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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:
<Table>
[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
</Table>
THE BISYS GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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2
BISYS LOGO
THE BISYS GROUP, INC.
90 PARK AVENUE, 10TH FLOOR
NEW YORK, NEW YORK 10016
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 15, 2001
------------------------
The Annual Meeting of Stockholders of The BISYS Group, Inc. ("BISYS" or the
"Company") will be held at Club 101, located at 101 Park Avenue, New York, New
York 10016, on November 15, 2001, at 9:00 a.m., for the following purposes:
1. to re-elect eight directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors shall have been
duly elected and qualified;
2. to consider and vote upon a proposal to amend the Company's Amended and
Restated Certificate of Incorporation to increase the number of
authorized shares from 180,000,000 to 360,000,000 shares of Common
Stock;
3. to consider and vote upon a proposal to approve the Company's 2002
Employee Stock Purchase Plan;
4. to consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP, independent public accountants, as the
auditors of the Company for the fiscal year ending June 30, 2002; and
5. to transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on September 21,
2001 as the record date for the determination of the stockholders of the Company
entitled to notice of and to vote at the Annual Meeting of Stockholders. Each
share of the Company's Common Stock outstanding on the record date is entitled
to one vote on all matters presented at the Annual Meeting.
ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO ATTEND
THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN
PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
Kevin J. Dell Signature
KEVIN J. DELL
Secretary
October 19, 2001
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THE BISYS GROUP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 15, 2001
This Proxy Statement is being furnished to stockholders of record of The
BISYS Group, Inc. ("BISYS" or the "Company") as of September 21, 2001 (the
"Record Date") in connection with the solicitation by the Board of Directors of
BISYS of proxies for the 2001 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at Club 101, located at 101 Park Avenue, New York, New York
10016, on November 15, 2001 at 9:00 a.m., and at any adjournments thereof, for
the purposes stated in the Notice of Annual Meeting. The approximate date of
mailing of this Proxy Statement and enclosed form of proxy to stockholders is
October 19, 2001.
As of the Record Date, the Company had outstanding 58,827,575 shares of
Common Stock, $.02 par value ("Common Stock"). Each share of Common Stock
outstanding on the Record Date is entitled to one vote on all matters presented
at the Annual Meeting. A majority of the outstanding shares entitled to vote at
the Annual Meeting will constitute a quorum. Abstentions and broker non-votes
are counted as present for purposes of determining whether a quorum is present.
Directors are elected by a plurality of votes cast. All other matters to
properly come before the Annual Meeting require the approval of a majority of
shares of Common Stock present and entitled to vote with respect to such
matters, except that Proposal 2 (amendment to the Amended and Restated
Certificate of Incorporation) requires the affirmative vote of a majority of the
issued and outstanding shares of Common Stock. Abstentions and broker non-votes
have no impact on the election of directors except to reduce the number of votes
for the nominee(s). With respect to all other proposals, abstentions as to
particular proposals will have the same effect as votes against such proposals,
whereas broker non-votes are not counted as votes and are not included in
calculating the number of votes necessary for approval, except for Proposal 2
(amendment to the Amended and Restated Certificate of Incorporation) where
broker non-votes will have the effect of a vote against that proposal.
If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the pleasure of the
stockholder signing it, either by a written notice of revocation received by the
person or persons named therein or by voting the shares covered thereby in
person or by another proxy dated subsequent to the date thereof.
Shares represented by duly executed proxies in the accompanying form will
be voted in accordance with the instructions indicated on such proxies, and, if
no such instructions are indicated thereon, will be voted in favor of the
nominees for election as directors named below and for the other proposals
referred to below. If any other matters properly come before the Annual Meeting,
it is intended that the persons named as proxies will vote such shares in
accordance with their own judgment.
1. ELECTION OF DIRECTORS
Eight directors are standing for re-election to the Board at the Annual
Meeting for terms expiring at the 2002 Annual Meeting. Accordingly, there are
eight nominees for election as directors, and proxies may not be voted for a
greater number of persons than the eight nominees named herein. The directors
will continue to serve until their respective successors are duly elected and
qualified.
Shares represented by proxies returned duly executed will be voted, unless
otherwise specified, in favor of the eight nominees for the Board of Directors
named below. If any (or all) such persons should be unable to serve, the persons
named in the enclosed proxy will vote the shares of Common Stock covered thereby
for such substitute nominee (or nominees) as the Board of Directors may select.
Stockholders may withhold authority to vote for any nominee by entering the name
of such nominee in the space provided for such purpose on the proxy card.
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NOMINEES FOR ELECTION AS DIRECTOR
<Table>
<Caption>
SERVED AS
NAME PRINCIPAL OCCUPATION DIRECTOR SINCE
---- -------------------- --------------
Lynn J. Mangum............................ Chairman of the Board and Chief Executive 1989
Officer of BISYS
Denis A. Bovin............................ Vice Chairman -- Investment Banking, and 2001
Senior Managing Director, Bear Stearns &
Co. Inc., a financial services firm
Robert J. Casale.......................... Until retirement, Group President, 1997
Brokerage Information Services, Automatic
Data Processing, Inc., a financial
services processing firm
Thomas A. Cooper.......................... Chairman, TAC Associates, a financial 1997
advisory and investment firm.
Jay W. DeDapper........................... Until retirement, Executive Vice President 1989
(Operations) NL Industries, Inc., a metal,
chemical and petroleum company.
John J. Lyons............................. President and Chief Operating Officer, 1992
Keefe Managers, Inc., a New York
City-based asset management firm and
registered investment company.
Thomas E. McInerney....................... General Partner of Welsh, Carson, Anderson 1989
& Stowe, a New York investment firm
Joseph J. Melone.......................... Until retirement, President and Chief 1999
Executive Officer, The Equitable Cos.,
Inc., an insurance company
</Table>
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to each of the nominees
for the office of director and each other executive officer of BISYS:
NOMINEES
MR. MANGUM, 59, has served as a Director and as Chairman of the Board and
Chief Executive Officer of the Company since it was founded in August 1989.
Prior to August 1989, he served as a Corporate Vice President of Automatic Data
Processing, Inc. ("ADP") and as Division President of ADP's Employer Services
National Accounts Division since December 1988. Prior thereto, he served for 22
years in various capacities in ADP's Financial Services Group including, among
other positions, Division President of the predecessor company of the Company
since 1983.
MR. BOVIN, 53, was appointed by the Board as a Director in June 2001. Mr.
Bovin is Vice Chairman -- Investment Banking, and Senior Managing Director, of
Bear Stearns & Co. Inc., a financial services firm. Prior to joining Bear
Stearns in 1992, Mr. Bovin spent more than two decades at Salomon Brothers Inc.
and headed that firm's Investment Banking Corporate Coverage and Capital Markets
Divisions after previously heading the firm's Communications and Technology
Group. He is a member of the Board of Directors of Bear Stearns & Co. and IDT
Corporation, an international telecommunications and Internet carrier.
MR. CASALE, 62, has served as a Director of the Company since 1997. Mr.
Casale is the former Group President, ADP, Brokerage Information Services, a
position in which he served from 1988 to 1997. His experience also includes
serving as Managing Director, Mergers & Acquisitions/Corporate Finance of the
High Technology Group of Kidder, Peabody & Co. and more than 10 years in various
executive positions with AT&T, including President-elect of AT&T's Special
Markets Group, responsible for major joint ventures and partnerships. He is a
member of the Board of Directors of The Provident Mutual Life Insurance Company
and Wall Street Access, a privately held New York Stock Exchange member firm.
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MR. COOPER, 65, has served as a Director of the Company since 1997. Mr.
Cooper is and has been Chairman of TAC Associates, a financial advisory and
investment firm, since 1996, and Chairman of Flatiron Credit Company, a finance
company, since 1997. He previously served since its formation and until 1996 as
Chairman of TAC Bancshares, Inc., a holding company formed in 1991 to acquire
and operate financial service institutions. From August 1993 to August 1996, he
served as Chairman, President and Chief Executive Officer of Chase Federal Bank,
Florida, following the acquisition and merger of Chase Federal Bank and
Financial Federal Bank by TAC Bancshares in August 1993. He is a member of the
Board of Directors of Renaissance Reinsurance, a publicly held reinsurance
company.
MR. DEDAPPER, 77, has served as a Director of the Company since 1989. Prior
to his retirement in 1981, he served for more than five years as Executive Vice
President (Operations) of NL Industries, Inc., a metal, chemical and petroleum
company, and served on its Board of Directors.
MR. LYONS, 61, has served as a Director of the Company since 1992. Since
February 1999, Mr. Lyons has served as President and Chief Operating Officer of
Keefe Managers, Inc., a New York City-based asset management firm and registered
investment company. From September 1997 to February 1999 he served as President
and Chief Executive Officer of Gateway American Bank of Florida, a community
bank headquartered in Ft. Lauderdale, Florida. From August 1996 to April 1997,
Mr. Lyons served as President and Chief Executive Officer of Regent National
Bank, Philadelphia, Pennsylvania. From April 1995 to August 1996, he served as
President and Chief Executive Officer and a Director of Monarch Savings Bank,
FSB, Clark, New Jersey. From December 1993 until April 1995, he was President
and Chief Executive Officer of Jupiter Tequesta National Bank, a national bank
headquartered in Tequesta, Florida. From 1980 until December 1993, he was
President and Chief Executive Officer of Lyons, Zomback & Ostrowski, Inc., a New
York-based bank and thrift consulting firm. That firm became a subsidiary of
Advest Group, Inc., a holding company with a brokerage firm as its principal
subsidiary. Mr. Lyons was Vice Chairman of Advest, Inc. during 1993 and from
1989 through 1993 was a member of its Board of Directors. He is a director of
Gateway American Bank of Florida, a publicly held banking company and Donegal
Group, Inc., a publicly held insurance company.
MR. MCINERNEY, 60, has served as a Director of the Company since 1989. Mr.
McInerney is, and has been since 1987, a general partner of Welsh, Carson,
Anderson & Stowe, a private equity investor specializing in the information
processing and healthcare industries, and is a general partner of the respective
sole general partners of its associated limited partnerships. He is a director
of the following publicly held companies: SpectraSite Holdings Inc., a provider
of wireless communication transmitting and receiving facilities; Centennial
Communications Corporation, a provider of voice and data communications
services; and Savvis Communications Corp., an international network services
provider. He is also a director of several private companies.
MR. MELONE, 70, has served as a Director of the Company since August 1999.
He retired as President and Chief Executive Officer of The Equitable Cos., Inc.
in 1998, a position in which he served since 1996. He previously served from
1992 through 1995 as President and Chief Operating Officer of the company upon
its formation in 1992 after serving two years in the same position for its
principal insurance subsidiary, The Equitable Life Assurance Society of the
United States. Prior to joining Equitable, Mr. Melone served as President of The
Prudential Insurance Company of America. He is a member of the Board of
Directors of Foster Wheeler Corporation, a publicly held engineering and
construction company. He also serves as Chairman of the Board of Horace Mann
Educators Corp., a publicly held insurance company.
Each director is elected annually and holds office until the next annual
meeting of stockholders and until his successor is duly elected and qualified.
Each non-employee director (i.e., directors other than Mr. Mangum) receives a
$15,000 annual retainer and a $1,000 fee for personal attendance at each
meeting, including committee meetings held other than the day of a Board
meeting. Mr. Mangum does not receive any compensation for his services as a
director. Pursuant to the Company's Non-Employee Directors' Stock Option Plan,
as amended (the "Non-Employee Directors' Stock Option Plan"), which became
effective, as amended, at the 1997 Annual Meeting of Stockholders, each person
who was a non-employee director of the Company at that time (i.e., nominees
other than Messrs. Mangum, Bovine and Melone) was granted an option to purchase
25,000 shares of Common Stock at an exercise price of $15.125 per share, the
fair market
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value of a share of Common Stock on the date of grant. Pursuant to the
Non-Employee Directors' Stock Option Plan, each non-employee director of the
Company elected thereafter by stockholders is granted an option to purchase
25,000 shares of Common Stock upon his initial election by stockholders as a
director. Accordingly, Mr. Melone was granted an option to purchase 25,000
shares of Common Stock upon his initial election by stockholders as a director
at the November 12, 1999 Annual Meeting of Stockholders at an exercise price of
$27.25 per share, the fair market value on the date of grant. Likewise, Mr.
Bovin will be granted an option to purchase 25,000 shares of Common Stock
assuming his election by stockholders at the November 15, 2001 Annual Meeting
with an exercise price equal to the closing price of a share of Common Stock of
the Company on November 14, 2001. Each such option vests 20% on the date of
grant and 20% upon such director's re-election by stockholders at subsequent
annual meetings until such option is fully vested. Each such option is
exercisable to the extent vested. A new stock option for an additional 25,000
shares of Common Stock will be granted to a non-employee director upon
re-election at the next annual meeting after the annual meeting at which any
prior option becomes fully vested. All stock options under the Non-Employee
Directors' Plan are granted at an exercise price equal to the fair market value
of a share of Common Stock on the date of grant. There are 550,000 shares of
Common Stock authorized and reserved for issuance in connection with the grant
of options under the Non-Employee Directors' Stock Option Plan, of which 171,200
shares are currently available for future option grants.
During fiscal 2001, the Board of Directors of the Company held five
meetings. The standing committees of the Board of Directors are the Audit
Committee, whose current members are Messrs. Cooper, DeDapper and Melone, and
the Compensation Committee, whose current members are Messrs. Casale and Lyons.
The Audit Committee routinely consults with the Company's management and
independent public accountants on financial matters, including the Company's
internal financial controls and procedures. The Audit Committee held four
meetings during fiscal 2001. The Compensation Committee reviews and makes
recommendations with respect to the salary and incentive compensation of the
Chief Executive Officer and his direct reports, and certain other employees of
the Company and its subsidiaries whose salaries are in excess of specified
levels; administers the Company's stock option plans, including the granting of
stock options and rights to purchase Common Stock; and administers the Company's
annual Employee Stock Purchase Plan, as approved by the stockholders. The
Compensation Committee held four meetings during fiscal 2001. The Board of
Directors of the Company does not have a standing Nomination Committee. During
fiscal 2001, all of the Company's directors attended at least 75% of the
meetings of the Board of Directors and all committees on which they served.
OTHER EXECUTIVE OFFICERS
ANDREW C. CORBIN, 38, serves as Senior Vice President, Chief Financial
Officer and Treasurer. He was elected to this position in August 2001. Since
joining the Company in 1996, he has served in a number of senior finance
positions, including Senior Vice President, Finance of the Investment Services
and Information Services Groups. Prior to joining the Company, he served in
various corporate finance positions with The Limited, Inc., a public company
specialty retailer, and General Motors Company, a public company automobile
manufacturer.
KEVIN J. DELL, 45, serves as Executive Vice President, General Counsel and
Secretary. He previously served since 1998 as Senior Vice President, having
joined the Company as Vice President, General Counsel and Secretary in 1996.
From 1993 until he joined the Company, he served as Vice President, General
Counsel and Secretary of Concurrent Computer Corporation, a public company
supplier of real-time computer systems.
J. ROBERT JONES, 48, serves as Executive Vice President, Business
Development. He previously served as Senior Vice President, Business Development
since 1996 and in a similar position within the BISYS organization since 1991.
From March 1989 to June 1991, Mr. Jones served as Vice President, Sales and
Marketing.
NEIL P. MARCOUS, 53, serves as Executive Vice President, Strategic
Marketing and Technology. He joined the Company in May 1998 as Executive Vice
President, including responsibilities as Group President,
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Marketing and Information Services. Prior to joining the Company, he served as
Vice President/General Manager of the Electronic Commerce Division of Electronic
Data Systems, Inc., a provider of information technologies services including
electronic funds transfer services, since joining that company in 1989. He
served as a Director of the Company from 1994 to 1998.
WILLIAM W. NEVILLE, 47, serves as Executive Vice President, including
responsibilities as Group President, Information Services, a position to which
he was promoted in September 2000. He previously served since 1997 as President
of the Banking Solutions division. He joined the Company in 1992 as Senior Vice
President/General Manager Sales, Eastern Region of the Banking Solutions
division.
LEONARD L. REYNOLDS, 56, serves as Executive Vice President, including
responsibilities as Group President, Insurance and Education Services. He joined
the Company in July 2000 as Group President following the Company's acquisition
of Ascensus Insurance Services, Inc. where he served as President from the time
it was founded in 1996. Prior to joining Ascensus, he served as President of
Accordia Personal Benefits of Utah, Inc., an insurance carrier, from 1992 to
1996.
MARK J. RYBARCZYK, 46, serves as Executive Vice President, Human Resources.
He previously served as Senior Vice President, Human Resources since 1993. He
has also served as Vice President, Human Resources of the Company and its
predecessor company since June 1987 and Director, Human Resources since October
1984.
DENNIS R. SHEEHAN, 45, serves as President and Chief Operating Officer. He
was promoted to this position in August 2001 after serving as Executive Vice
President, Chief Financial Officer and Treasurer of the Company since February
1998. Prior to that time he served as Senior Vice President, Finance of the
Company, which became an executive officer position in 1997. He served in a
similar position within the BISYS organization since joining the Company in
March 1995 in connection with the acquisition of Concord Holding Corporation, an
investment services public company, where he had served since 1992 in various
executive officer positions, including Executive Vice President and Chief
Financial Officer.
WILLIAM J. TOMKO, 43, serves as Executive Vice President, including
responsibilities as Group President, Investment Services, a position to which he
was promoted in September 2000. He previously served as President of the BISYS
Fund Services division since 1999 and served in various other senior management
and executive officer positions with that company since joining BISYS in 1993
following its acquisition of the Winsbury Group, an investment services firm.
Executive officers serve at the discretion of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of Forms 3, 4 and 5 submitted to the Company during and
with respect to fiscal 2001, all statements of beneficial ownership that were
required to be filed with the Securities and Exchange Commission (the
"Commission") were timely filed.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, based on filings with
the Commission for the period ended June 30, 2001, with respect to the shares of
Common Stock beneficially owned by stockholders reporting ownership of more than
5% of the 58,422,269 shares of Common Stock outstanding as of June 30, 2001:
<Table>
<Caption>
NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
FMR Corp. .................................................. 5,833,116(1) 10.0%
82 Devonshire Street
Boston, MA 02109
T. Rowe Price Associates, Inc. ............................. 4,545,600(2) 7.8%
100 East Pratt Street
Baltimore, Maryland 21202
Massachusetts Financial Services Company.................... 3,462,294(3) 5.9%
500 Boylston Street, 15th floor
Boston, MA 02116
</Table>
---------------
(1) The stockholder has sole investment power with respect to the shares shown
as beneficially owned by it, and sole voting power with respect to 688,586
shares and no voting power with respect to the remaining shares shown as
beneficially owned by it.
(2) These securities are owned by various individual and institutional investors
for which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities. The
stockholder has sole investment power with respect to the shares shown as
beneficially owned by it, and sole voting power with respect to 806,200
shares and no voting power with respect to the remaining shares shown as
beneficially owned by it.
(3) The stockholder has sole investment power with respect to the shares shown
as beneficially owned by it, and sole voting power with respect to 3,194,244
shares and no voting power with respect to the remaining shares shown as
beneficially owned by it.
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The following table sets forth, as of the September 21, 2001 record date,
certain information with respect to the shares of Common Stock beneficially
owned by (i) each director, (ii) each of the persons for whom compensation
information is disclosed below under the heading "Executive Compensation," and
(iii) all the Company's directors and executive officers at September 21, 2001
as a group.
<Table>
<Caption>
NO. OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
---------------- --------------------- --------
Lynn J. Mangum.............................................. 725,002(2) 1.2%
Denis A. Bovin.............................................. 5,000(3) *
Robert J. Casale............................................ 20,000(4) *
Thomas A. Cooper............................................ 49,416(5) *
Jay W. DeDapper............................................. 40,800(6) *
John J. Lyons............................................... 61,200(7) *
Thomas E. McInerney......................................... 93,584(8) *
Joseph J. Melone............................................ 34,000(9) *
Dennis R. Sheehan........................................... 246,661(10) *
J. Robert Jones............................................. 304,934(11) *
Mark J. Rybarczyk........................................... 322,240(12) *
Kevin J. Dell............................................... 93,050(13) *
All directors and executive officers as a group (17
persons).................................................. 2,263,375(14) 3.8%
</Table>
---------------
* Less than 1.0%.
(1) Each person has sole voting and investment power with respect to the shares
shown as beneficially owned by him. Assumes re-election of nominees for
Director and resulting vesting of certain stock options pursuant to the
Company's Non-Employee Directors' Stock Option Plan.
(2) Includes an aggregate of 148,000 shares subject to stock options
exercisable as of November 20, 2001 (60 days from the record date for the
Annual Meeting).
(3) Includes an aggregate of 5,000 shares subject to stock options exercisable
as of November 20, 2001.
(4) Includes an aggregate of 20,000 shares subject to stock options exercisable
as of November 20, 2001.
(5) Includes an aggregate of 10,000 shares subject to stock options exercisable
as of November 20, 2001.
(6) Includes an aggregate of 39,800 shares subject to stock options exercisable
as of November 20, 2001.
(7) Includes an aggregate of 51,323 shares subject to stock options exercisable
as of November 20, 2001.
(8) Includes an aggregate of 42,900 shares subject to stock options exercisable
as of November 20, 2001.
(9) Includes an aggregate of 30,000 shares subject to stock options exercisable
as of November 20, 2001.
(10) Includes an aggregate of 127,196 shares subject to stock options
exercisable as of November 20, 2001.
(11) Includes an aggregate of 113,874 shares subject to stock options
exercisable as of November 20, 2001.
(12) Includes an aggregate of 120,378 shares subject to stock options
exercisable as of November 20, 2001.
(13) Includes an aggregate of 58,000 shares subject to stock options exercisable
as of November 20, 2001.
(14) Includes an aggregate of 969,087 shares subject to stock options
exercisable as of November 20, 2001.
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EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended June 30, 2001, 2000,
and 1999, certain compensation information as to the Chief Executive Officer,
and each of the four most highly compensated executive officers of the Company
serving as executive officers at June 30, 2001 ("Named Executive Officers").
<Table>
<Caption>
LONG TERM COMP-
ENSATION AWARDS
ANNUAL COMPENSATION ------------------
-------------------- (G) (I)
(C) (D) SECURITIES ALL OTHER
(A) (B) SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS/SARS(#)(1) ($)(2)
--------------------------- ---- -------- -------- ------------------ ------------
Lynn J. Mangum.................. 2001 661,808 756,000 637,675 708,411
Chairman of the Board, and 2000 595,057 605,000 315,232 37,797
Chief Executive Officer 1999 534,077 510,000 130,000 39,436
Dennis R. Sheehan............... 2001 337,750 350,000 219,890 125,996
President and Chief 2000 277,768 315,000 109,000 13,297
Operating Officer 1999 242,346 275,000 60,000 8,487
J. Robert Jones................. 2001 284,346 340,000 213,891 293,754
Executive Vice President, 2000 256,385 310,000 112,000 32,284
Business Development 1999 236,462 260,000 60,000 26,992
Mark J. Rybarczyk............... 2001 256,519 220,000 193,082 211,761
Executive Vice President, 2000 212,769 220,000 88,258 27,346
Human Resources 1999 176,154 200,000 50,000 21,431
Kevin J. Dell................... 2001 290,577 240,000 106,795 98,855
Executive Vice President, 2000 244,577 210,000 61,230 12,850
General Counsel and Secretary 1999 213,808 150,000 50,000 8,927
</Table>
---------------
(1) For fiscal year 2000 and 2001, includes reload options as follows: Mr.
Mangum (145,232 and 457,675); Mr. Sheehan (29,000 and 119,890); Mr. Jones
(32,000 and 133,891); and Mr. Rybarczyk (28,258 and 123,082); and Mr. Dell
(1,230 and 26,795).
(2) For fiscal years 1999, 2000 and 2001 includes (i) the Company's matching
contribution under the Company's 401(k) Plan as follows: Mr. Mangum ($5,000,
$5,250 and $5,250); Mr. Sheehan ($5,000, $5,600 and $6,225); Mr. Jones
($5,000, $5,300 and $5,700); Mr. Rybarczyk ($5,300, $5,600, and $5,250); and
Mr. Dell ($5,375, $5,276 and $5,014); (ii) the economic value of a "split
dollar" life insurance policy as follows: Mr. Mangum ($5,186, $4,297 and
$4,668); Mr. Sheehan ($737, $822 and $923); Mr. Jones ($992, $984 and
$1,106); Mr. Rybarczyk ($631, $746 and $833); and Mr. Dell ($702, $824 and
$948); (iii) the value of the Company's matching contribution under a
voluntary executive deferred compensation program as follows: Mr. Mangum
($19,250, $28,250 and $36,500); Mr. Sheehan ($2,750, $6,875 and $7,875); Mr.
Jones ($21,000, $26,000 and $30,000); Mr. Rybarczyk ($15,500, $21,000 and
$24,250); and Mr. Dell ($2,850, $6,750 and $9,450). For fiscal year 2001,
includes a bonus estimated to cover the interest payable on a loan made to
each of the Named Executive Officers in 1999 to pay the exercise price of
certain stock options and related income taxes, grossed up to cover the
income taxes payable in respect of such bonus as follows: Mr. Mangum
($661,993); Mr. Sheehan ($110,973); Mr. Jones ($256,948); Mr. Rybarczyk
($181,429); and Mr. Dell ($83,443).
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options to the Named Executive Officers during the fiscal year ended June 30,
2001. The per share exercise price for all options is the last sale price on the
NASDAQ National Market System on the trading day before the option grant. The
first grant shown for each named Executive Officer represents the customary
annual grant under the Company's stock option plans made in August of each year
at the first Board meeting for the current fiscal year. The remaining options
were granted under the Company's reload program (designated by the letter "R")
in connection with the exercise of previously granted vested options. Under this
program, options holders may use BISYS common stock to pay the exercise price of
their options and have shares otherwise issuable upon such exercise
8
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to be withheld for the payment of income taxes due as a result of the exercise.
They then receive a new reload option to make up for the shares they used or had
withheld. Reload options have an exercise price equal to the fair market value
on the date of grant. Reload options maintain the option holder's commitment to
BISYS by maintaining as closely as possible the holder's aggregate net equity
position -- the sum of shares owned and shares subject to option. The issuance
of a reload option is not a new discretionary grant by BISYS. Rather, the
issuance results from rights granted to the option holder pursuant to the reload
program as part of the initial option grant. Reload options do not vest (i.e.,
become exercisable) for six months. The expiration date of the reload option is
the same as that of the initial underlying grant.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED OR BASE OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($)(1) 10% ($)(1)
---- ---------- --------------- -------- ---------- ------------ -------------
Lynn J. Mangum....... 180,000 5.3% 32.44 8/17/2010 3,671,959 9,305,464
60,506R 1.8% 36.94 8/22/2005 617,473 1,364,453
69,696R 2.1% 36.94 8/15/2006 875,541 1,986,304
50,112R 1.5% 36.94 8/14/2007 753,548 1,756,087
41,340R 1.2% 36.94 8/20/2008 729,073 1,746,256
28,426R 0.8% 36.94 8/20/2009 578,887 2,425,825
50,227R 1.5% 55.10 8/22/2005 596,415 1,284,400
57,855R 1.7% 55.10 8/15/2006 880,733 1,946,190
41,600R 1.2% 55.10 8/14/2007 779,554 1,768,541
34,317R 1.0% 55.10 8/20/2008 769,773 1,793,898
23,596R 0.7% 55.10 8/20/2009 620,759 1,486,825
Dennis R. Sheehan.... 100,000 3.0% 32.44 8/17/2010 2,039,977 5,169,702
76R 0.0% 36.94 3/29/2005 776 1,714
4,446R 0.1% 36.94 8/15/2006 55,852 126,709
8,224R 0.2% 36.94 11/14/2006 103,312 234,380
7,724R 0.2% 36.94 8/14/2007 116.148 270,674
28,092R 0.8% 36.94 2/26/2008 422,427 984,435
19,114R 0.6% 36.94 8/20/2008 337,095 807,400
1,422R 0.0% 36.94 8/20/2009 26,959 71,326
64R 0.0% 55.10 3/29/2005 760 1,637
3,697R 0.1% 55.10 8/15/2006 56,280 124,364
5,199R 0.2% 55.10 11/14/2006 79,145 174,890
2,407R 0.1% 55.10 8/14/2007 45,105 102,329
13,210R 0.4% 55.10 2/26/2008 296,317 690,544
15,889R 0.5% 55.10 8/20/2008 356,410 830,587
10,326R 0.3% 55.10 8/20/2009 271,654 650,659
J. Robert Jones...... 80,000 2.4% 32.44 8/17/2010 1,631,982 4,135,762
20,480R 0.6% 36.94 8/22/2005 209,001 461,839
22,180R 0.7% 36.94 8/14/2007 333,527 777,259
18,412R 0.5% 36.94 8/20/2008 324,714 777,747
13,020R 0.4% 36.94 8/20/2009 265,148 653,073
16,530R 0.5% 55.10 8/22/2005 196,284 422,704
17,902R 0.5% 55.10 8/14/2007 335,470 761,068
14,859R 0.4% 55.10 8/20/2008 333,306 776,744
10,508R 0.3% 55.10 8/20/2009 276,442 662,127
</Table>
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<Table>
<Caption>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED OR BASE OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($)(1) 10% ($)(1)
---- ---------- --------------- -------- ---------- ------------ -------------
Mark J. Rybarczyk.... 70,000 2.1% 32.44 8/17/2010 1,427,984 3,618,791
7,316R 0.2% 36.94 8/22/2005 74,661 164,981
17,200R 0.5% 36.94 8/15/2006 216,071 490,192
18,484R 0.6% 36.94 8/14/2007 277,949 647,739
15,344R 0.5% 36.94 8/20/2008 270,607 648,151
9,766R 0.3% 36.94 8/20/2009 198,882 489,855
5,905R 0.2% 55.10 8/22/2005 70,118 151,002
13,883R 0.4% 55.10 8/15/2006 211,342 467,012
14,918R 0.4% 55.10 8/14/2007 279,552 634,209
12,384R 0.4% 55.10 8/20/2008 277,788 647,365
7,882R 0.2% 55.10 8/20/2009 207,358 496,659
Kevin J. Dell........ 80,000 2.4% 32.44 8/17/2010 1,631,982 4,135,762
3,688R 0.1% 36.94 11/14/2006 46,330 105,106
7,218R 0.2% 36.94 8/14/2007 108,539 252,942
3,734R 0.1% 36.94 8/20/2008 65,853 157,729
3,062R 0.1% 55.10 11/14/2006 46,613 103,003
5,992R 0.2% 55.10 8/14/2007 112,286 254,738
3,101R 0.1% 55.10 8/20/2008 69,559 162,103
</Table>
---------------
(1) The dollar amounts shown in these columns are based on the assumed
appreciation rates of 5% and 10%, as prescribed by the Commission. These
amounts are not intended to forecast possible future appreciation, if any,
of the Company's stock price.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held at the end of the fiscal year ended June 30,
2001 based on the last sale price of a share of Common Stock on June 29, 2001 of
$59.00.
<Table>
<Caption>
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ON OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
EXERCISE VALUE YEAR END (#) FISCAL YEAR END
NAME (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------- ------------ -------------------------- --------------------------
Lynn J. Mangum.............. 635,266 $12,092,537 0 679,595 0 $16,299,371
Dennis R. Sheehan........... 171,686 $ 3,776,148 65,196 308,792 $2,126,396 $ 8,697,339
J. Robert Jones............. 179,052 $ 3,110,589 57,874 263,799 $2,799,243 $ 6,853,216
Mark J. Rybarczyk........... 160,328 $ 2,758,158 64,378 232,972 $3,118,346 $ 6,046,766
Kevin J. Dell............... 88,126 $ 1,888,684 0 200,155 0 $ 6,132,905
</Table>
LOANS TO EXECUTIVE OFFICERS
The Board of Directors approved and the Company made loans to the Named
Executive Officers in November 1999 to assist them in exercising non-qualified
stock options, retaining the underlying shares and paying the applicable taxes
resulting from such exercises. The table below sets forth the loan principal for
each officer and the number of shares acquired through option exercises using
the loans proceeds. Of the approximately $11.3 million in principal amount of
the loans, approximately $6.8 million represents the option exercise price paid
to the Company. The remaining principal amount of approximately $4.5 million was
used to pay withholding taxes resulting from the option exercises. Since the
options exercised were non-qualified
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options, the resulting compensation expense is deductible for corporate income
tax purposes by the Company. These loans are full recourse and are secured by
that number of the shares of the Company's Common Stock acquired pursuant to the
exercise of the option representing up to 120% of the principal amount of the
loan. The principal is repayable the later of five years from the date of the
loan or the expiration date of the option exercised using such loan proceeds.
The principal is also repayable within one year of the employee's death or
termination of employment due to disability and within 30 days of voluntary
resignation. The loans bear interest at an annual rate of either 5.98% or 6.25%
depending on the repayment date. The Board of Directors has authorized a payment
to each loan recipient to cover the interest payable on the loans together with
any additional individual income taxes, if any, incurred by such individual as a
result of such payment to the extent that any income represented by such payment
is not offset by the deductibility of the loan interest. The payment is grossed
up to cover any additional taxes resulting from such payment. As of October 19,
2001, no principal amount of any loan was due. Mr. Dell repaid his loan in full
in November 2000.
<Table>
<Caption>
NUMBER OF SHARES OF
NAME LOAN PRINCIPAL COMMON STOCK ACQUIRED
---- -------------- ---------------------
Lynn J. Mangum............................................ $5,636,968 181,407
Dennis R. Sheehan......................................... $ 941,476 32,228
J. Robert Jones........................................... $2,479,051 91,583
Mark J. Rybarczyk......................................... $1,718,879 52,702
Kevin J. Dell............................................. $ 570,172 14,257
</Table>
EMPLOYMENT AGREEMENTS
The Company does not have employment agreements with any of the Named
Executive Officers. The Company has entered into Key Executive Separation
Agreements with its executive officers. The Agreements provide for certain lump
sum severance payments in the event of termination other than for cause or
following a change in control of the Company. For terminations other than for
cause, the executive would receive one time (one and one-half times in the case
of Mr. Mangum) the sum of (i) his then current base salary and (ii) the greater
of his then current fiscal year "at Plan" annual incentive target amount or the
immediately prior year's annual incentive compensation settlement amount (such
sum, prior to being multiplied, referred to as the "Applicable Severance
Amount"). For terminations after a change in control, the executive would
receive two times (three times in the case of Mr. Mangum) his Applicable
Severance Amount. In the event of a change in control of the Company, the
executive may unilaterally terminate his employment with the Company for any
reason during the first 12 months after the change in control and, under certain
circumstances, during the 13th through 36th month after the change in control.
In the event of such termination of employment, the executive officer would
receive a lump sum severance payment equal to two times (three times in the case
of Mr. Mangum) his Applicable Severance Amount. The Agreement does not provide
any guarantee of employment or any other terms and conditions of employment.
Pursuant to the terms of their stock option agreements, in the event of a
change in control of the Company, all options then granted to the executive
officers of the Company become automatically vested, to the extent not
previously vested, as of the effective date of such change in control.
REPORT ON EXECUTIVE COMPENSATION
All issues relating to executive officer compensation are addressed by the
Compensation Committee of the Board of Directors. The Compensation Committee,
which for fiscal 2001 was comprised of Messrs. Lyons and Casale, approves base
salary and incentive compensation plans for executive officers reporting to the
chief executive officer and other senior executives with a base salary in excess
of a designated amount, and reviews and recommends base salary and incentive
compensation plans for Mr. Mangum, Chairman and Chief Executive Officer, for
final approval by the Board of Directors. Mr. Mangum, does not participate in
decisions of the Board regarding his compensation. The Compensation Committee
also establishes stock option plan participation levels for all employees,
including executive officers.
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The components of the Company's executive compensation program consist of
base salary, annual cash incentive plans and stock options. The Company's
executive compensation program is intended to provide executive officers with
overall levels of compensation opportunity that are competitive within the
information, investment, and insurance and education services industries, as
well as within a broader spectrum of companies of comparable size and
complexity. Competitive compensation information is determined from published
sources as well as independent consultants. The Company's compensation program
is structured and administered to support the Company's business mission and to
generate favorable returns for its stockholders.
BASE SALARY. Each executive officer's base salary is derived primarily
through an analysis of appropriate industry and competitive labor markets for
executive officer services, prepared at the direction of the Committee by the
Company's Human Resources department with the advice of independent consultants.
Other factors in formulating base salary recommendations include the level of an
executive's compensation in relation to other executives in the Company with the
same, more or less responsibilities, the performance of the particular
executive's business unit or department in relation to established strategic
plans, the Company's operating budget for the year and the overall financial and
strategic performance of the Company compared to target objectives.
INCENTIVE COMPENSATION PLAN. For each executive officer, a cash incentive
compensation plan is established at the beginning of each fiscal year in
connection with the establishment of the Company's strategic plans and annual
operating budgets. Each individual's plan establishes a range of minimum, "at
Plan" and maximum incentive compensation and a number of performance objectives.
The performance objectives generally include earnings per share growth, the
financial performance of an executive's business unit, and various other
measurable financial and non-financial objectives. Incentive compensation earned
is determined following completion of the fiscal year based on performance
compared to objectives. Incentive compensation in excess of the established
range may be paid where outstanding accomplishments have been achieved by the
executive during the fiscal year. For fiscal year 2001, the Company and each of
the Named Executive Officers met or exceeded "at Plan" performance objectives,
resulting in the bonus compensation set forth in the Executive Compensation
Table.
STOCK OPTION AWARDS. The Company maintains stock option plans that are
designed to align executive employees' and stockholders' interests in the
enhancement of stockholder value. In formulating recommendations for stock
option awards, the Compensation Committee evaluates the dilutive impact of
additional stock options, the Company's overall financial performance for the
year, the desirability of long-term service from an executive officer and the
number of options held by other executives of the Company with the same, more or
less responsibility than the executive officer under consideration. To encourage
long-term performance, stock options typically vest over a five-year period and
remain exercisable for ten years.
CEO COMPENSATION. Compensation for Mr. Mangum, the Company's Chairman and
Chief Executive Officer, is based on the same criteria used for executive
officers generally, including an analysis of chief executive officer
compensation of comparable companies. Mr. Mangum's incentive compensation for
fiscal 2001 reflects favorable achievement of the performance objectives
established under his cash incentive plan, particularly revenue and earnings per
share growth, and the strategic positioning of the Company, the key determinants
of Mr. Mangum's incentive compensation under his cash incentive plan.
Submitted by the Compensation Committee of the Board of Directors: John J. Lyons
(Chairman)
Robert J. Casale
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during fiscal year 2001
were John J. Lyons and Robert J. Casale. Each is a director of the Company but
neither is a current or former employee of the Company. There were no
Compensation Committee interlocks or insider participation during fiscal year
2001.
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change over
the past five fiscal years in the cumulative shareholder return (assuming the
reinvestment of dividends) of the Company's Common Stock with the cumulative
total returns of both a broad equity market index (S&P MidCap 400 Index) and a
peer group index (S&P 1500 Composite Services (Data Processing) Index).
The table shows the value of $100 invested on June 30, 1996 in BISYS Common
Stock and each of the broad market and published industry group indices.
<Table>
<Caption>
S&P 1500 COMPOSITE SVS.
BISYS GROUP, INC. S&P MIDCAP 400 INDEX (DATA PROCESSING) INDEX
----------------- -------------------- -----------------------
1996 100 100 100
1997 110.6 123.3 114.8
1998 108.6 156.8 138.9
1999 155 183.7 171.8
2000 162.9 214.9 203.2
2001 312.6 234 236.1
</Table>
The above report of the Compensation Committee, including the Performance
Graph, is not deemed to be soliciting material or to be filed with or
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporates such report or graph by reference.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of the Directors of the Company is
comprised of three independent Directors and acts under a written charter
approved by the Board of Directors. A copy of that charter is attached to this
Proxy Statement as Exhibit A. The members of the Committee are Messrs. DeDapper
(Chairman), Cooper and Melone, each of whom is independent as defined by The
National Association of Securities Dealers' independent director and audit
committee listing standards for Nasdaq companies.
Management has primary responsibility for the Company's internal controls
and financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee oversees the Company's financial reporting
process on behalf of the Board of Directors.
In fulfilling its oversight responsibilities, the Audit Committee has met
and held discussion with management and the independent auditors. Management
represented to the Committee that the Company's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles, and the Committee has reviewed and discussed the consolidated
financial statements, set forth in the
13
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Company's 2001 Report to Stockholders and the Company's Annual Report on Form
10-K for the year ended June 30, 2001, with management and the independent
auditors. The Audit Committee also discussed with PricewaterhouseCoopers,
independent accountants for the Company who are responsible for expressing an
opinion on the conformity of those audited financial statements with generally
accepting accounting principles, the matters required to be discussed by the
Statement on Auditing Standards No. 61, "Communication with Audit Committees,"
as amended. In addition, the Committee also received and reviewed the written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and discussed with the independent auditors their independence.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended June 30, 2001, filed with the
Securities and Exchange Commission.
Submitted by the Audit Committee of the Company's Board of Directors:
Jay W. DeDapper, Chairman
Thomas A. Cooper
Joseph J. Melone
AUDIT AND NON AUDIT FEES
AUDIT FEES. The aggregate fees billed by PricewaterhouseCoopers for audit
services for the year ended June 30, 2001, including reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for such
year, were $500,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES. PricewaterhouseCoopers did not render services related to financial
information systems design and implementation for the year ended June 30, 2001.
ALL OTHER FEES. Aggregate fees billed for all other services rendered by
PricewaterhouseCoopers for the year ended June 30, 2001 were $2.1 million,
including audit-related services of $800,000. Audit-related services generally
include fees for service auditor reviews, employee benefit plan audits, business
acquisitions, accounting consultations, and assistance provided in connection
with filings made under the Securities Act.
2. APPROVAL OF AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE COMPANY'S AUTHORIZED SHARES OF STOCK FROM
160,000,000 SHARES OF COMMON STOCK TO 320,000,000 SHARES OF COMMON STOCK
On August 28, 2001, the Board of Directors of the Company adopted
resolutions approving an amendment to the Company's Amended and Restated
Certificate of Incorporation (the "Restated Certificate") to increase the
Company's authorized number of shares of stock from 160,000,000 shares of Common
Stock to 320,000,000 shares of Common Stock, primarily in order to maintain the
same percentage of shares outstanding to shares authorized for issuance in the
event the Board of Directors determines to declare a 2 for 1 stock split in the
form of a stock dividend prior to the next Annual Meeting of Directors. The
additional shares would also be available for any other stock dividend or for
any other proper purpose approved by the Board. In the event that the Board were
to declare a 2 for 1 stock split in the form of a stock dividend, in the absence
of such increase in authorized shares approximately 88% of the shares authorized
for issuance would be outstanding or reserved for issuance in connection with
the Company's stock option plans or employee stock purchase programs. The Board
adopted the amendment, and recommends the amendment to stockholders, because the
Board believes that it is advisable and in the Company's best interests to have
available authorized and unissued shares in an amount adequate to provide for
the future needs of the Company.
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VOTE REQUIRED FOR APPROVAL
The amendment to the Restated Certificate will be submitted to stockholders
for their approval at the Annual Meeting. The affirmative vote of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required for approval of the proposal to amend the Restated Certificate.
SUMMARY OF PROPOSAL
The proposed amendment will modify the first sentence of Article FOURTH of
the Restated Certificate to read as follows:
"FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 320,000,000 shares, consisting of 320,000,000
shares of Common Stock, $.02 par value (the "Common Stock")."
The Company is currently authorized to issue 160,000,000 shares of stock,
consisting solely of Common Stock. The proposed amendment would increase the
total number of shares of authorized stock to 320,000,000 shares of Common
Stock. As of the September 21, 2001 record date for the Annual Meeting,
58,827,575 shares of Common Stock were issued and outstanding, and approximately
11.7 million aggregate additional shares of Common Stock were reserved for
issuance under the Company's stock option plans, and the 2001 and 2002 Employee
Stock Purchase Plans.
The increase in authorized Common Stock will not have an immediate effect
on the rights of existing stockholders. However, the additional shares will be
available for issuance from time to time by the Company in the discretion of the
Board of Directors without further authorization by vote of the stockholders
unless such authorization is otherwise required by applicable law or regulation.
These shares may be issued for stock splits or stock dividends or for any other
proper corporate purpose including, without limitation: acquiring other
businesses in exchange for shares of the Company's Common Stock; entering into
joint venture or similar arrangements with other companies in which Common Stock
or the right to acquire Common Stock are part of the consideration; raising
capital through the sale of Common Stock; attracting and retaining valuable
employees by the issuance of additional stock options or use of stock-based
compensation plans; assumption of stock options held by employees of companies
acquired by the Company; and the issuance of Common Stock pursuant to the
Company's stockholder rights plan.
Although the Company may engage in the foregoing actions in the future,
except for the issuance of shares upon exercise of outstanding stock options,
the issuance of additional stock options under the Company's 1999 Equity
Participation Plan, and the issuance of shares under the Company's 2001 and 2002
Employee Stock Purchase Plans, no such actions involving the issuance of
additional shares of Common Stock are pending as of the date hereof. If the
proposed amendment is approved, the Board of Directors would be able to
authorize the issuance of shares of Common Stock without the necessity, and
related costs or delays, of either calling a special stockholders' meeting or
waiting for the next Annual Meeting of Stockholders to increase the authorized
shares of Common Stock.
Shares of Common Stock, including the additional shares proposed for
authorization, do not have preemptive or similar rights, and current
stockholders will not have a prior right to purchase any new issue of Common
Stock of the Company in order to maintain their proportionate ownership of
Common Stock. Each additional authorized share of Common Stock will have the
same rights and privileges as currently authorized common stock.
The issuance of the additional shares of Common Stock could have the effect
of diluting earnings per share and book value per share, which could adversely
affect the Company's existing stockholders. Issuing additional shares of Common
Stock could dilute the voting rights of stockholders and could be issued in one
or more transactions that could have the effect of delaying, making more costly
or preventing a change of control or takeover of the Company. The proposed
amendment to the Restated Certificate is not being recommended in response to
any specific effort of which the Company is aware to obtain control of the
Company, and the Board of Directors has no present intention to use the
additional shares of Common Stock in order to impede a takeover attempt.
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The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting is required for approval of this
amendment to the Restated Certificate to increase the Company's authorized
shares of Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE RESTATED CERTIFICATE.
3. APPROVAL OF THE 2002 EMPLOYEE STOCK PURCHASE PLAN
On August 28, 2001, the Board of Directors of the Company adopted, subject
to stockholder approval, The BISYS Group, Inc., 2002 Employee Stock Purchase
Plan (the "2002 Plan"). Under the 2002 Plan, which is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"), options to purchase shares of Common Stock
(hereinafter, "Employee Options") will be granted to eligible employees of the
Company. The Board of Directors believes that the grant of Employee Options is
an important incentive for attracting, retaining and motivating employees
through the opportunity of equity participation. The 2002 Plan in intended to
serve this function. A copy of the 2002 Plan is attached to this Proxy Statement
as Exhibit B. The principal features of the 2002 Plan are summarized below.
VOTE REQUIRED FOR APPROVAL
The 2002 Plan will be submitted to stockholders for their approval at the
Annual Meeting. The affirmative vote of the holders of a majority of the shares
of Common Stock present or represented by proxy and entitled to vote at the
Annual Meeting is required for approval of the 2002 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE 2002 PLAN.
SUMMARY OF THE 2002 PLAN
An aggregate of 325,000 shares of Common Stock have been reserved for
issuance upon the exercise of Employee Options granted under the 2002 Plan,
subject to stockholder approval of the 2002 Plan. If approved by stockholders,
the 2002 Plan will become effective on January 1, 2002. The 2002 Plan will
terminate on December 31, 2002, unless terminated earlier by the Board of
Directors. The approximately 4,000 employees, who are regularly scheduled to
work for the Company, or its subsidiaries, at least 20 hours per week and who
have completed one month of employment as of January 1, 2002 for the Company, or
its subsidiaries, will be eligible to receive Employee Options. In addition, any
persons who become employees of the Company during 2002 by virtue of a merger or
acquisition (whether such transaction involves the acquisition of stock or
assets) (an "Acquisition") and who meet the remaining eligibility requirements
("Acquired Employees") will be eligible to receive Employee Options as of the
first day of the calendar quarter following such Acquisition. The maximum number
of shares that may be purchased by any participant under the 2002 Plan will be
equal to the lesser of 15% of base pay or $25,000, divided by 85% of the lesser
of the fair market value of the Company's Common Stock on January 1, 2002 (or,
in the case of Acquired Employees, the higher of the fair market value of the
Company's Common Stock on January 1, 2002 or their eligibility date) and
December 31, 2002, based upon the closing price of the Common Stock on the
Nasdaq National Market on the most recent prior trading day. No employee will be
granted an Employee Option if (i) immediately after such grant such employee
would own stock possessing 5% or more (including stock subject to outstanding
options) of the total combined voting power or value of all classes of stock of
the Company; or (ii) the exercise of such Employee Option would result in the
employee acquiring a cumulative total of more than 1,400 shares of Common Stock
under the 2002 Plan. In the event that any outstanding Employee Option expires
or is terminated for any reason, the shares allocable to the unexercised portion
of such Employee Option will be available for issuance under the 2002 Plan.
Under the 2002 Plan, the exercise price of an Employee Option will be the
lower of: (i) 85% of the fair market value of a share of Common Stock on January
1, 2002 (or, in the case of Acquired Employees, the higher of the fair market
value of the Company's Common Stock on January 1, 2002 or their eligibility
date) based upon the closing price of the Common Stock on the Nasdaq National
Market on the most recent prior
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trading day or (ii) 85% of the fair market value of a share of Common Stock on
December 31, 2002, based upon the closing price of the Common Stock on the
Nasdaq National Market on December 31, 2002. All Employee Options will be
considered exercised on December 31, 2002.
The Compensation Committee of the Board of Directors will administer the
2002 Plan. The Committee's authority to administer the 2002 Plan includes the
authority to (i) interpret the 2002 Plan and decide any matters arising
thereunder, and (ii) adopt such rules and regulations, not inconsistent with the
provisions of the 2002 Plan, as it may deem advisable to carry out the purposes
of the 2002 Plan. The Company is responsible for all expenses and liabilities
incurred by the Board of Directors or the Committee in administering the 2002
Plan.
The 2002 Plan provides that Employee Options are not transferable other
than by will or by the laws of descent and distribution, and during an
optionee's lifetime an Employee Option is exercisable only by an optionee. In
the event that after the adoption of the 2002 Plan the outstanding shares of the
Company's Common Stock are increased or decreased or changed into or exchanged
for a different number or kind of shares of stock or other securities of the
Company or of another corporation through reorganization, merger or
consolidation, recapitalization, stock split, split-up, combination or exchange
of shares or declaration of any dividends payable in Common Stock, the number of
shares of Common Stock (and the price per share) subject to the unexercised
portion of any outstanding Employee Option and the number of shares for which
Employee Options may be granted under the 2002 Plan will be appropriately
adjusted (to the nearest possible full share) by the Board of Directors, and
such adjustment shall be effective and binding for all purposes. Notwithstanding
the foregoing, the Board may make such adjustment as it deems equitable in
respect of outstanding Employee Options, including, without limitation, the
revision or cancellation of any outstanding Employee Options, in the event of an
offer to acquire the outstanding shares of the Company or a transaction
involving the sale of all or substantially all of the assets of the Company.
The market value of the Common Stock as of the close of business on
September 21, 2001, as reflected by the closing price of the Common Stock on the
Nasdaq National Market, was $49.19 per share. The decision whether to
participate in the 2002 Plan, and the extent of such participation, is in the
discretion of each eligible employee and, thus, the amount of Employee Options
to be granted is presently not determinable. To date, no Employee Options under
the 2002 Plan have been granted.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences of the Employee Options issuable under the 2002 Plan
are complex. Therefore, the description of tax consequences set forth below is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. The tax consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
Employee Options granted pursuant to the 2002 Plan are intended to qualify
as options issued under an "employee stock purchase plan" within the meaning of
Section 423 of the Code. If an optionee makes no disposition of the shares
acquired pursuant to the exercise of an Employee Option within one year after
the transfer of shares to such optionee and within two years from the grant of
the option, then, (i) such optionee will realize no taxable income as a result
of the grant or exercise of such Employee Option, and (ii) on the subsequent
disposition of the shares received upon exercise of the Employee Option or the
death of the optionee, the optionee generally will realize ordinary compensation
income equal to the lesser of (a) the excess of the fair market value of the
shares at the time of such disposition or death over the exercise price, or (b)
15% of the fair market value of the shares at the time the Employee Option was
granted. In the case of such a disposition, the optionee's basis in the shares
will be increased by the amount of ordinary compensation so realized, with the
result that the optionee generally will realize long-term capital gain or loss
equal to the difference, if any, between the proceeds realized from the
disposition over the sum of (x) the exercise price and (y) the amount of
ordinary compensation income realized. Under these circumstances, the Company
will not be entitled to a deduction for federal income tax purposes with respect
to either the issuance of the Employee Options, the transfer of shares upon
their exercise or the disposition of those shares.
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If shares subject to an Employee Option are disposed of prior to the
expiration of the above time periods, the optionee will recognize ordinary
income in the year in which the disqualifying disposition occurs, the amount of
which will generally be the lesser of (i) the excess of the fair market value of
the shares on the date of exercise over the exercise price, or (ii) the gain
recognized on such disposition. Such amount will ordinarily be deductible by the
Company for federal income tax purposes in the same year, provided that the
Company satisfies certain federal income tax withholding requirements. In
addition, the excess, if any, of the amount realized on a disqualifying
disposition over the fair market value of the shares on the date of exercise
generally will be treated as short-term capital gain.
4. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of PricewaterhouseCoopers
LLP, independent public accountants, as the auditors of the Company for the
fiscal year ending June 30, 2002, subject to the ratification of such
appointment by stockholders at the Annual Meeting. This firm and Coopers &
Lybrand L.L.P. (which merged with Price Waterhouse LLP in 1998 to form
PricewaterhouseCoopers LLP) have audited the Company's financial statements
since the Company's inception in 1989.
If the foregoing appointment of PricewaterhouseCoopers LLP is not ratified
by stockholders, the Board of Directors will appoint other independent
accountants whose appointment for any period subsequent to the 2002 Annual
Meeting of Stockholders will be subject to the approval of stockholders at that
meeting. A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting and will have an opportunity to make a statement should he so
desire and to respond to appropriate questions.
VOTE REQUIRED FOR RATIFICATION
The proposal to ratify the appointment of PricewaterhouseCoopers LLP as the
auditors of the Company for fiscal 2002 must be approved by the affirmative vote
of the holders of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
at the Annual Meeting other than those stated in the Notice of Annual Meeting
and referred to in this Proxy Statement. If any other matters should properly
come before the Meeting, it is intended that the proxies in the accompanying
form will be voted as the persons named therein may determine in their
discretion. The Company's Annual Report to Stockholders for the year ended June
30, 2001 is being mailed to stockholders together with this Proxy Statement.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. In addition to solicitation of proxies by mail, directors,
officers and employees of the Company (who will receive no additional
compensation therefore) and Georgeson Shareholder, Inc., a proxy solicitor (for
an estimated total cost to the Company of $5,000), may solicit the return of
proxies by telephone, telegram or personal interview. Arrangements have also
been made with brokerage houses and other custodians, nominees and fiduciaries
for the forwarding of solicitation material to the beneficial owners of stock
held of record by such persons, and the Company will reimburse them for
reasonable out-of-pocket expenses incurred by them in connection therewith.
Each holder of the Company's Common Stock who does not expect to be present
at the Annual Meeting or who plans to attend but who does not wish to vote in
person is urged to fill in, date and sign the proxy and return it promptly in
the enclosed return envelope.
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STOCKHOLDER PROPOSALS
If any stockholder of the Company intends to present a proposal for
consideration at the 2002 Annual Meeting of Stockholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's principal executive offices, 90 Park Avenue, New York,
New York 10016, Attention: Secretary, not later than June 11, 2002.
DISCRETIONARY AUTHORITY
A duly executed proxy given in connection with the Company's Annual Meeting
of Stockholders in 2002 will give each of the proxies named therein
discretionary authority to vote on any matter of which the Company does not have
written notice on or before September 7, 2002 (forty-five days prior to the
anniversary date on which the Company is first mailing its proxy materials for
its 2001 Annual Meeting), without advice as to the nature of such matter in the
Company's 2002 Proxy Statement.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JUNE 30, 2001, FILED BY THE COMPANY WITH THE COMMISSION, WILL BE FURNISHED
(WITHOUT EXHIBITS), WITHOUT CHARGE TO ANY PERSON REQUESTING A COPY THEREOF IN
WRITING AND STATING THAT SUCH PERSON IS A BENEFICIAL HOLDER OF SHARES OF COMMON
STOCK OF THE COMPANY ON SEPTEMBER 21, 2001, THE RECORD DATE FOR THE ANNUAL
MEETING OF STOCKHOLDERS. REQUESTS AND INQUIRIES SHOULD BE ADDRESSED TO THE BISYS
GROUP, INC., 90 PARK AVENUE, NEW YORK, NEW YORK 10016, ATTENTION: SECRETARY.
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EXHIBIT A
THE BISYS GROUP, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process, including
oversight review of the financial reports and other financial information
provided by the Company to any governmental or regulatory body, the public or
other users thereof, the Company's systems of internal accounting and financial
controls, and the annual independent audit of the Company's financial
statements.
In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose. The Board and the Committee
are in place to represent the Company's shareholders; accordingly, the outside
auditor is ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
MEMBERSHIP/MEETINGS
Effective as of June 14, 2001, the Committee shall be comprised of not less
than three members of the Board, and the Committee's composition will meet the
requirements of the Audit Committee Policy of the NASD. Committee meetings shall
be held not less than four times per year.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
2. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee. In
addition, at least one member of the Committee will have accounting or
related financial management expertise.
KEY RESPONSIBILITIES
The Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditor is responsible for auditing those
financial statements. Additionally, the Committee recognizes that financial
management, including the internal audit staff, as well as the outside auditor,
have more time, knowledge and more detailed information on the Company than do
Committee members; consequently, in carrying out its oversight responsibilities,
the Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification as to the
outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. The Committee shall update the
Board quarterly on these activities. These functions are set forth as a guide
with the understanding that the Committee may diverge from this guide as
appropriate given the circumstances.
- The Committee shall review with management and the outside auditors the
audited financial statements to be included in the Company's Annual
Report on Form 10-K (or the Annual Report to Shareholders if distributed
prior to the filing of Form 10-K) and review and consider with the
outside auditors the matters required to be discussed by Statement of
Auditing Standards ('SAS') No. 61.
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- As a whole, or through the Committee chair, the Committee shall review
with the outside auditors the Company's interim financial results to be
included in the Company's quarterly reports to be filed with Securities
and Exchange Commission and the matters required to be discussed by SAS
No. 61; this review will occur prior to the Company's filing of the Form
10-Q.
- The Committee shall meet with management (including appropriate internal
audit staff) and the outside auditors (collectively or individually as it
deems appropriate) to discuss the quality and adequacy of the Company's
internal controls, including the activities, organizational structure and
qualifications of the internal audit functions.
- The Committee shall:
- request from the outside auditors annually, a formal written statement
delineating all relationships between the auditor and the Company
consistent with Independence Standards Board Standard Number 1;
- discuss with the outside auditors any such disclosed relationships and
their impact on the outside auditor's independence; and
- recommend that the Board take appropriate action to oversee the
independence of the outside auditor.
- The Committee, subject to any action that may be taken by the full Board,
shall have the ultimate authority, and responsibility to select (or
nominate for shareholder approval), evaluate and, where appropriate,
replace the outside auditor. The Committee shall review the outside
auditor's proposed audit scope and approach and fee arrangements.
- The Committee shall:
- review management's monitoring of compliance with the company's code of
corporate conduct and with the Foreign Corrupt Practices Act.
- review, with the company's counsel, any legal matters that could have a
significant impact on the company's financial statements.
- review the findings of any examinations by regulatory agencies, such as
the Securities and Exchange Commission.
- review the policies and procedures in effect for the review of officers'
expenses and perquisites.
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EXHIBIT B
THE BISYS GROUP, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. Purpose. The purpose of The BISYS Group, Inc. 2002 Employee
Stock Purchase Plan (the "Plan") is to promote the interests of The BISYS Group,
Inc., a Delaware corporation (the "Company") and any Subsidiary thereof (as
hereinafter defined), and its stockholders by providing an opportunity to
certain current employees of the Company or any Subsidiary thereof to purchase
Common Stock of the Company. By encouraging such stock ownership, the Company
seeks to attract, retain and motivate such employees and to encourage such
employees to devote their best efforts to the business and financial success of
the Company. It is intended that the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of Section 423.
SECTION 2. Definitions. For purposes of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
2.01. "Base Pay" shall be determined as of the first business day of
December 2001 by multiplying the normal biweekly rate of a salaried Employee by
26 or the hourly rate of an hourly Employee by 2,080; provided, that, in the
case of a part-time hourly Employee, the Employee's Base Pay shall be determined
by multiplying such Employee's hourly rate by the number of regularly scheduled
hours of work for such Employee during the one-year period beginning on the
first business day of December 2001. The calculation of Base Pay shall be made
without regard to payments for overtime, shift premium, bonuses and other
special payments, commissions and other marketing incentive payments.
2.02. "Board of Directors" shall mean the Board of Directors of the
Company.
2.03. "Committee" shall mean the committee of the Board of Directors
referred to in Section 5 hereof.
2.04. "Common Stock" shall mean the Common Stock, $.02 par value, of the
Company.
2.05. "Eligibility Date" shall mean January 1, 2002; provided that any
Employee who becomes an Employee of the Company or any Subsidiary by virtue of a
merger or acquisition (whether such transaction involves the acquisition of
stock or assets) (an "Acquisition") shall have an Eligibility Date of the first
day of the calendar quarter following the completion of such Acquisition.
2.06. "Employee" shall mean any person, including an officer or director of
the Company or a Subsidiary of the Company, who is customarily employed on a
full-time or part-time basis by the Company or a Subsidiary of the Company and
is regularly scheduled to work at least 20 hours per week.
2.07. "Offering" shall have the meaning described in Section 4.01.
2.08. "Option" shall mean any option to purchase Common Stock granted to an
Employee pursuant to this Plan.
2.09. "Participant" shall mean any Employee that is eligible to participate
in the Plan and who elects to participate in the Plan.
2.10. "Parent of the Company" shall have the meaning set forth in Section
424(e) of the Code.
2.11. "Subsidiary of the Company" shall have the meaning set forth in
Section 424(f) of the Code.
SECTION 3. Eligibility and Participation. The following provisions shall
govern the eligibility of Employees to participate in the Plan.
3.01. Initial Eligibility. Any Employee who shall have completed one (1)
month of employment as of January 1, 2002 (including, for Employees who become
Employees by virtue of an Acquisition, employment with the acquired company)
shall be eligible to participate in the Offering.
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3.02. Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an Option under the Plan
(1) if, immediately after such grant, such Employee would own stock
possessing 5% or more of the total combined voting power or value of all classes
of stock of any of the Company, a Subsidiary of the Company or the Parent of the
Company, such ownership to be determined by applying the rules of Section 424(d)
of the Code and treating stock which the Employee may purchase under outstanding
options as stock owned by the Employee; or
(2) which would permit his rights to purchase stock under the Plan (and
under any other plans of the Company qualifying under Section 423 of the Code)
to accrue at a rate which exceeds the lesser of (i) $25,000 (or, for an Employee
who becomes an Employee by virtue of an Acquisition, a pro rata portion of
$25,000 based on the portion of the year during which such Employee is eligible
to participate hereunder) or (ii) 15% of the Employee's Base Pay of fair market
value of the stock (determined at the time such Option is granted) for each
calendar year in which such Option is outstanding; or
(3) if the exercise of such Option would result in the Employee acquiring a
cumulative total of more than 1,400 shares of Common Stock under the Plan.
3.03. Commencement of Participation. An eligible Employee may become a
Participant in the Plan by completing an authorization for a payroll deduction
on the form provided by the Company and filing it with the office of the
Executive Vice President of Human Resources of the Company on or before the date
set therefor by the Committee which date shall be prior to the Eligibility Date.
Payroll deductions shall be made from a Participant's 2002 Base Pay and shall
commence on the first regularly scheduled payday after the Eligibility Date and
shall terminate on the last regularly scheduled payday on or before December 31,
2002, unless sooner terminated by the Participant pursuant to Section 9.01.
SECTION 4. Common Stock Subject to the Plan.
4.01. Number of Shares. The total number of shares of Common Stock for
which Options may be granted under this Plan shall not exceed in the aggregate
three hundred twenty five thousand (325,000) shares of Common Stock. The Plan
will be implemented by an Offering of shares of Common Stock (the "Offering").
The Offering shall begin on January 1, 2002 and shall terminate on December 31,
2002.
4.02. Reissuance. The shares of Common Stock that may be subject to
Options granted under this Plan may be either authorized and unissued shares or
shares reacquired at any time and now or hereafter held as treasury stock, as
the Committee may determine. In the event that any outstanding Option expires or
is terminated for any reason, the shares allocable to the unexercised portion of
such Option may again be subject to an Option granted under this Plan.
SECTION 5. Administration of the Plan.
5.01. Committee. The Plan shall be administered by a committee (the
"Committee"), which shall be established by the Board of Directors and shall
consist of no less than two persons. All members of the Committee shall be
"Non-Employee Directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934.
The Committee shall be appointed from time to time by, and shall serve at
the pleasure of, the Board of Directors.
5.02. Interpretation. The Committee shall be authorized (i) to interpret
the Plan and decide any matters arising thereunder and (ii) to adopt such rules
and regulations, not inconsistent with the provisions of the Plan, as it may
deem advisable to carry out the purpose of this Plan.
5.03. Finality. The interpretation and construction by the Committee of
any provision of the Plan, any Option granted hereunder or any agreement
evidencing any such Option shall be final and conclusive upon all parties.
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5.04. Voting by Committee Members. Only members of the Committee shall
vote on any matter affecting the administration of the Plan or the granting of
Options under the Plan.
5.05. Expenses, Etc. All expenses and liabilities incurred by the Board of
Directors or the Committee in the administration of the Plan shall be borne by
the Company. The Committee may employ attorneys, consultants, accountants or
other persons in connection with the administration of the Plan. The Company,
and its officers and directors, shall be entitled to rely upon the advice,
opinions or valuations of any such persons. No member of the Board of Directors
or the Committee shall be liable for any action, determination or interpretation
taken or made in good faith with respect to the Plan or any Option granted
hereunder.
SECTION 6. Payroll Deductions.
6.01. Amount of Deduction. At the time a Participant files his
authorization for payroll deduction pursuant to Section 3.03, he shall elect to
have deductions made from his pay on each payday during the time he is a
Participant in the Offering at the rate of from 1 to 15% of his Base Pay, as
determined as of the first business day of December 2001.
6.02. Participant's Account; No Interest. All payroll deductions made for
a Participant shall be credited to his account under the Plan. A Participant may
not make any separate cash payment into such account. No interest shall accrue
on amounts credited to a Participant's account under the Plan, regardless of
whether or not the funds in such account are ultimately used to acquire shares
of Common Stock.
6.03. Changes in Payroll Deductions. A Participant may discontinue his
participation in the Plan pursuant to Section 9.01, but no other change can be
made during the Offering and, specifically, a Participant may not alter the
amount of his payroll deductions for the Offering.
6.04. Use of Funds. All payroll deductions received or held by the Company
under this Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
SECTION 7. Grant of Option.
7.01. Terms and Conditions. A description of the terms and conditions of
this Plan shall be made available to the Participants in such form and manner as
the Committee shall approve. Such description shall be consistent with this Plan
and with the treatment of Options as being issued under an "employee stock
purchase plan" under Section 423 of the Code.
7.02. Number of Option Shares; Pro Rata Allocation.
(a) On the Eligibility Date, each Participant shall be deemed to have been
granted an Option, subject to the limitations of Section 3.02, to purchase a
maximum number of shares of Common Stock equal to the number obtained by
multiplying (i) the percentage of the Employee's Base Pay which he has elected
to have withheld pursuant to Section 6.01 by (ii) the Employee's Base Pay and
dividing the resulting product by the lesser of : (y) the greater of: (1) 85% of
the fair market value of a share of Common Stock of the Company on January 1,
2002, based upon the closing price of the Common Stock on the Nasdaq National
Market on December 31, 2001; and (2) 85% of the fair market value of a share of
Common Stock of the Company on the Eligibility Date, based upon the closing
price of the Common Stock on the Nasdaq National Market on the day immediately
preceding the Eligibility Date; and (z) 85% of the fair market value of a share
of Common Stock of the Company on December 31, 2002, based upon the closing
price of the Common Stock on the Nasdaq National Market on December 31, 2002;
provided, however, that in no event shall the total number of shares of Common
Stock for which Options are granted exceed 325,000 shares.
(b) If the total number of shares of Common Stock for which Options would
have been granted pursuant to Section 7.02(a) would have exceeded 325,000 shares
(absent the proviso to that section), the Company shall make a pro rata
allocation of the Options available for grant in as nearly a uniform manner as
shall be practicable and as it shall determine to be equitable.
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7.03. Option Price. The Option price of shares of Common Stock subject to
an Option shall be the lower of:
(a) the greater of (i) 85% of the fair market value of a share of Common
Stock of the Company on January 1, 2002, based upon the closing price of the
Common Stock on the Nasdaq National Market on December 31, 2001; and (ii) 85% of
the fair market value of a share of Common Stock of the Company on the
Eligibility Date, based upon the closing price of the Common Stock on the Nasdaq
National Market on the day immediately preceding the Eligibility Date; and
(b) 85% of the fair market value of the shares of Common Stock subject to
the Option on December 31, 2002, based upon the closing price of the Common
Stock on the Nasdaq National Market on December 31, 2002.
7.04. Fair Market Value. For purposes of this Plan, the fair market value
per share of Common Stock as of any day shall mean the closing price as quoted
on the Nasdaq system on such day or, if such day is not a trading day, the last
preceding trading day. If at any time the Common Stock is not quoted in the
Nasdaq system, the fair market value of the shares of Common Stock subject to an
Option on the date the Option is granted shall be the fair market value thereof
determined in good faith by the Board of Directors.
7.05. Interest in Option Stock. A Participant shall have no interest in
shares of Common Stock covered by his Option until such Option has been
exercised.
7.06. Transferability. Neither payroll deductions credited to a
Participant's account nor Options shall be transferable otherwise than by will
or the laws of descent and distribution, and, during an Optionee's lifetime, an
Option shall be exercisable only by the Optionee.
7.07. Tax Withholding. In the event that the Company or any Parent or
Subsidiary of the Company is required to withhold any Federal, state or local
taxes in respect of any compensation income realized by the Participant as a
result of any "disqualifying disposition" of any shares of Common Stock acquired
upon exercise of an Option granted hereunder, the Company shall be entitled to
deduct from any payments of any kind otherwise due to such Participant the
aggregate amount of such Federal, state or local taxes required to be so
withheld or, if such payments are insufficient to satisfy such Federal, state or
local taxes, such Participant will be required to pay to the Company, or make
other arrangements satisfactory to the Company regarding payment to the Company
of, the aggregate amount of any such taxes. All matters with respect to the
total amount of taxes to be withheld in respect of any such compensation income
shall be determined by the Committee in its sole discretion.
SECTION 8. Exercise of Options.
8.01. Automatic Exercise. Unless a Participant gives written notice to the
Company of withdrawal pursuant to Section 9.01, his Option to acquire Common
Stock with payroll deductions made during any Offering will be deemed to have
been exercised automatically on December 31, 2002 for the purchase of the number
of shares of Common Stock which the accumulated payroll deductions in his
account at that time will purchase at the applicable Option price (but not in
excess of the number of shares of Common Stock for which Options have been
granted to the Employee pursuant to Section 7.02), and any excess in his account
at that time will be returned to him.
8.02. Fractional Shares. Fractional shares will be issued under the Plan.
8.03. Delivery of Stock. As promptly as practicable after December 31,
2002, the Company will deliver to each Participant, in such Participant's name,
the shares of Common Stock purchased upon exercise of such Participant's Option.
Such issuances shall be in "book entry" form. No shares of Common Stock issued
under the Plan may be certificated prior to January 1, 2004, except those shares
issued to persons subject to the reporting requirements under the Securities
Exchange Act of 1934, as amended.
SECTION 9. Withdrawal.
9.01. In General. A Participant may withdraw payroll deductions credited
to his account under the Plan at any time by giving written notice to the
Executive Vice President of Human Resources of the Company. All
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of the Participant's payroll deductions credited to his account will be paid to
him within 30 days after receipt of his notice of withdrawal, and no further
payroll deductions will be made from his pay; provided, that, the Participant
gives notice of withdrawal sufficiently prior to the next scheduled payroll
deduction.
9.02. Cessation of Employee Status. In the event a Participant shall cease
to be an Employee, as defined in Section 2.05, for any reason, other than as a
result of his death, the payroll deductions credited to his account will be
returned to him.
9.03. Termination Due to Death. In the event a Participant shall cease to
be an Employee, as defined in Section 2.05, by reason of his death, his legal
representative shall have the right to elect, by written notice given to the
Executive Vice President of Human Resources of the Company prior to December 31,
2002 either:
(a) to withdraw all of the payroll deductions credited to the Participant's
account under the Plan, or
(b) to exercise the Participant's Option granted under Section 7.02 for the
purchase of shares of Common Stock on December 31, 2002 for the purchase of the
number of shares of Common Stock which the accumulated payroll deductions in the
Participant's account will purchase at the applicable Option price, and any
excess in such account will be returned to the Participant's legal
representative.
In the event that no such written notice of election shall be duly received
by the office of the Executive Vice President of Human Resources of the Company,
the Participant's legal representative shall automatically be deemed to have
elected, pursuant to paragraph (b), to exercise the Participant's Option.
SECTION 10. Adjustments.
(a) In the event that after the adoption of the Plan by the Board of
Directors, the outstanding shares of the Company's Common Stock shall be
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation through reorganization, merger or consolidation, recapitalization,
reclassification, stock split, split-up, combination or exchange of shares or
declaration of any dividends payable in Common Stock, the Board of Directors
shall appropriately adjust (i) the number of shares of Common Stock (and the
Option price per share) subject to the unexercised portion of any outstanding
Option; provided, however, that the limitations of Section 424 of the Code shall
apply with respect to such adjustments; (ii) the number of shares of Common
Stock for which Options may be granted under this Plan, as set forth in Section
4.01 hereof, and such adjustment shall be effective and binding for all purposes
of this Plan.
(b) Notwithstanding the foregoing, in the event of (i) any offer to holders
of the Company's Common Stock generally relating to the acquisition of their
shares, including, without limitation, through purchase, merger or otherwise, or
(ii) any transaction generally relating to the acquisition of substantially all
of the assets or business of the Company, the Board of Directors may make such
adjustment as it deems equitable in respect of outstanding Options including,
without limitation, the revision or cancellation of any outstanding Options. Any
such determination by the Committee shall be effective and binding for all
purposes of this Plan.
SECTION 11. Effect of the Plan on Employment Relationship. Neither this
Plan nor any Option granted hereunder to a Participant shall be construed as
conferring upon such Participant any right to continue in the employ of the
Company or any Subsidiary as the case may be, or limit in any respect the right
of the Company or any Subsidiary to terminate such Participant's employment or
other relationship with the Company or any Subsidiary, as the case may be, at
any time.
SECTION 12. Amendment of the Plan. The Board of Directors may amend the
Plan from time to time as it deems desirable; provided, however, that, without
the approval of the holders of a majority of the outstanding stock of the
Company entitled to vote thereon at a meeting, the Board of Directors may not
amend the Plan (i) to increase materially the benefits accruing to Participants
under the Plan, (ii) to increase materially (except for increases due to
adjustments in accordance with Section 10 hereof) the aggregate number of shares
of Common Stock for which Options may be granted hereunder or (iii) to modify
materially the requirements as to eligibility for participation in the Plan.
B-5
29
SECTION 13. Termination of the Plan. The Board of Directors may terminate
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate one year after its effective
date. No Option may be granted hereunder after termination of the Plan. The
termination or amendment of the Plan shall not alter or impair any rights or
obligations under any Option theretofore granted under the Plan.
SECTION 14. Effective Date of the Plan. This Plan shall be effective as of
January 1, 2002, subject to approval by the holders of the majority of the
Common Stock present and represented at a special or annual meeting of the
shareholders held on or before December 31, 2001. If the Plan is not so
approved, the Plan shall not become effective.
B-6
30
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________________________________________________________________________________
THE BISYS GROUP, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders
Thursday, November 15, 2001
The undersigned stockholder of THE BISYS GROUP, INC., a Delaware
corporation, hereby appoints Dennis R. Sheehan and Kevin J. Dell, or either of
them, voting singly in the absence of the other, attorneys and proxies, with
full power of substitution and revocation, to vote, as designated below, all
shares of Common Stock of The BISYS Group, Inc., that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of said corporation to be
held at Club 101, 101 Park Avenue, New York, New York 10016 on November 15,
2001, at 9:00 a.m. (local time) and at any adjournment thereof, in accordance
with the instructions on the reverse side.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE,THE PROXY WILL BE
VOTED "FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSALS NO. 2, NO. 3, AND
NO. 4. The proxies are authorized to vote as they may determine in their
discretion upon such other business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL NO. 1
AND "FOR" PROPOSALS NO. 2, NO. 3, AND NO. 4.
1. Election of Directors:
[ ] FOR all nominees listed below
[ ] *WITHHOLD AUTHORITY
to vote for all nominees listed below
[ ] *EXCEPTIONS
Nominees: Lynn J. Mangum, Denis A. Bovin, Robert J. Casale, Thomas A. Cooper,
Jay W. DeDapper, John J. Lyons, Thomas E. McInerney, and Joseph J. Melone
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
Exceptions:_____________________________________________________________________
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY USING THE
ENCLOSED ENVELOPE.
(continued on reverse side)
31
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2. The proposal to approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the Company's authorized shares of
stock from 160,000,000 shares of Common Stock to 320,000,000 shares of
Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The proposal to approve the Company's 2002 Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. The proposal to ratify the appointment of PricewaterhouseCoopers LLP as
auditors of the Company for the fiscal year ending June 30, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The proxies are authorized to vote as they may determine in their discretion
upon such other business as may properly come before the meeting.
Change of Address and/or Comments Mark Here [ ]
Date________________________________________________________________, 2001
Signature ________________________________________________________________
Signature (if held jointly) ______________________________________________
Please sign exactly as name appears hereon. When shares are held in name of
joint holders, each should sign. When signing as attorney, executor, trustee,
guardian, etc. please so indicate. If a corporation, please sign in full
corporate name by an authorized officer. If a partnership, please sign in
partnership name by an authorized person.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK.
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE