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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
Compuware Corporation
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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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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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
COMPUWARE CORPORATION
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Corporate Headquarters
ONE CAMPUS MARTIUS, DETROIT, MICHIGAN 48226
(313) 227-7300 [COMPUWARE LOGO]
July 21, 2003
Dear Compuware Shareholder:
You are cordially invited to attend the 2003 Annual Meeting of Shareholders
of Compuware Corporation to be held at 3:00 p.m., Eastern Daylight Time, on
Tuesday, August 26, 2003. The meeting will be held at Compuware's corporate
offices, One Campus Martius, Detroit, Michigan 48226.
The following pages contain the formal Notice of the Annual Meeting and the
Proxy Statement. You may wish to review this material for information concerning
the business to be conducted at the meeting and the nominees for election as
directors.
Please indicate whether you plan to attend the meeting in the space
provided on the proxy card, or press the appropriate key if voting by telephone
or by Internet. If your shares are currently held in the name of your broker,
bank or other nominee and you wish to attend the meeting, you must obtain a
letter from your broker, bank or other nominee indicating that you are the
beneficial owner of a stated number of shares of stock as of the July 1, 2003
record date. This will help us determine whether you are permitted to attend the
meeting. You must be a Compuware shareholder or his or her named representative
to be entitled to attend the meeting. You must also obtain a legal proxy if you
desire to vote at the meeting.
Your vote is important. Whether you plan to attend the meeting or not, we
urge you to vote your shares, by completing, signing and returning your proxy
card or by telephone or Internet, as soon as possible. This will ensure that
your shares are voted in the event you are unable to attend the meeting. You
may, of course, revoke your proxy and, if you are a shareholder of record, vote
in person at the meeting if you so desire.
Sincerely,
/s/ PETER KARMANOS, JR.
Peter Karmanos, Jr.
Chairman and Chief Executive Officer
COMPUWARE CORPORATION
ONE CAMPUS MARTIUS
DETROIT, MICHIGAN 48226
NOTICE OF THE 2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 26, 2003
To the Shareholders:
This is our notice to you that the 2003 Annual Meeting of Shareholders of
Compuware Corporation will be held at our corporate offices, One Campus Martius,
Detroit, Michigan 48226, on Tuesday, August 26, 2003 at 3:00 p.m., Eastern
Daylight Time, to consider and act upon the following matters:
(1) The election of 12 directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified.
(2) Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on July 1, 2003 will
be entitled to vote at the meeting.
We call your attention to the attached Proxy Statement and the accompanying
proxy card. We request that you vote your shares and indicate whether you plan
to attend the meeting by either signing, dating and returning the proxy card in
the enclosed envelope or by using the telephone or Internet voting mechanisms
described in the Proxy Statement. If you attend the meeting and are a
shareholder of record, you may withdraw your proxy and vote your shares in
person at the meeting.
Due to space limitations at our new headquarters, it may be necessary for
us to use an additional conference room at this year's meeting to accommodate
all shareholders who wish to attend.
A copy of the 2003 Annual Report for the fiscal year ended March 31, 2003
accompanies this notice.
By Order of the Board of Directors,
/s/ THOMAS COSTELLO, JR.
Thomas M. Costello, Jr., Secretary
Detroit, Michigan
July 21, 2003
COMPUWARE CORPORATION
PROXY STATEMENT
2003 ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
This Proxy Statement and the accompanying Notice of the 2003 Annual Meeting
of Shareholders, 2003 Annual Report and proxy card are furnished in connection
with the solicitation of proxies by the Board of Directors of Compuware
Corporation. The proxies are being solicited for use at the 2003 Annual Meeting
of Shareholders to be held at 3:00 p.m., Eastern Daylight Time, on Tuesday,
August 26, 2003, at the headquarters of Compuware Corporation, One Campus
Martius, Detroit, Michigan 48226, and at any adjournment of that meeting. The
proxies are being solicited from holders of our common shares, par value $.01
per share. We expect that this Proxy Statement and the accompanying materials
will be first sent or given to shareholders on or about July 21, 2003.
We urge you to vote your shares promptly to make certain that your vote
will be counted at the meeting. There are four different ways you may cast your
vote this year. You may vote by:
- TELEPHONE, using the toll-free number listed on your proxy card. Please
follow the instructions on your proxy card. If you vote using the
telephone, you need not mail in your proxy card;
- INTERNET. Go to the voting site at http://www.eproxyvote.com/cpwr and
follow the instructions on the screen. When prompted for your Voter
Control Number, enter the number printed on the proxy card. If you vote
using the Internet, you need not mail in your proxy card.
- MARKING, SIGNING, DATING AND MAILING each proxy card and returning it in
the envelope provided; or
- ATTENDING AND COMPLETING A BALLOT AT THE ANNUAL MEETING, if you are a
shareholder of record.
If you give a proxy, you may revoke it at any time before it is voted by:
- giving our Secretary a written notice of revocation that is dated later
than the proxy card;
- signing a later-dated proxy card relating to the same shares and
delivering it to the transfer agent;
- voting again by telephone or Internet (prior to August 25, 2003 at 11:59
p.m., Eastern Daylight Time), since only your latest vote will be
counted; or
- by attending the Annual Meeting and voting in person, if you are a
shareholder of record.
Your attendance at the Annual Meeting will not in and of itself revoke your
proxy. Any written notice of revocation should be sent to: Secretary, Compuware
Corporation, One Campus Martius, Detroit, Michigan 48226.
References in this Proxy Statement to fiscal 2003 mean the 12 months ended
March 31, 2003.
GENERAL INFORMATION
We will bear the expense of soliciting proxies, including the cost of
preparing, printing and mailing the Notice of the 2003 Annual Meeting of
Shareholders, the Proxy Statement, the 2003 Annual Report on Form 10-K and the
accompanying proxy card. We may supplement our solicitation of proxies by mail
with personal interview, telephone or facsimile solicitation by our directors,
officers and other regular employees. We will not pay any special compensation
to them for these services. We have also retained Georgeson Shareholder
Communications, Inc. to assist our solicitation of proxies, at an approximate
cost of $8,000 plus reasonable expenses. We will request that brokers, nominees
and other similar record holders forward proxy material to the beneficial owners
of our common shares, and we will reimburse them upon request for their
reasonable expenses incurred in forwarding such material.
Holders of record of our common shares at the close of business on July 1,
2003 are entitled to notice of the 2003 Annual Meeting of Shareholders and to
vote at the meeting. On July 1, 2003, we had 382,682,011
outstanding common shares, our only class of stock outstanding. Each of these
shares is entitled to one vote on each matter submitted for a vote at the
meeting. The presence, either in person or by proxy, of the holders of at least
a majority of these outstanding common shares is necessary to constitute a
quorum at the 2003 Annual Meeting of Shareholders.
All valid proxies that are properly signed, dated and returned in time for
the meeting will be voted as specified in the proxy. IF NO SPECIFICATION IS
MADE, THE PROXIES WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES
LISTED.
If any other matters requiring a shareholder vote properly come before the
meeting, the persons appointed as proxies in the enclosed proxy card will vote
with respect to such matters in accordance with their best judgment, to the
extent permitted by law.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
BOARD OF DIRECTORS
The Board of Directors is responsible for our overall affairs. The Board of
Directors held five meetings this past fiscal year. Other than Ms. Chappell and
Mr. Grabe, each of the directors attended more than 75 percent of the meetings
of the Board and the committees of which they were a member. Standing committees
of the Board include an Audit Committee, a Compensation Committee and a
Nominating/ Governance Committee. In October 2002, the Board of Directors added
three additional standing committees, including a Diversity/Community Relations
Committee, a Shareholder Relations Committee and a Strategic Planning Committee.
AUDIT COMMITTEE
The Audit Committee currently consists of Dr. Didier, Mr. Halling, Dr.
Price and Mr. Prowse. Mr. Prowse joined the Audit Committee in May 2002 and Dr.
Price replaced Mr. Weicker on the Audit Committee in October 2002. During fiscal
2003, the Audit Committee consisted of Dr. Didier, Dr. Price and Messrs.
Halling, Prowse and Weicker. Each member of our Audit Committee is an
independent director as independence is defined in Rule 4200(a)(14) of the
National Association of Securities Dealers' listing standards, as those
standards have been modified or supplemented. In addition, the Board of
Directors determined that all of the members of the Audit Committee are
financially literate, and determined that Mr. Halling qualifies as the financial
expert on the Audit Committee, as defined by the rules and regulations of the
Securities and Exchange Commission. The Audit Committee met six times during the
past fiscal year.
The Audit Committee is organized and conducts its business pursuant to a
written charter adopted by the Board of Directors. A complete copy of the
Committee's revised charter is included as an appendix to this Proxy Statement.
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities with respect to our financial
reporting process, our system of internal controls, our significant accounting
policies and procedures, our internal and external audit process and the legal
compliance and ethics program that management and the Board have established.
The Audit Committee also provides an avenue for communication between internal
auditors, the independent accountants and the Board.
AUDIT COMMITTEE REPORT
Our Audit Committee has:
- reviewed and discussed our audited financial statements for the fiscal
year ended March 31, 2003 with our management;
- discussed with our independent accountants the matters required to be
discussed by SAS 61 (Codification of Statements on Auditing Standards, AU
380), as it has been modified or supplemented;
2
- received the written disclosures and the letter from our independent
accountants required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions
with Audit Committees), as it has been modified or supplemented; and
- discussed with our independent accountants our accountants' independence.
Based on the review and discussions described above in this paragraph, our
Audit Committee recommended to our Board of Directors that the audited financial
statements for the fiscal year ended March 31, 2003 be included in our Annual
Report on Form 10-K for the fiscal year ended March 31, 2003 for filing with the
Securities and Exchange Commission.
By the Audit Committee,
Elaine K. Didier
William R. Halling
Glenda D. Price
W. James Prowse
COMPENSATION COMMITTEE
The Compensation Committee currently consists of three directors, Ms.
Nelson and Messrs. Grabe and Weicker, none of whom is an employee of Compuware
or its subsidiaries. Ms. Nelson replaced Mr. Halling on the Compensation
Committee in October 2002. The Compensation Committee is organized and conducts
its business pursuant to a written charter adopted by the Board of Directors.
The Compensation Committee administers the Company's executive compensation and
stock option programs. The Committee also makes recommendations to the Board of
Directors on organization, succession and compensation, including stock option
programs and benefit plans, individual salary rates, supplemental compensation
and management special awards, the appointment of consultants and similar
matters where Board approval is required. The Compensation Committee met four
times during the past fiscal year.
DIVERSITY/COMMUNITY RELATIONS COMMITTEE
The Diversity/Community Relations Committee was formed in October 2002 and
consists of Mr. Archer, Ms. Chappell, Dr. Didier and Dr. Price. The
Diversity/Community Relations Committee makes recommendations to assist the
Company in achieving its initiatives regarding diversity and community
relations. The major objectives of the diversity initiatives are to (i) create
an inclusive environment that recognizes, understands, utilizes and values the
contributions of all employees; (ii) advance efforts that will attract, develop
and retain a diverse slate of employees and candidates; (iii) enhance
affirmative opportunities to attract diverse vendors; (iv) build relationships
with organizations that are diverse; and (v) develop strategies to assist with
the diversity initiatives. The Diversity/Community Relations Committee met three
times during the past fiscal year.
NOMINATING/GOVERNANCE COMMITTEE
The Nominating/Governance Committee consists of five individuals, Messrs.
Bedi, Grabe, Halling, Prowse and Weicker, all of whom were appointed to the
Committee in October 2002. None of the individuals are employees of Compuware or
its subsidiaries. Prior to October 2002, the Committee consisted of Messrs.
Karmanos, Romney and Thomas M. Costello, Jr., the Company's General Counsel. The
Committee makes recommendations to the Board of Directors on the election of
officers and the nomination of new members to the Board of Directors. The
Committee met one time during fiscal 2003. The Committee will consider nominees
recommended by the shareholders. The procedure for making nominations is
described under "Shareholder Proposals."
SHAREHOLDER RELATIONS COMMITTEE
The Shareholder Relations Committee was formed in October 2002 and consists
of Ms. Chappell, Ms. Nelson and Messrs. Prowse and Romney. The Shareholder
Relations Committee oversees the Company's
3
shareholder relations policies and programs so that the Company's communications
with shareholders are timely, relevant, accurate and, pursuant to the advice of
legal counsel, meet all legal obligations to investors. The Committee provides
strategic oversight for shareholder communications and related processes so that
investors and potential investors have access to relevant information about the
Company's vision, mission and operating results. The Shareholder Relations
Committee, in cooperation with the Company's management, met one time during the
past fiscal year.
STRATEGIC PLANNING COMMITTEE
The Strategic Planning Committee was formed in October 2002 and consists of
Ms. Chappell and Messrs. Archer, Bedi and Romney. The Strategic Planning
Committee, in cooperation with the Company's management, identifies business
issues facing the Company, and recommends potential strategies to solve those
issues. The Strategic Planning Committee met two times during the past fiscal
year.
4
SECURITY OWNERSHIP OF MANAGEMENT AND MAJOR SHAREHOLDERS
The following table shows, as of July 1, 2003, the beneficial ownership of
our common shares by all directors and executive officers as a group, by each
current director, by each executive officer named in the Summary Compensation
Table and by all persons known to us to beneficially own more than five percent
of our outstanding common shares. The number of shares beneficially owned is
determined according to Securities and Exchange Commission rules and is not
necessarily indicative of beneficial ownership for any other purpose. Under
those rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares as to
which the individual has the right to acquire on July 1, 2003 or within 60 days
thereafter through the exercise of any stock option or other right. Except as
otherwise noted, each beneficial owner identified in the table below has sole
voting and investment power with respect to the shares shown in the table.
<Table>
<Caption>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------------ ----------------------- --------
Dennis W. Archer............................................ 5,700 *
Gurminder S. Bedi........................................... 0 *
Elizabeth A. Chappell....................................... 221,899(2) *
Elaine K. Didier............................................ 205,625 *
Laura L. Fournier........................................... 498,969 *
William O. Grabe............................................ 359,434 *
William R. Halling.......................................... 334,061 *
Henry A. Jallos............................................. 2,815,861 *
Peter Karmanos, Jr.......................................... 21,419,071(3) 5.5%
Joseph A. Nathan............................................ 5,146,290(4) 1.3%
Faye Alexander Nelson....................................... 0 *
Glenda D. Price............................................. 0 *
W. James Prowse............................................. 2,346,305(5) *
G. Scott Romney............................................. 317,997(6) *
Lowell P. Weicker, Jr....................................... 116,159 *
Tommi A. White.............................................. 19,286(7) *
All executive officers and directors as a group (17
persons).................................................. 34,393,678(8) 8.6%
Dodge & Cox................................................. 46,644,528(9) 12.2%
FMR Corp.................................................... 29,112,017(10) 7.6%
Ahmet H. Okumus............................................. 19,359,582(11) 5.1%
</Table>
- -------------------------
* Less than one percent
(1) The column includes shares held for officers and directors through our ESOP
and shares that the individual has the right to acquire on July 1, 2003 or
within 60 days thereafter, as set forth below.
<Table>
<Caption>
NAME ESOP SHARES OPTION SHARES
---- ----------- -------------
Dennis W. Archer............................................ -- 5,500
Gurminder S. Bedi........................................... -- 0
Elizabeth A. Chappell....................................... -- 199,573
Elaine K. Didier............................................ -- 201,525
Laura L. Fournier........................................... 20,025 439,110
William O. Grabe............................................ -- 183,997
William R. Halling.......................................... -- 284,559
Henry A. Jallos............................................. 34,294 2,764,311
Peter Karmanos, Jr.......................................... 378,782 5,384,333
Joseph A. Nathan............................................ 189,242 4,326,772
Faye Alexander Nelson....................................... -- 0
Glenda D. Price............................................. -- 0
W. James Prowse............................................. 136,182 1,135,731
G. Scott Romney............................................. -- 256,899
Lowell P. Weicker, Jr....................................... -- 116,159
</Table>
5
<Table>
<Caption>
NAME ESOP SHARES OPTION SHARES
---- ----------- -------------
Tommi A. White.............................................. 1,052 0
Officer and Director Group.................................. 787,809 15,843,563
</Table>
- -------------------------
(2) Includes 24 shares held by Ms. Chappell's child.
(3) Includes (a) 3,425,978 shares owned by Mr. Karmanos's trusts, as to which
Mr. Karmanos has shared dispositive power for 47,272 of the 3,425,978
shares; (b) 5,808,978 shares held by Mr. Karmanos's partnerships, as to
which Mr. Karmanos has shared voting and dispositive power; and (c)
6,421,000 shares held by Mr. Karmanos's stock LLC, with respect to which
shares Mr. Karmanos has no dispositive power. Does not include 1,038,713
shares owned by Mr. Karmanos's wife. Mr. Karmanos has no voting or
dispositive power with respect to his wife's shares and disclaims
beneficial ownership of them. Mr. Karmanos's address is Compuware
Corporation, One Campus Martius, Detroit, Michigan 48226.
(4) Includes (a) 43,692 shares owned by Mr. Nathan; (b) 286,584 shares owned
jointly by Mr. Nathan and his wife; and (c) 300,000 shares, with respect to
which shares Mr. Nathan has no dispositive power.
(5) Includes (a) 574,392 shares owned by Mr. Prowse's trust and (b) 500,000
shares, with respect to which shares Mr. Prowse has no dispositive power.
(6) Includes 3,000 shares owned by Mr. Romney's wife, with respect to which
shares Mr. Romney has no voting or dispositive power.
(7) Includes 3,000 shares owned by Ms. White's husband, with respect to which
shares Ms. White has no voting or dispositive power.
(8) See notes (2), (3), (4), (5), (6) and (7) for information on shares with
respect to which persons included in the group do not currently have sole
voting and investment power.
(9) Based solely on a Schedule 13G, dated February 13, 2003, filed by Dodge &
Cox with the Securities and Exchange Commission disclosing ownership as of
December 31, 2002. Dodge & Cox's address is One Sansome St., 35th Floor,
San Francisco, California 94104. According to the Schedule 13G, Dodge & Cox
has sole voting power with respect to 42,820,128 shares, shared voting
power with respect to 927,200 shares and sole dispositive power with
respect to 46,644,528 shares.
(10) Based solely on a Schedule 13G, dated February 13, 2003, filed by FMR Corp.
with the Securities and Exchange Commission disclosing ownership as of
December 31, 2002. FMR Corp's address is 82 Devonshire St., Boston,
Massachusetts 02109. According to their joint Schedule 13G, FMR Corp. has
sole voting power with respect to 1,088,663 shares, and FMR Corp., Edward
C. Johnson 3d and Abigail P. Johnson each have sole dispositive power with
respect to 29,112,017 shares.
(11) Based solely on a Schedule 13G, dated August 13, 2002, filed by Ahmet H.
Okumus with the Securities and Exchange Commission disclosing ownership as
of August 7, 2002. Mr. Okumus's address is 575 Lexington Ave., 7th Floor,
New York, NY 10022. According to their joint Schedule 13G, Mr. Okumus has
shared voting and dispositive power with respect to 19,359,582 shares,
Okumus Capital, LLC has shared voting and dispositive power with respect to
14,729,992 shares, Okumus Opportunity Fund, Ltd. has shared voting and
dispositive power with respect to 6,547,200 shares, Okumus Opportunity
Partners, LP and Okumus Advisors, LLC each have shared voting and
dispositive power with respect to 2,317,300 shares, Okumus Technology Value
Fund, Ltd. has shared voting and dispositive power with respect to
2,470,720 shares, Okumus Technology Value Partners, LP and Okumus
Technology Advisors, LLC each have shared voting and dispositive power with
respect to 1,390,170 shares, Okumus Market Neutral Fund, Ltd. has shared
voting and dispositive power with respect to 5,712,072 shares, and Okumus
Market Neutral Partners, LP and Okumus Market Neutral Advisors, LLC each
have shared voting and dispositive power with respect to 922,120 shares.
6
I. ELECTION OF DIRECTORS
NOMINEES
Our Board of Directors proposes that the 12 directors named below,
constituting our entire Board of Directors, be elected as our directors, each to
hold office until the 2004 Annual Meeting of Shareholders and until his or her
successor is elected and qualified. If a quorum is present, the 12 nominees
receiving the greatest number of votes cast at the meeting or its adjournment
will be elected. Withheld votes will not be deemed votes cast in determining
which nominees receive the greatest number of votes cast, but will be counted
for purposes of determining whether a quorum is present.
All nominees for election have indicated their willingness to serve, if
elected. If any of them is unable or declines to serve as a director, the proxy
holders intend to vote the proxies in accordance with their best judgment for
the election of another person nominated in accordance with our Bylaws.
A brief summary of each nominee's principal occupation and other
information follows:
PETER KARMANOS, JR.
Mr. Karmanos, age 60, one of our founders, has served as one of our
directors since our inception in April 1973, as our Chairman of the Board since
November 1978 and as our Chief Executive Officer since July 1987. Mr. Karmanos
is also a director of Taubman Centers, Inc. and Worthington Industries, Inc.
DENNIS W. ARCHER
Mr. Archer, age 61, has served as one of our directors since January 2002.
Mr. Archer has been a member and Chairman of the law firm of Dickinson Wright
PLLC since January 2002. The law firm serves as counsel to us. Mr. Archer served
as mayor of the city of Detroit, Michigan from January 1994 through December
2001 and as an Associate Justice of the Supreme Court of the State of Michigan
from 1986 to 1990. Mr. Archer is the immediate past president of the National
League of Cities, is a director of Johnson Controls, Inc. and is the
President-Elect Nominee of the American Bar Association.
GURMINDER S. BEDI
Mr. Bedi, age 55, has served as one of our directors since October 2002.
Mr. Bedi is a private investor. He served as Vice President of Ford Motor
Company from October 1998 through his retirement in December 2001. Mr. Bedi
served as Vehicle Line Director at Ford Motor Company from October 1996 through
October 1998 and in a variety of other managerial positions at Ford for over 30
years. Mr. Bedi is also a director of Meridian Automotive Systems, Inc.
ELIZABETH A. CHAPPELL
Ms. Chappell, age 45, has served as one of our directors since October
1997. Ms. Chappell has served as President of The Economic Club of Detroit since
April 2002 and has been a business consultant in private practice since January
2001. From January 2000 until January 2001, Ms. Chappell served as our Executive
Vice President, Communications and Investor Relations. From September 1994
through December 1999, Ms. Chappell served as the Chief Executive Officer of The
Chappell Group, Inc., a consulting firm. Ms. Chappell is also a director of
Handleman Company.
ELAINE K. DIDIER
Dr. Didier, age 55, has served as one of our directors since October 1997.
Dr. Didier has been the Dean of the University Library and Professor at Oakland
University since August 1999. Dr. Didier served as the Interim Director of
Academic Outreach at the University of Michigan from 1997 until March 1999.
Prior to that appointment, Dr. Didier held other positions with the University
of Michigan since 1977, including Associate Dean of the Graduate School and
Director of Information Resources at the School of Business Administration.
7
WILLIAM O. GRABE
Mr. Grabe, age 65, has served as one of our directors since April 1992. Mr.
Grabe is a Managing Member of General Atlantic Partners, LLC, a private equity
firm focused exclusively on investing in information technology, process
outsourcing and communications businesses on a global basis, and has been
affiliated with General Atlantic Partners, LLC or its predecessor since April
1992. Mr. Grabe is also a director of Bottomline Technologies, Digital China
Holdings, Ltd., Exact Holding N.V., Gartner, Inc., Firepond, Inc. and several
privately held companies in which General Atlantic Partners, LLC is an investor.
WILLIAM R. HALLING
Mr. Halling, age 64, has served as one of our directors since October 1996.
Mr. Halling is a private investor. Mr. Halling served as the President of The
Economic Club of Detroit from May 1995 through March 2002. Mr. Halling is also a
director of Detroit Legal News. Mr. Halling is a certified public accountant.
Mr. Halling served as a director for KPMG LLC from October 1990 through June
1993 and as Managing Partner, Michigan/Toledo business unit, from August 1986
through June 1993.
FAYE ALEXANDER NELSON
Ms. Nelson, age 50, has served as one of our directors since October 2002.
Ms. Nelson is Vice President of Government Affairs for Wayne State University.
Prior to joining Wayne State in February 1996, Ms. Nelson was employed by Kmart
Corporation for 15 years and served in the positions of Director of Government
Affairs and Senior Corporate Attorney. Ms. Nelson serves on the board of several
community and civic organizations, including the Michigan Economic Growth
Authority, the National Conference for Community and Justice and the Michigan
Women's Foundation.
GLENDA D. PRICE
Dr. Price, age 63, has served as one of our directors since October 2002.
Dr. Price has served as the president of Marygrove College since 1998. Prior to
assuming her responsibilities at Marygrove, Dr. Price was the Provost at Spelman
College in Atlanta. Dr. Price has held positions as faculty and administrator at
several academic institutions, as well as practicing as a clinical laboratory
scientist. Dr. Price is also a director of LaSalle Bank Corporation, a member of
the ABN AMRO Group.
W. JAMES PROWSE
Mr. Prowse, age 60, has served as one of our directors since December 1986.
Mr. Prowse is a private investor. He began his employment with us in 1984 and
served as our Executive Vice President from February 1998 through March 1999.
From January 1992 through January 1998, Mr. Prowse served as our Senior Vice
President.
G. SCOTT ROMNEY
Mr. Romney, age 62, has served as one of our directors since January 1996.
Mr. Romney has been a partner at Honigman Miller Schwartz and Cohn LLP, a law
firm, since 1977. The law firm serves as counsel to us.
LOWELL P. WEICKER, JR.
Mr. Weicker, age 72, has served as one of our directors since October 1996.
Mr. Weicker is a private investor. He currently serves as President of the Board
of Directors of the Trust for America's Health, and is on the Board of Directors
of HPSC, Inc., UST Corporation, Phoenix Duff & Phelps Mutual Funds, World
Wrestling Entertainment and the National Library of Medicine of the National
Institute of Health. Mr. Weicker was Chairman, The Century Fund Commission, a
charitable commission, from January 2001 through December 2001 and Chairman, Pew
Foundation Environmental Health Commission, a charitable commission, from
January 2000 until December 2000. From 1990 through 1994, Mr. Weicker served as
the Governor of Connecticut, and from 1970 through 1988, as a U.S. Senator from
Connecticut.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES.
8
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth information for the fiscal years indicated
concerning the compensation of (1) our Chief Executive Officer and (2) our four
other most highly compensated executive officers who were serving as executive
officers on March 31, 2003. These executive officers are collectively referred
to as the Named Officers.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
-------------
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
---------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1) ($)(2)
--------------------------- ---- --------- -------- ------------- ------------
Peter Karmanos, Jr. ..................... 2003 950,000 0 570,000 185,000
Chairman of the Board and 2002 950,000 700,000 3,380,000 185,000
Chief Executive Officer 2001 700,000 0 1,128,015 185,000
Joseph A. Nathan......................... 2003 750,000 0 450,000 0
President and Chief Strategy Officer 2002 750,000 600,000 2,961,835 0
2001 600,000 0 1,057,544 0
Tommi A. White(3)........................ 2003 600,000 0 360,000 0
Chief Operating Officer 2002 350,000 400,000 1,000,000 0
Henry A. Jallos.......................... 2003 500,000 0 300,000 0
Executive Vice President, 2002 500,000 500,000 1,200,000 0
Global Account Management 2001 500,000 0 203,509 0
Laura L. Fournier........................ 2003 300,000 0 120,000 0
Senior Vice President, 2002 275,000 131,250 330,000 0
Chief Financial Officer and Treasurer 2001 262,500 0 75,968 0
</Table>
- -------------------------
(1) Amounts include options granted pursuant to our Replacement Stock Option
Program, under which the Named Officers may request a replacement option
grant at the time of exercise if they pay the exercise price and/or
withholding taxes by surrendering their stock to us. See "Option Grants in
Last Fiscal Year."
(2) In each of the past three fiscal years, we paid approximately $185,000 in
life insurance premiums in connection with a split-dollar life insurance
arrangement on the life of Mr. Karmanos. In connection with that
arrangement, the insurance premiums allocable to term life insurance and a
portion of the premiums allocable to whole life insurance were paid by Mr.
Karmanos's children or trusts for their benefit. We paid the remainder of
the premiums. Mr. Karmanos's children and trusts will repay the premiums
paid by us on the earliest to occur of (1) Mr. Karmanos's death or
retirement, (2) the cancellation of the policies, or (3) the transfer of the
policies to Mr. Karmanos's children or trusts for their benefit.
(3) Ms. White began her employment with us in September 2001.
9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options made during the last fiscal year to each of the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL
% OF REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------
NAME GRANTED(#)(1) YEAR ($/SH) DATE 5%($) 10%($)
---- ------------- ---------- -------- ---------- ----- ------
Peter Karmanos, Jr. ...... 570,000 9.54% $6.960 5/22/2012 $2,532,090 $6,381,832
Joseph A. Nathan.......... 450,000 7.53% 6.960 5/22/2012 1,999,018 5,038,289
Tommi A. White............ 360,000 6.02% 6.960 5/22/2012 1,599,214 4,030,631
Henry A. Jallos........... 300,000 5.02% 6.960 5/22/2012 1,332,679 3,358,859
Laura L. Fournier......... 120,000 2.01% 6.960 5/22/2012 533,071 1,343,544
</Table>
- -------------------------
(1) Fifty percent of the option becomes exercisable on the third year
anniversary of the date of grant, and 25 percent of the option shares vest
on the fourth year and fifth year anniversaries of the date of grant. The
option shares accelerate and are 100 percent exercisable in the event of
death or disability and may be included by the Named Officer in the
Replacement Program. Under the Replacement Program, the Named Officer may
request, no more than twice in a calendar year, a replacement option grant
at the time of exercise if the Named Officer pays the exercise price and/or
withholding taxes by surrendering their stock to us. The Named Officer
receives a replacement option grant equal to the number of shares
surrendered for the exercise price and/or the withholding taxes. Replacement
options are 100% exercisable on the date of grant which is the date of the
related exercise.
(2) These amounts represent the value of the options at the end of its term,
assuming the market price of the common shares appreciates at annually
compounded rates of five percent and 10 percent. These amounts represent
only assumed rates of appreciation in accordance with rules adopted by the
Securities and Exchange Commission. Actual gains, if any, will be dependent
on overall market conditions and on future performance of the common shares.
10
OPTION HOLDINGS
The following table sets forth information concerning the value of
unexercised options held by each of the Named Officers as of March 31, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<Table>
<Caption>
NUMBER OF UNEXERCISED
SHARES OPTIONS AT FY-END(#)
ACQUIRED ON VALUE ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- -------------
Peter Karmanos, Jr. ...... 0 $ 0 4,389,333 3,745,000
Joseph A. Nathan.......... 0 0 3,556,770 2,773,335
Tommi A. White............ 0 0 0 1,360,000
Henry A. Jallos........... 0 0 2,269,977 1,687,667
Laura L. Fournier......... 8,640 4,968 341,817 44,043
<Caption>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT FY-END($)(1)
----------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
Peter Karmanos, Jr. ...... $25,600 $0
Joseph A. Nathan.......... 0 0
Tommi A. White............ 0 0
Henry A. Jallos........... 0 0
Laura L. Fournier......... 17,040 0
</Table>
- -------------------------
(1) Represents the difference between the closing price on The NASDAQ National
Market of the underlying common shares on March 31, 2003 ($3.39) and the
aggregate exercise price of the outstanding options.
11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL COMPENSATION PHILOSOPHY
A basic philosophy of Compuware Corporation is that executive officers,
including the Company's Chief Executive Officer ("CEO"), and certain other key
executive employees have a meaningful portion of their total compensation tied
to the Company's profitability. In furtherance of this philosophy, key employees
participate in an executive incentive compensation program.
COMPENSATION FOR EXECUTIVES
Under the executive incentive compensation program, a participant's
compensation is comprised of their base salary and certain incentives. Incentive
awards are based on an established percentage of the participant's base salary
and are tied to the Company's business objectives. The incentives include (i) a
cash bonus, which is earned and paid only if the Company achieves specified
earnings per share ("EPS") and/or revenue targets, and (ii) stock options, which
are structured to vest over a five-year period. Since incentive awards account
for a large percentage of total compensation and since such awards are tied to
the Company's business objectives, the largest variable in determining total
compensation of the CEO, the executive officers, and other participants in the
incentive compensation program is the Company's profitability and revenue
growth.
The Compensation Committee consulted with Towers Perrin in its review of
the compensation of the CEO and other executive officers and in March 2003
adopted a revised executive incentive compensation program, which was made
effective in fiscal 2004. Consistent with prior programs, the revised program is
structured to reward participants with incentive opportunities when the Company
achieves its established financial objectives. Beginning in fiscal 2004,
executives also participate in a performance cash incentive plan, which is
structured to vest over a three-year period and which the participant is
eligible to earn only if the Company achieves specified EPS and/or revenue
targets.
In setting base salaries for the CEO and the executive officers, the
Compensation Committee, which is comprised of non-employee directors, has
reviewed information provided by Towers Perrin regarding compensation paid by
other technology companies of similar size to officers with similar
responsibilities. Other than the Company's Chief Financial Officer ("CFO"), none
of the Named Officers received a salary increase in fiscal 2003 or fiscal 2004.
In fiscal 2003, stock option grants issued to the Named Officers were
determined by dividing the target total cash compensation by five. Target total
cash compensation represented 300% (or 200% for the CFO) of the executive's base
salary. The actual annualized salary as of April 1, 2002 was used in calculating
the fiscal 2003 target total cash compensation.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The Company's CEO, Mr. Karmanos, did not receive a salary increase in
fiscal 2003 or fiscal 2004. Under the executive compensation incentive
compensation program in fiscal 2003, the executive officers, including Mr.
Karmanos, were eligible to receive an annual incentive if specified EPS and
revenue targets were achieved. The targets were not achieved for fiscal 2003 and
as a result executive officers, including Mr. Karmanos, did not receive a cash
incentive under the terms of the incentive arrangement.
Like other executive officers who were eligible to participate in the
executive incentive compensation program in fiscal 2003, Mr. Karmanos was
granted options in May 2002. The option grants were structured to encourage
long-term loyalty to the Company and will have value only to the extent that the
market price of the stock increases over the market value on the grant date.
Fifty percent of the option shares become exercisable on the third anniversary
of the date of grant, 25 percent become exercisable on the fourth anniversary
and the remainder become exercisable on the fifth anniversary.
Consistent with the philosophy of the Company, profitability and revenue
growth of the Company are the primary variables in the compensation to be paid
to Mr. Karmanos in fiscal 2004. Under the revised program, Mr. Karmanos is
eligible to receive a cash incentive, which will be earned and paid only if the
Company
12
achieves specified EPS and/or revenue targets. In addition, Mr. Karmanos will
also participate in a performance cash incentive, which will vest over a
three-year period and which Mr. Karmanos is eligible to earn only if the Company
achieves specified EPS and/or revenue targets in fiscal 2004.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended, restricts
the deductibility of executive compensation paid to the Company's Chief
Executive Officer and any of the four other most highly compensated executive
officers at the end of any fiscal year to not more than $1 million in annual
compensation (including gains from the exercise of certain stock option grants).
Certain performance-based compensation is exempt from this limitation if it
complies with the various conditions described in Section 162(m). Some of the
Company's option plans contain a shareholder-approved restriction on the number
of options that may be granted which is intended to cause compensation realized
in connection with the exercise of options granted under these plans to be
exempt from the restriction on deductibility.
The Compensation Committee does not believe that the other components of
our compensation program are likely to result in any payments to any executive
officer which would be subject to the restriction on deductibility and which are
in amounts that are material to Compuware. The Committee has concluded that no
further action with respect to qualifying such compensation for deductibility is
necessary at this time, but intends to continue to evaluate from time to time
the advisability of qualifying future executive compensation programs for
exemption from the Section 162(m) restriction on deductibility.
By the Compensation Committee,
William O. Grabe
Faye Alexander Nelson
Lowell P. Weicker, Jr.
13
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return on our common shares with the cumulative
total return of the Total Return Index for The NASDAQ Industry Index and the
cumulative total return of the Total Return Index for NASDAQ Computer and Data
Processing Services Stocks for the period from April 1, 1998 through March 31,
2003. The graph assumes the investment of $100 in our common shares and each of
the two NASDAQ indexes on March 31, 1998 and the reinvestment of all dividends.
The graph is presented in accordance with applicable legal requirements.
You should be careful about drawing any conclusions from the data contained in
the graph, because past results do not necessarily indicate future performance.
[PERFORMANCE CHART]
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------------------
Company/Index 3/31/98 3/31/99 3/31/00 3/31/01 3/31/02 3/31/03
- --------------------------------------------------------------------------------------------------------------------------
Compuware Corp $100 $ 96.71 $ 85.32 $ 39.49 $ 52.29 $13.73
NASDAQ Industry Index $100 $135.08 $250.99 $100.60 $101.32 $74.37
NASDAQ Computer & Data Proc $100 $162.85 $293.39 $ 99.73 $101.58 $73.96
- --------------------------------------------------------------------------------------------------------------------------
</Table>
COMPENSATION OF DIRECTORS
Effective for fiscal 2003, the Board of Directors approved a revised
director compensation arrangement for non-employee directors, including the 2002
Directors Phantom Stock Plan ("Plan"). Under the revised compensation
arrangement, each non-employee director who is serving as a director on April 1
of each year is paid an annual retainer of $40,000. Each director who is serving
as the chairperson of a Board committee receives an additional annual retainer
of $5,000. Directors receive $2,500 for attending each Board meeting and $1,500
for attending each committee meeting.
In addition, under the Plan, each non-employee director annually receives
phantom stock units valued at $40,000, which are issued quarterly, in increments
of $10,000. A phantom stock unit gives the non-employee director the right to
receive the value of a share of the Company's common stock in cash upon vesting,
which occurs upon the retirement of the director from the Board. Non-employee
directors are also eligible to receive stock options if we achieve specified EPS
and/or revenue targets. The targets were not achieved for fiscal 2003 and as a
result non-employee directors did not receive stock options. All options issued
will have an exercise price equal to the fair market value of the common shares
on the date of grant, will become exercisable in four equal annual installments
beginning on the first anniversary of the grant date, and will terminate 10
years after
14
the grant date. We also reimburse non-employee directors for out-of-pocket
expenses they incur in attending Board and committee meetings.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than 10 percent of a registered
class of our equity securities, to file with the SEC initial reports of
ownership and reports of changes in ownership of our common shares and other
equity securities. Officers, directors and greater than 10 percent shareholders
are required by SEC regulation to furnish us with copies of all Section 16(a)
reports they file.
To our knowledge, based solely on our review of the copies of such reports
furnished to us during or with respect to fiscal 2003, or written
representations that no Form 5 was required, a Form 4 disclosing one transaction
was not filed in a timely manner for Mr. Nathan. Other than the form referenced,
we believe that all Section 16(a) filing requirements applicable to our
officers, directors and greater-than-10-percent beneficial owners were met
during fiscal 2003.
RELATED-PARTY TRANSACTIONS
We paid approximately $625,000 to Karmanos Printing and Graphics, Inc. for
printing services, including the printing of our brochures, stationery,
envelopes, business cards, invoices and other office supplies for fiscal 2003.
We believe that such printing services were provided to us on terms that were no
less favorable to us than could have been obtained from unaffiliated third
parties. George Karmanos, the brother of Peter Karmanos, Jr., our Chairman of
the Board and Chief Executive Officer, and George's wife, are the owners of
Karmanos Printing and Graphics.
In fiscal 2003, we received $80,000 for web-development and web-hosting
services and we paid a total of approximately $1,330,000 in ticket, advertising,
office rental and suite license fees to certain major and minor league sports
venues, including arenas and teams located in Raleigh, North Carolina, Plymouth,
Michigan and Ft. Myers, Florida. These arenas and teams are owned, managed or
controlled by entities owned and controlled by interests of Peter Karmanos, Jr.,
our Chairman of the Board and Chief Executive Officer, and Thomas Thewes, our
former director and Vice-Chairman of the Board. This amount includes the
approximately $858,000 we paid to Compuware Sports Corporation pursuant to a
Promotion Agreement dated September 8, 1992. The Promotion Agreement
automatically renews for successive one-year terms, unless terminated by either
party with 60 days notice. The total amount also includes the approximately
$269,000 we paid to an entity owned and controlled by Mr. Karmanos pursuant to
an Advertising Agreement, dated December 1, 1996, which agreement includes the
right to name the Plymouth, Michigan arena "Compuware Arena" and the placement
of fixed advertising in and about the arena. The Advertising Agreement will
terminate on November 30, 2016.
As a benefit to various employees of the Company, we occasionally invite
them to vacation in condominium units which were recently acquired from an
unaffiliated third party by a trust in which Mr. Karmanos is the trustee and
beneficiary. These units were acquired by the trust as an accommodation to the
Company in order to preserve this valuable incentive for the Company's
employees. We paid the trust approximately $102,000 for rental fees for the
condominium units in fiscal 2003. We believe that the rental rates paid by us
are at or below market rates and are no less favorable to us than we could have
obtained from unaffiliated third parties.
Dennis W. Archer, one of our directors, is a partner in the law firm of
Dickinson Wright PLLC. We engaged the Dickinson firm to perform legal services
in fiscal 2003, and we expect to continue to engage the Dickinson firm to
perform legal services in fiscal 2004.
15
G. Scott Romney, one of our directors, is a partner in the law firm of
Honigman Miller Schwartz and Cohn LLP. We engaged the Honigman firm to perform
legal services in fiscal 2003, and we expect to continue to engage the Honigman
firm to perform legal services in fiscal 2004.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANT
Deloitte & Touche LLP ("Deloitte") acted as our independent public
accountants and audited our consolidated financial statements for the fiscal
year ended March 31, 2003. Our Audit Committee has not yet completed its
evaluation of the fiscal 2003 audit process. As a result, the selection of the
independent accountants to audit our fiscal 2004 financial statements will be
made by the Audit Committee at a later date, but prior to the rendering of any
services in connection with such engagement. Representatives from Deloitte are
expected to be present at the 2003 Annual Meeting of Shareholders and will have
the opportunity to make a statement at the meeting if they desire to do so.
Their representatives will also be available to respond to appropriate
questions.
AUDIT FEES
The aggregate fees billed by Deloitte for professional services rendered
for the audit of our annual financial statements and the reviews of the
financial statements included in our Forms 10-Q were $758,230 for fiscal year
ended March 31, 2003 and $833,349 for fiscal year ended March 31, 2002.
AUDIT-RELATED FEES
The aggregate fees billed by Deloitte for professional services rendered
for audit-related fees were $58,050 for fiscal year ended March 31, 2003 and
$73,400 for fiscal year ended March 31, 2002.
TAX FEES
The aggregate fees billed by Deloitte for tax-related services were
$820,666 for fiscal year ended March 31, 2003 and $1,437,127 for fiscal year
ended March 31, 2002.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The aggregate fees billed for professional services rendered by Deloitte
for fiscal year ended March 31, 2003 and fiscal year ended March 31, 2002 for
(1) directly or indirectly operating, or supervising the operation of, our
information system or managing our local area network, (2) designing or
implementing a hardware or software system that aggregates source data
underlying the financial statements or generates information that is significant
to our financial statements taken as a whole, were $0.
ALL OTHER FEES
The aggregate fees billed in fiscal 2003 for services rendered by Deloitte,
other than for the services covered under the captions "Audit Fees,"
"Audit-Related Fees" and "Tax Fees" above, were $29,994. Deloitte did not render
any such services in fiscal 2002.
Our Audit Committee has considered whether the provision of the services
covered under the captions "Audit-Related Fees," "Tax Fees," and "All Other
Fees" is compatible with maintaining Deloitte's independence. The Audit
Committee concluded that Deloitte is independent.
16
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at our 2004
Annual Meeting of Shareholders must be received by our Secretary at our offices,
One Campus Martius, Detroit, Michigan 48226, no later than March 23, 2004 to be
considered for inclusion in our Proxy Statement and proxy card relating to that
meeting. In addition, our bylaws provide that, in order for a shareholder
proposal or nomination to be properly brought before the 2004 Annual Meeting, we
must receive written notice of such proposal or nomination and the information
required by the bylaws on or before May 28, 2004. If the date for the 2004
Annual Meeting of Shareholders is significantly different than the first
anniversary of the 2003 Annual Meeting of Shareholders, the bylaws and
Securities and Exchange Commission rules provide for an adjustment to the notice
periods described above. All proposals, whether intended to be included in the
Company's proxy or not, should be sent by certified mail, return receipt
requested and should satisfy the applicable informational requirements contained
in the Company's bylaws and the rules of the Securities and Exchange Commission.
We expect the persons named as proxies for the 2004 Annual Meeting of
Shareholders to use their discretionary voting authority, to the extent
permitted by law, with respect to any proposal presented at that meeting by a
shareholder who does not provide us with written notice of such proposal
complying with the applicable requirements on or before June 6, 2004.
17
APPENDIX
COMPUWARE CORPORATION
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit Committee is established by and amongst the Board of Directors
for the primary purpose of assisting the board in:
- overseeing the integrity of the Company's financial statements,
- overseeing the Company's compliance with legal and regulatory
requirements,
- overseeing the independent auditor's qualifications and independence,
- overseeing the performance of the company's internal audit function and
independent auditor, and
- overseeing the Company's system of disclosure controls and system of
internal controls regarding finance, accounting, legal compliance, and
ethics that management and the Board have established.
Consistent with this function, the Audit Committee should encourage
continuous improvement of, and should foster adherence to, the Company's
policies, procedures and practices at all levels. The Audit Committee should
also provide an open avenue of communication among the independent auditors,
financial and senior management, the internal auditing function, and the Board
of Directors.
The Audit Committee has the authority to obtain advice and assistance from
outside legal, accounting, or other advisors as deemed appropriate to perform
its duties and responsibilities.
The Company shall provide appropriate funding, as determined by the Audit
Committee, for compensation to the independent auditor and to any advisers that
the audit committee chooses to engage.
The Audit Committee will primarily fulfill its responsibilities by carrying
out the activities enumerated in Section IV of this Charter. The Audit Committee
will report regularly to the Board of Directors regarding the execution of its
duties and responsibilities.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors (as defined
by all applicable rules and regulations), and free from any relationship
(including disallowed compensatory arrangements) that, in the opinion of the
Board, would interfere with the exercise of his or her independent judgment as a
member of the Committee. All members of the Committee shall have a working
familiarity with basic finance and accounting practices at the time of their
appointment, and at least one member of the Committee shall be a "financial
expert" in compliance with the criteria established by the SEC and other
relevant regulations. The existence of such member(s) shall be disclosed in
periodic filings as required by the SEC. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Company or an outside consultant. The Board shall elect the
members of the Committee. Unless a chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet periodically with management, the director of the internal
auditing function and the independent auditors in separate executive sessions to
discuss any matters that the Committee or each of these groups believe should be
discussed privately. The Committee should report to the Board of Directors
following the meetings of the Committee.
A-1
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS/ACCOUNTING INFORMATION REVIEW
1. Review this Charter periodically, at least annually, and recommend to
the Board of Directors any necessary amendments as conditions dictate.
2. Review and discuss with management the Company's annual financial
statements, and quarterly financial statements. Review other relevant
reports rendered by the independent auditors (or summaries thereof).
3. Recommend to the Board whether the financial statements should be
included in the Annual Report on Form 10-K. Review the 10-Q prior to its
filing.
INDEPENDENT AUDITORS
4. Appoint, compensate, and oversee the work performed by the independent
auditor for the purpose of preparing or issuing an audit report or
related work. Review the performance of the independent auditors and
remove the independent auditors if circumstances warrant. The
independent auditors shall report directly to the audit committee and
the audit committee shall oversee the resolution of disagreements
between management and the independent auditors in the event that they
arise.
5. Review with the independent auditor any problems or difficulties and
management's response; review the independent auditor's attestation and
report on management's internal control report; and hold timely
discussions with the independent auditors regarding the following:
- all critical accounting policies and practices;
- all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative disclosures
and treatments, and the treatment preferred by the independent auditor;
- other material written communications between the independent auditor
and management including, but not limited to, the management letter and
schedule of unadjusted differences; and
- an analysis of the auditor's judgment as to the quality of the
Company's accounting principles, setting forth significant reporting
issues and judgments made in connection with the preparation of the
financial statements.
6. At least annually, obtain and review a report by the independent auditor
describing:
- the firm's internal control procedures;
- any material issues raised by the most recent internal control review,
peer review, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting
one or more independent audits carried out by the firm, and any steps
taken to deal with any such issues.
7. Review and pre-approve nonaudit services to be provided by the
independent auditor. Pre-approval may be given such that broadly defined
predictable or recurring services may be pre-approved as permitted
services by the Committee. Such broadly defined predictable or recurring
permitted services would include such services as tax compliance, tax
consulting and tax audit support. This duty may be delegated to one or
more designated members of the audit committee with any such pre-
approval reported to the Audit Committee at its next regularly scheduled
meeting. Approval of nonaudit services shall be disclosed to investors
in periodic reports required by Section 13(a) of the Securities Exchange
Act of 1934.
A-2
FINANCIAL REPORTING PROCESSES AND ACCOUNTING POLICIES
8. In consultation with the independent auditors and the internal auditors,
review the integrity of the organization's financial reporting processes
(both internal and external), and the internal control structure
(including disclosure controls).
9. Review with management the effect of regulatory and accounting
initiatives, as well as off-balance-sheet structures, on the financial
statements of the Company.
10. Review and approve all related-party transactions.
11. Establish and maintain procedures for the receipt, retention, and
treatment of complaints regarding accounting, internal accounting, or
auditing matters.
12. Establish and maintain procedures for the confidential, anonymous
submission by Company employees regarding questionable accounting or
auditing matters.
INTERNAL AUDIT
13. Review activities, organizational structure, and qualifications of the
internal audit function.
14. Periodically review with the internal audit director any significant
difficulties, disagreements with management, or scope restrictions
encountered in the course of the function's work.
ETHICAL AND LEGAL COMPLIANCE
15. Periodically review Compuware's Code of Conduct and ensure that
management has established a system to monitor and enforce this Code.
Ensure that the code is in compliance with all applicable rules and
regulations.
16. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
17. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
A-3
CPUCM-PS-03
COMPUWARE CORPORATION
Dear Shareholder,
The enclosed proxy card relates to the 2003 Annual Meeting of Shareholders
of Compuware Corporation. Also enclosed are Compuware Corporation's Notice
of the Annual Meeting, Proxy Statement and 2003 Annual Report.
Your vote counts, and you are strongly encouraged to exercise your right
to vote your shares.
Please mark the box on the proxy card to indicate how your shares should
be voted. Then sign the card, detach it and return your proxy card in the
enclosed postage-paid envelope. You may also vote your shares by Internet
or telephone by following the instructions on the reverse side of this
card.
Your vote must be received prior to the Annual Meeting of Shareholders on
August 26, 2003.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Compuware Corporation
DETACH HERE
COMPUWARE CORPORATION
The undersigned hereby appoints as Proxy, Thomas M. Costello, Jr. or Laura L.
Fournier, with power of substitution, to vote the shares of Common Stock which
the undersigned is entitled to vote at the Annual Meeting of Shareholders of
Compuware Corporation, to be held on August 26, 2003 and at any adjournment(s)
thereof.
THE PROXY WILL VOTE YOUR SHARES IN ACCORDANCE WITH YOUR DIRECTIONS ON THIS CARD.
IF YOU DO NOT INDICATE YOUR CHOICE ON THIS CARD, THE PROXY WILL VOTE YOUR SHARES
FOR ALL THE NOMINEES FOR DIRECTOR AS LISTED IN PROPOSAL 1 AND IN THEIR
DISCRETION WITH RESPECT TO ANY AND ALL OTHER MATTERS BROUGHT BEFORE THE MEETING
TO THE EXTENT PERMITTED BY APPLICABLE LAW.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally. Trustees, custodians, and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If shareholder is a corporation, the signature
should be that of an authorized officer who should indicate his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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COMPUWARE CORPORATION
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
VOTER CONTROL NUMBER
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YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
VOTE-BY-INTERNET VOTE-BY-TELEPHONE
1. LOG ON TO THE INTERNET AND GO TO [COMPUTER ICON] 1. CALL TOLL-FREE [TELEPHONE ICON]
HTTP://WWW.EPROXYVOTE.COM/CPWR OR 1-877-PRX-VOTE (1-877-779-8683)
2. ENTER YOUR VOTER CONTROL NUMBER LISTED ABOVE 2. ENTER YOUR VOTER CONTROL NUMBER LISTED ABOVE AND
AND FOLLOW THE EASY STEPS OUTLINED ON THE SECURED FOLLOW THE EASY RECORDED INSTRUCTIONS.
WEBSITE.
IF YOU VOTE OVER THE INTERNET OR BY TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
1. The election of 12 directors to serve until the next COMPUWARE CORPORATION
Annual Meeting of Shareholders and until their
successors are elected and qualified.
NOMINEES: (01) Dennis W. Archer, (02) Gurminder S. Bedi, In their discretion, the Proxy is also authorized to the
(03) Elizabeth A. Chappell, (04) Elaine K. Didier, (05) extent permitted by law, to vote on any and all other
William O. Grabe, (06) William R. Halling, (07) Peter matters as may properly come before the meeting,
Karmanos, Jr., (08) Faye Alexander Nelson, (09) Glenda including the authority to vote to adjourn the meeting.
D. Price, (10) W. James Prowse, (11) G. Scott Romney, The undersigned hereby revokes any proxy or proxies
(12) Lowell P. Weicker, Jr. heretofore given to vote upon or act with respect to said
stock and hereby ratifies and confirms all that the Proxy
FOR WITHHELD named herein and their substitutes, or any of them, may
ALL / / / / FROM ALL lawfully do by virtue hereof. The undersigned
NOMINEES NOMINEES acknowledges receipt of the Notice of the Annual Meeting
and the Proxy Statement, both dated July 21, 2003, and
/ / the 2003 Annual Report.
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For all nominee(s) except as written above MARK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING. / /
MARK BOX AT RIGHT IF ADDRESS CHANGE OR COMMENTS / /
HAVE BEEN NOTED ON THE REVERSE SIDE OF THIS CARD.
Please be sure to sign and date this proxy card.
Signature: Date: Signature: Date:
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