<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CHECKFREE HOLDINGS CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CHECKFREE HOLDINGS CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
CHECKFREE HOLDINGS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
NOVEMBER 4, 1999
AND
PROXY STATEMENT
- --------------------------------------------------------------------------------
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT TO US IN THE ENCLOSED ENVELOPE
<PAGE> 3
CHECKFREE HOLDINGS CORPORATION
4411 East Jones Bridge Road
Norcross, Georgia 30092
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 8, 1999
To Our Stockholders:
Our annual meeting of stockholders will be held at our headquarters,
4411 East Jones Bridge Road, Norcross, Georgia, on Thursday, November 4, 1999,
at 10:00 a.m., local time, for the following purposes:
(1) To elect two Class I Directors each to serve for a three-year
term expiring at the 2002 annual meeting of stockholders.
(2) To transact any other business which may properly come before
the meeting or any adjournment thereof.
You will be most welcome at the meeting, and we hope you can attend.
Our directors and officers and representatives of our independent public
accountants will be present to answer your questions and to discuss our
business.
We urge you to execute and return the enclosed proxy as soon as
possible so that your shares may be voted in accordance with your wishes. If you
attend the meeting, you may vote in person and your proxy will not be used.
By Order of the Board of Directors,
Curtis A. Loveland
Secretary
----------------------------------------------------------------
PLEASE SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES
----------------------------------------------------------------
<PAGE> 4
CHECKFREE HOLDINGS CORPORATION
4411 East Jones Bridge Road
Norcross, Georgia 30092
-----------------------------
PROXY STATEMENT
-----------------------------
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 4, 1999
-----------------------------
This proxy statement is furnished to you in connection with the
solicitation of proxies to be used in voting at our annual meeting of
stockholders to be held on November 4, 1999, and at any adjournment thereof. Our
board of directors is soliciting the enclosed proxy. This proxy statement and
the enclosed proxy will be first mailed to our stockholders on approximately
October 8, 1999.
We will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of stock. Our representatives may also solicit
proxies by mail, telegram, telephone or personal interview.
The shares represented by the accompanying proxy will be voted as
directed if the proxy is properly signed and received by us prior to the
meeting. If no directions are made to the contrary, your proxy will be voted FOR
the nominees for director named herein. You have the power to revoke your proxy
at any time before the proxy is exercised by filing a written notice with our
corporate Secretary prior to the meeting. If you attend the meeting, you may
vote in person and your proxy will not be used.
Holders of record of our common stock at the close of business on
September 24, 1999, will be entitled to vote at the annual meeting. At that
time, we had 51,954,360 shares of our common stock outstanding and entitled to
vote. Each share of our common stock outstanding on the record date entitles the
holder to one vote on each matter submitted at the annual meeting.
The presence, in person or by proxy, of a majority of the outstanding
shares of our common stock is necessary to constitute a quorum for the
transaction of business at the annual meeting. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum.
Broker non-votes occur when brokers, who hold their customers' shares in street
name, sign and submit proxies for those shares and vote those shares on some
matters, but not others. Typically, this would occur when brokers have not
received any instructions from their customers, in which case the brokers, as
the holders of record, are permitted to vote on "routine" matters, which
typically include the election of directors.
The election of the director nominees requires the favorable vote of a
plurality of all votes cast by the holders of our common stock at a meeting at
which a quorum is present. Proxies that are marked "Withhold Authority" and
broker non-votes will not be counted toward a nominee's achievement of a
plurality and, thus, will have no effect. Each other matter to be submitted to
our stockholders for approval or ratification at the annual meeting requires the
affirmative vote of the holders of a majority of the shares of our common stock
present and entitled to vote on the matter. For purposes of determining the
number of shares of our common stock voting on the matter, abstentions will be
counted and will have the effect of a negative vote; broker non-votes will not
be counted and, thus, will have no effect.
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<PAGE> 5
ELECTION OF DIRECTORS
Our Restated Certificate of Incorporation provides for a classified
board of directors with three classes. Each class of directors consists, as
nearly as practical, of one-third of the total number of directors. Effective
December 15, 1997, the total number of authorized directors was fixed at six.
Our board of directors proposes the election of two incumbent Class I Directors
at the 1999 annual meeting of stockholders to continue service as Class I
Directors. Four incumbent Class II and Class III Directors will continue in
office. The nominees for Class I Directors, if elected, will serve for
three-year terms expiring at the 2002 annual meeting of stockholders.
William P. Boardman and George R. Manser are currently Class I
Directors and are being nominated by our board of directors for re-election as
Class I Directors.
It is intended that, unless otherwise directed, the shares represented
by the enclosed proxy will be voted FOR the election of Messrs. Boardman and
Manser as Class I Directors. In the event that any nominee for director should
become unavailable, the number of our directors may be decreased pursuant to our
By-Laws, or our board of directors may designate a substitute nominee, in which
event the shares represented by the enclosed proxy will be voted for the
substitute nominee.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR.
The following table sets forth for each nominee and each continuing
director, the person's name, age, and his position with us:
CLASS I DIRECTORS
(NOMINEES FOR TERMS EXPIRING IN 2002)
NAME AGE POSITION
-------------------- ---------------------- -------------------------
William P. Boardman 58 Director
George R. Manser 68 Director
CLASS II DIRECTORS
(TERMS EXPIRE IN 2000)
NAME AGE POSITION
-------------------- ---------------------- -------------------------
Mark A. Johnson 46 Vice Chairman, Corporate
Development and Marketing,
and Director
Eugene F. Quinn 45 Director
CLASS III DIRECTORS
(TERMS EXPIRE IN 2001)
NAME AGE POSITION
-------------------- ---------------------- -------------------------
Peter J. Kight 43 Chairman of the Board and
Chief Executive Officer
Jeffrey M. Wilkins 55 Director
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<PAGE> 6
Peter J. Kight, our founder, has served as our Chairman and Chief
Executive Officer since December 1997. He also serves as Chairman and Chief
Executive Officer of CheckFree Corporation (a position he has held since 1981),
as President of CheckFree Investment Corporation and CheckFree Management
Corporation, and as Chairman and Chief Executive Officer of CheckFree Investment
Services Corporation. Mr. Kight is also a director of CheckFree Corporation,
CheckFree Investment Services Corporation and CheckFree Management Corporation.
From 1997 to 1999, Mr. Kight served as President of CheckFree Holdings
Corporation and, from 1981 to 1999, he served as President of CheckFree
Corporation. Mr. Kight is a Director of Metatec International, Inc., a
publicly-held company that distributes information utilizing CD-ROM technology.
Mark A. Johnson has served as our Vice Chairman since December 1997. He
also serves as Vice Chairman, Corporate Development of CheckFree Corporation (a
position he has held since May 1997) and as an Executive Vice President of
CheckFree Investment Corporation and CheckFree Management Corporation. Mr.
Johnson has been a Director since 1983. He also serves as a Director of
CheckFree Corporation, CheckFree Investment Corporation, and CheckFree
Management Corporation. Mr. Johnson served as Executive Vice President, Business
Development of CheckFree Corporation from 1993 to 1997, as Treasurer of
CheckFree Corporation from 1993 to 1996, as Senior Vice President of CheckFree
Corporation from 1991 to 1993, and as a Vice President of CheckFree Corporation
from 1982 to 1991. Mr. Johnson is a Director of Claris Corporation (formerly SQL
Financials International, Inc.), a publicly-held company that develops, markets
and supports client/server financial software applications.
William P. Boardman has served as a Director since July 1996. Mr.
Boardman has been an officer of Bank One Corporation since 1984 and is currently
Senior Executive Vice President.
George R. Manser has served as a Director since 1983. In 1998, Mr.
Manser became the Director of Corporate Finance for Uniglobe Travel (USA),
L.L.C., which franchises travel agencies throughout the United States. Since
July 1994, Mr. Manser has served as Chairman of Uniglobe Travel (Capital Cities)
Inc., which is the predecessor of Uniglobe and current holding company of
Uniglobe. From 1985 to 1994, he served as Chairman of North American National
Corporation, a life insurance holding company. Mr. Manser is a Director of
Cardinal Health Inc., a publicly-held wholesale drug distributor, State Auto
Financial Corporation, a publicly-held insurance company, AmeriLink Corporation,
a publicly-held cabling services company, and Hallmark Financial Services, Inc.,
a publicly-held insurance services company. He is also an Advisory Director to
the Corporate Finance Department of J.C. Bradford & Co., an NASD broker-dealer.
Eugene F. Quinn has served as a Director since 1994. Mr. Quinn is a
principal of Confluence Capital, a private investment firm. From March 1997 to
April 1999, Mr. Quinn served as Senior Vice President for Online and Interactive
Services at MTV Networks, a division of Viacom, Inc. From 1984 to 1997, Mr.
Quinn served as a senior executive at Tribune Company and its Chicago Tribune
subsidiary.
Jeffrey M. Wilkins has served as a Director since 1990. Since August
1989, Mr. Wilkins has served as Chairman, President and Chief Executive Officer
of Metatec Corporation, and its successor Metatec International, Inc., a
publicly-held company which distributes information utilizing CD-ROM technology.
INFORMATION CONCERNING THE BOARD OF DIRECTORS, EXECUTIVE OFFICERS,
AND PRINCIPAL STOCKHOLDERS
MEETINGS, COMMITTEES, AND COMPENSATION OF THE BOARD OF DIRECTORS
Our board of directors had a total of eight meetings during the fiscal
year ended June 30, 1999. During Fiscal 1999, each of our directors attended 75%
or more of the total number of (i) meetings of our board, and (ii) meetings of
committees of our board on which the director served.
As compensation for their services, each non-employee director receives
annually, stock options under our 1995 Stock Option Plan to acquire 8,000 shares
of our common stock, which options will vest 100% after one year and terminate
ten years after grant. In addition, each non-employee director receives
out-of-pocket expenses incurred in connection with attendance at board and
committee meetings. On May 7, 1999, Messrs. Boardman,
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<PAGE> 7
Manser, Quinn, and Wilkins were each granted stock options to acquire 8,000
shares of our common stock at an exercise price of $44.4375 per share.
Our board of directors has two standing committees: a Stock Option and
Compensation Committee and an Audit Committee. Our Stock Option and Compensation
Committee has the authority to (i) administer our stock option plans, including
the selection of optionees and the timing of option grants; and (ii) review and
monitor key employee compensation policies and administer our management
compensation plans. The members of our Stock Option and Compensation Committee
are Messrs. Quinn (Chairman), Boardman and Manser. Our Stock Option and
Compensation Committee had a total of four meetings during Fiscal 1999.
Our Audit Committee recommends the annual appointment of our
independent public accountants with whom the Audit Committee reviews the scope
of audit and non-audit assignments and related fees, the accounting principles
used by us in financial reporting, internal financial auditing procedures and
the adequacy of our internal control procedures. Messrs. Manser (Chairman),
Quinn, and Wilkins serve as members of our Audit Committee. Our Audit Committee
had a total of four meetings during Fiscal 1999.
EXECUTIVE OFFICERS
In addition to Peter J. Kight and Mark A. Johnson, the following
persons are our executive officers:
Peter F. Sinisgalli, age 43, has served as our President since May
1999. He also has served as President of CheckFree Corporation since May 1999
and as Chief Operating Officer of CheckFree Corporation since November 1996. Mr.
Sinisgalli also serves as a director of CheckFree Corporation and CheckFree
Management Corporation. From 1994 to 1996, Mr. Sinisgalli was Executive Vice
President and Chief Financial Officer of Dun & Bradstreet Software. From 1993 to
1994, Mr. Sinisgalli was Senior Vice President--Group Finance of Dun &
Bradstreet Corporation. From 1990 to 1992, Mr. Sinisgalli held various positions
with Nielson Media Research, a division of Dun & Bradstreet Corporation.
Allen L. Shulman, age 51, has served as our Executive Vice President
and Chief Financial Officer since August 1998 and as General Counsel since May
1997. He also serves as Executive Vice President, Chief Financial Officer and
General Counsel of CheckFree Corporation and CheckFree Investment Corporation,
as Executive Vice President, Chief Financial Officer and Treasurer of CheckFree
Investment Services Corporation, and as Executive Vice President and Treasurer
of CheckFree Management Corporation. Mr. Shulman is also a director of CheckFree
Management Corporation. From May 1997 to August 1998, he also served as our
Senior Vice President. Immediately prior to joining us, Mr. Shulman was the
managing attorney for the Atlanta office of Horvath & Lieber, P.C. From 1983 to
1996, Mr. Shulman was General Counsel and Chief Financial Officer for United
Refrigerated Services, Inc.
Lynn D. Busing, age 47, has served as our Executive Vice President
since December 1997. He has also served as Executive Vice President, Corporate
Banking of CheckFree Corporation since August 1999. Prior to that, Mr. Busing
served as Executive Vice President, Account Management of CheckFree Corporation
from February 1996 to August 1999. Mr. Busing was Senior Vice President of
Servantis Systems Holdings, Inc. from 1993 to 1996. From 1987 to 1993, Mr.
Busing held various management positions with Digital Equipment Corporation.
James S. Douglass, age 34, has served as our Executive Vice President
since December 1997. He has also served as Executive Vice President, Corporate
Development of CheckFree Corporation since August 1999. Prior to that, Mr.
Douglass served as Executive Vice President, Mergers and Acquisitions of
CheckFree Corporation from August 1998 to August 1999. From September 1996 to
August 1998, he served as Executive Vice President and Chief Financial Officer
of CheckFree Holdings Corporation and CheckFree Corporation. From 1994 to 1996,
Mr. Douglass was Vice President, Corporate Controller and Chief Accounting
Officer for Medaphis Corporation. From 1988 to 1994, Mr. Douglass served in
various capacities with KPMG Peat Marwick LLP, finally as senior manager.
Sean E. Feeney, age 41, has served as our Executive Vice President
since December 1997. He has also served as President, Software Division and as
Executive Vice President, EC Sales of CheckFree Corporation since May 1998. From
February 1997 to May 1998, he served as Executive Vice President, Software
Solutions of CheckFree
-6-
<PAGE> 8
Corporation. During 1996, Mr. Feeney served as Vice President, North America
Channels and General Manager for Dun & Bradstreet Software. From 1990 to 1995,
Mr. Feeney held various sales positions with Dun & Bradstreet.
Ravi Ganesan, age 33, has served as our Executive Vice President since
December 1997. He has also served as Executive Vice President and Chief
Technology Officer of CheckFree Corporation since January 1997. From 1990 to
1997, Mr. Ganesan held various positions with Bell Atlantic, most recently as
Vice President, Distributed Operations & Information Technology from 1995 to
1997.
Matthew S. Lewis, age 34, has served as our Executive Vice President
since August 1999. He has also served as Executive Vice President, EC Product
Management and Marketing of CheckFree Corporation since January 1998. Prior to
that, Mr. Lewis served as our Senior Vice President from December 1997 to August
1999, and as Vice President, Corporate Strategy and Communications for CheckFree
Corporation from March 1996 to December 1997. From 1988 to 1996, Mr. Lewis held
various positions at BankSouth Corporation, including Vice President, Corporate
Affairs, Director of Compliance and Director of Communications and Manager of
Public Relations.
John J. Limbert, age 52, has served as our Executive Vice President
since August 1998. He has also served as Executive Vice President, EC Customer
Operations since May 1998. From 1977 to 1997, Mr. Limbert was employed at Banc
One Corporation in various capacities, most recently as the head of its Eastern
Region Consumer Banks.
Gary A. Luoma, Jr., age 42, has served as our Vice President, Chief
Accounting Officer and Assistant Secretary since December 1997. He has also
served as Vice President, Chief Accounting Officer and Assistant Secretary of
CheckFree Corporation (a position he has held since April 1997), as Vice
President and Assistant Secretary of CheckFree Investment Corporation and
CheckFree Management Corporation, and as Assistant Secretary of CheckFree
Investment Services Corporation. Mr. Luoma is also a director of CheckFree
Management Corporation. From 1995 to 1997, Mr. Luoma served as Vice President of
Finance, Americas Operations and Assistant Secretary and, from 1990 to 1995, as
Director of Finance, Planning and Analysis at Dun & Bradstreet Software. From
1983 to 1990, Mr. Luoma held various financial positions with the American
Security Group, including Assistant Treasurer, Assistant Controller and Internal
Audit Manager. From 1980 to 1983, Mr. Luoma served as a Certified Public
Accountant on the audit staff of Ernst & Whinney.
Curtis A. Loveland, age 52, has served as our Secretary since December
1997. He also serves as Secretary of CheckFree Corporation (a position he has
held since 1983), CheckFree Investment Corporation, CheckFree Investment
Services Corporation, and CheckFree Management Corporation. Mr. Loveland has
been associated with the law firm of Porter, Wright, Morris & Arthur LLP since
1973 and a partner since 1979.
Keven M. Madsen, age 39, has served as our Vice President since
December 1997 and as Treasurer since August 1998. He has also served as Vice
President and Treasurer of CheckFree Corporation (a position he has held since
July 1997), as Vice President and Treasurer of CheckFree Investment Corporation,
and as Vice President and Assistant Treasurer of CheckFree Management
Corporation. Mr. Madsen also serves as a director of CheckFree Management
Corporation. From December 1997 to August 1998, he served as our Assistant
Treasurer. From 1996 to 1998, Mr. Madsen served as Director of Tax & Treasury
and Assistant Treasurer of CheckFree Corporation. From 1990 to 1996, Mr. Madsen
served as Manager of Corporate Tax and Treasury for Dun & Bradstreet Software.
Prior to 1990, Mr. Madsen was a Certified Public Accountant in the audit and tax
divisions of Arthur Andersen & Co.
David Mangum, age 33, has served as our Senior Vice President, Finance
and Accounting since September 1999. From July 1998 to September 1999, he worked
as Vice President, Finance and Administration, Managed Systems Division for
Sterling Commerce, Inc. Prior to that, Mr. Mangum worked as the Director of
Finance for XcelleNet, Inc. from February 1997 to July 1998. From May 1993 to
January 1997, Mr. Mangum served as Director of Finance for Dun & Bradstreet
Software.
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<PAGE> 9
Randal A. McCoy, age 36, has served as our Executive Vice President
since August 1999. He has also served as Executive Vice President, EC Software
Development of CheckFree Corporation since August 1999. Prior to that, Mr. McCoy
served as Senior Vice President, Electronic Commerce Development of CheckFree
Corporation from February 1998 to August 1999, and as Vice President, Genesis
Platform Development of CheckFree Corporation from May 1997 to February 1998.
From 1990 to 1997, Mr. McCoy was Vice President, Corporate Banking Development
at Servantis Systems, Inc. Prior to that, Mr. McCoy worked as a large systems
architect at BellSouth Corporation.
Terrie O'Hanlon, age 38, has served as our Senior Vice President,
Communications and Media Relations since June 1998. She has also served as
Senior Vice President, Corporate Communications and Investor Relations of
CheckFree Corporation since August 1999. From June 1998 to August 1999, she
served as Senior Vice President, Communications and Media Relations of CheckFree
Corporation. From 1997 to 1998, Ms. O'Hanlon served as Vice President, Corporate
Communications at Medaphis Corporation. From 1995 to 1997, Ms. O'Hanlon was
Corporate Communications Director of Dun & Bradstreet Software. From 1990 to
1995, Ms. O'Hanlon served as Vice President of Crescent Communications.
Stephen Olsen, age 39, has served as our Executive Vice President since
August 1999. He has also served as Executive Vice President, EC Information
Technology Operations of CheckFree Corporation since August 1999. Prior to that,
Mr. Olsen served as our Senior Vice President from December 1997 to August 1999,
and as Senior Vice President and Chief Information Officer of CheckFree
Corporation from March 1997 to August 1999. From 1996 to 1997, Mr. Olsen served
as Vice President, Chief Information Officer of Geac Computer Corporation. From
1990 to 1996, Mr. Olsen served as Vice President, Chief Information Officer of
Dun & Bradstreet Software.
Harley J. Ostis, age 42, has served as our Senior Vice President since
January 1999. He has also served as Senior Vice President, Human Resources of
CheckFree Corporation since January 1999. From 1981 to 1999, Mr. Ostis held
various positions with Harris Corporation, most recently as Vice President,
Human Resources and Quality for Lanier Worldwide, a division of Harris
Corporation.
Francis X. Polashock, age 44, has served as our Executive Vice
President since December 1997. He also serves as Executive Vice President and
President, CheckFree Investment Services of CheckFree Corporation (a position he
has held since June 1999) and as President of CheckFree Investment Services
Corporation. From May 1997 to June 1999, Mr. Polashock served as Executive Vice
President and General Manager, Investment Services Division of CheckFree
Corporation. From 1981 to 1993, Mr. Polashock held several management positions
within Dun & Bradstreet Corporation, most recently as General Manager of Asia
Pacific and Latin America. From 1993 to 1997, Mr. Polashock was involved with
several entrepreneurial ventures targeted at the Chinese marketplace.
Glen Sarvady, age 37, has served as our Vice President, Operations
Strategy and Planning since August 1999. He has also served as Vice President,
Operations Strategy and Planning of CheckFree Corporation since August 1999.
Prior to that, Mr. Sarvady served as Vice President, Financial Planning and
Analysis of CheckFree Corporation from August 1998 to August 1999, and as Vice
President, Business Development of CheckFree Corporation from 1997 to 1998. From
1988 to 1997, Mr. Sarvady held a variety of financial management positions with
Dun & Bradstreet Corporation, most recently as Vice President, Finance of Dun &
Bradstreet Software.
Officers are elected annually by the board of directors and serve at
its discretion. There are no family relationships among our directors and
executive officers.
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<PAGE> 10
OWNERSHIP OF OUR COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding beneficial
ownership of our common stock by each of our directors, each of our executive
officers named in the Summary Compensation Table, and our directors and
executive officers as a group as of September 1, 1999:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)(2)
--------------------------------
STOCKHOLDER NUMBER PERCENT
- ------------------------------------------------- -------------- ---------------
<S> <C> <C>
Peter J. Kight (3) 6,767,418 12.9%
Mark A. Johnson (4) 1,513,194 2.9%
Peter F. Sinisgalli 105,860 *
Sean E. Feeney 28,316 *
Francis X. Polashock (5) 3,503 *
William P. Boardman 29,000 *
George R. Manser (6) 43,307 *
Eugene F. Quinn 35,523 *
Jeffrey M. Wilkins 18,000 *
All directors and executive officers as a group 8,798,585 16.6%
(23 persons) (3)(4)(5)(6)
</TABLE>
- ----------------------
* Represents beneficial ownership of less than 1% of our outstanding common
stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those shares.
(2) Includes shares purchasable within 60 days after September 1, 1999
pursuant to the exercise of options covering:
- 626,741 shares for Mr. Kight, - 42,307 shares for Mr. Manser,
- 29,495 shares for Mr. Johnson, - 26,523 shares for Mr. Quinn,
- 88,249 shares for Mr. Sinisgalli, - 16,000 for Mr. Wilkins, and
- 26,881 shares for Mr. Feeney, - 1,101,752 shares for all directors
- 0 shares for Mr. Polashock, and executive officers as a group.
- 25,000 shares for Mr. Boardman,
(3) Includes 8,600 shares held by the Peter J. Kight and Teresa J. Kight 1995
Children's Trust and 1,006,255 shares held by The PJK GRAT 97-1, The PJK
GRAT 97-2, The PJK GRAT 98-1, The PJK GRAT 98-2, The PJK GRAT 98-3 and The
PJK GRAT 98-4. Mr. Kight disclaims ownership of these shares in which he
has no pecuniary interest. Does not include 54,850 shares held by a
charitable foundation of which Mr. Kight is the trustee and disclaims any
beneficial ownership.
(4) Includes 8,786 shares held by the Mark A. Johnson 1997 Irrevocable
Children's Trust. Mr. Johnson disclaims ownership of these shares in which
he has no pecuniary interest.
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<PAGE> 11
(5) Includes 1,800 shares held by Mr. Polashock's minor children which Mr.
Polashock disclaims any beneficial ownership.
(6) Includes 1,000 shares held by Mr. Manser's spouse which Mr. Manser
disclaims any beneficial ownership.
OWNERSHIP OF COMMON STOCK BY PRINCIPAL STOCKHOLDERS
The following table sets forth information as of September 1, 1999
(except as noted below), relating to the beneficial ownership of our common
stock by each person known us to own beneficially more than 5% of the
outstanding shares of our common stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
---------------------------------------------
STOCKHOLDER NUMBER PERCENT
- ---------------------------------------------------- ------------------------ -------------------
<S> <C> <C>
Peter J. Kight (2)(3) 6,767,418 12.9%
4411 East Jones Bridge Road
Norcross, Georgia 30092
Intuit Inc. 10,600,000 19.2%
2535 Garcia Avenue
Mountain View, California 94039
Gintel Asset Management, Inc.(4) 3,468,975 6.5%
6 Greenwich Office Park
Greenwich, Connecticut 06831
Brown Investment Advisory & Trust Company(5) 6,188,896 11.7%
Brown Advisory Incorporated
19 South Street
Baltimore Maryland 21202
T. Rowe Price Associates, Inc. (6) 3,245,300 6.1%
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those shares.
(2) Includes 626,741 shares purchasable by Mr. Kight pursuant to the exercise
of options within 60 days after September 1, 1999.
(3) Includes 8,600 shares held by the Peter J. Kight and Teresa J. Kight 1995
Children's Trust and 1,006,255 shares held by The PJK GRAT 97-1, The PJK
GRAT 97-2, The PJK GRAT 98-1, The PJK GRAT 98-2, The PJK GRAT 98-3 and The
PJK GRAT 98-4. Mr. Kight disclaims ownership of these shares in which he
has no pecuniary interest. Does not include 54,850 shares held by a
charitable foundation of which Mr. Kight is the trustee and disclaims any
beneficial ownership.
(4) Based on information contained in Schedule 13G filed with the Securities
and Exchange Commission on January 29, 1998. Robert M. Gintel, Chief
Executive Officer and 100% shareholder of Gintel Asset Management, Inc., is
also controlling partner of Gintel & Co. Limited Partnership and Gintel-Ray
Ltd. Partnership. In addition, Gintel Asset Management, Inc. has
discretionary power over the accounts for which it
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<PAGE> 12
acts as investment advisor. As a result, Gintel Asset Management, Inc. may
be deemed to be the beneficial owner of the shares owned by these other
entities.
(5) Based on information contained in Schedule 13G filed with the Securities
and Exchange Commission on February 17, 1999.
(6) Based on information contained in Schedule 13G filed with the Securities
and Exchange Commission on February 8, 1999.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid during our fiscal years ended June 30, 1997, 1998 and 1999 to
our Chief Executive Officer and each of our four other highest compensated
executive officers (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------- -----------------
AWARDS
-----------------
SECURITIES
UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(1)
- ---------------------------------- ----------- ------------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
PETER J. KIGHT 1999 $400,000 $ 0(2) 100,000 $ 0
Chairman and Chief Executive 1998 $375,000 $ 182,813 100,000 $ 0
Officer 1997 $292,692 $ 256,776 300,000 $ 108,800
MARK A. JOHNSON 1999 $205,000 $ 0(2) 25,000 $ 1,000
Vice Chairman, Corporate 1998 $182,000 $ 54,600 25,000 $ 1,000
Development and Marketing 1997 $179,711 $ 80,330 30,847 $ 42,574
PETER F. SINISGALLI(3) 1999 $280,000 $ 0(2) 116,000(4) $ 1,000
President and Chief Operating 1998 $260,417 $ 103,125 58,000 $ 1,000
Officer 1997 $165,675 $ 114,757 192,373 $ 0
SEAN E. FEENEY(5) 1999 $200,000 $ 48,000 130,000(4) $ 1,000
Executive Vice President and 1998 $197,292 $ 69,920 15,000 $ 1,000
President, CheckFree Software 1997 $ 65,625 $ 40,101 54,322 $ 0
Division/Business Electronic
Commerce
FRANCIS X. POLASHOCK(6) 1999 $190,000 $ 45,600 130,000(4) $ 1,000
Executive Vice President and 1998 $188,965 $ 65,500 15,000 $ 1,000
President Investment Services 1997 $ 17,276 $ 6,000 100,000 $ 0
Division
</TABLE>
- ----------------------
(1) Includes matching contribution to our 401(k) Plan of $1,000 for Mr.
Johnson, Mr. Sinisgalli, Mr. Feeney, and Mr. Polashock for Fiscal 1999.
Includes matching contribution to our 401(k) Plan of $1,000 for Mr.
Johnson, Mr. Sinisgalli, Mr. Feeney, and Mr. Polashock for Fiscal 1998.
Includes matching contribution to our 401(k) Plan of $980 for Mr.
Johnson and relocation allowances of $108,800 for Mr. Kight and $41,594
for Mr. Johnson for Fiscal 1997.
(2) The fiscal 1999 bonuses for Messrs. Kight, Johnson and Sinisgalli were
deferred to fiscal 2000. An additional bonus of $156,000 for Mr. Kight,
$49,200 for Mr. Johnson and $92,400 for Mr. Sinisgalli over
-11-
<PAGE> 13
and above the fiscal 2000 bonus that they may earn will be paid only if
we hit our performance targets for fiscal 2000.
(3) Mr. Sinisgalli was employed by us effective November 3, 1996.
(4) Includes options granted in fiscal 1999 due to Repricing of options
granted in fiscal years 1998 and 1997 as reflected in the Ten Year
Option Repricing Section on pages 13 and 14.
(5) Mr. Feeney was employed by us effective February 15, 1997.
(6) Mr. Polashock was employed by us effective May 28, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning the grant
of stock options to the Named Executive Officers under our 1995 Stock Option
Plan during the 1999 Fiscal Year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
NUMBER OF
SECURITIES % OF TOTAL POTENTIAL REALIZED VALUE AT
UNDERLYING OPTIONS GRANTED ASSUMED ANNUAL RATES OF STOCK
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE PRICE PRICE APPRECIATION FOR
NAME (#) FISCAL YEAR(2) ($/SHARE) EXPIRATION DATE OPTION TERMS (3)(4)
- ------------------------------------------------------------------------------------------------------------------
5%($) 10%($)
----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Peter J. Kight 100,000 3.3% $44.4375 2009 $2,794,650 $7,082,193
Mark A. Johnson 25,000 0.8% $44.4375 2009 $ 698,663 $1,770,548
Peter F. Sinisgalli 58,000 1.9% $ 15.875 2008 $ 579,055 $1,467,438
58,000 1.9% $44.4375 2009 $1,620,897 $4,107,672
Sean E. Feeney 15,000 0.5% $44.4375 2009 $ 419,198 $1,062,329
65,000 2.1% $11.3125 2008 $ 462,434 $1,171,899
50,000(5) 1.7% $13.9375 2008 $ 438,261 $1,110,639
Francis X. Polashock 15,000 0.5% $44.4375 2009 $ 419,198 $1,062,329
115,000 3.8% $11.3125 2008 $ 818,153 $2,073,359
</TABLE>
- ----------------------
(1) This table covers the period from July 1, 1998 to June 30, 1999.
(2) Percentage is based upon 1,575,057 options granted to employees in fiscal
1999 and 1,418,403 options repriced in fiscal 1999.
(3) The dollar amounts in these columns are the product of (a) the difference
between (1) the product of the per share market price at the date of grant
and the sum of 1 plus the assumed rate of appreciation (5% and 10%)
compounded over the term of the option (ten years) and (2) the per share
exercise price and (b) the number of shares underlying the grant.
(4) The appreciation rates stated are arbitrarily assumed, and may or may not
reflect actual appreciation in the stock price over the life of the option.
Regardless of any theoretical value which may be placed on a stock option,
no increase in its value will occur without an increase in the value of the
underlying shares. Whether an increase will be realized will depend not
only on the efforts of the recipient of the option, but also upon
conditions in our industry and market area, competition, and economic
conditions, over which the optionee may have little or no control.
(5) Options cancelled due to repricing.
-12-
<PAGE> 14
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides certain information regarding the number
and value of stock options held by our Named Executive Officers at June 30,
1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR-END (#) YEAR-END ($)(2)
------------------------------ ------------------------------
SHARES
ACQUIRED
ON VALUE
EXERCISE REALIZED
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter J. Kight 0 $0 626,741 400,399 $14,942,448 $3,113,686
Mark A. Johnson 121,354 $1,385,863 29,495 52,352 $ 283,467 $ 165,261
Peter F. Sinisgalli 0 $0 88,249 220,124 $ 898,190 $1,663,214
Sean E. Feeney 0 $0 26,881 107,441 $ 311,163 $1,357,930
Francis X. Polashock 0 $0 0 130,000 $ 0 $1,868,750
</TABLE>
(1) Value realized represents the difference between the exercise price of the
option shares and the market price of the option shares on the date the
option was exercised. The value realized was determined without
consideration for any taxes or brokerage expenses that may have been owed.
(2) Represents the total gain which would be realized if all in-the-money
options held at year end were exercised, determined by multiplying the
number of shares underlying the options by the difference between the per
share option exercise price and the per share fair market value at year end
($27.5625 on June 30, 1999). An option is in-the-money if the fair market
value of the underlying shares exceeds the exercise price of the option.
TEN YEAR OPTION REPRICING
On September 8, 1998, our Stock Option and Compensation Committee
approved a stock option exchange program that allowed all of our associates who
held stock options (excluding Messrs. Kight, Johnson, Sinisgalli, and Shulman)
the right to exchange his or her existing stock options for new stock options
having the following terms:
- A new ten year life;
- Vesting of 40% of the options after two years, 60% after three
years, 80% after four years, and 100% after five (5) years;
- Subject to cancellation of the exchanged option agreement in
total; and
- Exercisable at a price based on the closing price of our common
stock on September 15, 1998 ($11.3125).
The table below presents the required disclosure with respect to any
repricing of options held by any executive officer during the last ten completed
years.
-13-
<PAGE> 15
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OF THE STOCK EXERCISE REMAINING AT
OPTIONS AT THE TIME PRICE AT TIME DATE OF
REPRICED OR OF REPRICING OF REPRICING NEW EXERCISE REPRICING OR
NAME DATE AMENDED (#) OR AMENDMENT ($) OR AMENDMENT ($) PRICE ($) AMENDMENT
- ------------------- ------- ------------ ---------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lynn D. Busing 9/16/98 15,000 $11.31 $25.75 $11.31 9.8 years
9/16/98 25,000 $11.31 $21.88 $11.31 7.4 years
James S. Douglass 9/16/98 15,000 $11.31 $25.75 $11.31 9.8 years
Sean E. Feeney 9/16/98 50,000 $11.31 $13.94 $11.31 9.9 years
9/16/99 15,000 $11.31 $25.75 $11.31 9.8 years
Ravi Ganesan 9/16/98 100,000 $11.31 $25.75 $11.31 9.8 years
Matthew S. Lewis 9/16/98 15,000 $11.31 $25.75 $11.31 9.8 years
9/16/98 15,000 $11.31 $27.88 $11.31 9.3 years
John J. Limbert 9/16/98 60,000 $11.31 $24.13 $11.31 9.7 years
Gary A. Luoma, Jr. 9/16/98 3,322 $11.31 $25.75 $11.31 9.8 years
Keven M. Madsen 9/16/98 5,000 $11.31 $17.25 $11.31 8.7 years
9/16/98 1,500 $11.31 $25.75 $11.31 9.8 years
Randal A. McCoy 9/16/98 25,000 $11.31 $25.75 $11.31 9.8 years
9/16/98 10,000 $11.31 $21.88 $11.31 7.4 years
Terrie O'Hanlon 9/16/98 10,000 $11.31 $24.25 $11.31 9.7 years
Stephen Olsen 9/16/98 15,000 $11.31 $25.75 $11.31 9.8 years
Frank X. Polashock 9/16/98 100,000 $11.31 $17.63 $11.31 8.8 years
9/16/98 15,000 $11.31 $25.75 $11.31 9.8 years
Glen Sarvady 9/16/98 10,000 $11.31 $17.25 $11.31 8.7 years
9/16/98 1,810 $11.31 $25.75 $11.31 9.8 years
9/16/98 5,000 $11.31 $13.94 $11.31 9.7 years
</TABLE>
Additionally, on November 5, 1998, our Stock Option and Compensation
Committee approved the repricing of some options that had been granted to Mr.
Sinisgalli and Mr. Shulman.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OF THE STOCK EXERCISE REMAINING AT
OPTIONS AT THE TIME PRICE AT TIME DATE OF
REPRICED OR OF REPRICING OF REPRICING NEW EXERCISE REPRICING OR
NAME DATE AMENDED (#) OR AMENDMENT ($) OR AMENDMENT ($) PRICE ($) AMENDMENT
- ------------------- ------- ------------ ---------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Peter F. Sinisgalli 11/5/98 58,000 $15.88 $25.75 $15.88 9.5 years
Allen L. Shulman 11/5/98 5,000 $15.88 $25.75 $15.88 9.5 years
</TABLE>
Our Stock Option and Compensation Committee approved the stock option
exchange, in light of the significant decreases in the price of our common stock
during the first and second quarters of fiscal 1999, to motivate and retain
existing associates who held "under water options."
STOCK OPTION AND COMPENSATION COMMITTEE
George R. Manser
Eugene F. Quinn
William P. Boardman
EMPLOYMENT AGREEMENTS
On May 1, 1997, Mr. Kight entered into an employment agreement with us.
Mr. Kight's employment agreement provides for a minimum base salary and a
covenant not to compete. Mr. Kight's minimum base salary was set at $300,000
until July 1, 1997, when it increased to $375,000. Mr. Kight's base salary was
increased to $400,000 for Fiscal 1999. Additionally, Mr. Kight received a stock
option to purchase 200,000 shares of our common stock at $14.75 per share, the
price per share on the date of the employment agreement. The covenant not to
compete in Mr. Kight's employment agreement is for the time of employment, plus
a one year period following
-14-
<PAGE> 16
termination of employment. If Mr. Kight's employment is terminated as a result
of our change in control (as defined in his employment agreement), if Mr. Kight
resigns after a change in control upon making a good faith determination that
his employment status or responsibilities have been materially adversely
affected, or if Mr. Kight's employment is terminated by us without cause, he is
entitled to receive the greater of two times his average annual compensation or
an amount equal to his basic salary and incentive compensation until June 30,
2002. The term of Mr. Kight's employment agreement runs through June 30, 2002,
and thereafter it renews for one-year periods.
On February 21, 1996, Mr. Busing entered into an employment agreement
with us. The employment agreement provides for a minimum base salary of $140,000
per year and a covenant not to compete. The covenant not to compete contained in
the employment agreement is for the time of employment, plus a one year period
following termination of employment. If Mr. Busing's employment is terminated as
a result of our change in control (as defined in his employment agreement) or if
he resigns after a change in control upon making a good faith determination that
his employment status or responsibilities have been materially adversely
affected, Mr. Busing is entitled to receive two times his average annual
compensation. If we terminate Mr. Busing's employment without cause, he would be
entitled to receive his basic salary for the six month period following his
termination date. The employment agreement is "at will" and, therefore, does not
have a stated term.
The following Compensation Committee Report and Performance Graph shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any of our filings under the Securities
Act of 1933, or the Securities Exchange Act of 1934, except to the extent that
we specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
-15-
<PAGE> 17
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Our Stock Option and Compensation Committee has the authority and
responsibility to establish, determine and administer:
- our officer compensation policies;
- the salaries of our executive officers;
- the formula for bonus awards to our executive officers; and
- the grants of stock options to our executive officers and other key
employees under our 1995 Stock Option Plan.
Our Stock Option and Compensation Committee consists solely of independent
non-employee directors. In general, the philosophy of our Stock Option and
Compensation Committee is to attract and retain qualified executives, reward
current and past individual performance, provide short-term and long-term
incentives for superior future performance, and relate total compensation to
individual performance as well as our performance. The preferred compensation
policy of the Stock Option and Compensation Committee is to set base pay at the
lower end of the comparable market ranges, establish performance based annual
cash bonus opportunities, and grant significant option positions to key
employees to provide greater long term incentives.
In Fiscal 1997, we hired an outside consulting firm to perform an
executive compensation survey us. The consulting firm was asked to prepare a
survey reviewing base compensation, bonus programs, and stock options in
relation to similarly situated companies. The survey concluded that our
compensation is mixed when compared to the market, with some positions below
market and others above market. After a complete review and discussion of the
survey, our Stock Option and Compensation Committee agreed that we would move
all executive officers to a July 1 compensation review and adjustment cycle
effective July 1, 1997, to permit a more uniform review of executive
compensation consistent with salary ranges established for executive positions.
Also, based in part on the recommendation of the consulting firm, we entered
into an employment agreement with Mr. Kight.
Mr. Kight's employment agreement, effective May 1, 1997, provided for
an increase in base salary for Fiscal 1999 from $375,000 to $400,000. In
addition, his employment agreement provided for a one-time stock option grant of
200,000 shares at $14.75 per share, the fair market value of the shares on May
1, 1997. The option shares become 100% vested on May 1, 2003; provided, however,
20% of the option shares will vest and become exercisable at the end of each
fiscal year 1998 through 2002 that we attain at least 80% of the budgeted net
income or not more than 120% of the budgeted net loss. The stock options also
become 100% vested if we terminate Mr. Kight's employment without cause or upon
a change in our control, as defined in the employment agreement. The term of the
employment agreement is five years, with automatic one-year renewals thereafter.
In addition to the recommendation of the outside consulting firm, the
determination of executive officer base salaries for Fiscal 1999 was based
primarily on subjective factors, such as our Stock Option and Compensation
Committee's perception of individual performance and the executive officer's
contribution to our overall performance, and not on specific criteria. No
specific weight was given to any of these factors because each of these factors
was considered significant and the relevance of each varies depending upon an
officer's responsibilities.
In order to motivate management to meet both our short-term and
long-term objectives, our Stock Option and Compensation Committee approved an
Incentive Compensation Plan for certain executive officers. The bonuses for
senior officers were based partially on the achievement of revenue targets and
partially on the achievement of our pre-tax earnings targets and, in appropriate
cases, partially on achievement of revenue targets and partially on the
achievement of pre-tax earnings targets of our operating divisions. Mr. Kight
did not receive a bonus for Fiscal 1999. The Committee deferred Mr. Kight's
fiscal 1999 bonus to fiscal 2000. If we hit our performance targets for fiscal
2000, Mr. Kight will receive an additional bonus of $156,000 over and above his
fiscal 2000 bonus.
In Fiscal 1999, we updated the executive pay survey performed by the
outside consulting firm for us in Fiscal 1998. The update concluded that our
compensation is mixed when compared to the market, with some
-16-
<PAGE> 18
positions below market and others above market. In general, the results of the
update validated our approach to long-term incentives in the aggregate. After a
complete review of the individual performance criteria discussed above and
discussion of the survey, we approved annual base salaries with target
performance bonus percentages for our executive officers for Fiscal 2000, which
included an increase in Mr. Kight's base salary from $400,000 to $420,000 for
Fiscal 2000.
The purposes of our 1995 Stock Option Plan are to provide long-term
incentives to key employees and motivate key employees to improve our
performance and thereby increase our common stock price. Beginning in Fiscal
1997, stock option awards are considered at the time of the hiring of key
associates and annually for all key associates by our Stock Option and
Compensation Committee. The value of the stock options awarded is entirely
dependent upon our stock performance over a period of time.
The number of shares of our common stock subject to the options granted
during Fiscal 1999 was determined based on a subjective evaluation of the past
performance of the individual, the total compensation being paid to the
individual, the individual's scope of responsibility, and the anticipated value
of the individual's contribution to our future performance. No specific weight
was given to any of these factors. Options awarded to each executive officer
during previous years were reviewed by our Stock Option and Compensation
Committee in determining the size of an option awarded for Fiscal 1999.
Each stock option awarded during Fiscal 1999 had an exercise price
equal to the fair market value of our underlying common stock on the date of the
grant. Generally, stock options granted to our new employees vest and become
exercisable at the rate of 20% per year if the option holder remains employed at
the time of vesting and terminate ten years from the date of grant. However,
annual stock option grants to our key employees, however, typically vest and
become exercisable at the rate of 33-1/3% per year if the option holder remains
employed at the time of vesting and terminate ten years from the date of grant.
Pursuant to our policy of granting stock options to key employees on an annual
basis, on May 7, 1999, Mr. Kight was granted an option to purchase 100,000
shares at a price of $44.4375 per share, the fair market value of the shares on
May 7, 1999, vesting at the rate of 33-1/3% per year based on continued
employment.
The Budget Reconciliation Act of 1993 amended the Internal Revenue Code
to add Section 162(m) which bars a deduction to any publicly held corporation
for compensation paid to a "covered employee" in excess of $1,000,000 per year.
Generally, we intend that compensation paid to covered employees shall be
deductible to the fullest extent permitted by law. Our 1995 Stock Option Plan
and our Incentive Compensation Plan are intended to qualify under Section
162(m).
STOCK OPTION AND COMPENSATION COMMITTEE
Eugene F. Quinn (Chairman)
William P. Boardman
George R. Manser
-17-
<PAGE> 19
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE NASDAQ STOCK MARKET - US INDEX
AND THE S&P COMPUTER SOFTWARE & SERVICES INDEX
The following Performance Graph compares our performance with that of
the Nasdaq Stock Market - US Index and the S&P Computer Software & Services
Index, which is a published industry index. The comparison of the cumulative
total return to stockholders for each of the periods assumes that $100 was
invested on September 27, 1995 (the effective date our common stock was
registered under the Securities Exchange Act of 1934, as amended), in our common
stock, and in the Nasdaq Stock Market - US Index and the S&P Computer Software &
Services Index and that all dividends were reinvested.
COMPARISON OF 45 MONTH CUMULATIVE TOTAL RETURN*
AMONG CHECKFREE HOLDINGS CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P COMPUTERS (SOFTWARE & SERVICES) INDEX
CUMULATIVE TOTAL RETURN
------------------------------------
9/28/95 12/95 12/96 6/97 6/98 6/99
CHECKFREE HOLDINGS CORPORATION 100 119 95 98 164 153
NASDAQ STOCK MARKET (U.S.) 100 104 127 143 188 268
S & P COMPUTERS (SOFTWARE & SERVICES) 100 102 159 216 336 516
-18-
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Currently, Messrs. Manser, Boardman and Quinn, who are not employees,
are members of the Stock Option and Compensation Committee. Since 1994, Mr.
Kight has served as a member of Metatec International, Inc. and its
predecessor's board of directors, of which Mr. Wilkins is Chairman, President
and Chief Executive Officer.
TRANSACTIONS BETWEEN INTUIT INC. AND CHECKFREE
We entered into a Services and License Agreement with Intuit Inc. in
connection with the acquisition of Intuit Services Corporation in January 1997.
The principal objectives of the agreement were to: (a) establish a continuing
cooperative relationship between the parties whereby users of certain Intuit
software products and services would continue to be able to obtain electronic
banking and electronic bill payment services from us through such Intuit
products and services; (b) provide the means for an orderly transition in the
operation and support of several services offered by Intuit Services Corporation
that were interdependent on certain technologies, equipment, facilities,
personnel and support services of Intuit and us; (c) set forth the terms on
which we and Intuit will cooperate to develop, market, distribute and support
certain of our respective products and services; and (d) provide for the grant
of certain technology licenses and mutual support and technical cooperation
agreements among the parties. During fiscal 1999, we incurred $2,608,072 in
royalty expense in connection with the terms of this agreement.
MR. KIGHT'S GUARANTY
In 1993, the State of Ohio issued State Economic Development Revenue
Bonds in the aggregate principal amount of $7,515,000 pursuant to a certain
trust agreement between the Treasurer of Ohio and The Provident Bank, as
trustee. The proceeds of the bonds were applied to the purchase of real property
that we leased from the Director of Development, State of Ohio for our
facilities in Worthington, Ohio. Mr. Kight guaranteed the obligations evidenced
by the bonds in order to induce their issuance by the State of Ohio pursuant to
a guaranty agreement, dated August 1, 1993, made with Provident. Under the
Guaranty Agreement, Mr. Kight's liability is limited to an amount equal to the
product of his percentage beneficial ownership of our common stock multiplied by
the outstanding principal of the bonds; provided, however, that Mr. Kight's
liability may not exceed $2,200,000. We agreed to indemnify and reimburse Mr.
Kight for any amount paid by him under the Guaranty Agreement. Additionally,
under the Guaranty Agreement, with certain limited exceptions, the Director of
Development's consent is required for Mr. Kight to sell or otherwise dispose of
his equity interest in our common stock. In June 1999, we sold our facilities in
Worthington, Ohio and, subsequently, Mr. Kight was released from his obligations
under the Guaranty Agreement.
MISCELLANEOUS
Curtis A. Loveland, our Secretary, is a partner in the law firm of
Porter, Wright, Morris & Arthur LLP, which firm serves as our outside general
counsel.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
officers and directors, and greater than 10% stockholders, to file reports of
ownership and changes in ownership of our securities with the Securities and
Exchange Commission. Copies of the reports are required by SEC regulation to be
furnished to us. Based on its review of these reports and written
representations from reporting persons, we believe that all reporting persons
complied with all filing requirements during the year ended June 30, 1999,
except for one late filing for Mr. Polashock.
-19-
<PAGE> 21
INDEPENDENT PUBLIC ACCOUNTANTS
Our board of directors has appointed Deloitte & Touche LLP, independent
public accountants, as our auditors for Fiscal 2000. Deloitte & Touche LLP has
served as our independent public accountants since 1981. Our board of directors
believes that the reappointment of Deloitte & Touche LLP for Fiscal 2000 is
appropriate because of the firm's reputation, qualifications, and experience.
Representatives of Deloitte & Touche LLP will be present at our annual meeting
and will have an opportunity to make a statement if they desire to do so. These
representatives will be available to respond to appropriate questions.
PROPOSALS BY STOCKHOLDERS FOR 2000 ANNUAL MEETING
If any of our stockholder wish to submit a proposal to be included in
next year's proxy statement and acted upon at our 2000 annual meeting of
stockholders, the proposal must be received by our corporate Secretary at our
principal executive offices, 4411 East Jones Bridge Road, Norcross, Georgia
30092, prior to the close of business on August 25, 2000. Any stockholder
proposal submitted outside the processes of Rule 14a-8 under the Securities
Exchange Act of 1934 for presentation to our 2000 annual meeting of stockholders
will be considered untimely for purposes of Rule 14a-4 and 14a-5 if notice
thereof is received by us after August 25, 2000.
OTHER MATTERS
As of the date of this proxy statement, our management knows of no
other business that will come before the meeting. Should any other matter
requiring a vote of the stockholders arise, the proxy in the enclosed form
confers upon the persons designated to vote the shares discretionary authority
to vote with respect to these matter in accordance with their best judgment.
Our 1999 Annual Report to Stockholders, including financial statements,
was furnished to our stockholders prior to or concurrently with the mailing of
this proxy material.
By Order of the Board of Directors,
Curtis A. Loveland
Secretary
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<PAGE> 22
CHECKFREE HOLDINGS CORPORATION
4411 EAST JONES BRIDGE ROAD, NORCROSS, GEORGIA 30092
--------------------------------------------------------
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 4, 1999
The undersigned stockholder of CheckFree Holdings Corporation (the
"Company") hereby appoints Peter J. Kight, Mark A. Johnson and Peter F.
Sinisgalli, or any one of them, as attorneys and proxies with full power of
substitution to each, to vote all shares of Common Stock of the Company which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Company's headquarters located at 4411 East Jones
Bridge Road, Norcross, Georgia, on Thursday, November 4, 1999, at 10:00 a.m.
local time, and at any adjournment or adjournments thereof, with all of the
powers such undersigned stockholder would have if personally present, for the
following purposes:
1. ELECTION OF GEORGE R. MANSER AND WILLIAM P. BOARDMAN AS CLASS I DIRECTORS.
[ ] FOR
[ ] WITHHOLD AUTHORITY FOR EACH NOMINEE
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR A SPECIFIC NOMINEE, WRITE THAT
NOMINEE'S NAME HERE:_______________________________________________________.
2. IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
(Continued and to be signed on other side.)
(Continued from other side.)
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Stockholders, dated October 8, 1999, the Proxy Statement and the
Annual Report of the Company furnished therewith. Any proxy heretofore given to
vote said shares is hereby revoked.
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IN THE ENCLOSED
ENVELOPE.
Dated:____________________, 1999
________________________________
(Signature)
________________________________
(Signature)
SIGNATURE(S) SHALL AGREE WITH
THE NAME(S) PRINTED ON THIS
PROXY. IF SHARES ARE REGISTERED
IN TWO NAMES, BOTH STOCKHOLDERS
SHOULD SIGN THIS PROXY. IF
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE YOUR FULL
TITLE AS SUCH.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
