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:
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 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
May 15, 1998
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 19,
1998 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 and Chief Executive Officer
COMPUTER MANAGEMENT SCIENCES, INC.
8133 Baymeadows Way
Jacksonville, Florida 32256
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 19, 1998
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 19, 1998, at 9:00 a.m., local time, for the
following purposes:
1. To elect one Class III director for a three-year term expiring in 2001;
and
2. 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 24, 1998,
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 15, 1998
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
15, 1998, 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 19, 1998, and at any
adjournment thereof (the "Meeting"). The close of business on April 24, 1998,
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 14,586,808 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 the director listed on the proxies. 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, 1997, by: (i) each of the Company's directors and Named Executive
Officers (as identified below under "Compensation of Directors and Executive
Officers--Executive Compensation); (ii) all Named 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
--------------------------------------------------------
Shares
Beneficially
Owned with Sole
Voting and Sole Other Shares Percent of
Investment Beneficially Total Shares Outstanding Shares
Name and Business Address(1) Power(2) Owned(3) Beneficially Owned Beneficially Owned
- ---------------------------- ----------------- --------------- ------------------ -------------------
Jerry W. Davis 2,692,263(4) 1,493,734(5) 4,185,997 29.0%
Anthony V. Weight 1,820,735(4) 1,493,734(5) 3,314,469 22.9%
Larry A. Longhi 183,748 93,673 277,421 1.9%
Timothy W. Smith 13,443 10,291 23,734 *
David C. Minardi 78,692 53,175 131,867 *
Edward W. Fishback, Jr. 192,636(6) 1,188 193,824 1.3%
Charles L. Stark III 2,000 884 2,884 *
Perry E. Esping 6,750 0 6,750 *
Harry C. Stonecipher 29,250 0 29,250 *
All executive officers and 5,019,517 1,493,734 6,513,251 45.1%
directors as a group (9 persons)
Employee Stock Ownership Plan and 1,449,279 0 1,449,279 10.0%
Trust
CMSI Capital, L.P.(7) 929,665 0 929,665 6.4%
Marsh & McLennan Companies, Inc. 0 1,295,957 1,295,957 9.0%
(8)
Putnam Investments, Inc. (8) 0 1,295,957 1,295,957 9.0%
Putnam Investment Management, Inc. 0 1,295,957 1,295,957 9.0%
(8)
The Putnam Advisory Company, Inc. 0 1,295,957 1,295,957 9.0%
(8)
- -----------------
<FN>
*Less than 1.0%
(1) The business address of all executive officers and directors listed above
is 8133 Baymeadows Way, Jacksonville, FL 32256, except for the following:
Timothy W. Smith, 2000 Windy Hill Road, Smyrna, GA 30080; Edward W.
Fishback, Jr., 3131 Lonnbladh Road, Tallahassee, FL 32308; Perry E. Esping,
Business Records Corp., Suite 1400, 1111 W. Mockingbird Lane, Dallas, TX
75247; and Harry C. Stonecipher, Boeing Company, 7755 E. Marginal Way
South, Seattle, WA 98124-2207
-2-
(2) "Shares Beneficially Owned with Sole Voting and Sole Investment Power"
includes (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
5,019,742 shares owned by the 10 executive officers and directors, 516,390
represent shares (neither issued nor outstanding) obtainable through such
stock options.
(3) "Other Shares Beneficially Owned" includes (a) as to Messrs. Davis and
Weight only, all the shares owned by the Employee Stock Ownership Plan and
Trust (the "ESOP") and all the shares owned by the Computer Management
Sciences, Inc., Profit Sharing 401(k) Plan and Trust ("401(k)") because
each is a Trustee of both Trusts, with shared investment power over all of
such shares and shared voting power over all shares held by the 401(k) and
all unallocated shares held by the ESOP; (b) as to the individual directors
and officers other than Messrs. Davis and Weight, shares allocated to the
shareholder's individual participant account in the ESOP over which the
shareholder has sole voting power pursuant to the terms of the ESOP and
Section 409(e) of the Internal Revenue Code, but no investment power; and
(c) as to the ten directors and officers as a group, all the ESOP shares
and all the 401(k) shares, counting each share only one time.
(4) 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 2,477,454 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
1,417,438 shares of Common Stock. Each of Messrs. Davis and Weight, as the
sole shareholder of the respective general partner, has retained sole
voting and investment power over the shares owned by the respective limited
partnership.
(5) Included among the total number of ESOP shares attributed to Messrs. Davis
and Weight are 99,011 shares and 85,412 shares, respectively, allocated to
their individual participant accounts in the ESOP, over which they possess,
in their capacity as individual plan participants, sole voting power.
(6) 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.
(7) CMSI Capital, L.P., is a Delaware limited partnership, the limited partners
of which are W. Robinson Frazier as Trustee of the Jerry W. Davis
Children's Trust under Agreement dated 9/17/95 and W. Robinson Frazier as
Trustee of the Anthony V. Weight Children's Trust under Agreement dated
9/17/95 (collectively, the "Children's Trusts"). The Children's Trusts hold
a total 99% interest in the assets of CMSI Capital, L.P. The general
partner is CMSI Investments, Inc., which holds a 1% interest in the assets
of CMSI Capital, L.P. The Children's Trusts are the registered owners of
all of the issued and outstanding stock of CMSI Investments, Inc. Neither
Mr. Davis nor Mr. Weight possesses any voting or investment powers,
directly or indirectly, over the stock held by CMSI Capital, L.P. The
mailing address of CMSI Capital, L.P., is c/o W. Robinson Frazier, Esq.,
1515 Riverside Avenue, Jacksonville, FL 32204.
(8) 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 1,295,957 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 Securities and
Exchange Commission and the Company on January 23, 1998 pursuant to Rule
13d-1(b)(1)(ii)(E) and (G).
</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 53 Chief Executive Officer and Director
R. Halsey Wise 33 President and Chief Operating Officer
Anthony V. Weight 56 Senior Vice President, Corporate Secretary, and
Director
Larry A. Longhi 40 Senior Vice President and Director
Edward W. Fishback, Jr. 55 Group Vice President and Director
Timothy W. Smith 38 Group Vice President
Charles L. Stark, III 51 Group Vice President
Anthony Colaluca 31 Vice President and Chief Financial Officer
Perry E. Esping 63 Director
Harry C. Stonecipher 61 Director
Jerry W. Davis. Mr. Davis is a founder of the Company and has served as
Chief Executive Officer and Chairman of the Board since the Company's inception
in 1983. He served as President of the Company from 1983 through July of 1997.
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.
R. Halsey Wise. Mr. Wise joined the Company as President and Chief
Operating Officer on July 18, 1997. Prior to joining the Company, from August
1994 to July 1997, Mr. Wise was employed as the Vice President of Investment
Banking with The Robinson-Humphrey Company, Inc., and co-led the Information
Technology Services group. Mr. Wise was employed by J.P. Morgan in the Mergers
and Acquisitions group from 1993 to August 1994, and by First Union Corporation
in the Corporate Finance group from 1987 through 1992.
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. In 1997 he was promoted to Senior 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.
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.
-4-
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 approximately seven
years prior to joining the Company, Mr. Colaluca, a certified public accountant,
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 Brite Voice
Systems, Inc. and BRC Holdings, Inc.
Harry C. Stonecipher. Mr. Stonecipher was elected as a director of the
Company on October 25, 1995. He has served as President, Chief Operating Officer
and a director of The Boeing Company since August 1997. He served as President,
Chief Executive Officer and a director of McDonnell Douglas Corporation from
1994 through July 1997. 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 also currently serves on the Boards of Directors
of Cincinnati Milacron, Inc. and Sentry Insurance.
The Board of Directors consists of six members. Messrs. Longhi and
Stonecipher are Class I directors, Messrs. Weight and Esping are Class II
directors, and Messrs. Davis and Fishback are Class III directors. David C.
Minardi resigned from the Board of Directors on July 2, 1997. The terms of the
Class I directors expire in 1999, the terms of the Class II directors expire in
2000, 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.
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 five times
during 1997.
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 1997.
-5-
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 two times during 1997.
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
During 1997, the Company's Board of Directors held one meeting. 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.
Based on a review of forms submitted to the Company during and with
respect to the fiscal year ended December 31, 1997, all Reporting Persons (as
defined in Section 16(a)) filed all required reports. The following Reporting
Persons filed late reports: Veanne Smith, Keith DelValle, R. Halsey Wise and R.
Thomas Baley each filed Form 3 "Initial Statement of Beneficial Ownership" more
than 10 days following the respective events which resulted in their becoming
Reporting Persons; and Keith DelValle, Donald White and Anthony Colaluca each
filed one Form 4 "Statement of Change in Beneficial Ownership" to report options
granted in October 1997 after the due date of November 10, 1997.
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.
-6-
Executive Compensation
The following table sets forth the annual and long-term compensation
received in 1997 and the prior two years by the Company's Chief Executive
Officer, the four most highly-compensated executive officers, and an additional
executive officer who would have been included among the four most
highly-compensated but for the fact that he was no longer serving as an officer
as of December 31, 1997 (collectively, the "Named Executive Officers").
Long-Term Compensation
Annual Compensation(1) Awards
-------------------------- -----------------------
Number of
Name and Principal Position Securities Underlying
Salary Bonus Options/SARs
Jerry W. Davis
Chief Executive Officer
1995 $189,000 $31,213 95,471
1996 222,807 -- --
1997 198,468 -- --
Larry A. Longhi
Senior Vice President
1995 72,000 116,263 --
1996 72,000 220,801 --
1997 72,000 168,090 29,000
Timothy W. Smith
Group Vice president
1995 60,000 91,999 3,000
1996 72,000 137,027 --
1997 72,000 178,857 16,500
David C. Minardi(2)
Group Vice President
1995 72,000 169,209 4,000
1996 72,000 173,856 --
1997 72,000 156,854 33,876
Charles L. Stark, III
Group Vice President
1995 6,524 -- --
1996 79,154 -- 5,000
1997 146,098 60,000 2,000
Edward W. Fishback, Jr.
Group Vice President
1995 101,184 182,000 --
1996 144,000 51,832 --
1997 144,000 5,460 --
- ------------------
(1) Excludes any perquisites and other personal benefits received, the
total value of which did not exceed 10% of the total annual salary and
bonus for such Named Executive.
(2) Mr. Minardi resigned as a director on July 2, 1997, and as an officer
and employee of the Company on December 15, 1997.
-7-
Option Grants in 1997
The following table sets forth information concerning options to purchase
shares of the Company's Common Stock granted during 1997 to the Named Executive
Officers. The amounts shown as potential realizable values on the options
identified in the table are based on assumed annualized rates of appreciation in
the price of the Common Stock of 5% and 10% over the term of the options. Actual
gains, if any, on stock option exercises are dependent on any future increases
in the market price of the common Stock. There can be no assurance that the
potential realizable values reflected in this table will be achieved.
Stock Option Grants in Last Fiscal Year
Name Number of % of Total Exercise Market Expiration Potential
Securities Options Price Price of Date Realizable Value at
Underlying Granted to ($ per Underlying Assumed Annual
Options Granted Employees in share) Security on Rates of Stock
Fiscal Year Date of Price Appreciation
Grant for Option Term
- --------- ------------------ --------- --------- --------- --------- ---------------------
5% 10%
Lawrence A. Longhi 29,000 5.8% $13.000 $13.000 05/01/07 $237,095 $600,825
David C. Minardi 33,876 6.7% 13.000 13.000 05/01/07 276,960 701,846
Timothy W. Smith 16,500 3.3% 13.000 13.000 05/01/07 110,372 279,694
Charles L. Stark, III 2,000 * 13.000 13.000 05/01/07 16,351 41,436
- -----------------
*Less than 1.0%
Aggregate Option Exercises in 1997 and December 31, 1997 Option Values
The following table sets forth information concerning the exercise of
stock options during 1997 by the Named Executive Officers and the value of
unexercised options held by the Named Executive Officers as of December 31,
1997.
1997 Option Exercises Fiscal Year End Option Values
---------------------------------------- ----------------------------------------------------
Name Number of Value Realized Number of Securities Value of Unexercised
Securities Upon Exercise(1) Underlying Unexercised In-the-Money Options
Underlying Options Options at Fiscal Year at Fiscal Year End
Exercised During End Exercisable (E) Exercisable (E)
1997 /Unexercisable (U) /Unexercisable (U)(2)
- --------- ------------------ ------------------ ------------------ ------------------
Jerry W. Davis 886,919 $14,121,524 214,809(E) $3,554,444(E)
Larry A. Longhi 84,000 1,274,448 100,077(E) 1,906,167(E)
29,000(U) 177,625(U)
Timothy W. Smith 6,370 72,875 3,023(E) 44,210(E)
20,873(U) 160,066(U)
David C. Minardi 68,990 900,282 0(U)(3) 0(U)(3)
Charles L. Stark, III -- -- 2,000(E) 750(E)
5,000(U) 13,375(U)
- ------------------
(1) Represents the amount by which the market value of the Common Stock on the
date of exercise exceeded the exercise price of the respective options
exercised.
(2) Represents the market value of the Common Stock as of December 31,
1997 ($19.125 per share less theexercise price of the options.
(3) Under the terms of the stock option plans, unexercisable options terminate
upon the termination of employment. Mr. Minardi resigned as an employee as
of December 15, 1997.
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.
Mr. Davis' 1997 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.
-9-
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
On June 13, 1997, the Company loaned funds to Jerry W. Davis, Jr., who is
employed by the Company as Director of MIS and who is the son of Chief Executive
Officer Jerry W. Davis. The loan is evidenced by a Note in the original
principal amount of $200,000, with interest at the rate of 7.25% per annum, both
principal and interest payable in thirty-six (36) monthly installments of
$1,445.61 each. At the end of the thirty-six month period, the remaining
principal balance is due in full. The Note is secured by a first mortgage on
improved residential real property located in Duval County, Florida, with an
appraised value at least equal to the principal amount of the loan.
On October 23, 1996, the Company loaned funds to Timothy W. Smith, a Group Vice
President with the Company. The loan is evidenced by a collateralized Promissory
Note in the original principal amount of $100,000, with interest at the rate of
7.25% per annum, both principal and interest payable in fifty-nine (59) monthly
installments of $722.81 each. At the end of the fifty-nine month period, the
remaining principal balance is due in full.
-10-
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, December 31, 1996, and December 31, 1997) 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 Twenty-Seven Month Cumulative Return
(Performance Graph Here)
9/29/95 12/31/95 12/31/96 12/31/97
Computer Management Sciences, Inc. $100 $127 $166 $137
NASDAQ C&DPS Index $100 $104 $129 $158
NASDAQ Stock Market - U.S. $100 $101 $125 $153
-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 1998 (Class III
directors), 1999 (Class I directors) and 2000 (Class II directors). One director
is to be elected at the Meeting for a term ending in 2001 (Class III), or until
his successor shall have been elected and qualified. The Board of Directors has
nominated Jerry W. Davis to stand for election at the Meeting as a Class III
director. See "Management - Directors and Executive Officers" for information on
Mr. Davis. The current term of Mr. Davis will expire on the date of the Meeting.
Edward W. Fishback, Jr. will not stand for re-election. The Board of Directors
may appoint a person to fill the resulting vacancy upon finding a suitable
candidate. The initial term of such additional director would end at the 1999
annual meeting of shareholders.
Approval By Shareholders
Election of the director nominee (Jerry W. Davis) will be approved if the
votes cast by holders of shares represented and entitled to vote at the Meeting
in favor of his election exceed the votes cast opposing his election. The Board
of Directors unanimously recommends a vote FOR the election of the Director
nominee. Unless otherwise indicated, votes will be cast pursuant to the
accompanying proxy FOR the election of the nominee. Should the 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 nominee named will be
unable or unwilling to serve if elected.
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, 1998. 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 1999 annual
meeting must be received by the Company on or before December 23, 1998, 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.
-12-
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.
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, 1997, 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 15, 1998
-13-
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 24, 1998, at the annual meeting of
stockholders to be held on June 19, 1998 or any adjournment thereof.
1. The re-election of Jerry W. Davis as Class III Director, with term expiring
in 2001.
FOR ______________ AGAINST _________
2. 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 Proposal 1.
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: , 1998
PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
Signature (if held jointly)