SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
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[ ] 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 /section/240.14a-11(c) or
/section/240.14a-12
HEALTHPLAN SERVICES CORPORATION
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(Name of Registrant as Specified in its Charter)
HEALTHPLAN SERVICES CORPORATION
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(Name of Person(s) Filing Proxy Statement )
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<PAGE>
[LETTERHEAD]
September 8, 2000
My Fellow Shareholders:
It is my pleasure and privilege to address you for the first time as
President. With a flurry of recent activity, we have much to discuss.
As today's marketplace for insurance, health care, and technology
rapidly changes, so will your Company. Just a few short months ago, we announced
the sale of our unemployment compensation and workers' compensation businesses.
More recently, we entered into an agreement to divest our self-funded and stop
loss units. Based on these transactions alone, we expect to reduce bank debt by
between $30 and $35 million. More work lies ahead, and our agenda is aggressive.
This reorganization is vital to our success. We believe it also creates unique
opportunities for your Company.
To be clear, the business you know today as National Preferred Provider
Network, or NPPN, is our crown jewel! NPPN's operating profits have more than
doubled during the past year, and its internal growth rate has averaged more
than 50% in the last two years. Our goal is to maintain that growth rate through
2002, exclusive of other available growth opportunities.
More importantly, we have created robust technology and a claims
repricing engine that distinguish NPPN from the competition. Today, NPPN offers
PPO, network management, network data management, and other e-commerce services
to customers, and we process more than 25% of NPPN's transactions over the
Internet. Our mission is to exploit our technology to create bottom-line
solutions for healthcare payers and providers, and thereby become the industry
leader in enabling our customers to better manage their medical care costs.
We believe this leadership position -- together with our dedicated and
loyal employees, continued growth prospects, and further reductions in our bank
debt -- will cultivate renewed prosperity for the "new HPS" and our
shareholders.
Finally, and on behalf of the entire Company, I would like to extend my
warmest appreciation to Jack Murray, Bill Bennett, and Bob Parker, all of whom
recently retired after committing many years of dedicated service to HPS. They
will continue to serve on the Company's Board of Directors.
Thank you for being patient, and stay tuned for further events.
Sincerely,
/s/ PHILLIP S. DINGLE
---------------------
Phillip S. Dingle
President
<PAGE>
HEALTHPLAN SERVICES CORPORATION
3501 Frontage Road
Tampa, Florida 33607
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
OCTOBER 10, 2000
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To the Stockholders of
HEALTHPLAN SERVICES CORPORATION
We are pleased to invite you to the Annual Meeting of Stockholders of
HealthPlan Services Corporation, a Delaware corporation (the "Company"), which
will be held at the Marriott Westshore, 1001 North Westshore Boulevard, Tampa,
Florida 33607 on Tuesday, October 10, 2000, at 11:00 a.m. local time, for the
following purposes:
(i) to elect eleven (11) directors, each to serve until
the next annual election of directors and until his
or her successor is duly elected and qualified, or
until his or her earlier resignation or removal;
(ii) to increase the number of shares of Common Stock
available for issuance under the 1995 HealthPlan
Services Corporation Directors Stock Option Plan; and
(iii) 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 August 16, 2000 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
September 8, 2000 President and Chief Operating Officer
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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 OCTOBER 10, 2000
PROXY STATEMENT
SOLICITATION
This Proxy Statement is provided 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 Marriott Westshore, 1001 North Westshore Boulevard, Tampa, Florida
33607, on Tuesday, October 10, 2000 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.
We expect that this Proxy Statement and accompanying notice and proxy
card will be mailed to the stockholders of the Company on or about September 8,
2000.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its
Common Stock, $.01 par value per share, of which 13,683,456 shares were
outstanding as of August 16, 2000. Each share entitles its holder to one vote.
Only stockholders of record at the close of business on the record date, August
16, 2000, 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 August 16, 2000,
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
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indicated, each stockholder named below has sole investment and voting power
with respect to shares beneficially owned by such stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY AUGUST 16, 2000 OF CLASS
------------------- --------------------- --------------- --------
<S> <C> <C> <C>
James K. Murray, Jr. Chairman of the Board and 766,041 (1) 5.6%
Suite 760 Director
777 South Harbour Island Blvd.
Tampa, Florida 33602
William L. Bennett Vice Chairman of the Board 244,865 (2) 1.8%
149 Common Street and Director
Dedham, Massachusetts 02026
Joseph A. Califano, Jr. Director 28,332 (3) *
633 Third Avenue
19th Floor
New York, New York 10017-6706
Joseph S. DiMartino Director 75,469 (3) *
22 E. 67th Street
New York, New York 10021
Vincent D. Farrell, Jr. Director 11,299 (4) *
45 Rockefeller Plaza
New York, New York 10111
John R. Gunn Director 28,332 (3) *
1275 York Avenue
New York, New York 10021
Nancy M. Kane, D.B.A. Director 27,882 (5) *
677 Huntington Avenue
Boston, Massachusetts 02115
James G. Niven Director 32,862 (3) *
1334 York Avenue
New York, New York 10021
Robert R. Parker Director 271,697 (6) 2.0%
218 S. Main
Quanah, Texas 79252
Arthur F. Weinbach Director 9,882 (7) *
One ADP Boulevard
Roseland, New Jersey 07068
</TABLE>
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<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED AS OF PERCENT
OF BENEFICIAL OWNER POSITION WITH COMPANY AUGUST 16, 2000 OF CLASS
------------------- --------------------- --------------- --------
<S> <C> <C> <C>
John D. Race Director Nominee 3,653,300 (8) 26.7%
201 S. Orange Avenue, Suite 850
Orlando, Florida 32801
Jeffery W. Bak Executive Vice President 38,960 (9) *
3501 Frontage Road
Tampa, Florida 33607
Phillip S. Dingle President and Chief Operating 62,964 (10) *
3501 Frontage Road Officer
Tampa, Florida 33607
Automatic Data Processing, Inc. -- 1,320,000 9.6%
One ADP Boulevard
Roseland, New Jersey 07068
DePrince, Race & Zollo, Inc. -- 3,511,900 (11) 25.7%
201 S. Orange Avenue, Suite 850
Orlando, Florida 32801
Dimensional Fund Advisors Inc. -- 1,116,305 (12) 8.2%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
All Directors and Executive Officers as -- 1,715,085 (13) 12.3%
a group (includes 14 persons)
</TABLE>
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* 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 2,400 shares issuable upon exercise of options that
are exercisable within 60 days of August 16, 2000.
(2) Includes 2,400 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000. Also includes 3,609
shares held by Mr. Bennett's children, as to which shares Mr. Bennett
disclaims beneficial ownership.
(3) Includes 16,800 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000.
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(4) Includes 9,600 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000.
(5) Includes 16,800 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000. Also includes 450 shares
held by Dr. Kane as custodian for her minor child.
(6) Includes 2,400 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000.
(7) Includes 9,600 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000. Does not include the
proportionate share ownership of the Company represented by 461,911
shares of Automatic Data Processing, Inc. ("ADP") common stock that are
beneficially owned by Mr. Weinbach or 504,000 shares of ADP common
stock issuable to Mr. Weinbach upon exercise of options that are
exercisable within 60 days of August 16, 2000. 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.
(8) Includes 3,511,900 shares beneficially owned by DePrince, Race & Zollo,
Inc. ("DePrince Race"), with respect to which shares Mr. Race disclaims
beneficial ownership. Mr. Race is a Partner and Portfolio Manager of
DePrince Race. Also includes 109,900 shares held in joint tenancy with
Mr. Race's wife; 8,000 shares held in a trust for the benefit of a
family member, with respect to which Mr. Race has investment and voting
power; and 10,000 shares held by a family member, as to which shares
Mr. Race disclaims beneficial ownership.
(9) Includes 36,200 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000.
(10) Includes 49,000 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000.
(11) The information set forth in the table and this footnote regarding
shares beneficially owned by DePrince Race as of August 16, 2000 is
based on information provided to the Company by DePrince Race.
(12) The information set forth in the table and this footnote regarding
shares beneficially owned by Dimensional Fund Advisors Inc.
("Dimensional") as of August 16, 2000 is based on information provided
to the Company by Dimensional.
(13) Includes 269,600 shares issuable upon exercise of options that are
exercisable within 60 days of August 16, 2000.
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, 11 directors will be elected to the Board of
Directors of the Company, each to serve until the next annual election of
directors and until a successor is duly elected and qualified, or until the
director's earlier resignation or removal.
With the exception John D. Race, all the nominees listed below
currently serve on the Board. Each nominee for election to the Board at the 2000
Annual Meeting 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 11 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
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number of nominees. The information set forth below regarding each nominee for
election has been furnished by the nominee.
<TABLE>
<CAPTION>
NAME AND AGE OCCUPATION/BACKGROUND
------------ ---------------------
<S> <C>
James K. Murray, Jr. - 65 Chairman of the Board of the Company since January 1998, and a director since
October 1994. Mr. Murray was Chief Executive Officer from December 1994 to May
2000, also serving as President from December 1994 to December 1997 and from
January 2000 to May 2000. 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. Mr. Murray
co-founded the predecessor to the Company in 1970.
William L. Bennett - 50 Vice Chairman of the Board of the Company since January 1998, Chairman of the
Board of the Company 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 Group, Inc. ("Noel"), a publicly
traded company that held controlling interests in small-to-medium size
operating companies. 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.
Joseph A. Califano, Jr. - 69 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 Automatic Data Processing, Inc.;
Kmart Corporation; True North Communications Inc.; and Warnaco, Inc.
Mr. Califano is a governor of the New York Presbyterian Hospital and a trustee
of The Century Foundation, 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 - 56 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 Noel from February 1995 to
November 1997.
</TABLE>
5
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<TABLE>
<CAPTION>
NAME AND AGE OCCUPATION/BACKGROUND
------------ ---------------------
<S> <C>
Vincent D. Farrell, Jr. - 53 Director of the Company since July 1997. Since 1982, Mr. Farrell has been
Managing Director and Chief Investment Officer for Spears, Benzak, Salomon &
Farrell, Inc., 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 - 57 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 the following not-for-profit entities: Empire Blue Cross and Blue
Shield, The Greater New York Hospital Association, and the Devereaux Foundation.
Nancy M. Kane, D.B.A. - 50 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.
James G. Niven - 54 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 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 - 67 Director of the Company since July 1998. Mr. Parker served as President and
Chief Operating Officer of the Company from January 1998 to January 2000, and
as Executive Vice President and Chief Operating Officer - Large Group Business
of the Company from July 1996 to December 1997. Mr. Parker was 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.
John D. Race - 45 Mr. Race is Co-Founder, Partner, and Portfolio Manager of DePrince, Race &
Zollo, Inc. ("DePrince Race"), an investment advisory firm with approximately
$1.5 billion in assets under management. Mr. Race is responsible for the
administrative and financial affairs of the firm, including oversight of the
portfolio management, research, and trading functions as they relate to the
firm's small-cap value discipline. Prior to forming DePrince Race in April
1995, Mr. Race was a Director, Partner, and President of SunBank Capital
Management, N.A., an investment subsidiary of SunTrust Banks, Inc. with $14
billion in assets under management.
</TABLE>
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<TABLE>
<CAPTION>
NAME AND AGE OCCUPATION/BACKGROUND
------------ ---------------------
<S> <C>
Arthur F. Weinbach - 57 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. Mr. Weinbach is a director of ADP and of
Schering-Plough Corporation, a company engaged in the discovery, development,
manufacturing, and marketing of pharmaceutical and health care products.
</TABLE>
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The 11 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 11
nominees described above.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
DIRECTOR COMPENSATION
We reimburse all directors for out-of-pocket expenses, including travel
expenses, related to attendance at Board and committee meetings. Directors who
are also Company employees receive no additional compensation for their service
on the Board and Board committees. Each director who is not an employee is
entitled to a quarterly retainer fee of $1,250 and an additional fee of $500 for
each Board meeting and committee meeting attended.
Pursuant to the HealthPlan Services Corporation 1997 Directors Equity
Plan, each non-employee director may receive Common Stock 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 our 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
Board of Directors has approved an increase in the number of options issuable
under the Plan, subject to stockholder approval at the Annual Meeting. A
description of the terms of the Plan is included at "Proposal 2: Approval of the
Amendment to the 1995 HealthPlan Services Corporation Directors Stock Option
Plan."
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board conducts its business through meetings of the Board and its
committees. The Board held seven meetings during 1999. In accordance with the
By-laws of the Company, the Board 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, except for James K. Niven, attended at least 75
percent of the total number of 1999 meetings of the Board and of the committees
on which he or she served. Mr. Niven attended 7 of 10 meetings of the Board and
of the committees on which he served.
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<PAGE>
The Executive Committee, which exercises, to the fullest extent
permitted by applicable law, all of the powers and authority of the Board 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, Vincent D. Farrell, Jr., and Arthur F. Weinbach. The Executive
Committee held five meetings during 1999.
The Audit Committee, which is composed of John R. Gunn, James G. Niven,
and Arthur F. Weinbach, operates pursuant to a Charter approved by the Board, a
copy of which is attached to this Proxy Statement as Appendix A. The Audit
Committee has authority to recommend to the Board 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. All members of the Audit Committee are independent
directors as defined by the New York Stock Exchange rules. The Audit Committee
held four meetings during 1999.
The Strategic Planning Committee, which is composed of William L.
Bennett, John R. Gunn, and Nancy M. Kane, D.B.A., has authority to retain, at
the expense of the Company, consultants and other advisors and to advise and
consult directly with the Board and the officers of the Company on long-term
planning matters and to recommend such actions to the Board as the Committee
deems appropriate. The Strategic Planning Committee held one meeting during
1999.
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 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 three meetings during 1999.
The Regulatory Affairs Committee, which is composed of Joseph A.
Califano, Jr., Nancy M. Kane, D.B.A., and James G. Niven, has authority to
retain, at the expense of the Company, consultants and other advisors and to
advise and consult directly with the Board 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 as the Committee deems appropriate. The Regulatory Affairs
Committee did not meet during 1999.
The Operations Committee, which is composed of John R. Gunn and Joseph
S. DiMartino, 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 one meeting during 1999.
See "Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Transactions" below for additional
information concerning directors.
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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>
Phillip S. Dingle - 38 President and Chief Operating Officer of the Company since June 2000. Mr.
Dingle served as Executive Vice President and Chief Financial Officer of the
Company from January 1999 to May 2000, and as Senior Vice President and
Chief Counsel of the Company from August 1996 to December 1998. Prior to
August 1996, Mr. Dingle was a partner with the law firm Hill, Ward &
Henderson in Tampa, Florida, having joined the firm in May 1990,
specializing in commercial trial law and general business matters.
Jeffery W. Bak - 35 Executive Vice President - Small Group Sales and Operations of the Company
since June 1999. From January 1999 to May 1999, Mr. Bak served as Executive
Vice President - Sales, Marketing, and Business Development of the Company.
From January 1997 to December 1998, Mr. Bak served as Senior Vice President
- Sales of the Company, and from January 1995 to December 1996 he served as
Vice President - Sales of the Company. From November 1992 to December 1994,
Mr. Bak was a reinsurance broker with Peglar & Associates in Stamford,
Connecticut.
George E. Lucco - 53 Executive Vice President - Large Group Operations of the Company since
October 1994. Mr. Lucco joined the Company in 1982 and has served as an
Executive Vice President with various operational and management
responsibilities since 1989.
Jeffrey L. Markle - 51 Executive Vice President - Medical Cost Management of the Company since July
1999. From June 1998 to June 1999, Mr. Markle was Senior Vice President -
Medical Loss Management of the Company. From 1996 to 1998, Mr. Markle was
Vice President of the US Group Operations for Swiss Re Life & Health, a
reinsurance company in Toronto. From 1994 to 1996, he was Vice President
and General Manager of the Canadian Operations of Olsten Kimberly Quality
Care, a home healthcare company. From 1991 to 1993, he was Chief Operating
Officer of Medisys Health Group, Inc., a preventive health care company in
Canada, and from 1989 to 1991 he was President and Chief Executive Officer
of Laurentian Health Services.
</TABLE>
9
<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, 1999 to: (i) the Company's Chief Executive Officer; and (ii) each of the
Company's four other most highly compensated executive officers whose salary and
bonus exceeded $100,000 during 1999 and who was serving as an executive officer
at the end of 1999 (collectively, the "Named Officers"). No disclosure is
required as to any other person. The table also sets forth information regarding
paid or accrued compensation to each Named Officer for the two preceding fiscal
years if such individual was then employed by the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES ALL
NAME AND UNDERLYING OTHER
PRINCIPAL POSITION (1) YEAR SALARY($) BONUS($) OPTIONS/SARS(#)(2) COMPENSATION($)(3)
---------------------- ---- --------- -------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
James K. Murray, Jr. 1999 $ 378,056 $ 99,375 35,000 $3,333
Chairman of the 1998 364,000 82,810 -- 1,580
Board and former Chief 1997 350,000 -- 35,000 2,297
Executive Officer
Robert R. Parker 1999 238,887 57,408 35,000 3,333
former President and 1998 230,100 55,200 -- 1,129
Chief Operating Officer 1997 202,963 -- 35,000 2,297
William L. Bennett 1999 216,032 38,938 35,000 3,333
Vice Chairman 1998 208,000 49,920 -- 1,342
of the Board 1997 198,387 -- 35,000 2,000
Jeffery W. Bak 1999 173,618 78,400 25,000 3,297
Executive Vice 1998 135,379 53,250 -- 1,650
President 1997 114,192 14,660 20,000 2,221
Phillip S. Dingle 1999 174,385 65,000 25,000 3,333
former Executive Vice 1998 149,558 53,250 -- 1,398
President and Chief 1997 134,731 -- 20,000 831
Financial Officer
</TABLE>
(1) Mr. Murray retired from his position as Chief Executive Officer on May
31, 2000. Mr. Parker retired from his position as President and Chief
Operating Officer on January 1, 2000. Mr. Dingle currently serves as
President and Chief Operating Officer.
(2) Refers to incentive stock options granted during the stated fiscal year
under either the HealthPlan Services Corporation 1995 Incentive Equity
Plan or the Amended and Restated HealthPlan Services Corporation 1996
Employee Stock Option Plan. The Incentive Plan and the Employee Option
Plan provide for grants of stock options to our employees, as
determined by the Compensation Committee of the Board of Directors. The
Compensation Committee may grant these options 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
10
<PAGE>
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.
(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 all employees with life
insurance benefits that are generally equal to two years base salary,
subject to certain adjustments.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS (1)
------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR OPTION TERM (10 YEARS) (2)
------------------------------------------
5% 10%
------------------ ------------------
NAME NUMBER OF % OF TOTAL EXERCISE EXPIRATION PER AGGREGATE PER AGGREGATE
SECURITIES OPTIONS/SARS OR BASE DATE SHARE VALUE SHARE VALUE
UNDERLYING GRANTED TO PRICE VALUE VALUE
OPTIONS/SARS EMPLOYEES IN ($/SHARE)
GRANTED (#) FISCAL YEAR
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James K. Murray, Jr. 35,000 .07 $11.00 1/7/09 $6.92 $242,200 $17.52 $613,200
Robert R. Parker 35,000 .07 11.00 1/7/09 6.92 242,200 17.52 613,200
William L. Bennett 35,000 .07 11.00 1/7/09 6.92 242,200 17.52 613,200
Jeffery W. Bak 25,000 .05 11.00 1/7/09 6.92 173,000 17.52 438,000
Phillip S. Dingle 25,000 .05 11.00 1/7/09 6.92 173,000 17.52 438,000
</TABLE>
----------------------------------------------
(1) Consists of option grants under the Employee Option Plan. Each option
grant vests over a four-year period from the grant date, January 7,
1999, with 20% of the options becoming vested on the grant date and 20%
becoming vested on each successive anniversary of the grant date, until
the options become fully vested on the fourth anniversary of the grant
date.
(2) The dollar gains under these columns result from calculations assuming
5% and 10% growth rates, as set by the Securities and Exchange
Commission, and are not intended to forecast future price appreciation
of our Common Stock. The gains reflect a future value based upon growth
at the prescribed rates. We are not aware of any formula which will
determine with reasonable accuracy a present value based on future
unknown or volatile factors. Options have value to the Named Officers
and to all option recipients only if the price of our Common Stock
advances beyond the applicable option exercise price during the
effective option period.
11
<PAGE>
AGGREGATED OPTION EXERCISES DURING 1999 AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to stock options
exercised by each Named Officer during 1999 and the number and value of
unexercised stock options held by each Named Officer at year-end. The Company
does not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT
FISCAL YEAR-END (#)
-------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
James K. Murray, Jr. -0- -0- 158,000 62,000
Robert R. Parker -0- -0- 88,000 57,000
William L. Bennett -0- -0- 158,000 62,000
Jeffery W. Bak -0- -0- 31,200 33,000
Phillip S. Dingle -0- -0- 40,000 35,500
</TABLE>
-----------------------------------------
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Effective June 1, 2000, the Company entered into an Employment and
Noncompetition Agreement with Phillip S. Dingle, the Company's President and
Chief Operating Officer. The Agreement has a one-year term ending May 31, 2001,
and will automatically renew for successive one-year terms unless either party
terminates by thirty days notice prior to a renewal date. The Agreement entitles
Mr. Dingle to an annual base salary of not less than $275,000 and a bonus for
2000 to be calculated based on the Company's financial performance and
achievement of specified corporate objectives. As further provided by the
Agreement, in June 2000 the Compensation Committee awarded Mr. Dingle an option
to purchase 133,000 shares of Common Stock. The Agreement generally provides
that if Mr. Dingle's employment is terminated without cause, as defined in the
Agreement, then Mr. Dingle will be entitled to an amount equal to one times his
annual base salary, plus the aggregate amount of his base salary which is due
during the remaining portion of the current Agreement term. The Agreement
contains certain noncompete and nonsolicitation restrictions that will survive
termination of Mr. Dingle's employment with the Company.
The Company was a party to an Employment and Noncompetition Agreement
with Robert R. Parker, who is a director of the Company and was President and
Chief Operating Officer of the Company until January 2000. The Agreement, which
had a three-year term ending June 30, 1999, required Mr. Parker to perform
duties assigned to him by the Board of Directors at an annual base salary of not
less than $200,000.
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.
12
<PAGE>
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).
COMPARISON OF 54 MONTH CUMULATIVE TOTAL RETURN*
AMONG HEALTHPLAN SERVICES CORPORATION, THE WILSHIRE 5000 INDEX
AND THE RUSSELL 2000 HEALTH CARE SECTOR INDEX
[GRAPH OMITTED]
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
6/95 9/95 12/953/96 6/96 9/96 12/963/97 6/97 9/97 12/973/98 6/98 9/98 12/983/99 6/999/99 12/99
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <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 50 49 55 26
------------------------------------------------------------------------------------------------------------------------
Wilshire 5000 100 109 114 121 126 130 139 140 163 179 182 206 210 185 225 233 252 235 278
------------------------------------------------------------------------------------------------------------------------
Russell 2000 100 116 128 134 134 127 122 112 127 145 134 146 131 109 139 123 138 131 164
------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<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.
1999 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 1999, the Company awarded 12,500 options to 2 new or promoted
employees. No shares of restricted stock or stock appreciation rights were
granted for 1999.
14
<PAGE>
1999 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 reflected 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. The Compensation Committee awarded the Chief Executive
Officer a bonus of $99,375 for 1999. The bonus amount was based on the Chief
Executive Officer's achievement of certain predetermined corporate objectives
during 1999.
COMPENSATION COMMITTEE:
Joseph A. Califano, Jr.
Vincent D. Farrell, Jr.
James G. Niven
Arthur F. Weinbach
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 Chairman and Chief Executive Officer of ADP. As
required by a December 1996 agreement under which ADP purchased approximately 9%
of our Common Stock, Mr. Weinbach was elected to our Board of Directors in
February 1997. ADP has provided payroll and shareholder distribution services
for us since 1995. During 1999, we paid ADP approximately $240,000 for these
services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1996, we entered into an agreement with Noel Group, Inc.
and ADP pursuant to which Noel agreed to sell 1,320,000 shares of our 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 our Common Stock.
As required by the ADP Agreement, Arthur F. Weinbach, Chairman and Chief
Executive Officer of ADP, was elected to the Board of Directors of the Company
in February 1997. ADP has provided payroll and shareholder distribution services
for us since 1995. During 1999, we paid ADP approximately $240,000 for these
services.
During 1999, James F. Carlin, who was a Company director until February
1999, was a limited partner in Consolidated Group Service Company Limited
Partnership, and was a shareholder and a director of the Consolidated
Partnership's general partner. The Consolidated Partnership owns our former
Framingham, Massachusetts facility and leased this property to Consolidated
Group beginning in 1987. In November 1998, in connection with the closing of our
Framingham operations, we entered into an agreement with the Consolidated
Partnership to terminate the lease, which had a term expiring in May 2003. Under
the termination agreement, we committed 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. During 1999, we paid the Consolidated
Partnership approximately $325,000 under this arrangement.
15
<PAGE>
PROPOSAL 2:
APPROVAL OF AN AMENDMENT TO THE
1995 HEALTHPLAN SERVICES CORPORATION DIRECTORS STOCK OPTION PLAN
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the 1995 HealthPlan Services Corporation Directors Stock Option
Plan (the "Plan") to increase by 120,000 shares the number of shares available
for issuance thereunder. If approved by the stockholders, the amendment will
become effective immediately. A copy of the amendment is attached as Appendix B.
The Purpose of the Plan is to provide an incentive to non-employee
directors and to enhance their identity with the Company and its financial
success. Pursuant to the Plan, each participating director automatically
receives an option to purchase 12,000 shares of Common Stock, effective as of
the later of (i) May 18, 1995 (the business day immediately preceding the day
that our securities were first offered to the public in an underwritten initial
public offering), or (ii) the date that the director becomes eligible to
participate. Each participating director is also granted an additional option to
purchase 12,000 shares of Common Stock if he or she is reelected to the Board at
the annual meeting of stockholders that follows the 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
our assets, we may accelerate vesting of the outstanding Plan options, subject
to applicable law. The exercise price of each option is the fair market value of
our Common Stock as of the grant date.
Of the 240,000 options originally authorized for issuance under the
Plan, all but 36,000 are outstanding or have been exercised. The Board of
Directors believes that, in order to continue to attract and retain directors of
outstanding ability and to strengthen the alignment of the personal financial
interests of participating directors with those of stockholders, the Company
should make additional shares available under the Plan.
Since only directors who are not employees of the Company are eligible
for participation in the Plan, none of the Named Officers or other executive
officers of the Company have a direct or indirect interest in the Plan. All
current non-employee directors have received stock awards under the Plan.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
An affirmative vote by a majority of the outstanding shares of Common
Stock present at the meeting of stockholders, whether in person or by proxy, is
needed for the adoption of this proposal.
The Board of Directors believes that the amendment to the Plan is in
the best interests of the Company and its stockholders and therefore recommends
a vote FOR this proposal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities law requires that the executive officers and
directors of the Company, as well as any beneficial owners of more than ten
percent of the outstanding Common Stock of the Company, must file reports with
the Securities and Exchange Commission and the Company reflecting how many
shares of the Company's equity securities they own and if they conducted any
transactions in that stock. Specifically, Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires that such reports be filed within a
certain time after (i) such person becomes subject to Section 16's reporting
requirements, and (ii) any changes in such person's beneficial ownership in the
Company's stock. On January 1, 1999, Jeffery W. Bak became a "Reporting Person"
for purposes of Section 16(a). A Form 3 was filed with respect to this status on
March 8, 1999, after the Form 3 filing deadline. On July 1, 1999, Jeffrey L.
Markle became a "Reporting Person for purposes of Section 16(a). A Form 3 was
filed with respect to this status on October 21, 1999, after the Form 3 filing
deadline. Based upon review of reports submitted to us and written
representations of persons that we know to be subject to these reporting
requirements, we believe that all other reports due for 1999 were filed on a
timely basis.
16
<PAGE>
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements for fiscal year 1999 with management and with the Company's
independent auditors, PricewaterhouseCoopers LLP. Specifically, the Audit
Committee has discussed with the independent auditors the matters required to be
discussed by SAS No. 61 (Codification of Statements on Auditing Standards).
The Audit Committee has received written disclosures from the
independent auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and discussed with the
independent auditors the auditors' independence from the Company. Based on
review and discussions of the audited financial statements for fiscal year 1999
with management and discussions with the independent auditors, the Audit
Committee recommended to the Board of Directors that the audited financial
statements for fiscal year 1999 be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, as filed with the
Securities and Exchange Commission.
AUDIT COMMITTEE:
John R. Gunn
James G. Niven
Arthur F. Weinbach
FORM 10-K ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, 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 September
29, 2000 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 1999 fiscal year and has been approved by the Board of
Directors of the Company to act in such capacity for the 2000 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.
17
<PAGE>
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 of July 18, 2000, 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 2001 MEETING
The deadline for including a stockholder proposal in the Company's
proxy statement and the form of proxy for the 2001 Annual Meeting, anticipated
to be held in May 2001, is December 6, 2000. Any proposals intended to be
presented at the 2001 Annual Meeting must be received by the Company at its
principal executive offices on or before that date. If any stockholder wishes to
submit a proposal, such stockholder must, at the time the proposal is submitted,
be 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 must have
held such securities for at least one year. Such stockholder must continue to
own such shares through the 2001 Annual Meeting date.
For any stockholder proposal that is not submitted for inclusion in the
2001 Proxy Statement, but is instead sought to be presented directly at the 2001
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 19, 2001; or (ii) receives notice of the proposal before
the close of business on February 19, 2001 and advises stockholders in the 2001
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,
/s/ PHILLIP S. DINGLE
Phillip S. Dingle
President and Chief Operating Officer
18
<PAGE>
APPENDIX A
HEALTHPLAN SERVICES CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE AND AUTHORITY
The primary purpose of the Audit Committee is to assist the Board in
fulfilling its responsibility to oversee management's conduct of the
Corporation's financial reporting process, including oversight of: (i) the
integrity of the financial statements of the Corporation; (ii) the compliance by
the Corporation with legal and regulatory requirements with respect to financial
reporting; and (iii) the independence and performance of the Corporation's
internal and external auditors. The Audit Committee is authorized: (i) to
consult directly with the independent auditors of the Corporation and such other
persons as the Committee deems appropriate; (ii) to review the preparations for
and scope of the audit of the Corporation's financial statements and review
drafts of such statements; (iii) to recommend such action to the Board of
Directors as the Committee deems appropriate; and (iv) to perform such other
duties relating to the financial statements and other matters of the Corporation
as the Board may assign from time to time.
II. COMPOSITION
A. MEMBERSHIP REQUIREMENTS
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall meet the independence and experience
requirements of the New York Stock Exchange.
B. ELECTION OF MEMBERS
The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board. Unless a Chairperson is elected by
the full Board, the members of the Audit Committee may designate a Chairperson
by majority vote of the full Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet with the chief financial officer, the
director of the internal auditing department, and the independent accountants
separately to discuss any matters that the Audit Committee or any of these
parties believes should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
A. DOCUMENTS/REPORTS REVIEW
1. Review and reassess, at least annually, the adequacy
of this Charter, and make recommendations to the
Board, as conditions dictate, to update this Charter.
2. Review and discuss with management and the
Corporation's independent accountants the
Corporation's annual financial statements, including:
(i) the preparations for and scope of the independent
audit of the statements; (ii) significant financial
reporting issues and judgments made in connection
with preparation of the Corporation's financial
statements; and (iii) other matters required to be
discussed by Statement of Auditing Standards No. 61
("SAS No. 61") or other applicable requirements.
<PAGE>
B. INDEPENDENT ACCOUNTANTS
1. Review the performance of the independent accountants
and make recommendations to the Board regarding the
appointment or termination of the independent
accountants. The Audit Committee and the Board have
the ultimate authority and responsibility to select,
evaluate, and where appropriate, replace the
Corporation's independent accountants. The
independent accountants are ultimately accountable to
the Audit Committee and the entire Board for such
accountants' review of the financial statements and
controls of the Corporation. On an annual basis, the
Audit Committee shall review and discuss with the
independent accountants any significant relationships
the accountants have with the Corporation to
determine the accountants' independence.
2. Oversee the independence of the accountants by:
o receiving from the independent accountants,
on a periodic basis, a statement delineating
all relationships between the accountants
and the Corporation consistent with
Independence Standards Board Standard 1
("ISB No. 1") or other applicable
requirements;
o reviewing, and actively discussing with the
Board, if necessary, and the independent
accountants, on a periodic basis, any
disclosed relationships or services between
the independent accountants and the
Corporation or any other disclosed
relationships or services that may impact
the objectivity and independence of the
accountants; and
o recommending, if necessary, that the Board
take appropriate action to satisfy itself of
the accountants' independence.
3. Based on the review and discussions referred to in
this Charter and other oversight activity as the
Audit Committee determines to be appropriate, the
Audit Committee shall determine whether to recommend
to the Board that the Corporation's audited financial
statements be included in the Corporation's Annual
Report on Form 10-K for the last fiscal year for
filing with the Securities and Exchange Commission.
C. FINANCIAL REPORTING PROCESS
1. In conjunction with the independent accountants and
the internal auditors, review the integrity of the
Corporation's financial reporting processes, both
internal and external.
2. Review any significant disagreement among management
and the independent accountants or the internal
auditing department in connection with the
preparation of the financial statements.
A-2
<PAGE>
APPENDIX B
AMENDMENT TO
1995 HEALTHPLAN SERVICES CORPORATION
DIRECTORS STOCK OPTION PLAN
================================================================================
THIS AMENDMENT TO 1995 HEALTHPLAN SERVICES CORPORATION DIRECTORS STOCK
OPTION PLAN (the "Amendment") is made as of _________________, 2000 by
HEALTHPLAN SERVICES CORPORATION, a Delaware corporation hereinafter referred to
as "Company." This Amendment amends that certain 1995 HealthPlan Services
Corporation Directors Stock Option Plan (the "Plan"). All capitalized terms not
otherwise defined in this Amendment shall have the meanings ascribed to them in
the Plan.
1) AMENDMENT TO ARTICLE V. Article V of the Plan is hereby deleted in
its entirety and replaced with the following:
"Shares Subject to Plan
The total number of shares of the Common Stock which are available for
granting options hereunder shall be 360,000 (subject to adjustment as provided
in this Article V and in Article VIII). The shares of Common Stock issued upon
exercise of an Option shall be made available, in the discretion of the Board,
either from authorized but unissued Common Stock or from any outstanding Common
Stock which has been reacquired by the Company. In the event that any Option
terminates for any reason, without having been exercised in full, the
unpurchased shares of Common Stock subject to that Option shall once again
become available for the granting of Options."
2) OTHER PROVISIONS. Except as provided above, all terms, conditions,
and provisions of the Plan shall remain in full force and effect.
<PAGE>
[HEALTHPLAN SERVICES LOGO]
CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MARRIOTT WESTSHORE
1001 N. WESTSHORE BOULEVARD
TAMPA, FLORIDA
OCTOBER 10, 2000
11:00 A.M.
HEALTHPLAN SERVICES CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HEALTHPLAN SERVICES CORPORATION (THE "COMPANY")
AND ALL MATTERS TO BE VOTED UPON ARE PROPOSED BY 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 Marriott Westshore, 1001 N. Westshore Boulevard, Tampa,
Florida 33607, on Tuesday, October 10, 2000 at 11:00 a.m. local time, and any
adjournment thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED "FOR" ALL OF THE
NOMINEES SET FORTH BELOW FOR ELECTION AS DIRECTORS AND "FOR" THE ADDITIONAL
PROPOSAL. 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]
<TABLE>
<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
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.
James K. Murray, Jr. Joseph S. DiMartino Nancy M. Kane, D.B.A John D. Race
William L. Bennett Vincent D. Farrell, Jr. James G. Niven Arthur F. Weinbach
Joseph A. Califano, Jr. John R. Gunn Robert R. Parker
PROPOSAL 2: APPROVAL OF AMENDMENT TO THE 1995 HEALTHPLAN SERVICES CORPORATION DIRECTORS STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(SEE REVERSE SIDE)
<PAGE>
The undersigned acknowledges receipt of the Notice of the Annual Meeting of
Stockholders and the Proxy Statement dated September 8, 2000 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: ___________________________, 2000
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.
