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:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
Computer Data Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii),14a-6(i), or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
4) Proposed maximum aggregate value of transaction:
( ) 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:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 22, 1996
The Annual Meeting of Stockholders of Computer Data Systems, Inc. ("CDSI")
will be held at the Corporation's headquarters located at One Curie Court,
Rockville, Maryland, on October 22, 1996 at 10:00 a.m., for the following
purposes:
1. To elect a Board of Directors comprised of eight persons to serve until
the next Annual Meeting and until their successors are duly elected and
qualified;
2. To consider approval of the appointment of Ernst & Young LLP as
independent auditors for the fiscal year ending June 30, 1997; and
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only holders of shares of Common Stock of record on the books of the
Corporation at the close of business on September 3, 1996 will be entitled to
notice of and to vote at the Annual Meeting or any adjournment thereof.
You are cordially invited to be present at the Annual Meeting. IF YOU
CANNOT ATTEND, PLEASE EXECUTE AND MAIL PROMPTLY THE ENCLOSED FORM OF PROXY,
USING THE ENCLOSED RETURN ENVELOPE.
By Order of the Board of Directors,
/s/ Donald E. Ziegler
Donald E. Ziegler
Secretary
One Curie Court
Rockville, Maryland 20850
September 17, 1996
COMPUTER DATA SYSTEMS, INC.
ONE CURIE COURT
ROCKVILLE, MARYLAND 20850
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 22, 1996
INFORMATION CONCERNING SOLICITATION AND VOTING
General
- -------
The following information is submitted concerning the enclosed form of proxy
and the matters to be acted upon under authority thereof at the Annual Meeting
of Stockholders of the Corporation to be held on the 22nd day of October 1996,
commencing at 10:00 a.m., or at any adjournment thereof, pursuant to the
accompanying notice of said meeting. The Annual Meeting will be held at the
Corporation's headquarters located at One Curie Court, Rockville, Maryland
20850. The Corporation intends to mail this proxy statement and accompanying
proxy to all stockholders entitled to vote at the Annual Meeting on or about
September 17, 1996.
Solicitation And Revocability Of Proxies
- ----------------------------------------
The proxy is solicited on behalf of the Board of Directors of the
Corporation. It may be revoked by the stockholder at any time prior to the
exercise thereof by filing with the Secretary of the Corporation a written
revocation or a duly executed proxy bearing a later date. The proxy shall be
suspended if the stockholder shall be present at the meeting and elect to vote
in person. Attendance at the meeting will not, by itself, revoke a proxy.
Shares represented by proxies received will be voted. Where the stockholder has
specified his choice with respect to the proposal to be acted upon, the shares
will be voted in accordance with the specification so made, and in the absence
thereof will be voted by the proxy holders as directed by management.
The cost of solicitation of proxies will be borne by the Corporation. In
addition to solicitation by mail, certain directors, officers and regular
employees of the Corporation may solicit proxies by facsimile, telephone or
personal interview for which they will receive no additional compensation. In
addition, arrangements will be made with brokerage firms and other custodians,
nominees and fiduciaries to forward solicitation material for the meeting to
beneficial owners, and the Corporation will reimburse them for their reasonable
expenses in so doing.
Voting Rights And Oustanding Shares
- -----------------------------------
Only stockholders of record on the books of the Corporation at the close of
business on September 3, 1996, will be entitled to notice of and to vote at the
Annual Meeting. As of that date, there were 5,937,470 shares of Common Stock
issued and outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote for each matter submitted to the stockholders for approval.
A majority of the outstanding shares entitled to vote must be present in
person or represented by proxy at the Annual Meeting to constitute a quorum.
Shares represented by properly executed proxies with respect to which a vote is
withheld, an abstention is indicated, or a broker does not vote ("broker
nonvotes") will be treated as shares that are present and entitled to vote for
purposes of determining a quorum, but those shares will not be treated as having
been voted for purposes of determining the approval of any matter submitted to
the stockholders for a vote. Unless otherwise noted in this proxy statement,
all matters to come before the meeting identified in the accompanying notice
require the affirmative vote of a majority of those shares, present in person or
by proxy and voting at the Annual Meeting, to be adopted, assuming that a quorum
is present.
INFORMATION WITH RESPECT TO CERTAIN STOCKHOLDERS
The stockholders named in the following table are those known to the
Corporation to be the beneficial owners of 5% or more of the Corporation's
Common Stock. Unless otherwise indicated, the information is as of July 26,
1996. For purposes of this table, and as used elsewhere in this Proxy
Statement, the term "beneficial owner" means any person who, directly or
indirectly, has or shares the power to vote, or to direct the voting of a
security or the power to dispose, or to direct the disposition of, a security.
Except as otherwise indicated, the Corporation believes that each individual
owner listed below exercises sole voting and dispositive power over their
shares.
PERCENTAGE OF
AMOUNT OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OWNERSHIP (SHARES) COMMON STOCK
- ---------------- -------------------- --------------
FMR Corporation 598,500 (1) 10.18%
82 Devonshire Street
Boston, Massachusetts 02109
Calvin S. Koonce 445,106 (2) 7.57%
6229 Executive Boulevard
Rockville, Maryland 20852
Clifford M. Kendall 342,634 (3) 5.83%
One Curie Court
Rockville, Maryland 20850
__________________________________
(1) As reported on Schedule 13G, dated April 9, 1996. Includes sole
dispositive power over 598,500 shares. FMR Corp. beneficially owns the
shares through its wholly-owned subsidiary, Fidelity Management and
Research Corporation ("Fidelity"), an investment adviser to several
investment companies registered under the Investment Corporation Act of
1940 that own shares of CDSI (the "Fidelity Funds"). The Board of
Trustees of the Fidelity Funds has the authority to vote or direct the
voting of the shares under written guidelines established by the Board of
Trustees of the Fidelity Funds. FMR Corp. through control of Fidelity,
and each of the Fidelity Funds has sole power to dispose of shares held by
the Funds. Mr. Edward C. Johnson, Chairman of FMR Corp., reported in the
statement on Schedule 13G sole dispositive power with respect to the
shares owned by FMR Corp.
(2) As reported on Schedule 13D, dated April 27, 1992. Number of shares
adjusted to reflect the August 1993, 2-for-1 stock split effected in the
form of a dividend.
(3) Includes 123,994 shares held by Mr. Kendall's spouse and 13,000 shares
subject to acquisition by the exercise of options exercisable within 60
days.
ITEM 1: ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
- ---------------------
Eight directors, comprising the entire membership of the Board of
Directors of the Corporation, are to be elected at the Annual Meeting. If
elected, the directors will serve until the next Annual Meeting and until their
successors are duly elected and qualified.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the eight nominees shown below. Although it is not
contemplated that any nominee will decline or be unable to serve as a director,
in either such event, the proxies will be voted by the proxy holders for such
other person as may be designated by the present Board of Directors.
Each nominee for election is currently serving as a member of the Board.
With the exception of Mr. Bracken, each nominee has also previously been elected
by the stockholders. The names of the nominees and certain information about
them are set forth below. Except as indicated, the principal occupation for the
past five years of each nominee is as listed below.
PRINCIPAL
NAME OCCUPATION ADDITIONAL INFORMATION
---- ---------- ----------------------
DR. RAYMOND B. HOXENG Retired Prior to his retirement in 1982,
Director since 1968 Tampa, FL Dr. Hoxeng was involved in university
Age 77 and hospital administration. His
earlier career was distinguished by
accomplishments in industrial
engineering and research.
CLIFFORD M. KENDALL Chairman of From 1970 to 1991, Mr. Kendall
Director since 1970 the Board served as Chief Executive Officer
Age 65 of the Corporation of the Corporation.
Member-Executive Committee
HILLIARD W. PAIGE Retired Mr. Paige is a former President of
Director since 1974 Washington, DC General Dynamics Corporation.
Age 76 Mr. Paige serves as a Director of The Member-
Executive, Atlantic Council of the United States,
Audit/Compensation Committees Washington, D.C.
ELMER B. STAATS Retired Mr. Staats is a former Comptroller
Director since 1981 Washington, DC General of the United States. Mr.
Age 82 Staats serves as Chairman of the
Member-Executive, Financial Accounting Standards
Audit/Compensation Committees Advisory Board, Washington, D.C.
PRINCIPAL
NAME OCCUPATION ADDITIONAL INFORMATION
---- ---------- ----------------------
WYATT D. TINSLEY Executive Mr. Tinsley serves as the Corporation's
Director since 1988 Vice President Chief Financial Officer.
Age 53
PAUL R. IGNATIUS Retired Mr. Ignatius is a former Secretary of
Director since 1991 Washington, DC the Navy. From 1987 to December
Age 75 1993, Mr. Ignatius served as the
Member-Executive, Chairman of the Board, Logistics
Audit/Compensation Committees Institute, Bethesda, MD.
JAMES A. PARKER President, Mr. Parker serves as President of
Director since 1991 Jay Parker & the Lincoln Institute for Research
Age 59 Associates, & Education, Inc., a non-profit
Member-Executive, Washington, DC public policy organization in
Audit/Compensation Committees (International Washington, D.C.
Consulting Firm)
PETER A. BRACKEN President and Mr. Bracken has served as President
Director since 1996 Chief Executive and Chief Executive Officer since
Age 55 Officer May 1996. Prior to joining CDSI, Mr.
Bracken served as President of
the Information Sciences Group of
Lockheed Martin Corporation.
MEETINGS AND COMMITTEES OF THE BOARD
- ------------------------------------
The Corporation has standing Executive and Audit/Compensation Committees
of the Board of Directors. The Board of Directors does not have a Nominating
Committee. The Board of Directors of the Corporation held four meetings during
the fiscal year ended June 30, 1996. All directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and Committees on which
they served. Overall attendance at such meetings was 99%.
The Executive Committee has the power and authority of the Board of
Directors and meets several times during the year in months when the Board of
Directors does not meet. Messrs. Kendall, Paige, Staats, Ignatius and Parker
serve on the Executive Committee. In the fiscal year ended June 30, 1996, the
Executive Committee met five times.
The Audit/Compensation Committee makes recommendations regarding the
engagement of the Corporation's independent auditors, reviews the arrangement
and scope of the audit, considers comments made by the independent auditors with
respect to the adequacy of the Corporation's internal accounting controls, and
reviews non-audit services provided by the firm. In addition, this committee
reviews and approves (or recommends to the full Board) the annual salary, bonus
and other benefits of senior management of the Corporation; reviews and makes
recommendations to the Board relating to executive compensation and plans; and
establishes, and periodically reviews, the Corporation's policy with respect to
management perquisites. The Audit/Compensation Committee also presently serves
as the committee of disinterested persons who administer the Corporation's 1991
Long-Term Incentive Plan. Messrs. Paige, Staats, Ignatius and Parker serve on
the Audit/Compensation Committee. During the fiscal year ended June 30, 1996,
the Audit/Compensation Committee met five times.
COMPENSATION OF DIRECTORS
- -------------------------
Directors who are employees receive no additional compensation for serving
as directors. In the fiscal year ended June 30, 1996, non-employee directors
received the following amounts for each meeting of the Board of Directors they
attended: Dr. Hoxeng received $2,000 per meeting and Messrs. Paige, Staats,
Ignatius, and Parker each received $1,200. Messrs. Paige, Staats, Ignatius, and
Parker also received a retainer of $12,000 each in the fiscal year ended June
30, 1996, for services rendered as members of the Executive and
Audit/Compensation Committees of the Board of Directors.
Pursuant to the Corporation's 1991 Long-Term Incentive Plan (the "Plan"),
non-employee directors of the Corporation also are granted stock options upon
being named a director and thereafter on an annual basis. In the fiscal year
ended June 30, 1996, each non-employee director was granted options to purchase
1,500 shares. The options become exercisable one year after the date of grant
and expire five years from the date of grant.
EXECUTIVE COMPENSATION
REPORT OF AUDIT/COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
- ----------------------------------------------------------------
The Audit/Compensation Committee of the Board of Directors, which is
composed of outside directors of the Corporation, is responsible for developing
and recommending to the Board of Directors the Corporation's general
compensation policies. The Committee approves the compensation plans for the
Corporation's executive officers, including the Chief Executive Officer (CEO),
and determines the compensation to be paid to the executive officers. The
Audit/Compensation Committee also is responsible for the granting of stock
options to the executive officers and the administration thereof.
The Audit/Compensation Committee has furnished the following report for
fiscal year 1996:
Compensation Philosophy. The following general principles have been adopted by
the Committee and represent the guidelines upon which compensation decisions are
based. Executive compensation is designed to:
Provide a competitive total compensation package that enables the
Corporation to attract and retain key executives who demonstrate
outstanding performance, technical expertise, business responsibility,
personal integrity, and professionalism.
Encourage cooperation and coordination among executives to meet the
Corporation's long-term business objectives and strategy.
Provide variable compensation that is directly linked with the financial
performance of the Corporation and the achievement of increased
stockholder value.
Executive Officer Compensation. The Corporation's executive compensation
program consists of three main components: (i) annual base salary, (ii) annual
incentive cash bonus, and (iii) equity participation. The executive officers,
including the CEO, are eligible for the same benefits, including group health
and life insurance and participation in the Corporation's Employee Retirement
Plan and 401(k) Savings Plan, as are available generally to the Corporation's
professional staff. The Corporation also provides whole life "split dollar"
insurance policies on the lives of the executive officers. The Corporation is
the beneficiary of the amount of its premiums paid with the remaining amounts
payable to the officers' estates. The executives may elect, under certain
circumstances, to convert the policy to an annuity based on the cash value less
premiums paid.
The compensation policies that are administered by the Committee are
further explained below:
Base Salary - Base salaries are competitive, but not excessive, assuring the
Corporation the ability to attract and retain qualified officers yet maintain a
relatively low cost structure for officer salaries. Base pay levels are
reviewed annually and established through comparisons with other professional
services firms of similar size and complexity.
Annual Incentive - Executive officers participate as a team in an incentive
compensation program with awards based on the attainment of predetermined
financial targets set annually by the Committee and on individual performance.
For 1996, the targets were based on achieving certain Corporation pre-tax levels
of income. The objective is to reward executives for meeting the predetermined
targets and provide opportunities for above average earnings by attaining
superior financial results for the Corporation and the stockholders.
Equity Participation - Non-qualifying stock option awards are granted
annually based on performance and serve as an incentive to enhance stockholder
value. Options are issued to executive officers, (as well as other line
officers and key employees) who have substantial responsibility for the
management and growth of the Corporation. Options granted are evidenced by an
agreement setting forth the number of shares awarded, and such other
terms and conditions as determined by the Committee. Options vest and become
exercisable in annual installments of twenty-five percent of the shares covered
by each grant commencing on the first anniversary of the grant date and expire
in five years from the grant date. In setting the size of grants for the CEO
and other executives, the Committee considers their position, individual
performance, stock options presently held, and the total number of shares
available for the issuance under the Corporation's stock option plan.
Compensation of the Current and Former CEO. The annual salary for the President
and CEO is established by the Audit/Compensation Committee using the same
criteria as discussed above for the executive officers. The CEO's annual
incentive compensation payment is determined by the Committee largely based on
whether targets for the Corporation's pre-tax income are met. The amount of
stock options granted to the CEO are intended to align the future rewards of the
CEO with the interests of the stockholders.
Gordon S. Glenn, who served as President and CEO of the Corporation since
1991, resigned from this position effective April 30, 1996. Mr. Glenn's salary
for fiscal year 1996 was $256,231, which represents an increase of approximately
twenty-three percent over his salary for the previous year. The percentage of
increase reflects the Committee's desire to bring the Corporation's compensation
for its top executives more in line with industry standards. Mr. Glenn's cash
award for fiscal year 1996 (shown in the Bonus column of the Summary
Compensation Table) was determined based on the Corporation's performance with
respect to the targets for 1996 pre-tax profits. Mr. Glenn was also awarded
stock options at the beginning of fiscal year 1996. As part of his separation
agreement with the Corporation, Mr. Glenn continued to draw his regular salary
through the end of July 1996 and will continue to serve the Corporation as a
consultant during fiscal year 1997.
Peter A. Bracken, the current President and CEO, joined the Corporation on
May 13, 1996. His compensation package, including salary and grant of stock
options, was established by the Audit/Compensation Committee and is consistent
with the Corporation's philosophy for executive compensation set out above. Mr.
Bracken was not eligible for an incentive compensation payment for fiscal year
1996.
Tax Compliance Policy. Section 162(m) of the Internal Revenue Code generally
limits to $1,000,000 the tax deductible compensation paid to the CEO and to each
of the four highest-paid executives employed as executive officers on the last
day of the fiscal year. However, the limitation does not apply to performance-
based compensation provided certain conditions are satisfied. The Committee
does not anticipate that in the foreseeable future any officer of the
Corporation will earn compensation in excess of $1 million that would not
qualify as performance-based compensation. Therefore, the Committee has not yet
determined a policy with respect to Section 162(m). The Committee intends to
review the implications of Section 162(m) when it becomes more relevant with
respect to the Corporation's executive compensation policies.
The Audit/Compensation Committee
Hilliard W. Paige Paul R. Ignatius
Elmer B. Staats James A. Parker
SEPARATION AGREEMENT WITH FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER
In April 1996, the Corporation entered into a separation agreement with
Gordon S. Glenn in connection with his resignation from CDSI. While Mr. Glenn
resigned as a Director and as President and Chief Executive Officer of CDSI,
and from all positions with CDSI subsidiaries and affiliates effective April 30,
1996, Mr. Glenn agreed to remain as a full-time employee of the Corporation
through July 31, 1996. Pursuant to the terms of the agreement, Mr. Glenn
received a one-time severance payment of $100,000 and certain other benefits.
In addition, Mr. Glenn agreed to continue to serve the Corporation as a
consultant for a portion of fiscal year 1997. The consultant fees payable to
Mr. Glenn under the agreement could reach $215,000, depending upon when Mr.
Glenn secures another full-time position.
EXECUTIVE OFFICERS
- ------------------
CLIFFORD M. KENDALL, age 65, has been with CDSI since its founding in 1968 and
is currently the Chairman of the Board of Directors. From 1970 to 1991, Mr.
Kendall served as Chief Executive Officer of the Corporation.
PETER A. BRACKEN, age 55, joined the Corporation in May 1996 as President and
Chief Executive Officer. From 1986 to 1996, Mr. Bracken was employed by Martin
Marietta Corporation (now Lockheed Martin Corporation), most recently as
President of the Information Sciences Group. Before joining Martin Marietta in
1986, Mr. Bracken served as Director of Mission Operations and Data Systems for
NASA's Goddard Space Flight Center.
WYATT D. TINSLEY, age 53, is currently Executive Vice President and the
Corporation's Chief Financial Officer. Mr. Tinsley joined CDSI in 1969.
MARY ANN MAYHEW, age 44, is currently President of the CDSI Information
Technology Solutions Company, a division of the Corporation ("CDSI ITS"). Ms.
Mayhew joined CDSI in 1980.
THOMAS A. GREEN, age 50, is currently President of the CDSI Business
Applications Solutions Company, a division of the Corporation ("CDSI BAS"). Mr.
Green joined CDSI in 1976.
EDWARD D. JOHNSON, age 42, is currently Senior Vice President of CDSI ITS. Mr.
Johnson joined CDSI in 1981.
DONALD E. ZIEGLER, age 47, is currently Treasurer and Secretary of the
Corporation. Mr. Ziegler joined CDSI in 1982.
SUMMARY COMPENSATION TABLE
The following table reports the compensation paid or accrued during the
three fiscal years ended June 30, 1996, for those individuals serving as
President and Chief Executive Officer of CDSI during fiscal year 1996 and for
each of the four other most highly compensated CDSI executive officers.
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
YEAR OTHER SECURITIES
NAME AND ENDED ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION 6/30 SALARY BONUS COMPENSATION OPTIONS (#) COMPENSATION(1)
- ------------------ ---- ------ ----- ------------ ----------- ---------------
CLIFFORD M. KENDALL 1996 $178,769 $142,000 ----- 8,000 $ 17,290
Chairman of the Board 1995 $148,000 $148,000 ----- 6,000 $ 16,259
1994 $148,000 $148,000 ----- 8,000 $ 15,329
PETER A. BRACKEN 1996 $ 28,846 N/A $21,750(2) 40,000 $ 361
President and
Chief Executive Officer
WYATT D. TINSLEY 1996 $149,385 $118,500 ----- 12,000 $ 11,304
Chief Financial 1995 $131,846 $130,000 ----- 6,000 $ 10,336
Officer 1994 $126,769 $124,000 ----- 8,000 $ 9,749
MARY ANN MAYHEW 1996 $149,038 $118,500 ----- 12,000 $ 10,142
President, CDSI ITS 1995 $122,654 $121,000 ----- 6,000 $ 9,355
1994 $112,769 $110,000 ----- 8,000 $ 8,609
THOMAS A. GREEN 1996 $149,077 $118,500 ----- 12,000 $ 10,533
President, CDSI BAS 1995 $123,077 $121,000 ----- 6,000 $ 8,954
1994 $114,808 $ 66,000 ----- 6,000 $ 8,312
GORDON S. GLENN 1996 $256,231 $203,820 ----- 24,000 $111,927(3)
Former President and 1995 $208,231 $205,000 ----- 30,000 $ 11,124
Chief Executive Officer 1994 $199,615 $195,000 $40,298(4) 40,000 $ 13,031
_________________________
(1) Amounts represent: (a) Corporation contributions to qualified and non-
qualified employee retirement plans (including matching contributions to
the 401(k) Savings Plan) and (b) Split Dollar Life Insurance. The values
for two component amounts for each named executive officer are as follows
for the fiscal year ended June 30, 1996: Mr. Kendall, (a) $10,480 and (b)
$6,810; Mr. Bracken, (a) $361 and (b) 0; Mr. Tinsley, (a) $10,268 and (b)
$1,036; Ms Mayhew, (a) $9,692 and (b) $450; Mr. Green, (a) $10,256 and (b)
$277; and Mr. Glenn, (a) $10,967 and (b) $960.
(2) Mr. Bracken joined the Corporation as President and CEO on May 13, 1996.
Amount shown represents fees paid to Mr. Bracken for consulting services
provided between April 10 and May 13.
(3) Mr. Glenn resigned as President and CEO as of April 30, 1996 and resigned
from the Corporation effective July 31, 1996. Amount includes $100,000
severance payment accrued before the close of fiscal year ended June 30,
1996.
(4) Amount includes the $35,000 initiation fee paid by the Corporation on
behalf of Mr. Glenn for membership in a local country club.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM(4)
GRANTED EMPLOYEE IN PRICE EXPIRATION
NAME (#) FISCAL YEAR(1) ($/SHR)(2) DATE(3) 5%($) 10%($)
- ---- ------- -------------- ---------- ---------- -------- --------
Clifford M. Kendall 8,000 3.6% $11.25 07/18/00 $ 24,817 $ 54,946
Peter A. Bracken 40,000 18.2% $21.75 05/13/01 $240,365 $531,144
Wyatt D. Tinsley 12,000 5.5% $11.25 07/18/00 $ 37,226 $ 82,419
Mary Ann Mayhew 12,000 5.5% $11.25 07/18/00 $ 37,226 $ 82,419
Thomas A. Green 12,000 5.5% $11.25 07/18/00 $ 37,226 $ 82,419
Gordon S. Glenn(5) 24,000 10.9% $11.25 10/31/96 $ 18,613 $ 41,209
______________________________
(1) Stock options exercisable into 219,900 shares of Common Stock were granted
to all employees and non-employee directors of the Corporation as a group
during the fiscal year ended June 30, 1996.
(2) The exercise price is the closing market price on the date of grant.
(3) Options vest and become exercisable in annual installments of 25% of shares
covered by each grant commencing on the first anniversary of the grant date,
and expire in five years from the grant date.
(4) The dollar amounts under the potential realizable values columns use the 5%
and 10% rates of appreciation permitted by the SEC, and are not intended to
forecast actual future appreciation in the stock price. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Corporation's Common Stock. There can be no assurance the amounts
reflected in this table will be achieved. The assumed rates are compounded
annually to the full five-year term of the options.
(5) Mr. Glenn resigned from the Corporation effective July 31, 1996. Pursuant
to the terms of the Stock Option Agreement governing the July 18, 1995
grant, Mr. Glenn had until October 31, 1996 to exercise options for 6,000
shares which were exercisable on the date of his resignation. The remainder
of the options granted expired upon his resignation.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
OPTIONS EXERCISED IN FY 1996 UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
---------------------------- AT 6/30/96 AT 6/30/96(2)
---------- -------------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------------- ---------------------
Clifford M. Kendall 4,100 $ 21,860 5,500 / 18,500 $ 66,188 $211,563
Peter A. Bracken -0- -0- -0- / 40,000 -0- $ 20,000
Wyatt D. Tinsley -0- -0- 19,900 / 22,500 $316,913 $255,563
Mary Ann Mayhew 8,200 $ 87,938 5,500 / 22,500 $ 66,188 $255,563
Thomas A. Green -0- -0- 9,100 / 20,750 $131,869 $229,688
Gordon S. Glenn(3) 97,500 $1,621,563 -0- / 76,500 -0- $881,813
______________________________
(1) Value is calculated based on the difference between the option price and
the closing market price of the Common Stock on the date of the exercise
multiplied by the number of shares to which the exercise relates.
(2) The closing price for the Corporation's Common Stock as reported by the
Nasdaq Stock Market on June 28, 1996 was $22.25. Value is calculated on
the basis of the difference between the option exercise price and $22.25,
multiplied by the number of shares of Common Stock underlying the option.
(3) Mr. Glenn resigned from the Corporation effective July 31, 1996. Options
for 43,000 shares, which were unexercisable as of that date, expired by
their terms upon his resignation.
SECURITIES OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding beneficial
ownership of the Corporation's Common Stock as of July 26, 1996 by: (i) each
director of the Corporation, (ii) each executive officer (and former executive
officer) named in the table above labeled Summary Compensation Table, and (iii)
all directors and executive officers of the Corporation as a group. This table
is based on information provided by the Corporation's directors and executive
officers. Unless otherwise indicated in the footnotes below, and subject to
community property laws where applicable, each of the named persons exercises
sole voting and dispositive power over his or her shares.
NAME OF AMOUNT OF PERCENTAGE
BENEFICIAL BENEFICIAL OF OUTSTANDING
OWNER OWNERSHIP COMMON STOCK
- ---------- ---------- --------------
Peter A. Bracken 1,000 *
Gordon S. Glenn 143,846 (1) 2.45%
Thomas A. Green 23,904 (2) *
Raymond B. Hoxeng 40,000 (3) *
Paul R. Ignatius 11,500 (4) *
Clifford M. Kendall 342,634 (5) 5.83%
Mary Ann Mayhew 25,902 (6) *
Hilliard W. Paige 21,000 (7) *
James A. Parker 11,728 (8) *
Elmer B. Staats 27,500 (9) *
Wyatt D. Tinsley 37,563 (10) *
All directors & executive
officers as a group
(15 persons) 812,045 (11) 13.81%
____________________________
* Less than one percent
(1) Mr. Glenn resigned from the Corporation effective July 31, 1996.
(2) Includes 14,250 shares subject to acquisition by the exercise of options
exercisable within 60 days.
(3) Includes 3,000 shares subject to acquisition by the exercise of options
exercisable within 60 days. Shares are held in two revocable trusts, one in
Dr. Hoxeng's name (17,000 shares) and one in the name of Dr. Hoxeng's spouse
(20,000 shares). Dr. Hoxeng and his spouse are co-trustees of both trusts.
(4) Includes 5,000 shares subject to acquisition by the exercise of options
exercisable within 60 days.
(5) Includes 123,994 shares held by Mr. Kendall's spouse and 13,000 shares
subject to acquisition by the exercise of options exercisable within 60
days.
(6) Includes 12,000 shares subject to acquisition by the exercise of options
exercisable within 60 days.
(7) Includes 5,000 shares subject to acquisition by the exercise of options
exercisable within 60 days.
(8) Includes 6,117 shares subject to acquisition by the exercise of options
exercisable within 60 days.
(9) Includes 7,000 shares subject to acquisition by the exercise of options
exercisable within 60 days.
(10) Includes 20,000 shares subject to acquisition by the exercise of options
exercisable within 60 days.
(11) Includes 105,267 shares subject to acquisition by the exercise of options
exercisable within 60 days.
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
Set forth below is a line-graph presentation comparing the cumulative
stockholder return on the Corporation's Common Stock, on an indexed basis,
against the cumulative total returns of the Nasdaq Stock Market - U.S. Index and
the S&P Computer Software and Services Index for the period of the Corporation's
last five fiscal years (June 30, 1991 = 100):
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG COMPUTER DATA SYSTEMS, INC., THE NASDAQ STOCK MARKET-US INDEX
AND THE S & P COMPUTER SOFTWARE & SERVICES INDEX
6/91 6/92 6/93 6/94 6/95 6/96
---- ---- ---- ---- ---- ----
Computer Data Systems, Inc. 100 132 240 355 286 584
Nasdaq Stock Market - U.S 100 120 151 153 204 261
S&P Comptr Softwr & Svcs. 100 113 167 189 294 392
* $100 INVESTED ON 06/30/91 IN STOCK OR INDEX - INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING JUNE 30.
[The above data appears as a line graph in the version of this document
distributed to stockholders.]
ITEM 2: APPROVAL OF INDEPENDENT AUDITORS
At the Annual Meeting, the stockholders will be asked to approve the
appointment of Ernst & Young LLP as the Corporation's independent auditors for
the fiscal year ending June 30, 1997. The Audit/Compensation Committee has
recommended that the appointment of Ernst & Young LLP be approved by the
stockholders. Representatives of Ernst & Young LLP are expected to be present
at the Annual Meeting with the opportunity to make a statement if they desire to
do so, and such representatives are expected to be available to respond to
appropriate questions.
Approval of the selection of the independent auditors will require the
affirmative vote of holders of shares of Common Stock representing a majority of
the number of votes present in person or represented by proxy at the Annual
Meeting, provided a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS THAT ALL STOCKHOLDERS VOTE
FOR APPROVAL OF THE INDEPENDENT AUDITORS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors and executive officers to file reports of ownership
and changes of ownership with the SEC and the Nasdaq Stock Market. The
Corporation believes that during the period from July 1, 1995 through June 30,
1996, its directors and executive officers complied with all applicable Section
16(a) filing requirements except that one Form 4 filed on behalf of Mr. Kendall
reporting the sale of securities in May 1996 was inadvertently filed four days
late.
STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be considered for the 1997 Annual
Meeting of Stockholders, it must be received by the Corporation at its offices
no later than May 23, 1997. All such stockholder proposals should be mailed to
the Corporation's headquarters and addressed to the attention of Donald E.
Ziegler, Secretary. To be eligible for inclusion in next year's proxy material,
such proposals must conform to the requirements set forth in Regulation 14A
under the Securities Exchange Act of 1934, as amended. In order to be
considered at an Annual Meeting, a stockholder proposal must be presented by the
proponents or their representatives in attendance at the meeting.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
at the Annual Meeting or action to be taken thereat except those set forth in
this Proxy Statement. If, however, any other business properly comes before the
Annual Meeting, the persons named in the proxy accompanying this Proxy Statement
will have the discretionary authority to vote upon such business, as well as
matters incident to the conduct of the Annual Meeting.
UPON THE WRITTEN REQUEST OF ANY RECORD HOLDER OR BENEFICIAL OWNER OF
COMMON STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS, THE
CORPORATION WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-
K, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES,
REQUIRED TO BE FILED WITH THE SEC FOR THE CORPORATION'S MOST RECENT FISCAL YEAR.
ADDRESS REQUESTS TO DONALD E. ZIEGLER, SECRETARY, COMPUTER DATA SYSTEMS, INC.,
ONE CURIE COURT, ROCKVILLE, MARYLAND 20850.
APPENDIX - Proxy Card PROXY 1996
(CDSI LOGO)
The undersigned hereby appoints Clifford M. Kendall, Peter A. Bracken, and
Wyatt D. Tinsley, and each of them, as Proxies, each with the power to appoint
his substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of Computer Data Systems, Inc.,
held of record by the undersigned on September 3, 1996, at the Annual Meeting of
Stockholders to be held October 22, 1996, or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL LISTED NOMINEES AND FOR
PROPOSAL #2.
1. Election of Directors: Raymond B. Hoxeng, Clifford M. Kendall, Hilliard
W. Paige, Elmer B. Staats, Wyatt D. Tinsley, Paul R. Ignatius, James A.
Parker, Peter A. Bracken
--- FOR --- WITHHOLD AUTHORITY
all nominees for all nominees
FOR, EXCEPT AUTHORITY TO VOTE WITHHELD FOR THE FOLLOWING NOMINEE(S) ONLY:
____________________________________________
2. Approval of the appointment of Ernst & Young LLP as the Corporation's
independent auditors.
--- FOR --- AGAINST --- ABSTAIN
PLEASE SIGN YOUR NAME(S) ON THE REVERSE SIDE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF PROPERLY
EXECUTED, IT WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE NOMINEES AND FOR PROPOSAL # 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
Please sign your name exactly as it appears below. If shares are held jointly,
all holders must sign. When signing in a fiduciary or representative capacity
(attorney, executor, administrator, trustee, guardian, officer of corporation,
etc.), please give full title as such. The signer hereby revokes all proxies
heretofore given by the signer to vote at such meeting or any adjournment
thereof.
Dated:......................, 1996
.......................................
Signature
.......................................
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.