<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
CONCENTRA CORPORATION
(Name of Registrant as Specified In Its Charter)
[NAME OF PERSON FILING]
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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
CONCENTRA CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 10, 1998
You are hereby notified that the annual meeting of stockholders (the
"Annual Meeting") of Concentra Corporation (the "Company") will be held on
August 10, 1998 at 9:00 a.m. at the Renaissance Bedford Hotel, 44 Middlesex
Turnpike, Bedford, Massachusetts 01730, for the following purposes:
1. To elect two (2) directors for a term of three years.
2. To approve the adoption by the Board of Directors of an amendment to the
Company's 1993 Stock Plan (the "1993 Stock Plan") to increase by 300,000
the number of shares of Common Stock authorized for issuance under the
1993 Stock Plan.
3. To ratify the action of the Board of Directors in appointing
PricewaterhouseCoopers LLP as the Company's auditors for the 1999 fiscal
year.
4. To consider and act upon such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 10, 1998 as
the record date for the Annual Meeting. Only stockholders on the record date are
entitled to notice of and to vote at the Annual Meeting and at any adjournment
thereof.
By order of the Board of Directors,
/s/ William E. Kelly
WILLIAM E. KELLY,
SECRETARY
July 16, 1998
IMPORTANT: IN ORDER TO SECURE A QUORUM AND TO AVOID THE EXPENSE OF ADDITIONAL
PROXY SOLICITATION, PLEASE MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING PERSONALLY. YOUR COOPERATION IS
GREATLY APPRECIATED.
<PAGE> 3
CONCENTRA CORPORATION
EXECUTIVE OFFICES
21 NORTH AVENUE
BURLINGTON, MASSACHUSETTS 01803
PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
This proxy statement and the accompanying proxy card are being mailed by
Concentra Corporation (the "Company") to the holders of record of the Company's
outstanding shares of Common Stock, $.00001 par value ("Common Stock"),
commencing on or about July 16, 1998. The accompanying proxy is solicited by the
Board of Directors of the Company for use at the annual meeting of stockholders
to be held on August 10, 1998 (the "Annual Meeting") and at any adjournment or
adjournments thereof. The cost of solicitation of proxies will be borne by the
Company. Directors, officers and employees may assist in the solicitation of
proxies by mail, telephone, telegraph, telefax, telex, in person or otherwise,
without additional compensation.
When a proxy is returned, prior to or at the Annual Meeting, properly
signed, the shares represented thereby will be voted by the proxies named in
accordance with the stockholder's instructions indicated on the proxy card. You
are urged to specify your choices on the enclosed proxy card. If the proxy is
signed and returned without specifying choices, the shares will be voted FOR the
election of directors as set forth in this Proxy Statement, FOR approval of the
amendment to the 1993 Stock Plan, FOR ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's auditors for the upcoming fiscal
year, and in the discretion of the proxies as to other matters that may properly
come before the Annual Meeting. Sending in a proxy will not affect a
stockholder's right to attend the Annual Meeting and vote in person. A proxy may
be revoked by notice in writing delivered to the Secretary of the Company at any
time prior to its use, by a written revocation submitted to the Secretary of the
Company at the Annual Meeting, by a duly-executed proxy bearing a later date, or
by voting in person by ballot at the Annual Meeting. A stockholder's attendance
at the Annual Meeting will not by itself revoke a proxy.
VOTING SECURITIES AND RECORD DATE
The only outstanding class of stock of the Company is its Common Stock.
Each share of Common Stock is entitled to one vote per share. The Board of
Directors has fixed July 10, 1998 as the record date for the Annual Meeting.
Only stockholders of record on the record date are entitled to notice of and to
vote at the Annual Meeting and any adjournment or adjournments thereof. On July
10, 1998, there were issued and outstanding 6,086,303 shares of Common Stock.
The Company's Restated By-laws provide that a quorum shall consist of the
representation in person or by proxy at the Annual Meeting of the holders of a
majority of the shares of capital stock issued and outstanding and entitled to
vote. The election of directors is by plurality of the votes cast at the Annual
Meeting either in person or by proxy. The approval of a majority of the votes
properly cast at the Annual Meeting, either in person or by proxy, is required
for the adoption of the proposal to approve of the amendment to the 1993 Stock
Plan, for the ratification of the appointment of the Company's auditors, and for
the approval of any other business which may properly be brought before the
Annual Meeting or any adjournment thereof.
With regard to the election of directors, votes may be left blank, cast in
favor or withheld; votes that are left blank will be counted in favor of the
election of the directors named on the proxy. Votes that are withheld will have
the effect of a negative vote. Abstentions may be specified on all proposals
other than the election of directors and will be counted as present for purposes
of the proposal on which the abstention is noted. Because the proposals to
approve the amendment to the 1993 Stock Plan and to ratify the selection of
auditors require the approval of a majority of the votes properly cast at the
Annual Meeting, either in person or by proxy, abstentions will count toward a
quorum but not be counted in determining the outcome of a proposal. Broker
non-votes will not be counted in determining a quorum for, or the outcome of,
any proposal.
<PAGE> 4
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information as of July 10, 1998 with
respect to the voting securities of the Company owned by (1) any person
(including any "group" as that term is defined in section 13(d)(3) of the
Securities Exchange Act of 1934) who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of a class of voting
securities of the Company, (2) each director or nominee for director of the
Company, (3) each of the executive officers named in the Summary Compensation
Table, and (4) all directors and executive officers of the Company as a group.
In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table, of any
voting securities of the Company if he or she has or shares voting power or
investment power with respect to such securities or has the right to acquire
beneficial ownership thereof at any time within 60 days of July 10, 1998. As
used herein "voting power" is the power to vote or direct the voting of shares,
and "investment power" is the power to dispose of or direct the disposition of
shares. Except as indicated in the notes following the table below, each person
named has sole voting and investment power with respect to the shares listed as
being beneficially owned by such person.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS OF NUMBER OF SHARES COMMON
BENEFICIAL OWNER BENEFICIALLY OWNED STOCK OUTSTANDING(1)
------------------- ------------------ --------------------
<S> <C> <C>
San Giorgio S.A. ........................................ 957,972 15.7%
100 Rue de Paris
91300 Massy, France
Special Situations Fund III, L.P.(2)..................... 749,939 12.3%
and affiliated entities
153 53rd Street
New York, NY 10022
Vincenzo Cannatelli(3)................................... 974,563 16.0%
Alberto de Benedictis(4)................................. 970,018 15.9%
Lawrence W. Rosenfeld(5)................................. 674,757 10.7%
c/o Concentra Corporation
21 North Avenue
Burlington, MA 01803
A. William Berkman Jr.(6)................................ 253,172 4.1%
Peter T. Lanell(7)....................................... 91,097 1.5%
David I. Lemont(8)....................................... 76,269 1.2%
Stephen J. Cucchiaro(9).................................. 73,249 1.2%
Robert E. Phillips(10)................................... 43,079 *
William E. Kelly(11)..................................... 12,046 *
Garreth P. Evans(11)(12)................................. 40,801 *
All directors and executive officers as a group (12 2,285,036 34.4%
persons)(13)...........................................
</TABLE>
- ---------------
* Less than one percent (1%)
(1) Shares of Common Stock issuable pursuant to options currently exercisable
or exercisable on, before or within 60 days of July 10, 1998 ("Currently
Exercisable Options") are deemed outstanding for the purpose of computing
the percentage of the class owned by the person holding such options, but
are not deemed outstanding for purposes of computing the percentage owned
by any other person.
(2) Derived from a Schedule 13D mailed to the Company under cover dated May 8,
1998. The Schedule 13D reported the following aggregate amounts
beneficially owned by the following entities: 288,750 shares by Special
Situations Fund L.P.; 235,000 shares by Special Situations Private Equity
Fund, L.P.; 103,900 shares by Special Situations Cayman Fund, L.P.; and
122,289 by Special Situations Technology Fund, L.P. The Schedule 13D
reports that Austin W. Marxe and David M. Greenhouse have sole voting power
and sole disposition power of the 749,939 shares.
(3) Includes shares held by San Giorgio S.A., as to which shares Mr. Cannatelli
disclaims beneficial ownership. Includes 16,591 shares issuable pursuant to
Currently Exercisable Options.
2
<PAGE> 5
(4) Includes shares held by San Giorgio S.A., as to which shares Mr. de
Benedictis disclaims beneficial ownership. Includes 12,046 shares issuable
pursuant to Currently Exercisable Options.
(5) Includes (i) 199,752 shares issuable pursuant to Currently Exercisable
Options, and (ii) 14,546 shares held by trusts for the benefit of Mr.
Rosenfeld's children. Mr. Rosenfeld disclaims beneficial ownership of the
shares held by such trusts.
(6) Includes shares held by Toyo Corporation, as to which shares Mr. Berkman
disclaims beneficial ownership. Includes 21,137 shares issuable pursuant to
Currently Exercisable Options.
(7) Includes 86,184 shares issuable pursuant to Currently Exercisable Options.
(8) Includes 74,245 shares issuable pursuant to Currently Exercisable Options.
(9) Includes 25,682 shares issuable pursuant to Currently Exercisable Options.
(10) Includes 40,661 shares issuable pursuant to Currently Exercisable Options.
(11) All such shares are issuable pursuant to Currently Exercisable Options.
(12) Mr. Evans resigned from the Company effective June 1, 1998.
(13) Includes (i) shares held by Toyo Corporation (of which Mr. Berkman is an
affiliate), and (ii) shares held by San Giorgio S.A. (of which Mr.
Cannatelli and Mr. de Benedictis are affiliates). Shares owned include
561,426 shares issuable pursuant to Currently Exercisable Options. Mr.
Berkman disclaims beneficial ownership of shares held by Toyo Corporation.
Messrs. Cannatelli and de Benedictis disclaim beneficial ownership of
shares held by San Giorgio S.A.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and persons who own more than 10% of the outstanding Common
Stock of the Company to file with the Securities and Exchange Commission ("SEC")
and the Nasdaq Stock Market reports of ownership and changes in ownership of
voting securities of the Company and to furnish copies of such reports to the
Company. Based solely on review of the copies of such reports furnished to the
Company or written representations from certain persons that no reports were
required for those persons, the Company believes that all Section 16(a) filing
requirements were satisfied.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Board of Directors is divided into three classes serving staggered
terms in accordance with the Company's Restated Certificate of Incorporation.
The Board of Directors has determined that the number of directors constituting
the full board of directors shall be six. The terms of two of the present
directors expire this year and each has been nominated for re-election to a term
of three years expiring in 2001.
Proxies are solicited in favor of the nominees named below and it is
intended that the proxies will be voted for the two nominees unless otherwise
specified. Approval of the nominees requires a plurality of the votes cast by
the holders of the outstanding shares of Common Stock. In the event that any of
the nominees should become unable or unwilling to serve as a director, it is
intended that the proxies will be voted for the election of such other person,
if any, as shall be designated by the board of directors. It is not anticipated
that any of the nominees will be unable or unwilling to serve as a director.
3
<PAGE> 6
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES LISTED BELOW.
The following are summaries of the background and business experience and
descriptions of the principal occupations of the nominees and directors
continuing in office.
NOMINEES FOR ELECTION:
<TABLE>
<CAPTION>
NAME AGE PRESENT PRINCIPAL EMPLOYER AND BUSINESS EXPERIENCE
- ---- --- ---------------------------------------------------------
<S> <C> <C>
Lawrence W. Rosenfeld............. 45 Mr. Rosenfeld, a founder of the Company, has been Chief
Executive Officer and a director since the Company's
inception in 1984, Chairman of the Board of Directors
since March 1993 and President from inception through
March 1993 and again since July 1994. From 1982 to 1984,
Mr. Rosenfeld was an independent CAD/CAM consultant. From
1974 to 1981, Mr. Rosenfeld was employed in various
positions at Hood Sailmakers, Inc.
Alberto de Benedictis............. 46 Mr. de Benedictis has been a director of the Company
since June 1993. He has been with Finmeccanica in various
positions for over ten years. He is currently Senior Vice
President of Finmeccanica for Strategic Finance. Mr. de
Benedictis serves on the Board of Directors of a number
of affiliates of Finmeccanica.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 1999:
<TABLE>
<CAPTION>
NAME AGE PRESENT PRINCIPAL EMPLOYER AND BUSINESS EXPERIENCE
- ---- --- ---------------------------------------------------------
<S> <C> <C>
A. William Berkman, Jr............ 55 Mr. Berkman has been a director of the Company since
August 1989. Mr. Berkman works as an independent
consultant and, since 1986, has served as a consultant to
Toyo Corporation, a publicly-held Japanese trading
company. Mr. Berkman is also the Chief Executive Officer
of Biomation Corporation, a manufacturer of logic
analysis systems, Chairman of the Board of Embedded
Performance, Inc., a manufacturer of emulators and
software for RISC microprocessors, and President of Toyo
U.S. Holdings, Inc., a wholly owned subsidiary of Toyo
Corporation.
William E. Kelly.................. 46 Mr. Kelly has been a director of the Company since June
1993. He has served as Secretary from the Company's
incorporation in 1984 (except for the period from June
1993 to September 1993). Mr. Kelly was a partner in the
law firm of Cuddy Bixby in Boston from 1988 until
December 1994. Since January 1995, Mr. Kelly has been a
partner in the Boston law firm of Peabody & Arnold LLP.
</TABLE>
4
<PAGE> 7
DIRECTORS WHOSE TERMS EXPIRE IN 2000:
<TABLE>
<CAPTION>
NAME AGE PRESENT PRINCIPAL EMPLOYER AND BUSINESS EXPERIENCE
- ---- --- ---------------------------------------------------------
<S> <C> <C>
Stephen J. Cucchiaro.............. 46 Mr. Cucchiaro has been a director of the Company since
March 1993 and is President of Windward Capital, Inc., an
investment management firm. From March 1993 until March
1994, Mr. Cucchiaro was President of the Company and,
following his resignation as President, he directed
special projects for the Company until he left in
September 1994 to found Windward Capital. From April 1992
to March 1993, he was the Company's Executive Vice
President, Chief Operating Officer and Chief Financial
Officer. From October 1987 until December 1989, Mr.
Cucchiaro was employed by Lotus Development Corporation
as General Manager of that company's Communications and
Specialty Software divisions. Mr. Cucchiaro was President
of Datext, Inc., a company he co-founded, from June 1984
until it was acquired by Lotus Development Corporation in
October 1987.
Vincenzo Cannatelli............... 45 Mr. Cannatelli has been Vice Chairman of the Board of
Directors of the Company and Chairman of its Executive
Committee since June 1993. Mr. Cannatelli is the Managing
Director and Chief Executive Officer of Elsag Bailey
Process Automation N.V., a company listed on the New York
Stock Exchange. He has been Group Executive Vice
President of the Elsag Bailey Group of companies, a
division of Finmeccanica, since 1992. Elsag Bailey
Process Automation N.V. is owned in the majority by
Finmeccanica. From 1989 to 1990, Mr. Cannatelli was
Executive Vice President of Elsag Bailey Inc. Prior to
1989, he served in several executive positions at STET
and in the Elsag Bailey Group.
</TABLE>
Each director holds office until that director's successor has been elected
and qualified. The Company's Board of Directors is divided into three classes.
Messrs. Rosenfeld and de Benedictis serve in the class whose term expires in
1998; Messrs. Berkman and Kelly serve in the class whose term expires in 1999;
and Messrs. Cucchiaro and Cannatelli serve in the class whose term expires in
2000. Upon expiration of the term of each class of directors, directors
comprising such class will be elected for a three-year term at the annual
meeting of stockholders in the year in which such term expires.
There are no family relationships among any of the executive officers or
directors of the Company.
The current directors of the Company were initially nominated and elected
in accordance with certain provisions of a shareholders' agreement which
terminated upon the closing of the Company's initial public offering in February
1995.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met eight times during the fiscal year ended March
31, 1998. The Board of Directors has standing Audit and Compensation Committees.
The Board has no nominating committee. All of the directors attended 75% or more
of the meetings of the Board and of the Board committee meetings which they were
entitled to attend.
The Compensation Committee, which consists of Messrs. Berkman, de
Benedictis and Kelly, reviews the Company's compensation philosophy and programs
and exercises authority with respect to the payment of compensation to directors
and officers and the administration of the stock incentive plans of the Company.
The Compensation Committee met four times during the fiscal year ended March 31,
1998.
5
<PAGE> 8
The Audit Committee, which consists of Messrs. Berkman, Cannatelli and
Cucchiaro, recommends the selection of and confers with the Company's
independent accountants regarding the scope and adequacy of annual audits;
reviews reports from the independent accountants; and meets with such
independent accountants and with the Company's financial personnel to review the
adequacy of the Company's accounting principles, financial controls and
policies. The Audit Committee met four times during the fiscal year ended March
31, 1998.
DIRECTOR COMPENSATION
Directors of the Company do not receive compensation for their services as
directors, but non-employee directors are reimbursed for expenses incurred in
connection with attendance at Board of Directors and Committee meetings.
On June 18, 1993, in connection with their election to the Board of
Directors, Messrs. Berkman, de Benedictis and Kelly were each granted
non-qualified options under the Company's 1987 Stock Plan to purchase 4,546
shares of Common Stock and Mr. Cannatelli was granted a non-qualified option
under such plan to purchase 9,091 shares of Common Stock. The exercise price of
all such options is $4.13 per share and all such options are subject to vesting
on an annual basis over five years.
Under the Company's 1994 Directors Stock Option Plan, each non-employee
director (excluding directors who decline the grant of options in writing) is
granted an option for the purchase of 2,500 shares of Common Stock on the first
day of each fiscal year during which such a person serves as a member of the
Board of Directors. The date of the first grant of options under the 1994
Directors Stock Option Plan was April 1, 1996.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid by the Company during
the fiscal year ended March 31, 1998 to those persons who were employed during
the fiscal year ended March 31, 1998 as (i) the Chief Executive Officer and (ii)
the four most highly paid executive officers, other than the Chief Executive
Officer, whose annual compensation exceeded $100,000 (collectively, the "Named
Executive Officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION(1)
---------------------------------- ----------------------------
COMMISSIONS AWARDS AND ALL OTHER
AND OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUSES($) OTHER(2) (# OF SHARES) $
- --------------------------- ---- --------- ----------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence W. Rosenfeld........... 1998 200,000 74,835 -- 50,000 --
Chairman of the Board, 1997 200,000 156,692 -- 40,000 --
President and Chief 1996 200,000 27,500 -- 81,250 --
Executive Officer
David I. Lemont................. 1998 180,000 40,843 -- 28,000 --
Senior Vice President and 1997 180,000 77,152 -- 24,000 --
Chief Operating Officer 1996 175,000 29,700 -- 34,063 --
Garreth P. Evans................ 1998 164,224 41,057 64,426(4) -- --
Senior Vice President, 1997 160,650 71,989 69,899(4) 15,000 --
Business Units Aerospace 1996 153,676 32,611 58,926(4) 19,000 --
and Automotive(3)
Peter T. Lanell................. 1998 145,000 62,396 -- 18,000 --
Vice President, Worldwide 1997 145,000 121,778 -- 15,000 --
Field Operations 1996 132,000 51,810 -- 20,000 --
Robert E. Phillips.............. 1998 110,000 21,811 -- 18,000 --
Vice President, Product 1997 110,000 30,071 -- 12,500 --
Definition and Chief 1996 100,000 18,173 -- 15,000 --
Technology Officer
</TABLE>
- ---------------
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during the
fiscal year ended March 31, 1998.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or 10% of the total of annual salary and bonus for the executive
officer for such year.
(3) Mr. Evans resigned from the Company effective June 1, 1998.
(4) Mr. Evans' other compensation includes payments for an automobile, benefits
and pension arrangements.
7
<PAGE> 10
OPTION GRANTS
The following table sets forth certain information concerning grants of
stock options made during the fiscal year ended March 31, 1998 to the Named
Executive Officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1998 INDIVIDUAL GRANTS(1)
--------------------------------------------------- POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM(2)
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED 1998 SHARE ($) DATE 5% ($) 10% ($)
---- ---------- ----------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Lawrence W. Rosenfeld............ 50,000(3) 12.2% 3.88 8/7/07 121,848 308,788
David I. Lemont.................. 28,000(4) 6.8% 3.88 8/7/07 68,235 172,921
Peter T. Lanell.................. 18,000(5) 4.4% 3.88 8/7/07 43,865 111,164
Robert E. Phillips............... 18,000(6) 4.4% 3.88 8/7/07 43,865 111,164
</TABLE>
- ---------------
(1) All options were granted at an exercise price equal to market value on the
date of grant. The market value of the Common Stock is determined by the
closing price of the Common Stock on the Nasdaq National Market.
(2) The 5% and 10% assumed annual compound rates of stock price appreciation for
a period of ten years are mandated by rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future Common Stock prices.
(3) So long as Mr. Rosenfeld remains an employee of the Company, options for the
purchase of 12,500 shares of Common Stock will become exercisable on each of
August 8, 1998, 1999, 2000, and 2001.
(4) So long as Mr. Lemont remains an employee of the Company, options for the
purchase of 7,000 shares of Common Stock will become exercisable on each of
August 8, 1998, 1999, 2000, and 2001.
(5) So long as Mr. Lanell remains an employee of the Company, options for the
purchase of 4,500 shares of Common Stock will become exercisable on each of
August 8, 1998, 1999, 2000, and 2001.
(6) So long as Mr. Phillips remains an employee of the Company, options for the
purchase of 4,500 shares of Common Stock will become exercisable on each of
August 8, 1998, 1999, 2000 and 2001.
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning the number
and value of exercised and unexercised options held by each of the Named
Executive Officers on March 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
SHARES MARCH 31, 1998(#) MARCH 31, 1998($)(1)
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence W. Rosenfeld.......... -- -- 165,251 106,000 $371,815 $238,500
David I. Lemont................ -- -- 47,062 94,001 105,890 211,502
Garreth P. Evans............... -- -- 38,625 49,921 4,688 14,063
Peter T. Lanell................ -- -- 65,752 50,340 147,942 113,265
Robert E. Phillips............. -- -- 25,490 42,738 57,353 96,161
</TABLE>
- ---------------
(1) Calculated on the basis of the stock price of the underlying securities at
March 31, 1998 of $6.13 per share, as determined by the Company's Board of
Directors, minus the per share exercise price.
8
<PAGE> 11
REPRICING OF EMPLOYEE OPTIONS
On February 26, 1998, the Board of Directors met to consider the need to
reprice the Company's outstanding stock options for the Company's employees.
Because of the decline in the price of the Company's common stock, the exercise
prices of the employees' options were significantly higher than the current
market value of the underlying common stock. The Board of Directors determined
that, at their current exercise prices, the options would be of little utility
in the Company's efforts to retain its employees. The Company on February 26,
1998 entered into an agreement to license its knowledge based engineering
software business to Knowledge Technologies International S.A. ("KTI") in an
effort to devote all of the Company's resources to expanding the developing its
sales force automation business and its SellingPoint software product. Given the
need to retain and provide incentives for its current SellingPoint employees and
develop the Company's SellingPoint business, the Board of Directors adopted a
program whereby all outstanding options under the 1987 Plan and the 1993 Plan
held by employees of the Company who had not been offered employment with KTI
would be repriced as of March 4, 1998 at $3.88 per share, the closing market
price on such date. Because of the critical need to retain the Company's
employees, the vesting period was not restarted. The repricing of stock options
affected 1,057,067 options.
TEN-YEAR OPTION/SAR REPRICINGS
The following table sets forth the repricing of employee options for all
executive officers.
<TABLE>
<CAPTION>
NUMBER OF MARKET
SECURITIES PRICE EXERCISE LENGTH OF
UNDERLYING OF STOCK AT PRICE AT ORIGINAL
OPTIONS/ TIME OF TIME OF OPTION TERM
SARS REPRICING REPRICING NEW REMAINING AT
REPRICED OR OR EXERCISE DATE OF
OR AMENDMENT AMENDMENT PRICE REPRICING OR
NAME DATE AMENDED(#) ($) ($) ($) AMENDMENT
---- ---- ---------- ----------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence W. Rosenfeld......... 3/4/98 100,000 3.88 4.13 3.88 5 years 3 months
75,000 3.88 9.50 3.88 7 years 3 months
6,250 3.88 9.25 3.88 7 years 7 months
40,000 3.88 4.88 3.88 8 years 1 month
50,000 3.88 6.00 3.88 9 years 5 months
Alex N. Braverman............. 3/4/98 3,637 3.88 6.88 3.88 6 years 4 months
5,666 3.88 11.25 3.88 7 years
2,500 3.88 9.50 3.88 7 years 3 months
6,000 3.88 4.88 3.88 8 years 1 month
12,500 3.88 9.00 3.88 8 years 8 months
20,000 3.88 6.00 3.88 9 years 5 months
Noreen H. Brochu.............. 3/4/98 1,454 3.88 4.13 3.88 5 years 3 months
5,000 3.88 9.50 3.88 7 years 3 months
9,375 3.88 4.88 3.88 8 years 1 month
14,000 3.88 6.00 3.88 9 years 5 months
Peter T. Lanell............... 3/4/98 546 3.88 4.13 3.88 2 years 10 months
1,364 3.88 4.13 3.88 2 years 11 months
20,273 3.88 4.13 3.88 4 years 1 month
36,364 3.88 4.13 3.88 5 years 3 months
4,545 3.88 6.88 3.88 6 years 4 months
20,000 3.88 9.50 3.88 7 years 3 months
15,000 3.88 4.88 3.88 8 years 1 month
18,000 3.88 6.00 3.88 9 years 5 months
David I. Lemont............... 3/4/98 40,000 3.88 6.88 3.88 6 years 4 months
15,000 3.88 11.25 3.88 7 years
30,000 3.88 9.50 3.88 7 years 3 months
4,063 3.88 9.25 3.88 7 years 7 months
24,000 3.88 4.88 3.88 8 years 1 month
28,000 3.88 6.00 3.88 9 years 5 months
Robert E. Phillips............ 3/4/98 13,637 3.88 4.13 3.88 5 years 3 months
9,091 3.88 5.50 3.88 5 years 9 months
15,000 3.88 9.50 3.88 7 years 3 months
12,500 3.88 4.88 3.88 8 years 1 month
18,000 3.88 6.00 3.88 9 years 5 months
</TABLE>
9
<PAGE> 12
NONCOMPETITION AND TERMINATION AGREEMENTS
The Company has entered into a Noncompetition and Termination Agreement
with Mr. Rosenfeld under which he has agreed not to compete with the Company for
a period of one year following termination of his employment and the Company has
agreed to pay to him, in the event his employment is terminated by the Company
without cause, a termination payment equal to his then current base salary plus
80% of his then current-year maximum variable compensation amount (the
"Termination Payment"). The Termination Payment is payable in twelve equal
monthly installments. In addition, in the event Mr. Rosenfeld's employment is
terminated by the Company without cause, all options held by him at the time his
employment is terminated will continue to vest during the period when the
Company is obligated to make installments of the Termination Payment and will
vest fully on the first anniversary of termination so long as he has not
breached his noncompetition agreement.
The Company has entered into a Noncompetition, Nondisclosure and
Developments Agreements with Mr. Lemont which provides, in part, for continued
payment of his base salary ("Severance Pay") in the event their employment is
terminated by the Company without cause. Mr. Lemont, whose current base salary
is $15,000 per month, is entitled to Severance Pay for up to six months in the
event his employment is terminated by the Company without cause. Mr. Lemont has
agreed not to compete with the Company for a period of one year following the
termination of his employment unless his employment is terminated by the Company
without cause, in which case his noncompetition obligation will terminate six
months following final payment of the Severance Pay.
EMPLOYEE STOCK OPTION PLANS
The 1987 and 1993 Stock Plans of the Company (the "Stock Plans") enable the
Company to grant incentive stock options to employees and to make awards of
restricted Common Stock and to grant non-qualified options to purchase Common
Stock to employees, officers and directors of and consultants to the Company.
Restricted stock awards entitle the recipient to purchase Common Stock from the
Company under terms which provide for vesting over a period of time and a right
of repurchase in favor of the Company of the unvested portion of the Common
Stock, subject to the award upon the termination of recipient's employment or
other relationship with the Company. Stock options entitle the optionee to
purchase Common Stock from the Company, for a specified exercise price during a
period specified in the applicable option agreement. The Stock Plans are
administered by the Compensation Committee of the Board of Directors which
selects the persons to whom restricted stock awards and stock options are
granted and determines the number of shares of Common Stock covered by the award
or option, its purchase price or exercise price, its vesting schedule and (in
the case of stock options) its expiration date. No grants of restricted stock
have been made under either plan. On March 4, 1998, the Board of Directors
authorized that certain stock options under the 1987 and 1993 Stock Option Plans
at exercise prices ranging from $4.13 to $11.25 would be repriced at the then
fair market value of $3.88. This repricing of stock options affected 1,057,067
options. As of March 31, 1998, under the 1987 Plan, 310,491 shares of Common
Stock had been issued upon exercise of options, options to purchase 567,221
shares of Common Stock were outstanding, and no shares remained available for
future issuance. As of the same date, under the 1993 Plan, 26,514 shares of
Common Stock had been issued upon exercise of options, options to purchase
787,004 shares of Common Stock were outstanding and 595,573 shares remained
available for future issuance.
EMPLOYEE STOCK PURCHASE PLAN
The Company's 1995 Employee Stock Purchase Plan (the "Stock Purchase Plan")
was adopted by the Board of Directors on July 27, 1995, which is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code (the "Code"). The Stock Purchase Plan is administered by the
Compensation Committee. The Stock Purchase Plan covers up to 440,000 shares of
the Company's Common Stock (subject to adjustment for any dividend, stock split
or other relevant changes in the Company's capitalization). With certain
exceptions, all employees (including officers) who are employed for at least 20
hours a week and at least five months or more per calendar year and who have
completed ninety days of continuous employment are eligible to participate in
the Stock Purchase Plan. The Stock Purchase Plan has a
10
<PAGE> 13
term of ten years and consists of eleven offerings of 40,000 shares each, each
of which offerings shall be six months in duration. The first offering under the
Stock Purchase Plan commenced on October 1, 1995 and subsequent offerings will
commence on the day following termination of the prior offering. The number of
shares available for an offering may be increased at the election of the Board
by the number of shares of Common Stock, if any, which were made available but
not purchased during an earlier offering. Participation in one offering under
the Stock Purchase Plan neither limits nor requires participation in any other
offering.
To participate in the Stock Purchase Plan, an eligible employee must
complete, sign and deliver a subscription agreement before the first day of an
offering. Participating employees are permitted to purchase shares of Common
Stock through payroll deductions at a purchase price equal to 85% of the lower
of the fair market value of the Common Stock on the first or last day of the
offering period. On each offering date, a participant may elect to purchase up
to the number of whole shares of Company stock determined by dividing (i) 10% of
such participant's compensation in the preceding 12 calendar months by (ii) 85%
of the fair market value of a share of the Common Stock on the offering date.
Employees may terminate their participation in an offering at any time during
the offering period, and participation ends automatically upon termination of
employment (except that the beneficiary of a deceased employee who dies while
participating in the plan may elect to use the amount previously withheld from
the deceased employee to purchase shares under the Stock Purchase Plan). Unless
a participating employee cancels his option or withdraws from the Stock Purchase
Plan, his option for the purchase of shares under the Stock Purchase Plan will
be exercised automatically upon the date of termination of an offering. The
Stock Purchase Plan provides that the Board of Directors may terminate the Stock
Purchase Plan at any time; provided, however, that no such termination may
affect any outstanding options.
401(K) PLAN
In 1991, the Board of Directors adopted the Company's 401(k) Plan, (the
"401(k) Plan"), which is intended to qualify under section 401(k) of the
Internal Revenue code of 1986, as amended (the "Code"). All employees who are at
least 21 years of age and have been employed by the Company for at least six
months are eligible to participate in the 401(k) Plan. Each eligible employee
may elect to contribute to the 401(k) Plan, through payroll deductions, up to
15% of his or her salary, subject to statutory limitation. The Company may at
its discretion make matching contributions on behalf of each participating
employee in an amount equal to some uniform percentage fixed from time to time
by the Board of Directors. The Company is not currently making matching
contributions. If the Company were to do so in the future, under the current
terms of the 401(k) Plan, employees would become vested in such Company
contributions at the rate of 25% per year of service.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company's 1994 Directors Stock Option Plan (the "Directors Plan") was
adopted on November 18, 1994 and amended on March 29, 1996, and provides for the
granting of options to purchase up to an aggregate of 150,000 shares of Common
Stock to directors who are not employees of the Company. The Directors Plan is
administered by the Compensation Committee. The Directors Plan and the options
granted thereunder are intended to comply with Rule 16b-3 (Reg. sec, 240.16b-3)
under the Securities Exchange Act of 1934, as amended. The exercise price for
options granted under the Directors Plan will be equal to the fair market value
of the Common Stock on the date of grant. Under the Directors Plan, each
eligible director (excluding directors who decline the grant of options in
writing) will be granted an option for the purchase of 2,500 shares of Common
Stock on the first day of each fiscal year during which such a person serves as
a member of the Board of Directors. The current non-employee members of the
Board of Directors, who received options under the Company's 1987 Stock Plan,
first received options under the Directors Plan on April 1, 1996. Newly elected
directors will become eligible for grants under the Directors Plan on the first
day of the fiscal year following the year in which they are first elected and
qualified as members of the Board of Directors and, so long as they remain on
the Board of Directors, on the first day of each fiscal year thereafter. Options
granted under the Directors Plan will remain exercisable for a period of ten
years from the date of grant (so long as the optionee remains a director of the
Company). If a holder of options granted under the Directors Plan ceases to
11
<PAGE> 14
be a director of the Company, his or her options will terminate on the earlier
of the scheduled termination date or three months after the effective date of
termination of his or her directorship. As of March 31, 1998, options for the
purchase of 25,000 shares were outstanding under the Directors Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to July 6, 1994, the Company did not have a Compensation Committee
and decisions relating to executive compensation were made by the Board of
Directors or the Executive Committee of the Board of Directors. Messrs.
Rosenfeld and Cucchiaro, as members of the Board of Directors, participated in
executive compensation decisions relating to executive officers other than
themselves. On July 6, 1994, the Board of Directors established a Compensation
Committee, consisting of Messrs, de Benedictis, Berkman and Kelly, and delegated
to the Compensation Committee responsibility for decisions concerning executive
compensation.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this proxy statement, in whole or in part, the following report and
the stock performance graph contained elsewhere herein shall not be incorporated
by reference into any such filings nor shall they be deemed to be soliciting
material or deemed filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Company's Board of
Directors (the "Board") acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the Company. In
addition, the Committee (i) recommends to the Board the base level and incentive
compensation for the Chief Executive Officer ("CEO"), (ii) establishes policies
and programs that determine the compensation of the Company's executive
officers, (iii) administers the 1987 and 1993 Stock Plans of the Company (the
"Stock Plans"), (iv) administers the 1995 Employee Stock Purchase Plan (the
"Stock Purchase Plan"), and (v) maintains the exclusive authority to grant stock
options to executive officers of the Company under its Stock Plans.
COMPOSITION AND ACTIVITIES OF THE COMMITTEE
The Committee is composed of three directors, none of whom is an employee
or officer of the Company. Currently, the Committee consists of A. William
Berkman, Jr. (who serves as Chairman), Alberto de Benedictis and William E.
Kelly. The Chairman of the Board and CEO, Lawrence W. Rosenfeld, participates in
the Committee's discussions, except those that relate to his compensation. Mr.
Rosenfeld provides compensation information, survey data and other material
requested by the Committee. In addition, he makes recommendations to the
Committee on the compensation methods and levels of the other executive
officers. Mr. Rosenfeld does not attend or participate in the discussions
regarding his own compensation, nor does he make any recommendation with respect
thereto. Mr. Rosenfeld does not vote on any matter considered by the Committee,
and he does not participate in administration of the Stock Plans or the Stock
Purchase Plan.
The Committee held four meetings in the fiscal year ended March 31, 1998,
and all voting members of the Committee attended those meetings.
COMPENSATION PHILOSOPHY AND POLICIES
The Company's objective is to develop compensation policies which will
assist in attracting, motivating, and retaining the high quality of executives
and managers capable of sustaining the Company's aggressive growth and profit
objectives. It is the opinion of the Committee that the implementation of this
philosophy is best accomplished by aligning each manager's compensation, and
therefore the manager's motivation, with
12
<PAGE> 15
that of the stockholders. Compensation policies which support this philosophy
include industry competitive salaries, cash bonuses and equity incentives.
The Committee favors a compensation system which emphasizes performance
bonus compensation and equity incentives, the proportion of variable
compensation increasing to 50% of total target compensation for senior
executives. Furthermore, the Committee believes that broad-based employee equity
ownership provides an important incentive to focus the efforts and contributions
of each participating employee on the Company's success.
ELEMENTS OF COMPENSATION
The components of officer and key manager compensation include salary, cash
bonus, stock options granted pursuant to the Stock Plans, purchase of stock
through participation in the Stock Purchase Plan, the right to participate in
the 401(k) plan (without matching employer contributions), supplemental life
insurance, and other standard benefits. There are no other officer or key
manager perquisites. Compensation of sales personnel include identical
components, except that sales commissions replace cash bonuses. All salaried
employees are compensated with a base salary, are entitled to participate in the
401(k) plan (without matching employer contributions), and receive other
standard benefits. In addition, all salaried employees are granted options under
the Stock Plans as part of an offer of employment, and are encouraged to accept
slightly lower salaries in exchange for participation in variable compensation
programs.
Base salary is determined on the basis of the level of responsibility,
expertise and experience of the employee or officer, taking into consideration
competitive conditions in the industry and the percentage of total target cash
compensation that is variable. The Committee reviews and approves the salaries
of the Company's executives. The measures of individual performance considered
in setting executive salaries include, to the extent applicable to an individual
executive officer, a number of quantitative and qualitative factors, including,
the Company's historical and recent financial performance in the principal area
of responsibility, individual performance, experience and overall contributions
made to the Company's success. The Committee has not found it practicable, nor
has it attempted, to assign relative weights to the specific factors used in
determining base salary levels, and the specific factors used may vary among
individual officers. Payment of base salary is not conditioned upon the
achievement of any specific or predetermined performance targets.
The Company's incentive compensation program seeks to motivate officers and
key managers to work effectively to achieve the Company's financial performance
objective and to reward the program participants when individuals and corporate
objectives are met. Cash bonuses awarded to officers and other key employees are
typically based on a target percentage of salary, adjusted for achievement of
revenue and profit goals by the Company and evaluations of individual
performance to predetermined objectives. Sales commissions are paid to sales
personnel during the fiscal year as a percentage of individual sales production.
The percentage of commission paid increases only after the individual sales
person exceeds a predetermined quota for the applicable period.
Ownership of the Company's Common Stock is a significant element of
executive and key manager compensation, and is considered an important
motivational tool for all employees. All employees are eligible to participate
in the Stock Plans. The Stock Plans permit the Board or the Committee to grant
options to employees on such terms as the Board or the Committee may determine.
The Committee has sole authority to grant stock options to officers of the
Company. In determining the terms of a stock option grant to an officer or other
employee (including the number of shares subject to an option), the Committee
takes into account equity participation by comparable employees within the
Company, external competitive circumstances, individual significant
contributions, the dilutive effect of any such option granted to earnings per
share, and other factors that may, from time to time, be relevant. This program
is intended to permit broad-based equity ownership throughout the Company.
The Committee has delegated the authority to recommend to the Committee the
grant of a small number of options as part of an offer of employment to members
of a management committee. This management committee consists of the CEO, the
Chief Operating Officer and the Chief Financial Officer. The delegated
13
<PAGE> 16
authority limits the size of any such recommendation of grants to the maximum in
a range of options predetermined for the job classification of the prospective
employee.
Options granted under the Stock Plans in fiscal 1998 generally vested
linearly over four years. The Committee may, from time to time, change the
vesting schedule of options, including options which have already been granted.
The Committee may also choose to grant options which do not vest until the end
of the option period, and wherein any future acceleration of such vesting is at
the sole discretion of the Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 1998
The Company's Chairman of the Board and CEO, Lawrence W. Rosenfeld,
received salary payments totaling $200,000 during the fiscal year ended March
31, 1998. In addition, Mr. Rosenfeld was paid cash bonus compensation of $74,835
during the fiscal year. Mr. Rosenfeld was granted an option to purchase 50,000
shares of the Company's Common Stock at an exercise price of $3.88 in the fiscal
year ended March 31, 1998.
DEDUCTIBILITY OF COMPENSATION EXPENSES
The Committee has reviewed Section 162(m) of the Code as amended by the
Omnibus Budget Reconciliation Act of 1993. The Committee has decided to take no
action at this time with respect to the Company's compensation program as a
result of this change in the tax law, but will continue to evaluate the possible
effects of the new provisions.
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
A. William Berkman, Jr., Chairman
William E. Kelly
Alberto de Benedictis
14
<PAGE> 17
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the Company's six month
cumulative total stockholder return with the NASDAQ Stock Market -- US Index and
the S&P Computer Software & Services Index. Cumulative total return is measured
assuming an initial investment of $100 and reinvestment of dividends.
COMPARISON OF 38 MONTH CUMULATIVE TOTAL RETURN*
AMONG CONCENTRA CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P COMPUTERS (SOFTWARE & SERVICES) INDEX
<TABLE>
<CAPTION>
S&P
COMPUTERS
MEASUREMENT PERIOD CONCENTRA NASDAQ STOCK (SOFTWARE &
(FISCAL YEAR COVERED) CORPORATION MARKET (U.S.) SERVICES)
<S> <C> <C> <C>
2/7/95 100.00 100.00 100.00
MAR-95 108.91 108.41 113.41
MAR-96 41.58 147.20 160.32
MAR-97 41.58 163.60 225.01
MAR-98 48.51 248.28 411.27
</TABLE>
- ---------------
* $100 invested on 2/07/95 in stock or index -- including reinvestment of
dividends. Fiscal year ending March 31.
15
<PAGE> 18
PROPOSAL NO. 2 -- APPROVAL OF THE AMENDMENT TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK
OF THE COMPANY AUTHORIZED TO BE ISSUED UNDER
THE COMPANY'S 1993 STOCK PLAN
On April 27, 1998, the Board of Directors adopted, subject to stockholder
approval, an amendment to the Company's 1993 Stock Plan (the "1993 Stock Plan")
to increase by 300,000, to a total of 1,709,091, the number of shares of Common
Stock authorized for issuance under the 1993 Stock Plan.
DESCRIPTION OF THE 1993 STOCK PLAN
General. The 1993 Stock Plan was adopted by the Company's Board of
Directors on June 11, 1993, and was subsequently approved by the Company's
stockholders. The 1993 Stock Plan is intended to encourage ownership of the
Company's Common Stock by directors, officers and employees of, and consultants
to, the Company. Under the Plan, the Company is able to provide incentives by
four methods. First, the Company may grant options to employees of the Company
which provide these individuals with the opportunity to purchase shares of the
Common Stock of the Company at a specified price during a given time period,
subject to various restrictions imposed by law, the Plan and Company policy.
These options qualify as "incentive stock options" ("Incentive Stock Options")
under Section 422A(b) of the Code. The Company may also grant options to
directors, officers, employees and consultants of the Company which do not
qualify as Incentive Stock Options ("Non-Qualified Options" and, together with
Incentive Stock Options, "Options"). These Non-Qualified Options also provide
the optionholder with the opportunity to purchase shares of the Company's Common
Stock. Another method by which the Company can provide incentives under the Plan
is to award Common Stock to its directors, officers, employees and consultants
("Awards"). Finally, the Company may authorize a director, officer, employee or
consultant to make a direct purchase of shares of the Common Stock of the
Company ("Direct Purchases"). Under the Plan, the Company may grant Incentive
Stock Options, Non-Qualified Options and Awards and authorize Direct Purchases
at any time prior to June 11, 2003. The Plan shall expire on June 11, 2003,
except as to Options outstanding on that date.
Administration of the Plan. The 1993 Stock Plan is currently administered
by the Compensation Committee of the Board of Directors, which consists of three
directors, each of whom must be a "disinterested person" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Compensation Committee selects the persons to whom Options, Awards
and Direct Purchases are granted and determines the number of shares of Common
Stock covered by the Options, Awards or Direct Purchases, the purchase price or
exercise price, the vesting schedule and (in the case of Options) the expiration
date. No option is exercisable after 10 years from the date on which it is
granted.
Stock Option Features. The aggregate fair market value (determined at the
time of grant) of shares issuable pursuant to incentive stock options which
first become exercisable in any calendar year by an employee or officer may not
exceed $100,000. Incentive stock options may not be granted at less than the
fair market value of the Common Stock on the date of grant or 110% of fair
market value in the case of incentive stock options granted to any optionee
holding 10% or more of all classes of voting stock of the Company.
Options issued under the 1993 Stock Plan are not transferable, except by
will or the laws of descent and distribution. Each option is exercisable only
while the optionee is in the employ or serving as a director of, or consultant
or to, the Company, except that an incentive stock option is exercisable within
up to three months after termination of employment or service to the extent such
option has vested at the time of such termination and non-qualified stock
options may be exercisable for a longer period after termination of employment
or any service arrangement. If an optionee dies while employed or retained by
the Company or within three months of the termination of his or her employment
by or service to the Company, such optionee's options may be exercised up to 180
days after his or her death. If an optionee is permanently disabled during his
or her employment by or service to the Company, such optionee's options may be
exercised up to 180 days following termination of his or her employment or
service due to such disability. The exercise price of options granted under the
1993 Stock Plan must be paid in full upon exercise in cash, shares of
16
<PAGE> 19
Common Stock already owned by the optionee or by any other means the Board of
Directors determines, or a combination thereof.
Termination and Amendment of the 1993 Stock Option Plan. The 1993 Stock
Plan will terminate on June 11, 2003, 10 years from the date the plan was
adopted by the Company's Board of Directors. The Board may terminate or amend
the 1993 Stock Plan at any time.
Accounting Effects. Under current accounting rules, neither the grant nor
exercise of options under the Stock Incentive Plan is expected to result in any
charge to the earnings of the Company. Options with variable exercise prices or
at an exercise price less the fair market value on the date of grant may result
in charges to earnings under certain circumstances.
Certain Federal Income Tax Consequences. The following is a brief summary
of certain Federal income tax aspects of options granted or which may be under
the Plan based upon the Federal income tax laws in effect on the date hereof.
This summary is not intended to be exhaustive and does not describe state or
local tax consequences.
1. Incentive Stock Options. An employee receiving an incentive stock
option ("ISO") will not realize taxable income upon the grant of the ISO or upon
its timely exercise. Exercise of an ISO will be timely if made during its terms
and if the employee remains an employee of the Company or a subsidiary
corporation at all times during the period beginning on the date of grant of the
ISO and ending on the date three months before the date of exercise (or 180 days
before the date of exercise in the case of a disabled employee). Exercise of an
ISO will also be timely if made within 180 days of the date of death (provided
it is exercisable by its terms) by the legal representative of an employee who
dies while in the employ of the Company or a subsidiary corporation. However,
the 1993 Stock Plan limits the right of the legal representative of any
participant to exercise an option to 180 days following death. Upon a sale of
the stock received upon exercise, except as noted below, the employee will
generally recognize long-term capital gain or loss equal to the difference
between the amount realized upon such sale and the exercise price. The Company,
under these circumstances, will not be entitled to any Federal income tax
deduction in connection with the exercise of the ISO or the sale of such stock.
If the stock acquired pursuant to an exercise of an ISO is disposed of by
the employee prior to the expiration of two years from the date of grant or
within one year from the date such stock is issued to him upon exercise (a
"disqualifying disposition"), any gain realized by the employee generally will
be taxable at the time of such disqualifying disposition, as follows: (i) at
ordinary income rates to the extent of the difference between the exercise price
and the lesser of the fair market value of the stock on the date the ISO is
exercised (the value on a later date is likely to govern in the case of an
employee whose sale of the stock at a profit could subject him to suit under
Section 16(b) of the Securities Exchange Act of 1934) or the amount realized on
such disqualifying disposition, and (ii) if the stock is a capital asset of the
employee, as short-term or long-term capital gain to the extent of any excess of
the amount realized on such disqualifying disposition over the fair market value
of the stock on the date which governs the determination of the employee's
ordinary income. In such case, the Company may claim a Federal income tax
deduction at the time of such disqualifying disposition for the amount taxable
to the employee as ordinary income. Any capital gain realized by the employee
will be long-term capital gain if the employee's holding period for the stock at
the time of disposition meets applicable holding period requirements for
long-term capital gains under the Code; otherwise it will be short-term. The
amount by which the fair market value of the stock on the exercise date of an
ISO exceeds the exercise price will be an item of tax preference for purposes of
the alternative minimum tax imposed by the Code.
2. Non-qualified Stock Options. In the case of non-qualified stock
options ("NQSOs") (and in the case of an untimely exercise of an ISO), the
employee will not be taxed upon grant of any such option, but rather, at the
time of exercise of such NQSOs, the employee, except as noted below, will
realize ordinary income for Federal income tax purposes in an amount equal to
the excess of the fair market value of the shares purchased over the exercise
price. The Company will generally be entitled to a tax deduction at such time
and in the same amount that the employee realizes ordinary income. If stock so
acquired is later sold or exchanged, then the difference between the sales price
and the fair market value of such stock on the date of
17
<PAGE> 20
exercise of the option is generally taxable as long-term or short-term capital
gains or loss depending upon whether the stock has been held for more than one
year after such date.
As stated above, generally income is realized by an employee upon exercise
of an NQSO (or untimely exercise of an ISO). However, in the case of such
exercise of an option by an employee whose sale of shares at a profit could
subject the employee to suit under Section 16(b) of the Securities Exchange Act
of 1934, realization of income is postponed so long as a sale of the shares
would expose the employee to such suit, unless the employee elects within 30
days after the exercise to be taxed as of the exercise date in the manner
described above. Absent such election, such an employee will realize ordinary
income at the time a sale would no longer expose him to such suit in an amount
equal to the excess of the fair market value of the shares at that time over the
exercise price. The fair market value will also govern for purposes of the
Company's deduction and for determining the employee's gain or loss upon
subsequent disposition of the shares.
3. Exercise with Shares. An employee who pays the exercise price upon
exercise of an NQSO, in whole or in part, by delivering shares of the Company's
stock already owned by him will realize no gain or loss for Federal income tax
purposes on the share surrendered, but otherwise will be taxed according to the
rules described above for NQSOs. (See "Certain Federal Income Tax
Consequences -- 2. Nonqualified Stock Options.") With respect to shares acquired
upon exercise which are equal in number to the shares surrendered, the basis of
such shares will be equal to the fair market value of such shares on the date of
exercise, and the holding period for such additional shares will commence on the
date the option is exercised.
When shares of the Company's stock are surrendered upon exercise of an ISO,
(i) no gain or loss will be recognized as a result of the exchange, (ii) a
number of shares received which is equal to the number of shares surrendered
will have a basis equal to that of the shares surrendered, and (except for
purposes of determining whether a disposition will be a disqualifying
disposition) will have a holding period which includes the holding period of the
shares exchanged and (iii) the remaining shares received will have a zero basis
and will have a holding period which begins on the date of the exchange. If any
of the shares received are disposed of within two years of the date of grant of
the ISO or within one year after exercise, the shares with the lowest basis
(i.e., a zero basis) will be deemed to be disposed of first, and such
disposition will be a disqualifying disposition giving rise to ordinary income
as discussed above.
AMENDED PLAN BENEFITS
1993 STOCK PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES AGGREGATE
SUBJECT TO OPTIONS EXERCISE
NAME AND POSITION GRANTED(#) PRICE ($)
----------------- ------------------ ----------
<S> <C> <C>
Lawrence W. Rosenfeld....................................... 96,250 $ 372,969
President, Chief Executive Officer and Chairman of the
Board
David I. Lemont............................................. 58,853 228,055
Senior Vice President and Chief Operating Officer
Garreth P. Evans(1)......................................... 42,273 260,627
Senior Vice President, Business Units Aerospace and
Automotive
Peter T. Lanell............................................. 37,545 145,487
Vice President, Business Units Industrial Products and
High Technology
Robert E. Phillips.......................................... 45,500 176,313
Vice President, Engineering
Executive Group............................................. 354,058 1,371,975
Non-Executive Director Group................................ -- --
Non-Executive Officer Employee Group........................ 432,946 1,677,666
</TABLE>
- ---------------
(1) Mr. Evans resigned from the Company effective June 1, 1998.
No Awards or Direct Purchases have been granted under the 1993 Stock Plan.
18
<PAGE> 21
REQUIRED AFFIRMATIVE VOTE
The approval of the amendment to increase by 300,000 the number of shares
of Common Stock authorized for issuance under the 1993 Stock Plan will require
the affirmative approval of a majority of the votes cast with respect to such
proposal at the Annual Meeting.
THIS PROPOSAL HAS BEEN UNANIMOUSLY APPROVED BY THE BOARD OF DIRECTORS,
WHICH RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ITS ADOPTION.
PROPOSAL NO. 3 -- RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed PricewaterhouseCoopers
LLP as auditors of the Company for the fiscal year ending March 31, 1999 and
further directed that management submit the selection of auditors for
ratification by the stockholders. PricewaterhouseCoopers LLP were the Company's
auditors for the fiscal year ended March 31, 1998.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting, with the opportunity to make a statement if they desire to
do so, and are expected to be available to respond to appropriate questions.
REQUIRED AFFIRMATIVE VOTE
The approval of the ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's auditors will require the
affirmative approval of a majority of the votes cast with respect to such
proposal at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO RATIFY THE CHOICE OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S AUDITORS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and San Giorgio System Technology S.p.A. ("SGST"), a subsidiary
of Finmeccanica and a corporate affiliate of San Giorgio S.A. ("San Giorgio"),
the Company's largest stockholder, are parties to an exclusive distributor
agreement pursuant to which the Company has appointed SGST exclusive distributor
in Italy of Concentra's products and customer support services for a three-year
term which expired in June 1996. The agreement obligated SGST to make a payment
to Concentra in the amount of $1.2 million, which was paid in four equal
quarterly installments beginning July 1, 1993, in return for which SGST received
the master copy of the licensed products with the right to resell 40 copies of
the Concentra software to end users.
The Company and Elsag International N.V. ("Elsag"), a subsidiary of
Finmeccanica, entered into a Corporate Software License Agreement, which was
subsequently assigned by Elsag to San Giorgio and thereafter by San Giorgio to
Finmeccanica. Under this agreement, the Company granted 60 licenses for use of
Concentra software by the Elsag Bailey Group, a division of Finmeccanica, at an
aggregate purchase price of $2.8 million, payable in quarterly installments. As
of March 31, 1995, the Company had received all payments due under the agreement
and Finmeccanica had received the master copy of the licensed products. In the
event Finmeccanica orders more than 60 licenses, such additional licenses may be
purchased at a discount of 30% below Concentra's U.S. list price.
The Company and Stephen J. Cucchiaro were parties to a Noncompetition and
Termination Agreement. Prior to Mr. Cucchiaro's resignation as President on
March 31, 1994, the Company modified its Noncompetition and Termination
Agreement with him to provide for a severance payment to Mr. Cucchiaro in the
amount of $141,500, payable in installments through March 1995. Mr. Cucchiaro is
a director of the Company. The terms of the severance arrangement with Mr.
Cucchiaro were reviewed and approved as consistent with similar arrangements
within the software industry and in the best interest of the Company and its
stockholders by the disinterested members of the Board of Directors.
19
<PAGE> 22
The Company has retained the law firm of Peabody & Arnold LLP as general
counsel. William E. Kelly, a director and Secretary of the Company, is a partner
in Peabody & Arnold LLP.
Stephen J. Cucchiaro, a director of the Company, has since July 1, 1996
been the manager of record for two of the seven investment options available to
eligible employees under the Company's 401(k) Plan. The decision to invest in
these funds is at the discretion of the individual employee and is completely
voluntary. Although Mr. Cucchiaro receives no compensation or remuneration
directly from the Company for his role as the manager of record for the two
funds, he is entitled to receive an annual management fee based on the amounts,
if any, which are invested in the two funds by eligible employees; such
management fee is payable from the accounts managed by Mr. Cucchiaro.
On July 6, 1994, the Company adopted a policy that all transactions between
the Company and its officers, directors and other affiliates must (i) be
approved by a majority of the members of the Company's Board of Directors and by
a majority of the disinterested members of the Company's Board of Directors and
(ii) be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the Company's 1999
annual meeting of stockholders must be received at the executive offices of the
Company not later than March 16, 1999 in order to be considered for inclusion in
the Company's proxy statement and form of proxy for that meeting.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended March
31, 1998 is being furnished to stockholders of record on July 10, 1998. The
Annual Report to Stockholders does not constitute a part of the proxy soliciting
material.
OTHER MATTERS
As of the date of this proxy statement, management of the Company knows of
no matter not specifically referred to above as to which any action is expected
to be taken at the Annual Meeting. The persons named in the enclosed form of
proxy, or their substitutes, will vote the proxies, insofar as the same are not
limited to the contrary, in regard to such other matters and the transaction of
such other business as may properly be brought before the Annual Meeting, in
their best judgement.
FORM 10-K AVAILABLE
THE ANNUAL REPORT OF THE COMPANY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K, WHICH INCLUDES CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES FOR THE COMPANY AND ITS SUBSIDIARIES, IS AVAILABLE
TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CHIEF FINANCIAL
OFFICER OF THE COMPANY AT 21 NORTH AVENUE, BURLINGTON, MASSACHUSETTS 01803.
20
<PAGE> 23
CONCENTRA CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 10, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) Lawrence
W. Rosenfeld and Alex N. Braverman, and each of them, with full power of
substitution, as proxies to represent and vote as designated herein, all shares
of stock of Concentra Corporation (the "Company") which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company to be held at the Renaissance Bedford Hotel, 44 Middlesex Turnpike,
Bedford, Massachusetts 01730, on Monday, August 10, 1998 at 9:00 a.m., or any
adjourned sessions thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholders. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. Attendance of the undersigned at the
meeting or at any adjournment thereof will not be deemed to revoke this proxy
unless the undersigned revokes this proxy in writing before it is exercised.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
<PAGE> 24
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of Stockholders, you
can be sure your shares are represented at the Meeting by promptly returning
your proxy (attached below) in the enclosed envelope. Thank you for your
attention to this important matter.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. To elect the following persons to serve as directors for a term of
three years (except as marked below):
NOMINEES: Lawrence W. Rosenfeld and Alberto de Benedictis
FOR / / WITHHELD / /
/ /
---------------------------------------------------------------
(Instruction: To vote against an individual nominee, write the name of
such nominee in the space provided above.
2. To approve the adoption of an amendment to the Company's 1993 Stock
Plan to increase by 300,000 the number of shares of Common Stock
authorized for issuance under the 1993 Stock Plan as described in the
accompanying proxy statement.
FOR / / AGAINST / / ABSTAIN / /
3. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent auditors for the 1999 fiscal year.
FOR / / AGAINST / / ABSTAIN / /
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments of the meeting.
FOR / / AGAINST / / ABSTAIN / /
/ / MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT.
Please sign exactly as name appears hereon. When shares are held by
joint owners, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give the 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: Date:
-------------------------------- -----------------------
Signature: Date:
-------------------------------- -----------------------
