UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] 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 Rule 14a-12
</Table>
MPSI Systems Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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MPSI SYSTEMS INC. 4343 SOUTH 118TH EAST AVENUE
TULSA, OKLAHOMA 74146
918 877-6774
FACSIMILE 918 877-6960
INTERNATIONAL COMPUTER SOFTWARE AND INFORMATION SERVICES
- --------------------------------------------------------------------------------
[MPSI LOGO]
May 13, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of MPSI Systems Inc. (the "Company") which will be
held on Thursday, June 20, 2002 at 2:00 p.m. CST at Tulsa
Employees Federal Credit Union, First Floor, 9323 East 21st
Street, Tulsa, Oklahoma 74129.
The formal notices of the Annual Meeting and the Proxy
Statement have been made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign
and return the enclosed Proxy as soon as possible in the envelope
provided. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN
THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
In lieu of providing a Company Annual Report to
Stockholders, a copy of the Company's Form 10-K is also enclosed.
The Board of Directors and Management look forward to
seeing you at the meeting.
Sincerely yours,
/s/ RONALD G. HARPER
RONALD G. HARPER
Chairman and Chief
Executive Officer
Encls.
MPSI SYSTEMS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 2002
The Annual Meeting of Stockholders of MPSI Systems Inc. (the "Company")
will be held at Tulsa Federal Employees Credit Union, First Floor, 9323 East
21st Street, Tulsa, Oklahoma 74129, on June 20, 2002 at 2:00 p.m. CST for the
following purposes:
1. To elect six (6) directors to hold office during the ensuing year.
2. To ratify the appointment of Tullius Taylor Sartain & Sartain LLP
as the Company's independent auditors.
3. To transact such other business as may properly come before the
meeting and any postponement or adjournment thereof.
The Board of Directors has fixed the close of business on April 26, 2002 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any postponement or adjournment thereof. A
complete list of stockholders entitled to vote will be available at the
Company's headquarters, 4343 South 118th East Avenue, Tulsa, Oklahoma, for ten
days prior to the meeting.
We hope that you will use this opportunity to take an active part in the
affairs of your Company by voting on the business to come before the meeting
either by executing and returning the enclosed Proxy or by casting your vote in
person at the meeting. The granting of such proxy will not affect your right to
vote in person should you decide to attend the meeting.
IF YOU DO NOT EXPECT TO ATTEND IN PERSON, IT WOULD BE APPRECIATED IF YOU
WOULD PROMPTLY SIGN AND RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY AND ON
BEHALF OF THE BOARD OF DIRECTORS. A PREPAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. IF A STOCKHOLDER RECEIVES MORE THAN ONE PROXY BECAUSE HE OR SHE
OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE
COMPLETED AND RETURNED.
By Order of the Board of Directors
/s/ LINDA K. WELLS
LINDA K. WELLS
Secretary
Tulsa, Oklahoma
May 13, 2002
May 13, 2002
MPSI SYSTEMS INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 20, 2002
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
This Proxy Statement and the enclosed proxy are furnished in connection
with the solicitation by the Board of Directors of MPSI Systems Inc., a Delaware
corporation (the "Company"), with principal executive offices at 4343 South
118th East Avenue, Tulsa, Oklahoma 74146, of proxies in the accompanying form to
be used at the Annual Meeting of Stockholders to be held on June 20, 2002, and
any postponement or adjournment thereof. The shares represented by the proxies
received pursuant to this solicitation and not revoked will be voted at the
Annual Meeting. This Proxy Statement and the enclosed proxy are being first sent
to security holders on May 13, 2002.
A proxy may be revoked at any time before it is voted by filing with the
Secretary of the Company a written notice of revocation or by duly executing a
proxy bearing a later date. A proxy may also be revoked by any stockholder
present at the meeting who expresses a desire to vote his or her shares in
person. Subject to any such revocation, all shares represented by properly
executed proxies will be voted in accordance with the specification on the
enclosed proxy. If no choice is so specified, the shares will be voted FOR the
election of the six (6) nominees for director listed in this Proxy Statement,
and FOR ratification of the appointment of Tullius Taylor Sartain & Sartain LLP
as independent auditors, all as described in the Notice of Annual Meeting of
Stockholders and in this Proxy Statement.
The close of business on April 26, 2002 has been fixed as the record date
for determining the holders of shares entitled to receive notice of and to vote
at the meeting. On such date, the Company had 2,911,781 shares of Common Stock
outstanding and entitled to vote. The holders of a majority of the outstanding
shares of Common Stock present in person or represented by proxy shall
constitute a quorum for the transaction of business at the meeting. Each such
share is entitled to one vote on all matters. An abstained vote will count in
achieving a quorum for transaction of business, but not towards approval or
rejection of the matter under consideration.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, certain directors,
officers and other employees of the Company, may make solicitation by personal
interview, telephone, facsimile or telegraph, and no additional compensation
will be paid for such solicitation. The Company will reimburse brokers and
nominees for their reasonable out-of-pocket expenses in forwarding soliciting
material to beneficial owners of shares held of record by such brokers and
nominees.
DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
Six directors are to be elected to serve until the next annual Meeting of
Stockholders and until their respective successors are fully elected or
appointed and qualified. All six of the nominees named below are presently
directors of the Company. Unless authority to vote for the directors is
withheld, it is intended that the shares represented by the enclosed Proxy will
be voted FOR the election of all six nominees. In the event that any such
nominee is unable or declines to serve for any reason, it is intended that
proxies will be voted for the election of the balance of those nominees named
and for such other persons as shall be designated by the present Board of
Directors, or the Board of Directors may be reduced in accordance with the
Bylaws of the Company. The Board of Directors has no reason to believe that any
of the persons named will be unable or unwilling to serve. An affirmative vote
of a majority of the outstanding shares of Common Stock present and voting at
the meeting is required for election of the six nominees to the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF ALL NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES
The following table sets forth the nominees, their ages, a brief
description of their recent business experience, including present occupations
and employment, certain directorships held by each and the year in which each
became a director of the Company. All were elected at the Company's Annual
Meeting of Stockholders held on September 28, 2000 and have continued to serve
since that time.
<Table>
<Caption>
NAME AND PRINCIPAL OCCUPATION AT PRESENT DIRECTOR
AND FOR THE PAST FIVE YEARS; DIRECTORSHIPS SINCE AGE
- ------------------------------------------ -------- ---
Ronald G. Harper(1)................................................................... 1970 63
Mr. Harper, who founded the Company in 1970, has served as its President, Chairman
of the Board and Chief Executive Officer since inception.
John C. Bumgarner, Jr.(1)(2).......................................................... 1982 59
In 1999, Mr. Bumgarner was appointed to his present position as Chief Operating
Officer and president, Strategic Investment of Williams Communications Group, Inc.,
a Tulsa-based telecom. Prior to that, he served as Senior Vice President - Corporate
Development and Planning of The Williams Companies, Inc., a Tulsa-based conglomerate.
In April 2002, Williams Communications Group, Inc. filed for reorganization under
Chapter 11.
Dr. David L. Huff(1).................................................................. 1982 71
Since 1968, Dr. Huff has been a member of the faculty at the University of Texas. He
has been a Fulbright Lecturer and has published numerous books and articles,
including Market Area Analysis, "A Graphical Index of Consumer Expectation,"
"Measures of Market Area Overlap," and "Retail Location Theory." He is an
expert in computer modeling techniques.
Joseph C. McNay(1)(2)................................................................. 1982 67
Since November 1976, Mr. McNay has been the President, a Director and the Chairman
of the Board of Essex Investment Management Company, Inc., a company engaged in
investment and advisory services. Mr. McNay is also a director of Regenerex,
which is a publicly held company.
John J. McQueen(2).................................................................... 1982 80
Mr. McQueen has been in the private practice of law in the Tulsa area since 1959. He
has also served as a certified public accountant with KPMG Peat Marwick, as a tax
specialist with Warren Petroleum Corp., and as controller of Davis Investments, a
company engaged in oil and real estate activities.
</Table>
2
<Table>
<Caption>
NAME AND PRINCIPAL OCCUPATION AT PRESENT DIRECTOR
AND FOR THE PAST FIVE YEARS; DIRECTORSHIPS SINCE AGE
- ------------------------------------------ -------- ---
Bryan D. Porto........................................................................ 1998 52
Mr. Porto was appointed Group Vice President of Operations and Leveraged Diversi-
fication in 2001. He previously served as Executive Vice President of MPSI's
Petroleum Services, Sr. Vice President - Retail Petroleum and has served in
marketing and Network planning positions since joining MPSI in the Rio de Janeiro
office in 1985.
</Table>
- --------------
(1) The individual identified is a member of the Compensation Committee.
(2) The individual identified is a member of the Audit Committee.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
During the fiscal year ended September 30, 2001, the Board of Directors
held two regular meetings and had one Action by Consent. All of the directors
attended at least 75% of the meetings of the Board, including meetings of
Committees of the Board on which they served. To assist it in carrying out its
duties, the Board of Directors has standing Compensation and Audit Committees.
On May 18, 2000, the Board of Directors unanimously approved a written
charter for the Audit Committee, a copy of which is attached hereto as Exhibit
A. The Audit Committee is comprised of three Board members considered to be
independent of management and the Company as they have no relationship that may
interfere with exercise of their independence. Information regarding the
functions performed by the Committee, its memberships, and the number of
meetings held during the fiscal year is set forth in the "Board Audit Committee
Report" included in this annual proxy statement.
The Committee annually reviews service fees from the Company's independent
auditors and identifies those related to Audit Services, Financial Information
Systems Design and Implementation Services and All Other Services. Fees for the
2001 Audit Services were $241,000, and All Other Fees were $43,000 (related to
taxation). The Audit Committee has reviewed the fees and they do not believe
that the provision of All Other Fees impaired the independence of Ernst & Young
LLP.
The Compensation Committee's functions are to develop and monitor
compensation arrangements. In performing these functions, the Compensation
Committee approves salary ranges and actual salaries for all executive officers,
monitors the effectiveness of and adopts changes as appropriate for all
executive compensation programs, sets requirements for and evaluates performance
under the executive compensation plans and approves all awards under such plans,
and administers and makes awards, interpretations and other decisions under
certain other employee benefit and compensation plans. The Compensation
Committee held no meetings during the fiscal year ended September 30, 2001. All
matters were covered during the regular Board meetings. See also "Board
Compensation Committee Report on Executive Compensation" below.
BOARD AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board and considered the compatability of nonaudit
services with the auditors' independence.
The Committee discussed with the Company's independence auditors the
overall scope and plans for their audits. The Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Committee held one meeting during fiscal year 2001.
3
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended September 30, 2001 for filing with the Securities and Exchange
Commission.
THE AUDIT COMMITTEE John C. Bumgarner, Jr.
Joseph C. McNay
John J. McQueen
INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS
The following table sets forth the executive officers currently serving the
Company, their ages, all positions and offices held with the Company and their
tenure in such office. If such officer has been employed by the Company for less
than five years, other background information and experience is listed. All
officers of the Company serve at the pleasure of its Board of Directors, and
there exists no arrangement or understanding among any of the Company's
executive officers with any other person pertaining to their selection to serve
in such position.
<Table>
<Caption>
SERVING IN
CURRENT
NAME AND ALL POSITIONS POSITION
AND OFFICES HELD WITH THE COMPANY SINCE AGE
- --------------------------------- ---------- ---
Ronald G. Harper.......................................................................... 1970 63
Mr. Harper, who founded the Company in 1970, has served as its President, Chairman
of the Board and Chief Executive Officer since inception.
Bryan D. Porto............................................................................ 2001 52
Mr. Porto was appointed Group Vice President of Operations and Leveraged
Diversification in 2001. He previously served as Executive Vice President of MPSI's
Petroleum Services Division and as Sr. Vice President, Retail Petroleum. He has
served in marketing and network planning positions since joining MPSI in the Rio
de Janeiro office in 1985.
James C. Auten............................................................................ 1996 53
Mr. Auten was appointed Vice President and Chief Financial Officer on January 1, 1996.
Mr. Auten joined MPSI in 1984 as Corporate Controller and held such position until
December 1992 when he was appointed Principal Accounting Officer.
William H. Webb........................................................................... 1996 62
Mr. Webb joined MPSI as General Manager, Corporate Human Resources on April 8,
1996. Previously, Mr. Webb spent 14 years with Amerada Hess Corporation as
Manager of Personnel Administration.
Bryan D. Gross............................................................................ 2000 45
Dr. Gross was appointed Group Vice President of Technology in November 1999.
Prior to this position, he led the Core Product Re-engineering effort and Corporate
Research activities. Dr. Gross joined MPSI in 1984 as Project Supervisor in Network
Planning. He joined QuikTrip Corporation in 1991 as Manager of Statistical Research
and Site Selection, returning to MPSI in 1997 as General Manager of Corporate
Technology.
</Table>
4
<Table>
<Caption>
SERVING IN
CURRENT
NAME AND ALL POSITIONS POSITION
AND OFFICES HELD WITH THE COMPANY SINCE AGE
- --------------------------------- ---------- ---
Richard K. Abrams.................................................................... 2001 54
Mr. Abrams was appointed Group Vice President, Convenience Retailing in 2001.
Prior to joining MPSI in 2000 as Managing Director of Europe and Africa, he served
in various executive positions with Caltex Corporation around the world. Mr. Abrams
currently resides in Bristol, England.
</Table>
STOCK OWNERSHIP
The following table sets forth information as of April 26, 2002 as to
shares of Common Stock beneficially owned by the directors (all of whom are
nominees for another term), certain executive officers, the directors and
officers of the Company as a group, and certain persons known to the Company to
own beneficially more than five percent of the Common Stock. Except as otherwise
indicated, each person has sole investment and voting power with respect to the
shares shown. Ownership information is based upon information furnished by the
respective owners.
<Table>
<Caption>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
------------------------
NUMBER PERCENT
NAME OF COMMON STOCKHOLDER OF SHARES OF CLASS
- -------------------------- --------- --------
Ronald G. Harper (2)............................................................ 1,262,122(1) 43%
4343 South 118th East Avenue
Tulsa, Oklahoma 74146
John C. Bumgarner, Jr........................................................... 205,322 7%
One Tech Center, No. 15-A
100 South Cincinnati
Tulsa, Oklahoma 74172
Joseph C. McNay................................................................. 242,722 8%
125 High Street, 29th Floor
Boston, Massachusetts 02110
Bank of Oklahoma, N.A........................................................... 284,714 10%
P. O. Box 2300
Tulsa, Oklahoma 74192
RS Investment Management Co., LLC (3)........................................... 225,838 8%
388 Market Street, Suite 200
San Francisco, California 94111
Sanford Orkin................................................................... 222,222 8%
3414 Peachtree Road, N.E., Suite 236
Atlanta, Georgia 30326
James C. Auten (2).............................................................. 1,854 *
Bryan D. Porto (2).............................................................. 13,902 *
Bryan D. Gross (2).............................................................. 12,559(4) *
Richard K. Abrams (2)........................................................... 3,333 *
William H. Webb (2)............................................................. 39 *
All officers and directors as a group (8persons)................................ 1,741,853 9%
</Table>
* Less than 1%.
5
(1) Includes 138,137 shares of Common Stock held in trust for the benefit
of Mr. Harper's family, 479,209 shares held in trust for the benefit of
certain charities, and 257,140 shares owned individually by children.
Mr. Harper has sole voting and investment power over all of the trust
shares except for 135,637 shares over which he shares investment or
voting power. Mr. Harper disclaims beneficial ownership of all trust
shares.
(2) The indicated individuals are executive officers of the Company.
(3) As reported in the Schedule 13G filed by the named person (among
others), voting and dispositive power over the listed shares may be
deemed shared among the RS Value Group, RSIM, LP, the RS Orphan Fund,
LP and the RS Orphan Offshore Fund and the named person by reason of
corporate relationships. Each such beneficial owner has the same
address as that set forth above for the named person.
(4) Includes 843 shares owned by spouse.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3 and 4 furnished to the Company with respect
to its most recent fiscal year, the Company has determined that reports required
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
were filed on a timely basis.
COMPENSATION OF DIRECTORS AND OFFICERS
Summary Compensation Table. The following table summarizes the compensation
paid over the last three completed fiscal years to the Company's CEO and the
other executive officers of the Company who received compensation of $100,000 or
more during the fiscal year ended September 30, 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- -------------------- -------
OTHER ALL
ANNUAL OTHER
COMPEN- RESTRICTED LTIP COMPEN-
NAME AND SALARY BONUS SATION STOCK OPTIONS/ PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($) (1) AWARDS SARS (#) ($) ($) (2)
------------------ ---- ------- ------ ------- ---------- -------- ------- --------
Ronald G. Harper.......... 2001 $220,298 -- $9,000 -- -- -- $ 6,218
Chairman of the Board, 2000 246,195 -- 8,716 -- -- -- 6,218
President & CEO 1999 252,531 -- 7,885 -- -- -- 10,682
Bryan D. Porto............ 2001 $145,002 -- -- -- -- -- $ 5,719
Group Vice President, 2000 172,329 -- -- -- -- -- 1,021
Operations & Diversification 1999 159,390 -- -- -- 10,000 -- 5,821
James C. Auten............ 2001 $105,482 -- -- -- -- -- $ 2,774
Group Vice President and 2000 114,851 -- -- -- -- -- 1,021
Chief Financial Officer 1999 117,185 -- -- -- -- -- 2,720
Bryan D. Gross............ 2001 $145,340 10,000 -- -- -- -- $ 4,240
Group Vice President, 2000 147,275 -- -- -- 3,000 -- 898
Technology 1999 90,848 10,000 -- -- 8,000 -- 3,403
Richard K. Abrams......... 2001 $144,996 $4,929 $6,888 -- -- -- $2,839
Group Vice President, 2000 144,996 -- 6,888 -- 10,000 -- --
Convenience Retailing
</Table>
(1) Represents automobile lease paid to or on behalf of Mr. Harper and
Mr. Abrams.
(2) The components of "All Other Compensation" for the fiscal years ended
September 30, 2001, 2000, and 1999 include (a) Company matching
contributions to the Company's 401(k) defined contribution plan (Mr.
Harper--$5,000, $0, and $4,800; Mr. Porto -- $4,698, $0, and $4,800; Mr.
Auten--$1,753, $0, and $1,699; Dr. Gross--$3,219, $0 and $2,544, and Mr.
Abrams--$2,839, $0 and $0 in 2001, 2000 and 1999, respectively); and (b)
supplemental life insurance premiums paid by the Company (Mr.
Harper--$6,218, $6,218, and $5,882, Mr. Porto--$1,021, $1,021, and $1,021;
Mr. Auten--$1,021, $1,021, and $1,021, and Dr. Gross--$1,021, $898 and
$859 in 2001, 2000 and 1999, respectively).
6
Options Exercised Table. The following table sets forth information concerning
each exercise of stock options by the named executive officers during the fiscal
year ended September 30, 2001, together with information concerning unexercised
options held by the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTIONS/SAR VALUES
<Table>
<Caption>
(a) (b) (c) (d) (e)
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised In-the-Money Options/SARs
on Exercise Realized Options/SARs at FY-End (#) at FY-End ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------------------------------------------------------------------------------------------------
James C. Auten * * -- / -- -- / --
Bryan D. Porto * * 6,666/3,334 ** -- / --
William D. Webb * * -- / -- -- / --
Bryan D. Gross * * 12,666/6,334 -- / --
Richard K. Abrams * * 3,333/6,667 -- / --
- -------------------------------------------------------------------------------------------------------------------
</Table>
* None exercised during the period.
** The unexercisable portion became exercisable December 2001.
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
The Company maintains a severance policy applicable to all full-time regular
employees with at least one year of full-time service. Eligible employees are
those who are terminated as the result of (1) a reduction of the Company's work
force, (2) elimination of a job or position, (3) inability to satisfactorily
perform required responsibilities, or (4) relocation of applicable Company
facilities. The amount of severance paid is based upon the employee's base
salary and length of service, and includes payment for vested but unused
vacations and pro rated automobile allowances, if applicable. The only named
executive officer who would receive aggregate severance in excess of $100,000
under the current policy is Mr. Ronald G. Harper. Mr. Harper's aggregate
severance would be approximately $115,000 at September 30, 2001.
Dr. David L. Huff, a director of the Company, is the owner of the "Huff
2000" software which Dr. Huff has licensed to the Company under an Exclusive
License Agreement. Under the terms of the agreement, the Company must pay Dr.
Huff a royalty equal to 50% of amounts received by the Company for the software
marketed under the name Huff Market Area Planner(TM). During fiscal year 2001,
the Company paid Dr. Huff $5,950 in royalties.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
was composed of Ronald G. Harper, President and Chief Executive Officer of the
Company, and independent outside directors, John C. Bumgarner, Jr., Joseph C.
McNay and Dr. David L. Huff. This Committee is responsible for overseeing and
administering the Company's executive compensation program described below.
The executive compensation program of the Company is reviewed and approved
annually by the Committee and is designed to serve the interests of the Company
and its stockholders by aligning executive compensation with stockholder
objectives and to encourage and reward management initiatives and good
performance. Specifically, the executive compensation program seeks to:
7
(i) implement compensation practices which allow the Company to attract and
retain highly qualified executives and maintain a competitive position in the
executive marketplace with employers of comparable size and in similar lines
of business;
(ii) enhance the compensation potential of executives who are in the best
position to contribute to the develop-ment and success of the Company by
providing the flexibility to compensate individual performance; and
(iii) directly align the interest of executives with the long-term interest
of stockholders through compensation opportunities in the form of Common
Stock ownership.
These objectives are met through a program comprised of base salary and
annual cash or stock incentive awards, which are tied to operating performance,
and long-term incentive opportunities primarily in the form of incentive stock
options.
Salary. The Committee considers annual salary adjustments for the Company's
executive officers, including those named in the Summary Compensation Table.
Salary adjustments are designed to reflect internal comparability,
organizational considerations and competitive data provided by outside surveys.
As a general rule, salary ranges are targeted toward the median of survey
results.
Incentive Awards. Executives are eligible for cash awards annually
based upon financial and nonfinancial results relative to pre-established
performance targets and objectives.
Stock Options. The Company's 1998 Stock Option Plan, approved by the
stockholders in 1998, permits the Committee to grant incentive or nonstatutory
stock options to executive officers. The plan provides for stock option awards
giving executives the right to purchase Common Stock over a five-year period at
the fair market value per share as of the date the option is granted. Options
generally become exercisable in three equal annual installments beginning one
year after grant. Neither Mr. Harper nor any other members of the Compensation
Committee are eligible to participate in the stock option plan. At April 26,
2002 there are options representing 36,000 shares outstanding under The 1998
Stock Plan applicable to the named executive officers.
Chief Executive Officer Compensation. Mr. Harper's overall compensation
package has decreased by approximately 15% during the three years ended
September 30, 2001 reflecting the overall reduction in corporate headcount with
cost containment initiatives.
THE COMPENSATION COMMITTEE
John C. Bumgarner, Jr.
Ronald G. Harper
Dr. David L. Huff
Joseph C. McNay
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ronald G. Harper, Chief Executive Officer of the Company, is the only
member of the Compensation Committee who is also an employee or officer of the
Company.
DIRECTORS' COMPENSATION
Members of the Board of Directors who are employees of the Company receive
no additional compensation as a result of their service as directors. Directors
who are not employees of the Company are compensated at the rate of $1,500 for
each board meeting attended and are reimbursed for any out-of-pocket expenses
incurred in attending meetings.
8
PERFORMANCE GRAPH
The following graph sets forth the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
preceding five fiscal years ended September 30, 2001 compared with the
cumulative total returns of the NASDAQ Stock Market--U.S. index and an industry
peer group. The comparison assumes $100 was invested on September 30, 1996 in
the Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[PERFORMANCE GRAPH]
<Table>
<Caption>
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------------
9/96 9/97 9/98 9/99 9/00 9/01
MPSI SYSTEMS INC. 100.00 167.00 116.14 270.98 187.16 43.87
NASDAQ STOCK MARKET (U.S.) 100.00 137.27 139.44 227.82 302.47 123.64
PEER GROUP 100.00 116.49 138.55 133.04 174.56 138.12
</Table>
For comparative purposes, the Company has identified a peer group including
companies who are competitors or who are known to provide services similar to
those provided by the Company. The peer group companies are CACI International
Incorporated, Information Resources Incorporated, Equifax Incorporated, Dun &
Bradstreet, Acxiom Corporation, SEI Investments Company, and Fair Issac &
Company, Inc.
APPOINTMENT OF INDEPENDENT AUDITORS
Effective April 17, 2002, Ernst & Young LLP declined to stand for
reelection as auditors of the Company. The reports of Ernst & Young LLP on the
Company's financial statements for the past two fiscal years did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope, or accounting principles. In connection with the
audits of the Company's financial statements for each of the two fiscal years
ended September 30, 2001 and 2000, and in the subsequent interim period, there
were no disagreements with Ernst & Young LLP on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to the satisfaction of Ernst & Young LLP would
have caused Ernst & Young LLP to make reference to the matter in their report.
Representatives of Ernst & Young LLP do not plan to attend the Annual Meeting.
The Company's Board of Directors has approved the appointment of Tullius
Taylor Sartain & Sartain LLP to act as the Company's independent auditors for
the current fiscal year, subject to ratification by the stockholders. Tullius
Taylor Sartain & Sartain LLP will be replacing Ernst & Young LLP, who have
served as the Company's independent auditors for several years. The decision of
the Board of Directors to appoint
9
Tullius Taylor Sartain & Sartain LLP is based on the recommendation of the Audit
Committee. In making its recommendation, the Audit Committee reviewed the
auditor's independence, the audit scope and audit fees.
An affirmative vote of a majority of the outstanding shares of Common Stock
present and voting at the meeting is required for ratification of the
appointment of the independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ITS
SELECTION OF INDEPENDENT AUDITORS
STOCKHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Stockholders to
be held in 2003, a stockholder proposal must be received by the Secretary at the
offices of the Company at the address set forth in the first page of this Proxy
Statement, not later than January 31, 2003.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the meeting, it is the intention of the persons named in the accompanying form
of proxy to vote the shares represented thereby on such matters in accordance
with their best judgment.
Whether or not you intend to be present at this meeting, you are urged to
return your proxy promptly. If you are present at this meeting and wish to vote
your shares in person, your proxy may be revoked upon request.
By Order of the Board of Directors
/s/ LINDA K. WELLS
LINDA K. WELLS
Secretary
Tulsa, Oklahoma
May 13, 2002
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED PREPAID ENVELOPE.
10
EXHIBIT A
MPSI SYSTEMS INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
board of directors. The committee shall be appointed by the board of directors
and shall comprise at least three directors, each of whom are independent of
management and the Company. Members of the committee shall be considered
independent if they have no relationship that may interfere with the exercise of
their independence from management and the Company. All committee members shall
be financially literate, or shall become financially literate within a
reasonable period of time after appointment to the committee, and at least one
member shall have accounting or related financial management expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, internal auditors and
management of the Company. In discharging its oversight role, the committee is
empowered to investigate any matter brought to its attention with full access to
all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The committee in carrying out is
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
EXHIBIT A
MPSI Audit Committee Charter 2
- --------------------------------------------------------------------------------
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
o The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of
the Company's shareholders. The committee shall have the ultimate
authority and responsibility to evaluate and, where appropriate,
replace the independent auditors. The committee shall discuss with the
auditors their independence from management and the Company and the
matters included in the written disclosures required by the
Independence Standards Board. Annually, the committee shall review and
recommend to the board the selection of the Company's independent
auditors, subject to shareholders' approval.
o The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting
and financial controls, including the Company's system to monitor and
manage business risk, and legal and ethical compliance programs.
Further, the committee shall meet separately with the internal auditors
and the independent auditors, with and without management present, to
discuss the results of their examinations.
o The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent
auditors under generally accepted auditing standards. The chair of the
committee may represent the entire committee for the purposes of this
review.
o The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report
on Form 10-K (or the annual report to shareholders if distributed prior
to the filing of Form 10-K), including their judgment about the
quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of the
disclosures in the financial statements. Also, the committee shall
discuss the results of the annual audit and any other matters required
to be communicated to the committee by the independent auditors under
generally accepted auditing standards.
2
<Table>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE MPSI SYSTEMS INC.
WITH- FOR ALL
FOR HOLD EXCEPT
ANNUAL MEETING OF STOCKHOLDERS 1. ELECTION OF DIRECTORS (except [ ] [ ] [ ]
THURSDAY, JUNE 20, 2002 as marked to the contrary below):
The undersigned hereby appoints Ronald G. NOMINEES:
Harper and Linda K. Wells proxies, with power to RONALD G. HARPER, JOHN C. BUMGARNER, JR., DR. DAVID L. HUFF,
act without the other and with power of JOSEPH C. MCNAY, JOHN J. MCQUEEN AND BRYAN D. PORTO
substitution, and hereby authorizes them to
represent and vote, as designated hereon, all the INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
shares of stock of MPSI Systems Inc. standing in NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE
the name of the undersigned with all powers which SPACE PROVIDED BELOW:
the undersigned would possess if present at the
Annual Meeting of Stockholders of the Company to --------------------------------------------------------------------
be held at Tulsa Federal Employees Credit Union,
First Floor, 9323 East 21st Street, Tulsa, FOR AGAINST ABSTAIN
Oklahoma 74129 on June 20, 2002, at 2:00 p.m. 2. Ratification of Tullius Taylor [ ] [ ] [ ]
Central Standard Time or any adjournment thereof: Sartain & Sartain LLP as the
independent certified public
accountants of the corporation.
In their discretion, the Proxies are authorized to vote on such other
business that may properly come before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please be sure to sign and date Date Please sign exactly as name appears hereon. When shares are held by
this Proxy in the box below. ______________ joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or
Stockholder sign above - Co-holder (if any) sign above other authorized officer. If a partnership, please sign in partnership
name by authorized person.
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
MPSI SYSTEMS INC.
4343 SOUTH 118TH EAST AVENUE
TULSA, OKLAHOMA 74146
AGENDA
o ELECTION OF DIRECTORS
o RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
o REPORT ON THE PROGRESS OF THE CORPORATION
o DISCUSSION ON MATTERS OF CURRENT INTEREST
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
</Table>