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 [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
PAREXEL International Corporation
(Name of Registrant as Specified In Its Charter)
PAREXEL International Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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[Parexel Logo]
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195 West Street, Waltham, Massachusetts 02451
Telephone: 781-487-9900
Fax: 781-487-0525
October 25, 2004
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
PAREXEL International Corporation (the "Company") to be held at 2:30 p.m.,
Eastern Standard Time, Thursday, December 16, 2004, at the Museum of Our
National Heritage located at 33 Marrett Road, Lexington, Massachusetts 02420.
At this meeting, you will be asked to consider and vote upon the following
matters:
(i) The election of two Class III Directors to the Company's Board of
Directors, each to serve for a three-year term continuing until the
annual meeting of stockholders in 2007 and until his successor is duly
elected and qualified;
(ii) The ratification of the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending June 30,
2005; and
(iii) The transaction of such other business as may properly come before
the meeting or any postponements or adjournments thereof.
The Board of Directors unanimously recommends that you vote FOR each of
these proposals.
Details regarding each of the matters to be acted upon at this meeting
appear in the accompanying Proxy Statement. Please give this material your
careful attention.
Whether you plan to attend the meeting or not, please complete, sign and
date the accompanying proxy card and return it in the enclosed postage-prepaid
envelope. It is important that your shares be voted whether you attend the
meeting in person or not. If you attend the meeting, you may vote in person even
if you have previously returned your proxy card. Your prompt cooperation is
greatly appreciated.
Very truly yours,
/s/ Josef von Rickenbach
Josef H. von Rickenbach
Chairman of the Board and Chief
Executive Officer
[PAREXEL LOGO]
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195 West Street, Waltham, Massachusetts 02451
Telephone: 781-487-9900
Fax: 781-487-0525
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 16, 2004
To the Stockholders of PAREXEL International Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of PAREXEL
International Corporation, a Massachusetts corporation (the "Company"), will be
held at 2:30 p.m., Eastern Standard Time, on Thursday, December 16, 2004, at the
Museum of Our National Heritage located at 33 Marrett Road, Lexington,
Massachusetts 02420, to consider and vote upon the following matters:
1. To elect two Class III Directors to the Company's Board of Directors,
each to serve for a three-year term continuing until the annual meeting
of stockholders in 2007 and until his successor is elected and
qualified;
2. To ratify the selection of Ernst & Young LLP, independent public
accountants, as auditors for the fiscal year ending June 30, 2005; and
3. To transact such other business as may properly come before the meeting
or any postponements or adjournments thereof.
The above items of business are more fully described in the Proxy Statement
accompanying this Notice. The Board of Directors has no knowledge of any other
business to be transacted at the Annual Meeting or at any adjournment thereof.
Only stockholders of record at the close of business on October 18, 2004
are entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. All stockholders are cordially invited to attend the Annual Meeting in
person. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, HOWEVER, YOU ARE
URGED TO SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE. You may revoke your proxy in the manner
described in the accompanying Proxy Statement at any time before it has been
voted at the Annual Meeting. Any stockholder attending the Annual Meeting may
vote in person even if he or she has returned a proxy.
By Order of the Board of Directors,
/s/ Susan H. Alexander
Susan H. Alexander
Secretary
Waltham, Massachusetts
October 25, 2004
[Parexel Logo]
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PROXY STATEMENT
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October 25, 2004
This Proxy Statement is being furnished by PAREXEL International
Corporation, a Massachusetts corporation ("PAREXEL" or the "Company") to holders
of common stock, par value $.01 per share ("Common Stock"), of PAREXEL in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board") for use at the Annual Meeting of Stockholders of the
Company to be held at 2:30 p.m., Eastern Standard Time, on Thursday, December
16, 2004, and at any adjournments or postponements thereof (the "Meeting"), at
the Museum of Our National Heritage located at 33 Marrett Road, Lexington,
Massachusetts 02420. The Company's 2004 Annual Report is being mailed with this
Proxy Statement on or about October 25, 2004 to all stockholders entitled to
vote at the Meeting.
The purpose of the Meeting is to consider and vote upon the following
matters:
1. To elect two Class III Directors to the Company's Board of Directors,
each to serve for a three-year term continuing until the annual meeting
of stockholders in 2007 and until his successor is elected and
qualified;
2. To ratify the selection of Ernst & Young LLP, independent public
accountants, as auditors for the fiscal year ending June 30, 2005; and
3. To transact such other business as may properly come before the meeting
or any postponements or adjournments thereof.
The Board has fixed the close of business on October 18, 2004 as the record
date (the "Record Date") for the determination of the Company's stockholders
entitled to notice of, and to vote at, the Meeting. Accordingly, only holders of
record of Common Stock as of the close of business on the Record Date will be
entitled to notice of, and to vote at, the Meeting or at any adjournment or
postponement thereof. As of the Record Date, 25,982,267 shares of the Company's
Common Stock were issued and outstanding.
The holders of Common Stock are entitled to one vote per share on any
proposal presented at the Meeting. Stockholders may vote in person or by proxy.
Execution of a proxy will not in any way affect a stockholder's right to attend
the Meeting and vote in person. Any proxy given pursuant to this solicitation
may be revoked by the person giving it at any time before it is voted. Proxies
may be revoked by (1) filing with the Secretary of the Company, before the
taking of the vote at the Meeting, a written notice of revocation bearing a
later date than the proxy, (2) duly executing a later-dated proxy relating to
the same shares and delivering it to the Secretary of the Company before the
taking of the vote at the Meeting or (3) attending the Meeting
and voting in person (although attendance at the Meeting will not in and of
itself constitute a revocation of a proxy unless the stockholder affirmatively
revokes the proxy). Any written notice of revocation or subsequent proxy should
be sent so as to be delivered to PAREXEL International Corporation, 195 West
Street, Waltham, Massachusetts 02451, Attention: Secretary, at or before the
taking of the vote at the Meeting.
The persons named as attorneys in the proxy are officers of the Company.
All properly executed proxies returned in time to be counted at the Meeting will
be voted in accordance with the instructions contained therein, and if no choice
is specified, the proxies will be voted in favor of the matters set forth in the
accompanying Notice of Meeting.
The representation in person or by proxy of the holders of at least a
majority of the shares of Common Stock entitled to vote at the Meeting is
necessary to establish a quorum for the transaction of business at the Meeting.
The affirmative vote of the holders of a plurality of the shares of Common Stock
voting is required for the election of the Class III Directors (Proposal 1). The
affirmative vote of the holders of a majority of the shares of Common Stock
voting is required to ratify the selection of Ernst & Young LLP as the Company's
auditors (Proposal 2).
Shares which abstain from voting on one or more matters, and shares held in
"street name" by brokers or nominees who indicate on their proxies that they do
not have discretionary authority to vote such shares as to one or more
particular matters ("broker non-votes"), will be counted for purposes of a
quorum, but will not be counted as votes in favor of any matter. Such shares
will also not be counted as voting on such matter. Accordingly, abstentions and
broker non-votes will have no effect on the outcome of voting on Proposals 1 and
2 at the Meeting.
The Board knows of no other matters to be presented at the Meeting. If any
other matters are properly presented for consideration at the Meeting (or any
adjournment or postponements thereof), the persons named in the enclosed form of
proxy and voting thereunder will have the discretion to vote on such matters in
accordance with their best judgment.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Company's Common Stock as of September 30,
2004 (unless otherwise indicated) (i) by each person who is known by the Company
to own beneficially more than 5% of the outstanding shares of Common Stock, (ii)
by each current Director of the Company, (iii) by each executive officer of the
Company named in the Summary Compensation Table on page 16, and (iv) by all
current Directors and executive officers of the Company as a group. Unless
otherwise indicated below, to the knowledge of the Company, all persons listed
below have sole voting and investment power with respect to their shares of
Common Stock, except to the extent authority is shared by spouses under
applicable law.
<Table>
<Caption>
SHARES BENEFICIALLY PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER OWNED(1) BENEFICIALLY OWNED(1)
- ------------------------ ------------------- ---------------------
Third Avenue Management, LLC(2)........................... 3,991,559 15.3%
Wellington Management Company, LLP(3)..................... 3,213,600 12.3%
Vanguard Specialized Funds -- Vanguard Health Care
Fund(4)................................................. 1,570,200 6.1%
Barclays Global Fund Advisors(5).......................... 1,546,152 5.9%
Franklin Advisers, Inc.(6)................................ 1,501,603 5.8%
A. Dana Callow, Jr.(7).................................... 90,336 0.3%
A. Joseph Eagle(8)........................................ 19,185 0.1%
Patrick J. Fortune, Ph.D.(9).............................. 52,004 0.2%
Richard L. Love(10)....................................... 5,835 *
Serge Okun(11)............................................ 89,003 0.3%
William U. Parfet(12)..................................... 23,704 0.1%
Josef H. von Rickenbach(13)............................... 441,054 1.7%
Andrew L. Smith(14)....................................... 60,000 0.2%
Carl A. Spalding(15)...................................... 265,227 1.0%
James F. Winschel, Jr.(16)................................ 146,507 0.6%
Michael E. Woehler, Ph.D.(17)............................. 47,445 0.2%
All executive officers and Directors as a group (15
persons)(18)............................................ 1,413,649 5.2%
</Table>
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* Less than 0.1 % of the outstanding Common Stock.
(1) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of such
shares. In calculating the percentage of shares of Common Stock
beneficially owned by each person or entity listed, the number of shares of
Common Stock deemed outstanding includes: (i) 25,968,992 shares of Common
Stock outstanding as of September 30, 2004; and (ii) shares issuable
pursuant to options held by the respective person or group which may be
exercised within 60 days after September 30, 2004 ("Presently Exercisable
Stock Options"), as set forth below.
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(2) The mailing address for this entity is 767 Third Avenue, New York, New York
10017. Shares beneficially owned are stated as of June 30, 2004, as
reflected in a Schedule 13F-HR filed with the Securities and Exchange
Commission (the "SEC"). This entity is a registered investment company, has
sole voting authority with regard to 3,862,259 of these shares and no
voting authority with regard to 129,300 of these shares.
(3) The mailing address for this entity is 75 State Street, Boston,
Massachusetts 02109. Shares beneficially owned are stated as of June 30,
2004, as reflected in a Schedule 13-F filed with the SEC. This entity has
sole voting power with regard to 1,480,700 of these shares, shared voting
power with regard to 41,900 of these shares and no voting power with regard
to 1,691,000 of these shares. This entity is a registered investment
adviser.
(4) The mailing address for this entity is 100 Vanguard Boulevard, Malvern,
Pennsylvania 19355. Shares beneficially owned are stated as of December 31,
2003, as reflected in a Schedule 13-G filed with the SEC. This entity is a
registered investment company and has sole voting and shared investment
power with regard to all of these shares.
(5) The mailing address for this entity is 45 Fremont Street, San Francisco,
California 94105. Shares beneficially owned are stated as of June 30, 2004,
as reflected in a Schedule 13-F filed with the SEC. This entity is a
registered investment company, has sole voting authority with regard to
1,364,296 of these shares and no voting authority with regard to 181,856 of
these shares.
(6) The mailing address for this entity is One Franklin Parkway, San Mateo,
California 94403. Shares beneficially owned are stated as of June 30, 2004,
as reflected in a Schedule 13-F filed with the SEC. This entity is a
registered investment company.
(7) Consists of shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(8) Consists of shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(9) Includes 41,835 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(10) Includes 4,835 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(11) Includes 85,003 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(12) Includes 12,004 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(13) Includes 331,250 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(14) Consists of shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(15) Includes 262,500 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(16) Includes 123,750 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options and 3,200 shares of Common Stock held as
custodian for children.
(17) Includes 42,500 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
(18) Includes 1,234,098 shares of Common Stock issuable pursuant to Presently
Exercisable Stock Options.
4
There are no material legal proceedings to which any Director, executive
officer, affiliate or owner of record or beneficially of more than 5% of PAREXEL
common stock, or any associate of any such individuals or entities, is a party
adverse to PAREXEL or any of its subsidiaries or has a material interest adverse
to PAREXEL or any of its subsidiaries.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Company's Restated Articles of Organization and
Section 8.06(b) of Chapter 156D of the Massachusetts General Laws, the Company's
Board is divided into three classes: the Class I, Class II and Class III
Directors. The term of office of each class of Directors is three years, with
one class of Directors being elected at each Annual Meeting of Stockholders. The
Class III Directors' terms will expire at this Meeting. The two nominees for
Class III Directors are A. Dana Callow, Jr. and Josef H. von Rickenbach. The
information below sets forth for each member of the Board, including the Class
III nominees for election at the Meeting, such person's age, principal
occupations during the past five years and certain other information.
All shares of Common Stock that are entitled to vote and are represented at
the Meeting by properly executed proxies received prior to or at the Meeting and
not duly and timely revoked, will be voted at such Meeting in accordance with
the instructions indicated in such proxies. Shares represented by all proxies
received by the Board and not marked so as to withhold authority to vote for the
nominees to the Board will be voted (unless a nominee is unable or unwilling to
serve) FOR the election of the nominees named below. The election of the
Directors will be determined by the affirmative vote of the holders of a
plurality of the shares of common stock voting at the Meeting. Each of the
nominees is presently a Director, and each has indicated a willingness to serve
as Director, if elected. The Company's Nominating and Corporate Governance
Committee has nominated the persons named below for election as Directors of the
Company. The persons named in the enclosed proxy, James F. Winschel, Jr. and
Susan H. Alexander, will vote to elect the nominees named below as Directors of
the Company unless authority to vote for the election of any or all of the
nominees is withheld by marking the proxy to that effect. Each nominee is
presently serving as a Director and has consented to being named in this proxy
statement and to serve if elected. If for any reason any nominee should become
unavailable of reelection prior to the Annual Meeting, the person acting under
the proxy may vote the proxy for the election of a substitute. It is not
presently expected that any of the nominees will be unavailable for election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE CLASS III
DIRECTOR NOMINEES NAMED BELOW.
CLASS III DIRECTORS: NOMINEES FOR ELECTION AT THE 2004 ANNUAL MEETING OF
STOCKHOLDERS
A. DANA CALLOW, JR., 52, was elected a Director of the Company in June 1986
and is the Presiding Director of the Board, a member of the Audit and Finance
Committee of the Board and Chairman of the
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Nominating and Corporate Governance Committee of the Board. Since January 1997,
Mr. Callow has served as the Managing General Partner of Boston Millennia
Partners Limited Partnership and Boston Millennia Partners III Limited
Partnership, both venture capital firms. Since 1983, Mr. Callow has also served
as a general partner of several Boston Capital Ventures' Limited Partnerships.
He is a member of the Board of Trustees of Tufts University and the Board of
Overseers of Tufts University School of Medicine. He is also a member of the
Board of the Tuck Center for Private Equity and Entrepreneurship at Dartmouth
College and is a Director of Jobs for Massachusetts, a non-profit organization.
He is currently a director of PHT Technologies, Inc., and several other private
companies.
JOSEF H. VON RICKENBACH, 49, founded PAREXEL in 1983 and has served as a
Director, Chairman of the Board and Chief Executive Officer since 1983 and
served as President from 1983 until April 2001. Mr. von Rickenbach presents
regularly at North American and European investor and industry conferences, and
pharmaceutical and other professional industry meetings. He was named the Ernst
& Young 1997 New England Region Entrepreneur of the Year. Mr. von Rickenbach has
also worked in the past for Schering-Plough, Inc., 3M (East), a division of 3M
Company, and ERCO (now ENSECO), Inc., a diversified testing and technical
consulting company. Mr. von Rickenbach received an M.B.A. from the Harvard
University Graduate School of Business Administration and has an undergraduate
degree from the College of Economics and Administration in Lucerne, Switzerland.
CLASS I DIRECTORS: TERM EXPIRES AT 2005 ANNUAL MEETING OF STOCKHOLDERS
PATRICK J. FORTUNE, PH.D., 57, was elected a Director of the Company in
June 1996 and is Chairman of the Compensation Committee of the Board and a
member of the Audit and Finance Committee of the Board. Since July 2001, Dr.
Fortune has served as a Partner of Boston Millennia Partners III Limited
Partnership, a venture capital firm, and since February 2002 has served as
Executive Chairman of Knowledge Impact Systems, Inc., a software end user
training company. From April 1999 to June 2001, he served as President, Chief
Operating Officer and a director of New Era of Networks, Inc., an internet
software and services company. From October 1995 to March 1999, Dr. Fortune was
Vice President, Information Technology and Chief Information Officer of Monsanto
Company, an agricultural, pharmaceutical and health products company. From
August 1994 to July 1995, Dr. Fortune was President and Chief Operating Officer,
Chief Information Officer and a member of the Board of Directors of Coram
Healthcare Corporation, a medical therapy services company. From December 1991
to August 1994, Dr. Fortune was Corporate Vice President, Information Management
at Bristol-Myers Squibb, a pharmaceutical company. Prior to that, Dr. Fortune
was Senior Vice President and General Manager of Packaging Corporation of
America, a subsidiary of Tenneco, and held several management positions with
Baxter International, Inc., including: Corporate Vice President; President,
Parenteral Products Division; Vice President, Research and Development; and Vice
President, Information Services.
WILLIAM U. PARFET, 57, was elected a Director of the Company in June 2001
and is Chairman of the Audit and Finance Committee of the Board and a member of
the Nominating and Corporate Governance Committee of the Board. Since May 1999
Mr. Parfet has served as the Chairman and Chief Executive Officer
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of MPI Research, Inc., Mattawan, Michigan, a research laboratory conducting risk
assessment toxicology studies. From October 1995 to May 1999, he served as
Co-Chairman of MPI Research, LLC and from 1993 to 1996 as President and Chief
Executive Officer of Richard-Allan Medical Industries, a worldwide manufacturer
of surgical products. Prior to that, he had served in a variety of positions at
The Upjohn Company, a pharmaceutical company, most recently as Vice Chairman of
the Board. He is a director of Stryker Corporation, CMS Energy Corporation and
Monsanto Company.
CLASS II DIRECTORS: TERM EXPIRES AT THE 2006 ANNUAL MEETING OF STOCKHOLDERS
A. JOSEPH EAGLE, 57, was elected a Director of the Company in March 1998
and is a member of the Compensation Committee of the Board. Since September
2001, Mr. Eagle has served as Chairman of Blackspot Interactive Limited, a road
safety products and services company in the United Kingdom. From April 2000 to
September 2001, Mr. Eagle primarily acted as a private investor. From March 1998
to April 2000, Mr. Eagle served as President of the Company's Medical Marketing
Services Division and Managing Director of PAREXEL MMS Europe Limited. From 1990
to March 1998, Mr. Eagle served as Managing Director and Chairman of PPS Europe
Limited, a medical marketing services company, which was acquired by the Company
in March 1998. Prior to 1985, Mr. Eagle served as Marketing Director of Ciba
Geigy UK Ltd., a pharmaceutical company, and was a Vice President of both Pfizer
Asia Management Centre and Pfizer Africa Middle East, a pharmaceutical company.
Prior to his service at Pfizer, Mr. Eagle was a product manager at Wellcome
International, a pharmaceutical company.
RICHARD L. LOVE, 61, was elected a Director of the Company in September
2002 and is a member of the Compensation Committee of the Board. Since January
2003, Mr. Love has served as Chief Operating Officer of Translational Genomics
Research Institute (TGen), a medical research organization, and since January
2002, he has served as a consultant to ILEX Oncology, an oncology focused
pharmaceutical company. From October 1994 to January 2002, Mr. Love served as
President and Chief Executive Officer of ILEX Oncology. From 1991 to 1994, he
served as Chief Operating Officer of the Cancer Therapy and Research Center, a
cancer treatment center focused on the clinical evaluation of new agents. From
1983 to 1991, Mr. Love served as Chief Executive Officer of Triton Biosciences,
Inc., a biotechnology company. Mr. Love currently serves as a director of Xilas
Medical, ILEX Oncology and Signase Inc.
SERGE OKUN, 58, was elected a Director of the Company in November 1997 and
is a member of the Compensation Committee of the Board. Since June 2003, Mr.
Okun has primarily acted as a private investor. From August 1996 to June 2003,
Mr. Okun served as President and Chief Executive Officer of PST International,
and from August 1996 to July 2000, served as President of BMTS, both privately
held ventures in health care technology. Prior to August 1996, Mr. Okun held
several senior management positions including Corporate Executive Vice President
and Corporate Senior Vice President at Dun & Bradstreet, in addition to various
senior management positions at IMS International and A.C. Nielson Company, two
companies constituting Dun & Bradstreet's Marketing Information Services
Division. At IMS International, Mr. Okun held several positions including
President, Chief Executive Officer, Senior Vice President, President IMS
America, President IMS France and General Manager IMS Canada. At A.C. Nielson
Company, Mr. Okun
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was President and Chief Executive Officer. Mr. Okun was a director of Adidas AG
from December 1995 to December 1998 and is currently a director of PST
International.
No Director is related by blood, marriage or adoption to any other Director
or any executive officer of PAREXEL.
CORPORATE GOVERNANCE
The Company's Board has long believed that good corporate governance is
important to ensure that the Company is managed for the long-term benefit of
stockholders. The Company's Board has continued to review its governance
practices in light of the Sarbanes-Oxley Act of 2002, new SEC rules and
regulations and the listing standards of Nasdaq. This proxy describes key
corporate governance guidelines and practices that the Company has adopted.
Complete copies of the corporate governance guidelines (as reflected in its
Board of Directors Charter and Corporate Governance Principles), committee
charters and code of conduct described below are available on the Company's
website at http://www.parexel.com under the category "Investor
Relations-Corporate Governance." Alternatively, you can request a copy of any of
these documents by writing to our Secretary.
CORPORATE GOVERNANCE GUIDELINES
The Board has adopted corporate governance guidelines to assist the Board
in the exercise of its duties and responsibilities and to serve the best
interests of the Company and its stockholders. These guidelines, which provide a
framework for the conduct of the Board's business, include that:
- the principal responsibility of the Directors is to oversee the
management of the Company;
- a majority of the members of the Board shall be independent Directors;
- the independent Directors meet regularly in executive session;
- Directors have full and free access to management and, as necessary and
appropriate, independent advisors;
- new Directors participate in an orientation program and all Directors are
expected to participate in continuing Director education on an ongoing
basis; and
- at least annually the Board and its committees will conduct a
self-evaluation to determine whether they are functioning effectively.
BOARD DETERMINATION OF INDEPENDENCE
Under the Nasdaq rules that become applicable to the Company on October 31,
2004, a Director of the Company will only qualify as an "independent director"
if, in the opinion of the Company's Board of Directors, that person does not
have a relationship which would interfere with the exercise of independent
8
judgment in carrying out the responsibilities of a Director. The Company's Board
of Directors has determined that none of Messrs. Callow, Eagle, Fortune, Love,
Okun or Parfet has a relationship which would interfere with the exercise of
independent judgment in carrying out the responsibilities of a Director and that
each of these Directors is an "independent director" as defined under Rule
4200(a)(15) of the Nasdaq rules.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company's Board has adopted a Code of Business Conduct and Ethics.
While no code of conduct can replace the thoughtful behavior of an ethical
director, officer or employee, the Company feels the Code of Business Conduct
and Ethics will, among other things, focus its board and management on areas of
ethical risk, provide guidance in recognizing and dealing with ethical issues,
provide mechanisms to report unethical conduct and generally help foster a
culture of honesty and accountability. Any amendment or waiver of the Code of
Business Conduct and Ethics may only be made by the Board. A current copy of the
Code of Business Conduct and Ethics is posted on the Company's website,
http://www.parexel.com under the category "Investor Relations-Corporate
Governance." Any future amendments to or waivers from the Code of Business
Conduct and Ethics that applies to the Company's principal executive officer,
principal financial officer, principal accounting officer or controller or
persons performing similar functions, and relates to any element of the code of
ethics definition enumerated in paragraph (b) of Item 406 of Regulation S-K,
will be promptly disclosed on the Company's website and on Form 8-K. In
addition, copies of the Code of Business Conduct and Ethics are available to all
stockholders upon request.
The Board also has a Presiding Director, an independent member whom: (i)
chairs meetings of the independent Directors in executive session; (ii) meets
with any Directors not adequately performing his or her duties; (iii)
facilitates communications between members of the Board and the Chairman; (iv)
works with the Chairman in the preparation of Board meeting agendas and
determining the need for any special meetings; and (v) consults with the
Chairman regarding Corporate governance and Board performance. Mr. Callow is the
current Presiding Director of the Board.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board has the responsibility for establishing broad corporate policies
and reviewing the Company's overall performance rather than day-to-day
operations. The Board's primary responsibility is to oversee the management of
the Company and, in so doing, serve the best interests of the Company and its
stockholders. The Board selects, evaluates and provides for the succession of
executive officers and, subject to stockholder election, Directors. It reviews
and approves corporate objectives and strategies, and evaluates significant
policies and proposed major commitments of corporate resources. Management keeps
the Directors informed of the Company's activities through regular reports and
presentations at board and committee meetings.
The Board met six times during the fiscal year ended June 30, 2004. The
Board has a standing Audit and Finance Committee, Compensation Committee and
Nominating and Corporate Governance Committee. Each committee operates under a
charter approved by the Board. Copies of the charters are available on the
9
Company's website, http://www.parexel.com under the category "Investor
Relations -- Corporate Governance."
The Board has determined that all of the members of each of the Board's
three standing committees are independent as defined under the new rules of the
Nasdaq Stock Market that become applicable to the Company on October 31, 2004,
including, in the case of all members of the Audit and Finance Committee, the
independence requirements contemplated by Rule 10A-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In addition, all of the
members of the Audit and Finance Committee are independent as defined by the
current Nasdaq rules that apply to the Company until October 31, 2004 and
otherwise satisfy Nasdaq's eligibility requirements for audit committee
membership.
The Audit and Finance Committee, which oversees the accounting and
financial functions of the Company, met seven times during the fiscal year ended
June 30, 2004. The Audit and Finance Committee has a written charter, adopted on
February 26, 2004, a copy of which is attached to this Proxy Statement as
Appendix A. Messrs. Callow, Fortune and Parfet are the current members of the
Audit and Finance Committee. The Board has determined that Mr. Parfet is an
"audit committee financial expert" as defined in Item 401(h)(2) of Regulation
S-K of the Exchange Act and is independent as defined by Item 7(d)(3)(iv) of
Schedule 14A of the Exchange Act.
The Compensation Committee of the Board, which reviews and makes
recommendations concerning executive compensation and reviews and approves
option grants and administers the Company's stock plans, met 5 times during the
fiscal year ended June 30, 2004. Messrs. Eagle, Fortune, Love and Okun are the
current members of the Compensation Committee. Mr. Eagle was appointed to the
Compensation Committee effective September 9, 2004.
The Nominating and Corporate Governance Committee of the Board has the
following principal duties: (i) to identify individuals qualified to serve as
members of the Board; (ii) recommend to the Board the persons to be nominated by
the Board for election as Directors at the annual meeting of stockholders; (iii)
develop and recommend to the Board a set of corporate governance principles
applicable to the Company; and (iv) oversee the evaluation of the Board and
management.
The members of the Nominating and Corporate Governance Committee are
Messrs. Callow and Parfet. The Nominating and Corporate Governance Committee met
four times during the fiscal year ended June 30, 2004.
During the fiscal year ended June 30, 2004, all of the Company's Directors
attended at least 75% of the aggregate of the total number of meetings of the
Board and all committees of the Board on which he served.
DIRECTOR CANDIDATES
To be considered as a Director nominee by the Nominating and Corporate
Governance Committee, an individual must have high personal and professional
character and integrity, exceptional ability and judgment, experience in senior
corporate management and demonstrated leadership skills, relevant industry
knowledge,
10
experience in international operations and markets and accounting/finance,
sufficient time to devote to Company matters, and an ability to work with the
other Directors to collectively serve the long-term interests of the
stockholders. In addition to these minimum requirements, the Nominating and
Corporate Governance Committee will also evaluate whether the nominee's skills
are complementary to the existing Directors' skills, and the Board's need for
operational, management, financial, international, industry-specific or other
expertise. The committee also evaluates whether the nominee meets the criteria
set forth in the Nasdaq rules for independence.
The Nominating and Corporate Governance Committee invites Board members to
submit nominations for Director. Stockholders may recommend individuals to the
Nominating and Corporate Governance Committee for consideration as potential
Director candidates by submitting their names, together with appropriate
biographical information and background materials and a statement as to whether
the stockholder or group of stockholders making the recommendation has
beneficially owned more than 5% of the Company's common stock for at least a
year as of the date such recommendation is made, to Nominating and Corporate
Governance Committee, c/o Corporate Secretary, PAREXEL International
Corporation, 195 West Street, Waltham, MA 02451. Assuming that appropriate
biographical and background material has been provided on a timely basis, the
Committee will evaluate stockholder-recommended candidates by following
substantially the same process, and applying substantially the same criteria, as
it follows for candidates submitted by others. See "Stockholder Proposals and
Communications" below. All nominees are evaluated by the Nominating and
Governance Committee to determine whether they meet the minimum qualifications
set forth above and whether they will satisfy the Board's needs for specific
expertise at that time. The Nominating and Corporate Governance Committee
nominates persons for election as Directors at the Company's annual meeting of
stockholders.
No stockholder has properly nominated anyone for election as a Director at
this Annual Meeting.
DIRECTORS ATTENDANCE AT ANNUAL MEETINGS
None of the Directors attended the Annual Meeting of stockholders held on
November 11, 2003, other than Josef H. von Rickenbach. Commencing in 2004,
Directors are expected to attend the Company's annual meetings of stockholders.
11
EXECUTIVE OFFICERS
Executive officers serve at the discretion of the Board on an annual basis
and serve until the first meeting of Directors following the next annual meeting
of stockholders, or at such other meeting as the Directors determine in
accordance with the Company's By-laws, and until their successors have been duly
elected and qualified. The current executive officers of the Company are as
follows:
<Table>
<Caption>
NAME AGE POSITION(S)
- ---- --- -----------
Josef H. von Rickenbach................... 49 Chairman of the Board and Chief Executive Officer
Carl A. Spalding.......................... 59 President and Chief Operating Officer
James F. Winschel, Jr. ................... 55 Senior Vice President and Chief Financial Officer
Michael E. Woehler, Ph.D. ................ 59 President, Clinical Research Services
Andrew L. Smith........................... 55 President, Medical Marketing Services
Kurt A. Brykman........................... 47 President, PAREXEL Consulting
Mark A. Goldberg, M.D. ................... 44 President, Perceptive Informatics, Inc.
Ulf Schneider, Ph.D....................... 47 Senior Vice President and Chief Administrative
Officer
Susan H. Alexander........................ 47 Senior Vice President, General Counsel and
Secretary
</Table>
JOSEF H. VON RICKENBACH (PLEASE SEE "ELECTION OF DIRECTORS").
CARL A. SPALDING has served as President and Chief Operating Officer of the
Company since April 2001. From June 1998 to September 2000 Mr. Spalding served
as Executive Vice President and Group President, Healthcare Product Services of
Cardinal Health, Inc., a provider of healthcare products and services. From June
1992 to June 1998, he served as Divisional Vice President, Ross Pediatric
Products of Abbott Laboratories, a pharmaceutical and healthcare products
manufacturer. Prior to that, Mr. Spalding was with Johnson & Johnson for 22
years in various domestic and international positions. Mr. Spalding received his
Bachelor's Degree in Business Administration from Northwestern University.
JAMES F. WINSCHEL, JR. has served as Senior Vice President and Chief
Financial Officer of the Company since June 2000. From January 1999 to May 2000,
Mr. Winschel served as President of U.B. Vehicle Leasing, Inc., a subsidiary of
The Bank of Tokyo Mitsubishi Ltd. ("BTM"). From December 1995 to September 1999,
Mr. Winschel served as Executive Vice President and Chief Financial Officer of
BTM Capital Corporation, another BTM subsidiary. From 1993 to 1995, Mr. Winschel
served as Vice President-Finance for the Physician Services Division of Caremark
International, Inc., a healthcare services company. From 1989 to 1993, he held a
variety of executive positions at Whirlpool Financial Corporation, including
Vice President and Managing Director of its commercial finance division and Vice
President and Chief Financial Officer. Prior to 1989, Mr. Winschel had a 16 year
career with General Electric Company and its subsidiaries, holding various
positions including serving in the financial management ranks of General
Electric Capital Corporation. Mr. Winschel received B.S. and M.B.A. degrees from
Syracuse University.
MICHAEL E. WOEHLER, Ph.D. has served as President, Clinical Research
Services, since January 2002. From August 2001 to January 2002, Mr. Woehler
served as Senior Vice President-Clinical Research Services.
12
From May 1999 to June 2001, he served as President and Chief Executive Officer
of Mosaic Technologies, Inc., a privately owned DNA application technology
marketing company. Prior to that, Mr. Woehler was with Pharmacia Biotech Inc., a
biotechnology company, for 18 years, most recently serving, from January 1997 to
February 1999, as President of Amersham Pharmacia Biotech Inc., its North
American holding company subsidiary, and Vice President, Separations Business
Area. Mr. Woehler received his B.A. in biology and chemistry from Northwestern
University and a Ph.D. in immunology from Marquette University.
ANDREW L. SMITH has served as President, Medical Marketing Services since
April 2000. From August 1996 to August 1999, Mr. Smith served as the Chief
Executive Officer of Cerebrus plc, a UK based biotechnology start-up company.
From December 1990 to August 1996, Mr. Smith served as Senior Vice President and
Managing Director of SmithKline Beecham, a U.K. pharmaceutical company. Mr.
Smith received his B.A. (Hons) in Natural Sciences (Biochemistry and Genetics)
and M.A. (Hons.) from the University of Cambridge in the United Kingdom.
KURT A. BRYKMAN has served as President, PAREXEL Consulting since September
2004. Prior to joining the Company, Mr. Brykman served as Vice President of the
health care and non-foods consumer packaged goods practice area at EURO RSCG
Meridian Consulting Group, a sales and marketing management consulting firm,
from April 2000 to September 2004. From February 1988 to April 2000, he served
as Vice President of the Customer Marketing Group of Schering-Plough, Inc., a
pharmaceutical company. Mr. Brykman received his B.S. in mathematics and
business from Michigan State University and an M.B.A. from the Kellogg Graduate
School of Management at Northwestern University.
MARK A. GOLDBERG, M.D. has served as President, Perceptive Informatics,
since July 2000. From July 1999 to July 2000, Dr. Goldberg served as Senior Vice
President in the Company's Clinical Research Services business and was
responsible for managing the Advanced Technology and Informatics Group
subdivision, which included IT applications support for both internal operations
and external clients. Dr. Goldberg joined PAREXEL in 1997 as Vice President and
established the Company's medical imaging group. Prior to joining PAREXEL, Dr.
Goldberg served as President and Director of WorldCare, Inc., a telehealth
spin-off from Massachusetts General Hospital established in 1991. Dr. Goldberg
received his undergraduate degree in Computer Science and Engineering from
Massachusetts Institute of Technology, and received his M.D. degree from the
University of Massachusetts Medical School.
ULF SCHNEIDER, PH.D. has served as Senior Vice President and Chief
Administrative Officer of the Company since June 2000 and Managing Director of
PAREXEL GmbH since 1996, and is responsible for coordination of world wide
administrative activities of the Company. From 1990 to 1992, he served as
Director of Finance and Administration of PAREXEL GmbH and from 1992 to 1996 he
served as Vice President of Finance of PAREXEL GmbH. Prior to joining PAREXEL,
Dr. Schneider held several financial management positions at Schering AG, a
pharmaceutical company, in Germany and was an Assistant Professor of Banking and
Finance at the Berlin Technical University. Dr. Schneider received his Masters
degree in business administration and Ph.D. in business management from the
Berlin Technical University.
13
SUSAN H. ALEXANDER has served as Senior Vice President, General Counsel and
Secretary of the Company since September 2003. Prior to joining the Company, Ms.
Alexander served as General Counsel and Secretary for IONA Technologies PLC, a
software company, from June 2001 to September 2003. From January 1995 to June
2001, she served as Counsel for Cabot Corporation, a specialty chemical company.
From 1990 to 1995, Ms. Alexander was a partner with the law firm of Hinckley
Allen & Snyder of Boston, Massachusetts. Prior to joining Hinckley Allen &
Snyder, Ms. Alexander was a partner with the law firm of Fine & Ambrogne of
Boston, Massachusetts. Ms. Alexander received her B.A. from Wellesley College
and received her J.D. from Boston University School of Law.
No executive officer is related by blood, marriage or adoption to any other
executive officer or any Director of PAREXEL.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company contributed all of the shares of stock of FWPS Group Limited, a
company organized under the laws of the United Kingdom, which it acquired in
January 2003, to its indirect majority owned subsidiary, Perceptive Informatics,
Inc. ("Perceptive"), in July 2003. Perceptive issued shares of its common stock
to PAREXEL International Trust, a wholly owned subsidiary of the Company, as
consideration for this contribution. As a result of the transaction, the
Company's ownership in Perceptive increased from 97.4% to 98.2%. Certain
executive officers and Directors of the Company own approximately 0.87% of the
issued and outstanding common stock of Perceptive. The terms of this transaction
were approved by an independent committee of the Board of Directors of the
Company, the members of which neither serve as Director of, nor own any shares
of stock of, Perceptive and using a valuation prepared by an independent third
party.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and Directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, Directors and greater-than-ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16 forms they file.
Based solely on the information provided to it, the Company believes that
during the fiscal year ended June 30, 2004 all of its officers, Directors and
greater-than-ten-percent stockholders complied with all Section 16(a) filing
requirements, with the exceptions of: Mr. Callow, whom reported in fiscal year
2005 a stock sale made in April 1997 late on a Form 5; Mr. Spalding, whom
reported in fiscal year 2005 an employee stock option grant made in September
2004 late on a Form 4; and Mr. Smith, whom reported in fiscal year 2004 a stock
sale made in September 2003 late on a Form 4.
14
REPORT OF THE AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee of the Company's Board of Directors is
composed of three members and acts under a written charter as noted above. In
February 2004, the Audit and Finance Committee reviewed and reassessed the
adequacy of its charter and recommended changes to the Board. Based on the
recommendations of the Audit and Finance Committee, the Board adopted an amended
and restated Audit and Finance Committee charter. A copy of the revised Audit
and Finance Committee charter is attached to this proxy statement as Appendix A.
All of the members of the Audit and Finance Committee are independent as defined
under the new rules of the Nasdaq Stock Market that become applicable to the
Company on October 31, 2004, including the independence requirements
contemplated by Rule 10A-3 under the Exchange Act. In addition, all of the
members of the Audit Committee are independent as defined by the current Nasdaq
rules that apply to the Company until October 31, 2004 and otherwise satisfy
Nasdaq's eligibility requirements for audit committee membership. The Audit and
Finance Committee held seven meetings during the fiscal year ended June 30,
2004.
The Audit and Finance Committee has reviewed and discussed with management
the Company's audited financial statements for the year ended June 30, 2004 and
has discussed with Ernst & Young LLP ("E&Y") the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
and Finance Committees).
The Audit and Finance Committee has received and reviewed the written
disclosures and letter from E&Y required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit and Finance Committees), and
has discussed with the auditors the auditors' independence. The Audit and
Finance Committee has also considered whether the provision of non-audit
services to the Company by E&Y is compatible with maintaining E&Y's
independence.
Based on the review and discussions referred to above, the Audit and
Finance Committee recommended to the Board of Directors that the financial
statements referred to above be included in the Company's Annual Report on Form
10-K for the year ended June 30, 2004.
Respectfully submitted by the Audit
and Finance Committee:
William U. Parfet, Chairman
A. Dana Callow, Jr.
Patrick J. Fortune
15
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer (the "CEO") and the four
other most highly compensated executive officers other than the CEO, in each
case whose total salary and bonus exceeded $100,000 in fiscal 2004
(collectively, the "Named Executive Officers") with respect to the Company's
last three completed fiscal years:
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
FISCAL -------------------- AWARDS SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS UNDERLYING/OPTIONS COMPENSATION(2)
- --------------------------- ------ --------- -------- ------------------ ---------------
Josef H. von Rickenbach.............. 2004 $457,903 -- 40,000 $3,000
Chairman of the Board 2003 469,107 $162,000 -- 3,000
and Chief Executive Officer 2002 472,205 148,500 30,000 3,000
Carl A. Spalding..................... 2004 $418,083 -- -- --
President and Chief Operating 2003 404,083 $145,478 -- --
Officer 2002 400,000 138,000 -- --
James F. Winschel, Jr. .............. 2004 $285,804 -- 35,000 $3,000
Senior Vice President 2003 275,833 $137,911 25,000 3,000
and Chief Financial Officer 2002 275,000 137,500 15,000 3,000
Andrew L. Smith...................... 2004 $289,071 -- 40,000 --
President, Medical Marketing 2003 279,692 $112,730 -- --
Services 2002 270,000 111,574 15,000 --
Michael E. Woehler, Ph.D.(3)......... 2004 $270,000 -- 50,000 $2,700
President, Clinical Research
Services 2003 259,167 $116,075 -- 2,650
2002 207,041 63,309 50,000 2,376
</Table>
- ---------------
(1) Includes payments for unused vacation time, if any.
(2) Amounts shown represent employer contributions under the Company's 401(k)
plan during the fiscal year.
(3) Mr. Woehler became President, Clinical Research Services effective January
24, 2002.
16
The following table sets forth information concerning options granted
pursuant to the Company's stock plans during the fiscal year ended June 30, 2004
to the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTED(2) FISCAL YEAR(3) SHARE(4) DATE(5) 5% 10%
- ---- ---------- -------------- --------- ---------- ---------- ----------
Josef H. von Rickenbach..... 40,000 9.4% $17.20 2/26/12 $337,975 $800,551
Carl A. Spalding............ -- -- -- -- -- --
James F. Winschel, Jr. ..... 20,000 4.7 16.89 9/15/11 162,319 387,805
15,000 3.5 17.09 1/27/12 119,515 288,979
Andrew L. Smith............. 15,000 3.5 16.89 9/15/11 121,739 290,854
25,000 5.9 17.09 1/27/12 199,191 481,632
Michael E. Woehler, Ph.D.... 35,000 8.3 16.89 9/15/11 284,058 678,658
15,000 3.5 17.09 1/27/12 119,515 288,979
</Table>
- ---------------
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation of the
Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the SEC and do not reflect the
Company's estimate of future stock price growth. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the timing
of such exercises and the future performance of the Company's Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by the
individuals.
(2) These options are exercisable in four equal installments commencing one year
from the date of grant.
(3) Based on an aggregate of 423,920 shares subject to options granted in the
fiscal year ended June 30, 2004 to employees of the Company.
(4) The exercise price per share of these options was equal to the fair market
value of the Company's Common Stock on the date of grant.
(5) The expiration date of these options is the eighth anniversary of the date
of grant of these options.
17
The following table sets forth certain information concerning the shares of
Common Stock acquired upon stock option exercises by the Named Executive
Officers and the value realized upon such exercises, as well as the number of
securities underlying options held by the Named Executive Officers at June 30,
2004, including (i) the number of unexercised stock options outstanding as of
June 30, 2004; and (ii) the value of such unexercised options at June 30, 2004.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- --------- ----------- ------------- ----------- -------------
Josef H. von
Rickenbach............. 60,000 $600,000 273,750 105,000 $1,473,438 $628,700
Carl A. Spalding......... -- -- 262,500 87,500 2,105,250 701,750
James F. Winschel,
Jr. ................... -- -- 108,750 61,250 1,186,663 395,938
Andrew L. Smith.......... -- -- 52,500 47,500 570,750 185,150
Michael E. Woehler,
Ph.D. ................. -- -- 25,000 75,000 196,700 350,200
</Table>
- ---------------
(1) Value realized is calculated based on the difference between the option
exercise price and the closing market price of the Company's Common Stock on
the Nasdaq National Market on the date of the exercise, multiplied by the
number of shares exercised.
(2) Value is based on the difference between the option exercise price and the
fair market value at June 30, 2004 ($19.80 per share as quoted on the NASDAQ
National Market), multiplied by the number of shares underlying the option.
EMPLOYMENT AGREEMENTS
The Company and Josef H. von Rickenbach, Chairman and Chief Executive
Officer, are parties to an Employment Agreement, dated December 6, 1999, as
amended. This contract expires on December 6, 2005 and will automatically renew
for additional three year periods, unless either party opts not to renew at
least 90 days prior to the end of any applicable three year period. Under the
terms of the agreement, in the event of termination by the Company by
non-renewal of the agreement, all unexpired stock options held by Mr. von
Rickenbach would vest and all other awards under any other long term incentive
plan, whether vested or not, would be paid out in a lump sum. In addition, in
the event of termination by the Company other than for "cause" (as defined in
the agreement), or by Mr. von Rickenbach for "good reason" (as defined in the
agreement), and not in connection with a "change of control" of the Company (as
defined in the agreement), or for termination due to death or disability, Mr.
von Rickenbach would be entitled to receive (i) continued payment of his
then-current base salary, plus bonus payments and benefits, perquisites and
services that otherwise would have been payable to him, for the next three
years, (ii) the vesting of all unexpired stock
18
options, and (iii) a lump sum payment for all other awards under any other long
term incentive plan. In the event of termination by the Company other than for
cause or by Mr. von Rickenbach for good reason, during the period beginning 12
months prior to, and ending 18 months following, a change of control, Mr. von
Rickenbach would be entitled to receive (i) the amount of base salary, bonuses
and benefits, perquisites and services that would have been payable if he had
remained an employee of the Company through the date of the change of control,
(ii) the amount of base salary, bonus payments and benefits, perquisites and
services that otherwise would have been payable to him for the three year period
following the change of control, (iii) outplacement services and (iv) the
vesting of all unexpired stock options. The agreement further provides that
benefits will be supplemented by an additional payment to "gross up" Mr. von
Rickenbach for any excise tax under the "golden parachute" tax provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), unless the value of all
payments to be received under this agreement would be greater when subjected to
a specified cap (in which case the benefit payments will be so capped). The
current rate of compensation for Mr. von Rickenbach under this agreement is
$450,000 for an annual salary, with a bonus target of $270,000.
The Company and Carl A. Spalding, President and Chief Operating Officer,
are parties to an Executive Change of Control/Severance Agreement dated April 9,
2001. Under the terms of the agreement, if the Company terminates Mr. Spalding's
employment without "cause" (as defined in the agreement), Mr. Spalding would be
entitled to receive (i) a lump sum cash payment equal to 18 months of his
monthly base salary plus the target bonus that would have been payable during
the 18 month period following termination, (ii) pro-rata vesting of any stock
options that would have vested on the next anniversary of the grant date of such
option and (iii) continued insurance benefit coverage substantially similar to
the coverage he had been receiving prior to such termination. In the event his
employment is terminated by the Company without cause during the period
beginning nine months prior to, and ending 18 months following, a "change of
control" of the Company (as defined in the Agreement), or Mr. Spalding
terminates his employment for "good reason" (as defined in the agreement) during
the 18 month period following a change of control of the Company, Mr. Spalding
is entitled to receive (i) a lump sum cash payment equal to 18 months of his
monthly base salary plus the target bonus that would have been payable during
the 18 month period following termination, (ii) accelerated vesting of both
stock options and capital accumulation benefits, and (iii) continued insurance
benefit coverage substantially similar to the coverage he had been receiving
prior to such termination. The agreement further provides that the benefits will
be supplemented by an additional payment to "gross up" Mr. Spalding for any
excise tax under the "golden parachute" tax provisions of the Code.
The Company and James F. Winschel, Jr., Senior Vice President and Chief
Financial Officer, are parties to an Executive Change of Control/Severance
Agreement dated April 3, 2001. Under the terms of the agreement, if Mr.
Winschel's employment is terminated without "cause" (as defined in the
agreement), he would be entitled to receive a lump sum cash payment equal to 12
months of his base salary plus the pro rata share of the target bonus that would
have been payable to him during the year in which termination occurs. If the
Company terminates Mr. Winschel's employment without cause during the period
beginning nine months prior to, and ending 18 months following, a "change of
control" of the Company (as defined in the
19
agreement), or Mr. Winschel terminates his employment "for good reason" (as
defined in the agreement) during the 18 month period following a change of
control of the Company, Mr. Winschel would be entitled to receive (i) a lump sum
cash payment equal to 12 months of his monthly salary plus the target bonus that
would have been payable to him during the 12 month period following termination,
(ii) accelerated vesting of both stock options and capital accumulation benefits
and (iii) continued insurance benefit coverage substantially similar to the
coverage he had been receiving prior to any such termination. The agreement
further provides that the benefits will be supplemented by an additional payment
to "gross up" Mr. Winschel for any excise tax under the "golden parachute" tax
provisions of the Code.
Each of the executive officers of the Company are bound by the terms of a
Key Employee Confidentiality and Invention Agreement, pursuant to which
confidential information proprietary to the Company obtained during the term of
employment by the Company may not be disclosed by the employee during or
subsequent to such term of employment, and pursuant to which the employee agrees
not to compete with the business of the Company during, and for one year
subsequent to, the term of employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Fortune, Eagle, Love and
Okun, none of whom has been an officer or employee of the Company or any of its
subsidiaries during the past three years. Messrs. Fortune, Love and Okun served
on the Compensation Committee for the entire fiscal year ended June 30, 2004.
No executive officer of the Company served as a member of the Compensation
Committee (or other Board committee performing equivalent functions) of another
entity, one of whose executive officers served as a Director of the Company.
DIRECTORS' COMPENSATION
CASH FEES
Prior to July 1, 2004, non-employee members of the Board received an annual
lump sum payment of $25,000 payable in July of each year for service as a
Director during the immediately preceding fiscal year ended June 30, pro rated
according to the length of any such Board service for such fiscal year if less
than one full year. Effective July 1, 2004, non-employee members of the Board
receive an annual lump sum payment of $30,000 as a Director and $7,500 for each
Committee of the Board on which he serves as Chairman, payable in July of each
year for service as a Director during the immediately preceding fiscal year
ended June 30, pro-rated according to the length of any such service for such
fiscal year if less than a full year. In addition, effective July 1, 2004,
non-employee Directors receive: (i) $1,500 per day for each meeting of the Board
attended in person, (ii) $750 per day for each meeting of the Board attended by
telephone conference call, (iii) $1,500 per day for each meeting of a Committee
of the Board on which he or she serves attended in person and not held on the
same day as, or the day before or after, a meeting of the Board; and (iv) $750
per
20
day for each meeting of a Committee of the Board on which he or she serves
either attended by telephone or held the day before or after a meeting of the
Board.
STOCK OPTIONS
All non-employee Directors are eligible to receive option grants on a
discretionary basis. In addition, prior to July 1, 2004, each non-employee
Director received an option grant for 1,000 shares of Common Stock for each
in-person meeting of the Board and its committees attended (500 shares for each
in-person committee meeting attended on the same date as an in-person Board
meeting), an option grant for 500 shares for each Board meeting attended by
telephone conference call and an option grant for 1,000 shares for each
committee meeting attended by telephone conference call. During the fiscal year
ended June 30, 2004, under this program, non-employee Directors were granted
options to purchase an aggregate of 61,500 shares of Common Stock under the
Company's Second Amended and Restated 1995 Stock Option Plan (the "1995 Plan").
The exercise prices for these option grants ranged from $13.88 per share to
$20.25 per share. The non-employee Directors were granted options for shares of
Common Stock during fiscal year 2004 as follows: Mr. Callow, 13,000; Mr. Eagle,
5,500; Dr. Fortune, 13,500; Mr. Love, 8,000; Mr. Okun, 8,500; and Mr. Parfet,
13,000. The options granted to non-employee Directors have an exercise price
equal to the fair market value of the Company's Common Stock on the date of
grant and vest in three equal annual installments commencing on the first
anniversary of the date of grant, unless a change in control of the Company
occurs in which case they become fully exercisable. Effective as of July 1,
2004, each non-employee Director will receive an option grant for 5,000 shares
of common stock on every September 1 and March 1 in lieu of the program
discussed above. Mr. Eagle also receives medical insurance benefits from the
Company worth approximately $2,000 per year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview. The Company's executive compensation program is administered by
the Compensation Committee of the Board of Directors (the "Compensation
Committee"). Pursuant to authority delegated by the Board of Directors, the
Compensation Committee establishes each year the non-equity compensation of
senior management; reviews, as appropriate, other compensation standards of the
Company; and administers the Company's 401(k) Savings and Retirement Plan. The
Compensation Committee also, pursuant to authority delegated by the Board of
Directors, establishes each year the equity compensation of senior management,
reviews, as appropriate, equity compensation standards of the Company, and
administers the Company's various stock plans, including the 1989 Stock Plan,
Second Amended and Restated 1995 Stock Option Plan, 1995 Non-Employee Director
Stock Option Plan, 1998 Non-Qualified, Non-Officer Stock Option Plan, the 2000
Employee Stock Purchase Plan and the 2001 Stock Incentive Plan.
The members of the Compensation Committee, all of whom are non-employee
Directors, bring expertise in matters relating to executive compensation to
their service on the Compensation Committee gained through their experience on
other Boards of Directors of public and private companies, and through serving
as senior executives at other companies. The current members of the Compensation
Committee are Patrick J. Fortune, A. Joseph Eagle, Richard L. Love and Serge
Okun.
21
Procedure for Establishing Compensation. During fiscal year 2004, the
Compensation Committee established the annual compensation for the Company's
executive officers, other than the CEO, based, in part, on recommendations of
the Company's Chief Executive Officer. The Committee reviewed the
recommendations, taking into account the following factors: (i) external market
data on executive compensation; (ii) the Company's performance; (iii) the
individual's contribution to the Company's success; (iv) the competitive
environment for the retention of executive talent; and (v) the internal equity
of compensation levels among executive officers.
Elements of Executive Compensation. The Company's compensation policy for
executive officers for the fiscal year ended June 30, 2004 was designed to
achieve the following objectives: (i) to enhance profitability of the Company
and align management's long-term interests with those of the stockholders; (ii)
to reward executives consistent with the Company's annual and long-term
performance goals; (iii) to recognize individual initiative and achievement and
(iv) to provide competitive compensation that will attract and retain qualified
executives.
An executive officer's compensation package includes: (i) base salary,
which is based upon past performance of the individual and the Company, future
corporate expectations and external market data, (ii) annual performance-based
compensation, which is based upon achievement of pre-determined financial
objectives of the Company and individual objectives, and (iii) long-term
incentive compensation, in the form of stock options, granted with the objective
of aligning executive officers' long-term interests with those of the
stockholders and encouraging the achievement of superior results over an
extended period. In addition, the compensation program is comprised of various
benefits, including medical, savings and insurance plans, the Company's 2000
Employee Stock Purchase Plan and the Company's 401(k) Savings and Retirement
Plan, all of which are generally available to all employees of the Company.
Base Compensation. Base salaries for executive officers are targeted at
competitive market levels for their respective positions, levels of
responsibility and experience. In setting base cash compensation levels for
executive officers, the Compensation Committee generally takes into account such
factors as: (i) the Company's past financial performance and future
expectations; (ii) the general and industry-specific business environment; (iii)
the individual executive officer's base compensation in the prior year; (iv)
periodic published surveys of base compensation at comparable companies; (v)
annual compensation increases at such companies; and (vi) corporate and
individual performance. The Compensation Committee's review of the foregoing
factors is subjective and the Compensation Committee assigns no fixed value or
weight to any specific factors when making its decisions regarding the salary of
executive officers. For fiscal year 2004, base salaries and variable incentive
compensation opportunities for executive officers of PAREXEL were targeted at
levels which would cause total annual compensation (i.e., salary and bonus) of
executive officers to average at approximately the median of compensation for
officers of comparatively sized companies and for overall industry practice.
Performance-Based Compensation. The Company's performance-based
compensation policies are designed to reward executive officers when the Company
meets or exceeds pre-determined goals and are also based on various
non-financial objectives such as the ability to recognize and pursue new
business
22
opportunities and initiate programs to enhance the Company's growth and success.
In establishing performance bonus formulas for the Company's executive officers
for fiscal year 2004, the Compensation Committee considered: (i) the annual base
compensation of each individual, (ii) individual performance, (iii) the actual
performance of the Company as compared with projected performance under the
Company's annual operating plan, (iv) the projected future performance of the
Company, (v) the general business environment, (vi) periodically published
surveys of performance compensation at comparable companies and (vii) surveys of
performance compensation at comparable companies prepared at the direction of
the Compensation Committee. The Compensation Committee's review of the foregoing
factors was subjective and the Compensation Committee did not assign a fixed
value or weight to any specific factors when making its decisions regarding
potential bonuses of executive officers.
Executive Officers of the Company are eligible to participate in the
Company's Performance Bonus Plan. Each participating executive officer has a
specific target award that is expressed as a percentage of his or her base
salary paid in the fiscal year, ranging from 40% to 60%. The award is calculated
based upon the financial performance of the participant's business unit, total
company performance, achievement of the participant's individual goals, or a
combination of the three. For fiscal year 2004, the executive officers of the
Company were not paid any bonuses under that plan.
Stock Options. Long-term incentive compensation, in the form of stock
options, allows the executive officers to share in any appreciation in the value
of the Company's Common Stock. The Board of Directors believes that stock option
participation aligns executive officers' interests with those of the Company's
stockholders. Stock options granted under the Company's stock plans generally
have an exercise price equal to the fair market value of the Company's Common
Stock on the date of grant. Stock options granted to executive officers in
fiscal year 2004 become exercisable in four equal annual installments.
In awarding stock options, the Compensation Committee reviewed: (i) the
overall compensation package of each executive officer; (ii) periodically
published surveys of stock option awards at comparable companies; (iii)
individual performance during the fiscal year in question; and (iv) the existing
levels of stock ownership, previous grants of stock options, vesting schedules
of outstanding options and the current stock price and (v) past financial
performance and future expectations. For new executive officers, the
Compensation Committee considers the general and industry-specific business
environment and the expected contribution of the executive officer to the
Company over the short and long term.
In fiscal year 2004, executive officers of the Company were awarded
non-qualified stock options to purchase a total of 280,000 shares of Common
Stock.
CEO Compensation. Generally, Mr. von Rickenbach, the Company's Chairman of
the Board and Chief Executive Officer, may participate in the same compensation
programs that are available to the Company's other executive officers and his
compensation is reviewed annually in accordance with the policies applicable to
other executive officers as described above. Mr. von Rickenbach's compensation
is subject to the terms of his employment agreement with the Company. The
current rate of compensation for Mr. von Rickenbach
23
under this agreement is $450,000 for an annual salary, with a bonus target of
$270,000. Mr. von Rickenbach was not paid any bonus for fiscal year 2004.
As described above, during fiscal year 2004, Mr. von Rickenbach was granted
stock options to purchase 40,000 shares of Common Stock at a price of $17.20 per
share. The exercise price was equal to the fair market value of such stock on
the date of grant. All of the options were non-qualified options and vest in
equal increments over a four year period commencing on the first anniversary of
the date of grant.
Deductibility of Executive Compensation. In general, under Section 162(m)
of the Code, the Company cannot deduct, for federal income tax purposes,
compensation in excess of $1,000,000 paid to certain executive officers. This
deduction limitation does not apply, however, to compensation that constitutes
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code and the regulations promulgated thereunder. The Committee has
considered the limitations on deductions imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and it is the
Committees' present intention that, for so long as it is consistent with the
Company's overall compensation objective, executive compensation will not be
subject to the deduction limitations of Section 162(m) of the Code.
No member of the Compensation Committee is currently, or was at any time
during the past three years, an officer or employee of the Company or any of its
subsidiaries. The members of the Compensation Committee are currently Dr.
Fortune, who serves as the Chairman, and Messrs. Eagle, Love and Okun. Through
September 2004, the Compensation Committee consisted of Messrs. Fortune, Love
and Okun, each of whom was a non-employee Director. Mr. Eagle, whom is a
non-employee Director, was appointed to the Compensation Committee effective
September 2004, and did not participate in determining executive compensation
levels for the fiscal year 2004 or stock option grants prior to September 2004.
Respectfully submitted by the
Compensation Committee:
Patrick J. Fortune, Chairman
A. Joseph Eagle
Richard L. Love
Serge Okun
24
STOCK PERFORMANCE GRAPH
The Company's Common Stock is listed for trading on the Nasdaq National
Market under the symbol "PRXL". The Stock Price Performance Graph set forth
below compares the cumulative total stockholder return on the Company's Common
Stock for the period from June 30, 1999 through June 30, 2004, with the
cumulative total return of the Nasdaq U.S. Stock Index and the Nasdaq Health
Services Index over the same period. The comparison assumes $100 was invested on
June 30, 1999 in the Company's Common Stock, in the Nasdaq U.S. Stock Index and
in the Nasdaq Health Services Index and assumes reinvestment of dividends, if
any.
[Performance Chart]
<Table>
<Caption>
- --------------------------------------------------------------------------------------
June 30, June 30, June 30, June 30, June 30, June 30,
1999 2000 2001 2002 2003 2004
- --------------------------------------------------------------------------------------
PAREXEL
International
Corporation $100.00 $ 71.83 $146.47 $104.48 $104.79 $148.73
Nasdaq U.S. Stock
Index 100.00 147.83 80.27 54.68 60.71 76.52
Nasdaq Health
Services Index 100.00 77.18 110.14 108.15 113.86 169.06
</Table>
The stock price performance shown on the graph above is not necessarily
indicative of future price performance. Information used in the graph was
obtained from The Nasdaq Stock Market, a source believed to be reliable, but the
Company is not responsible for any errors or omissions in such information.
25
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The Audit and Finance Committee has selected the firm of Ernst & Young LLP
("E&Y"), independent certified accountants, to serve as auditors for the year
ending June 30, 2005. E&Y has served as the Company's auditors since 2002.
The Board recommends a vote FOR ratification of the selection of E&Y to
serve as auditors for the year ending June 30, 2005. The ratification of this
selection is not required under the laws of the Commonwealth of Massachusetts,
where the Company is incorporated, but the results of this vote will be
considered by the Audit and Finance Committee in selecting auditors for future
fiscal years.
Representatives of E&Y are expected to be present at the Annual Meeting.
They will have the opportunity to make a statement if they desire to do so and
will also be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE RATIFYING THE SELECTION OF ERNST &
YOUNG LLP.
FEES PAID TO INDEPENDENT AUDITORS
AUDIT FEES
The aggregate fees billed to the Company by E&Y for professional services
for the audit of the Company's annual financial statements for the fiscal years
ended June 30, 2003 and 2004, and review of the financial statements included in
the Company's Quarterly Reports on Form 10-Q in fiscal years 2003 and 2004, was
approximately $602,000 and $1,183,000, respectively.
AUDIT RELATED FEES
The aggregate fees billed by E&Y for assurance and related services that
were reasonably related to the audit or review of the Company's financial
statements for the fiscal years ended June 30, 2003 and 2004, and which are not
included in the amounts disclosed above under the caption "Audit Fees," were
$10,000 and $12,000, respectively. These fees related to the audit of the
Company's employee benefits plans. All of these fees were approved by the Audit
and Finance Committee.
TAX FEES
The aggregate fees billed by E&Y for tax services for the fiscal year ended
June 30, 2003 were $428,000. Of this total, $149,000 was for domestic and
international tax compliance services and $279,000 was for domestic and
international tax planning and advice. The aggregate fees billed by E&Y for tax
services for the fiscal year ended June 30, 2004 were $336,000. Of this total,
$157,000 was for domestic and international tax
26
compliance services and $179,000 was for domestic and international tax planning
and advice. All of these fees were approved by the Audit and Finance Committee.
ALL OTHER FEES
There were no other fees billed to the Company by E&Y for services other
than Audit Fees, Audit Related Fees and Tax Fees described above for fiscal
years 2003 and 2004.
The Audit and Finance Committee has considered whether the provision of
non-audit services to the Company by E&Y is compatible with maintaining E&Y's
independence.
The Audit and Finance Committee has adopted policies and procedures
relating to the approval of all audit and non-audit services that are to be
performed by the Company's independent auditors. This policy generally provides
that the Company will not engage its independent auditors to render audit or
non-audit services unless the service is specifically approved in advance by the
Audit and Finance Committee or the engagement is entered into pursuant to one of
the pre-approval procedures described below.
From time to time, the Audit and Finance Committee may pre-approve
specified types of services that are expected to be provided to the Company by
its independent auditors during the next 12 months. Any such pre-approval is
detailed as to the particular service or type of services to be provided and is
also generally subject to a maximum dollar amount.
The Audit and Finance Committee has also delegated to the chairman of the
Audit and Finance Committee the authority to approve any audit or non-audit
services to be provided to the Company by its independent auditors. Any approval
of services by a member of the Audit and Finance Committee pursuant to this
delegated authority is reported on at the next meeting of the Audit and Finance
Committee.
27
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about PAREXEL Common Stock that may
be issued upon the exercise of options and rights under all of its existing
equity compensation plans as of June 30, 2004, including PAREXEL's 1989 Stock
Plan, 1995 Plan, 1995 Non-Employee Director Stock Option Plan, 1998 Non-
qualified, Non-Officer Stock Option Plan ("1998 Plan"), 2000 Employee Stock
Purchase Plan and 2001 Stock Incentive Plan.
<Table>
<Caption>
WEIGHTED- NUMBER OF SECURITIES
AVERAGE EXERCISE REMAINING AVAILABLE FOR
PRICE OF FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO OUTSTANDING EQUITY COMPENSATION
BE ISSUED UPON EXERCISE OPTIONS, PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, WARRANTS AND SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS COLUMN (A))
- ------------- ----------------------- ---------------- -----------------------
(A) (B) (C)
Equity compensation plans approved by
security holders.................... 2,430,649 $16.19 1,830,312
Equity compensation plans not approved
by security holders................. 814,776(1) $14.24 288,957
--------- ---------
Total....................... 3,245,425 2,119,269
</Table>
- ---------------
(1) See the description below of the 1998 Plan.
THE 1998 PLAN
As of June 30, 2004, PAREXEL had reserved 1,103,733 shares of Common Stock
for issuance under the 1998 Plan. The 1998 Plan provides for the granting of
nonqualified stock options to non-officer employees at the fair market value of
Common Stock on the grant date as determined under the provisions of the 1998
Plan. Options under the 1998 Plan expire in eight years from the date of grant
and vest at dates ranging from the issuance date to five years. As of June 30,
2004, approximately 814,776 shares are reserved for issuance upon exercise of
outstanding options and approximately 288,957 shares are available for grant
under the 1998 Plan. The Company's 1998 Plan has not been approved by the
Company's stockholders.
OTHER MATTERS
The Board does not intend to bring any matters before the Meeting other
than those specifically set forth in the Notice of Annual Meeting and it knows
of no matters to be brought before the meeting by others. If any other matters
properly come before the Meeting, it is the intention of the persons named in
the accompanying proxies to vote such proxies in accordance with the judgment of
the Board.
28
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be participating
in the practice of "householding" proxy statements and annual reports. This
means that only one copy of the Company's proxy statement or annual report may
have been sent to multiple stockholders in your household. The Company will
promptly deliver a separate copy of either document to you if you write or call
the Company at the following address or phone number: 195 West Street. Waltham,
Massachusetts, 02451, Attention: Investor Relations; 781-434-4118. If you wish
to receive separate copies of the annual report and proxy statement in the
future, or if you are receiving multiple copies and would like to receive only
one copy for your household, you should contact your bank, broker, or other
nominee record holder, or you may contact the Company at the above address and
phone number.
STOCKHOLDER PROPOSALS AND COMMUNICATIONS
Under SEC rules, proposals of stockholders intended for inclusion in the
Proxy Statement and form of proxy to be furnished to all stockholders entitled
to vote at the Company's 2005 Annual Meeting of Stockholders must be received at
the Company's principal executive offices not later than June 27, 2005.
If a stockholder of the Company wishes to present a proposal before the
Company's 2005 Annual Meeting of Stockholders but has not complied with the
requirements for inclusion of such proposal in the Proxy Statement under SEC
rules, such stockholder must give written notice of such proposal to the Company
not less than 60 and not more than 90 days prior to the scheduled meeting.
However, if the meeting is either a special meeting in lieu of an annual meeting
of stockholders to be held prior to the date specified in the by-laws or is a
special meeting and less than 70 days' notice is given of the date of the
meeting, a stockholder will have 10 days from the earlier of (a) the date on
which notice of such meeting was mailed or (b) the date that public disclosure
was made of such meeting date in which to give such notice. The notice from the
stockholder must describe the proposed business to be brought before the meeting
and include information about the stockholder making the proposal, any
beneficial owner on whose behalf the proposal is made, and any other stockholder
known to be supporting the proposal. If a stockholder fails to provide timely
notice of a proposal to be presented at the 2005 Annual Meeting of Stockholders,
the proxies designated by the Board will have discretionary authority to vote on
any such proposal. If a stockholder makes a timely notification, the persons
named in the proxy may still exercise discretionary authority under
circumstances consistent with the SEC's proxy rules.
Stockholders may send any communications regarding Company business,
including stockholder proposals, to the Board or any individual Director in care
of the Secretary of the Company at our principal executive offices located at
195 West Street, Waltham, Massachusetts 02451. The Company suggests any
communications should be sent by certified mail return receipt requested. The
Secretary will forward all such communications to the addressee. The Nominating
and Corporate Governance Committee of the Board, together with the Company's
management and legal counsel, will evaluate any stockholder proposal submitted
to the Company in connection with any meeting of stockholders, and shall
recommend to the Board the
29
appropriate response to such proposal. The Board will give appropriate attention
to written communications that are submitted by stockholders and other
interested parties, and will respond if and as appropriate. Absent unusual
circumstances or as contemplated by the charters of the committees of the Board,
the Presiding Director, shall, subject to advice and assistance from the General
Counsel of the Company, (1) be primarily responsible for monitoring
communications from stockholders and other interested parties, and (2) provide
copies or summaries of such communications to the other Directors as he or she
considers appropriate. Communications may be forwarded to all Directors if they
relate to important substantive matters and include suggestions or comments that
the Presiding Director considers to be important for the Directors to know. In
general, communications relating to corporate governance and long-term corporate
strategy are more likely to be forwarded than communications relating to
ordinary business affairs, personal grievances and matters as to which the
Company tends to receive repetitive or duplicative communications.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have Common Stock registered in the
names of a nominee and, if so, will reimburse such banks, brokers and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket costs.
Solicitation by the Company's officers and employees may also be made of some
stockholders in person or by mail, telephone or telegraph following the original
solicitation.
October 25, 2004
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED.
30
APPENDIX A
PAREXEL INTERNATIONAL CORPORATION
AUDIT AND FINANCE COMMITTEE CHARTER
A. PURPOSE
The purpose of the Audit and Finance Committee is to assist the Board of
Directors' oversight of:
- the integrity of the Company's financial statements;
- the Company's compliance with legal and regulatory requirements;
- the independent auditor's qualifications and independence; and
- the performance of the Company's internal audit function and independent
auditors.
B. STRUCTURE AND MEMBERSHIP
1.Number. The Audit and Finance Committee shall consist of at least three
members of the Board of Directors.
2.Independence. Except as otherwise permitted by the applicable rules of
The NASDAQ Stock Market ("NASDAQ"), each member of the Audit and Finance
Committee shall be independent as defined by such rules.
3.Financial Literacy; Financial Expert. Each member of the Audit and
Finance Committee must be able to read and understand fundamental
financial statements, including the Company's balance sheet, income
statement, and cash flow statement, at the time of his or her appointment
to the Audit and Finance Committee. In addition, at least one member must
be an "audit committee" financial expert (as defined by applicable SEC
rules).
4.Chair. Unless the Board of Directors elects a Chair of the Audit and
Finance Committee, the Audit and Finance Committee shall elect a Chair by
majority vote.
5.Compensation. The compensation of Audit and Finance Committee members
shall be as determined by the Board of Directors. No member of the Audit
and Finance Committee may receive, directly or indirectly, any
consulting, advisory or other compensatory fee from the Company or any of
its subsidiaries, other than fees paid in his or her capacity as a member
of the Board of Directors or a committee of the Board.
6.Selection and Removal. The Board of Directors, upon the recommendation
of the Nominating and Corporate Governance Committee, shall appoint
members of the Audit and Finance Committee. Each member of the Audit and
Finance Committee shall meet the audit committee membership
A-1
criteria set forth in the NASDAQ rules. The Board of Directors may remove
members of the Audit and Finance Committee, with or without cause, at any
time.
C. AUTHORITY AND RESPONSIBILITIES
GENERAL
The Audit and Finance Committee shall discharge its responsibilities, and
shall assess the information provided by the Company's management and the
independent auditor, in accordance with its business judgment. Management is
responsible for the preparation, presentation and integrity of the Company's
financial statements and for the appropriateness of the accounting principles
and reporting policies that are used by the Company. The independent auditors
are responsible for auditing the Company's financial statements and for
reviewing the Company's unaudited interim financial statements. The authority
and responsibilities set forth in this Charter do not reflect or create any duty
or obligation of the Audit and Finance Committee to plan or conduct any audit,
to determine or certify that the Company's financial statements are complete,
accurate, fairly presented or in accordance with generally accepted accounting
principles or applicable law, or to guarantee the independent auditor's report.
OVERSIGHT OF INDEPENDENT AUDITORS
1. Selection. The Audit and Finance Committee shall be solely and
directly responsible for appointing, evaluating, retaining and, when
necessary, terminating the engagement of the independent auditor. The
Audit and Finance Committee may, in its discretion, seek stockholder
ratification of the independent auditor it appoints.
2. Independence. The Audit and Finance Committee shall take, or recommend
that the full Board of Directors take, appropriate action to oversee
the independence of the independent auditor. In connection with this
responsibility, the Audit and Finance Committee shall obtain and review
a formal written statement from the independent auditor describing all
relationships between the independent auditor and the Company,
including the disclosures required by Independence Standards Board
Standard No. 1. The Audit and Finance Committee shall actively engage
in dialogue with the independent auditor concerning any disclosed
relationships or services that might impact the objectivity and
independence of the auditor.
3. Compensation. The Audit and Finance Committee shall have sole and
direct responsibility for setting the compensation of the independent
auditor. The Audit and Finance Committee is empowered, without further
action by the Board of Directors, to cause the Company to pay the
compensation of the independent auditor established by the Audit and
Finance Committee.
4. Preapproval of Services. The Audit and Finance Committee shall
preapprove all services (audit, review, attest and non-audit) to be
provided to the Company by the independent auditor; provided, however,
that de minimis non-audit services may instead be approved in
accordance with applicable SEC rules.
A-2
5. Oversight. The independent auditor shall report directly to the Audit
and Finance Committee, and the Audit and Finance Committee shall have
sole and direct responsibility for overseeing the work of the
independent auditor, including resolution of disagreements between
Company management and the independent auditor regarding financial
reporting. In connection with its oversight role, the Audit and Finance
Committee shall, from time to time as appropriate, receive and consider
the reports required to be made by the independent auditor regarding:
- critical accounting policies and practices;
- alternative treatments within generally accepted accounting
principles for policies and practices related to material items that
have been discussed with Company management, including ramifications
of the use of such alternative disclosures and treatments, and the
treatment preferred by the independent auditor; and
- other material written communications between the independent auditor
and Company management.
AUDITED FINANCIAL STATEMENTS
6. Review and Discussion. The Audit and Finance Committee shall review
and discuss with the Company's management and independent auditor the
Company's audited financial statements, including the matters about
which Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards, AU sec.380) requires discussion.
7. Recommendation to Board Regarding Financial Statements. The Audit and
Finance Committee shall consider whether it will recommend to the Board
of Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K.
8. Audit and Finance Committee Report. The Audit and Finance Committee
shall prepare an annual committee report for inclusion where necessary
in the proxy statement of the Company relating to its annual meeting of
security holders.
REVIEW OF OTHER FINANCIAL DISCLOSURES
9. Independent Auditor Review of Interim Financial Statements. The Audit
and Finance Committee shall direct the independent auditor to use its
best efforts to perform all reviews of interim financial information
prior to disclosure by the Company of such information and to discuss
promptly with the Audit and Finance Committee and the Chief Financial
Officer any matters identified in connection with the auditor's review
of interim financial information which are required to be discussed by
Statement on Auditing Standards Nos. 61, 71 and 90. The Audit and
Finance Committee shall direct management to advise the Audit and
Finance Committee in the event that the Company proposes to disclose
interim financial information prior to completion of the independent
auditor's review of interim financial information.
A-3
10. Quarterly Financial Statements. The Audit and Finance Committee shall
discuss with the Company's management and independent auditor the
Company's quarterly financial statements, including the Company's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
CONTROLS AND PROCEDURES
11. Oversight. The Audit and Finance Committee shall receive and review
the reports of the CEO and CFO required by Section 302 of the
Sarbanes-Oxley Act of 2002 and the applicable rules thereunder and Rule
13a-14 of the Exchange Act.
12. Internal Audit Function. The Audit and Finance Committee shall
coordinate the Board of Directors' oversight of the performance of the
Company's internal audit function. The Audit and Finance Committee
shall meet from time to time with the internal audit manager to
communicate expectations, review audit plans, monitor and assess
performance, review audit findings and provide direction and feedback,
as appropriate.
13. Procedures for Complaints. The Audit and Finance Committee shall
establish procedures for (i) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters; and (ii) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
14. Related-Party Transactions. The Audit and Finance Committee shall
review all related party transactions on an ongoing basis, and the
Audit and Finance Committee must approve all such transactions.
ADDITIONAL POWERS
The Audit and Finance Committee shall have such other duties and powers as
may be delegated from time to time by the Board of Directors.
D. PROCEDURES AND ADMINISTRATION
1. Meetings. The Audit and Finance Committee shall meet as often as it
deems necessary in order to perform its responsibilities. The Audit and
Finance Committee may also act by unanimous written consent in lieu of
a meeting. The Audit and Finance Committee shall keep such records of
its meetings as it shall deem appropriate.
2. Subcommittees. The Audit and Finance Committee may form and delegate
authority to one or more subcommittees (including a subcommittee
consisting of a single member), as it deems appropriate from time to
time under the circumstances. Any decision of a subcommittee to
preapprove audit, review, attest or non-audit services shall be
presented to the full Audit and Finance Committee at its next scheduled
meeting.
A-4
3. Reports to Board. The Audit and Finance Committee shall report
regularly to the Board of Directors.
4. Charter. The Audit and Finance Committee shall review and reassess the
adequacy of this Charter at least annually and recommend any proposed
changes to the Board of Directors for approval.
5. Independent Advisors. The Audit and Finance Committee is authorized,
without further action by the Board of Directors, to engage such
independent legal, accounting and other advisors as it deems necessary
or appropriate to carry out its responsibilities. Such independent
advisors may be the regular advisors to the Company. The Audit and
Finance Committee is empowered, without further action by the Board of
Directors, to cause the Company to pay the compensation of such
advisors as established by the Audit and Finance Committee.
6. Investigations. The Audit and Finance Committee shall have the
authority to conduct or authorize investigations into any matters
within the scope of its responsibilities as it shall deem appropriate,
including the authority to request any officer, employee or advisor of
the Company to meet with the Audit and Finance Committee or any
advisors engaged by the Audit and Finance Committee.
7. Funding. The Audit and Finance Committee is empowered, without further
action by the Board of Directors, to cause the Company to pay the
ordinary administrative expenses of the Audit and Finance Committee
that are necessary or appropriate in carrying out its duties.
A-5
PXC-PS-04
ZPXCC2
DETACH HERE
PROXY
PAREXEL INTERNATIONAL CORPORATION
PROXY FOR 2004 ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 16, 2004
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned Stockholder of PAREXEL International Corporation, a
Massachusetts corporation, revoking all prior proxies, hereby appoints James F.
Winschel, Jr. and Susan H. Alexander and each of them, proxies, with full power
of substitution, to vote all shares of Common Stock of PAREXEL International
Corporation which the undersigned is entitled to vote at the 2004 Annual
Meeting of Stockholders of the Company to be held at the Museum of Our National
Heritage, 33 Marrett Road, Lexington, Massachusetts on December 16, 2004 at
2:30 p.m., local time, and at any adjournments thereof, upon matters set forth
in the Notice of Annual Meeting of Stockholders and Proxy Statement dated
October 25, 2004, a copy of which has been received by the undersigned, and in
their discretion upon any other business that may properly come before the
meeting or any adjournments thereof. Attendance of the undersigned at the
meeting or at any adjourned session thereof will not be deemed to revoke this
proxy unless the undersigned shall affirmatively indicate thereat the intention
of the undersigned to vote said shares in person.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE
PROPOSAL IN ITEM 2.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
PAREXEL INTERNATIONAL
CORPORATION
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
ZPXCC1
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
#PXC
PLEASE MARK
X VOTES AS IN
THIS EXAMPLE
1. To elect two (2) Class III Directors to each serve for a term continuing
until the annual meeting of stockholders in 2007 and until his successor
is duly elected & qualified.
NOMINEES:
(01) A. Dana Callow, Jr., (02) Josef H. von Rickenbach
FOR WITHHELD
--- ---
--- ---------------------------------------------
For all nominee(s) except as written above
FOR AGAINST ABSTAIN
2. To ratify the selection of Ernst & Young LLP as
auditors for the fiscal year ending June 30, 2005. --- --- ---
MARK HERE
FOR ADDRESS
CHANGE AND ---
NOTE AT LEFT
THIS PROXY SHOULD BE DATED AND SIGNED BY THE
STOCKHOLDER(S) EXACTLY AS HIS OR HER NAME
APPEARS HEREON AND RETURNED PROMPTLY IN THE
ENCLOSED ENVELOPE. PERSONS SIGNING IN A FIDUCIARY
CAPACITY SHALL SO INDICATE. IF SHARES ARE HELD BY
JOINT TENANTS OR AS COMMUNITY PROPERTY, BOTH
SHOULD SIGN.
Signature: Date: Signature: Date:
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