UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [x] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MICROS Systems, Inc.
--------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act 0-11 (set forth the amount on which the filing fee is
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the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ______________________________.
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4) Date Filed: ___________________________
MICROS SYSTEMS, INC.
7031 COLUMBIA GATEWAY DRIVE
COLUMBIA, MARYLAND 21046-2289
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 15, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MICROS
Systems, Inc. ("MICROS" or the "Company") will be held at 11:00 a.m. Eastern
Standard Time on Friday, November 15, 2002, at the MICROS Corporate Headquarters
Building, 7031 Columbia Gateway Drive, Columbia, Maryland, 21046, for the
following purposes:
(1) To elect six directors to serve for a one-year term (Proposal
1); and
(2) To approve the appointment of PricewaterhouseCoopers LLP as
independent public accountants for the 2003 fiscal year
(Proposal 2); and
(3) To approve an amendment to the Company's 1991 Stock Option Plan,
which currently is scheduled to expire on September 23, 2003, so
as to provide for an extension of the existing Option Plan until
December 31, 2006 (Proposal 3); and
(4) To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The close of business on October 4, 2002, has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only holders of Common Stock of record at the close of
business on that date will be entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof. The transfer books of the Company will not
be closed.
By Order of the Board of Directors,
/s/Wendy M. Powell
Wendy M. Powell
Corporate Secretary
Columbia, Maryland
October 17, 2002
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
MICROS SYSTEMS, INC.
7031 COLUMBIA GATEWAY DRIVE
COLUMBIA, MARYLAND 21046-2289
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 15, 2002
VOTING RIGHTS AND PROXY SOLICITATION
This Proxy Statement is furnished to stockholders of MICROS Systems,
Inc. ("MICROS" or the "Company") in connection with the solicitation by the
Board of Directors of MICROS of proxies to be used at the Annual Meeting of
Stockholders to be held on Friday, November 15, 2002, 11:00 a.m. Eastern
Standard Time, at the MICROS Corporate Headquarters Building, 7031 Columbia
Gateway Drive, Columbia, Maryland, 21046, and at any adjournment thereof.
It is anticipated that this Proxy Statement and form of proxy will
initially be mailed to stockholders on or about October 17, 2002.
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR THE ELECTION OF MANAGEMENT'S
NOMINEES FOR DIRECTORS AND FOR ALL OTHER PROPOSALS. If any other matters are
properly brought before the Annual Meeting, the persons named in the
accompanying proxy will vote the shares represented by such proxies on such
matters in their best judgment.
The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. Stockholders may, however, revoke
a proxy at any time prior to its exercise by filing with the Secretary of the
Company a written notice of revocation, by delivering to the Company a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its Directors, officers and regular employees, may also solicit
proxies personally or by telephone or facsimile. The Company will request
persons, firms and corporations holding shares in their names or in the names of
their nominees, which are beneficially owned by others, to send proxy materials
to and obtain proxies from such beneficial owners and will reimburse such
holders for their reasonable out-of-pocket expenses in doing so. The Company may
retain a proxy solicitor if it were to determine subsequently that such action
is appropriate.
The securities that can be voted at the Annual Meeting consist of shares
of Common Stock of the Company with each share entitling its owner to one vote.
The close of business on October 4, 2002, has been fixed as the record date for
determination of stockholders entitled to vote at the meeting. The number of
shares outstanding on October 4, 2002, was 17,444,163. The presence in person or
by proxy of stockholders holding of record a majority of all votes entitled to
be cast at the Annual Meeting is necessary to constitute a quorum.
A majority of all votes cast at the meeting, a quorum being present, is
required for the adoption of each of the Proposals. Under applicable Maryland
law, proxies marked as abstentions and broker non-votes (where a nominee holding
shares for a beneficial owner has not received voting instructions from the
beneficial owner with respect to a particular matter and such nominee does not
possess or choose to
exercise discretionary authority with respect thereto) will be considered as
present at the meeting for purposes of determining the existence of a quorum.
With respect to Proposals 1, 2 and 3, broker non-votes and abstentions shall
have no effect. Each stockholder of record on the record voting date is entitled
to one vote per share. There are no cumulative voting rights.
A COPY OF THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR ITS FISCAL
YEAR ENDED JUNE 30, 2002, ACCOMPANIES THIS PROXY STATEMENT. THE COMPANY HAS
FILED AN ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED JUNE 30, 2002,
WITH THE SECURITIES AND EXCHANGE COMMISSION. STOCKHOLDERS MAY OBTAIN, FREE OF
CHARGE, A COPY OF SUCH ANNUAL REPORT ON FORM 10-K BY WRITING TO THE CORPORATE
SECRETARY AT THE COMPANY'S ADDRESS SET FORTH ABOVE.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is the number of shares of the Company's Common Stock
and the percentage of total outstanding shares beneficially owned by each
Director of the Company, the Chief Executive Officer, the four most highly
compensated executive officers (other than the Chief Executive Officer), all
Directors and executive officers as a group and, to the knowledge of the
Company, all persons beneficially owning more than 5% of the Company's Common
Stock as of August 31, 2002. Also set forth below is the address of each such
beneficial owner of more than 5% of the Company's Common Stock.
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY
OWNED AS OF PERCENT OF
INDIVIDUAL OR GROUP (1) AUGUST 31, 2002 (2) CLASS
----------------------- ------------------- --------------
A. L. Giannopoulos 471,166 (3) 2.5%
Chairman of the Board, President and Chief Executive Officer
Louis M. Brown, Jr. 195,000 (4) 1.0%
Vice Chairman of the Board
F. Suzanne Jenniches
Director 3,422 Less than 1%
John G. Puente 21,000 (5) Less than 1%
Director
Dwight S. Taylor 1,000 Less than 1%
Director
William S. Watson
Director 1,100 Less than 1%
T. Paul Armstrong
Executive Vice President, New Technologies 217,000 (6) 1.1%
J. Alan Hayman
Executive Vice President, Restaurant Sales and Strategies 14,754 (7) Less than 1%
Gary C. Kaufman
Executive Vice President, Finance and Administration and Chief
Financial Officer 266,932 (8) 1.4%
Thomas L. Patz
Executive Vice President, Strategic Initiatives, and General
Counsel 182,333 (9) 1.0%
Directors and Executive Officers 1,767,781 (10) 9.1%
as a Group (14 persons, including the above-named persons)
Liberty Wanger Asset Management
227 West Monroe, Suite 3000
Chicago, IL 60606 2,229,000 12.8%
SAFECO Asset Management Company
SAFECO Plaza
Seattle, WA 98185 1,727,203 9.9%
Lord, Abbett & Co.
90 Hudson Street
Jersey City, NJ 07302 1,544,720 8.9%
Neuberger Berman, Inc.
605 Third Avenue
New York, NY 10158 888,749 5.1%
(1) As of August 31, 2002, CEDE & Co., nominee for Stock Clearing
Corporation, Box 20, Bowling Green Station, New York, New York, a
central certificate service, held of record 17,422,430 shares,
representing 99.8% of the outstanding shares of Common Stock. Those
shares are believed to be owned beneficially by a large number of
beneficial owners and, except as indicated in this table, the Company is
not aware of any other individual or group owning beneficially more than
5% of the outstanding Common Stock.
(2) Information with respect to beneficial ownership is based on information
furnished to the Company by each shareholder. Sole voting and sole
investing power is exercised by each individual.
(3) Includes options to purchase 421,000 shares exercisable within 60 days.
(4) Includes options to purchase 146,000 shares exercisable within 60 days.
(5) Does not include 2,000 shares of Common Stock held by his wife, with
respect to which Mr. Puente disclaims any beneficial interest.
(6) Includes options to purchase 196,000 shares exercisable within 60 days.
(7) Includes options to purchase 11,666 shares exercisable within 60 days.
(8) Includes options to purchase 265,332 shares exercisable within 60 days.
(9) Includes options to purchase 181,333 shares exercisable within 60 days.
(10) Includes stock options for the purchase of 1,599,098 shares of Common
Stock exercisable within 60 days, and assumes 19,052,262 shares
outstanding upon the exercise of such options.
ELECTION OF DIRECTORS
(PROPOSAL 1)
Six directors are to be elected at the Annual Meeting, each to hold
office for a one-year term and until his or her successor is elected and
qualified. Unless authority to vote is expressly withheld, proxies received
pursuant to this solicitation will be voted for the election of the six nominees
named below.
It is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election of the Director
nominees listed below. Management believes that all such nominees will stand for
election and will serve if elected as Directors. If any of the nominees should
for any reason not be available for election, proxies will be voted for the
election of the remaining nominees and such substitute nominees as may be
designated by the Board of Directors.
Pursuant to the Company's By-Laws, the number of Directors shall be no
less than three and no more than nine. There are currently six Directors and the
Board has nominated six individuals for election. Proxies cannot be voted for a
greater number of persons than the six nominees named.
During the fiscal year ended June 30, 2002, the Board of Directors held
five regular meetings. Each incumbent Director attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors, and
meetings of committees of the Board of Directors of which he or she was a
member.
The Board of Directors had an Audit Committee for fiscal year 2002. The
Audit Committee was chaired by Mr. Watson, and included Ms. Jenniches and Mr.
Puente. The Audit Committee reviews the financial statements of the Company and
the scope of the independent annual audit. It also reviews the Company's
internal accounting procedures and the independent accountants' recommendations
to management concerning the effectiveness of the Company's internal financial
and accounting controls. In addition, the Audit Committee reviews and recommends
to the Board of Directors the firm to be engaged as the Company's independent
accountants. The Audit Committee also examines and considers other matters
relating to the financial affairs of the Company as it determines appropriate.
The Audit Committee met four times during the fiscal year ended June 30, 2002.
Representatives of PricewaterhouseCoopers LLP attended all four meetings of the
Audit Committee in fiscal year 2002.
Additionally, the Board of Directors had a Compensation Committee for
fiscal 2002, comprised of Mr. Taylor, who is the Compensation Committee
chairman, Ms. Jenniches and Mr. Puente. The Compensation Committee met three
times in connection with the fiscal year ended June 30, 2002. The Board of
Directors has assigned the Compensation Committee the function of analyzing and
approving, among other things, executive compensation, bonuses, and the issuance
of stock options under the 1991 Option Plan.
Further, the Board of Directors has established a Nominating Committee,
comprised of Messrs. Watson and Taylor. The Nominating Committee has been
assigned with the responsibility of identifying and interviewing individuals who
may be qualified to serve as new Board members. The Nominating Committee shall
act unilaterally, and accordingly, will not currently consider proposed
recommendations from stockholders. The Nominating Committee did not convene any
meetings in the fiscal year ended June 30, 2002.
At the Annual Meeting on November 19, 2001, the holders of 17,500,443
outstanding shares of Common Stock were eligible to cast votes in the election
of Directors. Of such shares, 95% were present in person or by proxy and voted
or withheld authority to vote in the election of Directors.
INFORMATION AS TO NOMINEES
The following table sets forth the names of management's nominees for
election as Directors to serve until the next Annual Meeting and until their
successors are elected and qualified. Also set forth is certain other
information, some of which has been obtained from the Company's records and some
of which has been supplied by the nominees, with respect to each nominee's
principal occupation or employment, his/her background, his/her age as of August
31, 2002, the periods during which he/she has served as a Director of the
Company and positions held with the Company, if any.
- -------------------------------------------------------------------------------------------------
NOMINEES FOR DIRECTOR AGE DIRECTOR SINCE POSITION HELD IN MICROS
- ------------------------------ ------- ------------------------ ---------------------------------
- -------------------------------------------------------------------------------------------------
A. L. Giannopoulos 62 1992 Chairman, President and Chief
Executive Officer
- -------------------------------------------------------------------------------------------------
Louis M. Brown, Jr. 59 1977 Vice Chairman of the Board
- -------------------------------------------------------------------------------------------------
F. Suzanne Jenniches 54 1996 Director
- -------------------------------------------------------------------------------------------------
John G. Puente 72 1996 Director
- -------------------------------------------------------------------------------------------------
Dwight S. Taylor 57 1997 Director
- -------------------------------------------------------------------------------------------------
William S. Watson 58 2000 Director
- -------------------------------------------------------------------------------------------------
A. L. Giannopoulos, 62, has been a Director since March 1992 and was elected
President and Chief Executive Officer in May 1993. In April 2001, Mr.
Giannopoulos was appointed Chairman of the
Company's Board of Directors. Effective as of June 1, 1995, Mr. Giannopoulos
resigned as General Manager of the Westinghouse Information and Security Systems
Divisions, having been with Westinghouse for 30 years, and was hired by the
Company pursuant to an Employment Agreement to terminate December 31, 1999,
subsequently amended to terminate on June 30, 2005. In prior assignments at
Westinghouse, Mr. Giannopoulos was General Manager of the Automation Division
and National Industrial Systems Sales Force, Industries Group. Mr. Giannopoulos
is a graduate of Lamar University with a Bachelor of Science degree in
Electrical Engineering.
Louis M. Brown, Jr., 59, has been a Director of the Company since 1977. Mr.
Brown held the position of President and Chief Executive Officer from January
1986 until his appointment as Chairman of the Board in January 1987. In April
2001, Mr. Brown tendered his resignation as Chairman, and was appointed Vice
Chairman. He also serves as Chief Executive Officer of Precision Auto Care,
Inc., a franchise company for the auto care industry. Additionally, Mr. Brown
serves as President and a director of IDEAS, Inc., a supplier of high
technology, custom-engineered products and services. Formerly, Mr. Brown served
as Chairman of Autometric, Inc. and of Planning Systems, Inc. He is a graduate
of the Johns Hopkins University (B.E.S.-E.E.).
F. Suzanne Jenniches, 54, has been a Director of the Company since October
1996. She is Vice President of Communications Systems for the Electronic Systems
Sector of Northrop Grumman, which designs and develops advanced communications
systems for both government and commercial applications. Ms. Jenniches is past
President of the national Society of Women Engineers, has served on the Board of
Governors for the American Association of Engineering Societies, and is
currently a member of the U.S. Army Science Board. Ms. Jenniches is a graduate
of Clarion College and holds a Masters degree in Environmental Engineering from
the Johns Hopkins University.
John G. Puente, 72, has been a Director since May 1996. He is the Chairman
of E-Cargo (Internet Cargo Services, Inc.), a company that coordinates product
shipments over the Internet. Until August 1999, Mr. Puente served as Chairman of
Telogy Networks, Inc., a developer of communications software products, at which
time it was acquired by Texas Instruments. Mr. Puente is on the Board of
Directors of Primus Telecommunications, a long distance telecommunications
service provider. Previously, he was Chairman and Chief Executive Officer of
Orion Network Systems, a company that provides satellite services and
facilities. Prior to joining Orion, Mr. Puente was Vice Chairman of M/A-Com, a
supplier of microwave components and systems to the telecommunications industry.
He was a founder and Chairman of Digital Communications Corporation (now Hughes
Network Systems) and SouthernNet, a fiber optic long distance company that
merged to form Telecom USA and was later acquired by MCI. Mr. Puente is a
graduate of Polytechnic Institute of New York and now serves on the Board of
Trustees of that institution, and he holds a Masters degree from Stevens
Institute of Technology. He is Chairman of the Board of Trustees of Capitol
College.
Dwight S. Taylor, 57, has been a Director of the Company since 1997. He is
President of Corporate Development Services, LLC ("CDS"), a commercial real
estate development firm with offices in Columbia, Maryland, and a subsidiary of
Corporate Offices Properties Trust (NYSE: OFC). From 1984 until 1998, Mr. Taylor
had been employed by Constellation Real Estate, Inc. in various capacities. Mr.
Taylor is also the immediate past President of the Maryland Chapter of the
National Association of Industrial and Office Properties ("NAIOP"), and a member
of the NAIOP National Board. Mr. Taylor currently serves on the Trustee Boards
of the Baltimore Polytechnic Institute Foundation, Capitol College, and Lincoln
University. Mr. Taylor is a 1968 graduate of Lincoln University with a Bachelor
of Arts degree in Economics.
William S. Watson, 58, currently serves as the Managing Director of The
Prism Partnership LLC, a consulting practice that provides strategic planning
and implementation consulting with a specialty in the
hospitality and travel industry. Mr. Watson also serves as Chairman and
Executive Vice President of TLX, Inc., a provider of logistics solutions to the
airline industry, based in Scottsdale, Arizona. During his career, Mr. Watson
also served as Vice President of Strategic Marketing for ITT-Sheraton Hotels,
and Executive Vice President, Chief Operating Officer of Best Western
International. Mr. Watson is a 1964 graduate of Croydon Polytechnic, with a
degree in Mechanical Engineering.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE SIX
NOMINEES AS DIRECTORS.
EXECUTIVE COMPENSATION
The following table sets forth the total annual compensation paid or accrued by
the Company for services in all capacities for the Chief Executive Officer and
the four most highly compensated executive officers of the Company whose
aggregate compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-----------------------------------------------------------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION (2) OPTIONS (#) COMPENSATION (3)
- -----------------------------------------------------------------------------------------------------------------------------
A. L. Giannopoulos 2002 $577,500 $180,000 $0 0 $5,500
Chairman, President 2001 500,500 0 0 75,000 5,250
and Chief Executive Officer 2000 448,927 0 1,893,500 70,000 6,500
Gary C. Kaufman 2002 330,000 78,000 0 50,000 4,865
Executive Vice 2001 300,000 0 188,670 50,000 5,467
President, Finance and
Administration, and Chief
Financial Officer 2000 221,462 0 588,531 58,000 3,990
Thomas L. Patz 2002 275,000 73,000 0 40,000 4,875
Executive Vice 2001 250,000 0 64,960 40,000 6,000
President, Strategic
Initiatives, and General
Counsel 2000 191,308 0 465,750 48,000 4,610
J. Alan Hayman (4) 2002 194,231 76,000 0 20,000 5,325
Executive Vice 2001 164,616 0 0 25,000 4,207
President, Restaurant 2000 52,500 0 0 0 0
Sales and Strategies
T. Paul Armstrong 2002 210,000 57,200 148,815 25,000 4,538
Executive Vice 2001 190,000 0 0 30,000 3,396
President, New 2000 191,462 0 1,178,938 48,000 2,558
Technologies
(1) Bonuses were paid to all recipients pursuant to decisions made by the
Compensation Committee of the Board of Directors, based on financial
performance (revenue and income before taxes) of the Company. See
Compensation Committee Report on Executive Compensation for more detail.
(2) Represents the aggregate difference between the actual exercise price of
options granted and the fair market value of the Common Stock as of the
date of option exercise.
(3) Represents the Company's contributions to the 401(k) savings plan for
the named executives.
(4) J. Alan Hayman became a MICROS employee effective January 31, 2000.
EMPLOYMENT AGREEMENTS
The Company has entered into an Employment Agreement with Mr.
Giannopoulos that, as amended, expires on June 30, 2005. The Agreement, as
amended, provides that Mr. Giannopoulos will be paid an annual salary of
$690,000 for fiscal year 2003 and is eligible for a bonus targeted at $400,000
for fiscal year 2003. The actual amount of the bonus is tied to certain
performance criteria but cannot exceed 200% of the targeted amount.
The Company has entered into an Employment Agreement with Mr. Kaufman
that expires on September 30, 2005. The Employment Agreement will be
automatically renewed for a one-year period, unless either party elects to
terminate such. The Agreement provides that Mr. Kaufman will be paid a base
annual salary, and is eligible for a bonus. The actual amount of the bonus is
tied to certain performance criteria but cannot exceed 200% of the targeted
amount. The annual salary and target bonus may not be reduced.
The Company has entered into an Employment Agreement with Mr. Patz that
expires on September 30, 2005. The Employment Agreement will be automatically
renewed for a one-year period, unless either party elects to terminate such. The
Agreement provides that Mr. Patz will be paid a base annual salary, and is
eligible for a bonus. The actual amount of the bonus is tied to certain
performance criteria but cannot exceed 200% of the targeted amount. The annual
salary and target bonus may not be reduced.
STOCK OPTIONS
Certain full-time, salaried officers and employees of the Company and
its subsidiaries, and non-employee Company Directors are eligible to participate
in the 1991 Option Plan which provides for the issuance of incentive stock
options, non-qualified stock options and stock appreciation rights.
An option may not be exercised within one year after the date of grant
and becomes exercisable in installments during its term as determined by the
Board of Directors or Compensation Committee, in accordance with the terms of
the Option Plan. If an option holder dies or becomes disabled, his or her option
becomes fully exercisable and may be exercised for one year following the
termination of employment. If the option holder retires after attaining age 62,
his or her option becomes fully exercisable and may be exercised for three
months following retirement, unless otherwise extended by the Compensation
Committee. If termination occurs for any other reason, an option may be
exercised, to the extent exercisable at termination, for 30 days after
termination of employment. No option may be exercised after the expiration of
its term.
The exercise price of the shares of Common Stock covered by an option
may not be less than the fair market value of the Common Stock on the date of
grant, which is defined under the Option Plan to be not less than the average of
the highest bid and lowest asked prices of the Common Stock on NASDAQ on the
date of grant.
The following table sets forth the details of stock options granted to
the individuals listed in the Summary Compensation Table during fiscal year
2002. The second table in this section shows the value of exercised and
unexercised options for the individuals listed in the Summary Compensation
Table.
OPTION GRANT TABLE
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
-----------------------------------------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED (1) IN 2002 PER SHARE DATE 5% ($) 10% ($)
---- ----------- ------- --------- ---------- ------ -------
A. L. Giannopoulos 0 0.0% $0 - $0 $0
Gary C. Kaufman 50,000 9.5 25.155 11/19/11 790,992 2,004,530
Thomas L. Patz 40,000 7.6 25.155 11/19/11 632,794 1,603,624
J. Alan Hayman 20,000 3.8 25.155 11/19/11 316,397 801,812
T. Paul Armstrong 25,000 4.8 25.155 11/19/11 395,496 1,002,264
(1) Options to purchase 524,750 shares of Common Stock were granted to Company
employees and one non-employee director during fiscal year 2002.
OPTION EXERCISES AND YEAR-END VALUE TABLE
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED OPTIONS AT 6/30/02 6/30/02 (2)
NAME (#) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
A. L.
Giannopoulos 0 $0 421,000 0 $2,624,145 $0
Gary C. Kaufman 0 0 265,332 102,668 1,714,237 413,713
Thomas L. Patz 0 0 181,333 82,667 1,121,776 330,969
J. Alan Hayman 0 0 8,333 36,667 79,069 222,950
T. Paul Armstrong 18,000 148,815 196,000 61,000 1,241,905 232,025
(1) Represents market value of the Company's Common Stock at exercise date less
the exercise price.
(2) Represents market value of the Company's Common Stock at June 30, 2002, less
the exercise price.
DIRECTOR COMPENSATION
Directors received a fee of $2,500 per quarter during fiscal year 2002
and an additional $1,000 for each Board of Directors meeting attended. The
compensation for Directors for fiscal year 2003 shall remain at the 2002 levels.
The compensation for Audit Committee members, Compensation Committee members,
and Nominating Committee members for fiscal year 2002 was $1,000 per meeting,
and shall remain at this level for fiscal year 2003. Members of the Board of
Directors are reimbursed for travel and other reasonable out-of-pocket expenses.
Directors who are full-time, salaried employees of the Company or any of its
subsidiaries or affiliates do not receive any fees for their services as members
of the Board of Directors or any of its committees.
In addition to the above-mentioned fees, for fiscal years 2002 and 2001,
Mr. Brown was compensated $308,000 and $209,231, respectively, for consulting
services provided to the Company. For fiscal 2002, Mr. Brown earned a base
consulting fee of $230,000 and a bonus of $78,000. The bonus was accrued in
fiscal year 2002 and paid in September 2002. See "Certain Relationships and
Related Transactions" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2002, none of the members of the Compensation
Committee was an employee or officer of the Company, or has any relationship
with the Company requiring additional special disclosure.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In fiscal year 2002, the Company's compensation for executives,
including grants under the Stock Option Plan, was administered by the
Compensation Committee. In fiscal year 2002, there were two meetings of the
Compensation Committee, and a third meeting in September 2002 in connection with
the computation and issuance of bonuses for fiscal year 2002. Set forth below is
a report submitted by Mr. Taylor, Ms. Jenniches, and Mr. Puente, as members of
the Company's Compensation Committee, addressing the Company's compensation
policies for the last completed fiscal year, as they affected Mr. Giannopoulos,
in his capacity as Chairman, President and Chief Executive Officer of the
Company, and the four executive officers other than Mr. Giannopoulos, who, for
the last completed fiscal year, were the Company's most highly compensated
executives (collectively with Mr. Giannopoulos, the "Named Executive Officers").
COMPONENTS OF EXECUTIVE COMPENSATION
The basic premise of the Company's executive compensation policy is to
ensure a link between executive compensation and the creation of stockholder
value, while motivating and retaining key employees. The primary components of
the compensation packages offered to the Company's executive officers by the
Company for the last completed fiscal year consisted of three basic elements -
base salary, annual incentive bonus, and long-term incentives in the form of
stock options.
BASE SALARY
Base salaries of the executive officers, including the Named Executive
Officers, reflect the evaluation of the Compensation Committee of the
performance of the Company's executive officers in the point-of-sale and
property management and central reservation systems industry (specifically,
information systems for the hospitality industry) on an international, rather
than a national, regional or local level. Although there is no fixed
relationship between corporate performance and base salary, the Compensation
Committee considers several factors in determining base salaries of the
Company's executive officers, including corporate performance, the increasing
importance of their role in the Company's operations on a consolidated basis,
achievement of personal objectives, and the general effect of increases in the
cost of living. The Company periodically consults with compensation consulting
and executive search firms, which make recommendations as to how the Company may
adjust salary in certain situations to pay a level of compensation at least
equal to the average of other companies of similar size and in similar
industries to that of MICROS. In fiscal year 2002, the Compensation Committee
continued to evaluate compensation levels offered by other companies similarly
positioned to MICROS in terms of both size (revenue and income) and industry
(including certain peer companies that are included in the S&P Application
Software composite index).
The Compensation Committee continues to attempt to offer compensation to
the Company's Named Executive Officers in amounts equal to that of other
companies in competitive industries and with comparable levels of revenue.
Currently, the Compensation Committee considers the base salary and incentive
bonus components of total compensation to be generally in the middle range of
compensation as compared to compensation levels of other senior executives of
companies in similar industries. Moreover, the Company considers that the
compensation levels are comparable to those companies in the computer software
and services peer group, including certain peer companies that are included in
the S&P Application Software composite index.
INCENTIVE BONUSES
Prior to the commencement of each fiscal year, the Compensation
Committee establishes "target bonuses" for each of the Named Executive Officers
(other than for Mr. Giannopoulos, whose target bonus is stipulated in his
employment agreement), based on the Named Executive Officer's position and
responsibilities. Target bonuses are not guaranteed. Evaluation of bonuses for
the 2002 fiscal year was performed by the Compensation Committee based on the
assessment of the Compensation Committee of various factors relating to both
corporate-wide and business unit financial performance, as further discussed
below. For fiscal years 2000 and 2001, no incentive bonuses were paid to the
Named Executive Officers. For fiscal year 2002, partial incentive bonuses were
paid to the Named Executive Officers and other employees. With respect to Named
Executive Officers who do not directly oversee a specific business unit, the
bonus was calculated by the addition of the following two amounts: (i) the sum
derived by multiplying 50% of the target bonus by a ratio, the numerator of
which is the Company's actual fiscal 2002 revenue, and the denominator of which
is the budgeted 2002 revenue, provided that no bonus shall be paid under this
prong if the ratio is less than 100%; and (ii) the sum derived by multiplying
50% of the target bonus by a ratio, the numerator of which is the Company's
actual fiscal 2002 income before taxes, and the denominator of which is the
budgeted 2002 income before taxes, provided that no bonus shall be paid under
this prong if the ratio is less than 100%. With respect to Named Executive
Officers who directly oversee a specific business unit, the bonus was calculated
by the addition of the following four amounts: (i) the sum derived by
multiplying 25% of the target bonus by a ratio, the numerator of which is the
Company's actual fiscal 2002 revenue, and the denominator of which is the
budgeted 2002 revenue, provided that no bonus shall be paid under this prong if
the ratio is less than 100%; (ii) the sum derived by multiplying 25% of the
target bonus by a ratio, the numerator of which is the Company's actual fiscal
2002 income before taxes, and the denominator of which is the budgeted 2002
income before taxes, provided that no bonus shall be paid under this prong if
the ratio is less than 100%; (iii) the sum derived by multiplying 25% of the
target bonus by a ratio, the numerator of which is the applicable business
unit's actual fiscal 2002 revenue, and the denominator of which is the budgeted
2002 revenue, provided that no bonus shall be paid under this prong if the ratio
is less than 100%; and (iv) the sum derived by multiplying 25% of the target
bonus by a ratio, the numerator of which is the business unit's actual fiscal
2002 income before taxes, and the denominator of which is the budgeted 2002
income before taxes, provided that no bonus shall be paid under this prong if
the ratio is less than 100%.
STOCK OPTIONS
Stock options for the purchase of 135,000 shares were granted to Named
Executive Officers during fiscal year 2002. Mr. Giannopoulos declined the award
of any stock options in fiscal year 2002. The Compensation Committee allocated
options on the basis of various factors, including the employee's current
position, performance based on both objective and subjective factors, seniority,
and Company performance in general. The Compensation Committee attempts to
achieve an equitable allocation of the grant of options, to both the Named
Executive Officers, other senior officers, and non-executive employees of the
Company and its subsidiaries. Stock options constitute the element of executive
compensation most linked to stockholder value inasmuch as their value increases
directly with any increase in the price of the
Company's Common Stock. The real value recognized by the award recipient is
directly related to future corporate performance. The stock option grants tie
executive compensation to stock performance, since the stock options will have
value only if and to the extent the market price of the Company's stock
increases from the exercise price of the stock options. Recommendations with
respect to recipients and the number of options to be granted thereto are made
by the Chairman, President and CEO based on performance. The Compensation
Committee evaluates the recommendations, analyzing both the quantity of the
proposed grants and the identities of the proposed recipients. The Compensation
Committee will then, in its sole discretion, approve, reject or modify the
proposed allocation of stock options.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Compensation Committee executive compensation policies are designed
to provide competitive levels of compensation by integrating into total
compensation the Company's annual and long-term performance goals. The
Compensation Committee acknowledges and emphasizes the importance of stock
ownership by management and, accordingly, stock option compensation. Stock-based
incentives create a nexus between stockholder and management interests by
providing motivation for executives over the long term. The Company's 1991
Option Plan is designed to attract, motivate and retain the valuable executive
talent necessary to ensure the continued success of the Company. As a result of
the use of long-term compensation as part of executive officers' total
compensation, actual compensation levels in any particular year may be above or
below those of the Company's competitors, depending upon the Company's overall
performance.
RELATIONSHIP OF CORPORATE PERFORMANCE TO EXECUTIVE COMPENSATION
The determination of bonuses for the last completed fiscal year was
based on corporate performance as measured by pre-tax income and net revenue.
Accordingly, the Compensation Committee performs a mathematical analysis based
on actual performance compared to budgeted performance. Bonuses that may be
earned by Named Executive Officers equal the targeted bonus, established in the
beginning of the fiscal year, multiplied by factors calculated comparing actual
and budgeted performance. Additionally, individual non-financial performance
items may be considered as well.
In reviewing corporate performance, pre-tax income and net revenue serve
as the focal points in the analysis by the Compensation Committee. The pre-tax
income and net revenue are evaluated both on a consolidated basis and a business
unit basis. Additionally, the Compensation Committee considers the competitive
climate in which the Company must operate. It is the Compensation Committee's
policy that the total compensation package, the sum total of base salaries and
incentive bonuses, for executive officers, including the Named Executive
Officers, eligible for incentive compensation should be equal to competitive
average total compensation as presented in appropriate wage surveys. Target
bonus amounts vary according to salary levels and positions comparable to those
established in the previous fiscal year.
The financial position of the Company is reviewed annually to determine
which aspects of the executive officers' performance need to be emphasized, and
accordingly, which factors will be taken into consideration in the determination
of the incentive bonuses. The measures of corporate performance that were
considered by the Compensation Committee for the last completed fiscal year
included pre-tax income and net revenue. In addition to these performance
factors, the Compensation Committee considered the "individual" factor. This
factor is based on the recommendation of the Chief Executive Officer and may be
quantitative or qualitative, depending on emphasis desired, but not necessarily
derived from normal financial reports. The non-financial objectives also
generally include achieving certain pre-designated non-financial events or
objectives, such as consummating a transaction with a key customer, or
completing a certain software development milestone.
As in most other executive compensation packages, the subjective factor
of human judgment plays a role in determining the Company's incentive bonuses.
Individual bonuses are reviewed and judgment is applied by the Compensation
Committee based upon the executive's individual contribution to the performance
of the Company as a whole and his or her primary area of responsibility in
particular. No bonuses are paid where an executive fails to perform duties in
accordance with the Company's Code of Business Practices.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Company considers that the compensation level of the Chief Executive
Officer should be comparable to those companies in the computer software and
services peer group (including certain peer companies that are included in the
S&P Application Software composite index). Effective June 1, 1995, Mr.
Giannopoulos entered into an Employment Agreement with the Company, which, as
amended, is in effect until June 30, 2005. Under the Agreement for fiscal year
2002, as amended, Mr. Giannopoulos was entitled to receive a base salary of
$577,500 and had a target bonus of $350,000 (based upon achieving 100% of the
corporate objectives established by the Compensation Committee). In determining
Mr. Giannopoulos' fiscal year 2002 bonus, the Compensation Committee utilized
the following formulae: (i) the sum derived by multiplying 50% the $350,000
target bonus (or $175,000) by a ratio, the numerator of which is the Company's
actual fiscal 2002 revenue, and the denominator of which is the budgeted 2002
revenue, provided that no bonus shall be paid under this prong if the ratio is
less than 100%; and (ii) the sum derived by multiplying 50% the $350,000 target
bonus (or $175,000) by a ratio, the numerator of which is the Company's actual
fiscal 2002 income before taxes, and the denominator of which is the budgeted
2002 income before taxes, provided that no bonus shall be paid under this prong
if the ratio is less than 100%. Applying this formula, Mr. Giannopoulos earned a
bonus of $180,000, which represents 103% of the first prong of the formula, and
0% of the second prong, since the Company did not achieve 100% of the income
before tax internal budget.
The Committee has considered the impact of the provisions of the
Internal Revenue Code that, in certain circumstances, disallow compensation
deductions in excess of $1 million for any year with respect to the Company's
CEO and four other most highly compensated officers. The Company expects that
these provisions will not limit its tax deductions for executive compensation in
the near term.
DWIGHT S. TAYLOR (Chairman)
F. SUZANNE JENNICHES and JOHN G. PUENTE
Members of the Compensation Committee
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of the Company is composed
of three independent directors, as required by NASDAQ listing standards. The
members of the Audit Committee are Mr. Watson (Chairman), Ms. Jenniches, and Mr.
Puente. The Audit Committee operates under a written charter adopted by the
Board of Directors, which is attached as Exhibit B to this proxy statement, and
is responsible for overseeing the Company's financial reporting process on
behalf of the Board of Directors. Each year, the Audit Committee recommends to
the Board of Directors the selection of the Company's independent auditors.
On July 30, 2002, the Sarbanes-Oxley Act was signed into law. On August
27, 2002, the Audit Committee met with representatives of management, internal
legal counsel and PricewaterhouseCoopers LLP. During that meeting, the Audit
Committee reviewed the provisions of the Sarbanes-Oxley Act, and
the policies, procedures and processes in place, as well as those that will be
implemented to comply with the requirements of the Sarbanes-Oxley Act as they
become effective.
Management is responsible for the Company's financial statements and the
financial reporting process, including internal controls. 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 for issuing a report thereon. The Audit Committee's responsibility
is to monitor and oversee these processes.
Accordingly, the Audit Committee has met and held discussions with both
Company management and PricewaterhouseCoopers LLP, the Company's independent
auditors. Each Audit Committee meeting commences with the participation of the
Audit Committee members, staff from PricewaterhouseCoopers LLP, and Company
management, including members from the internal audit group; each meeting
concludes with a private session between the Audit Committee members and the
staff from PricewaterhouseCoopers LLP, without employees of the Company.
Management represented to the Audit Committee that the Company's consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America, and the Audit Committee has
reviewed and discussed the consolidated financial statements with Management and
the independent auditors. The Audit Committee discussed Statement on Auditing
Standards No. 61, "Communication with Audit Committees" with
PricewaterhouseCoopers LLP. They discussed PricewaterhouseCoopers LLP's judgment
of the quality (not just the acceptability) of the Company's accounting
principles as applied to financial reporting. Additionally,
PricewaterhouseCoopers LLP stated that it was satisfied that the Company's
accounting staff was forthright and straightforward in answering all questions
posed to them.
PricewaterhouseCoopers LLP also provided the Audit Committee with the
written disclosures and letter required by Independence Standards Board Standard
No. 1, "Independence Discussions with Audit Committees", and the Audit Committee
discussed with PricewaterhouseCoopers LLP that Firm's independence. The Audit
Committee further considered whether the provision by PricewaterhouseCoopers LLP
of domestic and international tax services is compatible with maintaining the
auditors' independence, and thereafter approved the engagement of
PricewaterhouseCoopers LLP for the provision of such tax services.
Based upon the Audit Committee's discussion with management and the
independent auditors, the Audit Committee's review of the representation by
management, and the disclosures by the independent auditors, the Audit Committee
recommended to the Board of Directors that the Company's audited consolidated
financial statements for the year ended June 30, 2002 be included in the
Company's Annual Report on Form 10-K, for filing with the Securities and
Exchange Commission. The Audit Committee has also recommended the selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for fiscal year
2003.
WILLIAM S. WATSON (Chairman)
F. SUZANNE JENNICHES and JOHN G. PUENTE
Members of the Audit Committee
STOCK PERFORMANCE GRAPH
The following line graph compares (1) the cumulative total stockholder
return on the Company's Common Stock during the past five fiscal years, based on
the market price of MICROS Systems, Inc. Common Stock, with (2) the cumulative
total yearly return of the S&P 500 Index and (3) the S&P Application Software
composite index.
STOCKHOLDER RETURNS
COMPANY/INDEX JUN-97 JUN-98 JUN-99 JUN-00 JUN-01 JUN-02
- ------------- ------ ------ ------ ------ ------ ------
MICROS SYSTEMS, INC. $100.00 $157.59 $161.90 $88.39 $104.76 $131.95
S&P 500 INDEX $100.00 $130.16 $159.78 $171.36 $145.95 $119.70
APPLICATION SOFTWARE $100.00 $120.78 $40.38 $42.49 $39.82 $16.68
Note to graph:
Assumes $100 invested on June 30, 1997, in MICROS Systems, Inc. Common Stock,
and an identical amount in the S&P 500 Index and the Application Software
composite index, and the reinvestment of dividends.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 2002 and 2001, the Company compensated Louis M. Brown, Jr.,
Vice-Chairman of the Board, $308,000 and $209,231, respectively, for consulting
services provided to the Company. For fiscal 2002, Mr. Brown earned a base
consulting fee of $230,000 and a bonus of $78,000. The bonus was accrued in
fiscal year 2002 and paid in September 2002. Effective June 30, 1995, and
amended February 1, 1999, and April 26, 2001, the Company and Mr. Brown entered
into a Consulting Agreement terminating June 30, 2005, pursuant to which Mr.
Brown is to provide on the average 20 hours per week of consulting services to
the Company in exchange for a base consulting fee plus a target bonus.
During fiscal 2002 and 2001, the Company paid J. Alan Hayman $1,596,279 and
$323,819, respectively, for earn-out payment obligations as part of the 1999
acquisition by MICROS of Stanley Hayman and Company, Inc. and Micros of South
Florida, Inc., each entity in which he was a 46.5% shareholder. There are no
additional earn-out payments required. In addition, during fiscal 2002 and 2001,
the Company paid a real estate partnership in which J. Alan Hayman holds a 50%
interest, $426,511 and $401,940, respectively, for the rental of the Laurel,
Maryland facilities. The rental rates were fair market value rates, as
determined by two independent valuations. The Laurel lease expires on December
31, 2002, and shall not be renewed.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
The Company's Board of Directors has selected the firm of
PricewaterhouseCoopers LLP as the independent public accountants for the Company
for the year ending June 30, 2003. The approval of its selection is to be voted
upon at the Annual Meeting. PricewaterhouseCoopers LLP has served in this role
since August 1990, and its selection was approved by the stockholders at the
last Annual Meeting. It is expected that representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting and available
to respond to appropriate questions, and will have the opportunity to make a
statement if they so desire.
Audit Fees
The aggregate fees paid or payable for professional services rendered by
PricewaterhouseCoopers LLP for the fiscal year ended June 30, 2002 are as
follows:
Audit Fees, including reviews of quarterly financial information $0.6 million
Financial Information Systems Design and Implementation Fees $0.0 million
All other fees $1.1 million
"All other fees" relates primarily to: (i) tax planning and compliance
assistance; and (ii) employee benefit plan audits.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 2003 FISCAL
YEAR.
AMENDMENT TO THE
1991 STOCK OPTION PLAN
(EXTENSION OF TERM UNTIL DECEMBER 31, 2006)
(PROPOSAL 3)
The 1991 Option Plan, as amended by the shareholders, shall expire on
September 23, 2003. Accordingly, the 1991 Option Plan expires in less than one
year. To effectuate the ongoing purposes of the 1991 Option Plan, including
providing compensation and retention incentives for Company employees, and
hiring bonuses for prospective employees, it is necessary to extend the 1991
Option Plan. If the 1991 Option Plan were to expire, the Company could no longer
be able to grant the remaining available options to employees under the existing
1991 Option Plan after September 23, 2001. This would materially and adversely
impact the Company's ability to offer competitive pay packages. The proposed
amendment: (i) does not extend the term of any options previously extended; (ii)
does not provide for the right to offer options in the future with any term in
excess of that currently permitted (which is ten years); and (iii) does not
increase the number of option shares previously authorized under the 1991 Option
Plan.
The affirmative vote of a majority of all votes cast by stockholders at
a meeting at which a quorum is present is required in order to adopt the
amendment to the 1991 Option Plan. As of the record date, Directors and officers
of the Company have the power to vote approximately 1.0% of the outstanding
shares of Common Stock. All of the Directors and officers have expressed an
intent to vote in favor of the proposed amendment to the 1991 Option Plan.
INTRODUCTION
The principal features of the 1991 Option Plan are summarized below. The
summary is qualified by reference to the complete text of the 1991 Option Plan,
which is attached as Exhibit A.
PURPOSE
The purpose of the 1991 Option Plan is to provide a performance
incentive to certain officers and other key employees of the Company and its
subsidiaries in order that such persons may acquire a (or increase their)
proprietary interest in the Company and to encourage such persons to remain in
the employ of the Company and its subsidiaries. In addition, non-employee
Directors may participate in the 1991 Option Plan.
ADMINISTRATION
The 1991 Option Plan may be administered by either the Compensation
Committee or by the Board of Directors itself (individually and collectively,
the "Administrating Committee"). It is intended that at all times the 1991
Option Plan will be administered by Directors who are "non-employee directors"
within the meaning of Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "1934 Act").
In general, the Administrating Committee determines the persons to whom
options are granted, the terms of the options and the number of shares covered
by each option.
DURATION, AMENDMENT AND TERMINATION
The 1991 Option Plan became effective as of September 23, 1991 and
currently will terminate on September 23, 2003, unless sooner terminated by the
Board of Directors. This amendment contained herein serves to extend the
termination date until December 31, 2006.
In addition to the power to terminate the 1991 Option Plan at any time,
the Board of Directors also has the power to amend the 1991 Option Plan;
provided, no amendment to the 1991 Option Plan may be made without stockholder
approval if the amendment would (i) change the minimum option prices set forth
in the 1991 Option Plan, (ii) increase the maximum term of options, (iii)
materially increase the benefits accruing to the participants under the 1991
Option Plan, or (iv) materially modify the requirements as to eligibility under
the 1991 Option Plan.
ELIGIBILITY
The 1991 Option Plan provides for the grant of options to non-employee
directors, officers and other key employees of the Company and its subsidiaries.
As described below, non-employee directors may be granted only non-qualified
options. As of August 31, 2002, 6,709,400 options (which include previously
canceled options later re-granted) have been granted under the 1991 Option Plan.
Pursuant to Section 5 of the Plan, if all or part of an expired option is
unexercised, the shares that were not exercised may again be available for
grant.
AWARDS UNDER THE 1991 OPTION PLAN
The 1991 Option Plan currently reserves a total of 6,100,000 shares of
the Company's Common Stock which may be issued pursuant to options under the
1991 Option Plan since its inception. As of October 4, 2002, the closing market
price for the Company's Common Stock was $22.98 per share. The
1991 Option Plan provides for the grant of incentive stock options as defined
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and non-qualified options. If an option expires without being exercised in full,
such shares of Company Common Stock which were not exercised are again available
for grant under the 1991 Option Plan.
The type and terms of each option granted under the 1991 Option Plan are
determined by the Compensation Committee. The option price per share shall not
be less than the fair market value of the Company's Common Stock at the date of
grant of the option. Fair market value will be determined by the Compensation
Committee pursuant to the criteria set forth in the 1991 Option Plan. An option
may contain such terms as are deemed appropriate by the Administrating
Committee, including a provision that allows the Company to re-acquire an option
for cash.
EXERCISE OF OPTIONS
An option may be exercised by an optionee by delivery to the Company of
the exercise price which must be paid either: (i) in cash or cash equivalent; or
(ii) in the discretion of the Compensation Committee, by delivery of previously
owned shares of Common Stock or by a combination of cash and Common Stock.
The term of an option may not exceed ten (10) years. An option is
exercisable in such installments and at such times during its term as determined
by the Compensation Committee. To the extent not exercised, installments are
cumulative and may be exercised in whole or in part at any time after becoming
exercisable until the option expires.
With respect to incentive stock options, the aggregate fair market value
of shares that may be exercised by an optionee for the first time during any
year may not exceed $100,000.
TERMINATION OF EMPLOYMENT
In the event the optionee's employment (or service as a non-employee
Director) terminates by reason of death, all options become fully exercisable
and may be exercised by the optionee's estate within one year after the date of
such death but not later than the date on which such options would otherwise
expire.
If the optionee's employment (or service as a non-employee Director) is
terminated as a result of disability, all options become fully exercisable and
may be exercised within one year after such termination but not later than the
date on which such options would otherwise expire.
If an optionee's employment is terminated on or after age 62 in
accordance with the Company's normal retirement policies, all options become
fully exercisable and, except as otherwise approved by the Administrating
Committee, may be exercised for a period of three months after such termination,
but not later than the date on which the options would otherwise expire.
If an optionee's employment (or service as a non-employee Director)
terminates other than for retirement, death or disability, the options held by
such optionee, to the extent exercisable as of the date of termination, may be
exercised at any time during the thirty (30) day period immediately following
the date of termination, but not after the date on which such options would
otherwise expire. However, if termination is on account of cause, all options
expire as of the date of termination.
An optionee's estate means the optionee's legal representative or any
person who acquires the right to exercise an option by reason of the optionee's
death.
RESTRICTION ON TRANSFER
Options are transferable only by will or by the laws of descent and
distribution. During an optionee's lifetime, an option may be exercised only by
the optionee.
FEDERAL INCOME TAX TREATMENT
Incentive Stock Options
Incentive stock options under the 1991 Option Plan are intended to meet
the requirements of Section 422 of the Code. There are no tax liabilities to the
optionee upon the grant of an incentive stock option. In general, if an optionee
acquires stock upon the exercise of an incentive stock option, no income will
result to the optionee upon such exercise and the Company will not be allowed a
deduction as a result of such exercise provided the optionee makes no
disposition of the stock within two years from the date of grant and one year
after the option is exercised. The basis to the optionee of shares acquired on
the exercise of an incentive stock option will be equal to the exercise price.
Any gain or loss realized upon the sale of the shares acquired will be treated
as capital gains or loss, as applicable.
If the optionee fails to satisfy the one- or two-year holding periods
described above, the optionee will be treated as having received ordinary income
at the time of the disposition of the stock generally equal to the excess of the
value of the stock on the date of exercise (or, if less, the amount realized
from the disposition) over the exercise price. Any gain in excess of the amount
treated as ordinary income will be treated as capital gain. The Company will be
entitled to a deduction for the amount taxable to the optionee as ordinary
income.
Although the exercise of an incentive stock option will not result in
regular income tax liability to an optionee, it may subject the optionee to
liability for the "alternative minimum tax."
Non-Qualified Options
There are no tax liabilities to the optionee upon the grant of a
non-qualified option. In general, an optionee who exercises a non-qualified
option will recognize ordinary income in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
exercise and the Company will be entitled to a deduction in the same amount. The
Company will withhold federal and state income and employment taxes due on this
compensation from amounts otherwise payable to the optionee. The optionee's
basis in such shares will generally be the fair market value on the date of
exercise, and when he/she disposes of the shares he/she will recognize capital
gain or loss.
THE BOARD OF DIRECTORS BELIEVES THAT THE EXTENSION OF THE TERM OF THE
MICROS SYSTEMS, INC. 1991 STOCK OPTION PLAN IS IN THE BEST INTERESTS OF ALL
STOCKHOLDERS AND RECOMMENDS A VOTE FOR THE PROPOSAL.
PLAN BENEFITS
The following table sets forth the number of shares of Common Stock
subject to options granted to each of the following under the 1991 Option Plan
during fiscal year 2002. Future awards under the 1991 Option Plan as proposed to
be amended are not determinable at this time. The Company does not believe
that the amount of awards granted during fiscal year 2002 or since the inception
of the 1991 Option Plan would have been different if the 1991 Option Plan had
been amended at the time such grants were made.
1991 OPTION
-----------
NAME AND POSITION PLAN
----------------- ----
A. L. Giannopoulos . . . . . . . . . . . . . . .
Chairman, President and Chief Executive Officer 0
Gary C. Kaufman . . . . . . . . . . . . . . . .
Executive Vice President, Finance
and Administration, and Chief Financial Officer 50,000
Thomas L. Patz . . . . . . . . . . . . . . . . . .
Executive Vice President,
Strategic Initiatives, and General Counsel 40,000
J. Alan Hayman . . . . . . . . . . . . . . . . .
Executive Vice President, Restaurant Sales & Strategies 20,000
T. Paul Armstrong . . . . . . . . . . . . . . . .
Executive Vice President, New Technologies 25,000
Executive Officers as a Group . . . . . . .
(9 executive officers, including those named above) 210,000
Non-Executive Director Group (5 persons) 0
Non-Executive Officer/ Employee Group (60 persons) 314,750
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Executive officers, directors and greater than 10% beneficial
owners are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that during fiscal year 2002 all filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners have been satisfied, with the exception of the sale by Mr. Bernard Jammet
of 10,000 shares of MICROS stock in February, 2002, which was reported to the
Securities and Exchange Commission on July 3, 2002.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the fiscal year 2003
Annual Meeting of Stockholders must be received by the Company by June 19, 2003,
to be considered for inclusion in the proxy statement and form of proxy relating
to that meeting.
OTHER MATTERS
The Board of Directors is not aware of any matters other than those
discussed herein, which are to be presented for action at the Annual Meeting. If
any other business properly comes before the Annual Meeting, the persons named
in the accompanying form of proxy will vote in regard thereto according to their
best judgment.
By Order of the Board of Directors,
/s/Wendy M. Powell
------------------
Wendy M. Powell
Corporate Secretary
Columbia, Maryland
October 17, 2002
EXHIBIT A
MICROS SYSTEMS, INC.
1991 STOCK OPTION PLAN
(WITH PROPOSED AMENDMENT)
1. PURPOSE OF PLAN. The purpose of the MICROS Systems, Inc. 1991 Stock
Option Plan, as amended (the "Plan"), is to serve as a performance incentive and
to encourage the ownership of MICROS Systems, Inc. (the "Company") stock by key
employees of the Company and its subsidiaries (including officers and directors)
so that the person to whom the option is granted may acquire a (or increase his
or her) proprietary interest in the Company and its subsidiaries and in order to
encourage such person to remain in the employ of the Company or its
subsidiaries. In addition, nonemployee directors may participate in the Plan as
provided herein. Options granted pursuant to the Plan may consist of incentive
stock options ("ISOs") (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) and nonqualified options.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors; except that if and to the
extent that no Committee exists which has the authority to administer the Plan,
the functions of the Committee shall be exercised by the Board of Directors. The
Committee shall consist of not less than two (2) members of the Board of
Directors. Members of the Committee shall be "non-employee directors" (within
the meaning of Rule 240.16(b)-3 of the Securities and Exchange Commission).
The Committee shall determine the purchase price of the stock covered by
each option, the employees and nonemployee directors to whom, and the time or
times at which, options shall be granted, the number of shares to be covered by
each option, and the term of each option. In addition, the Committee shall have
the power and authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the respective option agreements (which need not be identical) and
to make all other determinations deemed necessary or advisable for the
administration of the Plan.
If the Committee is appointed, the Board of Directors shall designate
one of the members of the Committee as chairman and the Committee shall hold
meetings at such times and places as it shall deem advisable. A majority of the
Committee members shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or determination
reduced to writing and signed by all the Committee members shall be fully as
effective as if it had been made by a vote at a meeting duly called and held.
The Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
3. EFFECTIVENESS AND TERMINATION OF PLAN.
(a) The Plan shall become effective as of September 23, 1991.
(b) This Plan shall terminate on the earliest of (i) December 31, 2006, (ii)
the date when all shares of the Company's Common Stock (the "Shares") reserved
for issuance under the Plan have been acquired through the exercise of options
granted under the Plan, or (iii) such earlier date as determined by the Board of
Directors. Any option outstanding under the Plan at the time of the Plan's
termination shall remain in effect in accordance with its terms and conditions
and those of the Plan.
4. GRANTEES. Subject to Section 2, options may be granted to key employees
(including directors and officers) and nonemployee directors of the Company and
its subsidiaries as determined by the Committee (each such employee or director,
a "Grantee"); provided, however, ISOs shall only be granted to employees.
5. THE SHARES. Subject to Section 7, the aggregate number of Shares which
may be issued under the Plan shall be 6,100,000. Such number of Shares may be
set aside out of the authorized but unissued Common Stock not reserved for any
other purpose or out of Common Stock held in or acquired for the treasury of the
Company. If all or part of an expired option is unexercised, the Shares which
were not exercised may again be available for grant under the Plan.
6. GRANT, TERMS AND CONDITIONS OF OPTIONS. Options may be granted by the
Committee at any time and from time to time prior to the termination of the
Plan. Except as hereinafter provided, options granted pursuant to the Plan shall
be subject to the following terms and conditions.
(a) Price. The purchase price of the Shares subject to an option shall be
no less than the fair market value of the Shares at the time of grant; provided,
however, if an ISO is granted to a person owning Common Stock of the Company
possessing more than 10% of the total combined voting power of all classes of
stock of the Company as defined in Section 422 of the code ("10% Stockholder"),
the purchase price shall be no less than 110% of the fair market value of the
Shares. The fair market value of the Shares shall be determined by and in
accordance with procedures to be established by the Committee, whose
determination shall be final.
Notwithstanding the foregoing, if the Company's Common Stock is admitted to
quotation on the National Association of Securities Dealers Automated Quotation
system on the date the option is granted, fair market value shall not be less
than the average of the highest bid and lowest asked prices of the Common Stock
on such system on such date. If the Common Stock is admitted to trading on a
national securities exchange on the date the option is granted, fair market
value shall not be less than the last sales price reported for the Common Stock
on such exchange on such date or on the last date preceding such date on which a
sale was reported.
The exercise price shall be paid in full in United States dollars in cash
or by check at the time of exercise. At the discretion of the Committee, the
exercise price may be paid with (i) Common Stock already owned by, and in
possession of, the Grantee or (ii) any combination of United States dollars or
Common Stock. Anything contained herein to the contrary notwithstanding, any
required withholding tax shall be paid by the Grantee in full at the time of
exercise of an option. Common Stock used to satisfy the exercise price of an
option shall be valued at its fair market as of the close of business on the day
of exercise. The exercise price shall be subject to adjustment, but only as
provided in Section 7 hereof.
(b) Limit on Incentive Option Amount. Notwithstanding any provisions
contained herein to the contrary, the Shares covered by an ISO granted to a
Grantee which are exercisable for the first time during any calendar year shall
not exceed the $100,000 limitation in Section 422 of the Code.
(c) Duration and Exercise of Options. An option may be granted for a term
as determined by the Committee but not exceeding ten (10) years from the date of
grant; provided, however, the term of an ISO granted to a 10% Stockholder may
not exceed five (5) years. Options shall be exercised at such time and in such
amounts (up to the full amount thereof) as may be determined by the Committee at
the time of grant. If an option is exercisable in installments, the Committee
shall determine what events, if any, will accelerate the exercise of the option.
The Plan shall be subject to approval by the Company's stockholders within
one (1) year from the date on which it was adopted. Prior to such stockholder
approval, options may be granted under the Plan, but any such option shall not
be exercisable prior to such stockholder approval. If the Plan is not approved
by the Company's stockholders, the Plan shall terminate and all options
theretofore granted under the Plan shall terminate and become null and void.
(d) Termination of Employment. Except as otherwise determined by the
Committee, upon the termination of a Grantee's employment (or service as a
nonemployee director), the Grantee's rights to exercise an option shall be as
follows:
i) If the Grantee's employment (or service as a nonemployee director) is
terminated on account of total and permanent disability (pursuant to the
Company's long-term disability plan for Grantees who are employees) and as
defined in Section 22(e)(3) of the Code), any option shall become fully (100%)
vested as of the date of termination and may be exercised by the Grantee (or by
the Grantee's estate if the Grantee dies after termination) at any time within
one (1) year after termination on account of disability but in no event after
the expiration of the term of the option.
ii) In the case of a Grantee whose employment (or service as a
nonemployee director) is terminated by death, any option shall become fully
(100%) vested as of the date of death and the Grantee's estate shall have the
right for a period of one (1) year following the date of such death to exercise
the option but in no event after the expiration of the term of the option.
iii) In the case of a Grantee who retires from the Company and its
subsidiaries after attaining age 62, an option shall become fully (100%) vested
as of the date of retirement and the Grantee may, within the three-month period
following retirement, exercise such option but in no event after the expiration
of the term of the option. If the Grantee dies during such three-month period,
the Grantee's estate may exercise such option during the period ending on the
first anniversary of the Grantee's retirement but in no event after the
expiration of the term of the option.
iv) In the case of a Grantee whose employment with the Company and its
subsidiaries (or service as a nonemployee director) is terminated for any reason
other than death, disability or retirement, the Grantee (or the Grantee's estate
in the event of the Grantee's death after such termination) may, within the
30-day period following such termination, exercise an option to the extent the
right to exercise had accrued prior to such termination but in no event after
the expiration of the term of the option. Notwithstanding the foregoing, if the
Grantee's termination of employment is on account of misconduct or any act that
is adverse to the Company, the Grantee's option shall expire as of the date of
termination of employment.
v) A Grantee's "estate" shall mean the Grantee's legal representative or
any person who acquires the right to exercise an option by reason of the
Grantee's death. The Committee may in its discretion require the transferee of a
Grantee to supply it with written notice of the Grantee's death or disability
and to supply it with written notice of the Grantee's death or disability and to
supply it with a copy of the will (in the case of the Grantee's death) or such
other evidence as the Committee deems necessary to establish the validity of the
transfer of an option. The Committee may also require the agreement of the
transferee to be bound by all of the terms and conditions of the Plan.
(e) Transferability of Option. Options shall be transferable only by will
or the laws of descent and distribution and shall be exercisable during the
Grantee's lifetime only by the Grantee.
(f) Form, Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, an option shall be
evidenced by such form of agreement as is approved by the Committee, and
consistent with the terms hereof. Notwithstanding the foregoing, no modification
of an option shall, without the consent of the Grantee, alter or impair any
rights or obligations under any option theretofore granted under the Plan nor
shall any modification be made which shall adversely affect the status of an ISO
as an incentive stock option under Section 422 of the Code.
(g) Minimum Number of Shares. The minimum number of Shares for which an
option may be exercised at any time shall be 100 shares, unless the unexercised
portion of the option covers a lesser number of Shares.
(h) Maximum Number of Shares. Subject to adjustments as provided in Section
7(a) hereof, the maximum number of Shares subject to options that may be granted
hereunder during any one fiscal year of the Company to any one individual shall
be limited to 200,000 Shares.
(i) Other Terms and Conditions. Options may contain such other provisions,
which shall not be inconsistent with any of the foregoing terms of the Plan, as
the Committee shall deem appropriate, including a provision permitting the
Company or a subsidiary to reacquire an option for cash.
7. CAPITAL STRUCTURE CHANGES.
(a) If the outstanding shares of the Company's Common Stock are increased,
decreased or changed into, or exchanged for a different number or kind of shares
or securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or the
like, the Board of Directors shall make appropriate and proportionate
adjustments in the number, kinds and limits of shares available for options
pursuant to the Plan or subject to any outstanding options and in the purchase
price therefor. The determination of the Board of Directors as to such
adjustments shall be conclusive.
(b) Fractional Shares resulting from any adjustment in options pursuant to
Section 7 shall be eliminated at the time of exercise by rounding-down for
fractions less than one-half (1/2) and rounding-up for fractions equal to or
greater than one-half (1/2). No cash settlements shall be made with respect to
fractional Shares eliminated by rounding. Notice of any adjustments shall be
given by the Committee to each Grantee whose option has been adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of the Plan.
(c) Upon dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation in which the Company is not the
surviving corporation, or upon the sale of substantially all of the property of
the Company to another corporation, the Plan and options issued thereunder shall
terminate, unless provision is made in connection with such transaction for the
assumption of options theretofore granted, or the substitution for such options
of new options of the successor employer corporation or a parent or subsidiary
thereof, with appropriate adjustment as to the number and kinds of shares and
the per share exercise price. In the event of such termination, all outstanding
options shall be exercisable in full for at least 30 days prior to the
termination date whether or not otherwise exercisable during such period.
(d) Options may be granted under this Plan from time to time in
substitution for similar options held by employees of corporations who become or
are about to become employees of the Company or a subsidiary as the result of a
merger or consolidation, the acquisition by the Company or a subsidiary of the
assets of the employing corporation, or the acquisition by the Company or a
subsidiary of the fifty percent (50%) or more of the stock of the employing
corporation causing it to become a subsidiary.
8. SECURITIES LAW REQUIREMENTS. No option granted pursuant to this Plan
shall be exercisable in whole or in part nor shall the Company be obligated to
sell any Shares subject to any such option if such exercise or sale, in the
opinion of counsel for the Company, violates the Securities Act of 1933 (or
other federal or state statutes having similar requirements). Each option shall
be subject to the further requirement that, if at any time the Committee shall
determine in its discretion that the listing, registration or qualification of
the Shares subject to such option under any securities exchange requirements or
under any applicable law, or the consent or approval of any governmental
regulatory body, is necessary as a condition of, or in connection with, the
granting of such option or the issuance of Shares thereunder, such option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee. The Committee may require each
person purchasing Shares pursuant to an option to represent to and agree with
the Company in writing that he is acquiring the Shares without a view to
distribution thereof. The certificates for such Shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for Shares delivered under the Plan shall be subject to
stop-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
9. AMENDMENTS. The Board of Directors may amend or terminate the Plan in
whole or in part as it deems appropriate and proper; provided, however, except
as provided in Section 7, (i) without stockholder approval no action may be
taken which changes the minimum option price, increases the maximum term of
options, materially increases the benefits accruing to Grantees under the Plan,
materially increases the number of Shares which may be subject to options
pursuant to this Plan, or materially modifies the requirements as to eligibility
for participation hereunder, and (ii) without the consent of the Grantee, no
action may be taken which adversely affects the rights of such Grantee
concerning an option.
10. NO EMPLOYMENT RIGHT. Neither this Plan nor any action taken hereunder
shall be construed as giving any right to any individual to be retained as an
officer or employee of the Company or any of its subsidiaries.
11. INDEMNIFICATION. Each person who is or at any time serves as a member
of the Board of Directors or the Committee shall be indemnified and held
harmless by the Company against and from (i) any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by such person in
connection with or resulting from any claim, action, suit or proceeding to which
such person may be a party or in which such person may be involved by reason of
any action or failure to act under this Plan and (ii) any and all amounts paid
by such person in satisfaction of judgment in any such action, suit or
proceeding relating to this Plan.
Each person covered by this indemnification shall give the Company an
opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend
the same on such person's own behalf. The foregoing persons may be entitled
under the charter or by-laws of the Company or any of its subsidiaries, as a
matter of law, or otherwise, or any power that the Company or a subsidiary may
have to indemnify such person or hold such person harmless.
12. GOVERNING LAW. Except to the extent preempted by federal law, all
matters relating to this Plan or to options granted hereunder shall be governed
by the laws of the State of Maryland.
13. EXPENSES; PROCEEDS. The expenses of implementing and administering this
Plan shall be borne by the Company and its subsidiaries. Proceeds from the sale
of Common Stock under the Plan shall constitute general funds of the Company.
14. TITLES AND HEADINGS. The titles and headings of the Sections in this
Plan are for convenience of reference only; in the event of any conflict, the
text of this Plan, rather than such titles or headings, shall control.
EXHIBIT B
MICROS SYSTEMS, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors (the "Board") known
as the Audit Committee. The Audit Committee of the Board shall be comprised of
at least three directors who are independent of management and MICROS Systems,
Inc. (the "Company"). Members of the Audit Committee shall be considered
independent if they have no relationship to the Company that may interfere with
the exercise of their independence from management and the Company. All Audit
Committee members will be financially literate, and at least one member will
have certain accounting or related financial management expertise.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the directors in
fulfilling their responsibility to the shareholders, potential shareholders and
investment community relating to the oversight and monitoring of the corporate
accounting and reporting practices of the Company, the Company's systems of
internal accounting and financial controls, as well as the integrity of the
financial reports of the Company. In so doing, it is the responsibility of the
Audit Committee to maintain free and open communication between the directors,
the independent auditors, and the financial management of the Company.
FREQUENCY OF MEETINGS
The Audit Committee will meet (either in person or telephonically) at
least four times each year to perform its required duties. The Audit Committee
may ask members of management or others to attend the meeting and provide
pertinent information as necessary. The Audit Committee may schedule its regular
meetings immediately prior to or after regularly scheduled Company Board
meetings.
RESPONSIBILITIES
The Audit Committee believes its policies and procedures should be
designed to best assist the Board in fulfilling its oversight responsibilities
reviewing: (1) financial reporting functions and related financial information
that will be provided to the shareholders and others; (2) the Company's external
audit processes; and (3) systems of internal compliance. The Audit Committee
should review its policies and procedures periodically to assure that such
policies and procedures address changes in applicable regulations.
DUTIES OF THE AUDIT COMMITTEE
In carrying out these responsibilities, the Audit Committee will:
A. Financial Reporting and Related Financial Information
- Review the financial statements, auditors' opinion and MD&A
contained in the annual report to shareholders prior to the
filing of the Form 10-K with management and the independent
auditors to determine that the independent auditors are satisfied
with the disclosure and content of the financial statements to be
presented to the shareholders.
- Review with the outside auditors the Company's interim financial
results to be included in the Company's quarterly reports to be
filed with the SEC, and the matters required to be discussed by
Statement of Auditing Standards ("SAS") No. 61; this review will
occur prior to the Company's filing of the Form 10-Q.
- Review with financial management and the independent auditors
the results of their timely analysis of significant financial
reporting issues and practices, including changes in, or
adoptions of, accounting principles and disclosure practices,
and discuss any other matters required to be communicated to the
Audit Committee by the auditors.
- Review pronouncements issued by the SEC and FASB that may have a
material effect on the financial statements or related Company
compliance policies.
B. Audit Processes
- Inquire of management and the independent auditors about
significant risks or exposures, and assess the steps management
has taken to minimize such risks to the Company.
- Review and recommend to the Board the independent auditors to be
selected to audit the financial statements of the Company.
- In accordance with the terms of the Sarbanes-Oxley Act, have the
independent auditors acknowledge and recognize that they are
directly and ultimately accountable to the Board, as the
shareholders' representatives, and that the Board may terminate
their services at any time.
- Meet with the independent auditors and financial management of
the Company to review and approve the scope of the proposed
audit.
- Review, at the conclusion of the annual audit, the independent
auditors' summary of significant accounting and auditing issues
identified, along with recommendations and management's
corrective action plans (management letter). Such review should
also address any significant changes to the original audit plan
and any serious disputes with management during the audit or
review.
- On an annual basis, obtain from the independent auditors a
written communication delineating all their relationships and
professional services as required by Independence Standards
Board Standard No. 1: Independence Discussions with Audit
Committees. In addition, review with the independent auditors
the nature and scope of any disclosed relationships or
professional services and take, or recommend that the Board take
appropriate action to ensure the continuing independence of the
auditors.
- Provide sufficient opportunity for the independent auditors to
meet with the members of the Audit Committee without members of
management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the
Company's financial, accounting and auditing personnel, and the
cooperation that the independent auditors received during the
course of audit.
C. Internal Control and Compliance
- Review with the independent auditors and financial and
accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal controls or
particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to
the
adequacy of internal controls to expose any payments,
transactions or procedures that might be deemed improper.
D. Reporting by the Audit Committee and Other Matters
- Report the results of the annual audit to the Board.
- Minutes of all meetings will be maintained and approved by the
Audit Committee. The Chairperson of the Audit Committee shall
submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each Audit Committee meeting
with, the Board.
- Investigate any matter brought to its attention within the scope
of its duties.
- Obtain the full Board's approval of this Charter and review and
reassess this Charter as conditions dictate, at least annually.