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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for use of the Commission
[X] Definitive proxy materials only (as permitted by Rule 14a-6(3)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PAREXEL INTERNATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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 5, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
PAREXEL International Corporation (the "Company") to be held at 3:00 p.m.,
Boston time, on Thursday, November 12, 1998, at the Museum of Our National
Heritage located at 33 Marrett Road, Lexington, Massachusetts 02421.
At this meeting, you will be asked to:
(i) elect two Class III directors for three-year terms; and
(ii) ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending June 30, 1999.
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 or not you plan to attend the meeting, 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 or not you attend
the meeting in person. If you attend the meeting, you may vote in person even if
you have previously returned your proxy card. Your prompt cooperation will be
greatly appreciated.
Very truly yours,
/s/ Josef H. von Rickenbach
----------------------------------
Josef H. von Rickenbach
President, Chief Executive Officer
and Chairman
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[PAREXEL LOGO]
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195 West Street, Waltham, Massachusetts 02451
Telephone: 617-487-9900
Fax: 617-487-0525
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On November 12, 1998
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 3:00 p.m., Boston time, on Thursday, November 12, 1998, at the Museum of
Our National Heritage located at 33 Marrett Road, Lexington, Massachusetts
02421, to consider and vote upon the following proposals:
1. To elect two Class III directors to the Company's Board of
Directors, each to serve for a term of three years and until his successor
is elected and qualified or until his earlier resignation or removal.
2. To ratify the selection of PricewaterhouseCoopers LLP, independent
accountants, as auditors for the fiscal year ending June 30, 1999.
3. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on September 18, 1998
are entitled to notice of and to vote at the meeting. All stockholders are
cordially invited to attend the meeting in person. TO ENSURE YOUR REPRESENTATION
AT THE 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/ William T. Sobo, Jr.
-------------------------------------
William T. Sobo, Jr.
Senior Vice President, Chief Financial
Officer, Treasurer and Clerk
Waltham, Massachusetts
October 5, 1998
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[PAREXEL LOGO]
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PROXY STATEMENT
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October 5, 1998
This Proxy Statement is being furnished to holders of common stock, par
value $.01 per share ("Common Stock"), of PAREXEL International Corporation, a
Massachusetts corporation ("PAREXEL" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board")
for use at the annual meeting of the Company's stockholders to be held at 3:00
p.m., Boston time, on Thursday, November 12, 1998, and at any adjournments or
postponements thereof (the "Meeting"), at the Museum of Our National Heritage
located at 33 Marrett Road, Lexington, Massachusetts 02421. The Company's 1998
Annual Report, containing consolidated financial statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
fiscal year ended June 30, 1998, is being mailed contemporaneously with this
Proxy Statement to all stockholders entitled to vote at the Meeting. This Proxy
Statement and the form of proxy were first mailed to stockholders on or about
October 5, 1998.
The purpose of the Meeting is:
1. To elect two Class III directors to the Company's Board of
Directors, each to serve for a term of three years and until his successor
is elected and qualified or until his earlier resignation or removal.
2. To ratify the selection of PricewaterhouseCoopers LLP, independent
accountants, as auditors for the fiscal year ending June 30, 1999.
The Board has fixed the close of business on September 18, 1998 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 an
adjournment thereof. As of the Record Date, 24,744,175 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 Clerk 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 Clerk 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). 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: Clerk, at or before the taking of the vote at the Meeting.
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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 and, with respect to the election of the Board, will be voted as stated
below under "Election of Director." Any stockholder submitting a proxy has the
right to withhold authority to vote for the nominee to the Board by so marking
the box provided on the proxy.
In addition to the election of two Class III directors to three year terms,
the stockholders will consider and vote upon a proposal to ratify the selection
of auditors, all as further described in this Proxy Statement. All proxies 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 at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business at the Meeting. Votes
withheld from the nominee, abstentions and broker non-votes are counted as
present or represented for purposes of determining the presence or absence of a
quorum. A "non-vote" occurs when a broker holding shares for a beneficial owner
votes on one proposal, but does not vote on another proposal because the broker
does not have discretionary voting power and has not received instructions from
the beneficial owner. Directors are elected by a plurality of the votes cast by
stockholders entitled to vote at the Meeting. All other matters being submitted
to stockholders require the affirmative vote of a majority of shares present in
person or represented by proxy at the Meeting. An automated system administered
by the Company's transfer agent tabulates the votes. The vote on each matter
submitted to stockholders is tabulated separately. Abstentions are included in
the number of shares present or represented and voting on each matter and,
therefore, with respect to votes on specific proposals, will have the effect of
negative votes. Broker "non-votes" are not so included.
Where a choice has been specified on the proxy with respect to the
foregoing matters, the shares represented by the proxy will be voted in
accordance with the specification. The shares will be voted FOR the matter in
question if no specification is made.
The Board knows of no other matter 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 regarding beneficial
ownership of the Company's Common Stock as of September 18, 1998 (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 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.
SHARES BENEFICIALLY PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER OWNED(1) BENEFICIALLY OWNED(1)
- ------------------------ ------------------- ---------------------
Pilgrim Baxter & Associates(2)........................... 1,939,201 7.8%
1255 Drummers Lane, Suite 300
Wayne, PA 19087
The Joseph Eagle 1989 Settlement Trust(3)................ 1,607,666 6.5%
Portman House
32 Hue Street
St. Helier, Jersey JE1 4HH
Putnam Investments, Inc. and affiliates(4)............... 1,517,820 6.1%
One Post Office Square
Boston, MA 02109
Josef H. von Rickenbach(5)............................... 169,008 *
Werner M. Herrmann (6)................................... 79,586 *
A. Dana Callow(7)........................................ 75,914 *
James A. Saalfield(8).................................... 51,964 *
Patrick J. Fortune(9).................................... 18,332 *
Serge Okun(10)........................................... 15,000 *
A. Joseph Eagle.......................................... 0 *
William T. Sobo, Jr.(11)................................. 33,442 *
James M. Karis(12)....................................... 23,357 *
Taylor J. Crouch(13)..................................... 17,534 *
Barry R. Philpott(14).................................... 9,550 *
All executive officers and directors as a group
(12 persons)(15)....................................... 513,087 2.1%
- ---------------
* Less than 1% of the outstanding Common Stock.
(1) The number of shares of Common Stock deemed outstanding includes: (i)
24,744,175 shares of Common Stock outstanding as of September 18, 1998; and
(ii) shares issuable pursuant to options held by the respective person or
group which may be exercised within 60 days after September 18, 1998
("presently exercisable" stock options), as set forth below.
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(2) Ownership is stated as of June 30, 1998, as reflected in a Schedule 13F
filed by Pilgrim Baxter & Associates ("Pilgrim") with the Securities and
Exchange Commission. Pilgrim is a registered investment adviser. Pilgrim
has shared power to vote or direct the vote of such shares and has sole
power to dispose or direct the disposition of such shares.
(3) Ownership is stated as of March 10, 1998, as reflected in a Schedule 13D
filed by The Joseph Eagle Settlement Trust ("Trust") with the Securities
and Exchange Commission. The Trust has sole power to vote such shares and
sole power to dispose of such shares. All voting and investment power with
respect to any securities held by the Trust is vested in the trustees. The
trustees of the Trust are Terence Le Sueur and Contra Nominees Limited. The
sole shareholder of Contra Nominees Limited is LSI Holdings Limited. A.
Joseph Eagle, a director of the Company, is not considered a beneficial
owner of the Trust.
(4) Ownership is stated as of June 30, 1998, as reflected in a Schedule 13F
filed by Putnam Investments, Inc. ("Putnam") with the Securities and
Exchange Commission. Putnam is a wholly owned subsidiary of Marsh &
McLennan Companies, Inc. Shares beneficially owned by Putnam consist of
securities beneficially owned by subsidiaries of Putnam which are
registered investment advisors, which in turn include securities
beneficially owned by clients of such investment advisors, which clients
may include investment companies registered under the Investment Company
Act and/or employee benefits plans, pension funds, endowment funds or other
institutional clients. The subsidiaries, Putnam Investment Management,
Inc., the investment adviser to the Putnam family of mutual funds, and the
Putnam Advisory Company, Inc., the investment advisor to Putnam's
institutional clients, have dispositary power over the shares as investment
managers, but each of the mutual funds trustees have voting power over the
shares held by each fund. The Putnam Advisory Company, Inc. has shared
voting power over the shares held by the institutional clients. Putnam
disclaims beneficial ownership of such shares.
(5) Includes 79,000 shares of Common Stock issuable pursuant to presently
exercisable stock options. Reflects transfer in November 1997 to the Josef
H. von Rickenbach Childrens' Trust.
(6) Includes 2,600 shares of Common Stock issuable pursuant to presently
exercisable stock options. Includes 76,986 shares of Common Stock owned by
Sawema Investments Ltd., a Caymans Island corporation and the sole
shareholder of Sawema Trust, of which Dr. Herrmann is currently the sole
beneficiary.
(7) Includes 63,332 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(8) Includes 38,332 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(9) Consists of 18,332 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(10) Consists of 15,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(11) Includes 29,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(12) Includes 22,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(13) Includes 11,250 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(14) Includes 9,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(15) Includes 307,346 shares of Common Stock issuable pursuant to presently
exercisable stock options.
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ELECTION OF DIRECTORS
In accordance with the Company's Restated Articles of Organization, the
Company's Board is divided into three classes: the Class I, Class II and Class
III directors. Each director is elected for a three-year term of office, with
one class of directors being elected at each annual meeting of stockholders. The
Class III directors' terms will expire at this Meeting. Each director holds
office until his successor is elected and qualified or until his earlier death,
resignation or removal. The nominees for Class III directors are Josef H. von
Rickenbach and A. Dana Callow. The information below sets forth for each member
of the Board, including the Class III nominees to be elected 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 a plurality of the votes cast at the Meeting.
The Board knows of no reason why the nominees would be unable or unwilling to
serve, but if such should be the case, proxies may be voted for the election of
other persons.
Class III Directors: To be elected at the 1998 Annual Meeting of Stockholders
JOSEF H. VON RICKENBACH, 43, co-founded PAREXEL in 1983 and has served as a
director since then. Prior to his involvement with PAREXEL, he was European Area
Manager with ERCO (now ENSECO), Inc., a diversified testing and technical
consulting company. Mr. von Rickenbach has worked for Schering-Plough, Inc. and
3M (East), a division of Minnesota Mining and Manufacturing, Inc. Mr. von
Rickenbach received an M.B.A. from the Harvard University Graduate School of
Business Administration and has an undergraduate degree from the Lucerne College
of Economics and Administration.
A. DANA CALLOW, JR., 46, was elected a director of the Company in June 1986
and is a member of the Audit Committee, Compensation Committee and Stock Option
Committee of the Board. Mr. Callow is the Managing General Partner of the
general partner of Boston Millennia Partners Limited Partnership, a venture
capital firm. He is also a general partner of Boston Capital Ventures
International Limited Partnership, Boston Capital Ventures Limited Partnership,
Boston Capital Ventures II Limited Partnership and Boston Capital Ventures III,
Limited Partnership, each a venture capital partnership. Mr. Callow is a
director of a number of companies, including ILEX Oncology, Inc., Professional
Development, Inc., and Child Health Systems, Inc.
Class I Directors: Term expires at the 1999 Annual Meeting of Stockholders
PATRICK J. FORTUNE, PH.D., 51, was elected a director of the Company in
June 1996 and is a member of the Compensation Committee of the Board. Mr.
Fortune is Vice President, Information Technology and Chief Information Officer
of Monsanto Company. From 1994 to October 1995, Mr. Fortune was President and
Chief Operating Officer, Chief Information Officer and a member of the Board of
Directors of Coram
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Healthcare Corporation. From 1991 to 1994, Mr. Fortune was Corporate Vice
President, Information Management at Bristol-Myers Squibb. Prior to that, Mr.
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, Vice President,
Research and Development and Vice President, Information Services.
PROF. DR. MED. WERNER M. HERRMANN, 57, is a Senior Vice President of
PAREXEL and was elected a director of the Company in April 1991. Dr. Herrmann
founded a Berlin-based provider of clinical and biostatistical and clinical data
management services in 1982, which was acquired by PAREXEL and renamed PAREXEL
GmbH Independent Pharmaceutical Research Organization. Prior to 1982, Dr.
Herrmann was head of the Psychiatry and Neurology Branch, Department of
Experimental and Clinical Pharmacology, Institute for Drugs, Federal Health
Office, Berlin, Germany, from 1979 to 1982. Dr. Herrmann is a Full Professor at
the Department of Psychiatry, Free University of Berlin.
Class II Directors: Term Expires at 2000 Annual Meeting of Stockholders
JAMES A. SAALFIELD, 51, was initially elected a director of the Company in
January 1993 and is a member of the Audit Committee and the Stock Option
Committee of the Board. Mr. Saalfield is a retired general partner of Fleet
Venture Partners I, II, III and IV and managing general partner of Dean's Hill
L.P. and The Still River Fund and President of The Still River Management
Company. Mr. Saalfield served as the senior vice president of Fleet Venture
Resources, Inc. and senior vice president of Fleet Growth Resources, Inc. from
1985 to 1993. Mr. Saalfield is a director of a number of companies, including
KVH Industries, Physiometrix Inc. and a number of private companies.
SERGE OKUN, 52, was initially elected a director of the Company in November
1997. Mr. Okun is President and Chief Executive Officer of PST International and
President of BMTS. Prior to his positions at PST International, 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 was President and Chief Executive Officer. Mr. Okun is a
director of ADIDAS AG and several privately held companies including MediMedia,
BMTS and Fin'Objects.
A. JOSEPH EAGLE, 51, was initially elected a director of the Company in
March 1998. Mr. Eagle is President of the Company's Medical Marketing Services
Division and Managing Director of PAREXEL MMS Europe Limited, formerly PPS
Europe Limited, which was acquired by the Company in March 1998. Prior to 1985,
Mr. Eagle served as Marketing Director of Ciba Geigy UK Ltd. and was a Vice
President of both Pfizer Asia Management Centre and Pfizer Africa Middle East.
Prior to his service at Pfizer, Mr. Eagle was a product manager at Wellcome
International.
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DIRECTORS' COMPENSATION
Non-employee members of the Board receive $1,500 per day of in-person Board
meetings (with no more than one $1,500 payment being made for any one day and no
more than $7,500 per year for each director). Non-employee directors are also
reimbursed for their reasonable out-of-pocket expenses incurred in attending
meetings. There are no family relationships among any of the executive officers
or directors of the Company.
Until September 1998, under Part II of the Company's Amended and Restated
1995 Stock Plan (the "1995 Plan"), non-employee directors of the Company were
eligible to receive an annual formula grant of Non-qualified Options. Part II of
the 1995 Plan provided for the automatic grant of an option to purchase up to
15,000 shares of Common Stock on the first business day of July of each year to
each non-employee director depending upon attendance by such non-employee
director at meetings of the Board and committees thereof during the prior year.
The exercise price of Non-qualified Options granted under Part II is 100% of the
fair market value of the Company's Common Stock on the date of grant as defined
in the 1995 Plan. Non-qualified Options granted to non-employee directors
pursuant to Part II of the 1995 Plan were transferable to family members or
other persons for estate planning purposes. All Non-qualified options granted
under Part II of the Plan are exercisable in three equal vesting periods unless
a change of control of the Company occurs in which case they become fully
exercisable immediately.
In September 1998, the Board voted to amend the 1995 Plan to eliminate Part
II. The Board then adopted a policy which provides for discretionary grants of
Non-qualified Options to non-employee directors at each regularly scheduled
meeting of the Board of Directors. Consistent with the formula provisions
previously in effect, the number of options granted under the new policy is
determined by such non-employee director's attendance at meetings of the Board
and committees thereof, with an annual limitation of options to purchase 15,000
shares per director. In addition, each non-employee director was granted an
additional option to purchase 2,000 shares of Common Stock in September 1998.
All of the options described above vest in three equal annual installments
commencing on the first anniversary of the date of grant and the exercise price
of all such options is 100% of the fair market value of the Company's Common
Stock on the date of grant as defined in the Plan.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board met eight times and took action by unanimous written consent two
times during the fiscal year ended June 30, 1998. The Board has a standing Audit
Committee, Stock Option Committee and Compensation Committee. The Audit
Committee, which oversees the accounting and financial functions of the Company,
met two times during the fiscal year ended June 30, 1998. Messrs. Callow and
Saalfield are the current members of the Audit Committee. The Stock Option
Committee of the Company, which reviews and approves option grants and
administers the Company's stock option plans, took action by unanimous written
consent ten times during the fiscal year ended June 30, 1998. Messrs. Callow and
Saalfield are the current members of the Stock Option Committee. The
Compensation Committee of the Company, which reviews and makes recommendations
concerning executive compensation, did not meet during the fiscal year ended
June 30, 1998. Messrs. Callow and Fortune are the current members of the
Compensation Committee.
During the fiscal year ended June 30, 1998, all of the Company's directors
attended at least seventy-five percent of the total number of meetings of the
Board and at least seventy-five percent of the total number of meetings of all
committees of the Board on which they served.
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EXECUTIVE OFFICERS
Executive officers serve at the discretion of the Board on an annual basis
and serve until their successors have been duly elected and qualified or until
their earlier resignation or removal. The current executive officers of the
Company are as follows:
NAME AGE POSITION(S)
---- --- -----------
Josef H. von Rickenbach...................... 43 President, Chief Executive Officer and
Chairman of the Board
William T. Sobo, Jr.......................... 41 Senior Vice President, Chief Financial
Officer, Treasurer and Clerk
James M. Karis............................... 50 President, Contract Research Services
and Chief Operating Officer
Barry R. Philpott............................ 49 President, PAREXEL Consulting Group
A. Joseph Eagle.............................. 51 President, Medical Marketing Services
and Managing Director, PAREXEL MMS
Europe Limited
Paule Dapres, M.D............................ 53 Senior Vice President
Taylor J. Crouch............................. 38 Senior Vice President
WILLIAM T. SOBO, JR. is responsible for all financial activities of the
Company as well as corporate development and administrative activities in North
America. Prior to joining PAREXEL in 1987, Mr. Sobo was a supervisor at Coopers
& Lybrand in the emerging business/middle market group and also served as the
controller for a regional financial consulting firm. Mr. Sobo is a Certified
Public Accountant and received an M.B.A. from Boston University and a B.S. from
the Wharton School at the University of Pennsylvania.
JAMES M. KARIS is responsible for the general management of the Company's
worldwide clinical research operations, including proposal preparation, contract
negotiations and account management. Prior to joining PAREXEL in December 1996,
Mr. Karis served in several senior management positions, most recently as Chief
Operating Officer of Pharmaco International Inc. Prior to that, Mr. Karis served
as President of KMR Group, Inc. Mr. Karis holds an M.A. in Economics from The
American University and a B.S. in industrial management and economics from
Purdue University.
BARRY R. PHILPOTT is responsible for the general management of PAREXEL's
Consulting Group and also coordinates the Company's corporate development and
administrative activities in Europe. Prior to joining PAREXEL in 1993, Mr.
Philpott served in several senior management positions with EG&G Inc., a
diversified technology company based in Massachusetts, most recently as General
Manager of its Worldwide Optical & Analytical Division. Previous to this
position he was the President and Managing Director of EG&G Applied Research
Corp.
PAULE DAPRES, M.D. is responsible for the Company's clinical research
operations. Prior to joining PAREXEL in 1992 as general manager of the Company's
French operations, Dr. Dapres served in several senior management positions at
Schering Plough, Inc. Dr. Dapres received her M.D. degree from the University of
Paris.
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TAYLOR J. CROUCH is responsible for the Company's worldwide client
relations and marketing activities. Prior to joining PAREXEL's operations in
Germany as Vice President, Client Relations and Marketing in 1991, Mr. Crouch
served in several senior management positions, most recently as Marketing
Operations Manager, at Schering-Plough, Inc. in Germany. Mr. Crouch received an
M.B.A. from the University of Chicago.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company served as a member of the Compensation
Committee (or other Board committee performing equivalent functions or, in the
absence of any such committee, the entire Board of Directors) of another entity,
one of whose executive officers served as a director of the Company.
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EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation paid or accrued by the Company for services
rendered to the Company, in all capacities, for the past three fiscal years by
its 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 (collectively, the "Named Executive
Officers"). The Company did not grant any restricted stock awards or stock
appreciation rights or make any long-term incentive plan payouts during the
fiscal years 1998, 1997 or 1996.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------- SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION OPTIONS COMPENSATION
------------------ ------ --------- ----- ------------ ----------- ------------
Josef H. von Rickenbach................ 1998 $350,252 $ 35,938 $ 5,124(2) 60,000 $ 7,412(3)
President, Chief Executive Officer 1997 255,208 160,626(7) 4,302(2) 0 9,945(9)
and Chairman 1996 199,188 0 5,114(2) 100,000 38,825
James M. Karis......................... 1998 $264,231 $104,000 -- 30,000 $ 7,664(4)
President, Contract Research 1997 115,455 44,000 -- 15,000 3,000(5)
Services and Chief Operating 1996 -- -- -- 70,000 --
Officer
Barry R. Philpott...................... 1998 $214,955 $ 27,461 $13,264(2) 30,000 $19,392(5)
President, PAREXEL Consulting 1997 193,860 97,334 9,305(2) 0 15,509(5)
Group 1996 162,530 50,694 12,151(2) 30,000 13,002
Taylor J. Crouch....................... 1998 $177,695 $160,690 -- 27,500 $ 2,941(5)
Senior Vice President 1997 130,000 159,275(8) -- 0 3,553(5)
1996 150,968 16,171 -- 24,000 3,570
William T. Sobo, Jr.................... 1998 $225,252 $ 17,500 -- 30,000 $11,791(6)
Senior Vice President, 1997 175,000 73,750 -- 0 3,618(5)
Chief Financial Officer, 1996 144,750 61,500 -- 60,000 11,184
Treasurer and Clerk
- ---------------
(1) Includes commissions, if any.
(2) Automobile allowance.
(3) Includes $3,000 in contributions to defined benefit plans and $4,412 for
unused paid vacation.
(4) Includes $3,000 in contributions to defined benefit plans, $1,298 for unused
paid vacation and $3,366 for relocation expenses.
(5) Contributions to defined benefit plans.
(6) Includes $3,000 in contributions to defined benefit plans and $8,791 for
unused paid vacation.
(7) Amount includes $70,000 earned in fiscal 1996 but paid in fiscal 1997.
(8) Amount includes $84,436 earned in fiscal 1996 but paid in fiscal 1997.
(9) Includes $3,087 in contributions to defined contribution plans and $6,858
for unused paid vacation.
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EMPLOYMENT AGREEMENTS
The Company and James M. Karis are parties to a letter agreement of
employment dated December 30, 1996. Mr. Karis' current annual base salary is
$264,000. The agreement provides that the Company will continue to pay Mr.
Karis' base salary for six months if Mr. Karis is terminated by the Company
other than for cause.
The Company and Barry R. Philpott are parties to a letter agreement of
employment dated July 6, 1993. Mr. Philpott's current annual base salary is
L130,000 (approximately $215,000). The Company may terminate Mr. Philpott's
employment upon two months' notice and upon payment of severance benefits equal
to one month's base salary per full year of service, with a maximum payment
equal to six months' base salary.
DR. HERRMANN entered into a letter agreement of employment with the Company
effective July 1, 1997 which was amended on April 1, 1998. This agreement
provides for an annual base salary of $92,800. In addition, Dr. Herrmann and
PAREXEL GmbH are parties to an employment agreement dated June 30, 1993 and
amended effective July 1, 1997 and April 1, 1998. This agreement provides for an
annual base salary of approximately DM 144,000 (approximately $80,000).
PAREXEL MMS Europe Limited, formerly PPS Europe Limited, a subsidiary of
the Company, and A. Joseph Eagle are parties to a letter agreement of employment
dated April 17, 1998. Mr. Eagle's current annual base salary is L130,000
(approximately $215,000). The Company may terminate the agreement and Mr.
Eagle's employment upon twelve months notice and upon payment of Mr. Eagle's
salary, bonus and other benefits until the expiration of such twelve month
period. The agreement terminates immediately in the event Mr. Eagle is
terminated for cause.
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.
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OPTIONS AND STOCK PLANS
Option Grants.
The following table sets forth information concerning options granted
pursuant to the 1995 Plan during the fiscal year ended June 30, 1998 to the
Named Executive Officers as reflected in the Summary Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS OR AT ASSUMED ANNUAL RATES
NUMBER OF SARS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM(1)
OPTIONS/SARS IN FISCAL BASE PRICE EXPIRATION --------------------------
NAME GRANTED YEAR(2) PER SHARE(3) DATE 5% 10%
---- ------------ ---------- -------------- ---------- ---------- ----------
Josef H. von Rickenbach...... 30,000(4) 5.9% $31.75 7/2/05 206,821 307,775
30,000(5) 26.88 6/5/06 424,821 632,187
James M. Karis............... 15,000(4) 3.0% $31.75 7/2/05 103,410 153,888
15,000(5) 26.88 6/5/06 212,411 316,094
Barry R. Philpott............ 15,000(4) 3.0% $31.75 7/2/05 86,175 128,240
15,000(5) 26.88 6/5/06 212,411 316,094
Taylor J. Crouch............. 12,500(4) 2.7% $31.75 7/2/05 103,410 153,888
15,000(5) 26.88 6/5/06 212,411 316,094
William T. Sobo, Jr.......... 15,000(4) 3.0% $31.75 7/2/05 103,410 153,888
15,000(5) 26.88 6/5/06 212,411 316,094
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(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 Securities and Exchange
Commission (the "Commission") 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) Based on an aggregate of 1,011,495 shares subject to options granted in the
fiscal year ended June 30, 1998 to employees of the Company.
(3) The exercise price per share was equal to the fair market value of the
Company's Common Stock as defined in 1995 Plan.
(4) 40% of option exercisable over time; 10% on each anniversary date of grant.
30% of option exercisable after 5 years from date of grant, or earlier
dependent on threshold shareholder return, as defined in option
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agreement. 30% of option exercisable after 5 years from date of grant, or
earlier dependent on threshold earnings per share, as defined in option
agreement.
(5) Exercisable in four equal annual installments.
Option Exercises and Fiscal Year-End Option Table. The following table
sets forth certain information concerning options granted to the Named Executive
Officers, including (i) the number of shares of Common Stock purchased upon
exercise of options in the fiscal year ended June 30, 1998; (ii) the net value
realized upon such exercise; (iii) the number of unexercised stock options
outstanding as of June 30, 1998; and (iv) the value of such unexercised options
at June 30, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT FISCAL
ACQUIRED VALUE FISCAL YEAR-END YEAR-END (2)
ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Josef H. von
Rickenbach............. -- -- 76,000 84,000 $2,014,500 $846,750
James M. Karis........... -- -- 21,000 79,000 220,500 726,300
Taylor J. Crouch......... 12,000 371,812 10,000 41,500 198,750 469,563
Barry R. Philpott........ 10,500 71,641 10,500 51,000 213,188 688,250
William T. Sobo, Jr...... 20,000 567,813 28,000 42,000 718,500 423,375
- ---------------
(1) Amounts disclosed in this column do not reflect amounts actually received by
the Named Executive Officers but are calculated based on the difference
between the fair market value of Common Stock on the date of exercise and
exercise price of the options. Named Executive Officers will receive cash
only if and when they sell the Common Stock issued upon exercise of the
options and the amount of cash, if any, received by such individuals is
dependent on the price of the Company's Common Stock at the time of such
sale.
(2) Value is based on the difference between the option exercise price and the
fair market value at June 30, 1998, the fiscal year-end ($36.375 per share
as quoted on the Nasdaq National Market) multiplied by the number of shares
underlying the option.
Stock Plans. The Company currently maintains three stock ownership plans:
the Amended and Restated 1995 Stock Plan, the 1995 Employee Stock Purchase Plan
and the 1998 Non-Qualified, Non-Officer Stock Option Plan.
Amended and Restated 1995 Stock Plan. The Amended and Restated 1995 Stock
Plan (the "1995 Plan") was adopted by the Board of Directors of the Company on
September 14, 1995 and approved by the stockholders on November 3, 1995. The
Board of Directors twice approved amendments to the 1995 Plan: (i) on July 8,
1997, which amendments became effective upon shareholder approval on November
13, 1997,
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and (ii) on September 24, 1998. The 1995 Plan currently authorizes the grant of
Stock Rights to acquire 2,438,334 shares of Common Stock.
The 1995 Plan provides for the grant of incentive stock options ("ISOs") to
officers and other employees of the Company and the grant of options not
eligible for ISO treatment ("Non-qualified Options") and stock awards
("Awards)," together with ISOs and Non-qualified Options, ("Stock Rights")) to
employees, consultants, directors and officers of the Company. The 1995 Plan is
administered by the Stock Option Committee or the Board of Directors. The Stock
Option Committee has the authority to determine the persons to whom Stock Rights
shall be granted (subject to certain eligibility requirements for grants of
ISOs), the number of shares covered by each such grant, in respect to ISOs,
Non-qualified Options, and Purchases, the exercise of purchase price per share,
the time or times at which Stock Rights shall be granted, and other terms and
provisions governing the Stock Rights, including the nature of such Stock Right
as an ISO, Non-qualified Option, Award, or Purchase, as well as the
restrictions, if any, applicable to shares of Common Stock issuable upon
exercise of Stock Rights. In addition, the Stock Option Committee has authority
to determine the duration of each option, which generally is not more than eight
years from its date of grant, or in the case of any ISO granted to an employee
owning more than 10% of the total combined voting power of all classes of stock
of the Company or any Related Company, not more that five years from its date of
grant.
The exercise price per share of Non-qualified Options granted pursuant to
the 1995 Plan shall in no event be less than the minimum legal consideration
required under the laws of the Commonwealth of Massachusetts or the laws of any
jurisdiction in which the Company or its successors in interest may be
organized. If the Stock Option Committee grants Non-qualified Options with an
exercise price less than fair market value per share of Common Stock on the date
of grant, such grant will be submitted for, and will be contingent upon
shareholder approval. The exercise price per share of ISOs granted under the
1995 Plan cannot be less than the fair market value of the Common Stock on the
date of grant, or, in the case of ISOs granted to employees holding more than
10% of the total combined voting power of all classes of stock of the Company or
any Related Company, 110% of the fair market value of the Common Stock on the
date of grant.
If an ISO optionee ceases to be employed by the Company or any Related
Company other than by reason of death or disability, no further installments of
his or her ISOs will become exercisable, and the ISOs shall terminate after the
passage of 60 days from the date of termination of employment (but not later
than their specified expiration dates), except to the extent that such ISOs
shall have been converted into Non-qualified Options. If an optionee dies, any
ISO held by the optionee may be exercised, to the extent exercisable on the date
of death, by the optionee's estate, personal representative or beneficiary who
acquires the ISO by will or by the laws of descent and distribution, at any time
within 180 days from the date of the optionee's death (but not later than the
specified expiration date of the ISO). If an ISO optionee ceases to be employed
by the Company by reason of his or her disability (as defined in Section
22(e)(3) of the Code), the optionee may exercise any ISO held by him or her on
the date of termination of employment, to the extent exercisable on that date or
at any time within 180 days from the date of termination of employment (but not
later than the specified expiration date of the ISO).
Non-qualified Options generally are subject to such termination and
cancellation provisions as may be determined by the Stock Option Committee.
Non-qualified Options granted to non-employee directors will
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terminate, to the extent not then vested, when such non-employee director ceases
to be a member of the Board. To the extent vested, the Non-qualified Option may
be exercised within 270 days of the date the optionee ceases to be a member of
the Board. Such Non-qualified Options granted to non-employee directors shall
terminate entirely after 270 days have expired. Upon a Change of Control (as
defined in the 1995 Plan), any then-unexercisable portion of an option granted
to non-employee directors shall become immediately and fully exercisable.
Stock Rights may be granted under the 1995 Plan at any time prior to
September 14, 2005, unless the Board of Directors votes to terminate the 1995
Plan sooner. As of the Record Date, options to purchase 1,687,000 shares of
Common Stock were outstanding under the 1995 Plan, of which 332,000 shares were
then exercisable and 595,000 shares remained available for grant.
At the September 1998 meeting of the Board of Directors of the Company, the
Board eliminated Part II of the 1995 Plan which provided for the automatic
non-discretionary formula grant of options to non-employee directors. The Board
voted to grant options to non-employee directors under Part I of the 1995 Plan
at each regularly scheduled board meeting (approximately 4-5 times per year).
The amount of options granted to each non-employee director at each board
meeting will be dependent upon the number of board and committee meetings
attended by that director during the period commencing on the day following the
prior regularly scheduled board meeting up to and including the regularly
scheduled board meeting at which the options are being granted. The exercise
price of all option grants to non-employee directors shall be the fair market
value of the Company's Common Stock as defined in Section 14(D) of the 1995 Plan
(i.e., the last reported sale price for the Common Stock on Nasdaq on the last
business day preceding the date of grant).
At a meeting of the Board in September 1998, each non-employee director was
granted an option for 2,000 shares of stock in addition to any options each
non-employee director was granted based on board and committee meeting
attendance. The options granted in September will vest in three equal annual
installments.
1995 Employee Stock Purchase Plan. The 1995 Employee Stock Purchase Plan
(the "1995 Purchase Plan") was adopted by the Board of Directors of the Company
on September 14, 1995 and was approved by the stockholders on November 3, 1995.
The 1995 Purchase Plan provides for the issuance of a maximum of 600,000 shares
of Common Stock pursuant to the exercise of nontransferable options granted to
participating employees. Presently, 312,503 shares are available for future
issuance under the 1995 Purchase Plan. The 1995 Purchase Plan is intended to
encourage stock ownership by all eligible employees of the Company so that they
may share in the growth of the Company and designed to encourage eligible
employees to remain in the employ of the Company. It is intended that options
granted pursuant to the 1995 Purchase Plan will constitute options pursuant to
an "employee stock purchase plan" within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code").
The 1995 Purchase Plan is administered by the Stock Option Committee. All
employees of the Company, except employees who immediately after the option was
granted would own five percent or more of the Company's voting stock, whose
customary employment is more than 20 hours per week and for more than five
months in any calendar year are eligible to participate in the 1995 Purchase
Plan. To participate in the 1995 Purchase Plan, an eligible employee must
authorize the Company to deduct an amount (not less than
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one percent nor more than ten percent of a participant's total compensation)
from his or her total compensation, including base pay or salary and any bonuses
or commissions, generally during six-month periods from September 1 to the last
day of February and from March 1 to August 31 of each calendar year (each a
"Payment Period"), but in no case shall an employee be entitled to purchase more
than 1,000 shares in any Payment Period. Any excess is refunded to the employee
to the extent the 1,000 share limit is exceeded. The exercise price for the
option for each Payment Period is 85% of the lesser of the average market price
of the Common Stock on the first or last business day of the Payment Period. If
an employee is not a participant on the last day of the Payment Period, such
employee is not entitled to exercise his or her option, and the amount of his or
her accumulated payroll deductions will be refunded. An employee's rights under
the 1995 Purchase Plan generally terminate upon his or her voluntary withdrawal
from the plan at any time or upon termination of employment. To date, options to
purchase 287,497 shares of Common Stock have been exercised pursuant to the 1995
Purchase Plan. As of September 18, 1998, 928 employees were participating in the
1995 Purchase Plan. Unless terminated sooner, the 1995 Purchase Plan shall
terminate on September 14, 2005.
1998 Non-Qualified, Non-Officer Stock Option Plan. The 1998 Non-Qualified,
Non-Officer Stock Option Plan (the "1998 Plan") was adopted by the Board of
Directors of the Company on February 26, 1998. The 1998 Plan currently
authorizes the grant of Non-qualified Options to acquire 500,000 shares of
Common Stock.
The 1998 Plan provides for the grant of non-qualified stock options to
employees and consultants who are not officers or directors of the Company. The
1998 Plan is administered by the Stock Option Committee of the Board of
Directors, which consists of two directors. The 1998 Plan was adopted by the
Board in order to provide the Company with the ability to offer stock options to
employees of potential acquisition candidates as part of the Company's overall
acquisition strategy. The stock options would be granted in order to provide an
incentive for such employees to continue their employment after such an
acquisition and aid the Company in retaining qualified and important employees.
The Plan also allows for the grant of options to existing employees of the
Company. However, according to the terms of the Plan, no options may be granted
to officers or directors of the Company regardless of whether or not they are or
will become an employee.
Subject to the provisions of the 1998 Plan, the Stock Option Committee has
authority to select the optionees and determine the terms of the stock options
granted, including (i) the time or times at which stock options shall be
granted; (ii) the number of shares covered by each grant; (iii) when the stock
option becomes exercisable; (iv) the exercise price per share; (v) whether
transfers of options to family members or other persons for estate planning
purposes will be permitted; and (vi) the restrictions, if any, applicable to
shares of Common Stock issuable upon the exercise of stock options.
Stock options may be granted under the 1998 Plan at any time prior to
February 26, 2008, unless the Board of Directors votes to terminate the 1998
Plan sooner. As of the Record Date, options to purchase 167,585 shares of Common
Stock were outstanding under the 1998 Plan, of which 112,085 shares were then
exercisable and 309,510 shares remained available for grant.
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Federal Income Tax Consequences. THE FOLLOWING DISCUSSION OF UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF OPTIONS GRANTED
UNDER THE 1995 PLAN, THE 1995 PURCHASE PLAN AND THE 1998 PLAN, AND OF CERTAIN
OTHER RIGHTS GRANTED UNDER THE 1995 PLAN, IS BASED UPON THE PROVISIONS OF THE
CODE AS IN EFFECT ON THE DATE OF THIS PROXY STATEMENT, CURRENT REGULATIONS, AND
EXISTING ADMINISTRATIVE RULINGS OF THE INTERNAL REVENUE SERVICE. IT IS NOT
INTENDED TO BE A COMPLETE DISCUSSION OF ALL OF THE FEDERAL INCOME TAX
CONSEQUENCES OF THESE PLANS OR OF THE REQUIREMENTS THAT MUST BE MET IN ORDER TO
QUALIFY FOR THE DESCRIBED TAX TREATMENT.
A. Incentive Stock Options. The following general rules are applicable
under current United States federal income tax law to ISOs granted under the
1995 Plan:
1. In general, an optionee will not recognize any income upon the
grant of an ISO or upon the issuance of shares to him or her upon the
exercise of an ISO, and the Company will not be entitled to a federal
income tax deduction upon either the grant or the exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of
within (i) two years from the date the ISO was granted or (ii) one year
from the date the shares are issued to the optionee pursuant to the ISO
exercise (the "Holding Period"), the difference between the amount realized
on any subsequent disposition of the shares and the exercise price will
generally be treated as capital gain or loss to the optionee.
3. If shares acquired upon exercise of an ISO are disposed of and the
optionee does not satisfy the Holding Periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the
exercise price or (ii) the actual gain on disposition, will be taxed to the
optionee as ordinary income in the year of such disposition.
4. The difference between the amount realized by an optionee as the
result of a Disqualifying Disposition and the sum of (i) the exercise price
and (ii) the amount of ordinary income recognized under the above rules, if
any, generally will be treated as capital gain or loss.
5. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of shares acquired upon exercise of an ISO, the
Company generally will be entitled to a corresponding federal income tax
deduction.
6. An optionee may be entitled to exercise an ISO by delivering shares
of the Company's Common Stock to the Company in payment of the exercise
price, if the optionee's ISO agreement so provides. If an optionee
exercises an ISO in such fashion, special rules will apply.
7. In addition to the tax consequences described above, the exercise
of an ISO may result in an "alternative minimum tax." In general, the
amount by which the value of the shares received upon exercise of the ISO
exceeds the exercise price is included in the optionee's alternative
minimum taxable income. A taxpayer is required to pay the higher of his
regular tax liability or the alternative minimum tax. A taxpayer who pays
alternative minimum tax attributable to the exercise of an ISO may be
entitled to a tax credit against his or her regular tax liability in later
years.
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8. Special rules apply if the shares acquired upon the exercise of an
ISO are subject to vesting, or are subject to certain restrictions on
resale under federal securities laws applicable to directors, officers or
10% stockholders.
B. Non-Qualified Stock Options. The following general rules are
applicable under current United States federal income tax law to options granted
under the 1995 Plan which do not qualify as ISOs, and to all options granted
under the 1998 Plan:
1. In general, an optionee will not recognize any income upon the
grant of a Non-qualified Option, and the Company will not be entitled to a
federal income tax deduction upon such grant.
2. An optionee generally will recognize ordinary income at the time of
exercise of the Non-qualified Option in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise over
the exercise price. The Company may be required to withhold income tax on
this amount.
3. When an optionee sells the shares acquired upon the exercise of a
Non-qualified Option, he or she generally will recognize capital gain or
loss in an amount equal to the difference between the amount realized upon
the sale of the shares and his or her basis in the shares (generally, the
exercise price plus the amount taxed to the optionee as ordinary income).
4. When an optionee recognizes ordinary income attributable to a
Non-qualified Option, the Company generally will be entitled to a
corresponding federal income tax deduction.
5. An optionee may be entitled to exercise a Non-qualified Option by
delivering shares of the Company's Common Stock to the Company in payment
of the exercise price. If an optionee exercises a Non-qualified Option in
such fashion, special rules will apply.
6. Special rules apply if the shares acquired upon the exercise of a
Non-qualified Option are subject to vesting, or are subject to certain
restrictions on resale under federal securities laws applicable to
directors, officers or 10% stockholders.
C. Stock Awards and Purchases. The following general rules are applicable
under current federal income tax law to Awards and Purchases (each as defined
below) under the 1995 Plan:
Under current federal income tax law, persons receiving Common Stock under
the 1995 Plan pursuant to an award of Common Stock ("Award") or a grant of an
opportunity to purchase Common Stock ("Purchase") generally will recognize
ordinary income equal to the fair market value of the shares received reduced by
any purchase price paid. The Company generally will be entitled to a
corresponding federal income tax deduction. When such shares are sold, the
seller generally will recognize capital gain or loss equal to the excess of the
amount realized upon the sale of shares over his or her basis in the shares
(generally, the fair market value of the Shares when acquired). Special rules
apply if the shares acquired are subject to vesting, or are subject to certain
restrictions on resale under federal securities laws applicable to directors,
officers or 10% stockholders.
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D. Options Granted under the 1995 Employee Stock Purchase Plan. The
following general rules are currently applicable under current United States
federal income tax law to options under the 1995 Purchase Plan:
1. The amounts deducted from an employee's pay under the 1995 Purchase
Plan will be included in the employee's compensation subject to federal
income tax. In general, no additional income will be recognized by the
employee either at the time options are granted pursuant to the 1995
Purchase Plan or at the time the employee purchases shares pursuant to the
1995 Purchase Plan.
2. If the employee disposes of shares purchased pursuant to the 1995
Purchase Plan more than two years after the first business day of the
Payment Period in which the employee acquired the shares, then upon such
disposition the employee will recognize ordinary income in an amount equal
to the lesser of:
(a) the excess, if any, of the fair market value of the shares at
the time of disposition over the amount the employee paid for the
shares, or
(b) the excess of the fair market value of the shares on the first
business day of the Payment Period over the option price.
In addition, the employee generally will recognize capital gain or loss in
an amount equal to the difference between the amount realized upon the sale of
shares and the employee's tax basis in the shares (generally, the amount the
employee paid for the shares plus the amount, if any, taxed as ordinary income).
3. If the employee disposes of shares purchased pursuant to the 1995
Purchase Plan within two years after the first business day of the Payment
Period in which the employee acquired the shares, then upon disposition the
employee will recognize ordinary income in an amount equal to the excess,
if any, of the fair market value of the shares on the last business day of
the Payment Period over the amount the employee paid for the shares.
In addition, the employee generally will recognize capital gain or
loss in an amount equal to the difference between the amount realized upon
the sale of shares and the employee's tax basis in the shares (generally,
the amount the employee paid for the shares plus the amount, if any, taxed
as ordinary income).
4. If the employee disposes of shares purchased pursuant to the 1995
Purchase Plan more than two years after the first business day of the
Payment Period in which the employee acquired the shares, the Company will
not be entitled to any federal income tax deduction with respect to the
options granted or the shares issued upon their exercise. If the employee
disposes of such shares prior to the expiration of this two-year holding
period, the Company generally will be entitled to a federal income tax
deduction in an amount equal to the amount which is treated as ordinary
income as a result of such disposition.
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STOCK PERFORMANCE GRAPH
The Stock Price Performance Graph set forth below compares the cumulative
total stockholder return on the Company's Common Stock from November 22, 1995,
the date of the Company's initial public offering, through June 30, 1998, 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
November 22, 1995 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.
SHAREHOLDER RETURN ON COMMON STOCK
[PERFORMANCE GRAPH]
November 22, 1995 June 30, 1998
PAREXEL International Corporation $100 $378
Nasdaq U.S. Stock Index 100 188
Nasdaq Health Services Index 100 112
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.
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COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
Overview. The Company's executive compensation program is administered by
the Compensation Committee and the Stock Option Committee of the Board of
Directors (the "Compensation Committee" and "Stock Option Committee,"
respectively, and "Committees," collectively). 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 Stock Option Committee, 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 1986 Incentive Stock
Option Plan, 1987 Stock Plan, 1989 Stock Plan, 1995 Plan, 1995 Purchase Plan and
1998 Plan.
The members of the Compensation Committee and the Stock Option Committee,
who are currently non-employee directors, bring expertise in matters relating to
executive compensation to their service on the Committees gained through their
experience on other Boards of Directors of public and private companies. The
current members of the Compensation Committee are A. Dana Callow, Jr. and
Patrick J. Fortune. The current members of the Stock Option Committee are Mr.
Callow and James A. Saalfield.
Procedure for Establishing Compensation. At the beginning of each fiscal
year the Committees establish the annual compensation for the Company's
executive officers based, in part, on recommendations of the Company's Chief
Executive Officer. The Committees review the recommendations, taking into
account the following factors: (i) external market data; (ii) the Company's
performance; (iii) the individual's contribution to the Company's success; and
(iv) the internal equity of compensation levels among executive officers. In
addition, in determining fiscal 1998 compensation levels, the Committees
reviewed recommendations from a compensation consulting firm, including a survey
of cash compensation and stock option awards at comparable companies.
Tax Considerations. 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 Company has considered the
limitations on deductions imposed by Section 162(m) of the Code, and it is the
Company's present intention that, for so long as it is consistent with its
overall compensation objective, substantially all tax deductions attributable to
executive compensation will not be subject to the deduction limitations of
Section 162(m) of the Code.
Elements of Executive Compensation. The Company's compensation policy for
executive officers is 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. Compensation under the executive
compensation program is comprised of cash compensation in the form of salary and
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performance-based bonuses, long-term incentive opportunities in the form of
stock options and various benefits, including medical, savings and insurance
plans available to all employees of the Company.
An executive officer's compensation package includes: (i) base salary,
which is based upon the overall performance of the Company 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
and the Company's 1995 Purchase Plan, 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)
corporate and individual performance; and (vi) recommendations from a
compensation consulting firm. 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.
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 opportunities and initiate programs to enhance the Company's growth and
success. Performance-based cash compensation is generally awarded based on
formulas established by the Compensation Committee at the time salaries are
fixed. Bonus formulas for each executive officer are based on the Company
achieving specified objectives set forth in the Company's annual operating plan.
In establishing performance bonus formulas for the Company's executive
officers, the Compensation Committee considered: (i) the annual base
compensation of each individual; (ii) individual performance; (iii) the actual
performance of the Company as compared to projected performance under the
Company's annual operating plan; (iv) the projected future performance of the
Company; (v) the general business environment; and (vi) periodically published
surveys of performance compensation at comparable companies. 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 the salary of executive officers.
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 its
stockholders. When establishing stock option grant levels, the Stock Option
Committee considered the existing levels of stock
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ownership, previous grants of stock options, vesting schedules of outstanding
options, the current stock price and recommendations from an independent
consulting firm. 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 prior to June 1998 become
exercisable as follows: (i) 40% over time (10% on each of the first four
anniversaries of the date of grant); (ii) 30% on the fifth anniversary of the
date of grant, or earlier if the Company achieves certain shareholder return
levels specified in the option agreement; and (iii) 30% on the fifth anniversary
of the date of grant, or earlier if the Company achieves certain earnings per
share levels specified in the option agreement. In June 1998, the Board of
Directors and the Compensation Committee decided to dispense with a vesting
formula based on the Company's achievement of certain earnings per share levels
and granted its executive officers stock options which become exercisable in
four equal annual installments. Future option grants to executive officers of
the Company shall be similarly exercisable.
In awarding stock options, the Stock Option Committee generally reviews:
(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; (iv) past
financial performance and future expectations; and (v) recommendations from an
independent consulting firm. For new executive officers, the Stock Option
Committee also 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 the fiscal year ended June 30, 1998, each executive officer of the
Company was awarded Non-qualified Options. In the aggregate, the executive
officers were granted options to purchase 215,000 shares of Common Stock.
CEO Compensation. Generally, Mr. von Rickenbach, the Company's President
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 base salary
for fiscal year 1998 was $350,252 and he received a cash bonus of $35,938. In
addition to the achievement of performance targets in accordance with the
Company's executive compensation policies, the Committee determined that Mr. von
Rickenbach's 1998 compensation was justified because of the Company's strong
financial performance in fiscal 1997. Specifically, the Committee noted: the
40.1% increase in the Company's revenues for fiscal 1997 compared to fiscal
1996, the achievement by the Company of financial and other performance
objectives; and the successful completion in fiscal 1997 of seven strategic
acquisitions. Mr. von Rickenbach received stock options to purchase 60,000
shares of Common Stock in fiscal 1998.
Respectfully submitted by the:
Compensation Committee: Stock Option Committee:
A. Dana Callow, Jr. A. Dana Callow, Jr.
Patrick J. Fortune James A. Saalfield
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy whereby all transactions between the
Company and its officers, directors and affiliates will be on terms no less
favorable to the Company than could be obtained from unrelated third parties and
will be approved by a majority of the disinterested members of the Company's
Board of Directors.
Patrick J. Fortune, a director of the Company, is an executive officer at
Monsanto Company. The Company earned net revenues of approximately $25,200,000
for fiscal 1998 in connection with clinical trials management and biostatistical
analysis as well as other drug development and consulting services provided to
G.D. Searle & Co., a subsidiary of Monsanto Company.
RATIFICATION OF SELECTION OF AUDITORS
The Board has selected the firm of PricewaterhouseCoopers LLP, independent
accountants, to serve as auditors for the year ending June 30, 1999.
PricewaterhouseCoopers LLP has served as the Company's auditors since 1992. The
Board recommends a vote FOR ratification of this selection.
It is expected that a member of the firm of PricewaterhouseCoopers LLP will
be present at the Meeting, will have an opportunity to make a statement if so
desired and will be available to respond to appropriate questions from the
Company's stockholders.
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 Board in selecting auditors for
future fiscal years.
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.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
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 Securities and Exchange Commission.
Officers, directors and greater-than-ten percent stockholders are required by
SEC regulation to furnish the Company will all Section 16 forms they file.
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Based solely on its review of the copies of such forms received by it, the
Company believes that during the fiscal year ended June 30, 1998 all of its
officers, directors and greater-than-ten-percent stockholders complied with all
Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS
The Company currently intends to hold its 1999 Annual Meeting of
Stockholders during November 1999. 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 1999 Annual Meeting of
Stockholders must be received at the Company's principal executive offices not
later than June 7, 1999. The deadline for providing timely notice to the Company
of matters that stockholders otherwise desire to introduce at the 1999 Annual
Meeting of Stockholders of the Company is August 20, 1999. In order to curtail
any controversy as to the date on which a proposal was received by the Company,
it is suggested that proponents submit their proposals by certified mail, return
receipt requested. Such stockholder proposals should be submitted to PAREXEL
International Corporation, 195 West Street, Waltham, Massachusetts 02451,
Attention: Clerk.
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. The Company may retain a proxy solicitation firm to assist in the
solicitation of proxies. The Company will bear all reasonable solicitation fees
and expenses if such a proxy solicitation firm is retained.
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1462-PS-98
30
PROXY
PAREXEL INTERNATIONAL CORPORATION
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 12, 1998
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned Stockholder of PAREXEL International Corporation, a
Massachusetts corporation, revoking all prior proxies, hereby appoints Josef
H. von Rickenbach and William T. Sobo, Jr. 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 1998
Annual Meeting of Stockholders of the Company to be held at the Museum of Our
National Heritage, 33 Marrett Road, Lexington, Massachusetts on November 12,
1998 at 3:00 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 5, 1998, 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, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE PROPOSAL IN
ITEM 2.
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SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
1. To elect two (2) Class III Directors to serve for three year terms.
FOR AGAINST ABSTAIN
NOMINEE: 2. To ratify the selection of
Josef H. von Rickenbach PricewaterhouseCoopers LLP [ ] [ ] [ ]
FOR WITHHELD as auditors for the fiscal
[ ] [ ] year ending June 30, 1999.
NOMINEE:
A. Dana Callow, Jr.
FOR WITHHELD
[ ] [ ] 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: ________________