SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement
Confidential, for Use of the Commission Only(as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Computer Management Sciences, Inc.
(Name of Registrant as Specified in its Charter)
Computer Management Sciences, Inc.
(Name of Person(s) Filing Proxy Statement, if other than 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:
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: (1)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration No.:
3) Filing Party:
4) Date Filed:
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
COMPUTER MANAGEMENT SCIENCES, INC.
8133 Baymeadows Way
Jacksonville, Florida 32256
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Computer
Management Sciences, Inc. (the "Company"), which will be held at the Holiday Inn
at Baymeadows, 9150 Baymeadows Road, Jacksonville, Florida 32256, on June 6,
1997 at 9:00 a.m., local time.
Please note that attendance at the annual meeting will be limited to
stockholders as of the record date (or their authorized representatives) and to
guests of the Company. If your shares are registered in your name and you plan
to attend the annual meeting, please mark the appropriate box on the enclosed
proxy card, and you will be pre-registered for the meeting (if your shares are
held of record by a broker, bank or other nominee, and you plan to attend the
meeting, you must also pre-register by returning the registration card forwarded
to you by your bank or broker). Stockholders who are not pre-registered will be
admitted to the annual meeting only upon verification of stock ownership.
The Notice of Annual Meeting and Proxy Statement on the following pages
cover the formal business of the meeting. Please give these proxy materials your
careful attention. It is important that your shares be represented and voted at
the annual meeting regardless of the size of your holdings. Accordingly, whether
or not you plan to attend the meeting, please complete, sign, date, and return
the accompanying proxy card in the enclosed envelope to assure your stock will
be represented at the annual meeting. If you decide to attend the annual meeting
and vote in person, you will, of course, have that opportunity.
The continuing interest of the shareholders in the business of the Company
is gratefully acknowledged. We hope many will attend the meeting.
Sincerely,
JERRY W. DAVIS
Chairman, President and
Chief Executive Officer
COMPUTER MANAGEMENT SCIENCES, INC.
8133 Baymeadows Way
Jacksonville, Florida 32256
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 6, 1997
The Annual Meeting of Shareholders of Computer Management Sciences, Inc.
will be held at the Holiday Inn at Baymeadows, 9150 Baymeadows Road,
Jacksonville, Florida 32256, on June 6, 1997, at 9:00 a.m., local time, for the
following purposes:
1. To elect two Class II directors for three-year terms expiring in 2000;
and
2. To Consider and act upon a proposal to amend the Company's Amended and
Restated Articles of Incorporation to increase the authorized capital stock of
the Company from 20,000,000 shares of common stock, par value $0.01 per share,
and 5,000,000 shares of preferred stock, par value $0.01 per share, to
40,000,000 shares of common stock, par value $0.01 per share, and 5,000,000
shares of preferred stock, par value $0.01 per share.
3. To transact such other business as may properly come before this annual
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 21, 1997,
as the record date for the determination of shareholders entitled to notice of
and to vote at this annual meeting.
Shareholders are requested to vote, date, sign and promptly return the
enclosed proxy in the envelope provided for that purpose, WHETHER OR NOT THEY
INTEND TO BE PRESENT AT THE MEETING.
By Order of the Board of Directors,
Anthony V. Weight
Corporate Secretary
Jacksonville, Florida
May 6, 1997
COMPUTER MANAGEMENT SCIENCES, INC.
PROXY STATEMENT
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
This proxy statement is first being sent to shareholders on or about May
6, 1997, in connection with the solicitation of proxies by the Board of
Directors of Computer Management Sciences, Inc. (the "Company"), to be voted at
the Annual Meeting of Shareholders to be held on June 6, 1997, and at any
adjournment thereof (the "Meeting"). The close of business on April 21, 1997,
has been fixed as the record date for the determination of shareholders entitled
to notice of and to vote at the Meeting. At the close of business on the record
date, the Company had outstanding 12,998,451 shares of common stock, $.01 par
value per share ("Common Stock"), entitled to one vote per share.
Shares represented by duly executed proxies in the accompanying form
received by the Company prior to the Meeting will be voted at the Meeting. If
shareholders specify in the proxy a choice with respect to any matter to be
acted upon, the shares represented by such proxies will be voted as specified.
If a proxy card is signed and returned without specifying a vote or an
abstention on any proposal, it will be voted according to the recommendation of
the Board of Directors on that proposal. The Board of Directors recommends a
vote FOR the election of directors listed on the proxies. The Board of Directors
recommends a vote FOR the proposal to amend the Company's Amended and Restated
Articles of Incorporation to increase authorized capital stock of the Company
from 20,000,000 shares of Common Stock and 5,000,000 shares of preferred stock,
par value $0.01 per share ("Preferred Stock"), to 40,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock. The Board of Directors knows of
no other matters that may be brought before the Meeting. However, if any other
matters are properly presented for action, it is the intention of the named
proxies to vote on them according to their best judgment.
Shareholders who hold their shares through an intermediary must provide
instructions on voting as requested by their bank or broker. A shareholder who
signs and returns a proxy may revoke it at any time before it is voted by taking
one of the following three actions: (i) giving written notice of the revocation
to the Corporate Secretary of the Company; (ii) executing and delivering a proxy
with a later date; or (iii) voting in person at the Meeting.
Votes cast by proxy or in person at the Meeting will be tabulated by one
or more inspectors of election appointed at the Meeting, who will also determine
whether a quorum is present for the transaction of business. Abstentions and
broker non-votes will be counted as shares present in the determination of
whether shares of the Company's Common Stock represented at the Meeting
constitute a quorum. With respect to matters to be acted upon at the Meeting,
abstentions and broker non-votes will not be counted for the purpose of
determining whether a proposal has been approved.
The expense of preparing, printing, and mailing proxy materials to
shareholders of the Company will be borne by the Company. In addition to
solicitations by mail, regular employees of the Company may solicit proxies on
behalf of the Board of Directors in person or by telephone. The Company will
reimburse brokerage houses and other nominees for their expenses in forwarding
proxy material to beneficial owners of the Company's stock.
The executive offices of the Company are located at 8133 Baymeadows Way,
Jacksonville, Florida 32256. The Company's telephone number is (904) 737-8955.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's outstanding shares of Common Stock as of
December 31, 1996, by: (i) each of the Company's directors and named executive
officers who is a shareholder; (ii) all executive officers and directors of the
Company, as a group; and (iii) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock. Except as
indicated by the notes to the following table, each of the holders listed below
has sole voting power and investment power over the shares beneficially owned.
Shares Beneficially Owned
--------------------------------------------------
Total Owned Percent
Owned Owned Directly and Beneficially
Name (1) Directly (2) Indirectly Indirectly Owned(10)
- -------- ------------- ----------- ---------- ----------
Jerry W. Davis 1,605,412(3) 3,259,051(4)(7) 4,864,463 36.0%
Anthony V. Weight 1,037,378(3) 2,885,993(4)(7) 3,923,371 30.5%
Larry A. Longhi 267,747 93,098(5) 360,845 2.9%
David C. Minardi 82,293 53,106(5) 135,399 1.1%
Edward W. Fishback, Jr. 192,636(8) 650(5) 193,286 1.6%
Timothy W. Smith 10,420 9,716(5) 20,136 *
Perry E. Esping 3,600 0 3,600 *
Harry C. Stonecipher 26,100 0 26,100 *
All executive officers and directors 3,225,586 4,637,639(6) 7,863,225 55.2%
as a group (8 persons)
Employee Stock Ownership Plan and Trust 1,474,300 0 1,474,300 11.9%
Marsh & McLennan Companies, Inc. (9) 1,018,350 0 1,018,350 8.2%
Putnam Investments, Inc. (9) 0 1,018,350 1,018,350 8.2%
Putnam Investment Management, Inc. (9) 0 1,018,350 1,018,350 8.2%
The Putnam Advisory Company, Inc. (9) 0 1,018,350 1,018,350 8.2%
<FN>
*Less than 1.0%
(1) Except as follows and as indicated in Footnote (9) below, the business
address for all shareholders is 8133 Baymeadows Way, Jacksonville, Florida
32256: Mr. Stonecipher, McDonnell Douglas Corp., P.O. Box 516, St. Louis,
Missouri 63166; Mr. Esping, Business Records Corp., 1111 W. Mockingbird
Lane, Suite 1400, Dallas, Texas 75247; and Mr. Fishback, 3131 Lonnbladh
Road, Tallahassee, Florida 32308.
(2) Shares "Owned Directly" include (a) shares registered in the name of the
shareholder and (b) in the case of the executive officers and directors,
shares obtainable by virtue of fully-vested and exercisable stock options.
Of the total 3,225,586 shares owned by the 8 executive officers and
directors, 1,828,688 represent shares (neither issued nor outstanding)
obtainable through such stock options.
(3) Mr. Weight is the trustee (having sole voting and investment power) of a
trust created on September 19, 1995, by Mr. Davis for the primary benefit
of himself and his children. Mr. Davis is the trustee (having sole voting
and investment power) of a trust created on September 19, 1995, by Mr.
Weight for the primary benefit of himself and his children. During the
initial two-year term of the trusts, some or all of the stock will be
returned to the grantor.
-2-
(4) As to Messrs. Davis and Weight, the shares included as owned indirectly by
them include all of the 1,474,300 shares owned by the Computer Management
Sciences, Inc., Employee Stock Ownership Plan and Trust (the "ESOP") and
all of the 33,105 shares owned by the Computer Management Sciences, Inc.,
Profit Sharing 401(k) Plan and Trust, because each is a Trustee of both
Trusts and therefore possesses shared investment power over such shares.
Included among the total number of ESOP shares attributed to Messrs. Davis
and Weight are 98,436 shares and 84,837 shares, respectively, allocated to
their individual participant accounts in the ESOP, over which they possess
sole voting power (see Footnote 5 below); for purposes of this table,
however, the ESOP shares are attributed only one time to each of them.
(5) As to all shareholders other than Messrs. Davis and Weight, the shares
allocated to each such shareholders' individual participant account in the
ESOP are deemed beneficially owned by the respective shareholders because
each participant has sole voting power over such shares pursuant to the
terms of the ESOP and Section 409(e) of the Code.
(6) In aggregating the shares held by all executive officers and directors as a
group, the entire number of shares held in the ESOP and in the Profit
Sharing-401(k) Plan is counted only one time for the entire group.
(7) Mr. Davis is the sole shareholder of Bull Gator, Inc., a Delaware
corporation which is the general partner of First Oneida (1995) Limited
Partnership, a Delaware limited partnership owning 1,751,646 shares of
Common Stock. Mr. Weight is the sole shareholder of Downunder (1995)
Company, Inc., a Delaware corporation which is the general partner of
Sundown (1995) Limited Partnership, a Delaware limited partnership owning
1,378,588 shares of Common Stock. As the sole shareholder of the respective
general partners, each of Messrs. Davis and Weight have retained sole
voting and investment power over the shares owned by the respective limited
partnerships.
(8) In addition to 175,437 shares owned by Mr. Fishback for his own benefit, an
additional 17,199 shares are registered in his name as Custodian for his
daughter under the Florida Uniform Transfers to Minors Act. Under the terms
of the custodianship, Mr. Fishback holds sole voting and investment power
over such stock.
(9) Putnam Investments, Inc. ("PI"), a Massachusetts corporation, is a
wholly-owned subsidiary of Marsh & McLennan Companies, Inc. ("M&MC"), a
Delaware corporation. Putnam Investment Management, Inc., a Massachusetts
corporation which is the investment adviser to the Putnam family of mutual
funds, and The Putnam Advisory Company, Inc., a Massachusetts corporation
which is the investment adviser to PI's institutional clients, are
wholly-owned subsidiaries of PI (the "Putnam Subsidiaries"). The shares
shown as beneficially owned by each of M&MC, PI, and the Putnam
Subsidiaries in the above schedule represent the same 1,018,350 shares. The
Putnam Subsidiaries have investment power over the shares as investment
managers, but each of the mutual funds' trustees have voting power over the
shares held by each fund, and The Putnam Advisory Company, Inc., has shared
voting power over the shares held by the institutional clients. M&MC owns
the shares directly but has no voting or investment power over the shares
of Common Stock. PI may be deemed to have shared Investment Power as the
Parent Holding Company of the Putnam Subsidiaries. The mailing address for
PI and the Putnam Subsidiaries is One Post Office Square, Boston, MA 02109;
the address for M&MC is 1166 Avenue of the Americas, New York, NY 10036.
The source of all information provided in the schedule and this footnote
concerning the beneficial ownership of M&MC, PI, and the Putnam
Subsidiaries is taken from Form 13G as filed with the Commission and the
Company on February 12, 1997, pursuant to Rule 13d-1(b)(1)(ii)(E) and (G).
(10) The TCW Group, Inc., a Nevada corporation, and Robert Day possess sole
voting and investment powers with respect to 605,150 shares, or 4.9%, of
the Common Stock which is directly owned by three subsidiaries of The TCW
Group, Inc., which are controlled by The TCW Group, Inc., as follows: Trust
Company of the West, a California corporation and a bank as defined in
Section 3(a)(6) of the Securities Exchange Act of 1934; TCW Asset
Management Company, a California corporation and an Investment Adviser
registered under Section 203 of the Investment Advisers Act of 1940; and
TCW Funds Management, Inc., a California corporation and an Investment
Adviser registered under Section 203 of the Investment Advisers Act of
1940. The TCW Group, Inc., and Robert Day filed a Form 13G with the
Commission and the Company on February 12, 1997, pursuant to Rule
13d-1(b)(1)(ii)(G), and based on the total number of shares outstanding as
of September 30, 1997, and their understanding that their holdings
represented more than 5% of the outstanding shares of Common Stock of the
Company. The Form 13G, according to a source with The TCW Group, Inc., was
filed in error, and the subject stock is not properly included in the above
schedule.
</FN>
-3-
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information regarding the Company's
directors and executive officers:
Name Age Positions With the Company
Jerry W. Davis 52 President, Chief Executive Officer and Director
Anthony V. Weight 55 Senior Vice President, Corporate Secretary, and
Director
Edward W. Fishback, Jr. 54 Group Vice President and Director
Larry A. Longhi 39 Group Vice President and Director
John W. Martin, II 48 Group Vice President and Director
David C. Minardi 34 Group Vice President
Timothy W. Smith 37 Group Vice President
Charles L. Stark, III 50 Group Vice President
Anthony Colaluca 30 Vice President and Chief Financial Officer
Perry E. Esping 62 Director
Harry C. Stonecipher 60 Director
Jerry W. Davis. Mr. Davis is a founder of the Company and has served as
President, Chief Executive Officer and Chairman of the Board since the Company's
inception in 1983. For approximately three years prior to founding the Company,
Mr. Davis held a senior level position with Uniroyal, Inc., where he was
responsible for a worldwide strategic business unit. Prior to joining Uniroyal,
Inc., Mr. Davis held various marketing, product management and financial
positions during his 10 years of service with the DuPont Company.
Anthony V. Weight. Mr. Weight is a founder of the Company, and has served
as Senior Vice President and a director since the Company's inception in 1983.
Mr. Weight served as the Company's Treasurer from 1983 until April 1996 and
Chief Financial Officer from March 1995 until April 1997. For approximately 17
years prior to founding the Company, Mr. Weight held senior level marketing and
supervisory positions with Uniroyal, Inc. in the United States and Canada.
Edward W. Fishback, Jr. Mr. Fishback served, from 1979 through 1995, as
President and a director of the Company's subsidiary, MIS Software Development,
Inc. ("MSD"), prior to its acquisition by the Company. Mr. Fishback has served
as a Group Vice President of the Company since February 1996 and was appointed
as a director (Class III) on April 19, 1996, to fill a vacancy on the Board.
Larry A. Longhi. Mr. Longhi joined the Company as a systems consultant in
1984 and has served as a director since 1985. Mr. Longhi served as a Vice
President from 1985 until February 1996, when he was appointed as a Group Vice
President. Prior to joining the Company, from 1981 to 1984, Mr. Longhi was
employed as a systems analyst with Blue Cross/Blue Shield of Florida.
John W. Martin, II. Mr. Martin joined the Company in connection with the
Company's acquisition of Summit Computer Services, Inc. in April 1996. Prior to
the acquisition, he served as President of Summit Computer Services from June of
1987 through the date of the acquisition. He was appointed as a Group Vice
President of the Company in May of 1996. Prior to 1987, Mr. Martin was a Senior
Vice President with Broadway & Seymour, Inc., and prior to that, a Senior
Manager with J.P. Stevens & Co.
-4-
David C. Minardi. Mr. Minardi joined the Company in 1989 with
responsibility for human resources functions and has served as a director of the
Company since 1992. Mr. Minardi served as a Vice President of the Company from
1992 until February 1996, when he was appointed as a Group Vice President. From
1987 to 1989, Mr. Minardi was corporate recruiter for Florida National Bank.
Timothy W. Smith. Mr. Smith was appointed as a Group Vice President of the
Company in February 1996. Prior to being named a Group Vice President, Mr. Smith
served as a Vice President of the Company from April 1995 until February 1996,
and as the Branch Manager of Company branch offices in Atlanta, Greenville and
Chicago since joining the Company in 1993. From 1992 to 1993, Mr. Smith was
employed by Daugherty Systems, Inc., a computer consulting company, and from
1985 to 1992, Mr. Smith was employed by Computer Task Group, an international
consulting company, in each case as branch manager, sales representative and
systems consultant.
Charles L. Stark, III. Mr. Stark joined the Company in November of 1995 as
Director of Project Management Services, and was elected as a Group Vice
President in April of 1996. For three years prior to joining the Company, he
worked as an independent software consultant, and prior to that he served as the
Director of Retail Banking for Barnett Technologies, Inc.
Anthony Colaluca. Mr. Colaluca joined the Company in September of 1996 as a
Vice President and Chief Accounting Officer. In April of 1997, Mr. Colaluca was
appointed as the Chief Financial Officer of the Company. For seven years prior
to joining the Company, Mr. Colaluca held various positions with KPMG Peat
Marwick LLP, including Senior Manager, Manager, Supervising Senior Accountant
and Senior Accountant.
Perry E. Esping. Mr. Esping was elected as a director of the Company on
October 25, 1995. He has been President, Chief Executive Officer and Chairman of
Business Records Corporation since 1988. Prior to 1988, Mr. Esping served as
President of American Express Co.'s Data Based Services Group, U.S.A., founded
and served as Chairman and Chief Executive Officer of First Data Resources, Inc.
and served as President of Mid America Bankcard Association (a computer service
company). Mr. Esping currently serves on the Boards of Directors of Service Data
Corporation and Brite Voice Systems, Inc.
Harry C. Stonecipher. Mr. Stonecipher was elected as a director of the
Company on October 25, 1995. He has served as President, Chief Executive Officer
and a director of McDonnell Douglas Corporation since 1994. Mr. Stonecipher
previously served as Chairman and Chief Executive Officer of Sundstrand
Corporation (a manufacturer of aerospace and electronic equipment) from 1991
through 1994 and as its President from 1987 through 1991. Mr. Stonecipher
currently serves on the Boards of Directors of Cincinnati Milacron, Inc. and
Sentry Insurance.
The Board of Directors consists of seven members. Messrs. Longhi, Minardi,
and Stonecipher are Class I directors, Messrs. Weight and Esping are Class II
directors, and Messrs. Davis and Fishback are Class III directors. The terms of
the Class I directors expire in 1999, the terms of the Class II directors expire
in 1997, and the terms of the Class III directors expire in 1998. The Articles
of Incorporation and Bylaws provide that the size of the Board of Directors may
be changed (to not fewer than three or more than nine members) by amendment of
the Bylaws by the Board of Directors or by holders of 66b% of the outstanding
Common Stock.
-5-
Meetings of the Board of Directors and Standing Committees
The Company's Board of Directors has a Compensation Committee, an Audit
Committee, and an Executive Committee. The Compensation Committee consists of
Messrs. Esping and Stonecipher. The Compensation Committee is responsible for
establishing salaries, bonuses and other compensation for the Company's
executive officers. See "Board Compensation Committee Report on Executive
Compensation." The Compensation Committee also is responsible for administering
the Company's stock option plans and for establishing the terms and conditions
of all stock option grants thereunder. The Compensation Committee met one time
during 1996.
The members of the Audit Committee are Messrs. Esping, Stonecipher and
Weight. The duties of the Audit Committee are to recommend to the Board of
Directors the selection of independent certified public accountants, to meet
with the Company's independent certified public accountants to review the scope
and results of the annual audit, and to consider various accounting and auditing
matters related to the Company, including its system of internal controls and
financial management practices. The Audit Committee met one time during 1996.
The members of the Executive Committee are Messrs. Davis and Weight. The
Executive Committee is empowered to exercise all of the authority of the Board
of Directors of the Company, except as limited by the Florida Business
Corporation Act. Under Florida law, an executive committee may not, among other
things, recommend to shareholders actions required to be approved by
shareholders, fill vacancies on the board of directors, amend the bylaws or
approve the reacquisition or issuance of shares of a company's capital stock.
The Executive Committee met four times during 1996.
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
During 1996, the Company's Board of Directors held four meetings. Each
incumbent director attended all of the Board meetings and meetings of committees
of which he is a member.
Compliance With Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors, and ten percent shareholders are required by the SEC regulations to
furnish the Company with copies of all Section 16(a) reports they file.
Edward Fishback filed a late Form 3 following his election as an executive
officer on February 13, 1996, which made him subject to the 16(a) reporting
requirements. Timothy Smith, an officer of the Company, filed a late Form 4
reflecting a purchase of common stock by his spouse on July 16, 1996. Clifford
Holt, Antonio Timbol, Donald White, and Charles Stark, all being officers of the
Company, as well as Perry Esping and Harry Stonecipher, both being non-employee
Directors of the Company, each filed a late Form 4 to report their receipt of
grants of stock options on various dates in November 1996.
-6-
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors
Non-employee directors receive stock options for their services pursuant
to the 1995 Non-Employee Director Stock Option Plan (the "Director Plan"). The
Director Plan provides for the grant of non-qualified options to purchase Common
Stock of the Company to non-employee directors of the Company. The Director Plan
authorizes the issuance of a maximum of 168,750 shares of Common Stock. The
Director Plan is administered by the Compensation Committee. The Director Plan
provides for the automatic grant of: (a) an option to purchase an aggregate of
6,750 shares of the Common Stock upon the initial election of each non-employee
director of the Company, and (b) an option to purchase an additional 4,500
shares of Common Stock immediately following each annual meeting of the
Company's shareholders (beginning with the meeting held in 1996) at which such
non-employee director is either re-elected to, or continues to serve as an
incumbent member of, the Company's Board of Directors. Each such option is
granted at an exercise price equal to the fair market value of the Common Stock
on the date of grant. All options granted under the Director Plan have a term of
10 years and vest in equal installments over the first five years of such term.
No director who is an employee of the Company receives separate compensation for
services rendered as a director.
Executive Compensation
The following table sets forth the annual and long-term compensation
received in 1996 and the prior two years by the Company's Chief Executive
Officer and the four most highly-compensated executive officers (the "Named
Executives").
Long-Term
Annual Compensation(1) Compensation Awards
Number of
Securities Underlying
Name and Principal Position Salary Bonus Options/SARs
Jerry W. Davis
President and Chief Executive Officer
1994 $216,000 $34,500 --
1995 189,000 31,213 214,810
1996 222,807 -- --
Edward W. Fishback, Jr.
Group Vice President(2)
1994 -- -- --
1995 101,184 182,000 --
1996 144,000 51,832 --
Larry A. Longhi
Group Vice President
1994 72,000 151,000 --
1995 72,000 116,263 --
1996 72,000 220,801 --
David C. Minardi
Group Vice President
1994 72,000 124,533 25,101
1995 72,000 169,209 9,000
1996 72,000 173,856 --
Timothy W. Smith
Group Vice President
1994 60,000 73,244 8,367
1995 60,000 91,999 6,750
1996 72,000 137,027 --
(1) Excludes any perquisites and other personal benefits received, the total
value of which did not exceed 10% of the total annual salary and bonus for such
Named Executive.
(2) Mr. Fishback's 1995 compensation was paid by MSD immediately prior to the
acquisition of MSD by the Company.
-7-
Option Grants in 1996
No options to purchase shares of the Company's Common Stock were granted
to the Named Executives during 1996.
Aggregate Option Exercises in 1996 and December 31, 1996 Option Values
No options were exercised by the Named Executives in 1996. The following
table sets forth information concerning the value of unexercised options held by
the Named Executives as of December 31, 1996.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year End at Fiscal Year End
Name Exercisable (E)/Unexercisable (U) Exercisable (E)/Unexercisable(U)(1)
Jerry W. Davis................... 1,101,729(E) $24,992,239(E)
Larry A. Longhi.................. 184,078(E) 4,265,455(E)
David C. Minardi................. 77,231(E) 1,703,168(E)
15,440(U) 299,397(U)
Timothy W. Smith................. 7,720(E) 149,698(E)
7,397(U) 133,743(U)
Edward W. Fishback, Jr........... -- --
- ------------------
(1) Represents the market value of the Common Stock as of December 31, 1996
($23.25 per share) less the exercise price of the options.
Compensation Committee Interlocks and Insider Participation
The Board's Compensation Committee currently consists of Messrs.
Stonecipher and Esping, who are outside directors. There were no transactions
and relationships between the Compensation Committee members or the Chief
Executive Officer and the Company required to be reported herein.
-8-
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE FOLLOWING BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
Board Compensation Committee Report on Executive Compensation
The Company's executive compensation programs are intended to enable it to
attract and retain talented executives and to reward them appropriately. The
Compensation Committee (the "Committee") attempts to determine the appropriate
total levels of compensation, as well as the appropriate mix of base salary,
annual incentives and long-term incentives. In determining compensation,
consideration is given both to overall Company performance and to individual
performance, taking into account the contributions made by the executive toward
improving Company performance. Consideration is also given to the executive's
position, location, and level of responsibility in the structure of the Company
and the job performance of the executive in planning, providing direction for,
and implementing the Company's strategy. The Committee's primary objective in
establishing compensation programs is to support the Company's goal of
maximizing the value of shareholders' investment in the Company.
The Company's program for executive compensation consists of three
components: base salary, an annual incentive (bonus) payment, and long-term
incentives. An executive's base salary is determined through a combination of
several factors: an evaluation of the sustained performance of the executive,
prevailing levels of pay for positions of comparable responsibility in the
industry, level of responsibility, and prior experience. Payments under the
Company's annual incentive plans are tied to the Company's level of
profitability. Actual incentive payments are determined by applying a formula
based on Company performance to each executive's annual incentive opportunity.
Applying this formula results in payments at the targeted incentive opportunity
level when budgeted earnings are achieved, and payments below the target level
when earnings are below those set by the budget. The formula provides for
payments above the targeted level only when earnings exceed those set in the
budget.
The Company's long term incentives are in the form of stock options, stock
appreciation rights ("SARs") and restricted stock awarded to executives and
other key employees under the 1995 Stock Incentive Plan (the "1995 Plan")
adopted by the Board of Directors and approved by the Company's shareholders
effective as of September 1, 1995. The objective of these awards is to advance
the longer term interests of the Company and its shareholders and complement
incentives tied to annual performance. These awards provide rewards to
executives and other key employees upon the creation of incremental shareholder
value and attainment of long-term earnings goals. Stock incentive awards under
the 1995 Plan produce value to executives only if the price of the Company's
stock appreciates, thereby directly linking the interests of executives with
those of the shareholders. Subject to the provisions of the 1995 Plan, the
Compensation Committee, in its discretion, selects the recipients of awards and
the number of shares or options granted thereunder and determines other matters,
such as (i) vesting schedules, (ii) the exercise price of options, (iii) the
duration of awards and (iv) the price of SARs. Options and SARs expire
immediately upon termination of an optionee's employment either for cause or
voluntarily by the optionee without the Company's consent. The restrictions upon
stock awards lapse over time or upon the occurrence of specified events, and the
restricted shares are forfeited if the recipient ceases to be an employee of the
Company before the restrictions lapse.
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Mr. Davis' 1996 compensation was approved by the Committee applying the
principles outlined above in the same manner as they were applied to the other
executives of the Company. In addition, the Committee reviews the compensation
paid to chief executive officers of comparable companies and considers those
compensation levels in determining Mr. Davis' compensation.
The Committee believes that the program it has adopted serves to focus the
efforts of the Company's executives on the attainment of a sustained high rate
of Company growth and profitability for the benefit of the Company and its
shareholders.
Compensation Committee
Harry C. Stonecipher
Perry E. Esping
Certain Transactions
In connection with the Company's acquisition of MIS Software Development,
Inc., a Florida corporation ("MSD"), in December, 1995, the Company agreed to
acquire a parcel of improved real property that serves as MSD's principal
operating facility at its appraised value. The real property was owned by MSD
Properties, a Florida general partnership ("MSD Properties"), and leased to MSD.
The partners of MSD Properties included Edward W. Fishback, Jr., the principal
shareholder of MSD, and certain executive officers of MSD. In 1996, the Company
acquired the improved real property for its appraised value of $175,000. MSD
continues to use the property as its principal operating facility.
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PERFORMANCE GRAPH
The following graph is a comparison of the cumulative total returns for
the Company's Common Stock as compared with the cumulative total return for the
NASDAQ Stock Market (U.S.) Total Return Index and the NASDAQ Computer & Data
Processing Services Stocks ("C&DPS") Nasdaq Total Return Index. The cumulative
return of the Company was computed by dividing the difference between the price
of the Company's Common Stock at the end of each measurement period (December
31, 1995, and December 31, 1996) and the beginning of the cumulative measurement
period (September 29, 1995) by the price of the Company's Common Stock at the
beginning of the cumulative measurement period. The total return calculations
are based upon an assumed $100 investment on September 29, 1995, the date of the
Company's initial public offering.
Comparison of Fifteen-Month Cumulative Return
(Performance Graph Here)
9/29/95 12/31/95 12/31/96
Computer Management Sciences, Inc. $100 $127 $166
NASDAQ C&DPS Index $100 $104 $129
NASDAQ Stock Market - U.S. $100 $101 $125
-11-
PROPOSED ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes of
directors. The Company's Articles of Incorporation provide that at each annual
meeting, directors shall be elected by class for a term of three years, to
preserve as evenly as practicable, the division of directors into classes. The
current terms of the three classes of directors expire in 1997 (Class II
directors), 1998 (Class III directors), and 1999 (Class I directors). Two
directors are to be elected at the Meeting for terms ending in 2000 (Class II),
or until their respective successors shall have been elected and qualified.
The Board of Directors has nominated each of Anthony V. Weight and Perry
E. Esping to stand for election at the Meeting as a Class II director. See
"Management - Directors and Executive Officers" for information on such
nominees. The current terms of Messrs. Weight and Esping will expire on the date
of the Meeting.
Approval By Shareholders
Election of the director nominees will be approved if the votes cast by
holders of shares represented and entitled to vote at the Meeting in favor of
their election exceed the votes cast opposing their election. The Board of
Directors unanimously recommends a vote FOR the election of the Director
nominees. Unless otherwise indicated, votes will be cast pursuant to the
accompanying proxy FOR the election of these nominees. Should any nominee become
unable or unwilling to accept nomination or election for any reason, it is
intended that votes will be cast for a substitute nominee designated by the
Board of Directors. The Board has no reason to believe the nominees named will
be unable or unwilling to serve if elected.
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
On April 4, 1997, the Company's Board of Directors (i) approved an
amendment to Article VI of the Amended and Restated Articles of Incorporation of
the Company to increase the authorized capital stock of the Company from
20,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, $0.01
par value per share ("Preferred Stock"), to 40,000,000 shares of Common Stock
and 5,000,000 shares of Preferred Stock, and (ii) directed that the amendment in
the form set forth in Exhibit A (the "Amendment") be submitted to a vote of the
shareholders of the Company at the Meeting.
Presently, the Company has 12,998,451 shares of Common Stock and no shares
of Preferred Stock outstanding. The Preferred Stock may be issued from time to
time in one or more series. The Board of Directors is authorized to fix the
number of shares in each series, the designation thereof, and the relative
rights, preferences, and limitations of each series, and specifically the Board
of Directors is authorized to fix with respect to each series: (i) the dividend
rate; (ii) redeemable features, if any; (iii) rights upon liquidation; (iv)
whether or not the shares of such series shall be subject to purchase,
retirement, or sinking fund provisions; (v) whether or not the shares of such
series shall be convertible into or exchangeable for shares of any other class
or series and, if so, the rate of conversion or exchange; (vi) restrictions, if
any, upon the payment of dividends on Common Stock; (vii) restrictions, if any,
upon creation of indebtedness; (viii) voting powers, if any, of the shares of
each series; and (ix) such other rights, preferences, and limitations as shall
not be inconsistent with the laws of the State of Florida.
The proposed increase in authorized shares of capital stock will enhance
the Company's flexibility in connection with possible future actions, such as
stock splits, stock dividends, acquisitions, financing transactions, employee
benefit plan issuances, and such other corporate purposes as may arise. Having
such authorized capital stock available for issuance in the future would give
the Company greater flexibility and would allow additional shares of capital
stock to be issued without the expense and delay of a special shareholders'
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meeting. Such a delay might deny the Company the flexibility the Board views as
important in facilitating the effective use of the Company's capital stock. The
Company is not presently engaged in any negotiations with respect to the use of
any shares of the additional authorized capital stock, nor are there currently
any commitments, arrangements or understandings with respect to the issuance of
such shares.
The future issuance of additional shares of capital stock on other than a
pro rata basis may dilute the ownership of current shareholders. The rules of
the National Association of Securities Dealers, Inc. ("NASD") currently require
shareholder approval of certain issuances of shares of Common Stock or
securities convertible into Common Stock by issuers of securities traded on the
Nasdaq Stock Market's National Market, on which the Company's Common Stock is
currently traded. These issuances include: (i) stock option or purchase plans
for officers or directors where the securities that may be issued exceed the
lesser of 1% of the number of outstanding shares of Common Stock, 1% of the
voting power outstanding or 25,000 shares; (ii) actions resulting in a change in
control of the Company; (iii) acquisition transactions involving directors,
officers or substantial security holders where the present or potential issuance
of such securities could result in an increase in outstanding shares of Common
Stock of 5% or more; (iv) acquisition transactions generally where the present
or potential issuance of such securities could result in an increase in
outstanding shares of Common Stock of 20% or more; and (v) certain other sales
or issuances of Common Stock (or securities convertible into or exchangeable for
Common Stock) in a non-public offering equal to 20% or more of the voting power
outstanding before the issuance for less than the greater of book or market
value of the stock. Exceptions to these rules may be made upon application to
the NASD when (i) the delay in securing shareholder approval would seriously
jeopardize the financial viability of the enterprise and (ii) reliance by the
Company on this exception is expressly approved by the Company's audit committee
or a comparable body. In other instances, the issuance of additional shares of
capital stock would be within the discretion of the Board of Directors without
the requirement of further action by shareholders, except as otherwise required
by applicable law or any stock exchange or automated quotation system upon which
the Company's securities may then be listed.
The proposed shares of capital stock for which authorization is sought
would increase the number of shares of capital stock available for issuance by
the Company, but would have no effect upon the terms of the Common Stock or the
rights of the holders of such stock. If and when issued, the proposed additional
shares of Common Stock would have the same rights and privileges as the shares
of Common Stock presently outstanding and the Preferred Stock would have their
designations, rights and privileges as established by the Board of Directors
from time to time. Holders of capital stock will not have pre-emptive rights to
purchase additional shares of capital stock.
The issuance of additional shares of capital stock also could be used to
block an unsolicited acquisition through the issuance of large blocks of stock
to persons or entities considered by the Company's officers and directors to be
opposed to the acquisition, which might be deemed to have an anti-takeover
effect (i.e., might impede the completion of a merger, tender offer or other
takeover attempt). In fact, the mere existence of such a block of authorized but
unissued shares, and the Board's ability to issue such shares without
shareholder approval, might deter a bidder from seeking to acquire shares of the
Company on an unfriendly basis. While the authorization of additional shares of
capital stock might have such effects, the Board of Directors of the Company
does not intend or view the increase in capital stock as an anti-takeover
measure, nor is the Company aware of any proposed transaction of this type.
-13-
Recommendation
The affirmative vote of a majority of all the outstanding shares of the
Company's Common Stock will be required to approve the adoption of the
Amendment. If the Amendment is approved by the shareholders of the Company, such
amendment will become effective when the articles of amendment to the Company's
Amended and Restated Articles of Incorporation are filed with the Florida
Department of State. The Board of Directors unanimously recommends a vote FOR
the adoption of the Amendment to the Amended and Restated Articles of
Incorporation to increase the authorized capital stock of the Company from
20,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock to
40,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock,
substantially in the form of Exhibit A hereto.
INFORMATION CONCERNING INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has appointed KPMG Peat Marwick LLP as
independent accountants to audit the consolidated financial statements of the
Company for the year ending December 31, 1997. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Meeting with the opportunity to
make a statement if they so desire and to respond to appropriate questions posed
by shareholders.
PROPOSALS OF SHAREHOLDERS FOR THE NEXT ANNUAL MEETING
Proposals of shareholders intended for presentation at the 1998 annual
meeting must be received by the Company on or before December 23, 1997, in order
to be included in the Company's proxy statement and form of proxy for that
meeting.
The Company's Articles of Incorporation also require advance notice to the
Company of any shareholder proposal and of any nominations by shareholders of
persons to stand for election as directors at a shareholders' meeting. Notice of
shareholder proposals and of director nominations must be timely given in
writing to the Secretary of the Company prior to the meeting at which the
directors are to be elected. To be timely, notice must be received at the
principal executive office of the Company not less than 60 days prior to the
meeting of shareholders; provided, however, that in the event that less than 70
days' notice or prior public disclosure of the date of the meeting is given or
made to the shareholders, notice by the shareholder, in order to be timely, must
be so delivered or received not later than the close of business on the tenth
day following the day on which such notice of the date of the annual meeting was
mailed to shareholders or public disclosure of the date of the annual meeting
was made.
In addition to the matters required to be set forth by the rules of the
Securities and Exchange Commission, a shareholder's notice with respect to a
proposal to be brought before the annual meeting must set forth (a) a brief
description of the proposal and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Company's books,
of the shareholder proposing such business and any other shareholders known by
such shareholder to be supporting such proposal, (c) the class and number of
shares of the Company that are beneficially owned by such shareholder on the
date of such shareholder notice and by other shareholders known to such
shareholder to be supporting such proposal on the date of such shareholder
notice, and (d) any financial interest of the shareholder in such proposal.
-14-
A shareholder's notice with respect to a director nomination must set
forth (a) as to each nominee (i) the name, age, business address, and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of the Company that are
beneficially owned by such person, (iv) all information that would be required
to be included in the proxy statement soliciting proxies for the election of the
nominee director (including such person's written consent to serve as a director
if so elected), and (b) as to the shareholder providing such notice (i) the name
and address, as they appear on the Company's books, of the shareholder, and (ii)
the class and number of shares of the Company that are beneficially owned by
such shareholder on the date of such shareholder notice.
The complete Articles of Incorporation provisions governing these
requirements are available to any shareholder without charge upon request from
the Secretary of the Company.
OTHER MATTERS
The Company has provided to each shareholder a copy of the Company's
Annual Report on Form 10-K, including the financial statements for its fiscal
year ended December 31, 1996, as filed with the Securities and Exchange
Commission pursuant to Rule 13a-1 under the Securities Exchange Act of 1934.
Additional copies of the Company's Annual Report on Form 10-K are available upon
written request. All such requests should be directed to Anthony V. Weight,
Corporate Secretary, Computer Management Sciences, Inc., 8133 Baymeadows Way,
Jacksonville, Florida 32256. No charge will be made for copies of such annual
report; however, a reasonable charge for the exhibits will be made.
By Order of the Board of Directors,
Anthony V. Weight
Corporate Secretary
Jacksonville, Florida
May 6, 1997
-15-
Exhibit A
Article VI of the Amended and Restated Articles of Incorporation is
amended in its entirety as follows:
ARTICLE VI. CAPITAL STOCK
The capital stock of the Company shall be divided into two classes: Forty
million (40,000,000) shares of common voting stock, having a par value of $.01
per share, and Five million (5,000,000) shares of preferred stock, having a par
value of $.01 per share.
COMPUTER MANAGEMENT SCIENCES, INC.
8133 Baymeadows Way
Jacksonville, Florida 32256
PROXY
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Anthony V. Weight and Anthony Colaluca,
or either of them, as Proxies, each with the power to appoint his substitute,
and hereby authorizes them or their substitutes to represent and to vote, as
designated below, all the shares of stock of Computer Management Sciences, Inc.
held of record by the undersigned on April 21, 1997, at the annual meeting of
stockholders to be held on June 6, 1997 or any adjournment thereof.
1. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS (except as marked to the to vote for all nominees
contrary below) _____ listed below _____
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below)
Anthony V. Weight, Perry E. Esping
2. To approve the proposal to amend the Company's Amended and Restated
Articles of Incorporation to increase the authorized capital stock of the
Company from 20,000,000 shares of common stock, $0.01 par value per share,
and 5,000,000 shares of preferred stock, par value $0.01 per share, to
40,000,000 shares of common stock, $0.01 par value per share, and 5,000,000
shares of preferred stock, par value $0.01 per share.
FOR _____ AGAINST _____ ABSTAIN _____
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted for Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED: , 1997
PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
Signature (if held jointly)