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>
HealthPlan Services Corporation
3501 Frontage Road
Tampa, Florida 33607
- ------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 12, 1998
- ------------------------------------------------------------------------------
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 Sheraton Grand Hotel, 4860 Kennedy Boulevard, Tampa, Florida 33609
on Tuesday, May 12, 1998, at 9:00 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; and
(ii) 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 16, 1998 has been fixed as the record 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 2, 1998
----------------------------
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>
HEALTHPLAN SERVICES CORPORATION
3501 FRONTAGE ROAD
TAMPA, FLORIDA 33607
(813) 289-1000
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 12, 1998
PROXY STATEMENT
SOLICITATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of HealthPlan Services Corporation (the "Company") of
proxies to be used at the Annual Meeting of Stockholders of the Company to be
held at The Sheraton Grand Hotel, 4860 Kennedy Boulevard, Tampa, Florida 33609,
on Tuesday, May 12, 1998 at 9:00 a.m. local time, and at any and all
adjournments of the Annual Meeting. A proxy may be revoked at any time prior to
its exercise by giving written notice 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 also has made 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 2, 1998.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its
Common Stock, $.01 par value per share, of which 14,936,947 shares were
outstanding as of March 16, 1998. Each share entitles its holder to one vote.
Only stockholders of record at the close of business on the record date, March
16, 1998, will be entitled to vote at the Annual Meeting or at any adjournments
of the Annual Meeting. The presence in person or by proxy of a majority of the
shares of Common Stock issued and outstanding and entitled to vote will
constitute a quorum for the transaction of business. Pursuant to Delaware law,
abstentions will be treated as present and entitled to vote and therefore will
be counted in determining the existence of a quorum and will have the effect of
a vote against any matter requiring the affirmative vote of the shares present
and entitled to vote. Pursuant to Delaware law, broker "non-votes" and withheld
votes are considered present but not entitled to vote and thus will be counted
in determining the existence of a quorum but will not be counted in determining
whether a matter requiring approval of a majority of the shares present and
entitled to vote has been approved or whether a plurality of the vote of the
shares present and entitled to vote has been cast.
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 16, 1998, by:
(i) each beneficial owner 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 in 1997; 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.
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY MARCH 16, 1998 OF CLASS
- ------------------- --------------------- -------------- --------
<S> <C> <C> <C>
James K. Murray, Jr. Chairman of the Board, Chief 1,002,091 (1) 6.7%
3501 Frontage Road Executive Officer, and
Tampa, Florida 33607 Director
William L. Bennett Vice Chairman of the Board 301,588 (2) 2.0%
3501 Frontage Road and Director
Tampa, Florida 33607
Joseph A. Califano, Jr. Director 18,732 (3) *
152 W. 57th St. - 12th Floor
New York, New York 10019
James F. Carlin Director 15,670 (4) *
233 W. Central Street
Natick, Massachusetts 01760
Joseph S. DiMartino Director 73,366 (3) *
200 Park Avenue 10th Floor
New York, New York 10166
Vincent D. Farrell, Jr. Director 708,344 (5) 4.7%
45 Rockefeller Plaza 33rd Floor
New York, New York 10111
John R. Gunn Director 18,732 (3) *
1275 York Avenue
New York, New York 10021
Nancy M. Kane, D.B.A. Director 18,732 (6) *
677 Huntington Avenue
Boston, Massachusetts 02115
David Nierenberg Director 46,217 (7) *
19605 N. E. 8th Street
Camas, Washington 98607
James G. Niven Director 23,262 (3) *
1334 York Avenue
New York, New York 10021
Marc I. Perkins Director 7,400 (8) *
310 East Atlantic Avenue
Delray Beach, Florida 33483
Trevor G. Smith Director 263,820 (9) 1.8%
777 Harbor Island Blvd., Suite 760
Tampa, Florida 33602
Arthur F. Weinbach Director 5,082 (10) *
One ADP Boulevard
Roseland, New Jersey 07068
2
<PAGE>
SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY MARCH 16, 1998 OF CLASS
- ------------------- --------------------- -------------- --------
Timothy T. Clifford Former Chief Operating 4,743 *
c/o 15 Pleasant Street Connector Officer
Framingham, Massachusetts 01701 - Small Group Business
Robert R. Parker President and Chief 306,297 (11) 2.0%
3501 Frontage Road Operating Officer
Tampa, Florida 33607
Gary L. Raeckers Executive Vice President 75,687 (11) *
3501 Frontage Road
Tampa, Florida 33607
Automatic Data Processing, Inc. -- 1,320,000 8.8%
One ADP Boulevard
Roseland, New Jersey 07068
Spears, Benzak, -- 704,245 (12) 4.7%
Salomon & Farrell, a division of
Key Asset Management Inc.
45 Rockefeller Plaza
New York, New York 10111
The Goldman Sachs Group, L.P. -- 859,456 (13) 5.8%
and Goldman, Sachs & Company
85 Broad Street
New York, New York 10004
All Directors and Executive Officers -- 2,976,320 (14) 19.5%
as a group (includes 17 persons)
<FN>
- ----------------------------
* Less than one percent.
(1) Includes 82,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also includes 173,156 shares
held by two private companies with respect to which Mr. Murray shares
investment and voting power; Mr. Murray disclaims beneficial ownership in
such shares except to the extent of his interest in such private
companies. Also includes 150,000 shares held by Mr. Murray's wife, as to
which shares Mr. Murray disclaims beneficial ownership; and 593,803 shares
held by a family limited partnership with respect to which Mr. Murray
shares investment and voting power.
(2) Includes 82,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also includes 609 shares
held by Mr. Bennett's children, as to which Mr. Bennett disclaims
beneficial ownership.
(3) Includes 7,200 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998.
(4) Includes 4,800 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998.
(5) Includes 2,400 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also includes 704,245 shares
beneficially owned by Spears, Benzak, Salomon & Farrell, Inc., with
respect to which shares Mr. Farrell disclaims beneficial ownership.
(6) Includes 7,200 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also includes 900 shares
held by Dr. Kane as custodian for her minor children.
3
<PAGE>
(7) Includes 7,200 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also includes 39,017 shares
held by the Nierenberg Family 1993 Living Trust, with respect to which Mr.
Nierenberg has investment and voting power as trustee.
(8) Includes 2,400 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also includes 5,000 shares
held by a partnership with respect to which Mr. Perkins is the General
Partner.
(9) Includes 7,200 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also includes 71,500 shares
held in trust for the benefit of Mr. Smith's wife, as to which shares Mr.
Smith disclaims beneficial ownership; and 183,420 shares held in trust for
the benefit of Mr. Smith, with respect to which Mr. Smith shares
investment and voting power.
(10) Includes 4,800 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Does not include the
proportionate share ownership of the Company represented by 165,204 shares
of Automatic Data Processing, Inc. ("ADP") common stock that are
beneficially owned by Mr. Weinbach or an additional 332,000 shares of ADP
common stock issuable to Mr. Weinbach upon exercise of options that are
exercisable within 60 days of March 16, 1998. Also 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 investment
and voting power with respect to the shares owned by ADP.
(11) Includes 37,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998.
(12) The information set forth in the table and this footnote regarding shares
beneficially owned by Spears, Benzak, Salomon & Farrell, a division of Key
Asset Management Inc. ("Spears Benzak") as of March 16, 1998 is based on
information provided to the Company by Spears Benzak. The shares
beneficially owned by Spears Benzak consist entirely of shares as to which
Spears Benzak shares voting and disposition authority with various clients
for which the shares were purchased. In each case the client has the
ultimate power to vote and dispose of the shares and may at any time
revoke Spears Benzak's authority.
(13) The information set forth in the table and this footnote regarding shares
beneficially owned by The Goldman Sachs Group, L.P. ("GS Group") and
Goldman, Sachs & Co. ("Goldman Sachs") is based on a Schedule 13G filed by
GS Group and Goldman Sachs dated February 14, 1998, stating that the GS
Group and Goldman Sachs shared voting and dispositive power with respect
to 859,456 shares of Common Stock. The Schedule 13G states that GS Group
and Goldman Sachs each disclaim beneficial ownership of the Common Stock
beneficially owned by (i) managed accounts, and (ii) certain investment
limited partnerships of which a subsidiary of GS Group or Goldman Sachs is
the general partner or managing general partner, to the extent partnership
interests in such partnerships are held by persons other than GS Group,
Goldman Sachs, or their affiliates.
(14) Includes 356,200 shares issuable upon exercise of options that are
exercisable within 60 days of March 16, 1998. Does not include shares
beneficially owned by Mr. Clifford, who terminated his employment with the
Company in December 1997.
</FN>
</TABLE>
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 13.
All current directors are nominees for election to the Board at the 1998
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. 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. If any of the nominees is unable to serve as a director, each
4
<PAGE>
of the persons designated by proxy reserves full discretion to cast his votes
for another person in the nominee's place. 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. - 62 Chairman of the Board and Chief Executive
Officer of the Company since January 1998,
and a director of the Company since October
1994. Mr. Murray was President and Chief
Executive Officer of the Company between
December 1994 and December 1997. Mr. Murray
co-founded the predecessor to the Company
(the "Predecessor Company") in 1970 with
Charles H. Guy, Jr. and Trevor G. Smith, who
is 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 to December
1993. In October 1994, Mr. Murray, together
with Noel Group, Inc. ("Noel") and Messrs.
Guy and Smith, acquired all of the
outstanding capital stock of the Predecessor
Company from D&B. Mr. Murray is a director of
Noel and of Sykes HealthPlan Services, Inc.,
a corporation in which the Company holds a
50% equity interest.
William L. Bennett - 48 Vice Chairman of the Board since January
1998, Chairman of the Board between December
1994 and December 1997, and a director of the
Company since August 1994. Until March 1995,
Mr. Bennett served as Chairman and Chief
Executive Officer of Noel. Previously, Mr.
Bennett was Co-Chairman and Chief Executive
Officer of Noel from November 1991 to July
1994. Mr. Bennett is a director of Allegheny
Energy, Inc., an electric utility holding
company; Sylvan, Inc., a company that
produces mushroom spawn and fresh mushrooms;
and Sykes HealthPlan Services, Inc., a
corporation in which the Company holds a 50%
equity interest.
Joseph A. Califano, Jr. - 66 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; Travelers Group, Inc.; and
Warnaco, Inc. Mr. Califano is a governor of
The New York and Presbyterian Hospital and a
trustee of New York University, The Twentieth
Century Fund, The Urban Institute, and The
American Ditchley Foundation. Mr. Califano is
Founding Chairman 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.
5
<PAGE>
NAME AND AGE OCCUPATION/BACKGROUND
- ------------ ---------------------
James F. Carlin - 58 Director of the Company since July 1996. Mr.
Carlin co-founded Consolidated Group, Inc.
("Consolidated Group") in 1971. Mr. Carlin
served as a director of Consolidated Group
from 1971 until July 1996, when the Company
purchased the Consolidated Group business.
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 the Massachusetts
Health and Education Tax Exempt Trust,
Arbella Mutual Insurance Company, and Uno
Restaurant Corp. He also is Chairman of the
Massachusetts Board of Higher Education.
Joseph S. DiMartino - 54 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 Group of Mutual Funds.
From 1982 to 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 Group 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 1994 was the
distributor for the Dreyfus Group of Mutual
Funds. He also was Chairman of the Board of
Directors of Noel from February 1995 until
November 1997. He is a director of The
Muscular Dystrophy Association, Carlyle
Industries, Inc., Century Business Services,
Inc., and Staffing Resources, Inc.
Vincent D. Farrell, Jr. - 51 Director of the Company since July 1997.
Since 1982, Mr. Farrell has been Managing
Director and Chief Investment Officer for
Spears, Benzak, Salomon & Farrell, a money
management firm based in New York with $5
billion in assets under management. Mr.
Farrell also is a director of Swiss Army
Brands Company, Inc., a consumer products
company best known for its Swiss Army knives
and watches. Mr. Farrell is a frequent guest
lecturer throughout the country for a number
of large securities firms.
John R. Gunn - 55 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, Inc., 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.
Nancy M. Kane, D.B.A. - 48 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
not-for-profit medical group practice
organization.
6
<PAGE>
NAME AND AGE OCCUPATION/BACKGROUND
- ------------ ---------------------
David Nierenberg - 45 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 1995, 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. Mr. Nierenberg is
a director of Southwest Washington Medical
Center, a private not-for-profit hospital.
James G. Niven - 52 Director of the Company since November 1994.
Since 1996, Mr. Niven has been a Senior Vice
President at Sotheby's, an international
auction house. Since 1982, he has been a
general partner of Pioneer Associates, a
venture capital investment company. He also
is a director of The Lynton Group, Inc., a
company engaged in aircraft charter and
maintenance; Lincoln Snacks Company, a snack
food manufacturer; and Tatham Offshore, Inc.,
an independent energy company engaged in the
development, exploration, and production of
offshore oil and gas reserves. Mr. Niven also
is a member of the Board of Managers of
Memorial Sloan-Kettering Cancer Center, a
trustee and a director of the Neil A.
McConnell Foundation, and a trustee of The
Blenheim Foundation, the Museum of Modern
Art, and the National Center for Learning
Disabilities.
Marc I. Perkins - 52 Director of the Company since October 1997.
Since 1992, Mr. Perkins has been President
and Chief Executive Officer of Perkins
Capital Advisers, Inc. and General Partner of
Perkins Partners I, Ltd. He has been a
principal in PMK Securities and Research,
Inc., a securities broker dealer, since
February 1995. For the last seven years,
Barron's magazine has included Mr. Perkins as
a member of Barron's Round Table. He appears
regularly on CNBC and is a frequent lecturer
at numerous organizations and universities.
Trevor G. Smith - 62 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 Chairman of the Board and Chief
Executive Officer of the Predecessor Company
from 1991 to 1993. Mr. Smith is a Chartered
Life Underwriter.
Arthur F. Weinbach - 55 Director of the Company since February 1997.
Since 1996, Mr. Weinbach has been President
and Chief Executive Officer of Automatic Data
Processing, Inc. ("ADP"). Previously, he
served as Executive Vice President of ADP
from 1992 to 1994 and as President and Chief
Operating Officer of ADP from 1994 to 1996.
Mr. Weinbach serves on the Board of Directors
of ADP.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The 13 nominees for director receiving a plurality of the votes of the
shares present (in person or by proxy) and entitled to vote at the Annual
Meeting shall be elected.
The Board of Directors recommends that the stockholders vote FOR the 13
nominees described above.
7
<PAGE>
ADDITIONAL INFORMATION CONCERNING DIRECTORS
DIRECTORS' COMPENSATION
As officers of the Company, Mr. Murray and Mr. Bennett receive no
additional compensation for their service on the Board of Directors and 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 committee meeting attended. The Company reimburses all
directors for out-of-pocket expenses, including travel expenses, related to
attendance at such meetings.
Pursuant to the HealthPlan Services Corporation 1997 Directors Equity Plan
(the "Directors Equity Plan"), which was approved by the Company's stockholders
at the 1997 Annual Meeting, each non-employee director may receive Common Stock
of the Company rather than a cash retainer fee as compensation for each quarter
in which the director serves on the Board. The shares issued for each quarter
have a value equal to $2,500, which is calculated based on the fair market value
of the Company's Common Stock at the end of the quarter. An eligible director
may make an irrevocable election not to participate in the Plan in any year and
instead receive quarterly cash retainers. 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.
Each director who is not an employee of the Company also participates 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 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. In the event of any
merger, consolidation, or sale of substantially all of the assets of the
Company, the Company at its option may accelerate vesting of the outstanding
Directors Option Plan options, subject to applicable law. 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 its committees. The Board of Directors held six meetings during 1997. In
accordance with the By-laws of the Company, the Board of Directors currently has
Executive, Audit, Strategic Planning, Operations, Compensation, and Regulatory
Affairs Committees established as standing committees. There is no Nominating
Committee of the Board. During 1997, Mr. Califano attended seven of the eleven
meetings of the Board and the Committees on which he served. Each other director
attended at least 75 percent of the total number of 1997 meetings of the Board
and of the Committees on which he or she served.
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 Vincent D. Farrell, Jr. The Executive Committee held
six meetings during 1997.
The Audit Committee, which is composed of John R. Gunn, James F. Carlin,
Marc I. Perkins, and Arthur F. Weinbach, has authority to recommend to the Board
of Directors the independent public accountants to serve as auditors, to review
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 to approve the types of professional services
for which the Company may retain the independent auditors. The Audit Committee
held three meetings during 1997.
8
<PAGE>
The Strategic Planning Committee, which is composed of Marc I. Perkins,
Nancy M. Kane, D.B.A., David Nierenberg, 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 long-term planning matters and to recommend such actions to the Board
of Directors as the Committee deems appropriate. The Strategic Planning
Committee held three meetings during 1997.
The Compensation Committee, which is composed of Joseph A. Califano, Jr.,
Vincent D. Farrell, Jr., James G. Niven, and Arthur F. Weinbach, 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 five meetings during 1997.
The Regulatory Affairs Committee, which is composed of Joseph A. Califano,
Jr., Nancy M. Kane, D.B.A., 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 1997.
The Operations Committee, which is composed of James F. Carlin, John R.
Gunn, Joseph S. DiMartino, and David Nierenberg, has authority to act as a
liaison between the Board and management in matters relating to the overall
operations of the Company. The Operations Committee held two meetings in 1997.
See "Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Transactions" below for additional
information concerning directors.
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.
POSITION, PRINCIPAL OCCUPATION, AND OTHER
NAME AND AGE DIRECTORSHIPS
- ------------ ------------------------------------------
James K. Murray, Jr. - 62 Chairman of the Board and Chief Executive Officer
of the Company since January 1998, and a director
of the Company since October 1994. Mr. Murray was
President and Chief Executive Officer of the
Company between December 1994 and December 1997.
Mr. Murray co-founded the Predecessor Company in
1970 with Charles H. Guy, Jr. and Trevor G. Smith,
who 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 to December 1993.
In October 1994, Mr. Murray, together with Noel
and Messrs. Guy and Smith, acquired all of the
outstanding capital stock of the Predecessor
Company from D&B. Mr. Murray also is a director of
Noel and of Sykes HealthPlan Services, Inc., a
corporation in which the Company holds a 50%
equity interest.
9
<PAGE>
POSITION, PRINCIPAL OCCUPATION, AND OTHER
NAME AND AGE DIRECTORSHIPS
- ------------ ------------------------------------------
William L. Bennett - 48 Vice Chairman of the Board since January 1998,
Chairman of the Board between December 1994 and
December 1997, and a director of the Company since
August 1994. Until March 1995, Mr. Bennett served
as Chairman and Chief Executive Officer of Noel.
Previously, Mr. Bennett was Co-Chairman and Chief
Executive Officer of Noel from November 1991 to
July 1994. Mr. Bennett is a director of Allegheny
Energy, Inc., an electric utility holding company;
Sylvan, Inc., a company that produces mushroom
spawn and fresh mushrooms; and Sykes HealthPlan
Services, Inc., a corporation in which the Company
holds a 50% equity interest.
Donald W. Gould, Jr. - 35 Senior Vice President and Chief Financial Officer
of the Company since January 1998. From September
1996 until December 1997, Mr. Gould was Vice
President Finance of the Company, and from March
to September 1996 Mr. Gould served as a consultant
to the Company. Prior to that time Mr. Gould
served as President of Chicago Classics Golf,
Inc., a golf equipment manufacturer, from January
1995 to February 1996, and as a director of Geneva
Capital Markets, a merger and acquisition
intermediary for small businesses, from June 1992
to December 1994.
George E. Lucco - 50 Executive Vice President - Large Group Operations
of the Company since October 1994. Mr. Lucco
joined the Predecessor Company in 1982 and has
served as an Executive Vice President with various
operational and management responsibilities since
1989.
Robert R. Parker - 65 President and Chief Operating Officer of the
Company since January 1998. Mr. Parker served as
Executive Vice President and Chief Operating
Officer - Large Group Business of the Company from
July 1996 to December 1997, and as Chairman and
Chief Executive Officer of Harrington Services
Corporation ("Harrington") from 1986 until
December 1997. Harrington became a wholly owned
subsidiary of the Company in July 1996.
Gary L. Raeckers - 56 Executive Vice President - Small Group Operations
of the Company since January 1998. From July 1996
to December 1997, Mr. Raeckers was Executive Vice
President and Chief Operating Officer - The New
England of the Company, and from October 1994 to
June 1996 he served as Executive Vice President -
The New England of the Company. Prior to that, Mr.
Raeckers served the Predecessor Company as
Executive Vice President from August 1993 to
October 1994 and as President from April 1989 to
August 1993.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid or accrued by the Company for the fiscal year ended December 31, 1997 to
the Company's Chief Executive Officer and to each of the Company's four other
most highly compensated executive officers whose salary and bonus exceeded
$100,000 during such year (collectively, the "Named Officers"). The table also
sets forth information regarding paid or accrued compensation to each Named
Officer for the two preceding fiscal years if such individual was then employed
by the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------ -------------
SECURITIES ALL
NAME AND UNDERLYING OTHER
PRINCIPAL POSITION(1) YEAR SALARY($) BONUS($) OPTIONS/SARs(#)(2) (COMPENSATION($)(3)
- --------------------- ---- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
James K. Murray, Jr. 1997 $ 350,000 $ -- 35,000 $2,297
Chairman of the Board 1996 357,693 -- 100,000 --
and Chief Executive 1995 250,000 -- 50,000 --
Officer
Robert R. Parker 1997 202,963 -- 35,000 2,297
President and Chief 1996 101,482 (4) -- 75,000 4,500
Operating Officer 1995 -- -- -- --
William L. Bennett 1997 198,387 -- 35,000 2,000
Vice Chairman 1996 143,077 -- 100,000 --
of the Board 1995 69,231 -- 50,000 --
Timothy T. Clifford 1997 188,510 -- -- 1,347
Former Chief Operating 1996 102,308 (5) 225,000 (6) 75,000 --
Officer -- Small Group 1995 -- -- -- --
Business
Gary L. Raeckers 1997 174,865 -- 20,000 1,615
Executive Vice 1996 175,385 -- 25,000 --
President - Small Group 1995 150,000 -- 35,000 --
Operations
<FN>
- ----------
(1) Indicates each Named Officer's current position with the Company,
effective January 1, 1998. During 1997, Mr. Murray was President and Chief
Executive Officer of the Company, Mr. Bennett was Chairman of the Board of
Directors of the Company, Mr. Parker was Chief Operating Officer - Large
Group Business of the Company, Mr. Clifford was Chief Operating Officer -
Small Group Business of the Company, and Mr. Raeckers was Chief Operating
Officer - The New England of the Company.
(2) Refers to incentive stock options granted for the stated fiscal year under
either the HealthPlan Services Corporation 1995 Incentive Equity Plan (the
"Incentive Plan") or the Amended and Restated HealthPlan Services
Corporation 1996 Employee Stock Option Plan (the "Employee Option Plan").
The Incentive Plan and the Employee Option Plan provide for grants of
stock options to Company employees, as determined by the Compensation
Committee of the Board of Directors. Options granted under these Plans 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. Each option grant reflected in the table vests over a four-year
period from the date of the grant,
11
<PAGE>
with 20% of the options becoming vested on the grant date and 20% becoming
vested on each successive anniversary of the grant date until the options
become fully vested on the fourth anniversary of the grant date. In the
event of any merger or other transaction in which the Company does not
survive, the Compensation Committee at its option may accelerate the
vesting of all outstanding Incentive Plan and Employee Option Plan
options, subject to applicable law.
(3) Consists of Company contributions to each Named Officer's account under
the HealthPlan Services, Inc. Profit Participation 401(k) Plan. Does not
include the amount of life insurance premium payments allocable to each
Named Officer. The Company provides life insurance benefits to all
employees generally equal to two years base salary, subject to certain
adjustments.
(4) Refers to compensation paid to Mr. Parker after he joined the Company on
July 1, 1996. Mr. Parker's compensation is subject to an Employment and
Noncompetition Agreement described at "Employment Agreements" below.
(5) Refers to compensation paid to Mr. Clifford after he joined the Company on
July 1, 1996. Mr. Clifford terminated his employment with the Company in
December 1997. Mr. Clifford's compensation was subject to an Employment
and Noncompetition Agreement (the "Clifford Agreement") described at
"Employment Agreements" below.
(6) Refers to a signing bonus of $100,000 paid to Mr. Clifford when he joined
the Company on July 1, 1996 and a performance bonus of $125,000 paid to
Mr. Clifford for 1996. The Company paid these bonuses in accordance with
the Clifford Agreement.
</FN>
</TABLE>
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
INDIVIDUAL GRANTS(1)
--------------------------------------------
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR OPTION TERM (10 YEARS)(2)
-------------------------------------------
5% 10%
------------------- ---------------------
NUMBER OF % OF TOTAL EXERCISE OR EXPIRATION PER AGGREGATE PER AGGREGATE
SECURITIES OPTIONS/SARs BASE PRICE DATE SHARE VALUE SHARE VALUE
UNDERLYING GRANTED TO ($/SHARE) VALUE VALUE
OPTIONS/SARs EMPLOYEES IN
NAME GRANTED (#) FISCAL YEAR
- ------------------- ------------- ---------------- ----------- ---------- ------ --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James K. Murray, Jr 35,000 6.8 $ 20.69 12/16/07 $ 13.01 $455,350 $ 32.97 $1,153,950
Robert R. Parker 35,000 6.8 20.69 12/16/07 13.01 455,350 32.97 1,153,950
William L. Bennett 35,000 6.8 20.69 12/16/07 13.01 455,350 32.97 1,153,950
Timothy T. Clifford -- -- -- -- -- -- -- --
Gary L.Raeckers 20,000 3.9 20.69 12/16/07 13.01 260,200 32.97 659,400
<FN>
- ----------
(1) Consists of option grants under the Employee Option Plan. Each option
grant vests over a four-year period from the grant date, December 16,
1997, with 20% of the options becoming vested on the grant date and 20%
becoming vested on each successive anniversary of the grant date until the
options become fully vested on the fourth anniversary of the grant date.
(2) The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates, as set by the Securities and Exchange Commission,
and are not intended to forecast future price appreciation of the Common
Stock of the Company. The gains reflect a future value based upon growth
at these prescribed rates.
12
<PAGE>
The Company is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors. Options have value to the Named Officers and to all option
recipients only if the price of the Company's Common Stock advances beyond
the applicable option exercise price during the effective option period.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES DURING 1997 AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to stock options
exercised by each Named Officer during 1997 and the number and value of
unexercised stock options held by each Named Officer at year-end. The Company
does not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
--------------------------- ----------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James K. Murray, Jr. -0- -0- 70,000 115,000 $269,800 $328,050
Robert R. Parker -0- -0- 30,000 80,000 82,400 134,450
William L. Bennett -0- -0- 70,000 115,000 269,800 328,050
Timothy T. Clifford -0- -0- 30,000 -0- 82,400 -0-
Gary L. Raeckers -0- -0- 31,000 49,000 83,200 96,000
<FN>
- ----------
(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,
1997 ($21.00) and the exercise price of the options held by the applicable
Named Officer on such date.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
The Company is a party to an Employment and Noncompetition Agreement with
Robert R. Parker, President and Chief Operating Officer of the Company (the
"Parker Agreement"). The Parker Agreement, which has a three-year term ending
June 30, 1999, provides for Mr. Parker's performance of such duties as may be
assigned to him by the Company's Board of Directors, at an annual base salary of
not less than $200,000. The Parker Agreement provides that if the Company
terminates Mr. Parker's employment without cause or due to death or disability,
or if Mr. Parker terminates his employment due to a significant change in the
terms of his employment, as defined in the Agreement, then Mr. Parker generally
will be entitled to continuation of applicable benefit programs, subject to
specified conditions, and also will be entitled to receive the greater of (i)
his base salary to be paid during the remaining term of the Agreement, or (ii)
the total amount of his annual base salary. The Parker Agreement contains
certain noncompete and nonsolicitation restrictions that will survive
termination of Mr. Parker's employment with the Company.
The Company was a party to an Employment and Noncompetition Agreement with
Timothy T. Clifford, former Chief Operating Officer - Small Group Business of
the Company (the "Clifford Agreement"). Pursuant to the Clifford Agreement,
which had a two-year term ending June 30, 1998, the Company paid Mr. Clifford an
annual base salary of $200,000, a one-time signing bonus of $100,000, and a
performance bonus for 1996 of $125,000. The Clifford Agreement provided that if
the Company terminated Mr. Clifford's employment without cause or due to death
or disability, or if Mr. Clifford terminated his employment due to a significant
change in the terms of his employment, as defined in the Agreement, then Mr.
Clifford generally would have been entitled to receive certain post-termination
severance payments and benefits. The Agreement also provided that if the Company
terminated Mr. Clifford's employment with the Company for cause or Mr. Clifford
terminated his employment for a reason other than a significant change in the
terms of his employment, then Mr. Clifford would be required to repay to the
Company a pro rata portion of his signing bonus, based on the number of months
remaining in his contract term at the time of his termination. Mr. Clifford
terminated his employment with the Company in December 1997. Under the terms of
the Clifford Agreement, Mr. Clifford is not entitled to any severance or other
post-termination payments. Mr. Clifford
13
<PAGE>
continues to be subject to certain noncompete and nonsolicitation
restrictions which survived termination of his employment with the Company.
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 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.
COMPARISON OF 30 MONTH CUMULATIVE TOTAL RETURN*
AMONG HEALTHPLAN SERVICES CORPORATION, THE WILSHIRE 5000 INDEX
AND THE RUSSELL 2000-HEALTH CARE INDEX
CUMULATIVE TOTAL RETURN
--------------------------------
1995 1996 1997
---- ---- ----
HealthPlan Services Corporation 100 140 141
Wilshire 5000 100 139 182
Russell 2000-Health Care 100 122 134
* $100 INVESTED ON 6/30/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors, which is composed of
four outside Directors, acts on behalf of the Board of Directors in determining
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 and Employee
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, annual
incentives, and stock options, the Company considers generally available
information regarding compensation 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 aggregate amount of all awards made to
executive officers in prior years. 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.
1997 EXECUTIVE COMPENSATION
In 1997, the Compensation Committee reviewed a study comparing the
Company's executive compensation program to that of a group of comparison
companies. The Committee determined that while the Company's executive salaries
and incentive programs were generally competitive with comparison companies, the
long-term value of the stock option grants were significantly more competitive
than those of the comparison companies. The Committee used this data to reaffirm
its commitment to weighting executive compensation more heavily toward
incentives and stock options, rather than salaries. The Committee also approved
changes to the
15
<PAGE>
Company's annual incentive plan for 1998 that will change the basis for
executive incentives from simply earnings per share to a combination of
shareholder value and strategic and tactical results.
In 1997, the Compensation Committee awarded 510,000 stock options to 46
employees, including each of the Company's current executive officers. No shares
of restricted stock, stock appreciation rights, or cash incentive bonuses were
granted in 1997.
1997 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, 1997, the Compensation Committee awarded the
Chief Executive Officer an option to purchase 35,000 shares of Common Stock. No
cash incentive bonus was paid to the Chief Executive Officer or any other
executive officer of the Company for 1997. The amount of the option 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 1997 and those anticipated to be made by him in the future, and
the strong results achieved during a period in which the Company integrated two
major acquisitions.
Compensation Committee:
Arthur F. Weinbach, Chairman
Joseph A. Califano, Jr
James G. Niven
Vincent D. Farrell, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board is currently composed of four
directors: Joseph A. Califano, Jr., Vincent D. Farrell, Jr., James G. Niven, and
Arthur F. Weinbach, none of whom is or was an officer or employee of the Company
or its subsidiaries. Mr. Weinbach is President and Chief Executive Officer of
ADP; see "Certain Relationships and Related Transactions" below for a
description of transactions between the Company and ADP. Samuel F. Pryor, who
served on the Compensation Committee until May 1997, was an executive officer of
Noel until June 1997. Charles H. Guy, Jr., who served on the Compensation
Committee until May 1997, was an executive officer of the Predecessor Company
until 1986. James K. Murray, Jr., Chairman of the Board and Chief Executive
Officer of the Company, is a member of the Compensation Committee of the Board
of Directors of Noel. Joseph S. DiMartino, a member of the Company's Board of
Directors, was Chairman of the Board of Directors of Noel until November 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1996, Noel, 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. Upon
completion of this transaction on February 7, 1997, Noel and ADP owned
approximately 29% and 9%, respectively, of the Company's Common Stock. The ADP
Agreement generally provided that: (i) prior to December 31, 1997, ADP could not
enter into an agreement to acquire additional shares of the Company's Common
Stock, unless such acquisition was approved by the Company's Board of Directors,
or unless the Company entertained alternative offers; (ii) Noel could 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 could 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 intended to sell any interest in its
Common Stock; (ii) to grant ADP certain piggyback registration rights; and (iii)
to file a shelf registration statement with respect to ADP's shares within 15
days after the date of the ADP Agreement. In April 1997, the Company filed shelf
registration statements with the Securities and Exchange Commission covering the
shares of the Company's Common Stock held by Noel and ADP.
16
<PAGE>
In April 1997, in connection with a plan of complete liquidation and
dissolution, Noel began distribution of all of its remaining shares of the
Company's Common Stock.
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. Beginning in the last quarter of 1996, ADP and the Company
began a market test under which the Company distributed health insurance
products to small business owners through ADP's licensed sales force. In
addition, ADP has provided payroll and shareholder distribution services for the
Company since 1995. During 1997, the Company paid ADP approximately $110,000 for
these services.
Effective July 1, 1996, the Company acquired all of the issued and
outstanding stock of Consolidated Group, Inc., for approximately $62 million in
cash. A portion of the purchase price for this acquisition was placed in escrow
to cover certain pre-closing liabilities. In March 1998, in connection with the
settlement of all outstanding escrow claims, the escrow agent distributed
$2,571,799 to former Consolidated Group stockholders, including $276,569 to
James F. Carlin, who is a director of the Company, and $1,247,626 to Holyoke L.
Whitney, who was a director of the Company until July 1997.
At the closing of the Consolidated Group acquisition, the Company 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 the property, if the
Company contracts to sell the 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. Any profit in excess
of $150,000 will be divided equally between the Company 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 a director of the Consolidated Partnership's general
partner. The Consolidated Partnership owns the Company's Framingham,
Massachusetts facility and leased this property to Consolidated Group beginning
in 1987. Since July 1, 1996, when the Company purchased Consolidated Group, the
Company has paid $129,111 plus certain expenses per month under the terms of
this lease. As of February 1998, the Company and the Consolidated Partnership
entered into an amendment to the lease agreement. Pursuant to this amendment,
which clarified the parties' responsibilities with respect to future capital
repair requirements for the property, the Company agreed to contribute
approximately $263,000 to the cost of certain outstanding capital repair items.
James K. Murray III, who was Executive Vice President and Chief Financial
Officer of the Company until December 1997, is the son of James K. Murray, Jr.,
the Company's Chairman and Chief Executive Officer. Mr. Murray III became an
officer of Sykes HealthPlan Services, Inc., a corporation in which the Company
holds a 50% equity interest, in December 1997. There are no other family
relationships among the Company's directors and officers.
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 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. Vincent D. Farrell, Jr.
became a director of the Company on July 22, 1997. A Form 3 was filed with
respect to Mr. Farrell on October 23, 1997, after the Form 3 filing deadline.
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 1997 were
filed on a timely basis.
17
<PAGE>
FORM 10-K ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997, 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.
STOCKHOLDER LIST
Subject to Delaware law, a list of Company stockholders entitled to vote
at the Annual Meeting will be open to examination beginning on May 2, 1998 at
the offices of the Company at 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 1997 fiscal year and has been approved by the Board of Directors of the
Company to act in such capacity for the 1998 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 such representative desires to do so. 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 1999 MEETING
Stockholder proposals intended to be presented at the 1999 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 1, 1998 for inclusion in the proxy statement and the form of proxy
relating to the 1999 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 1999 Annual Meeting
date.
By Order of the Board of Directors,
Phillip S. Dingle
Corporate Secretary
<PAGE>
APPENDIX A
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 Sheraton Grand Hotel, 4860 Kennedy Boulevard, Tampa, Florida
33609, on Tuesday, May 12, 1998 at 9:00 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. 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]
<TABLE>
<CAPTION>
<S> <C> <C>
PROPOSAL 1: ELECTION OF DIRECTORS
[ ] 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>
<CAPTION>
<S> <C> <C> <C>
James K. Murray, Jr. Joseph S. DiMartino Nancy Kane, D.B.A Marc I. Perkins
William L. Bennett Vincent D. Farrell, Jr. David Nierenberg Trevor G. Smith
Joseph A. Califano, Jr. John R. Gunn James G. Niven Arthur F. Weinbach
James F. Carlin
</TABLE>
(SEE REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
The undersigned acknowledges receipt of the Notice of the Annual Meeting of
Stockholders and the Proxy Statement dated April 2, 1998 and ratifies all
actions that the proxies or either of them or their substitutes may lawfully
take or cause to be taken by virtue hereof and revokes all former proxies.
Dated:_____________________________________ , 1998
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.
