UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
First Data Corporation
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(Name of Registrant as Specified In Its Charter)
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(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[FIRST DATA CORPORATION LOGO]
FIRST DATA CORPORATION
5660 New Northside Drive
Suite 1400
Atlanta, Georgia 30328-5800
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 10, 2000
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First
Data Corporation, a Delaware corporation (the "Company"), will be held at the
Company's corporate offices, at 5660 New Northside Drive, Atlanta, Georgia
30328-5800 on Wednesday, May 10, 2000, at 11:30 a.m. (E.D.T.), for the
following purposes:
1. The election of three directors;
2. The ratification of the selection of Ernst & Young LLP as independent
auditors of the Company for 2000; and
3. The transaction of such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Shareholders of record at the close of business on March 13, 2000 (the
"Record Date") will be entitled to vote at the meeting and any adjournment or
postponement thereof.
You are cordially invited to attend the meeting, but whether or not you
expect to attend in person, you are urged to mark, date and sign the enclosed
proxy and return it in the enclosed prepaid envelope or follow the alternative
voting procedures described on the proxy.
By Order of the Board of Directors
/s/ Michael T. Whealy
Michael T. Whealy
Corporate Secretary
March 27, 2000
YOUR VOTE IS IMPORTANT
WHETHER YOU OWN A FEW OR MANY SHARES OF COMMON STOCK, YOU ARE URGED TO
PROMPTLY MARK, DATE, SIGN AND RETURN YOUR PROXY OR FOLLOW ANY ALTERNATIVE
VOTING PROCEDURES DESCRIBED ON THE PROXY SO THAT YOUR SHARES MAY BE VOTED IN
ACCORDANCE WITH YOUR WISHES AND SO THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. YOUR PROMPT ACTION WILL AID THE COMPANY IN REDUCING THE EXPENSE OF
PROXY SOLICITATION.
FIRST DATA CORPORATION
PROXY STATEMENT
The Board of Directors of First Data Corporation ("FDC" or the "Company")
is soliciting your proxy to vote at the Annual Meeting of Stockholders to be
held on May 10, 2000, at 11:30 a.m. (E.D.T.), and any adjournment or
postponement of that meeting. The meeting will be held at the Company's
corporate offices at 5660 New Northside Drive, Atlanta, Georgia 30328-5800.
This Proxy Statement and the accompanying Proxy Card, Notice of Meeting, and
Annual Report to Shareholders was first mailed on or about March 27, 2000 to
all shareholders of record as of March 13, 2000 (the "Record Date"). The only
voting securities of the Company are shares of the Company's Common Stock,
$.01 par value per share (the "Common Stock"), of which there were 415,008,170
shares outstanding as of the Record Date (excluding treasury stock).
The Company's Annual Report to Shareholders, which contains financial
statements for the year ended December 31, 1999, accompanies this Proxy
Statement. You may also obtain a copy of the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission without charge by
writing to Investor Relations, First Data Corporation, 5660 New Northside
Drive, Suite 1400, Atlanta, Georgia 30328-5800.
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TABLE OF CONTENTS
Page
----
The Proxy Process and
Shareholder Voting....... 2
Questions and Answers
About the Proxy Process.. 2
Proposals Submitted for
Shareholder Vote......... 5
Proposal 1 -- Election
of Directors........... 5
Proposal 2 --
Ratification of
Selection of Auditors.. 5
Board of Directors........ 6
Governance of the
Company.................. 8
Committees of the Board of
Directors................ 8
Common Stock Ownership of
Directors and Executive
Officers................. 9
Compensation of
Directors................ 10
Executive Compensation
Report by the
Compensation and Benefits
Committee................ 10
Summary Compensation
Table.................... 13
Option Grants in 1999..... 14
Aggregated Option
Exercises in 1999 and
Year-End 1999 Option
Values................... 15
Long-Term Incentive
Plans -- Grants in 1999.. 15
Retirement Plans.......... 16
Performance Graph......... 17
Certain Transactions and
Other Matters............ 18
Section 16(a) Beneficial
Ownership Reporting
Compliance............... 19
Principal Holders of
Common Stock............. 19
THE PROXY PROCESS AND SHAREHOLDER VOTING
The proxy process is the means by which corporate shareholders can exercise
their rights to vote for the election of directors and other strategic
corporate proposals. This Proxy Statement provides notice of a scheduled
shareholder meeting, describes the proposals presented for shareholder action
and includes information required to be disclosed to shareholders. The
accompanying Proxy Card provides shareholders with a simple means to vote on
the described proposals without having to attend the shareholder meeting in
person. By executing the Proxy Card, you authorize Henry C. Duques and Michael
T. Whealy to act as your Proxies to vote your shares as specified.
The proxy voting mechanism also is vitally important to the Company. In
order for the Company to obtain the necessary shareholder approval of
proposals, a "quorum" of shareholders (a majority of the issued and
outstanding shares entitled to vote, excluding treasury stock) must be
represented at the meeting in person or by proxy. Since few shareholders can
spend the time or money to attend shareholder meetings in person, voting by
proxy is necessary to obtain a quorum and complete the shareholder vote.
It is important that you vote your shares to assure a quorum is obtained so
corporate business can be transacted. If a quorum is not obtained, the Company
must postpone the meeting and solicit additional proxies; this is an expensive
and time-consuming process that is not in the best interest of the Company or
its shareholders.
QUESTIONS AND ANSWERS ABOUT THE PROXY PROCESS
Why Did I Receive These Materials?
Shareholders of the Company as of the close of business on the March 13,
2000 Record Date are entitled to vote at the Company's Annual Meeting. The
Company is required by law to distribute these proxy materials to all
shareholders as of the Record Date.
What Does It Mean If I Receive More Than One Set Of Materials?
This means you own shares of the Company that are registered under
different names. For example, you may own some shares directly as a
"Registered Holder" and other shares through a broker or you may own shares
through more than one broker. In these situations you will receive multiple
sets of proxy materials. It is necessary for you to vote, sign and return
all of the Proxy Cards or follow the instructions for any alternative
voting procedure on each of the Proxy Cards you receive in order to vote
all of the shares you own. Each Proxy Card you received came with its own
prepaid return envelope; if you vote by mail make sure you return each
Proxy Card in the return envelope which accompanied that Proxy Card.
How Do I Vote?
You may vote by mail or follow any alternative voting procedure described
on the Proxy Card. To use an alternative voting procedure, follow the
instructions on each Proxy Card that you receive. To vote by mail, sign and
date each Proxy Card you receive, indicating your voting preference on each
proposal, and return each Proxy Card in the prepaid envelope which
accompanied that Proxy Card. If you return a signed and dated Proxy Card
but you do not indicate your voting preferences, your shares will be voted
in favor of the director nominees and in favor of the other proposal. All
outstanding shares of Common Stock represented by your signed and dated
Proxy Card or for which you have provided instructions by the alternative
voting procedure that are received in time for the 2000 Annual Meeting will
be voted.
Does My Vote Matter?
Absolutely! Corporations are required to obtain shareholder approval for
the election of directors and other important matters. Shareholder
participation is not a mere formality. It is essential for the Company to
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continue to function. Each share of Common Stock is entitled to one vote
and every share voted has the same weight. It is also important that you
vote to assure that a quorum is obtained so corporate business can be
transacted.
What Percentage Of Votes Is Required To Elect Directors?
If a quorum is obtained, the three nominees receiving the greatest number
of votes will be elected.
What Percentage Of Votes Is Required To Approve Other Proposals?
If a quorum is obtained, proposals other than the election of directors
require the affirmative vote of a majority of shares of Common Stock
represented at the meeting and entitled to vote. Since majority approval is
required, an "ABSTAIN" vote has the effect of a vote against the proposal.
What Is The Effect Of Not Voting?
It depends on how ownership of your shares is registered. If you own shares
as a Registered Holder, rather than through a broker, your unvoted shares
will not be represented at the meeting and will not count toward the quorum
requirement. Assuming a quorum is obtained, your unvoted shares will not
affect whether a proposal is approved or rejected.
If you own shares through a broker and do not vote, your broker may
represent your shares at the meeting for purposes of obtaining a quorum. As
described in the answer to the following Question, in the absence of your
voting instruction, your broker may or may not vote your shares.
If I Don't Vote, Will My Broker Vote For Me?
If you own your shares through a broker and you don't vote, your broker may
vote your shares in its discretion on some "routine matters." With respect
to other proposals, however, your broker may not vote your shares for you.
With respect to these proposals, the aggregate number of unvoted shares is
reported as the "broker non-vote." "Broker non-vote" shares are counted
toward the quorum requirement but they do not affect the determination of
whether a matter is approved. The Company believes that the proposals set
forth in this Proxy Statement are routine matters on which brokers will be
permitted to vote unvoted shares.
Is My Vote Confidential?
It is the policy of the Company that all shareholder meeting proxies,
ballots and voting records that identify the particular vote of a
shareholder are confidential. The vote of any shareholder will not be
revealed to anyone other than a non-employee tabulator of votes or an
independent election inspector, except (i) as necessary to meet applicable
legal and stock exchange listing requirements, (ii) to assert claims for or
defend claims against the Company, (iii) to allow the inspectors of
election to certify the results of the shareholder vote, (iv) in the event
a proxy solicitation in opposition to the Company or the election of the
Board of Directors takes place, (v) if a shareholder has requested that
their vote be disclosed, or (vi) to respond to shareholders who have
written comments on Proxy Cards.
If I Own My Shares Through A Broker, How Is My Vote Recorded?
Brokers typically own shares of Common Stock for many shareholders. In this
situation the Registered Holder on the Company's stock register is the
broker or its nominee. This often is referred to as holding shares in
"Street Name." The "Beneficial Owners" do not appear in the Company's
shareholder register. Therefore, for shares held in Street Name,
distributing the proxy materials and tabulating votes are both two-step
processes. Brokers inform the Company how many of their clients are
Beneficial Owners and the Company provides the broker with that number of
proxy materials. Each broker then forwards the proxy materials to its
clients who are Beneficial Owners to obtain their votes. When you receive
proxy materials from your broker, the accompanying return envelope is
addressed to return your executed Proxy Card to
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your broker. Shortly before the meeting, each broker totals the votes and
submits a Proxy Card reflecting the aggregate votes of the Beneficial
Owners for whom it holds shares.
Can I Revoke My Proxy And Change My Vote?
You have the right to revoke your proxy at any time prior to the time your
shares are voted. If you are a Registered Holder, your proxy can be revoked
in several ways: (i) by timely delivery of a written revocation delivered
to the Corporate Secretary, (ii) by submitting another valid proxy bearing
a later date, or (iii) by attending the meeting and giving the Inspector of
Elections notice that you intend to vote your shares in person. If your
shares are held by a broker, you must contact your broker in order to
revoke your proxy.
Will Any Other Business Be Transacted At The Meeting? If So, How Will My Proxy
Be Voted?
Management does not know of any business to be transacted at the Annual
Meeting other than those matters described in this Proxy Statement. The
period specified in the Company's By-Laws for submitting proposals to be
considered at the meeting has passed and no proposals were submitted.
However, should any other matters properly come before the meeting, and any
adjournments and postponements thereof, shares with respect to which voting
authority has been granted to the Proxies will be voted by the Proxies in
accordance with their judgment.
Who Counts The Votes?
Votes will be counted and certified by the Inspectors of Election, who are
employees of Norwest Bank Minnesota, National Association, the Company's
independent Transfer Agent and Registrar. If you are a Registered Holder,
your executed Proxy Card is returned directly to Norwest for tabulation. As
noted above, if you hold your shares through a broker, your broker returns
one Proxy Card to Norwest on behalf of its clients.
How Much Does The Proxy Solicitation Cost?
The Company has engaged the firm of Morrow & Co. to assist in distributing
and soliciting proxies for a fee of $7,000, plus expenses. However, the
proxy solicitor fee is only a small fraction of the total cost of the proxy
process. The largest expense in the proxy process is printing and mailing
the proxy materials. Proxies also may be solicited on behalf of the Company
by directors, officers or employees of the Company in person or by mail,
telephone or facsimile transmission. No additional compensation will be
paid to such directors, officers, or employees for soliciting proxies.
What Is The Deadline For Submitting Proposals To Be Considered For Inclusion
In The 2001 Proxy Statement?
Shareholder proposals requested to be included in the Company's 2001 Proxy
Statement must be received by the Company not later than November 27, 2000.
Proposals should be directed to Michael T. Whealy, Corporate Secretary,
First Data Corporation, 5660 New Northside Drive, Suite 1400, Atlanta,
Georgia, 30328-5800.
If I Do Not Submit A Proposal In Time To Be Included In The 2001 Proxy
Statement, May I Still Nominate Someone To Be A Director Of The Company Or
Submit Any Business To Be Considered At The Company's Annual Shareholder
Meeting In 2001?
Even if a proposal is not submitted in time to be considered for inclusion
in the Company's 2001 Proxy Statement, a proper shareholder proposal or
director nomination may still be considered at the Company's 2001 annual
meeting but only if the proposal or nomination is received by the Company
no sooner than January 10, 2001 but not later than February 9, 2001. All
proposals should be directed to Michael T. Whealy, Corporate Secretary,
First Data Corporation, 5660 New Northside Drive, Suite 1400, Atlanta,
Georgia, 30328-5800.
4
PROPOSALS SUBMITTED FOR SHAREHOLDER VOTE
Proposal 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes serving staggered
three-year terms. The terms of office of three current directors, Mr. Jones,
Mr. Levenson and Mr. Russell, expire at the 2000 Annual Meeting of
Stockholders. They have been nominated for reelection through the 2003 Annual
Meeting of Stockholders or until a successor is elected and qualified. (See
the Board of Directors section for information concerning all Directors). In
the case of a vacancy occurring during the year in any class, the Board of
Directors may elect another director as a replacement, may leave the vacancy
unfilled or may reduce the number of directors.
The terms of Ms. Spero, Mr. Burdetsky and Mr. Duques expire at the 2001
Annual Meeting of Stockholders. The terms of Mr. Robinson, Mr. Schwartz and
Mr. Staglin expire at the 2002 Annual Meeting of Stockholders.
A shareholder may (i) vote for the election of any one or more of the
nominees, or (ii) withhold authority to vote for one or more of the nominees
by so indicating on the Proxy Card. Your shares will be voted as you specify
on the enclosed Proxy Card or as you instruct via the alternative voting
procedure described on the Proxy Card. If you sign, date and return the Proxy
Card without specifying how you want your shares voted, they will be voted for
the election of the Director nominees. If unforseen circumstances (such as
death or disability) require the Board of Directors to substitute another
person for any of the Director nominees, your shares will be voted for that
other person.
Directors are elected by a plurality of votes of the shares represented at
the meeting and entitled to vote. Therefore, if a quorum is present, the three
nominees receiving the greatest number of votes will be elected. The effects
of unvoted shares, abstentions and "broker non-votes" are discussed in the
preceding Questions and Answers.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO REELECT MR. JONES, MR.
LEVENSON AND MR. RUSSELL AS DIRECTORS FOR A THREE-YEAR TERM.
Proposal 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors recommends to the shareholders the ratification of
the selection of Ernst & Young LLP, independent auditors, to audit the
accounts of the Company and its subsidiaries for 2000. In the event the
shareholders fail to ratify the appointment, the Board of Directors will
consider it a direction to select other auditors for the subsequent year. Even
if the selection is ratified, the Board of Directors, in its discretion, may
select a new independent accounting firm at any time during the year if the
Board of Directors feels that such a change would be in the best interest of
the Company and its shareholders.
Ernst & Young LLP has been serving as the independent auditors for the
Company or its predecessor entities since 1980. Ernst & Young LLP follows a
policy of rotating the partner in charge of the Company's audit every seven
years. Other partners and non-partner personnel are rotated on a periodic
basis.
A representative of Ernst & Young LLP will be present at the meeting with
the opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
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BOARD OF DIRECTORS
Principal Occupation, Business Director
Name and Age Experience and Directorships Since
------------ ------------------------------ --------
Ben Burdetsky....... Professor Emeritus of the School of Business 1992
Age 71 and Public Management of The George Washington
University since 1995 and Director of the
Burdetsky Labor-Management Institute at the
University. Dr. Burdetsky was a member of the
full-time faculty from January 1977 to 1994.
From June 1988 until 1992, he served as Dean,
and from March 1984 to June 1988 he served as
an Associate Dean, of the School of Business
and Public Management of The George Washington
University. Dr. Burdetsky is a Director of
National Capital Preferred Provider
Organization.
Henry C. Duques..... Chairman and Chief Executive Officer of the 1989
Age 56 Company from April 1989 to the present. From
September 1987 to 1989, he served as President
and Chief Executive Officer of the Data Based
Services Group of American Express Travel
Related Services Company, Inc., the
predecessor of the Company. He was Group
President Financial Services and a member of
the Board of Directors of Automatic Data
Processing, Inc. ("ADP") from 1984 to 1987.
Mr. Duques is a Director of theglobe.com and
Unisys Corporation.
Courtney F. Jones... Former Managing Director in charge of the New 1992
Age 60 World Banking Group of Bankers Trust from
December 1997 to July 1999. A director of RSP
Manufacturing Corporation since March 1998,
and Medical Manager Corporation since April
1997. From July 1989 to December 1990,
Managing Director in the Investment Banking
Division of Merrill Lynch & Co., Inc. From
October 1985 until July 1989, he served as
Chief Financial Officer, Executive Vice
President and a member of the Board of
Directors of Merrill Lynch & Co., Inc. Prior
to that, Mr. Jones served as Treasurer and
Secretary of the Finance Committee of the
Board of Directors of General Motors
Corporation. He also was formerly a Director
of General Motors Acceptance Corporation and
General Motors Insurance Company.
Robert J. Levenson.. Managing General Partner of the Lenox Capital 1992
Age 58 Group. Former Executive Vice President of the
Company from 1993 to 2000. Former Senior
Executive Vice President, Chief Operating
Officer, and Member of the Office of the
President and Director of Medco Containment
Services, Inc., a provider of managed care
prescription benefits, from October 1990 to
December 1992. From 1985 until October 1990,
he was a Group President and Director of ADP.
Mr. Levenson is a Director of Emisphere
Technologies, Inc., Superior Telecom, Inc.,
Vestcom International, Inc. and Virtual
Communities, Inc.
6
Principal Occupation, Business Director
Name and Age Experience and Directorships Since
------------ ------------------------------ --------
James D. Robinson III.. Chairman and Chief Executive Officer of RRE 1992
Age 64 Investors, LLC a private information
technology venture investment firm, and a
General Partner of RRE Ventures, L.P. He is
also non-executive Chairman of Violy Byorum
& Partners Holdings, LLC, a private
investment firm specializing in financial
advisory and investment banking activities
in Latin America. Mr. Robinson previously
served as Chairman and Chief Executive
Officer and as a Director of American
Express Company from 1977 to 1993. He is a
Director of Bristol-Myers Squibb Company,
The Coca-Cola Company, Cambridge Technology
Partners, and Concur Technologies Inc. Mr.
Robinson is a member of the Business
Council and the Council on Foreign
Relations. He is Honorary Co-Chairman of
Memorial Sloan-Kettering Cancer Center, an
Honorary Trustee of the Brookings
Institution and Chairman Emeritus of the
World Travel and Tourism Council
Institution.
Charles T. Russell..... Former President and Chief Executive Officer 1994
Age 70 of Visa International from 1984 to January
1994. Mr. Russell joined Visa in 1971. He
serves on the Board of Visitors at the
University of Pittsburgh's Joseph M. Katz
School of Business. Mr. Russell also is a
Director of CyberCash, Inc., and InfiStar
Corporation (formerly Card Issuer Program
Management Corporation), which provides
management services to credit card issuers.
Bernard L. Schwartz.... Chairman and Chief Executive Officer, Loral 1992
Age 74 Space & Communications Ltd., a high-
technology company concentrating on
satellite manufacturing and satellite-based
services. Chairman and Chief Executive
Officer, Loral Corporation, a manufacturer
of components for information systems, from
1972 to 1996. Chairman and Chief Executive
Officer of Globalstar Telecommunications
Limited, which is developing a world-wide,
low-earth-orbit satellite-based digital
telecommunications service. He also serves
as Chairman and Chief Executive Officer of
K&F Industries Inc., world-wide supplier of
aircraft braking systems and Chairman of
Space Systems/Loral, a manufacturer of
telecommunications and environmental
satellites. Mr. Schwartz is a Director of
Reliance Group Holdings, Inc., a trustee of
Mount Sinai-New York University Medical
Center, and a trustee of Thirteen/WNET.
Joan E. Spero.......... President of the Doris Duke Charitable 1998
Age 55 Foundation since 1997. Ms. Spero was
Undersecretary of State for Economic,
Business and Agricultural Affairs from 1993
to 1997. From 1981 to 1993, Ms. Spero held
several offices with American Express
Company, the last being Executive Vice
President, Corporate Affairs and
Communications. Prior to that Ms. Spero was
Ambassador to the United Nations for
Economic and Social Affairs from 1980 to
1981 and she was an Assistant Professor at
Columbia University from 1973 to 1979. Ms.
Spero is a member of the Board of Trustees
of the Brookings Institution, Wisconsin
Alumni Research Foundation, and Columbia
University. She serves as a
Director/Trustee of certain Scudder Kemper
Funds. Ms. Spero was a member of the Board
of Directors of Hercules Incorporated from
1985 to 1993 and acted as Chair of the
Audit and Compensation Committees for
periods of that time.
7
Principal Occupation, Business Director
Name and Age Experience and Directorships Since
------------ ------------------------------ --------
Garen K. Staglin.... Managing Director of the Rutherford Fund, a 1992
Age 55 private venture capital fund. Mr. Staglin has
been the Chairman of the Board of Directors
of Safelite Glass Corporation, a manufacturer
and retailer of auto glass, since August
1991, and from August 1991 until April 1997,
he also was the Chief Executive Officer of
Safelite Glass Corporation. From April 1980
until August 1991, Mr. Staglin served as the
Corporate Vice President and General Manager
of ADP's Automotive Services Group. He serves
as a Director of Quick Response Services,
Inc., CyberCash, Inc. and Specialized Bicycle
Corp. Mr. Staglin also serves on the Advisory
Council of the Stanford Graduate School of
Business.
GOVERNANCE OF THE COMPANY
In accordance with applicable Delaware law, the business of the Company is
managed under the direction of its Board of Directors. Pursuant to the
Company's Restated Certificate of Incorporation, the Board of Directors is to
consist of not less than one nor more than fifteen Directors. Directors are
divided into three classes and Directors in each class are elected for a
three-year term. The Board was composed of nine Directors in 1999. During
1999, the Board of Directors met eight times (not including Committee
meetings). Each of the Directors attended at least 75 percent of the aggregate
number of meetings of the Board and Board committees on which they served
during 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The members of the Audit Committee are Courtney F. Jones (Chairperson), Ben
Burdetsky and Joan E. Spero. The Audit Committee consists solely of directors
who are not current or former employees of the Company or any subsidiary and
are, in the opinion of the Board of Directors, free from any relationship that
would interfere with the exercise of independent judgment in the discharge of
the Audit Committee's duties. The Audit Committee has general responsibility
for reviewing with management the financial controls, accounting, compliance
with law, audit and reporting activities of the Company and its subsidiaries
as well as reviewing the contingency plans for business continuity
undertakings. The Audit Committee also (i) recommends to the Company's Board
of Directors the approval of the financial statements as audited by the
independent accountants, (ii) approves any special assignments given to such
accountants and the related fees, (iii) reviews the planned scope of the
annual audit, the related fees, the independent accountants' report of audit,
the accompanying management letter, if any, and management's response thereto,
(iv) reviews the planned scope and results of the Company's internal audit
examinations and assessments, (v) consults with the independent accountants
with regard to the adequacy of the Company's internal accounting controls, the
effectiveness and efficiency of the Company's internal audit staff, and legal
compliance matters, (vi) reviews and conducts investigations regarding
possible violations of law and of the Company's Code of Conduct, retains
outside counsel and other experts to assist in such investigations and directs
appropriate remedial steps to be taken if such violations are detected, (vii)
reviews and oversees related-party transactions, and (viii) reviews any major
accounting changes made or contemplated by the Company. In addition, beginning
with the May 14, 1997 meeting, the Committee has exercised oversight
responsibility for Year 2000 planning throughout the Company. During 1999, the
Audit Committee met five times.
The members of the Compensation and Benefits Committee (the "Compensation
Committee") are Charles T. Russell (Chairperson), Ben Burdetsky, and Bernard
L. Schwartz. The Compensation Committee consists solely of directors who are
not current or former employees of the Company or any subsidiary. The
Compensation Committee is responsible for (i) the administration of all salary
and incentive compensation plans for the officers and key employees of the
Company and its subsidiaries, (ii) reviewing management organization,
development and succession planning, (iii) reviewing senior management
compensation, and (iv) granting and otherwise administering specific awards
under the Corporation's 1992 Long-Term Incentive Plan and comparable
8
plans. The Compensation Committee may exercise all of the powers and authority
of the Board with respect to the Corporation's employee pension benefit plans
and employee welfare benefit plans. The Compensation Committee regularly
consults with independent compensation advisors in performing its duties. The
Compensation Committee also has responsibility for screening and nominating
new Director candidates. In exercising its Director nomination
responsibilities, the Committee shall consider women and minority candidates
consistent with the Company's nondiscrimination policies. In addition, the
Committee will consider persons recommended by shareholders. Shareholder
recommendations may be submitted to the Secretary of the Company at 5660 New
Northside Drive, Suite 1400, Atlanta, Georgia 30328, and they will be
forwarded to the Compensation Committee members for their consideration.
During 1999, the Compensation Committee met six times.
The members of the Executive Committee are James D. Robinson III
(Chairperson), Henry C. Duques, and Courtney F. Jones. The Executive Committee
meets in place of the full Board of Directors in intervals between meetings of
the Board. The Committee may act on behalf of the Board of Directors on all
matters permitted by the General Corporation Law of the State of Delaware. The
Executive Committee met once in 1999.
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of January 1, 2000, the beneficial
ownership of Common Stock by all directors and nominees, each of the executive
officers named in the Summary Compensation Table contained in this Proxy
Statement and all directors and executive officers as a group. Each person has
sole voting and investment power of the shares, except as noted.
Amount and
Nature of
Beneficial
Name Ownership(1)
---- ------------
Eula L. Adams............................................. 160,149(2)
Lee Adrean................................................ 495,978
David P. Bailis........................................... 474,909(3)
Ben Burdetsky............................................. 63,107
Henry C. Duques........................................... 3,336,816(4)
Charles T. Fote........................................... 1,146,794
Courtney F. Jones......................................... 118,875
Robert J. Levenson........................................ 803,622
James D. Robinson III..................................... 135,875(5)
Charles T. Russell........................................ 49,656
Bernard L. Schwartz....................................... 115,525
Joan E. Spero............................................. 8,340
Garen K. Staglin.......................................... 121,375
All directors and executive officers as a group (14
persons)................................................. 7,208,027
- --------
(1) The number of shares reported includes shares covered by options that are
exercisable within 60 days of January 1, 2000 as follows: Mr. Adams,
153,702; Mr. Adrean, 491,978; Mr. Bailis, 471,184; Mr. Burdetsky, 62,307;
Mr. Duques, 3,330,165; Mr. Fote, 1,145,072; Mr. Jones, 116,875; Mr.
Levenson, 792,830; Mr. Robinson, 116,875; Mr. Russell, 49,256; Mr.
Schwartz, 108,525; Ms. Spero, 8,340; Mr. Staglin, 96,267; all directors
and executive officers as a group, 7,119,545.
(2) Includes 640 shares held by Mr. Adams' wife.
(3) Includes 950 shares held by Mr. Bailis' wife.
(4) Includes 4,268 shares held by Mr. Duques' wife.
(5) Includes 5,000 shares held by Mr. Robinson's wife.
The percent of outstanding Common Stock beneficially owned by all directors
and executive officers as a group is approximately 1.7%. The percentage
beneficially owned by any director or nominee does not exceed 1%.
9
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its affiliates were paid
an annual retainer of $50,000. In addition, a non-employee chairman of a
standing committee receives an annual retainer of $5,000. Non-employee
directors have the option of electing to receive all or a portion of the
annual retainer fees in the form of stock option grants pursuant to the First
Data Corporation 1993 Director's Stock Option Plan. Non-employee directors
also receive annual grants of non-qualified options pursuant to the same plan.
Each director receives options for 10,000 shares of Common Stock upon
commencing services as a director and options for 4,000 shares of Common Stock
on the date of each annual shareholders' meeting thereafter, except that on
the fourth and eighth annual shareholders' meetings thereafter, instead of
options for 4,000 shares, each director receives options for 14,000 shares.
Directors are reimbursed for their actual expenses incurred in attending
Board, committee and shareholder meetings, including those for travel, food
and lodging.
EXECUTIVE COMPENSATION REPORT BY THE COMPENSATION
AND BENEFITS COMMITTEE
The Compensation Committee establishes compensation policies and employee
benefits plans. It also sets the bonus awards for senior management, including
the Named Executives.
Compensation Philosophy. The Company's executive compensation programs are
based on the belief that the interests of its Chief Executive Officer (CEO)
and senior management should be aligned with those of the shareholders. For
these executives, the Compensation Committee has determined that a significant
portion of total compensation should be comprised of "at-risk," performance-
based components. The at-risk components provide longer-term rewards that are
not earned unless specific, pre-established goals are met.
In furtherance of its objectives, the Compensation Committee has structured
the CEO and senior management's total compensation as a combination of base
salary, annual incentive compensation, stock options and a long-term incentive
award.
The Compensation Committee seeks to set executive compensation at levels
sufficient to attract, retain and motivate highly qualified executive
personnel in light of the compensation practices of a group comprised of
companies of comparable size and complexity and top-performing companies in
various business sectors in which the Company operates (the "Comparator
Group"). An independent consultant surveys the Comparator Group to determine
compensation practices and provides the Compensation Committee with
comparative evaluations and advice.
The Comparator Group includes the companies in the peer group included in
the Performance Graph in this Proxy Statement. As it did in prior years, the
Performance Graph uses a Company-selected group of ten computer services
companies. The Comparator Group also includes other companies that are in the
same business or are of a similar revenue size, reflecting the Compensation
Committee's belief that the broader group is representative of the Company's
main competition for executive talent.
The Compensation Committee's philosophy is that base salary and annual
incentive compensation should be competitive with the Comparator Group, and,
based upon the Company's financial performance both as a whole and relative to
specific targets, that long-term incentive compensation must promote corporate
performance which exceeds both a minimum rate of return and objectively
identified targets relative to the S&P 500 Index.
Base Salary. It is the Compensation Committee's policy, in setting total
compensation, that while base salary should remain competitive, annual and
long-term incentive compensation should be emphasized. Accordingly, Mr.
Duques' salary is targeted to reflect salaries between the 50th and 75th
percentile paid by the Comparator Group. The salaries of the other Named
Executives are targeted to reflect salaries at approximately
10
the 75th percentile paid by the Comparator Group. The Committee targets the
total compensation to be paid when pre-established performance goals are
achieved to be at or above the 75th percentile paid by the Comparator Group.
Annual Incentive Compensation. The Committee implemented a separate annual
incentive plan for Mr. Duques and Mr. Fote in 1999, after obtaining
shareholder approval to maintain the tax deductibility of the incentive plan
payments. The Senior Executive Incentive Plan provides an annual incentive
opportunity based on the performance of Company earnings before interest
expense and taxes (EBIT) and is designed to focus attention and efforts on
this important financial measurement.
For executive management, except Mr. Duques and Mr. Fote, the Company
adopted an annual management incentive program with bonus targets payable if
specific goals are achieved. The annual incentive opportunity is based on the
overall performance of the Company and on the performance of a business unit
or staff function. The purpose of this incentive is to tie a significant
portion of annual pay directly to key financial results and other important
objectives.
Stock Options. The Compensation Committee has established an annual option
grant program under which the number of option grants made each February to
the Named Executives and other senior management is performance driven. For
1999, the CEO was eligible for up to 150,000 options, Mr. Fote was eligible
for up to 100,000 options and each of the other Named Executives was eligible
for up to 75,000 options. One-half of the total possible grant is based on the
performance of the Company's common stock as compared to that of the companies
in the S&P 500 Index and one-half is based on the achievement of business unit
and individual performance objectives. In 1999, the Committee reviewed the
option holdings of senior management and awarded "premium-priced" options to
Mr. Duques and Mr. Fote to align their economic interests with those of the
shareholders. These grants are reflected in the table entitled Option Grants
in 1999.
Long-Term Incentive Compensation. Because the Compensation Committee
considers a long-term orientation essential for the CEO and members of
executive management, a major part of their incentive compensation is based on
the Company's Shareholder Value Plan. Under the plan, a unit value (award
amount) is determined at the end of each year based on the performance of the
Company's common stock as compared to that of the companies in the S&P 500
Index during the preceding two years (subject to the Committee's discretion to
adjust downward). The award amount is banked for a two-year period and
increases annually by an amount equal to 50% of the Company's return on equity
percentage or, if the return on equity is negative, decreases by an amount
equal to 100% of the Company's return on equity percentage. The maximum unit
value is awarded if the percentage increase in the price of the Company's
common stock, plus dividends, exceeds that of 75% of the companies in the S&P
500 Index.
The increase in the Company's common stock during the performance period
ended December 31, 1999 was greater than that of 75% of the companies in the
S&P 500 Index, resulting in the maximum unit value of $3,600,000 being awarded
to Mr. Duques and $750,000 for other executives. Because it wanted to further
align the interests of Mr. Duques and executive management with those of stock
holders, the Committee exercised its discretion to reduce the unit value by
50%, and to instead award stock options at an exercise price at the fair
market value of the Company's common stock on the grant date. The number of
options was determined by dividing the amount of award reduction by 20% of the
exercise price.
Performance Reviews. Although the CEO's annual and long-term incentive
award is formula driven (subject to the Compensation Committee's discretion to
make a downward adjustment), the Compensation Committee has developed a
formalized process for providing performance review and feedback to Mr.
Duques. For 1999, the outside Board members and Mr. Duques mutually developed
goals for him in several major areas including strategy and long-term
objectives and executive development and succession planning. In December
1999, Mr. Duques submitted a self-assessment to the outside Board members. In
February 2000, the outside Board members met separately to discuss the
assessment, then conducted a performance review with Mr. Duques. Performance
goals for 2000 also were set at this meeting. Similarly, in February 2000, Mr.
Duques
11
reviewed his assessment of each of the other Named Executives with the outside
Board members and received their input. Mr. Duques then met with each of the
Named Executives to discuss performance and set performance goals for 2000.
Policy on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code limits the tax deduction to $1 million for compensation paid to
any of the Named Executives unless certain requirements are met. The Company's
1992 Long-Term Incentive Plan, Shareholder Value Plan, and the Company's
Senior Executive Incentive Plan are designed to meet those requirements. The
Compensation Committee's present intention is to comply with the requirements
of Section 162(m) to the extent necessary to obtain full deductibility of
executive compensation unless the Compensation Committee determines that such
compliance would not be in the best interest of the Company and its
shareholders.
COMPENSATION AND BENEFITS COMMITTEE
Charles T. Russell (Chairperson)
Bernard L. Schwartz
Ben Burdetsky
12
SUMMARY COMPENSATION TABLE
The following table shows the cash and other compensation paid or earned
and certain long-term awards made to the Named Executives for all services to
the Company in all capacities for 1999, 1998, and 1997.
Long-Term
Annual Compensation Compensation
------------------------------------- -------------------------
Awards Payouts
----------- ---------
Other Annual Securities LTIP All Other
Name and Compensation Underlying Payout Compensation
Principal Position Year Salary ($) Bonus ($) ($) Options (#) ($) ($)(1)
------------------ ---- ---------- --------- ------------ ----------- --------- ------------
Henry C. Duques........ 1999 812,308 762,000(2) 14,489(3) 600,557(4) 0 94,917
Chairman of the Board 1998 800,000(5) 0(6) 26,274 567,383(7)(8) 2,492,910(9) 114,433
and Chief Executive
Officer 1997 600,000 0(6) 12,689 463,630 1,726,537(10) 69,884
Charles T. Fote........ 1999 700,000 610,000(2) 0 271,783(4) 0 84,600
President and Chief 1998 611,138 200,000 3,834 434,345(8) 679,885(9) 94,000
Operating Officer 1997 436,336 225,000 0 184,070 642,928(10) 60,000
Eula L. Adams.......... 1999 337,885 289,000 0 66,783(4) 0 42,493
Executive Vice
President 1998 264,423 200,000 1,366 90,000 0 38,809
1997 230,000 210,000 0 44,045 0 35,096
Lee Adrean............. 1999 458,654 303,600 0 66,783(4) 0 37,994
Executive Vice
President 1998 437,115 135,000 2,651 217,500 679,885(9) 64,000
and Chief Financial
Officer 1997 388,462 100,000 0 130,800 0 31,774
David P. Bailis........ 1999 450,000 337,400 0 71,783(4) 0 52,636
Executive Vice
President 1998 428,367 170,000 162,359(11) 238,447(8) 0 44,111
1997 338,462 130,000 0 149,121(7) 0 26,635
- --------
(1) Amounts shown for Messrs. Fote, Adrean, Bailis and Adams for 1999 include
Company contributions to defined contribution plans. The amounts shown
for Mr. Duques for 1999 consist of Company contributions to defined
contribution plans ($76,357) and the dollar value of split dollar life
insurance ($18,560).
(2) Includes discretionary bonuses. In addition to the amounts determined by
the plan, the Committee directed that discretionary bonuses also be paid
in the following amounts: Mr. Duques: $150,000 and Mr. Fote: $100,000.
(3) The amount shown for Mr. Duques consists of the dollar value of above-
market interest on the Salary Deferral Plan ($14,489).
(4) Includes options granted in lieu of a portion of the Shareholder Value
Plan "banked" award for the 1998-1999 performance period.
(5) The Committee directed that $200,000 of this amount be awarded in the
form of a stock option which is included among those reported in this
table.
(6) Mr. Duques did not have an annual bonus plan in 1997 or 1998.
(7) Includes stock options which the executive received in lieu of cash
compensation.
(8) A portion of these are purchased stock options which the executive
elected to purchase under a special offering in early 1998.
(9) Awards in 1998 were payouts of amounts "banked" at the end of the two-
year performance period ended December 31, 1995. Messrs. Bailis and Adams
were not eligible to participate at that time.
(10) These awards are payouts made under the Shareholder Value Plan of amounts
"banked" at the end of the performance period ended December 31, 1994.
Before the awards were banked, the Committee directed that the amounts
awarded be reduced by $1,500,000 for Mr. Duques and $110,000 for Mr. Fote
and granted the executives stock options. Messrs. Adrean, Bailis and
Adams were not eligible to participate in the plan at that time.
(11) Includes above-market interest on the Supplemental Savings Plan in the
amount of $2,431 and $159,928 for relocation, moving expenses and
associated reimbursement amounts.
13
OPTION GRANTS IN 1999
The following table contains information concerning grants of stock options
under the 1992 Long-Term Incentive Plan (the "Incentive Plan") to each of the
Named Executives during 1999.
Individual Grants
-----------------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base Grant
Options Employees in Price Expiration Date Present
Name Granted 1999(1) ($/share) Date Value(2)
- ---- ---------- ------------ --------- ---------- ------------
Henry C. Duques..... 50,000(3) 0.7152 38.4688 02/03/09 678,885
50,000(3) 0.7152 42.5625 04/01/09 751,130
300,000(4) 4.2910 70.0000 12/08/09 2,331,540
200,557(5) 2.8686 44.8750 12/08/09 3,176,582
Charles T. Fote..... 40,000(3) 0.5721 38.4688 02/03/09 543,108
40,000(3) 0.5721 42.5625 04/01/09 600,904
150,000(4) 2.1455 70.0000 12/08/09 1,165,770
41,783(5) 0.5976 44.8750 12/08/09 661,793
Eula L. Adams....... 25,000(3) 0.3576 38.4688 02/03/09 339,443
41,783(5) 0.5976 44.8750 12/08/09 661,793
Lee Adrean.......... 25,000(3) 0.3576 38.4688 02/03/09 339,443
41,783(5) 0.5976 44.8750 12/08/09 661,793
David P. Bailis..... 30,000(3) 0.4291 38.4688 02/03/09 407,331
41,783(5) 0.5976 44.8750 12/08/09 661,793
- --------
(1) Based on options to purchase an aggregate of 6,991,422 shares granted
under the Incentive Plan during 1999 to all employees.
(2) These values were calculated using the Black-Scholes single option pricing
model, a formula widely used and accepted for valuing traded stock
options. The model is based on immediate exercisability and
transferability which are not features of the options shown in the table.
Any ultimate value will depend on the market value of the Company's stock
at a future date. The following assumptions were used to calculate the
values shown: estimated future dividend yield of .17%; expected price
volatility of 25.4%, risk-free rate of return of 6.34%; and option holding
period of 5 years.
(3) Options were granted under the Incentive Plan and carry an exercise price
of 100% of the fair-market value on the date of grant and become
exercisable in increments of one-fourth each year beginning on the first
anniversary date of the grant.
(4) Options were awarded under the Incentive Plan as a one-time grant at a
premium price of $70.00 when the fair market value was $44.875. Options
will vest when the Company's stock price closes at or above $70.00 for
five consecutive trading days by December 31, 2002, but in no event sooner
than one year after the date of grant. If the stock price has not closed
at or above $70.00 for five consecutive trading days by December 31, 2002,
the options will automatically cancel; otherwise, the options will cancel
ten years from the date of grant.
(5) The Committee exercised its discretion to reduce the amounts of the
performance grants awarded under the Shareholder Value Plan for the period
ended December 31, 1999. Awards were reduced by 50% and options were
granted in an amount equal to the amount of the award reduction divided by
20% of the exercise price. These options were granted at the fair market
value of the stock on the date of grant, and become exercisable in
increments of one-third each year beginning on the first anniversary date
of the grant.
14
AGGREGATED OPTION EXERCISES IN 1999 AND
YEAR-END 1999 OPTION VALUES
The following table sets forth information for the Named Executives
regarding the exercise of stock options during 1999 and unexercised stock
options held as of the end of 1999:
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at December 31, 1999 at December 31, 1999(1)
------------------------------- -------------------------------
Shares
Acquired on Value
Name Exercise(#) Realized($) Exercisable(#) Unexercisable(#) Exercisable($) Unexercisable($)
- ---- ----------- ----------- -------------- ---------------- -------------- ----------------
Henry C. Duques......... 90,955 2,700,904 3,256,221 1,215,488 91,470,714 10,742,983
Charles T. Fote......... 66,148 2,004,447 1,118,007 589,081 29,162,452 6,555,210
Eula L. Adams........... 15,710 382,442 137,941 166,805 3,742,116 2,542,565
Lee Adrean.............. 40,854 937,607 473,653 206,456 5,776,529 2,361,624
David P. Bailis......... 25,138 753,901 440,255 231,428 6,176,511 2,801,285
- --------
(1) The amounts shown reflect the $49.5938 fair market value of the Company's
stock on December 31, 1999 less the option exercise price, but they do not
reflect the impact of taxes.
LONG-TERM INCENTIVE PLANS--GRANTS IN 1999
The following table sets forth information regarding grants made in 1999
under the Shareholder Value Plan to the Named Executives for the four-year
period beginning January 1, 1999:
Estimated Future Payouts under
Non-Stock Price-Based Plans
---------------------------------
Performances
Number of or Other
Shares, Units Period Until
or Other Maturation or Threshold Target Maximum
Name Rights(#)(1) Payout ($)(2) ($)(3) ($)(4)
- ---- ------------- ------------- ----------- -------- ------------
Henry C. Duques.. 0 4 years 660,000 N/A 3,600,000
Charles T. Fote.. 0 4 years 500,000 N/A 2,000,000
Eula L. Adams.... 0 4 years 250,000 N/A 750,000
Lee Adrean....... 0 4 years 250,000 N/A 750,000
David P. Bailis.. 0 4 years 250,000 N/A 750,000
- --------
(1) The Company's long-term incentives under the Shareholder Value Plan are
not based on shares, units or rights. Under the terms of the plan, at the
end of a two-year performance period, a unit value, i.e., the award, is
established for each executive based on the performance of the Company's
Common Stock as compared to the performance of companies in the S&P 500
Index, subject to the Committee's discretion to reduce the award produced
by the formula based on factors it determines in its discretion. Those
unit values or awards are banked for an additional two-year period, until
payout of award, during which time the amount will be increased by a
percentage equal to 50% of the shareholders' return on equity each year,
or, if return on equity is negative, decreased by a percentage equal to
100% of the shareholders' return on equity each year. For the two-year
performance period ended December 31, 1999, the formula produced a unit
value of $750,000 for Messrs. Fote, Adrean, Bailis and Adams, and a unit
value of $3,600,000 for Mr. Duques. To further align the executives'
interests with those of shareholders, the Committee exercised its downward
discretion to reduce the award by 50% and to instead award stock options
at an exercise price at the fair market value of the Company's Common
Stock on the date of grant. The number of options granted was determined
by dividing the amount of award reduction by 20% of the exercise price.
(2) Two thresholds must be met before any unit value is established for any of
the Named Executives. First, the rate of total shareholders' return must
exceed the average two-year treasury note rate of return for the 60-day
period prior to the performance period. Second, no unit value is
established if the percentage increase in the Common Stock price, plus
dividends, does not exceed the percentage increase of at least 50% of the
companies in the S&P Index. Amounts shown are the unit values which would
be established under the plan formula applicable to each executive if the
thresholds are met, but not exceeded. As noted in
15
footnote (1), these amounts will increase or decrease during the two-year
banking period after they are set based on the Company's return on equity.
(3) No performance level or pay level has been identified as a target.
(4) Amounts shown are the maximum unit values which may be established at the
end of the performance period. The ultimate payout is determined by the
Company's return on equity over the two-year banking period after the unit
value is established, and may be greater or less than the amount shown. No
limit has been placed on the potential increase or decrease.
RETIREMENT PLANS
The Company's defined benefit retirement plans were frozen in 1997. Mr.
Duques, Mr. Fote, Mr. Bailis and Mr. Adams each have a frozen benefit which
would provide for an annual payment at age 65 of approximately $37,700,
$97,246, $9,582 and $6,948 respectively. Mr. Adrean did not accrue any benefits
under the plans because he joined the Company after participation was frozen.
All of the Company's executives participate in the Company's defined
contribution plans. The Company's contributions to the Named Executive's
defined contribution plans are shown in the "All Other Compensation" column of
the Summary Compensation Table.
16
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
total shareholder return on Common Stock of the Company since December 31,
1994 with the cumulative total return over the same period of (i) the S&P 500
Index, and (ii) a peer group selected by the Company composed of the following
ten computer services companies with market capitalizations over one billion
dollars (Automatic Data Processing Inc., Ceridian Corp., Computer Sciences
Corp., DST Systems Inc., Electronic Data Systems Corp., Equifax Inc., Fiserv
Inc., Paychex Inc., Sunguard Data Systems Inc., and Total System Services
Inc.) (the "Peer Group").
Pursuant to rules of the Securities and Exchange Commission ("SEC"), the
comparison assumes $100 was invested on January 1, 1995 in the Company's
Common Stock and in each of the indices and assumes reinvestment of dividends,
if any. Also pursuant to SEC rules, the returns of each of the companies in
the Peer Group are weighted according to the respective company's stock market
capitalization at the beginning of each period for which a return is
indicated. Historic stock price is not indicative of future stock price
performance.
[PERFORMANCE GRAPH APPEARS HERE]
FDC PEER GROUP S&P 500
------ ---------- -------
12/31/94 100 100 100
12/31/95 141.45 140.25 137.58
12/31/96 154.59 149.02 169.17
12/31/97 124.16 179.02 225.61
12/31/98 135.67 230.16 290.09
12/31/99 210.25 277.40 351.13
17
CERTAIN TRANSACTIONS AND OTHER MATTERS
In the ordinary course of business, the Company and its subsidiaries from
time to time engage in transactions with other corporations or financial
institutions whose officers or directors are also directors or officers of the
Company or a subsidiary. Transactions with such corporations and financial
institutions are conducted on an arm's-length basis and may not come to the
attention of the directors or officers of the Company or of the other
corporations or financial institutions involved.
RRE Investors. In December 1995, the Company made a $3,000,000 limited
partnership investment in RRE Connect Investors, L.P. (the "Connect
Partnership"). The Connect Partnership invested these proceeds in securities
of Connect, Inc. In February 2000, Connect, Inc. merged with a subsidiary of
Calico Commerce, Inc. and each share of Connect, Inc. was converted into 0.081
shares of Calico Commerce, Inc. The general partner of the Connect Partnership
is RRE Partners LLC and the Connect Partnership engaged RRE Advisors, LLC to
manage the affairs of the Connect Partnership. The Company paid RRE Advisors,
LLC an annual management fee of $60,000 plus 2% of its capital investment
through December 1998. No management fee was paid in 1999. In addition, the
Limited Partnership Agreement provides that the general partner is entitled to
a 17% carried interest in profits realized beyond the amount of the original
investment.
In the fourth quarter of 1996, the Company made a commitment to invest up
to $3 million as a limited partner in RRE Investors, L.P. As of December 31,
1999, the Company had funded $2,709,718 of the commitment. The Company is
required to pay RRE Advisors, LLC an annual management fee of 2% of its
capital commitment as well as its pro rata share of certain organizational and
other expenses. In addition, the Limited Partnership Agreement provides that
the general partner is entitled to receive 20% of all distributions after
satisfaction of certain distribution preferences in favor of the limited
partners. During 1999, the Company paid $60,000 in management fees and
organizational expenses.
In the second quarter of 1999, the Company made a commitment to invest up
to $5 million as a limited partner in RRE Investors II, L.P. As of December
31, 1999, the Company had funded $825,550 of the commitment. The Company is
required to pay RRE Advisors, LLC an annual management fee of 2.5% of its
capital commitment as well as its pro rata share of certain organizational and
other expenses. In addition, the Limited Partnership Agreement provides that
the general partner is entitled to receive 20% of all distributions after
satisfaction of certain distribution preferences in favor of the limited
partners. During 1999, the Company paid $62,500 in management fees and
organizational expenses.
Mr. Robinson and members of his family control and have equity interests in
RRE Investors, L.P.; RRE Investors II, L.P.; RRE Partners LLC; and RRE
Advisors, LLC (collectively, the "RRE Entities"). Prior to authorizing the
investments as described above, Mr. Robinson disclosed his interests in the
transactions to the Board and the Board unanimously approved the investments.
The Rutherford Fund. The Company is contemplating an investment of up to
$50 million as a limited partner in The Rutherford Fund I, L.P. (the "Fund").
As of March 1, 2000, the Company has not entered into any agreement nor made
any investment. If the Company does enter into an agreement, the Company
expects that it will be required to pay Rutherford Venture Management, L.L.C.
an annual management fee as well as some portion of the organizational and
other expenses. The Company also expects that Rutherford Venture Management,
L.L.C., as the general partner, will receive some portion of the distributions
from the Fund. Mr. Staglin has, or following the transaction the Company
expects that he will have, control and equity interests in The Rutherford Fund
I, L.P. and Rutherford Venture Management, L.L.C. The Company's investment in
the Fund is subject to approval by the Board taking into consideration Mr.
Staglin's interest in the transaction.
18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of the
Company's Common Stock ("Section 16 Persons") to file reports of ownership and
changes in ownership in the Company's Common Stock with the SEC and the New
York Stock Exchange. The Company inadvertently caused one report for Robert J.
Levenson to be filed late with respect to one grant of an option to purchase
Common Stock. Based on the Company's records and other information, the
Company believes, with the one exception noted above, that all Section 16(a)
filing requirements for the Section 16 Persons have been complied with during
or with respect to the fiscal year ended December 31, 1999.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth, based on the number of shares outstanding
as of December 31, 1999, the percentage of ownership of the Common Stock by
the persons believed by the Company to own beneficially more than 5% of the
Common Stock based solely upon filings with the Securities and Exchange
Commission.
Amount and Nature of
Name and Address Beneficial Ownership Percent of Class
---------------- -------------------- ----------------
AMVESCAP PLC 23,802,325(1) 5.70%
11 Devonshire Square (shared voting and
London EC2M 4YR dispositive power)
England; and
1315 Peachtree Street, N.E.
Atlanta, Georgia 30309
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(1) A Schedule 13G dated February 3, 2000, was filed by AMVESCAP PLC, the
parent holding company, and its subsidiaries AVZ, Inc.; AIM Management
Group Inc.; AMVESCAP Group Services, Inc.; INVESCO, Inc.; INVESCO North
American Holdings, Inc.; INVESCO Capital Management, Inc.; INVESCO Funds
Group, Inc.; INVESCO Management & Research, Inc.; INVESCO Realty Advisers,
Inc.; and INVESCO (NY) Asset Management, Inc. According to the Schedule
13G filing, the shares are held on behalf of other persons who have the
right to receive or the power to direct the receipt of dividends or the
proceeds from the sale of the shares.
* * *
You are urged to mark, date, sign and return the enclosed Proxy Card in the
prepaid envelope provided for such purpose or follow any alternative voting
procedure described on the Proxy Card. Your prompt action may save the Company
the expense of a second mailing.
We encourage all shareholders to attend the Annual Meeting of Stockholders
on May 10, 2000. If, due to a disability, you desire this document in an
alternative, accessible format or you will need special assistance at the
meeting, please contact the Corporate Secretary.
HENRY C. DUQUES
Chairman
19
[FIRST DATA LOGO APPEARS HERE] COMPANY #
CONTROL #
There are two ways to vote your Proxy
Vote by phone -- call toll free -- 1-800-240-6326
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Then follow the simple instructions.
. Your telephone vote authorizes your shares to be voted in the same manner
as if you marked, signed and returned your proxy.
Vote by mail
Mark, sign and date your proxy card, and return it in the postage-paid
envelope we've provided or return it to First Data Corporation, c/o Shareowner
Services(SM), P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by phone, please do not mail your Proxy Card
Please detach here
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The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of directors: 01 Courtney F. Jones 02 Robert J. Levenson [_] Vote FOR all [_] Vote WITHHELD
03 Charles T. Russell nominees from all nominees
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
2. The ratification of the selection of Ernst & Young LLP as independent auditors [_] For [_] Against [_] Abstain
of the Company for 2000.
In their discretion, the Proxies are also authorized to vote upon such other
matters as may properly come before the meeting. Management presently is not
aware of any such matters to be presented for action.
Date _____________________________
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority.
Corporations should provide full name
or corporation and title of authorized
officer signing the proxy.
Shown on the reverse side are the number of shares of FDC stock, if any,
beneficially held for you (1) in the Incentive Savings Plan. (2) in the Employee
Stock Purchase Plan, and (3) as Restricted Stock, as of March 13, 2000. Shares
held in the Incentive Savings Plan were provided by The American Express Trust
Company, Shares held in the Employee Stock Purchase Plan were provided by
Charles Schwab & Company, Inc., and Shares of Restricted Stock were provided by
FDC Stock Plan Administration.
By following the phone voting procedures on the reverse side or by
completing and mailing the card attached below in time for delivery by May 5,
2000, you will have voted all of your shares held in the Incentive Savings Plan,
the Employee Stock Purchase Plan and as Restricted Stock.
If you own FDC shares outside of the plans, you will receive separate proxy
materials and you should follow the voting instructions described in the
materials to vote those shares.
Please detach here
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FIRST DATA CORPORATION proxy
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Employee Proxy Voting Card in Connection with the
First Data Corporation Incentive Savings Plan (ISP)/
Employee Stock Purchase Plans (ESPP)/Restricted Stock
This Proxy is solicited on behalf of the Board of Directors of First Data
Corporation (FDC).
Voting authorization for ISP Shares--I hereby instruct American Express
Trust Company ("American Express"), as Trustee under the FDC ISP, to vote,
in person or by proxy, all shares of Common Stock of FDC allocated to my
account under the ISP at the Annual Meeting of Stockholders of FDC to be
held on May 10, 2000 and at any postponement or adjournment thereof, in the
manner specified below. American Express will vote the ISP shares
represented by the voting instruction if properly completed and signed by
me and received back by May 5, 2000. The ISP Trust Agreement instructs
American Express to vote FDC shares allocated to my ISP account for which
American Express has not received instructions from me in the same
proportion on each issue as it votes those shares credited to participants'
accounts for which American Express received instructions from participants
Voting Authorization for ESPP shares and Restricted Stock--I hereby appoint
Henry C. Duques and Michael T. Whealy, as Proxies, each with the power to
appoint his substitute, and hereby authorize them to represent and to vote,
as designated below, all the shares of Common Stock of FDC beneficially
held by me in the ESPP or as Restricted Stock on March 13, 2000, at the
Annual Meeting of Stockholders of FDC to be held on May 10, 2000 and at any
adjournment or postponement thereof, in the manner specified below. With
respect to ESPP Shares and Restricted Stock, this Proxy, when properly
executed, will be voted as directed by the undersigned stockholder. If no
direction is given, this Proxy will be voted for the election of the
nominees indicated and for the approval of all Proposals presented.
(continued, and to be signed and dated, on the reverse side)
[FIRST DATA LOGO APPEARS HERE] Company #
Control #
There are two ways to vote your Proxy.
Vote by Phone -- Call Toll Free -- 1-800-240-6326
. Use any touch-tone telephone to vote your Proxy 24 hours a
day, 7 days a week.
. You will be prompted to enter your 3-digit Company Number and your 7-
digit Control Number which are located above.
. Then follow the simple instructions.
. Your telephone vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed and returned your proxy.
Vote by Mail
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to First Data Corporation, c/o
Shareowner Services (SM), P.O. Box 64873, St. Paul, MN 55164-0873
If you vote by phone, please do not mail your Proxy Card.
Please detach here
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The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of directors: 01 Courtney F. Jones 02 Robert J. Levenson [_] Vote FOR all [_] Vote WITHHELD
03 Charles T. Russell nominees from all nominees
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
2. The ratification of the selection of Ernst & Young LLP as independent auditors
of the Company for 2000. [_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL AND ELECTION OF THE INDICATED
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NOMINEES.
Address Changed? Mark Box [_]
Indicate changes below: Date ____________________________________
Signature(s) in Box
Please sign exactly as your name(s) appear on
Proxy. If held in joint tenancy, all persons
must sign. Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full name or
corporation and title of authorized officer
signing the proxy.
Please detach here
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FIRST DATA CORPORATION proxy
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This proxy is solicited by the Board of Directors of First Data Corporation
(FDC)
By signing this proxy, you revoke all prior proxies and appoint Henry C.
Duques and Michael T. Whealy, and each of them, with each having the full
power to appoint his substitute, to represent and to vote all the shares of
Common Stock of FDC you held in your account on March 13, 2000 at the Annual
Meeting of Stockholders of FDC to be held on May 10, 2000, and any
adjournment or postponement of such meeting, in the manner specified on the
other side of this proxy. In their discretion, Mr. Duques and Mr. Whealy are
also authorized to vote upon such other matters as may properly come before
the meeting. Management presently is not aware of any such matters to be
presented for action.
See reverse for voting instructions.