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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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 11, 1999
- --------------------------------------------------------------------------------
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 Wyndham Westshore, 4860 West Kennedy Boulevard, Tampa, Florida 33609
on Tuesday, May 11, 1999, at 11:00 a.m. local time, for the following purposes:
(i) to elect twelve (12) 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 15, 1999 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,
Tampa, Florida PHILLIP S. DINGLE, Secretary
April 5, 1999
- --------------------------------------------------------------------------------
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 11, 1999
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 Wyndham Westshore, 4860 West Kennedy Boulevard, Tampa, Florida
33609, on Tuesday, May 11, 1999 at 11:00 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 5, 1999.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its
Common Stock, $.01 par value per share, of which 13,867,822 shares were
outstanding as of March 15, 1999. Each share entitles its holder to one vote.
Only stockholders of record at the close of business on the record date, March
15, 1999, 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 15, 1999, 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)
each officer of the Company who is a Named Officer in the Summary Compensation
Table set forth below; 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.
1
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY MARCH 15, 1999 OF CLASS
- ------------------- --------------------- -------------- --------
<S> <C> <C> <C>
James K. Murray, Jr. Chairman of the Board and Chief 881,705 (1) 6.3%
3501 Frontage Road Executive Officer
Tampa, Florida 33607
William L. Bennett Vice Chairman of the Board 356,254 (2) 2.5%
3501 Frontage Road
Tampa, Florida 33607
Joseph A. Califano, Jr. Director 21,132 (3) *
152 W. 57th Street
12th Floor
New York, New York 10019
Joseph S. DiMartino Director 75,766 (3) *
22 E. 67th Street
New York, New York 10021
Vincent D. Farrell, Jr. Director 433,011 (4) 3.1%
45 Rockefeller Plaza
33rd Floor
New York, New York 10111
John R. Gunn Director 21,132 (3) *
1275 York Avenue
New York, New York 10021
Nancy M. Kane, D.B.A. Director 20,682 (5) *
677 Huntington Avenue
Boston, Massachusetts 02115
David Nierenberg Director 53,617 (6) *
19605 N. E. 8th Street
Camas, Washington 98607
James G. Niven Director 25,662 (3) *
1334 York Avenue
New York, New York 10021
Robert R. Parker President, Chief Operating 328,297 (7) 2.4%
3501 Frontage Road Officer, and Director
Tampa, Florida 33607
Marc I. Perkins Director 4,920 (8) *
One Winnenden Road
Norwich, Connecticut 06360
Trevor G. Smith Director 204,220 (9) 1.5%
777 Harbor Island Blvd.
Suite 760
Tampa, Florida 33602
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY MARCH 15, 1999 OF CLASS
- ------------------- --------------------- -------------- --------
<S> <C> <C> <C>
Arthur F. Weinbach Director 7,482 (10) *
One ADP Boulevard
Roseland, New Jersey 07068
Steven V. Hulslander Executive Vice President and 81,678 (11) *
3501 Frontage Road Chief Information Officer
Tampa, Florida 33607
George E. Lucco Executive Vice President 76,500 (12) *
3401 Morse Crossing
Columbus, Ohio 43219
Gary L. Raeckers Executive Vice President 92,822 (13) *
3501 Frontage Road
Tampa, Florida 33607
Automatic Data Processing, Inc. -- 1,320,000 (10) 9.5%
One ADP Boulevard
Roseland, New Jersey 07068
The Goldman Sachs Group, L.P. -- 1,449,400 (14) 10.5%
and Goldman, Sachs & Company
85 Broad Street
New York, New York 10004
DePrince, Race & Zollo, Inc. -- 2,042,200 (15) 14.7%
201 S. Orange Avenue, Suite 850
Orlando, Florida 32801
All Directors and Executive Officers as -- 2,648,206 (16) 18.4%
a group (includes 17 persons)
</TABLE>
- ------------------------------------------
* Less than one percent.
(1) Does not include 160,000 shares held by a private entity in which Mr.
Murray owns securities; Mr. Murray is not a controlling shareholder of
such entity and he does not have or share investment control over the
entity's portfolio. Includes 13,156 shares held by a private company
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 company. 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 with respect to which Mr. Murray shares investment and
voting power; and 119,000 shares issuable upon exercise of options that
are exercisable within 60 days of March 15, 1999.
(2) Includes 119,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999. Also includes 3,609
shares held by Mr. Bennett's children, as to which Mr. Bennett
disclaims beneficial ownership.
(3) Includes 9,600 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999.
3
<PAGE>
(4) Includes 4,800 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999. Also includes 426,512
shares beneficially owned by Spears, Benzak, Salomon & Farrell, Inc., a
division of Key Asset Management, Inc. ("Spears Benzak"), with respect
to which shares Mr. Farrell disclaims beneficial ownership. Mr. Farrell
is Managing Director and Chief Investment Officer of Spears Benzak.
(5) Includes 9,600 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999. Also includes 450 shares
held by Dr. Kane as custodian for her minor child.
(6) Includes 9,600 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999. Also includes 43,735
shares held by the Nierenberg Family 1993 Living Trust, with respect to
which Mr. Nierenberg has investment and voting power as trustee.
(7) Includes 59,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999.
(8) Includes 4,800 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999.
(9) Includes 9,600 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999. 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 121,420 shares
held in trust for the benefit of Mr. Smith, with respect to which Mr.
Smith shares investment and voting power.
(10) Includes 7,200 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999. Does not include the
proportionate share ownership of the Company represented by 371,820
shares of Automatic Data Processing, Inc. ("ADP") common stock that are
beneficially owned by Mr. Weinbach or 736,000 shares of ADP common
stock issuable to Mr. Weinbach upon exercise of options that are
exercisable within 60 days of March 15, 1999. Also does not include
1,320,000 shares held by ADP. Mr. Weinbach is the Chairman 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 40,500 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999.
(12) Includes 39,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999.
(13) Includes 53,000 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999.
(14) The information set forth in the table and this footnote regarding
shares beneficially owned by Goldman, Sachs & Co. ("Goldman Sachs") as
of March 15, 1999 is based on information provided to the Company by
Goldman Sachs. As of December 31, 1998, Goldman Sachs beneficially
owned 1,449,400 shares of the Company's Common Stock. These shares are
held for the benefit of investment advisory accounts and discretionary
customer accounts. Goldman Sachs and The Goldman Sachs Group, L.P. ("GS
Group"), the parent holding company for Goldman Sachs, have shared
voting and investment power with respect to these shares of the
Company's Common Stock. Goldman Sachs and GS Group and their affiliates
disclaim beneficial ownership of shares held for the benefit of
investment advisory accounts and discretionary customer accounts.
Included in the 1,449,400 shares are 1,040,600 shares of Common Stock
which are beneficially owned by Goldman Sachs Trust on behalf of
Goldman Sachs Small Cap Value Fund (the "Fund"), for which Goldman
Sachs Asset Management, a separate operating division of Goldman Sachs,
as Investment Adviser, has voting and investment power.
4
<PAGE>
(15) The information set forth in the table and this footnote regarding
shares beneficially owned by DePrince, Race & Zollo, Inc. ("DePrince
Race") as of March 15, 1999 is based on information provided to the
Company by DePrince Race.
(16) Includes 512,300 shares issuable upon exercise of options that are
exercisable within 60 days of March 15, 1999.
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, 12 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. Trevor G. Smith has declined to stand for
reelection 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 12.
Each current director other than Mr. Smith is a nominee for election to
the Board at the 1999 Annual Meeting. Each of these 12 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 12
nominees to serve as a director. If any of the nominees is unable to serve as a
director, each 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 each current director of the Company who
is a nominee for election has been furnished by the director.
<TABLE>
<CAPTION>
NAME AND AGE OCCUPATION/BACKGROUND
- ------------ ---------------------
<S> <C>
James K. Murray, Jr. - 63 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 from
December 1994 to 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.
William L. Bennett - 49 Vice Chairman of the Board since January 1998,
Chairman of the Board from December 1994 to 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; and
Sylvan, Inc., a company that produces mushroom spawn
and fresh mushrooms.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE OCCUPATION/BACKGROUND
- ------------ ---------------------
<S> <C>
Joseph A. Califano, Jr. - 67 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.;
Kmart Corporation; and Warnaco, Inc. Mr. Califano is
a governor of the New York 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.
Joseph S. DiMartino - 55 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 to December 1994,
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. He also was Chairman of the
Board of Directors of Noel from February 1995 to
November 1997. He is a director of The Muscular
Dystrophy Association, Carlyle Industries, Inc.,
Century Business Services, Inc., Career Blazers, Inc.
(formerly Staffing Resources, Inc.), and Noel.
Vincent D. Farrell, Jr. - 52 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 - 56 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. - 49 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.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE OCCUPATION/BACKGROUND
- ------------ ---------------------
<S> <C>
David Nierenberg - 46 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 - 53 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;
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.
Robert R. Parker - 66 Director of the Company since July 1998. 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 to December 1997. Harrington became a wholly
owned subsidiary of the Company in July 1996.
Marc I. Perkins - 53 Director of the Company since October 1997. Since
October 1998, Mr. Perkins has been the Vice Chairman
and Chief Executive Officer of Gunther International,
a manufacturer of high speed inserting equipment.
From 1992 until December 1998, Mr. Perkins was
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 years 1990
through 1998, Barron's magazine included Mr. Perkins
as a member of Barron's Round Table. He has appeared
on CNBC and is a frequent lecturer at numerous
organizations and universities.
Arthur F. Weinbach - 56 Director of the Company since February 1997. Since
1998, Mr. Weinbach has been Chairman and Chief
Executive Officer of Automatic Data Processing, Inc.
("ADP"). From 1996 to 1998, Mr. Weinbach was
President and Chief Executive Officer of ADP.
Previously, he served as President and Chief
Operating Officer of ADP from 1994 to 1996 and as
Executive Vice President of ADP from 1992 to 1994.
Mr. Weinbach serves on the Board of Directors of ADP.
</TABLE>
7
<PAGE>
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The 12 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 12
nominees described above.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
DIRECTORS' COMPENSATION
As officers of the Company, Mr. Murray, Mr. Bennett, and Mr. Parker
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
Directors Equity 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 reelected
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 seven meetings during
1998. 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. Each incumbent director attended at least
75 percent of the total number of 1998 meetings of the Board and of the
committees on which he or she served.
8
<PAGE>
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 five meetings during 1998.
The Audit Committee, which is composed of John R. Gunn, 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 two meetings during 1998.
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 one meeting during 1998.
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
four meetings during 1998.
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 1998.
The Operations Committee, which is composed of 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 1998.
See "Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Transactions" below for additional
information concerning directors.
9
<PAGE>
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.
<TABLE>
<CAPTION>
NAME AND AGE POSITION, PRINCIPAL OCCUPATION, AND OTHER DIRECTORSHIPS
- ------------ -------------------------------------------------------
<S> <C>
James K. Murray, Jr. - 63 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
from December 1994 to 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.
William L. Bennett - 49 Vice Chairman of the Board since January 1998, Chairman of the Board
from December 1994 to 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; and Sylvan, Inc., a company that
produces mushroom spawn and fresh mushrooms.
Robert R. Parker - 66 Director of the Company since July 1998. 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 from 1986 to
December 1997. Harrington became a wholly owned subsidiary of the
Company in July 1996.
Jeffery W. Bak - 33 Executive Vice President - Sales, Marketing, and Business Development
of the Company since January 1999. From January 1997 to December 1998,
Mr. Bak was Senior Vice President - Sales of the Company, and from
January 1995 to December 1996 Mr. Bak served as Vice President of the
Company. From November 1992 to December 1994, Mr. Bak was a reinsurance
broker with Peglar & Associates in Stamford, Connecticut.
Phillip S. Dingle - 37 Executive Vice President and Chief Financial Officer of the Company
since January 1999. From August 1996 to December 1998, Mr. Dingle was
Senior Vice President and Chief Counsel of the Company. Prior to August
1996, Mr. Dingle was a partner with the law firm of Hill, Ward &
Henderson in Tampa, Florida, having joined the firm in May 1990,
specializing in commercial trial law and general business matters. Mr.
Dingle commenced his legal career at the law firm of Holland & Knight
in 1988.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE POSITION, PRINCIPAL OCCUPATION, AND OTHER DIRECTORSHIPS
- ------------ -------------------------------------------------------
<S> <C>
George E. Lucco - 51 Executive Vice President 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.
Gary L. Raeckers - 57 Executive Vice President 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.
</TABLE>
11
<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, 1998 to: (i) the Company's Chief Executive Officer; (ii) each of the
Company's four other most highly compensated executive officers whose salary and
bonus exceeded $100,000 during 1998 and who was serving as an executive officer
at the end of 1998; and (iii) an individual for whom disclosure would have been
provided but for the fact that he was not serving as an executive officer at the
end of 1998 (collectively, the "Named Officers"). The table also sets forth
information regarding paid or accrued compensation to each Named Officer for the
two preceding fiscal years if such individual was then employed by the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES ALL
NAME AND UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#)(1) COMPENSATION($)(2)
------------------ ---- --------- -------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
James K. Murray, Jr. 1998 $ 364,000 $ 82,810 -- $ 1,580
Chairman of the Board 1997 350,000 -- 35,000 2,297
and Chief Executive 1996 357,693 -- 100,000 --
Officer
Robert R. Parker 1998 230,100 55,200 -- 1,129
President and Chief 1997 202,963 -- 35,000 2,297
Operating Officer 1996 101,482 (3) -- 75,000 4,500
William L. Bennett 1998 208,000 49,920 -- 1,342
Vice Chairman 1997 198,387 -- 35,000 2,000
of the Board 1996 143,077 -- 100,000 --
Gary L. Raeckers 1998 182,000 35,000 -- 1,723
Executive Vice 1997 174,865 -- 20,000 1,615
President 1996 175,385 -- 25,000 --
Steven V. Hulslander 1998 167,000 40,080 -- 956
Executive Vice President 1997 159,731 -- 20,000 3,195
and Chief Information 1996 154,328 -- 17,500 4,630
Officer
George E. Lucco 1998 166,400 37,440 -- 1,405
Executive Vice 1997 160,000 30,000 20,000 3,185
President 1996 154,328 -- 25,000 4,630
</TABLE>
- -----------------------------
(1) Refers to incentive stock options granted during 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
12
<PAGE>
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, 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.
(2) 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 all employees with life
insurance benefits that are generally equal to two years base salary,
subject to certain adjustments.
(3) 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 "Parker Employment Agreement"
below.
AGGREGATED OPTION EXERCISES DURING 1998 AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to stock options
exercised by each Named Officer during 1998 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
UNDERLYING UNEXERCISED
OPTIONS AT
FISCAL YEAR-END (#)
-------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
James K. Murray, Jr. -0- -0- 114,000 71,000
Robert R. Parker -0- -0- 59,000 51,000
William L. Bennett -0- -0- 114,000 71,000
Gary L. Raeckers -0- -0- 51,000 29,000
Steven V. Hulslander -0- -0- 38,500 24,000
George E. Lucco 3,000 29,250 37,000 27,000
</TABLE>
- -----------------------------------
PARKER EMPLOYMENT AGREEMENT
The Company is a party to an Employment and Noncompetition Agreement
with Robert R. Parker, President and Chief Operating Officer of the Company (the
"Employment Agreement"). The Employment 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 Employment Agreement provides that, prior
to termination of the Employment Agreement, if the Company terminates Mr.
Parker's employment without cause or due to death or disability, or Mr. Parker
terminates his employment due to a significant change in the terms of his
employment, then Mr. Parker generally would be entitled to continuation of
applicable benefit programs, subject to specified conditions. He also would be
entitled to receive the total amount of his annual base salary. The Employment
Agreement contains certain noncompete and nonsolicitation restrictions that
survive termination of Mr. Parker's employment with the Company.
13
<PAGE>
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).
The Company cannot predict whether its 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.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
6/95 9/95 12/95 3/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HPS Common Stock 100 135 165 151 152 145 140 112 126 141 141 177 119 73 80
- ------------------------------------------------------------------------------------------------------------------------
Wilshire 5000 100 109 114 121 126 130 139 140 163 179 182 206 210 185 225
- ------------------------------------------------------------------------------------------------------------------------
Russell 2000 100 116 128 134 134 127 122 112 127 145 134 146 131 109 139
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
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, include three principal elements: base salary, cash bonus,
and incentive equity awards. The Company's objective is to emphasize 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. The
Company also considers generally available information regarding compensation
prevailing in the industry, but does not utilize any particular indices.
The Company's incentive equity compensation includes 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 price 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 each executive
officer, including the Chief Executive Officer, may be paid a cash bonus at the
end of each fiscal year. The bonuses are dependent primarily on the Company's
financial performance and achievement of strategic corporate objectives
established by the Company at the start of each fiscal year. Financial
performance objectives include targets for earnings, stock price, and dividends.
1998 EXECUTIVE COMPENSATION
In January 1999, the Compensation Committee awarded 471,500 stock
options to 41 employees, including each of the Company's current executive
officers. During 1998, the Company awarded 192,000 options to 15 new or promoted
employees. No shares of restricted stock or stock appreciation rights were
granted for 1998. Each executive officer, including the Chief Executive Officer,
earned a portion of his potential bonus amount for 1998.
15
<PAGE>
1998 CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's compensation is determined generally in
accordance with the factors described above applicable to all executive
officers. In January 1999, the Compensation Committee awarded the Chief
Executive Officer an option to purchase 35,000 shares of Common Stock. The
amount of the option grant reflects the senior position held by the Chief
Executive Officer within the Company, the contributions made by the Chief
Executive Officer to the Company in 1998, and those anticipated to be made by
him in the future. In addition, the Compensation Committee awarded the Chief
Executive Officer a bonus of $82,810 for 1998. The bonus amount was based on the
Chief Executive Officer's achievement of certain predetermined corporate
objectives during 1998.
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 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.
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, ADP owned approximately 9%
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. From October 1996 until August
1998, ADP and the Company implemented 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 1998, the Company paid
ADP approximately $195,000 for these services.
Effective July 1, 1996, the Company acquired all of the issued and
outstanding stock of Consolidated Group, Inc. ("Consolidated Group"), 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 was a director of the
Company from July 1996 to February 1999.
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 contracted to sell the property within forty-two months after the
closing date of the Consolidated Group acquisition, then the Company was
required to pay a predetermined portion of any sale profits to certain former
stockholders of Consolidated Group, including Mr. Carlin. In the second quarter
of 1998, the Company sold the Southborough facility. In accordance with its
agreement with Cordaville LLC and the former Consolidated Group stockholders,
the Company paid Mr. Carlin $29,229 in connection with this sale.
16
<PAGE>
Mr. Carlin is a limited partner in Consolidated Group Service Company
Limited Partnership (the "Consolidated Partnership"), and is a shareholder and a
director of the Consolidated Partnership's general partner. The Consolidated
Partnership owns the Company's former Framingham, Massachusetts facility and
leased this property to Consolidated Group beginning in 1987. During 1998, the
Company paid the Consolidated Partnership $1,761,511 plus certain expenses under
the 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 contributed approximately
$262,500 to the cost of certain outstanding capital repair items. In November
1998, in connection with the closing of the Company's Framingham operations, the
Consolidated Partnership and the Company entered into an agreement to terminate
the lease, which had a term expiring in May 2003. In connection with this
termination, the Company agreed to pay up to approximately $2.2 million to the
Consolidated Partnership over a three-year period to cover certain rent
differential, tenant improvement, and other costs related to the termination and
to leasing the facility to a new tenant.
There are no family relationships among the Company's current directors
and officers. James K. Murray III, who was Executive Vice President and Chief
Financial Officer of the Company from October 1995 to December 1997, is the son
of James K. Murray, Jr., the Company's Chairman and Chief Executive Officer. In
December 1997, Mr. Murray III became an officer of Sykes HealthPlan Services,
Inc. ("SHPS"), a corporation in which the Company held a 50% equity interest. In
October 1998, in connection with the Company's sale of its interest in SHPS and
the termination of Mr. Murray III's employment with SHPS, the Compensation
Committee of the Board of Directors authorized and directed the Company to pay
Mr. Murray III $250,000 in exchange for a two-year noncompetition agreement,
relinquishment of outstanding stock options, and other consideration. In
authorizing this arrangement, the Compensation Committee reviewed and evaluated
the Company's successful transaction involving SHPS and the value added by Mr.
Murray III in connection therewith, among other factors. Mr. Murray, Jr. recused
himself from any participation in Compensation Committee deliberations regarding
this arrangement.
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. On February 23, 1998,
Steven V. Hulslander ceased being a "Reporting Person" for purposes of Section
16(a). A Form 4 was filed with respect to this change in status on May 10, 1998,
after the Form 4 filing deadline. Marc I. Perkins, a director of the Company,
acquired 120 shares of the Company's Common Stock on May 28, 1998. This
transaction was reported on a Form 5 filed on February 15, 1999, after the
reporting 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 1998
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, 1998, 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.
17
<PAGE>
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 April 30,
1999 at the offices of the Company at 3501 Frontage Road, Tampa, Florida 33607.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, independent certified public accountants,
was engaged to audit the financial statements of the Company and its
subsidiaries for the 1998 fiscal year and has been approved by the Board of
Directors of the Company to act in such capacity for the 1999 fiscal year. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
Annual Meeting and to be available to respond to appropriate questions. The
PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers 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, including the election of any person to the
Board of Directors where a nominee named in this Proxy Statement is unable to
serve for good cause or will not serve, any matter with respect to which the
Company has not received notice as February 17, 1999, and matters incident to
the conduct of the meeting, the persons acting under the enclosed form of proxy
will be authorized to vote thereunder in accordance with their best judgment.
PROPOSALS FOR THE 2000 MEETING
To be considered for inclusion in the proxy statement and the form of
proxy for the 2000 Annual Meeting, stockholder proposals must be received by
the Company at its principal executive offices by December 7, 1999. 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 2000 Annual Meeting date.
For any stockholder proposal that is not submitted for inclusion in the
2000 Proxy Statement, but is instead sought to be presented directly at the 2000
Annual Meeting, management will be able to vote proxies in its discretion if the
Company: (i) does not receive notice of the proposal prior to the close of
business on February 21, 2000; or (ii) receives notice of the proposal before
the close of business on February 21, 2000 and advises stockholders in the 2000
Proxy Statement about the nature of the matter and how management intends to
vote on such matter.
Stockholder proposals should be sent certified mail, return receipt
requested, to the attention of the Corporate Secretary at the Company's
principal executive offices at 3501 Frontage Road, Tampa, Florida 33607.
By Order of the Board of Directors,
Phillip S. Dingle
Corporate Secretary
18
<PAGE>
HEALTHPLAN SERVICES
CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
WYNDHAM WESTSHORE
4860 WEST KENNEDY BOULEVARD
TAMPA, FLORIDA
MAY 11, 1999
11:00 A.M.
- FOLD AND DETACH HERE -
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 Wyndham Westshore, 4860 West Kennedy Boulevard, Tampa,
Florida 33609, on Tuesday, May 11, 1999 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. IN THEIR DISCRETION THE
DESIGNEES 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, ANY MATTER WITH RESPECT TO WHICH THE COMPANY HAS
NOT RECEIVED NOTICE, AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
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 M. Kane, D.B.A Robert R. Parker
William L. Bennett Vincent D. Farrell, Jr. David Nierenberg Marc I. Perkins
Joseph A. Califano, Jr. John R. Gunn James G. Niven Arthur F. Weinbach
</TABLE>
(SEE REVERSE SIDE)
<PAGE>
- FOLD AND DETACH HERE -
The undersigned acknowledges receipt of the Notice of the Annual Meeting of
Stockholders and the Proxy Statement dated April 5, 1999 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:__________________________, 1999
Signature:____________________________
Signature:____________________________
NOTE: Please sign exactly as your
name appears hereon. Joint owners
should each sign. When signing as
attorney or for an estate, trust,
or corporation, please give full
title. Please return the signed
card in the enclosed envelope.
