.
During the fiscal year ended July 31, 1998, options to purchase 100,000
shares of Common Stock under the Plans were granted to Mr. MacDougald. The
principal factors considered in determining the granting of stock options to
executive officers of the Company, including the Company's chief executive
officer, were the executive officer's tenure with the Company, his or her total
cash compensation for the prior year, the executive officer's acceptance of
additional responsibilities and his or her contributions toward the Company's
attainment of strategic goals.
SECTION 162(m) LIMITATIONS
Under Section 162(m) of the Internal Revenue Code, a tax deduction by
corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is otherwise
excluded from the limitation. Based upon the Compensation Committee's commitment
to link compensation with performance as described in this report, the
Compensation Committee currently intends to qualify compensation paid to the
Company's executive officers for deductibility by the Company under Section
162(m).
COMPENSATION COMMITTEE
Thomas F. Costello
Mark M. Goldman
James E. MacDougald
Peter A. Sullivan
SEPTEMBER 3, 1998
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 (together, the "Acts"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP as the Company's
independent auditors for fiscal 1999. A representative of Grant Thornton LLP
will be present at the Annual Meeting. Such representative will be available to
respond to appropriate questions and may make a statement if he or she so
desires.
SHAREHOLDER PROPOSALS
The deadline for submission of shareholder proposals pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), for
inclusion in the Company's proxy statement for its
11
<PAGE> 14
1999 Annual Meeting of Shareholders is July 19, 1999. Notice to the Company of a
shareholder proposal submitted other than pursuant to Rule 14a-8 will be
considered untimely, and may not be properly brought before the 1999 Annual
Meeting by a shareholder, if received by the Company after July 19, 1999.
OTHER MATTERS
Management knows of no matter to be brought before the Annual Meeting which
is not referred to in the Notice of Annual Meeting. If any other matters
properly come before the Annual Meeting, it is intended that the shares
represented by Proxy will be voted with respect thereto in accordance with the
judgment of the persons voting them.
By Order of the Board of Directors,
SUZANNE M. MACDOUGALD
Secretary
12
<PAGE> 15
APPENDIX
1998 ANNUAL MEETING OF SHAREHOLDERS OF
ABR INFORMATION SERVICES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints James E. MacDougald as proxy, with full
power of substitution, to represent and to vote all shares of voting common
stock of ABR INFORMATION SERVICES, INC., a Florida corporation (the "Company"),
at the Annual Meeting of Shareholders of the Company to be held on Tuesday,
December 22, 1998, at 3:00 p.m., EST, and at any adjournment thereof, hereby
revoking any and all heretofore given:
1. Election of director:
[ ] FOR THE ELECTION OF MARK M. GOLDMAN for term expiring in 2001 (the
"Nominee")
[ ] WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEE
2. In his discretion, the proxy is authorized to vote upon such other business
as may properly come before the Annual Meeting.
(continued and to be signed on reverse side)
(continued from other side)
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 THE NOMINEE.
DATED: , 1998
------------------
------------------------------
Signature of Shareholder
------------------------------
Signature of Shareholder if
held jointly
Please sign exactly as your name appears hereon. If shares owned by more
than one person, all owners should sign. Persons signing as executors,
administrators, trustees or in similar capacities should so indicate. If a
corporation, please sign full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE PAID ENVELOPE.
