<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
Filed by the Registrant X
---
Filed by a Party other than the Registrant
---
Check the appropriate box:
Preliminary Proxy Statement Confidential, for Use of the
- --- --- Commission Only (as permitted by
Rule 14a-6(e)(2))
X Definitive Proxy Statement
- ---
Definitive Additional Materials
- ---
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- ---
HEALTHPLAN SERVICES CORPORATION
(Name of Registrant as Specified in Its Charter)
N/A
------------------------------------------------------------------------
(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
HealthPlan Services Corporation
3501 Frontage Road
Tampa, Florida 33607
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 6, 1997
- --------------------------------------------------------------------------------
To the Stockholders of
HEALTHPLAN SERVICES CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
HealthPlan Services Corporation, a Delaware corporation (the "Company"), will be
held at The Centre Club, 123 South Westshore Boulevard, Tampa, Florida 33609 on
Tuesday, May 6, 1997, at 11:00 a.m. local time, for the following purposes:
(i) to elect thirteen (13) directors, each to hold office for the
ensuing year or until his or her successor is duly elected and
qualified, or until his or her earlier resignation or removal;
(ii) to consider and act upon a proposal to adopt the Amended and
Restated HealthPlan Services Corporation 1996 Employee Stock
Option Plan;
(iii) to consider and act upon a proposal to adopt the HealthPlan
Services Corporation 1997 Directors Equity Plan; and
(iv) to consider and act upon such other matters as may properly be
brought before the meeting or any adjournment(s) thereof.
The close of business on March 10, 1997 has been fixed as the date for
the determination of stockholders entitled to notice of, and to vote at, the
meeting or any adjournment(s) thereof. Only stockholders of record at such time
will be so entitled to vote.
Your attention is called to the accompanying Proxy Card and Proxy
Statement.
The Directors and Officers of the Company invite you to attend the
meeting.
By Order of the Board of Directors,
/s/ Phillip S. Dingle
--------------------------------------
Tampa, Florida PHILLIP S. DINGLE, Secretary
April 11, 1997
----------------
Stockholders are cordially invited to attend the Annual Meeting. If you do not
expect to be present at the meeting but wish your shares to be voted upon the
matters to come before it, please fill in, date, and sign the accompanying Proxy
Card, and return it promptly in the envelope enclosed for your convenience. No
postage is necessary if mailed in the United States.
<PAGE> 3
HEALTHPLAN SERVICES CORPORATION
3501 FRONTAGE ROAD
TAMPA, FLORIDA 33607
(813) 289-1000
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 6, 1997
PROXY STATEMENT
SOLICITATION
The Board of Directors of HealthPlan Services Corporation (the
"Company") hereby solicits proxies to be used at the Annual Meeting of
Stockholders of the Company to be held at The Centre Club, 123 South Westshore
Boulevard, Tampa, Florida 33609, on Tuesday, May 6, 1997 at 11:00 a.m. local
time, and at any and all adjournments thereof, and this Proxy Statement is
furnished in connection therewith. A proxy may be revoked at any time prior to
its exercise by giving written notice of revocation to the Secretary of the
Company at or before the Annual Meeting, by duly executing a subsequent proxy
relating to the same number of shares, or by attending the Annual Meeting and
voting in person. Directors, officers, and regular employees of the Company may,
without additional compensation, solicit proxies in person or by telephone,
personal interview, mail, or telegraph. The Company will also make arrangements
with brokerage houses, as well as other custodians, nominees, and fiduciaries
that are record holders of the Company's Common Stock, to forward proxy
soliciting material to the beneficial owners of shares of the Company's Common
Stock. The Company will reimburse such record holders for their reasonable
expenses incurred in such activities. The cost of solicitation of proxies will
be borne by the Company.
It is anticipated that this Proxy Statement and accompanying notice and
proxy card, as well as the Company's Annual Report, will be mailed to the
stockholders of the Company on or about April 11, 1997.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its
Common Stock, $.01 par value per share, of which 14,991,126 shares were
outstanding as of March 10, 1997. Each share entitles its holder to one vote.
Only stockholders of record at the close of business on March 10, 1997 will be
entitled to vote at the Annual Meeting or at any and all adjournments thereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the best knowledge of the Company based on information filed with
the Securities and Exchange Commission and information provided directly to the
Company by the persons and entities named below, the following table sets forth
the beneficial ownership of the Company's Common Stock, as of March 10, 1997,
by: (i) each holder of more than five percent of the Company's Common Stock;
(ii) each current director and nominee for director of the Company; (iii) the
Chief Executive Officer of the Company and the Company's four other most highly
compensated executive officers; and (iv) the directors and executive officers of
the Company as a group. Except as otherwise indicated, each stockholder named
below has sole investment and voting power with respect to shares beneficially
owned by such stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY MARCH 10, 1997 OF CLASS
- ------------------- --------------------- -------------- --------
<S> <C> <C> <C>
James K. Murray, Jr President, Chief Executive 963,559(1) 6.4%
3501 Frontage Road Officer, and Director
Tampa, Florida 33607-3599
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY MARCH 10, 1997 OF CLASS
- ------------------- --------------------- -------------- --------
<S> <C> <C> <C>
William L. Bennett Chairman of the Board and 245,070(2) 1.6%
15 Pleasant Street Connector Director
Framingham, Massachusetts 01701
Joseph A. Califano, Jr Director 16,050(3) *
152 W. 57th St. - 12th Floor
New York, New York 10019
James F. Carlin, Jr Director 13,270(4) *
233 W. Central Street
Natick, Massachusetts 01760
Joseph S. DiMartino Director 12,800(5) *
667 Madison Ave
25th Floor
New York, New York 10021
John R. Gunn Director 16,050(3) *
1275 York Ave
New York, New York 10021
Charles H. Guy, Jr Director 537,861(6) 3.6%
205 S. Hoover, Suite 204
Tampa, Florida 33609
Nancy Kane, D.B.A Director 16,050(3) *
677 Huntington Ave
Boston, Massachusetts 02115
David Nierenberg Director 150,735(7) 1.0%
19605 N. E. 8th St
Camas, Washington 98607
James G. Niven Director 16,050(8) *
1334 York Avenue
New York, New York 10021
Samuel F. Pryor, IV Director 96,362(9) *
645 Madison Ave. - 22nd Floor
New York, New York 10022
Trevor G. Smith Director 260,935(10) 1.7%
777 Harbor Island Blvd., Suite 760
Tampa, Florida 33602
Arthur F. Weinbach Director 2,400(11) *
One ADP Boulevard
Roseland, NJ 07068-1728
Holyoke L. Whitney Director 124,400(4) *
40 Grove Street, Suite 320
Wellesley, Massachusetts 02181
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY MARCH 10, 1997 OF CLASS
- ------------------- --------------------- -------------- --------
<S> <C> <C> <C>
Richard M. Bresee Chief Operating Officer 59,500(12) *
3501 Frontage Road - Health Care Alliances
Tampa, Florida 33607-3599
Timothy T. Clifford Chief Operating Officer 45,043(13) *
15 Pleasant Street Connector - Small Group Business
Framingham, Massachusetts 01701
Steven V. Hulslander Executive Vice President 55,695(14) *
3501 Frontage Road - Chief Information Officer
Tampa, Florida 33607-3599
Gary L. Raeckers Chief Operating Officer 58,889(12) *
3501 Frontage Road - The New England
Tampa, Florida 33607-3599
Automatic Data Processing, Inc. -- 1,320,000 8.8%
One ADP Boulevard
Roseland, New Jersey 07068-1728
Noel Group, Inc. -- 4,275,846 28.5%
667 Madison Ave
New York, New York 10021
All Directors and Executive -- 3,141,016(15) 20.6%
Officers as a group (includes 20
persons)
</TABLE>
- -----------------------
* Less than one percent.
(1) Includes 173,156 shares held by two private companies in which Mr.
Murray has a pecuniary interest; Mr. Murray disclaims beneficial
ownership in such shares except to the extent of his interest in the
private companies. Also includes 150,000 shares held by Mr. Murray's
wife, as to which shares Mr. Murray disclaims beneficial ownership;
593,803 shares held by a family limited partnership; and 45,000 shares
issuable upon exercise of options that are exercisable within 60 days
of March 10, 1997. Does not include the proportionate share ownership
of the Company represented by 8,334 shares of Noel Group, Inc. ("Noel")
common stock that are issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(2) Includes 45,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997. Does not include the
proportionate share ownership of the Company represented by 442,315
shares of Noel common stock that are issuable upon exercise of options
that are exercisable within 60 days of March 10, 1997 or 3,000 shares
of Noel common stock held in trust for the benefit of Mr. Bennett's
children, as to which Mr. Bennett disclaims beneficial ownership.
(3) Includes 4,800 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(4) Includes 2,400 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(5) Includes 4,800 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997. Does not include the
proportionate share ownership of the Company represented by 8,334
shares of
3
<PAGE> 6
Noel common stock that are issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997 and an additional 800,000
shares of Noel common stock issuable upon exercise of a warrant that is
exercisable within 60 days of March 10, 1997. Does not include
4,275,846 shares held by Noel. Mr. DiMartino is Chairman of the Board
of Noel, and therefore may be deemed to share voting and investment
power with respect to the shares owned by Noel.
(6) Includes 74,490 shares held by Guy Corporate Partners, Inc., a company
controlled by Mr. Guy, and 4,800 shares issuable upon exercise of
options that are exercisable within 60 days of March 10, 1997.
(7) Includes 38,735 shares held by the Nierenberg Family 1993 Living Trust,
of which Mr. Nierenberg is trustee; 100,000 shares owned by the D3
Family Fund, L.P., an investment partnership of which Mr. Nierenberg is
the general partner, as well as a limited partner through his IRA and
through a family trust; 7,200 shares held by four foreign investors on
whose behalf Mr. Nierenberg manages investments; and 4,800 shares
issuable to Mr. Nierenberg upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(8) Includes 4,800 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997. Does not include the
proportionate share ownership of the Company represented by 22,223
shares of Noel common stock issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(9) Includes 20,078 shares held by a trust for the benefit of Mr. Pryor's
minor children, as to which shares Mr. Pryor disclaims beneficial
ownership; 20,078 shares held by Mr. Pryor's 401(k) account; and 4,800
shares issuable upon exercise of options that are exercisable within 60
days of March 10, 1997. Does not include the proportionate share
ownership of the Company represented by 233,334 shares of Noel common
stock that are beneficially owned by Mr. Pryor, and an additional
60,000 shares of Noel common stock issuable upon exercise of options
that are exercisable within 60 days of March 10, 1997. Mr. Pryor has
declined to stand for re-election to the Board of Directors of the
Company at the 1997 Annual Meeting.
(10) Includes 71,500 shares held in trust for the benefit of Mr. Smith's
wife, as to which shares Mr. Smith disclaims beneficial ownership;
183,420 shares held in trust for the benefit of Mr. Smith; and 4,800
shares issuable upon exercise of options that are exercisable within 60
days of March 10, 1997.
(11) Includes 2,400 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997. Does not include the
proportionate share ownership of the Company represented by 166,943
shares of Automatic Data Processing, Inc. ("ADP") common stock that are
beneficially owned by Mr. Weinbach or an additional 260,000 shares of
ADP common stock issuable upon exercise of options that are exercisable
within 60 days of March 10, 1997. Does not include 1,320,000 shares
held by ADP. Mr. Weinbach is the President and Chief Executive Officer
of ADP, and therefore may be deemed to share voting and investment
power with respect to the shares owned by ADP.
(12) Includes 21,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(13) Includes 15,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(14) Includes 15,500 shares issuable upon exercise of options that are
exercisable within 60 days of March 10, 1997.
(15) Includes 247,900 shares issuable upon exercise of options that are
exercisable within 60 days March 10, 1997.
4
<PAGE> 7
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, 13 directors will be elected to the Board of
Directors of the Company, each to hold office for the ensuing year or until his
or her successor is duly elected and qualified, or until his or her earlier
resignation or removal. The number of seats on the Board of Directors of the
Company is currently fixed at 14. Samuel F. Pryor, IV has declined to stand for
re-election to the Board, and therefore there will be one vacancy on the Board
after the Annual Meeting of Stockholders. At the Annual Meeting of the Board,
which will occur immediately after the Annual Meeting of Stockholders, the Board
will consider a proposal to decrease the number of seats on the Board to 13.
All current directors other than Mr. Pryor are nominees for election to
the Board at the 1997 Annual Meeting. Each of these 13 nominees has consented to
being named in this Proxy Statement, and has notified management that he or she
intends to serve, if elected. If any of the nominees should be unable to serve
as a director, the persons designated by proxies reserve full discretion to cast
their votes for another person in the nominee's place. Unless authority is
withheld on the attached form of proxy card, such proxy will be voted FOR the
election of each of the 13 nominees to serve as a director. Proxies cannot be
voted for a greater number of persons than the number of nominees. The
information set forth below regarding the current directors of the Company has
been furnished by the directors.
NAME AND AGE OCCUPATION/BACKGROUND
James K. Murray, Jr. - 61 President and Chief Executive Officer of the
Company since December 1994 and a director
of the Company since October 1994. Mr.
Murray co-founded the predecessor to the
Company (the "Predecessor Company") in 1970
with Charles H. Guy, Jr. and Trevor G.
Smith, each of whom is currently a director
of the Company. Mr. Murray held the position
of Corporate Senior Vice President of The
Dun & Bradstreet Corporation ("D&B") from
March 1990 until his retirement from D&B in
December 1993. Mr. Murray also served as
Chairman of the Board of the Reuben H.
Donnelley Corp., a publisher of telephone
yellow pages, from August 1991 until
December 1993. In October 1994, Mr. Murray,
together with Messrs. Guy and Smith and Noel
Group, Inc. ("Noel"), acquired all of the
outstanding capital stock of the Predecessor
Company from D&B. Mr. Murray is also a
director of Noel.
William L. Bennett - 47 Chairman of the Board since December 1994
and a director of the Company since August
1994. Until March 1995, Mr. Bennett served
as Chairman and Chief Executive Officer of
Noel and continues to serve as a consultant
to Noel. Previously, Mr. Bennett was
Co-Chairman and Chief Executive Officer of
Noel from November 1991 until July 1994. Mr.
Bennett is a director of Noel; Belding
Heminway Company, Inc. ("Belding Heminway"),
a manufacturer and distributor of high
technology threads, specialty fabrics, and
buttons; Allegheny Power System, Inc., an
electric utility holding company; and
Sylvan, Inc., a company that produces
mushroom spawn and fresh mushrooms.
5
<PAGE> 8
NAME AND AGE OCCUPATION/BACKGROUND
Joseph A. Califano, Jr. - 65 Director of the Company since January 1995.
Since 1992, Mr. Califano has been Chairman
and President of The National Center on
Addiction and Substance Abuse at Columbia
University. He is a director of Authentic
Fitness Corporation; Automatic Data
Processing, Inc.; Chrysler Corporation;
Kmart Corporation; New York/New England
Telephone Companies; The Travelers, Inc.;
and Warnaco Inc. Mr. Califano is a governor
of New York Hospital and a trustee of New
York University, The Twentieth Century Fund,
The Urban Institute, and The American
Ditchley Foundation. Mr. Califano is
Chairman of the Board of the Institute for
Social and Economic Policy in the Middle
East at the Kennedy School of Government at
Harvard University. He is an Adjunct
Professor of Public Health (Health Policy
and Management) at Columbia University's
Medical School (Department of Psychiatry)
and School of Public Health and a member of
the Institute of Medicine of the National
Academy of Sciences. Mr. Califano served as
Secretary of the United States Department of
Health, Education and Welfare from 1977 to
1979. He is a member of the Advisory Council
of the American Foundation for AIDS
Research. He is the author of nine books and
numerous articles.
James F. Carlin, Jr. - 57 Director of the Company since July 1996. Mr.
Carlin co-founded Consolidated Group, Inc.
("Consolidated Group") in 1971 with Holyoke
L. Whitney, who is also a director of the
Company. Mr. Carlin served as a director of
Consolidated Group from 1971 until July
1996, when Consolidated Group became a
wholly owned subsidiary of the Company.
Since 1983, Mr. Carlin has been Chairman and
Chief Executive Officer of Carlin
Consolidated, Inc., a privately held
investment and management firm. Mr. Carlin
is a Trustee of the John Hancock group of
mutual funds and a director of Uno
Restaurant Corp. From September 1991 to July
1992, he was the State-Appointed Receiver
for the City of Chelsea, Massachusetts. He
is currently Chairman of the Massachusetts
Board of Higher Education.
Joseph S. DiMartino - 53 Director of the Company since March 1995.
Since January 1995, Mr. DiMartino has been
Chairman of the Board of approximately 168
funds in the Dreyfus Family of Mutual Funds.
From 1982 until January 1995, he was
President, a director and, until August
1994, Chief Operating Officer of The Dreyfus
Corporation, an investment advisor and
manager of the Dreyfus Family of Mutual
Funds. From 1982 until August 1994, Mr.
DiMartino also served as Executive Vice
President and a director of Dreyfus Service
Corporation, a wholly owned subsidiary of
the Dreyfus Corporation, which until August
24, 1994 was the distributor for the Dreyfus
Family of Mutual Funds. He is also Chairman
of the Board of Directors of Noel and a
director of The Muscular Dystrophy
Association; Belding Heminway; and Staffing
Resources, Inc.
John R. Gunn - 54 Director of the Company since November 1994.
Since 1982, Mr. Gunn has served in various
capacities for the Memorial Sloan-Kettering
Cancer Center, a medical center and research
institute, and is currently its Executive
Vice President and Chief Operating Officer
and a member of its Board of Managers. Mr.
Gunn is a director of U.S. Home Care, a home
health care company, and the following
not-for-profit entities: Empire Blue Cross
and Blue Shield, The Greater New York
Hospital Association, the Devereaux
Foundation, and the Hospital Association of
New York State.
6
<PAGE> 9
NAME AND AGE OCCUPATION/BACKGROUND
Charles H. Guy, Jr. - 73 Director of the Company since October 1994.
Since 1987, Mr. Guy has been Chairman and
Chief Executive Officer of Guy Corporate
Partners, Inc., a private company that
invests in emerging, closely held
businesses. Mr. Guy co-founded the
Predecessor Company in 1970 with James K.
Murray, Jr. and Trevor G. Smith and served
as its Chairman from 1970 through 1986.
Nancy Kane, D.B.A. - 47 Director of the Company since November 1994.
Dr. Kane is an author, lecturer, and
recognized expert in managed health care.
Since 1980, she has been a member of the
Harvard School of Public Health faculty,
where she has served in the Department of
Health Policy and Management. Dr. Kane is a
director of the Urban Medical Group, a
non-profit medical group practice
organization.
David Nierenberg - 44 Director of the Company since November 1994.
Since April 1995, Mr. Nierenberg has been
President of Nierenberg Investment
Management Co., Inc., an investment
management company. Between 1986 and 1996,
Mr. Nierenberg was a general partner of
Trinity Ventures, Ltd., a venture capital
company focusing on investments in consumer
products and specialty retail, software,
financial services, and health care.
James G. Niven - 51 Director of the Company since November 1994.
In 1996, Mr. Niven joined Sotheby's, Inc. as
Senior Vice President. Since 1982, he has
been a general partner of Pioneer
Associates, a venture capital investment
company. He is also a director of Noel; The
Lynton Group, Inc., a company engaged in
aircraft charter and maintenance; Lincoln
Snacks Company, a snack food manufacturer;
The Prospect Group, Inc. ("Prospect"), a
company which prior to its adoption in 1990
of a Plan of Complete Liquidation and
Distribution conducted its major operations
through subsidiaries acquired in leveraged
buyout transactions; Tatham Offshore, Inc.,
an independent energy company engaged in the
development, exploration, and production of
offshore oil and gas reserves; and CBT
Bancshares, Inc., a multi-financial holding
company. Mr. Niven is also an advisory
director of Houston National Bank, a
commercial bank. He is a member of the Board
of Managers of Memorial Sloan-Kettering
Cancer Center and is a trustee of the Museum
of Modern Art and the National Center for
Learning Disabilities, Inc.
Samuel F. Pryor, IV - 41 Director of the Company since August 1994.
Mr. Pryor has been Managing Director of Noel
since November 1991. Mr. Pryor has served as
President of Brazil Rail Partners, LLC, a
transportation management company, since
1996, and has been President and a director
of Prospect since October 1991. Mr. Pryor is
also a director of Illinois Central
Corporation, a railroad holding company, and
Belding Heminway. Mr. Pryor has declined to
stand for re-election to the Board at the
1997 Annual Meeting.
Trevor G. Smith - 61 Director of the Company since October 1994.
Since 1994, Mr. Smith has been President and
a director of Reveley Resources, Inc., a
consulting and health care investment
management firm. Mr. Smith co-founded the
Predecessor Company in 1970 with Charles H.
Guy, Jr. and James K. Murray, Jr. Mr. Smith
served as Vice Chairman of the Predecessor
Company from 1978 until 1988 and as Chairman
of the Board and Chief Executive Officer of
the Predecessor Company from 1991 until
1993. Mr. Smith is a Chartered Life
Underwriter.
7
<PAGE> 10
NAME AND AGE OCCUPATION/BACKGROUND
Arthur F. Weinbach - 53 Director of the Company since February 1997.
Since 1996, Mr. Weinbach has served as
President and Chief Executive Officer of
Automatic Data Processing, Inc. ("ADP").
Previously, he served as Executive Vice
President of ADP from 1992 until 1994 and as
President and Chief Operating Officer of ADP
from 1994 until 1996. Mr. Weinbach serves on
the Board of Directors of ADP and the Board
of Directors of Decision One Corporation, a
computer maintenance company.
Holyoke L. Whitney - 64 Director of the Company since July 1996. Mr.
Whitney co-founded Consolidated Group in
April 1971 with Mr. Carlin, served as
President and Chief Operating Officer of
Consolidated Group during its early
formative years, and served continuously as
Chairman of the Board of Directors of
Consolidated Group from 1971 until July
1996, when Consolidated Group became a
wholly owned subsidiary of the Company. Mr.
Whitney is President of The Whitney Group,
Ltd., where he oversees several private
business ventures. Mr. Whitney is the former
President of The Carroll Center for the
Blind, where he served as a director for
many years and was recently elected Director
Emeritus.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The 13 nominees for director receiving a plurality of the votes cast at
the meeting or by proxy shall be elected.
The Board of Directors recommends that the Stockholders vote FOR the 13
nominees described above.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
DIRECTORS' COMPENSATION
Directors who are officers or employees of the Company receive no
additional compensation for their service as members of the Board of Directors
or as members of Board committees. Each director who is not an officer or
employee of the Company is entitled to a quarterly retainer fee of $1,250 and an
additional fee of $500 for each Board meeting and separately scheduled committee
meeting attended. The Company reimburses all directors for out-of-pocket
expenses, including travel expenses, related to the attendance at such meetings.
The Compensation Committee has adopted the HealthPlan Services
Corporation 1997 Directors Equity Plan (the "Directors Equity Plan") effective
January 1, 1997, subject to approval by the Company's stockholders at the 1997
Annual Meeting. Pursuant to the Directors Equity Plan, each participating
director will receive Common Stock of the Company as compensation for each
quarter in which the director serves on the Board. The number of shares issued
for each quarter will have a value equal to $2,500, to be calculated based on
the fair market value of the Company's Common Stock at the end of such quarter.
All non-employee directors are eligible to participate in the Plan. An eligible
director may make an irrevocable election not to participate in the Plan in any
year and instead receive quarterly cash retainers (currently set at $1,250). The
aggregate number of shares of Common Stock available for awards under the
Directors Equity Plan is 100,000, subject to specified adjustments in the event
of changes in the outstanding shares of Common Stock.
Directors who are not employees of the Company also participate in the
1995 HealthPlan Services Corporation Directors Stock Option Plan (the "Directors
Option Plan"). Pursuant to the Directors Option Plan, each non-employee director
automatically receives an option to purchase 12,000 shares of the Company's
Common Stock, effective as of the later of (i) May 18, 1995 (the business day
immediately preceding the day that the Company's securities were first offered
to the public in an underwritten initial public offering), or (ii) the date of
the director's election to the Board. The Directors Option Plan further provides
that each non-employee director will be granted an additional option to purchase
12,000 shares of Common Stock if such director is re-elected to the Board of
Directors at the Company's annual meeting of stockholders which follows such
director's fourth complete year of service on the
8
<PAGE> 11
Board. All options vest over a four-year period from the date of grant, with 20%
of the options becoming exercisable on the grant date and 20% becoming
exercisable on each of the next four anniversaries of the grant date. The
exercise price of each option is the fair market value of the Company's Common
Stock as of the grant date. The aggregate number of shares of Common Stock
available for awards under the Directors Option Plan is 240,000, subject to
specified adjustments in the event of changes in the outstanding shares of
Common Stock.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors conducts its business through meetings of the
Board and through its committees. In accordance with the By-laws of the Company,
the Board of Directors currently has Executive, Audit, Strategic Planning,
Compensation, and Regulatory Affairs Committees established as standing
committees of the Board. There is no Nominating Committee of the Board. The
Board of Directors held nine meetings during 1996. Each director attended at
least 75 percent of the total number of meetings of the Board of Directors and
the Committees on which he or she serves.
The Executive Committee, which exercises, to the fullest extent
permitted by applicable law, all of the powers and authority of the Board of
Directors in the management of the business and affairs of the Company during
intervals between Board meetings, is composed of James K. Murray, Jr., William
L. Bennett, Joseph S. DiMartino, and Charles H. Guy, Jr. The Executive Committee
held one meeting during 1996.
The Audit Committee, which is composed of John R. Gunn, Nancy Kane,
D.B.A., James G. Niven, and Samuel F. Pryor, IV, has authority to recommend to
the Board of Directors the independent public accountants to serve as auditors,
reviews with the independent auditors the annual audit plan, the financial
statements, the auditors' report and their evaluation and recommendations
concerning the Company's internal controls, and approves the types of
professional services for which the Company may retain the independent auditors.
The Audit Committee held three meetings during 1996.
The Strategic Planning Committee, which is composed of James K. Murray,
Jr., William L. Bennett, Joseph S. DiMartino, John R. Gunn, Nancy Kane, D.B.A.,
David Nierenberg, Trevor G. Smith, and Holyoke L. Whitney, has authority to
retain, at the expense of the Company, consultants and other advisors and to
advise and consult directly with the Board of Directors and the officers of the
Company on long-term planning matters and to recommend such actions to the Board
of Directors as the Committee deems appropriate. The Strategic Planning
Committee held two meetings during 1996.
The Compensation Committee, which is composed of Joseph A. Califano,
Jr., Charles H. Guy, Jr., James G. Niven, and Samuel F. Pryor, IV, has authority
to exercise all of the powers and authority of the Board of Directors relating
to the compensation of, and the provision of incentives for, the Company's
officers, directors, management, employees, and other persons performing
services on behalf of the Company, including, without limitation, matters
relating to salaries, bonuses, deferred compensation, pension and profit sharing
plans, stock option plans, and all other plans, agreements, or arrangements
relating in any way to compensation or to the provision of incentives to persons
performing such services. The Compensation Committee held four meetings during
1996.
The Regulatory Affairs Committee, which is composed of Joseph A.
Califano, Jr., James F. Carlin, Jr., David Nierenberg, James G. Niven, and
Trevor G. Smith, has authority to retain, at the expense of the Company,
consultants and other advisors and to advise and consult directly with the Board
of Directors and the officers of the Company on regulatory matters affecting the
Company, including but not limited to regulation under the insurance laws and
other statutes and regulations of all 50 states, the District of Columbia, and
Puerto Rico, and to recommend such action to the Board of Directors as the
Committee deems appropriate. The Regulatory Affairs Committee did not meet
during 1996.
See "Certain Relationships and Related Transactions" below for
additional information concerning directors.
9
<PAGE> 12
EXECUTIVE OFFICERS
The executive officers shown below currently serve in the capacities
indicated. Executive officers are appointed by the Board of Directors and serve
at the pleasure of the Board.
NAME AND AGE POSITION, PRINCIPAL OCCUPATION, AND OTHER
DIRECTORSHIPS
James K. Murray, Jr. - 61 President and Chief Executive Officer of the
Company since December 1994 and a director
of the Company since October 1994. Mr.
Murray co-founded the Predecessor Company in
1970 with Charles H. Guy, Jr. and Trevor G.
Smith, each of whom is currently a director
of the Company. Mr. Murray held the position
of Corporate Senior Vice President of D&B
from March 1990 until his retirement from
D&B in December 1993. Mr. Murray also served
as Chairman of the Board of the Reuben H.
Donnelley Corp., a publisher of telephone
yellow pages, from August 1991 until
December 1993. In October 1994, Mr. Murray,
together with Messrs. Guy and Smith and
Noel, acquired all of the outstanding
capital stock of the Predecessor Company
from D&B. Mr. Murray is also a director of
Noel.
William L. Bennett - 47 Chairman of the Board since December 1994
and a director of the Company since August
1994. Until March 1995, Mr. Bennett served
as Chairman and Chief Executive Officer of
Noel and continues to serve as a consultant
to Noel. Previously, Mr. Bennett was
Co-Chairman and Chief Executive Officer of
Noel from November 1991 until July 1994. Mr.
Bennett is a director of Noel; Belding
Heminway, a manufacturer and distributor of
high technology threads, specialty fabrics,
and buttons; Allegheny Power System, Inc.,
an electric utility holding company; and
Sylvan, Inc., a company that produces
mushroom spawn and fresh mushrooms.
Richard M. Bresee - 48 Chief Operating Officer - Health Care
Alliances of the Company since July 1996,
and Executive Vice President - Health Care
Alliances of the Company since October 1994.
Mr. Bresee initially joined the Predecessor
Company in November 1984 and served as
Senior Vice President of Managed Care of the
Predecessor Company from 1992 until
September 1994.
Timothy T. Clifford - 41 Chief Operating Officer - Small Group
Business of the Company since July 1996, and
President and Chief Executive Officer of
Consolidated Group since 1991. Consolidated
Group became a wholly owned subsidiary of
the Company in July 1996.
Steven V. Hulslander - 43 Executive Vice President - Chief Information
Officer of the Company since October 1994.
Mr. Hulslander joined the Predecessor
Company in May 1984 and served as Vice
President - Applied Technologies & LINX of
the Predecessor Company from October 1992
until August 1993, and as Senior Vice
President - Information Systems of the
Predecessor Company from August 1993 until
September 1994.
James K. Murray III - 34 Executive Vice President - Chief Financial
Officer of the Company since October 1995.
Previously, Mr. Murray was President and
Chief Executive Officer and a director of
Plant State Bank, a federally insured
commercial bank in Hillsborough County,
Florida, from 1993 to 1995, and Executive
Vice President and Chief Financial Officer
of Plant State Bank from 1990 until 1993.
Mr. Murray is a director of Medirisk, Inc.,
a company engaged in the health care
information business. He is a member of the
American and Florida Institutes of Certified
Public Accountants as well as the Georgia
Society of Certified Public Accountants.
10
<PAGE> 13
NAME AND AGE POSITION, PRINCIPAL OCCUPATION, AND OTHER
DIRECTORSHIPS
Robert R. Parker - 64 Chief Operating Officer - Large Group
Business of the Company since July 1996, and
Chairman and Chief Executive Officer of
Harrington Services Corporation
("Harrington") since 1986. Harrington became
a wholly owned subsidiary of the Company in
July 1996.
Gary L. Raeckers - 55 Chief Operating Officer - The New England of
the Company since July 1996, and Executive
Vice President - The New England of the
Company since October 1994. Prior to that,
Mr. Raeckers served the Predecessor Company
as Executive Vice President from August 1993
until October 1994 and as President from
April 1989 to August 1993.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid or accrued by the Company during the fiscal year ended
December 31, 1996 to the Company's President and Chief Executive Officer and to
each of the Company's four other most highly compensated executive officers
whose salary and bonus exceeded $100,000 during such year (collectively, the
"Named Officers"). The table also sets forth information regarding paid or
accrued compensation to each Named Officer for the two preceding fiscal years if
such individual was then employed either by the Company or the Predecessor
Company.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
RESTRICTED SECURITIES ALL
NAME AND STOCK UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARD(S)($)(1) OPTIONS/SARS(#)(2) COMPENSATION ($)(3)
------------------ ---- --------- -------- -------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
James K. Murray, Jr 1996 $357,693 $ -- $ -- 100,000 $ --
President and Chief 1995 250,000 -- -- 50,000 --
Executive Officer 1994 48,077(4) 31,250(4) -- -- --
Richard M. Bresee 1996 175,385 -- -- 25,000 4,947
Chief Operating Officer 1995 150,000 -- -- 35,000 4,620
--Health Care Alliances 1994 132,731(5) 149,883(5) 95,125 -- 4,926
Timothy T. Clifford 1996 102,308(6) 100,000(7) -- 75,000(6) --
Chief Operating Officer 1995 -- -- -- -- --
--Small Group Business 1994 -- -- -- -- --
Steven V. Hulslander 1996 154,328 -- -- 17,500 4,630
Chief Information Officer 1995 125,000 -- -- 25,000 4,069
1994 107,178(8) 103,891(8) 95,125 -- 3,198
Gary L. Raeckers 1996 175,385 -- -- 25,000 --
Chief Operating Officer 1995 150,000 -- -- 35,000 --
--The New England 1994 207,121(9) 27,750(9) 95,125 -- 1,348
</TABLE>
- --------------------
(1) Consists of the value of 37,500 shares of restricted Common Stock
issued to each of Mr. Bresee, Mr. Hulslander, and Mr. Raeckers in
November 1994, as adjusted for the three-for-two stock split on March
8, 1995. The restricted Common Stock vests over a four-year period,
with 25% of the shares becoming vested on each anniversary of the date
of issuance. The value indicated is based on the fair market value of
the Common Stock as of the date of issuance (approximately $100,125, or
$2.67 per share), less the amount paid by each Named Officer for his
shares ($5,000). As of December 31, 1996, each of the
11
<PAGE> 14
Named Officers in question held 18,750 vested shares (with a value at
year-end of $396,188) and 18,750 unvested shares (with a value at
year-end of $396,188). Dividends on all restricted Common Stock would
be paid at the same rate as paid to all holders of Common Stock. The
award of restricted Common Stock is recorded in the Company's books as
compensation to each of the Named Officers in accordance with the value
of the vested portion of the restricted stock.
(2) Refers to total stock options granted for the stated fiscal year.
(3) Consists of Company contributions to the Named Officers' accounts under
the HealthPlan Services, Inc. Profit Participation 401(k) Plan.
(4) Consists of salary and bonus paid to Mr. Murray, Jr. by the Company for
services commencing October 1, 1994. Prior to October 1, 1994, Mr.
Murray, Jr. was employed by D&B, the Predecessor Company's parent, and
received no compensation directly from the Predecessor Company.
(5) Consists of $102,154 in salary and $131,133 in bonus paid to Mr. Bresee
by the Predecessor Company for services prior to October 1, 1994, and
$30,577 in salary and $18,750 in bonus paid to Mr. Bresee by the
Company for services rendered following October 1, 1994.
(6) Refers to compensation paid to Mr. Clifford after he joined the Company
on July 1, 1996. Mr. Clifford's compensation is subject to an
Employment and Noncompetition Agreement between Mr. Clifford and
Consolidated Group (the "Clifford Employment Agreement"), as described
below, under "Employment Agreement."
(7) Refers to a signing bonus paid to Mr. Clifford when he joined the
Company on July 1, 1996. The Company paid this bonus in accordance with
the Clifford Employment Agreement.
(8) Consists of $83,139 in salary and $88,266 in bonus paid to Mr.
Hulslander by the Predecessor Company for services prior to October 1,
1994, and $24,039 in salary and $15,625 in bonus paid to Mr. Hulslander
by the Company for services rendered following October 1, 1994.
(9) Consists of $178,275 in salary and $9,000 in bonus paid to Mr. Raeckers
by the Predecessor Company for services rendered prior to October 1,
1994, and $28,846 in salary and $18,750 in bonus paid to Mr. Raeckers
by the Company for services rendered following October 1, 1994.
12
<PAGE> 15
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR OPTION TERM (10 YEARS)(2)
---------------------------------------------
5% 10%
--------------------- --------------------
NUMBER OF % OF TOTAL EXERCISE EXPIRATION PER AGGREGATE PER AGGREGATE
SECURITIES OPTIONS/SARS OR BASE DATE SHARE VALUE SHARE VALUE
NAME UNDERLYING GRANTED TO PRICE VALUE VALUE
OPTIONS/SARS EMPLOYEES IN ($/SHARE)
GRANTED (#) FISCAL YEAR
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James K. Murray, Jr. 100,000 11.3 $16.88 10/30/06 $10.61 $1,061,000 $26.90 $2,690,000
Richard M. Bresee 25,000 2.8 16.88 10/30/06 10.61 265,250 26.90 672,500
Timothy T. Clifford 25,000 2.8 23.63 07/01/06 14.86 371,500 37.66 941,500
50,000 5.6 16.88 10/30/06 10.61 530,500 26.90 1,345,000
Steven V. Hulslander 17,500 1.9 16.88 10/30/06 10.61 185,675 26.90 470,750
Gary L. Raeckers 25,000 2.8 16.88 10/30/06 10.61 265,250 26.90 672,500
</TABLE>
- ------------------
(1) Consists of option grants under the HealthPlan Services Corporation
1995 Incentive Equity Plan (the "Incentive Plan"). The Incentive Plan
provides for the grant of stock options and related stock appreciation
rights ("SARs"), as well as restricted stock, to key employees, as
determined by the Compensation Committee of the Board of Directors.
Options granted under the Incentive Plan may be granted either as
incentive options, which qualify for certain favorable tax treatment,
or as non-qualified options. The Compensation Committee has the
authority to set the exercise price for options at the time of grant,
except that the exercise price of an incentive option may not be less
than the fair market value of the Common Stock on the grant date, and
the exercise price of a non-qualified option may not be less than 50%
of the fair market value of the Common Stock on the grant date. Options
granted in 1996 vest over a four-year period from the date of the
grant, with 20% of the options becoming vested on the grant date and
20% becoming vested on each successive anniversary of the grant date,
and with the options becoming fully vested on the fourth anniversary of
the effective date. SARs entitle an optionee to surrender unexercised
stock options for cash or stock equal to the excess of fair market
value of the surrendered shares over the option price of such shares.
The Company did not grant any SARs or shares of restricted stock in
1996.
(2) The dollar gains under these columns result from calculations assuming
5% and 10% growth rates, as set by the Securities and Exchange
Commission, and are not intended to forecast future price appreciation
of the Common Stock of the Company. The gains reflect a future value
based upon growth at these prescribed rates. The Company is not aware
of any formula which will determine with reasonable accuracy a present
value based on future unknown or volatile factors. Options have value
to the Named Officers and to all option recipients only if the price of
the Company's Common Stock advances beyond the applicable option
exercise price during the effective option period.
13
<PAGE> 16
AGGREGATED OPTION EXERCISES DURING 1996 AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to stock options
exercised by the Named Officers during 1996 and the number and value of
unexercised stock options held by the Named Officers at year-end. The Company
does not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
SHARES ACQUIRED ----------------------------- -------------------------------
NAME ON EXERCISE (#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James K. Murray, Jr. -0- -0- 20,000 130,000 $71,300 $531,950
Richard M. Bresee -0- -0- 14,000 46,000 28,520 149,030
Timothy T. Clifford -0- -0- -0- 75,000 -0- 212,500
Steven V. Hulslander -0- -0- 10,000 32,500 28,520 117,155
Gary L. Raeckers -0- -0- 14,000 46,000 28,520 149,030
</TABLE>
(1) Each dollar value in these columns is calculated based on the
difference between the closing price of the Company's Common Stock on
December 31, 1996 ($21.13) and the exercise price of the options held
by the applicable Named Officer on such date.
EMPLOYMENT AGREEMENT
Effective July 1, 1996, the closing date of the Company's acquisition
of Consolidated Group, Consolidated Group entered into an Employment and
Noncompetition Agreement with Timothy T. Clifford. This agreement, which has a
two-year term ending June 30, 1998, provides for Mr. Clifford's employment in
the capacity of Chairman and Chief Executive Officer of Consolidated Group, or
in a similar capacity, and for his performance of such duties as may be assigned
to him by the Consolidated Group board of directors. The agreement entitles Mr.
Clifford to an annual base salary of not less than $200,000, a one-time signing
bonus of $100,000, and a bonus for 1996 of up to $125,000 if Consolidated Group
met specified performance targets in 1996. The Company has not yet made a
determination with respect to the amount of Mr. Clifford's 1996 bonus. The
agreement also gives Mr. Clifford the right to participate in all employee
benefits programs of the Consolidated Group, consistent with the terms of such
programs and the Consolidated Group acquisition agreement. Pursuant to the
agreement, on July 1, 1996 the Company granted Mr. Clifford an Incentive Plan
option to purchase 25,000 shares of the Company's Common Stock. If Consolidated
Group terminates Mr. Clifford's employment without cause or due to death or
disability, or if Mr. Clifford terminates his employment due to a significant
change in the terms of his employment, as defined in the agreement, then the
agreement generally requires Consolidated Group to pay Mr. Clifford the greater
of (i) $250,000, or (ii) the salary to be paid to Mr. Clifford during the
remaining term of the agreement. In the event of a termination without cause or
due to death or disability, Mr. Clifford is entitled to continuation of
applicable benefit programs, subject to specified conditions. The agreement also
contains a noncompetition provision that generally prohibits Mr. Clifford from
engaging in any business that delivers marketing, distribution, administration,
or cost containment services on behalf of health care payors, primarily to the
small business marketplace.
STOCK PERFORMANCE GRAPH
As part of the executive compensation information presented in this
Proxy Statement, the Securities and Exchange Commission requires a comparison of
stock performance of the Company with stock performance of (i) a broad equity
index such as the Wilshire 5000 Index, and (ii) either a published industry
index or a Company-constructed peer group index.
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company with the cumulative total return on the Wilshire
5000 Index and the Russell 2000 Health Care Index (assuming the
14
<PAGE> 17
investment of $100 in the Company's Common Stock, the Wilshire 5000 Index, and
the Russell 2000 Health Care Index on June 30, 1995).
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph below. The
Company will not make or endorse any predictions as to future stock performance.
<TABLE>
<CAPTION>
Russell 2000
Measurement Period Health Care HPS Common Wilshire 5000
(Fiscal Year Covered) Index Stock Index
- --------------------- ------------ ---------- -------------
<S> <C> <C> <C>
6/30/95 100 100 100
9/29/95 116 135 109
12/29/95 128 165 114
3/29/96 134 151 121
6/28/96 134 152 126
9/30/96 127 145 130
12/31/96 122 140 139
</TABLE>
15
<PAGE> 18
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors, which is composed
of four outside Directors, determines the compensation of the Company's
executive officers. In addition to making salary and bonus determinations, the
Compensation Committee is authorized to grant stock options, stock appreciation
rights, and restricted stock to the Company's executive officers under the
Company's Incentive Plan. Subject to stockholder approval at the 1997 Annual
Meeting, the Compensation Committee also will be authorized to grant stock
options to executive officers under the Amended and Restated HealthPlan Services
Corporation 1996 Employee Stock Option Plan.
Compensation Objectives
The philosophy underlying the Company's compensation programs is to
align executive officer compensation with increases in stockholder value. A key
objective is to ensure that a major portion of each executive officer's
compensation is linked to significant improvements in the Company's overall
performance. Another key objective is to make it possible for the Company to
attract, retain, and reward executives who will lead the Company in achieving or
exceeding corporate performance goals.
Executive Compensation Programs
The Company's executive officer compensation programs, which contain no
special perquisites, consist of three principal elements: base salary, cash
bonus, and incentive equity awards. The Company's objective is to emphasize
incentive compensation in the form of bonuses and incentive equity awards,
rather than base salary. In making compensation determinations, the Company
reviews the historical compensation levels of each executive officer, evaluates
the executive officer's past performance, and assesses the expected further
contributions of the executive officer. With respect to base salaries, the
Company considers generally available information regarding salaries prevailing
in the industry, but does not utilize any particular indices.
Total compensation for executive officers also includes long-term
incentives offered by stock options, stock appreciation rights, and restricted
stock awards. These equity incentives are instrumental in promoting the
alignment of long-term interests between the Company's executive officers and
stockholders; an executive officer realizes gains only if he or she remains with
the Company for a specified length of time, and (in the case of stock options
and stock appreciation rights) only if the stock price increases over the fair
market value at the date of grant. In determining the amount of such incentive
equity grants, the Company evaluates the job level of the executive officer,
responsibilities to be assumed by the executive officer, responsibilities of the
executive officer in prior years, and the size of awards made to executive
officers in prior years relative to the Company's overall performance. The
Company's incentive equity program has emphasized stock option grants, rather
than awards of restricted stock or stock appreciation rights. The Company
generally provides stock options through initial option grants at the date of
hire and periodic additional grants. It has been the Company's practice to fix
the exercise of stock options, which generally become exercisable in equal
annual installments over a period of four years beginning on the date of grant,
at 100% of the fair market value on the grant date.
The Company also maintains incentive plans under which executive
officers (including the Chief Executive Officer) may be paid cash bonuses at the
end of each fiscal year. The bonuses are dependent primarily on the Company's
financial performance and achievement of corporate objectives established by the
Company at the start of each fiscal year.
1996 Executive Compensation
In connection with the Consolidated Group and Harrington acquisitions,
the Board of Directors approved the base salary and bonus amounts for Timothy T.
Clifford, the President and Chief Executive Officer of Consolidated Group, who
joined the Company as Chief Operating Officer - Small Group Business, and the
base salary for Robert R. Parker, the Chairman and Chief Executive Officer of
Harrington, who joined the Company as Chief Operating Officer - Large Group
Business. The Compensation Committee made all other executive officer
compensation determinations for 1996. In connection with the Consolidated Group
and Harrington acquisitions, effective July 1, 1996 the Compensation Committee
awarded 171,000 options to 17 former Consolidated Group and Harrington employees
who were joining the Company, including Mr. Clifford and Mr. Parker. On October
30,
16
<PAGE> 19
1996, in lieu of cash bonuses for fiscal year 1996, the Compensation Committee
awarded 657,500 stock options to 23 employees, including each of the Company's
eight executive officers.
1996 Chief Executive Officer Compensation
The Chief Executive Officer's compensation is determined in accordance
with the factors described above applicable to executive officers generally. For
the fiscal year ended December 31, 1996, the Compensation Committee awarded the
Chief Executive Officer an option to purchase 100,000 shares of Common Stock of
the Company in lieu of a cash bonus. The amount of this grant reflects the
senior position held by the Chief Executive Officer within the Company, the
significant contributions made by the Chief Executive Officer to the Company in
1996 and those anticipated to be made by him in the future, and the strong
results achieved during a period in which the senior management team was
reorganized and the Company made two major acquisitions.
Compensation Committee
Joseph A. Califano, Jr.
Charles H. Guy, Jr.
James G. Niven
Samuel F. Pryor, IV
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board is currently composed of four
directors: Messrs. Califano, Guy, Niven, and Pryor, none of whom is or was an
officer or employee of the registrant or its subsidiaries. Mr. Guy was an
executive officer of the Predecessor Company until 1986. Mr. Pryor is an
executive officer of Noel, and Mr. Bennett served as an executive officer of
Noel until March 1995. Mr. DiMartino is Chairman of the Board of Directors of
Noel, and Messrs. Bennett, Murray, Jr., and Niven are members of the Noel board.
Mr. Murray, Jr. has been on the compensation committee of the Noel board since
March 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William L. Bennett, who has served as a director of the Company since
August 1994 and was elected Chairman of the Board of the Company in December
1994, served as Chairman and Chief Executive Officer of Noel until March 20,
1995, and continues to serve on Noel's Board of Directors and perform consulting
services for Noel. James K. Murray, Jr., who has served as President and Chief
Executive Officer of the Company since December 1994 and as a director of the
Company since October 1994, was elected to the Board of Directors of Noel in
February 1995. Joseph S. DiMartino, who has served as a director of the Company
since March 1995, has been a director of Noel since October 1990 and became
Chairman of the Board of Noel in March 1995. James G. Niven, who has served as a
director of the Company since November 1994, has been a director of Noel since
February 1991. Samuel F. Pryor, IV, who has served as a director of the Company
since August 1994, has served as Managing Director of Noel since November 1991.
None of the other officers or directors of the Company are affiliated with Noel.
In December 1996, Noel, Automatic Data Processing, Inc. ("ADP"), and
the Company entered into an agreement (the "ADP Agreement") pursuant to which
Noel agreed to sell 1,320,000 shares of the Company's Common Stock to ADP at a
purchase price of $20 per share. This transaction was completed on February 7,
1997. Upon completion of the transaction, Noel and ADP owned approximately 29%
and 9%, respectively, of the Company's Common Stock. The ADP Agreement generally
provides that: (i) prior to December 31, 1997, ADP may not enter into an
agreement to acquire additional shares of the Company's Common Stock, unless
such acquisition is approved by the Company's Board of Directors, or unless the
Company entertains alternative offers; (ii) Noel may not dispose of its
remaining shares of the Company's Common Stock prior to September 30, 1997 other
than through a direct distribution to Noel's shareholders, subject to specified
conditions; and (iii) the Company may not take any action prior to December 31,
1997 that could interfere with "pooling-of-interests" accounting. The Company
also generally agreed: (i) to give ADP the opportunity to maintain its
percentage ownership interest in the Company in the event that prior to December
31, 1997 the Company intends to sell any interest in its Common Stock; (ii) to
grant ADP certain piggyback registration rights; and (iii) to file a shelf
17
<PAGE> 20
registration statement with respect to ADP's shares within 15 days after the
date of the ADP Agreement. On April 1, 1997, the Company filed a shelf
registration statement with the Securities and Exchange Commission covering the
shares of the Company's Common Stock held by ADP. As required by the ADP
Agreement, Arthur F. Weinbach, President and Chief Executive Officer of ADP, was
elected to the Board of Directors of the Company in February 1997. In May 1996,
Noel's Board of Directors adopted a plan of liquidation and dissolution, which
was approved by Noel's shareholders on March 19, 1997. In connection with Noel's
liquidation, on March 31, 1997 the Company filed a registration statement with
the Securities and Exchange Commission covering the shares of the Company's
Common Stock held by Noel.
Effective July 1, 1996, the Company acquired all of the issued and
outstanding stock of Consolidated Group for approximately $62 million in cash.
In connection with this acquisition, James F. Carlin, Jr., Holyoke L. Whitney,
and Timothy T. Clifford, who owned shares of Consolidated Group common stock,
received approximately $5.8 million, $26.4 million, and $3.6 million,
respectively, of the adjusted purchase price in exchange for their Consolidated
Group shares. Messrs. Carlin and Whitney also have the right to receive a
portion of any funds remaining after termination of an escrow fund established
at the time of closing to cover certain pre-closing liabilities. There is $3
million in principal remaining in this escrow account. After the closing, Mr.
Carlin and Mr. Whitney were elected to the Board of Directors of the Company,
and Mr. Clifford was appointed Chief Operating Officer - Small Group Business of
the Company.
At the time of the Consolidated Group acquisition, Messrs. Carlin,
Whitney, and Clifford purchased 10,870, 120,000, and 13,043 shares,
respectively, of the Company's Common Stock at a purchase price of $23 per
share. These shares were not registered under the Securities Act of 1933 at the
time of issuance and were subject to subscription agreements that restricted
their transfer. Pursuant to these subscription agreements, Messrs. Carlin,
Whitney, and Clifford had the right to include their restricted shares in any
future registration statement filed by the Company, subject to certain
conditions. These restricted shares were included in the Company's Form S-3
registration statement, which became effective on February 14, 1997, as
described below.
At the closing of the Consolidated Group acquisition, Consolidated
Group acquired an office and warehouse facility in Southborough, Massachusetts
from The 150 Cordaville Road LLC ("Cordaville LLC"), a limited liability
company. Consolidated Group had previously leased this property from Cordaville
LLC. Pursuant to the agreement that governed the transfer of this property, if
Consolidated Group contracts to sell the Southborough property within forty-two
months after the closing date of the Consolidated Group acquisition, then the
first $150,000 of the profit from such sale shall be transferred to certain
former stockholders of Consolidated Group, including Messrs. Carlin and Whitney,
and any profit in excess of $150,000 shall be divided equally between
Consolidated Group and such former stockholders.
Messrs. Carlin and Whitney are limited partners in Consolidated Group
Service Company Limited Partnership (the "Consolidated Partnership"), and each
is a shareholder and director of the Consolidated Partnership's general partner.
The Consolidated Partnership owns the headquarters of the Company's Small Group
Operating Unit in Framingham, Massachusetts and has leased this property to the
Company's subsidiary, Consolidated Group, since 1987. Since July 1, 1996, when
the Company purchased Consolidated Group, the Company has paid $129,111 per
month under the terms of this lease. The Company and the Consolidated
Partnership are currently negotiating the terms of a new lease agreement with
respect to this property.
Effective July 1, 1997, the Company acquired all of the issued and
outstanding stock of Harrington for $32.5 million in cash and 1,400,110 shares
of the Company's Common Stock. In connection with this acquisition, Robert R.
Parker, who owned shares of Harrington common stock, received approximately $5.7
million cash and 269,297 shares of the Company's Common Stock in exchange for
his Harrington shares.
After the closing of the Harrington acquisition, Mr. Parker was
appointed Chief Operating Officer - Large Group Business of the Company. As of
the closing date, R.E. Harrington, Inc. ("R.E. Harrington"), a wholly owned
subsidiary of Harrington, entered into an employment agreement with Mr. Parker.
This agreement, which has a three-year term ending June 30, 1999, provides for
Mr. Parker's employment in the capacity of Chairman and Chief Executive Officer
of R.E. Harrington, or in a similar capacity, and for his performance of such
duties as may be assigned to him by the R.E. Harrington board of directors, at
an annual base salary of not less than $200,000. Pursuant to the agreement, on
July 1, 1996 the Company granted Mr. Parker an Incentive Plan option to purchase
25,000 shares of the Company's Common Stock. Mr. Parker's agreement also
entitles him to severance benefits in the event that his employment is
terminated prior to the end of the three-year term, subject to certain
conditions.
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<PAGE> 21
Pursuant to the Harrington acquisition agreement (the "Harrington
Agreement"), the Company agreed to use its best efforts to file a registration
statement sufficient to permit the public offering and sale of the shares of the
Company's Common Stock issued to the Harrington stockholders in the acquisition,
with such registration statement to become effective on or before October 31,
1996. On October 30, 1996, the Company received a letter from the representative
for Harrington's shareholders, including Mr. Parker, stating that the Company
was in violation of the Harrington Agreement and reserving all rights under such
Agreement. As of the date hereof, it is not possible for the Company to evaluate
what, if any, damages might result from such notice. In November 1996, the
Company filed a Form S-3 registration statement with the Securities and Exchange
Commission registering the restricted shares of the Company's Common Stock held
by the former Harrington and Consolidated Group shareholders. This registration
statement became effective on February 14, 1997.
Effective January 1, 1996, the Company entered into a consulting
agreement with Reveley Resources, Inc. ("Reveley"). Reveley is controlled by
Trevor G. Smith, a director of the Company. The Company has agreed to pay
Reveley a consulting fee of $1,050 for each full day of Mr. Smith's consulting
services and to reimburse Reveley for its accountable out-of-pocket expenses
directly relating to Mr. Smith's services. The consulting services rendered by
Mr. Smith include providing advice with respect to regulatory matters,
interfacing with the Company's clients and potential clients, and interfacing
with various industry organizations. This arrangement is terminable at any time
by either party. In 1996, the Company paid Reveley a total of $53,500 in
consulting fees and expense reimbursement under this arrangement.
Between November 1995 and August 1996, the Company advanced a total of
$114,200 to Craig H. Cassady, who was then Executive Vice President - Sales of
the Company. The Company and Mr. Cassady agreed that these interest-free
advances would be applied against future bonuses earned by Mr. Cassady. In
October 1996, in connection with the termination of Mr. Cassady's employment
with the Company, the Company extinguished all remaining debt owed by Mr.
Cassady with respect to these advances.
James K. Murray III, Executive Vice President and Chief Financial
Officer of the Company, is the son of James K. Murray, Jr., the Company's
President and Chief Executive Officer. There are no other family relationships
among the Company's directors and officers.
PROPOSAL 2:
APPROVAL OF THE AMENDED AND RESTATED
HEALTHPLAN SERVICES CORPORATION 1996 EMPLOYEE STOCK OPTION PLAN
On February 25, 1997, the Board of Directors adopted the Amended and
Restated HealthPlan Services Corporation 1996 Employee Stock Option Plan (the
"Amended 1996 Option Plan" or the "Amended Plan"), subject to stockholder
approval. The text of the Amended 1996 Option Plan is attached as Appendix A to
this Proxy Statement.
The Amended Plan amends and restates the HealthPlan Services
Corporation 1996 Employee Stock Option Plan (the "1996 Option Plan"), which was
adopted by the Board of Directors on June 15, 1996. The 1996 Option Plan
authorized option grants to any employee of the Company or its subsidiaries
other than an officer, director, or ten percent (10%) beneficial holder of any
class of the Company's Common Stock, all as defined under Section 16 of the
Securities Exchange Act of 1934. Up to 500,000 shares of the Company's Common
Stock were issuable under the 1996 Option Plan, and as of March 10, 1997 the
Compensation Committee had granted options to purchase 305,900 shares under the
Plan. The Amended Plan increases the number of shares issuable under the Plan to
1,250,000. The Amended Plan also expands the class of eligible individuals,
providing that all employees of the Company or its subsidiaries may be
considered for option awards. As of March 20, 1997, there were approximately
3,400 employees of the Company and its subsidiaries.
The purpose of the Amended Plan is to advance the interests of the
Company by offering employees an opportunity to increase their proprietary
interest in the Company through stock option grants. The Board of Directors
believes that these grants will promote the growth and profitability of the
Company because each optionee will have an additional incentive to achieve the
Company's objectives through participation in its success.
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<PAGE> 22
PRINCIPAL TERMS OF THE AMENDED 1996 OPTION PLAN
The Amended 1996 Option Plan is administered by the Compensation
Committee of the Board. The Compensation Committee has full power to select,
from among the officers and other employees eligible for awards, the individuals
to whom awards will be granted, to make any combination of awards to any
participants, and to determine the specific terms of each award, subject to the
provisions of the Amended Plan.
The Board of Directors may terminate or amend the Amended 1996 Option
Plan at any time, except that no such action may terminate awards already
granted or otherwise affect the rights of any participant under an outstanding
award without the participant's consent. Without stockholder approval, the Board
may not amend the Amended 1996 Option Plan to (i) increase the total number of
shares of stock subject to the Amended 1996 Option Plan, or (ii) change or
modify the class of eligible participants. The Compensation Committee is
authorized to make appropriate adjustments in connection with outstanding awards
under the Amended 1996 Option Plan in the event of stock dividends, stock
splits, recapitalizations, mergers, liquidations, or other changes in the
Company's outstanding stock.
The Amended 1996 Option Plan provides that options may be granted only
to employees whose participation the Compensation Committee determines is in the
best interest of the Company. Options may be granted either as incentive stock
options (which qualify for certain favorable tax consequences) or as
non-qualified stock options. No options may be granted after June 15, 2006. An
optionee may not transfer his or her options other than by will or by the laws
of descent and distribution.
Subject to the provisions of the Amended Plan, the Compensation
Committee establishes the terms of each option, including the number of shares
issuable upon exercise, the exercise price, the term, any conditions on
exercise, and the consequences of any termination of employment. In the case of
an option intended to be an incentive stock option, the term of the option may
not exceed ten years from the grant date. The option price, which may not be
less than 100% of the fair market value per share of the Common Stock on the
grant date, is payable in full upon exercise, and payment may be made in cash.
At the discretion of the Committee, a participant also may pay the exercise
price by delivery to the Company of shares of Common Stock (valued at their fair
market value at the time of exercise), or by a combination of cash and stock.
In the discretion of the Compensation Committee, options under the
Amended 1996 Option Plan may include a "reload option." A reload option, if
included in the original option, would be triggered when an optionee pays the
exercise price of all or a portion of the original option by delivering shares
of the Company's Common Stock. In that event, the optionee automatically would
be granted an additional option to acquire the same number of shares as had been
delivered to pay such exercise price. The reload option would be subject to all
of the terms and conditions of the original option, except that (i) the exercise
price per share would be equal to the fair market value of the Common Stock on
the date the original option was exercised, and (ii) the Committee could specify
additional conditions or contingencies. For example, the Committee could require
that the optionee hold shares acquired upon exercise of the original option for
a specified period of time.
FEDERAL INCOME TAX CONSEQUENCES
The grant of a stock option under the Amended 1996 Option Plan
generally will not result in taxable income for the recipient of the grant or in
a deductible compensation expense for the Company at the time of grant. A
participant will have no taxable income upon exercise of an incentive stock
option (except that the alternative minimum tax may apply), and the Company will
receive no deduction when an incentive stock option is exercised. Upon exercise
of a non-qualified stock option, a participant will recognize ordinary income in
the amount by which the fair market value of the Common Stock on the date of
exercise exceeds the exercise price, and the Company generally will be entitled
to a corresponding deduction. The treatment of a participant's disposition of
shares of Common Stock acquired upon the exercise of an option depends on the
length of time the shares have been held and on whether such shares were
acquired by exercising an incentive stock option or a non-qualified stock
option. Generally, there will be no tax consequences for the Company in
connection with the disposition of shares acquired under an option, except that
the Company may be entitled to a deduction in the case of a disposition of
shares acquired upon exercise of an incentive stock option, if such disposition
occurs before the applicable holding period has been satisfied.
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<PAGE> 23
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
An affirmative vote by a majority of the outstanding shares of Common
Stock present at the meeting of stockholders, whether in person or by proxy, is
needed for the adoption of this proposal.
The Board of Directors believes that the Amended 1996 Option Plan is in
the best interests of the Company and its stockholders and therefore recommends
a vote FOR this proposal.
PROPOSAL 3:
APPROVAL OF THE HEALTHPLAN SERVICES CORPORATION 1997 DIRECTORS EQUITY PLAN
The Compensation Committee of the Board of Directors adopted the
HealthPlan Services Corporation 1997 Directors Equity Plan (the "Directors
Equity Plan") effective January 1, 1997, subject to stockholder approval. The
text of the Directors Equity Plan is attached as Appendix B to this Proxy
Statement.
The purpose of the Directors Equity Plan is to advance the interests of
the Company by offering eligible directors an opportunity to increase their
proprietary interest in the Company. The Company believes that the Plan will
promote the growth and profitability of the Company by strengthening the
alignment of the personal financial interests of participating directors with
those of stockholders.
PRINCIPAL TERMS OF THE DIRECTORS EQUITY PLAN
Any director who is not an employee of the Company or any of its
subsidiaries may participate in the Directors Equity Plan. Assuming the election
of each of the nominees for director at the 1997 Annual Meeting of Stockholders,
there will be 11 directors eligible to participate. Pursuant to the Directors
Equity Plan, each participating director will receive grants of Common Stock of
the Company in lieu of quarterly cash retainers as compensation for his or her
service on the Board. The number of shares issued for each quarter will be
equal to (i) $2,500, divided by (ii) the fair market value of the Common Stock
on the last business day of such quarter. An eligible director may make an
irrevocable election not to participate in the Directors Equity Plan in any
year, and instead receive quarterly cash retainers (currently set at $1,250).
The aggregate number of shares of Common Stock available for awards under the
Directors Equity Plan is 100,000, subject to specified adjustments in the event
of changes in the outstanding shares of Common Stock.
The Board of Directors may terminate or amend the Directors Equity Plan
at any time, except that absent stockholder approval the Board may not amend the
Directors Equity Plan to (i) increase the total number of shares of Common Stock
subject to the Directors Equity Plan, or (ii) change or modify the class of
eligible participants. The Compensation Committee is authorized to make
appropriate adjustments in connection with outstanding awards under the
Directors Equity Plan in the event of stock dividends, stock splits,
recapitalizations, mergers, or other changes in the Company's outstanding stock.
FEDERAL INCOME TAX CONSEQUENCES
The issuance of any shares of Common Stock under the Directors Equity
Plan generally will result in taxable income for the recipient and a deductible
compensation expense for the Company at the time of issuance. The treatment of a
participating director's disposition of such shares depends on the length of
time the shares have been held, but generally there will be no tax consequences
for the Company in connection with such disposition.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
An affirmative vote by a majority of the outstanding shares of Common
Stock present at the meeting of stockholders, whether in person or by proxy, is
needed for the adoption of this proposal.
The Board of Directors believes that the Directors Equity Plan is in
the best interests of the Company and its stockholders and therefore recommends
a vote FOR this proposal.
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<PAGE> 24
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, each executive officer, director, and beneficial owner of more than ten
percent of the outstanding Common Stock of the Company is required to file
reports with the Securities and Exchange Commission reporting its beneficial
ownership of the Company's Common Stock (i) at the time that such party becomes
subject to Section 16's reporting requirements, and (ii) at the time of any
changes in beneficial ownership occurring thereafter. On February 28, 1997,
after the Form 5 filing deadline, Richard M. Bresee, Timothy T. Clifford, James
K. Murray, Jr., and James K. Murray III each filed a Form 5 Annual Statement of
Changes in Beneficial Ownership with the Securities and Exchange Commission, and
William L. Bennett, Steven V. Hulslander, Robert R. Parker, and Gary L. Raeckers
amended previous Form 5 filings, to disclose options granted to such officers on
October 30, 1996. Mr. Hulslander's Form 5 amendment also disclosed a
discretionary transaction under the HealthPlan Services, Inc. Profit
Participation 401(k) Plan. Based upon a review of reports submitted to the
Company and written representations of persons known by the Company to be
subject to these reporting requirements, the Company believes that all other
reports due for 1996 were filed on a timely basis.
FORM 10-K ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING THE FINANCIAL STATEMENTS THERETO, MAY BE OBTAINED WITHOUT CHARGE BY
ANY STOCKHOLDER UPON WRITTEN REQUEST TO THE CHIEF FINANCIAL OFFICER, HEALTHPLAN
SERVICES CORPORATION, 3501 FRONTAGE ROAD, TAMPA, FLORIDA 33607.
INDEPENDENT AUDITORS
Price Waterhouse LLP, independent certified public accountants, was
engaged to audit the financial statements of the Company and its subsidiaries
for the 1996 fiscal year and has been approved by the Board of Directors of the
Company to act in such capacity for the 1997 fiscal year. A representative of
Price Waterhouse LLP is expected to be present at the Annual Meeting and to be
available to respond to appropriate questions. The Price Waterhouse
representative also will be afforded an opportunity to make a statement at the
Meeting if desired. The Board of Directors' selection of Price Waterhouse LLP as
auditors will not be placed before the stockholders for ratification.
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Company's management knows of no business which may come before the
Annual Meeting except that indicated above. However, if any other business is
brought before the Annual Meeting, the persons acting under the enclosed form of
proxy may vote thereunder in accordance with their best judgment.
PROPOSALS FOR THE 1998 MEETING
Stockholder proposals intended to be presented at the 1998 Annual
Meeting should be sent certified mail, return receipt requested, and must be
received by the Company at its principal executive offices (Attention: Corporate
Secretary) by December 12, 1997 for inclusion in the proxy statement and the
form of proxy relating to the 1998 Annual Meeting. Any such proposal may be made
only by a party that, at the time the proposal is submitted, is the record or
beneficial owner of at least 1% or $1,000 in market value of securities entitled
to be voted on the proposal at the meeting, and has held such securities for at
least one year, and that continues in such capacity through the 1998 Annual
Meeting date.
By Order of the Board of Directors,
Phillip S. Dingle
Corporate Secretary
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<PAGE> 25
APPENDIX A
AMENDED AND RESTATED
HEALTHPLAN SERVICES CORPORATION
1996 EMPLOYEE STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set
forth unless the context clearly indicates to the contrary:
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, including effective date and transition rules (whether or not
codified). Any reference herein to a specific section or sections of the Code or
any rules or regulations promulgated thereunder shall be deemed to include a
reference to any corresponding provision of future law, rule, or regulation.
"Committee" shall mean the Compensation Committee of the Board, or a
committee of Directors appointed from time to time by the Board, having the
duties and authority set forth herein in addition to any other authority granted
by the Board.
"Company" shall mean HealthPlan Services Corporation, a Delaware
corporation, and any successor to it.
"Director" shall mean a member of the Board.
"Employee" shall mean any employee of the Company or any Subsidiary of
the Company, or any Director who also serves as an Officer and whose duties as
such involve a significant time commitment beyond that associated with
preparation for and attendance at meetings of the Board and Committees.
"Employer" shall mean the corporation that employs an Optionee.
"Fair Market Value" of the Stock on any date shall mean:
(1) the closing or last sale price on such date on the principal
securities exchange on which the shares of Stock are traded
or, if there is no such sale on the relevant date, then on the
last previous day on which a sale was reported; or
(2) if there is no price as specified in (1), the amount
determined in good faith by the Committee based on such
relevant facts, which may include opinions of independent
experts, as may be available to the Committee.
"ISO" shall mean an Option that complies with and is subject to the
terms, limitations and conditions of Code Section 422 and any regulations
promulgated with respect thereto.
"1934 Act" shall mean the Securities Exchange Act of 1934, as the same
may be amended from time to time.
"Officer" shall mean a person who constitutes an officer of the Company
for purposes of Section 16 of the 1934 Act, as determined by reference to such
Section 16 and the rules, regulations, judicial decisions, and interpretive or
"no action" positions with respect thereto of the Securities and Exchange
Commission, as the same may be in effect or set forth from time to time.
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"Option" shall mean a contractual right to purchase Stock, which right
is granted pursuant to the provisions of Article VI hereof.
"Optionee" shall mean a person to whom an Option has been granted
hereunder.
"Option Price" shall mean the price at which an Optionee may purchase a
share of Stock pursuant to an Option.
"Parent" shall mean any corporation (other than the corporation with
respect to which the determination is being made) in an unbroken chain of
corporations ending with the corporation with respect to which the determination
is being made if, at the time of the grant (or modification) of an Option, each
of the corporations other than the corporation with respect to which the
determination is being made owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
"Plan" shall mean the Amended and Restated HealthPlan Services
Corporation 1996 Employee Stock Option Plan as set forth herein, as amended from
time to time.
"Purchasable" when used to describe Stock, shall refer to Stock that
may be purchased by an Optionee under the terms of this Plan and the applicable
Stock Option Agreement.
"Reload Option" shall mean an Option that is granted, without further
action of the Committee: (i) to an Optionee who surrenders or authorizes the
withholding of shares of Stock in payment of amounts specified in paragraphs
6.7(c) or 6.7(d) hereof, (ii) for the same number of shares as is so paid, (iii)
as of the date of such payment and at an Option Price equal to the Fair Market
Value of the Stock on such date, and (iv) otherwise on the same terms and
conditions as the Option whose exercise has occasioned such payment, subject to
such contingencies, conditions or other terms as the Committee shall specify at
the time such exercised Option is granted.
"Stock" shall mean the $0.01 par value Common Stock of the Company or,
in the event that the outstanding shares of such stock are hereafter changed
into or exchanged for shares of a different class of stock or securities of the
Company or some other corporation, such other stock or securities.
"Stock Option Agreement" shall mean an agreement between the Company
and an Optionee setting forth the terms of an Option.
"Subsidiary" shall mean any corporation (other than the corporation
with respect to which the determination is being made) in an unbroken chain of
corporations beginning with the corporation with respect to which the
determination is being made if, at the time of the grant (or modification) of
the Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
ARTICLE II
THE PLAN
2.l NAME. The Plan shall be known as the "Amended and Restated
HealthPlan Services Corporation 1996 Employee Stock Option Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company, its shareholders, and any Subsidiary of the Company, by offering
certain Employees an opportunity to acquire or increase their proprietary
interests in the Company by granting such persons Options. These grants will
promote the growth and profitability of the Company, and any Subsidiary of the
Company, because Optionees will be provided with an additional incentive to
achieve the Company's objectives through participation in its success and
growth.
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2.3 EFFECTIVE DATE. The Plan shall become effective on ____________,
1997.
2.4 TERMINATION DATE. No further Options shall be granted hereunder on
or after June 15, 2006, but all Options granted prior to that time shall remain
in effect in accordance with their terms.
ARTICLE III
ELIGIBILITY
The persons eligible to participate in this Plan shall consist only of
Employees (which may include a person who is a Director, if such person is
otherwise an Employee) whose participation the Committee determines is in the
best interests of the Company.
ARTICLE IV
ADMINISTRATION
4.1 DUTIES AND POWERS OF THE COMMITTEE. The Plan shall be administered
by the Committee. The Committee shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it may deem
necessary. The Committee shall have the power to act by unanimous written
consent in lieu of a meeting, and shall have the right to meet telephonically.
In administering the Plan, the Committee's actions and determinations shall be
binding on all interested parties. The Committee shall have the power to grant
Options in accordance with the provisions of the Plan. Subject to the provisions
of the Plan, the Committee shall have the discretion and authority to determine
those individuals to whom Options will be granted, the number of shares of Stock
subject to each Option, such other matters as are specified herein, and any
other terms and conditions of the Stock Option Agreement applicable thereto. To
the extent not inconsistent with the provisions of the Plan, the Committee shall
have the authority to amend or modify an outstanding Stock Option Agreement
relative to an Option, or to waive any provision thereof, provided that the
Optionee consents to such action.
4.2 INTERPRETATION; RULES. Subject to the express provisions of the
Plan, the Committee also shall have complete authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations necessary or advisable in the administration of the Plan,
including, without limitation, the amending or altering of any Options granted
hereunder as may be required to comply with or to conform to any federal, state,
or local laws or regulations.
4.3 NO LIABILITY. Neither any member of the Board nor any member of the
Committee shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Option granted hereunder.
4.4 MAJORITY RULE. To the extent consistent with applicable law and the
Certificate of Incorporation and Bylaws of the Company, a majority of the
members of the Committee shall constitute a quorum, and any action taken by a
majority at a meeting at which a quorum is present, or any action taken without
a meeting evidenced by a writing executed by all the members of the Committee,
shall constitute the action of the Committee.
4.5 COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.
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ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 LIMITATIONS. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2 hereof, the maximum number of shares of Stock that may
be issued and sold hereunder shall be One Million Two Hundred Fifty Thousand
(1,250,000) shares. Shares subject to an Option may be either authorized and
unissued shares or shares issued and later acquired by the Company; provided,
however, that shares of Stock with respect to which an Option has been exercised
shall not again be available for issuance hereunder. The shares covered by any
unexercised portion of an Option that has terminated for any reason may be
granted again under the Plan, and such shares shall not be considered as having
been optioned or issued in computing the number of shares of Stock remaining
available for grant hereunder.
5.2 ANTIDILUTION.
(a) In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of merger, consolidation,
reorganization, recapitalization, reclassification, combination or
exchange of shares, stock split or stock dividend, or in the event that
any spin-off, spin-out or other distribution of assets materially
affects the price of the Company's stock:
(i) The aggregate number and kind of shares of Stock
for which Options may be granted hereunder shall be adjusted
proportionately by the Committee; and
(ii) The rights of Optionees (concerning the number
of shares subject to Options and the Option Price) under
outstanding Options shall be adjusted proportionately by the
Committee.
(b) If the Company shall be a party to any reorganization in
which it does not survive, involving merger, consolidation, or
acquisition of the stock or substantially all the assets of the
Company, the Committee, in its discretion, may:
(i) declare that all Options granted under the Plan
shall become exercisable immediately notwithstanding the
provisions of the respective Stock Option Agreements regarding
exercisability or vesting, and that all such Options shall
terminate 30 days after the Committee gives written notice of
the immediate right to exercise all such Options and of the
decision to terminate all Options not exercised within such
30-day period; or
(ii) notify all Optionees that all Options granted
under the Plan shall be assumed by the successor corporation
or substituted with Options issued by such successor
corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in paragraph 5.2(b), the
provisions of such paragraph shall apply. In all other instances, the
adoption of a plan of dissolution or liquidation of the Company shall
cause every Option outstanding under the Plan to terminate to the
extent not exercised prior to the adoption of the plan of dissolution
or liquidation by the stockholders, provided that the Committee in its
discretion may declare all Options granted under the Plan to be
exercisable at any time on or before the fifth business day following
such adoption notwithstanding the provisions of the respective Stock
Option Agreements regarding exercisability. The Committee's actions
under this provision and the Optionee's exercise of Options under this
provision shall be subject, however, to the limitations set forth in
Article VI hereof.
(d) The adjustments described in paragraphs (a) through (c) of
this Section 5.2, and the manner of their application, shall be
determined solely by the Committee, and any such adjustment may provide
for the elimination of fractional share interests. The adjustments
required under this Article V shall
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apply to any successors of the Company and shall be made regardless of
the number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 TYPES OF OPTIONS GRANTED. Within the limitations provided herein,
Options may be granted to one Employee at one or several times or to different
Employees at the same time or at different times, in either case under different
terms and conditions, as long as the terms and conditions of each Option are
consistent with the provisions of the Plan. Without limiting the foregoing,
Options may be granted subject to conditions based on the financial performance
of the Company or any other factor the Committee deems relevant.
6.2 OPTION GRANT AND AGREEMENT. Each Option granted or modified
hereunder shall be evidenced (a) by either minutes of a meeting or a written
consent of the Committee, and (b) by a written Stock Option Agreement executed
by the Company and the Optionee. The terms of the Option, including the Option's
duration, time or times of exercise, exercise price, whether the Option is
intended to be an ISO, and whether the Option is to be accompanied by the right
to receive a Reload Option, shall be stated in the Stock Option Agreement.
Separate Stock Option Agreements shall be used for Options intended to be ISO's
and those not so intended.
6.3 OPTIONEE LIMITATIONS. The Committee shall not grant an ISO to any
person who, at the time the ISO would be granted:
(a) is not an Employee; or
(b) owns or is considered to own stock possessing more than
10% of the total combined voting power of all classes of stock of the
Employer, or any Parent or Subsidiary of the Employer; provided,
however, that this limitation shall not apply if at the time an ISO is
granted the Option Price is at least 110% of the Fair Market Value of
the Stock subject to such Option and such Option by its terms would not
be exercisable after the expiration of five years from the date on
which the Option is granted. For the purpose of this paragraph (b), a
person shall be considered to own (i) the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or
half blood), spouse, ancestors and lineal descendants, (ii) the stock
owned, directly or indirectly, by or for a corporation, partnership,
estate, or trust in proportion to such person's stock interest,
partnership interest or beneficial interest therein, and (iii) the
stock which such person may purchase under any outstanding options of
the Employer or of any Parent or Subsidiary of the Employer.
6.4 $100,000 LIMITATION. Except as provided below, the Committee shall
not grant an ISO to, or modify the exercise provisions of outstanding ISO's held
by, any person who, at the time the ISO is granted (or modified), would thereby
receive or hold any incentive stock options (as described in Code section 422)
of the Employer and any Parent or Subsidiary of the Employer, such that the
aggregate Fair Market Value (determined as of the respective dates of grant or
modification of each option) of the stock with respect to which such incentive
stock options are exercisable for the first time during any calendar year is in
excess of $100,000; provided, that the foregoing restriction on modification of
outstanding ISO's shall not preclude the Committee from modifying an outstanding
ISO if, as a result of such modification and with the consent of the Optionee,
such Option no longer constitutes an ISO; and provided that, if the $100,000
limitation described in this Section 6.3 is exceeded, an Option that otherwise
qualifies as an ISO shall be treated as an ISO up to the limitation and the
excess shall be treated as an Option not qualifying as an ISO. The preceding
sentence shall be applied by taking options intended to be ISO's into account in
the order in which they were granted.
6.5 OPTION PRICE. The Option Price under each Option shall be
determined by the Committee; provided however, that the Option Price shall not
be less than the Fair Market Value of the Stock on the date that the Option is
granted (or, in the case of an option that is subsequently modified, on the date
of such modification).
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<PAGE> 30
6.6 EXERCISE PERIOD. The period for the exercise of each Option granted
hereunder shall be determined by the Committee, but the Stock Option Agreement
with respect to each Option intended to be an ISO shall provide that such Option
shall not be exercisable after the expiration of ten years from the date of
grant (or modification) of the Option. In addition, no option granted to an
Employee who is also an Officer or Director shall be exercisable prior to the
expiration of six months from the date such option is granted, other than in the
case of the death or disability of such Employee.
6.7 OPTION EXERCISE
(a) Unless otherwise provided in the applicable Stock Option
Agreement, an Option may be exercised at any time or from time to time
during the term of the Option as to any or all whole shares that have
become Purchasable under the provisions of the Option, but not at any
time as to less than 100 shares unless the remaining shares that have
become so Purchasable are less than 100 shares. The Committee shall
have the authority to prescribe in any Stock Option Agreement that the
Option may be exercised only in accordance with a vesting schedule
during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the
Treasurer of the Company at its principal office of written notice of
exercise with respect to a specified number of shares of Stock, and
(ii) payment to the Company at that office of the full amount of the
Option Price for such number of shares.
(c) The Option Price shall be paid in full upon the exercise
of the Option; provided, however, that the Committee may provide in a
Stock Option Agreement that, in lieu of cash, all or any portion of the
Option Price may be paid by tendering to the Company shares of Stock
duly endorsed for transfer and owned by the Optionee, to be credited
against the Option Price at the Fair Market Value of such shares on the
date of exercise (however, no fractional shares may be so transferred,
and the Company shall not be obligated to make any cash payments in
consideration of any excess of the aggregate Fair Market Value of
shares transferred over the aggregate option price).
(d) In addition to and at the time of payment of the Option
Price, the Optionee shall pay to the Company in cash the full amount of
any federal, state, or local income, employment, or other taxes
required to be withheld from the income of such Optionee as a result of
such exercise; provided, however, that in the discretion of the
Committee any Stock Option Agreement may provide that all or any
portion of such tax obligations, together with additional taxes not
exceeding the actual additional taxes to be owed by the Optionee as a
result of such exercise, may, upon the irrevocable election of the
Optionee, be paid by tendering to the Company whole shares of Stock
duly endorsed for transfer and owned by the Optionee, or by
authorization to the Company to withhold shares of Stock otherwise
issuable upon exercise of the Option, in either case in that number of
shares having a Fair Market Value on the date of exercise equal to the
amount of such taxes thereby being paid, and subject to such
restrictions as to the approval and timing of any such election as the
Committee may from time to time determine to be necessary or
appropriate to satisfy the conditions of the exemption set forth in
Rule 16b-3 under the 1934 Act.
(e) The holder of an Option shall not have any of the rights
of a stockholder with respect to the shares of Stock subject to the
Option until such shares have been issued and transferred to him upon
the exercise of the Option.
6.8 NONTRANSFERABILITY OF OPTION. No Option or any rights therein shall
be transferable by an Optionee otherwise than by will or the laws of descent and
distribution. During the lifetime of an Optionee, an Option granted to that
Optionee shall be exercisable only by such Optionee (or by such Optionee's
guardian or other legal representative, should one be appointed).
6.9 TERMINATION OF EMPLOYMENT. The Committee shall have the power to
specify, with respect to the Options granted to any particular Optionee, the
effect upon such Optionee's right to exercise an Option of the
A-6
<PAGE> 31
termination of such Optionee's employment under various circumstances, including
but not limited to the death or disability of the employee, which effect may
include immediate or deferred termination of such Optionee's rights under an
Option, or acceleration of the date at which an Option may be exercised in full.
6.10 EMPLOYMENT RIGHTS. Options granted under the Plan shall not be
affected by any change of employment so long as the Optionee continues to be an
Employee. Nothing in the Plan or in any Stock Option Agreement shall confer on
any person any right to continue in the employ of the Company or any Subsidiary
of the Company, or shall interfere in any way with the right of the Company or
any such Subsidiary to terminate such person's employment at any time.
6.11 CERTAIN SUCCESSOR OPTIONS. To the extent not inconsistent with the
terms, limitations, and conditions of Code Section 422, and any regulations
promulgated with respect thereto, an option issued in respect of an Option held
by an Employee to acquire stock of any entity acquired, by merger or otherwise,
by the Company (or any Subsidiary of the Company) may contain terms that differ
from those stated in this Article VI, but solely to the extent necessary to
preserve for any such Employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code Section 425(a).
ARTICLE VII
CONDITIONS TO ISSUING STOCK
The Company shall not be required to issue or deliver any shares of
Stock purchased upon the full or partial exercise of any Option granted
hereunder until all of the following conditions are fulfilled:
(a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed;
(b) The completion of any registration or other qualification
of such shares that the Company shall determine to be necessary or
advisable under any federal or state law or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, or the Company's determination that an
exemption is available from such registration or qualification;
(c) The obtaining of any approval or other clearance from any
federal or state governmental agency that the Company shall determine
to be necessary or advisable; and
(d) The lapse of such reasonable period of time following
exercise as shall be appropriate for reasons of administrative
convenience.
Unless the shares of Stock covered by the Plan shall be the subject of
an effective registration statement under the Securities Act of 1933, as
amended, stock certificates issued and delivered to Optionees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time: (i) cause the Committee to cease granting
Options, (ii) terminate the Plan, or (iii) in any respect amend or modify the
Plan; provided, however, that the Board (unless its actions are approved or
ratified by the stockholders of the Company within twelve months of the date the
Board amends the Plan) may not amend the Plan to increase the number of shares
of stock subject to the Plan beyond the amount previously approved or ratified
by the shareholders, or to change or modify the class of persons that may
participate in the Plan.
A-7
<PAGE> 32
No termination, amendment or modification of the Plan shall adversely
affect the rights of an Optionee under any outstanding Option without the
consent of the Optionee or his or her legal representative.
ARTICLE IX
MISCELLANEOUS
9.1 REPLACEMENT GRANTS. At the sole discretion of the Committee, an
Optionee may be given an election to surrender an Option in exchange for a new
Option.
9.2 FORFEITURE FOR COMPETITION. If an Optionee provides services to a
person or entity that the Committee reasonably determines to be a competitor of
the Company or any of its Subsidiaries, whether as an employee, officer,
director, independent contractor, consultant, agent or otherwise, such services
being of a nature that can reasonably be expected to involve the skills and
experience used or developed by the Optionee while an Employee, then that
Optionee's rights under any Options outstanding hereunder shall be forfeited and
terminated, subject to a determination to the contrary by the Committee.
9.3 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors of the Company.
9.4 GENDER. Whenever used herein, the masculine pronoun shall include
the feminine gender.
9.5 HEADINGS NO PART OF PLAN. Headings of Articles and Sections hereof
are inserted for convenience and reference, and do not constitute a part of the
Plan.
A-8
<PAGE> 33
APPENDIX B
HEALTHPLAN SERVICES CORPORATION
1997 DIRECTORS EQUITY PLAN
(Adopted by the Compensation Committee of the Board of Directors as of
January 1, 1997, subject to stockholder approval)
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set
forth unless the context clearly indicates to the contrary:
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean (i) any day on which the principal securities
exchange or national market on which the shares of Stock are traded is open; or
(ii) if the shares of Stock are not traded on an exchange, then any day other
than a Saturday, Sunday, or Company holiday.
"Committee" shall mean the Compensation Committee of the Board, or a
committee of Directors appointed from time to time by the Board, having the
duties and authority set forth herein in addition to any other authority granted
by the Board.
"Company" shall mean HealthPlan Services Corporation, a Delaware
corporation, and any successor to it.
"Director" shall mean a member of the Board.
"Eligible Director" shall mean a Director who is eligible to
participate in the Plan pursuant to Article III of the Plan.
"Employee" shall mean any employee of the Company or any Subsidiary of
the Company, or any Director who also serves as an Officer and whose duties as
such involve a significant time commitment beyond that associated with
preparation for and attendance at meetings of the Board and Committees.
"Fair Market Value" of the Stock on any date shall mean:
(1) the closing or last sale price on such date on the principal
securities exchange on which the shares of Stock are traded
or, if there is no such sale on the relevant date, then on the
last previous day on which a sale was reported; or
(2) if there is no price as specified in (1), the amount
determined in good faith by the Committee based on such
relevant facts, which may include opinions of independent
experts, as may be available to the Committee.
"Participating Director" shall mean, with respect to any fiscal year,
any Eligible Director other than an Eligible Director who has elected not to
participate in the Plan in accordance with the terms of Section 5.1 of the Plan.
"Plan" shall mean the HealthPlan Services Corporation 1997 Directors
Equity Plan as set forth herein, as amended from time to time.
B-1
<PAGE> 34
"Quarterly Retainer" shall mean the cash amount paid to each Director
who is not a Participating Director as compensation for his or her service on
the Board during any fiscal quarter, which amount shall be determined by the
Board or an appropriate committee of the Board.
"Restricted Stock Agreement" shall mean an agreement between the
Company and a Participating Director entered into pursuant to Section 6.1 below.
"Stock" shall mean the $0.01 par value Common Stock of the Company or,
in the event that the outstanding shares of such Stock are hereafter changed
into or exchanged for shares of a different class of stock or securities of the
Company or some other corporation, such other stock or securities.
"Subsidiary" shall mean any corporation (other than the corporation
with respect to which the determination is being made) in an unbroken chain of
corporations beginning with the corporation with respect to which the
determination is being made if, at the time of the grant (or modification) of
the Stock, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
ARTICLE II
THE PLAN
2.l NAME. The Plan shall be known as the "HealthPlan Services
Corporation 1997 Directors Equity Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its stockholders by offering each Eligible Director the opportunity
to increase his or her proprietary interest in the Company.
2.3 EFFECTIVE DATE. The Plan shall become effective on January 1, 1997,
subject to approval of the stockholders of the Company.
2.4 DUTIES AND POWERS OF THE COMMITTEE. The Plan shall be administered
by the Committee. To the extent not inconsistent with the provisions of the
Plan, the Committee shall have the authority to amend or modify an outstanding
Restricted Stock Agreement, or to waive any provision thereof, provided that the
affected Director consents to such action. Subject to the express provisions of
the Plan, the Committee also shall have complete authority to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to it, to
determine the details and provisions of each Restricted Stock Agreement, and to
make all other determinations necessary or advisable in the administration of
the Plan, including, without limitation, the amending or altering of any
Restricted Stock Agreement entered into hereunder as may be required to comply
with or to conform to any federal, state, or local laws or regulations. No
member of the Board or the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan.
ARTICLE III
ELIGIBILITY
Each Director who is not any Employee shall be eligible to participate
in the Plan. Participation shall continue for so long as the Director continues
to serve on the Board.
B-2
<PAGE> 35
ARTICLE IV
SHARES OF STOCK SUBJECT TO PLAN
4.1 LIMITATIONS. Subject to any antidilution adjustment pursuant to the
provisions of Section 4.2 hereof, the maximum number of shares of Stock that may
be issued and sold hereunder shall be 100,000 shares.
4.2 ANTIDILUTION.
(a) In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of merger, consolidation,
reorganization, recapitalization, reclassification, combination or
exchange of shares, stock split or stock dividend, or in the event that
any spin-off, spin-out or other distribution of assets materially
affects the price of the Company's stock, the aggregate number and kind
of shares of Stock which may be granted hereunder shall be adjusted
proportionately by the Committee; and
(b) The adjustments described in paragraph (a) of this Section
4.2, and the manner of their application, shall be determined solely by
the Committee, and any such adjustment may provide for the elimination
of fractional share interests. The adjustments required under this
Article IV shall apply to any successors of the Company and shall be
made regardless of the number or type of successive events requiring
such adjustments.
ARTICLE V
ISSUANCE OF SHARES
5.1 ISSUANCE OF SHARES. For each fiscal quarter, the Company shall
issue shares of Stock to each Participating Director who served as a Director at
any time during such quarter. The number of shares issued to each Participating
Director pursuant to the previous sentence shall equal: (i) $2,500; divided by
(ii) the Fair Market Value of the Stock on last Business Day of such quarter;
provided, however, that no fractional shares shall be issued pursuant to the
Plan. Whenever a fractional share would otherwise be required to be issued, the
number of shares issuable shall be rounded up to the nearest whole number.
5.2 IRREVOCABLE ELECTION. An Eligible Director may make an irrevocable
election not to participate in the Plan for any fiscal year. The Director shall
make such election prior to his or her receipt of any Stock under the Plan for
such year. Each Eligible Director who elects not to participate shall receive
Quarterly Retainers as compensation for such Director's service on the Board
during such year.
5.3 WITHHOLDING TAXES. Whenever the Company is required to issue shares
of Stock under the Plan to a Participating Director, such Participating Director
shall remit to the Company an amount sufficient to satisfy any federal, state,
or local withholding tax liability prior to the delivery of any certificate or
certificates for such shares. Notwithstanding the foregoing, at the option of
the Company and to the extent permitted by applicable law, including regulations
promulgated under the Securities Exchange Act of 1934, such federal, state, or
local withholding tax liability may be satisfied prior to the delivery of any
certificate or certificates for the shares by an adjustment, equal in value to
such liability, in the number of shares to be transferred to the applicable
Participating Director.
ARTICLE VI
RESTRICTIONS ON STOCK
6.1 RESTRICTED STOCK AGREEMENTS. Each issuance of Stock hereunder shall
be evidenced by a written Restricted Stock Agreement executed by the Company and
the applicable Participating Director.
B-3
<PAGE> 36
6.2 RESTRICTIONS ON TRANSFER. Unless the shares of Stock covered by the
Plan are the subject of an effective registration statement under the Securities
Act of 1933, as amended, stock certificates issued and delivered to
Participating Directors shall bear such restrictive legends as the Company shall
deem necessary or advisable pursuant to applicable federal and state securities
laws. In addition to any other restrictions contained in the Plan or in the
applicable Restricted Stock Agreement, no share of Stock issued pursuant to the
Plan shall be transferable by the applicable Participating Director during the
first six months after issuance of such share, other than by the laws of descent
or distribution.
ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time: (i) terminate the Plan; or (ii) in any
respect amend or modify the Plan; provided, however, that the Board (unless its
actions are approved or ratified by the stockholders of the Company within
twelve months of the date the Board amends the Plan) may not amend the Plan to
increase the number of shares of stock subject to the Plan beyond the amount
previously approved or ratified by the stockholders, or to change or modify the
class of persons that may participate in the Plan.
ARTICLE VIII
MISCELLANEOUS
8.1 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors to the Company.
8.2 GENDER. Whenever used herein, the masculine pronoun shall include
the feminine gender.
8.3 HEADINGS NOT PART OF PLAN. Headings of Articles and Sections hereof
are inserted for convenience and reference, and do not constitute a part of the
Plan.
8.4 TERM. The term of this Plan shall commence on January 1, 1997,
subject to approval by the stockholders of the Company, and shall continue in
effect until the tenth anniversary of such stockholder approval.
B-4
<PAGE> 37
APPENDIX
HEALTHPLAN SERVICES CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HEALTHPLAN
SERVICES CORPORATION (THE "COMPANY").
The undersigned hereby constitutes and appoints James K. Murray, Jr. and
William L. Bennett, or either of them (each a "Designee"), attorneys, agents,
and proxies with power of substitution to vote all of the shares of the Company
that the undersigned is entitled to vote at the Annual Meeting of Stockholders
to be held at The Centre Club, 123 South Westshore Boulevard, Tampa, Florida
33609, on Tuesday, May 6, 1997 at 11:00 a.m. local time, and any adjournment
thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS INDICATED, WILL BE VOTED "FOR" ALL OF THE NOMINEES SET FORTH BELOW
FOR ELECTION AS DIRECTORS AND "FOR" EACH OF THE ADDITIONAL PROPOSALS. IN THEIR
DISCRETION THE PARTIES ARE ALSO AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING, INCLUDING THE ELECTION OF ANY PERSON TO
THE BOARD OF DIRECTORS WHERE A NOMINEE NAMED IN THE PROXY STATEMENT IS UNABLE TO
SERVE FOR GOOD CAUSE OR WILL NOT SERVE.
Please mark your votes as indicated in this example. [X]
PROPOSAL 1: ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as otherwise marked below) nominees listed below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name below)
<TABLE>
<S> <C> <C> <C>
James K. Murray, Jr. Joseph S. DiMartino Nancy Kane, D.B.A. Trevor G. Smith
William L. Bennett John R. Gunn David Nierenberg Arthur F. Weinbach
Joseph A. Califano, Jr. Charles H. Guy, Jr. James G. Niven Holyoke L. Whitney
James F. Carlin, Jr.
</TABLE>
(See Reverse Side)
PROPOSAL 2: APPROVAL OF AMENDED AND RESTATED HEALTHPLAN SERVICES CORPORATION
1996 EMPLOYEE STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 3: APPROVAL OF HEALTHPLAN SERVICES CORPORATION 1997 DIRECTORS EQUITY
PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Change of Address _____________________________________________________________
_______________________________________________________________________________
The undersigned acknowledges receipt
of the Notice of the Annual Meeting of
Stockholders and the Proxy Statement
dated April 11, 1997 and ratifies all
that the proxies or either of them or
their substitutes may lawfully do or
cause to be done by virtue hereof and
revokes all former proxies.
Dated: ___________________ , 1997
Signature:_______________________
_________________________________
NOTE: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or guardian,
please give full title as such. Please return the signed card in the enclosed
envelope, or send to HealthPlan Services Corporation, Attention: Corporate
Secretary, P.O. Box 30098, Tampa, Florida 33630-3098.
