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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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
JOHN H. HARLAND CO.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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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NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
(HARLAND LOGO)
John H. Harland Company
TIMOTHY C. TUFF
Chairman of the Board,
President and Chief Executive Officer
March 16, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 annual meeting of
shareholders of John H. Harland Company to be held at The Georgian
Terrace, 659 Peachtree Street, NE, Atlanta, Georgia on Friday, April
27, 2001 at 10:00 a.m. A 9:30 reception will precede the meeting.
The items of business are fully addressed in the Proxy Statement. In
addition, we will review the Company's 2000 results and discuss our
plans for 2001.
Your vote is important regardless of the number of shares you hold.
Please date, sign and return the proxy in the enclosed envelope to
ensure that your shares are represented at the meeting.
On behalf of your Board of Directors, thank you for your continued
support and interest in Harland.
Sincerely,
/s/ Timothy C. Tuff
Timothy C. Tuff
Box 105250 Atlanta, Georgia 30348 Phone (770) 981-9460
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2001
To the Shareholders of
John H. Harland Company
The 2001 annual meeting of shareholders of John H. Harland Company will be
held at The Georgian Terrace, 659 Peachtree Street, NE, Atlanta, Georgia on
Friday, April 27, 2001 at 10:00 a.m. for the following purposes:
(1) To elect three Directors;
(2) To ratify the appointment of Deloitte & Touche LLP as the Company's
independent certified public accountants for 2001;
(3) To amend the Company's Employee Stock Purchase Plan to increase the
number of shares of Common Stock available for sale thereunder; and
(4) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on March 6, 2001 will be
entitled to vote at the meeting.
By Order of the Board of Directors
JOHN C. WALTERS
Vice President and Secretary
Atlanta, Georgia
March 16, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE VOTE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
WHICH DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED STATES.
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J O H N H. H A R L A N D C O M P A N Y
BOX 105250
ATLANTA, GEORGIA 30348
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2001
The enclosed form of proxy is solicited by the Board of Directors of John
H. Harland Company (the "Company") for use at the annual meeting on April 27,
2001 and any adjournment thereof. When such proxy is duly executed and returned,
the shares it represents will be voted as directed or, if no direction is
indicated, they will be voted as the Board of Directors recommends. Any
shareholder giving a proxy may revoke it at any time before it is voted by
delivering to the Secretary of the Company a notice of revocation or a proxy
bearing a later date or by attending the meeting and voting in person.
Only shareholders of record as of the close of business on March 6, 2001
are entitled to vote at the meeting. As of that date, the Company had issued and
outstanding 28,627,391 shares of Common Stock. Each share is entitled to one
vote. No cumulative voting rights are authorized. This Proxy Statement and the
accompanying proxy will be first mailed to shareholders on March 16, 2001.
Votes cast by proxy or in person at the meeting will be tabulated by the
election inspectors appointed for the meeting. The inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining a quorum but as unvoted for purposes of approving any matter
submitted to the shareholders. If a broker indicates on a proxy that it does not
have discretionary authority to vote on a particular matter, those shares will
not be considered as present. A quorum is present if a majority of the shares
entitled to vote are represented in person or by proxy at the meeting.
ELECTION OF DIRECTORS
Under the Bylaws, Directors are divided into three classes with each class
serving a three-year term and one class elected at each annual meeting. The
terms of three Directors expire at the 2001 Annual Meeting. John McMahon and
Larry Prince are being renominated for a three-year term expiring in 2004. Due
to the press of business, Juanita Baranco is not standing for re-election. We
thank Ms. Baranco, who has served as a Director since 1993, for her dedicated
efforts on behalf of the Company. Jesse Spikes, who was recently elected to fill
that vacancy on the Board, and whose term expires at the 2001 annual meeting, is
also being nominated for re-election for a three-year term. The remaining
Directors will continue to serve until their respective terms expire as
indicated. The affirmative vote of a plurality of votes cast is required to
elect Directors.
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The Board has no reason to believe that any nominee will be unavailable to
serve as a director. However, if at the time of the meeting any nominee should
be unable or decline to serve, the persons named in the proxy will vote for a
substitute nominee, vote to allow the vacancy created thereby to remain open
until filled by the Board, or vote to reduce the number of Directors for the
ensuing year, as the Board recommends.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM
CURRENT DIRECTOR OF
AGE PRINCIPAL OCCUPATION TERM EXPIRES HARLAND SINCE
NAME --- -------------------- ------------ -------------
JOHN J. MCMAHON JR. 58 Chairman of the Executive Committee, 2001 1988
McWane, Inc. (pipe and valve
manufacturing) and Chairman, Ligon
Industries, LLC (leveraged buyouts)
Director, Alabama National
Bancorporation, National Bank of
Commerce and Protective Life
Corporation
LARRY L. PRINCE 62 Chairman and Chief Executive 2001 1990
Officer, Genuine Parts Company
(distributor of automobile
replacement parts)
Director, Crawford & Company,
Equifax, Inc., Southern Mills and
SunTrust Bank, Inc.
JESSE J. SPIKES 50 Partner, Long Aldridge & Norman LLP 2001 March 2001
(full service law firm)
DIRECTORS WHOSE TERMS WILL CONTINUE AFTER THE ANNUAL MEETING
WILLIAM S. ANTLE III 56 Former Chairman, President and Chief 2003 2000
Executive Officer of Oak Industries
Inc. (engineered components for
telecommunications industry) from
1989 to 2000
Director, Esco Technologies Inc.,
GenRad, Inc. and Linc.net
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CURRENT DIRECTOR OF
AGE PRINCIPAL OCCUPATION TERM EXPIRES HARLAND SINCE
NAME --- -------------------- ------------ -------------
JOHN D. JOHNS 49 President and Chief Operating 2003 2000
Officer of Protective Life
Corporation (insurance and
investment products)
Director, Alabama National
Bancorporation, National Bank of
Commerce, Protective Life
Corporation and Protective Life
Insurance Company
RICHARD K. LOCHRIDGE 57 President, Lochridge & Company, Inc. 2002 1999
(management consulting)
Director, Dover Corporation, Lowe's
Companies, Inc. and PETsMART, Inc.
G. HAROLD NORTHROP 65 Vice Chairman of the Board and 2002 1984
retired President and Chief
Executive Officer of Callaway
Gardens (horticultural,
environmental and recreational
facility); Former Chairman of the
Board, American Business Products,
Inc. (specialty packaging and
printed office products) 1999-2000;
Director, SunTrust Bank, West
Georgia NA
EILEEN M. RUDDEN 50 President and Chief Executive 2003 1999
Officer, FairMarket, Inc. (online
e-commerce selling solutions) since
2000; previously Senior Vice
President of Lotus Development
Corporation (software development)
since 1986
TIMOTHY C. TUFF 53 Chairman, President and Chief 2002 1998
Executive Officer of the Company;
President and Chief Executive
Officer of Boral Industries, Inc.
(building and construction
materials) 1993-1998 Director,
Printpack, Inc.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee is composed of Mr. Johns (Chair), Mr. McMahon and Ms.
Rudden. Its primary function is to help the Board fulfill its oversight
responsibilities by reviewing the financial reports provided by the Company to
shareholders or any governmental body, the Company's systems of internal
controls established by management and the Board, and the Company's auditing,
accounting and financial reporting processes generally. The Audit Committee
recommends the independent auditors to the Board; reviews with such auditors the
scope and results of their engagement; reviews and discusses the audited
financial statements with management and the independent auditors; and consults
with the independent and internal auditors and
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management regarding the Company's accounting methods, the adequacy of its
internal controls and the objectivity of its financial reporting.
The Executive Committee is composed of Messrs. Prince (Chair), McMahon and
Tuff. Its principal function is to act between meetings of the Board.
The Governance Committee is composed of Messrs. Northrop (Chair), Antle and
Lochridge. Its principal functions are to review qualifications for Board
membership and make recommendations for the election of Directors and
appointment of executive officers of the Company; make recommendations to the
Board as to matters of corporate governance; administer management incentive
compensation and stock option plans; establish the compensation of the Chief
Executive Officer and other officers of the Company; and review the compensation
of Directors. The Committee will consider qualified Director candidates
recommended by shareholders, who may do so by writing to the Secretary of the
Company.
The Board met eight times during 2000. The Audit Committee held three
meetings, the Executive Committee held five meetings and the Governance
Committee held eight meetings. Each incumbent Director attended at least 75% of
the aggregate number of meetings of the Board and all committees on which they
served during the year, and the average attendance at Board and committee
meetings was 95%.
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STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
AND CERTAIN OTHER PERSONS
The following table sets forth the beneficial ownership of the Company's
Common Stock by each incumbent Director, each named executive officer and all
Directors and executive officers as a group, all as of December 31, 2000, and by
5% shareholders as of the dates indicated in the footnotes.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
-------------------------
NAME NUMBER PERCENT
- ---- ------------ -------
William S. Antle III........................................ 12,858(1) *
Atlantic Investment Company................................. 1,566,300(2) 5.5
Richard C. Blum & Associates, L.P........................... 4,052,750(3) 14.2
Charles B. Carden........................................... 36,204(4) *
FMR Corp.................................................... 2,494,700(5) 8.7
ICM Asset Management, Inc................................... 2,257,342(6) 7.9
John D. Johns............................................... 2,764(7) *
Richard K. Lochridge........................................ 11,070(8) *
John J. McMahon Jr.......................................... 18,240(9) *
G. Harold Northrop.......................................... 18,946(10) *
S. David Passman III........................................ 165,895(4) *
Pioneer Investment Management, Inc.......................... 1,613,000(11) 5.6
Larry L. Prince............................................. 11,506(12) *
Earl W. Rogers Jr........................................... 155,665(4) *
Eileen M. Rudden............................................ 4,028(13) *
Jesse J. Spikes............................................. 0
Timothy C. Tuff............................................. 346,601(4) 1.2
John C. Walters............................................. 119,447(4) *
All executive officers and Directors as a group (13
persons).................................................. 903,224(4) 3.2
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* Represents less than 1%
(1) Includes 2,858 share equivalents credited to Mr. Antle's deferred
compensation account under the Compensation Plan for Non-Employee Directors
(the "Deferral Plan").
(2) According to a Schedule 13G dated March 7, 2001 filed with the Securities
and Exchange Commission ("SEC") by Richard W. Courts, II, Lynda B. Courts,
Atlantic Investment Company and Courts Foundation, Inc., 50 Hurt Plaza,
Atlanta, Georgia 30303, (i) Mr. Courts has sole voting and dispositive
power covering 46,100 shares and shared power covering all 1,566,300
shares, (ii) Mrs. Courts has sole voting and dispositive power covering
1,200 shares, (iii) Atlantic Investment Company (of which Mr. Courts is
Chairman) has sole voting and dispositive power covering 1,019,000 shares,
and (iv) Courts Foundation, Inc. (of which Mr. Courts is President) has
sole voting and dispositive power covering 500,000 shares.
(3) According to a Schedule 13D dated April 23, 1999 filed with the SEC by
Richard C. Blum & Associates, L.P. ("RCBA L.P."), Richard C. Blum &
Associates, Inc. ("RCBA Inc."), RCBA Strategic Partners, L.P.
("Strategic"), RCBA GP, L.L.C. ("RCBA GP") and Richard C. Blum (the
Chairman and a substantial shareholder of RCBA Inc. and a managing member
of RCBA GP), 909 Montgomery Street, San Francisco, California 94133, (i)
RCBA L.P. and RCBA Inc. hold 1,959,250 shares on behalf of limited
partnerships (for which RCBA L.P. serves as the general partner)
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and certain investment advisory clients, (ii) Strategic holds 1,818,800
shares, and (iii) RCBA L.P. has voting and investment power with respect to
274,700 shares that are owned by an unaffiliated third party investment
manager. Voting and investment power concerning such shares are held solely
by RCBA L.P. and RCBA GP, and each of the reporting persons has shared
voting and shared dispositive power with respect to such shares. Mr. Blum
disclaims beneficial ownership of such shares except to the extent of any
pecuniary interest therein.
(4) Includes 30,000, 155,000, 145,800, 280,000 and 112,000 shares which may be
acquired on or before March 1, 2001 upon the exercise of stock options by
Messrs. Carden, Passman, Rogers, Tuff and Walters, respectively, and
722,800 shares by all executive officers as a group.
(5) According to a Schedule 13G dated February 1, 1999, FMR Corp. ("FMR"), 82
Devonshire Street, Boston, Massachusetts 02109, holds the shares on behalf
of other persons who have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, such shares.
Except as set forth below, the interest of any such person does not exceed
5% of the outstanding Common Stock. FMR and Edward C. Johnson 3d, Chairman
of FMR, each has sole power to vote 195,000 shares and sole dispositive
power covering the entire shares. Fidelity Management & Research Company is
the beneficial owner of 2,299,700 shares as a result of acting as
investment advisor to various investment funds ("Funds"), one of which,
Fidelity Value Fund, holds 2,199,700 shares. Mr. Johnson, FMR and the Funds
each has sole power to dispose of the shares owned by the Funds. The
remaining 195,000 shares are owned beneficially by Fidelity Management
Trust Company as a result of its serving as investment manager of the
Funds.
(6) According to a Schedule 13G dated February 13, 2001, ICM Asset Management,
Inc., 601 W. Main Avenue, Spokane, Washington 99201, and James M. Simmons
(President of ICM) have shared voting power covering 1,478,417 shares and
shared dispositive power covering 2,257,342 shares.
(7) Represents share equivalents under the Deferral Plan.
(8) Includes 4,070 share equivalents under the Deferral Plan.
(9) Includes 5,195 shares held by Mr. McMahon's wife, in which he disclaims any
beneficial interest, and 9,565 share equivalents under the Deferral Plan.
(10) Includes 11,746 share equivalents under the Deferral Plan.
(11) According to a Schedule 13G dated January 3, 2001, Pioneer Investment
Management, Inc., 60 State Street, Boston, Massachusetts 02109, has sole
voting and dispositive power covering such shares, all of which are
beneficially owned by such firm.
(12) Includes 10,306 share equivalents under the Deferral Plan.
(13) Represents share equivalents under the Deferral Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, Directors and 10% shareholders to file reports with the SEC
covering their beneficial ownership of the Company's equity securities and
furnish copies thereof to the Company. Based solely upon a review of such
reports received by it, and written representations of such persons, the Company
believes that all applicable filing requirements were met during 2000.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table presents summary information with respect to
compensation paid by the Company to each executive officer of the Company during
2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION($) RESTRICTED SECURITIES ALL OTHER
--------------------------- STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER AWARDS($)(1) OPTIONS(#)(2) ($)(3)
- --------------------------- ---- ------- ------- ------- ------------ ------------- ------------
Timothy C. Tuff.......... 2000 525,000 515,130 -- 184,500 50,000 24,561
Chairman, President 1999 545,192 472,500 120,763 149,558 350,000 16,896
and Chief Executive 1998 70,673 150,000 407,650 504,849 350,000 --
Officer
Charles B. Carden........ 2000 307,558 248,346 -- 61,500 20,000 14,312
Vice President and 1999 152,308 113,775 -- -- 150,000 3,808
Chief Financial Officer 1998 -- -- -- -- -- --
S. David Passman III..... 2000 307,500 236,221 -- 76,875 20,000 8,962
Vice President and 1999 313,077 225,000 -- -- -- 8,093
President -- 1998 260,000 272,500 -- -- 125,000 8,092
Harland Checks
Earl W. Rogers Jr. ...... 2000 244,800 160,834 -- 38,437 10,000 9,429
Vice President -- 1999 253,846 174,600 -- -- -- 4,879
Manufacturing Services & 1998 241,775 180,000 -- -- 123,000 3,370
Technology
John C. Walters.......... 2000 255,000 158,610 -- 38,437 10,000 11,448
Vice President, 1999 259,615 187,500 -- -- -- 11,121
Secretary and 1998 250,000 187,500 -- -- 70,000 11,218
General Counsel
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(1) At December 31, 2000 the number and value of the aggregate restricted stock
holdings were as follows: Mr. Tuff -- 62,000 shares, $875,000; Mr.
Carden -- 4,000 shares, $56,500; Mr. Passman -- 5,000 shares, $70,625; Mr.
Rogers -- 2,500 shares, $35,312; and Mr. Walters -- 2,500 shares, $35,312.
Mr. Tuff received 50,000 restricted shares in connection with his original
employment by the Company in 1998. Of such shares, 50% will vest after three
years of employment and an additional 25% will vest after four years and
five years, respectively, subject to early vesting upon the occurrence of
certain events, including a change in control or termination of employment
without cause. All other restricted shares are restricted for a period of
five years, subject to earlier vesting if the Company's common stock
outperforms the S&P 500 Index in two of any three consecutive calendar years
or in the event of a change in control, and are forfeited in the event of
termination of employment for any reason, other than disability or death.
Cash dividends are paid on the restricted stock.
(2) The Company has not granted any Stock Appreciation Rights.
(3) Included in this category for 2000 are amounts for Messrs. Tuff, Carden,
Passman, Rogers and Walters covering (a) life and medical insurance
premiums -- $19,311, $9,062, $3,712, $5,046 and $6,198,
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respectively; and (b) matching contributions of $5,250 to the Company's
401(k) Plan (other than Mr. Rogers, who received $4,383).
OPTION GRANTS
The following table provides details regarding stock options granted during
2000.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---------- ------------ -------- ---------- ---------- ------------
Timothy C. Tuff............. 50,000 3.2 15.375 3/20/10 483,463 1,225,190
Charles B. Carden........... 20,000 1.3 15.375 3/20/10 193,385 490,076
S. David Passman III........ 20,000 1.3 15.375 3/20/10 193,385 490,076
Earl W. Rogers Jr........... 10,000 .6 15.375 3/20/10 96,693 245,038
John C. Walters............. 10,000 .6 15.375 3/20/10 96,693 245,038
- ---------------
(1) These amounts represent assumed rates of appreciation. Actual gains, if any,
on stock option exercises are dependent on the future performance of the
Common Stock.
Options are exercisable at the rate of 20% per year beginning one year from
date of grant and normally expire on the earlier of 10 years from date of grant
or three months after termination of employment. In the event of a change in
control of the Company, as defined in the option grants, all of the options
would become fully vested.
OPTION EXERCISES AND YEAR END VALUES
None of the named executive officers exercised any options during 2000. The
following table sets forth information with respect to unexercised options as of
December 31, 2000 and the value of in-the-money options based on the spread
between the exercise price and the closing price of the Company's Common Stock
on such date.
FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END(#) FISCAL YEAR END($)
----------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Timothy C. Tuff............................... 280,000 470,000 275,000 --
Charles B. Carden............................. 30,000 140,000 -- --
S. David Passman III.......................... 150,000 120,000 7,500 11,250
Earl W. Rogers Jr............................. 141,200 106,800 7,500 11,250
John C. Walters............................... 108,000 72,000 3,750 5,625
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DEFERRED COMPENSATION ARRANGEMENTS
The Company has entered into a Supplemental Retirement Agreement with Mr.
Tuff pursuant to which he is entitled to receive an annual benefit of $186,000
upon retirement at age 65. In addition, if he remains employed by the Company
for a minimum of five years, he will be entitled to a reduced normal retirement
benefit ($36,000 after five years, increasing annually), which vests in the
event of long term disability, and may elect to receive a reduced early
retirement benefit after age 62 in the annual amount of $92,000. All such
benefits are payable for a period of 10 years. The Company has also provided
life insurance coverage for Mr. Tuff in the amount of $750,000. The Company has
entered into a deferred compensation agreement with Mr. Rogers, providing for an
annual benefit of $12,000 at age 65. No other executive officer has any such
retirement benefit.
NONCOMPETE AND TERMINATION AGREEMENTS
The Company has entered into noncompete and termination agreements with
certain officers, including each of the named executive officers, under which
each officer has agreed not to compete with the Company for a two-year period
following termination of employment. However, if an officer's employment is
terminated after a change in control of the Company, or if the officer resigns
within one year thereafter, then the agreement not to compete will not apply and
the officer will receive a lump sum payment equal to the lesser of three times
his or her average annual compensation for the five calendar year period
preceding the date of termination (or the highest compensation in any single
year, in the case of Mr. Tuff) or the maximum payment which the Company can make
to such officer without triggering Federal excise tax liability. In the event of
an involuntary termination of employment without cause (in the absence of a
change in control), the officer (other than Mr. Tuff) shall receive a lump sum
payment equal to his or her annual base salary at that time. Mr. Tuff will
receive salary continuation for 24 months if any such termination occurs less
than three years after his date of employment and for 12 months if such
termination occurs thereafter. Each agreement is for an initial term of five
years, renewable for successive one-year terms until terminated by either party.
DIRECTOR COMPENSATION
In 1996, the Board of Directors adopted a Compensation Plan for
Non-Employee Directors ("Directors' Plan"), pursuant to which each Director's
annual retainer is paid in Common Stock of the Company, issuable on a quarterly
basis, in such amount as fixed by the Board from time to time. The current
retainer is 2,300 shares. Payment of the retainer in Common Stock serves to more
closely align the interests of the Directors with shareholders. In addition, the
Board has adopted a Director share ownership program pursuant to which
non-employee Directors are expected to acquire ownership of Common Stock equal
to five times the annual retainer over a period of five years.
Directors may elect to defer receipt of all or any portion of the annual
retainer as well as meeting and committee fees. Deferred fees are credited to
the Director's deferred compensation account, in cash or stock equivalents.
Stock equivalents are credited with dividends in the form of additional stock
equivalents. Deferred fees will be distributed in Common Stock or cash at such
future dates as specified by the Director, unless distribution is accelerated in
certain events, including a change in control of the Company. Currently, seven
Directors defer the retainer or meeting fees as stock equivalents.
During 2000, each non-employee Director received 2,000 shares of Common
Stock as well as $1,000 per Board and committee meeting attended, with committee
chairs receiving $1,500. Employee Directors receive no compensation for Board
services.
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The following reports of the Governance Committee and the Audit Committee
and the stock performance graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates the information
by reference, and shall not otherwise be deemed filed under such Acts.
GOVERNANCE COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Governance Committee, comprised solely of outside directors, is
responsible for overseeing the Company's executive compensation program and the
use of stock for compensation purposes under the Company's stock option plans.
This report summarizes the Committee's compensation philosophy, strategy and
actions for the Chief Executive Officer and all other executive officers.
COMPENSATION PHILOSOPHY AND STRATEGY
The Committee's compensation philosophy is to implement compensation
programs that are designed to:
- Attract and retain highly qualified key executives;
- Provide competitive base salaries;
- Motivate executives to achieve strategic operating and personal
objectives by rewarding performance that supports achievement of business
plan goals; and
- Encourage employee Common Stock ownership to closely align them with
shareholder interests.
Such compensation programs are designed to balance short and long-term
financial objectives, build shareholder value and provide rewards for
individual, team and corporate performance. The Company believes that it is
important to encourage the ownership of the Company's Common Stock throughout
the Company, with an overall intent to encourage employees to act like an owner
of the business. To that end, in 2000 the Company instituted a program to grant
restricted stock to employees and expanded the group of key employees receiving
stock option grants, and also maintains an employee stock purchase plan which
enables employees to purchase Company stock at a discount through payroll
deductions.
The components of the Company's executive compensation program are (i) cash
compensation, consisting of base salary and annual incentive bonus based on the
achievement of Company, business unit and personal performance goals, and (ii)
long-term stock incentives. In determining base salaries the Committee considers
each individual's responsibilities and performance, taking into account
market-competitive pay levels. For both annual incentives and long-term stock
incentives, the Committee intends to provide competitive compensation for target
levels of performance; more than competitive compensation for performance above
target; and less than competitive compensation in the event the Company or an
individual does not meet performance goals.
In 1999 the Committee undertook a thorough review of the executive
compensation program, and reaffirmed its intention to provide competitive
compensation opportunities consistent with market median pay levels. With the
assistance of an outside consultant, the Committee assessed the competitiveness
of the base salaries, annual incentive opportunities and stock incentive grants
with respect to a peer group of comparably sized firms with whom the Company
competes for customers and for executive talent, as well as comparably sized
firms across a wide range of industries. Because the Committee tailors its
competitive perspective to companies it believes are most relevant, the
companies chosen for these external competitive analyses overlap
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with, but are not identical to, the companies represented in the indices
employed in the Five Year Stock Performance Graph.
The Committee's policy with respect to executive compensation takes into
account any potential limitation on the deductibility of compensation in excess
of $1,000,000 under Section 162(m) of the Internal Revenue Code (the "Code"),
but does not require that all compensation qualify for exemption from such
limitation. It is the Company's goal to have as much of the compensation paid to
its executive officers as possible qualify as performance based and be
deductible for federal income tax purposes.
CASH COMPENSATION
Base Salary. The Committee annually reviews the base salary of each
executive officer, including the Chief Executive Officer. The Committee believes
that such base salaries are competitive and enhance the Company's ability to
attract and retain talented executives. Changes in base salary for executive
officers reflect the Committee's assessment of competitive norms and changes in
roles and responsibilities, as well as the performance of each individual.
Annual Incentive Bonus. Under the supervision of the Committee, the
Company maintains a Senior Management Incentive Plan pursuant to which annual
cash bonuses are payable to executive officers and employees. These senior
managers are responsible for establishing strategic direction or are responsible
for major functional or operating units, and have an impact on bottom-line
results. For the past several years, the Company has tied executive compensation
to the achievement of Company goals, putting a substantial portion of total
compensation at risk. Under the Plan, bonuses for 2000 were based on the
achievement of the Company's earnings per share goal, personal stretch
objectives (reflecting expectations above and beyond the scope of normal
performance goals), return on assets, revenue growth and specific financial
objectives for business unit participants. With respect to each element of the
Plan, performance expectations are communicated at the beginning of the year.
Achievement of these levels of performance is designed to yield the payment of a
target incentive award that is consistent with median competitive levels of
incentive compensation. For performance above or below expectations, incentive
awards can range from 0% to 150% of each individual's target award. The
Committee believes this close link between individual incentive opportunity and
Company and business unit performance appropriately motivates and rewards
participants for their contributions to the Company's success.
LONG-TERM INCENTIVES
The Committee grants stock incentives to key employees under the Company's
stock option plans on an annual basis. As part of the Committee's review of the
compensation program in 1999, it assessed the competitiveness of the Company's
option grant practices, and determined that it was appropriate to implement a
more regular review and allocation of options to executives and other key
employees, consistent with their performance and competitive guidelines, in
order to retain the Company's most vital asset: its people. In addition, in 2000
the Committee approved the award of restricted stock to executive officers and
certain key executives, which is now a component of the long-term incentives.
The Committee considers recommendations of the Chief Executive Officer,
responsibility levels, compensation and the market price of the Company's Common
Stock in determining the size of option and restricted stock grants. The
Committee believes that increased stock ownership among executive officers will
serve to provide additional motivation on their part to contribute to the
success of the Company.
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CHIEF EXECUTIVE OFFICER COMPENSATION
For 2000, Mr. Tuff's incentive bonus was based on the Company's improvement
in operating performance and the attainment of his personal stretch objectives,
consistent with the terms of the Senior Management Incentive Plan, including the
acquisition of Concentrex Incorporated, which has significantly increased the
Company's presence in the financial software sector. The stock options and
restricted stock award in March 2000 were based in part on the Committee's
assessment of the Company's and Mr. Tuff's overall performance in 1999, and were
components of the annual grant program. Consistent with the Committee's
objective of having a major portion of the CEO's compensation tied to
performance and linking such compensation to increasing shareholder value, Mr.
Tuff's base salary was unchanged in 2000 and 1999.
The Committee believes that its executive compensation policies and
programs effectively serve the interests of shareholders and the Company and are
appropriately balanced to provide increased motivation for executives to
contribute to the Company's overall future success. As described above, a
significant portion of the executive officers' compensation is at risk and tied
to attaining corporate earnings, revenue and other operating targets, as well as
personal performance objectives, and improving shareholder value.
GOVERNANCE COMMITTEE
G. Harold Northrop, Chair
William S. Antle III
Richard K. Lochridge
GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Governance Committee is a present or former officer or
employee of the Company. No interlocking relationship exists between the members
of the Governance Committee and the board of directors or compensation committee
of any other company, nor has any such relationship existed in the past.
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FIVE YEAR STOCK PERFORMANCE GRAPH
The line graph below compares the cumulative, five-year shareholder return
on the Company's Common Stock (assuming the reinvestment of dividends) with the
S&P 500 Index and the S&P Specialty Printing Index.
JOHN H. HARLAND CO. S&P 500 S&P SPECIALTY PRINTING
------------------- ------- ----------------------
1995 $ 100.00 $ 100.00 $ 100.00
1996 $ 164.37 $ 122.96 $ 96.83
1997 $ 105.99 $ 163.98 $ 107.39
1998 $ 81.39 $ 210.84 $ 122.73
1999 $ 95.93 $ 255.22 $ 79.77
2000 $ 75.54 $ 231.98 $ 85.55
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REPORT OF THE AUDIT COMMITTEE
The audit functions of the Audit Committee are focused on (1) the adequacy
of the Company's internal controls and financial reporting processes, (2) the
reliability of its financial statements and (3) the performance of the Company's
independent and internal auditors. The Committee meets with management
periodically to discuss these matters, and also regularly meets privately with
both the independent and internal auditors, each of whom has unrestricted access
to the Committee.
The Audit Committee is responsible for, among other things, reviewing with
the independent auditors the scope and results of their audit engagement. In
connection with the fiscal 2000 audit, the Committee has:
- reviewed and discussed with management the Company's audited financial
statements to be included in the annual report on Form 10-K for the year
ended December 31, 2000, which management has represented to have been
prepared in accordance with generally accepted accounting principles;
- discussed with Deloitte & Touche LLP, the Company's independent auditors,
the matters required by Statement on Auditing Standards No. 61; and
- received from and discussed with such firm the written disclosures and
letter required by Independence Standards Board Standard No. 1 regarding
their independence.
Based on these reviews and discussions, the Committee has recommended to
the Board that the audited financial statements be included in the Form 10-K.
Audit Fees. The aggregate fees billed by Deloitte & Touche for
professional services for the audit of the Company's financial statements for
2000 and the reviews of the financial statements included in the Company's Forms
10-Q were $406,629.
Financial Information Systems Design and Implementation Fees. There were
no fees billed by such firm for professional services described in Paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X during 2000.
All Other Fees. The aggregate fees billed by such firm for all other
services rendered to the Company (not mentioned above) during 2000 were
$1,182,862.
The Audit Committee has considered whether rendering the services described
in the previous two paragraphs is compatible with maintaining the independence
of Deloitte & Touche and has concluded that such firm's independence has not
been compromised thereby.
The Audit Committee has adopted a Charter, a copy of which is attached as
Exhibit A. The members of the Committee have been determined by the Board to be
independent for purposes of the New York Stock Exchange listing standards.
AUDIT COMMITTEE
John D. Johns, Chair
John J. McMahon Jr.
Eileen M. Rudden
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board has reappointed
Deloitte & Touche LLP as auditors of the Company for fiscal 2001, subject to
ratification by the shareholders at the annual meeting. Deloitte & Touche or its
predecessors has audited the Company's financial statements since 1947.
Representatives of Deloitte & Touche will be present at the meeting, will have
the opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has unanimously recommended that the shareholders
approve an amendment to the Company's Employee Stock Purchase Plan (the
"Purchase Plan") increasing the Common Stock authorized to be sold thereunder by
750,000 shares. The Purchase Plan, originally approved by the Company's
shareholders in 1979, has been amended from time to time to increase the number
of shares, and currently authorizes the sale of 4,350,000 shares of Common
Stock. From its inception through December 31, 2000, 4,232,232 shares have been
purchased thereunder, leaving 117,768 shares available as of such date, which
management deems insufficient to maintain the Purchase Plan. Approximately
168,000 shares have been issued annually under the Purchase Plan during the past
three years.
The Board has unanimously determined that the amendment to the Purchase
Plan is in the best interests of the Company and its shareholders. The Purchase
Plan is an important element in the Company's efforts to recruit and retain
employees needed to maintain and approve the Company's competitive position, and
encourages employees to acquire a proprietary interest in the Company through
voluntary payroll deductions.
The amendment will be adopted upon receiving the affirmative vote of
holders of a majority of the shares represented at the annual meeting. Proxies
will be voted in accordance with the specifications marked thereon, and, if no
specification is made, will be voted "FOR" adoption.
The following discussion summarizes the material terms of the Purchase
Plan. This discussion does not purport to be complete and is qualified in its
entirety by reference to the Purchase Plan, a copy of which was filed
electronically with the SEC with this Proxy Statement.
GENERAL INFORMATION
The shares sold to employees pursuant to the Purchase Plan may be either
authorized but unissued shares or shares purchased by the Company in the open
market. In the opinion of management, the Purchase Plan is not subject to any
provisions of the Employee Retirement Income Security Act. In addition, the
Purchase Plan is not qualified under Section 401(a) of the Code.
PARTICIPATION
All full-time employees of the Company and its designated subsidiaries are
eligible to participate in the Purchase Plan. The Company conducts an offering
during each calendar quarter (an "Offering Period"). A full-time employee is one
who is employed for more than 20 hours per week and for more than five months in
a calendar year. Non-employee Directors are not eligible to participate.
An eligible employee may enroll in the Purchase Plan by completing a
written authorization for payroll deductions. Payroll deductions will begin as
of the first day of the Offering Period. An employee will continue
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to be a participant under the Purchase Plan until such time as he or she becomes
ineligible or elects to terminate participation.
PAYROLL DEDUCTIONS AND PURCHASE OF STOCK
Payroll Deductions. Participants may elect payroll deductions from 3% to
20% of annualized total cash compensation, including overtime, bonus and
commissions. An employee may not participate in an Offering Period once it has
commenced and may not vary the amount of the deduction during an Offering
Period, except that the Company will cease deductions upon receipt of notice
from a participant. A participant may change the deduction percentage for any
Offering Period prior to its commencement. Once an employee files an
authorization, the Company will continue payroll deductions during each
subsequent Offering Period until it has received notice to the contrary or the
participant becomes ineligible to participate. No contributions are made to the
Purchase Plan by the Company and no contributions may be made except by payroll
deductions.
Purchase of Stock. The money deducted is used at the end of each Offering
Period to exercise an option granted to the participant under the Purchase Plan
to purchase the number of full and partial shares of Common Stock determined by
dividing $6,250 by the fair market value of the Common Stock on the first day of
the Offering Period. This option is the mechanism used in the Purchase Plan to
determine the maximum number of shares that a participant may purchase in an
Offering Period. The purchase price is 85% of the fair market value (the mean
between the high and low selling prices) of the Common Stock on either the first
or last business day of the Offering Period, whichever is lower. The option will
be exercised automatically on the last day of such Offering Period for the
maximum number of shares that the accumulated payroll deductions at that time
will purchase at the applicable price. Any excess deductions will be promptly
refunded after the Offering Period, without interest.
Additional Information. No employee may be granted an option under the
Purchase Plan if the exercise thereof would result in the employee owning more
than 5% of the total combined voting power or value of the Common Stock of the
Company. The right to purchase Common Stock may not accrue at a rate exceeding
$25,000 per calendar year. As of December 31, 2000, approximately 5,400
employees, including five executive officers, were eligible to participate in
the Purchase Plan. Since benefits under the Purchase Plan depend on employee
elections to participate and the fair market value of the Company's Common Stock
at various future dates, it is not possible to determine the benefits that will
be received by executive officers and other employees thereunder.
WITHDRAWAL AND ASSIGNMENT
A participant may cease payroll deductions during an Offering Period at any
time. In such case, the amount already deducted will be used to purchase shares
of Common Stock at the end of the Offering Period, and the participant will not
be able to receive a cash refund. A participant who ceases payroll deductions
during an Offering Period may participate again in any succeeding Offering
Period. Upon termination of employment for any reason, including retirement or
death, any option granted under the Purchase Plan will immediately expire and
the payroll deductions will be returned without interest. Neither the payroll
deductions nor any rights with regard to the purchase of shares under the
Purchase Plan may be assigned, transferred, pledged or otherwise disposed of.
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ADMINISTRATION OF THE PURCHASE PLAN
The Purchase Plan is administered by the Governance Committee, which is
responsible for resolving any questions regarding the interpretation of the
Purchase Plan. The Committee may delegate record keeping and other
administrative duties to management or to a third party administrator.
AMENDMENT AND TERMINATION
The Board of Directors may terminate or amend the Purchase Plan at any
time, provided such action does not adversely affect rights previously granted
to participants unless required by law. Shareholder approval is required to
increase the authorized number of shares of Common Stock under the Purchase
Plan, to change the eligibility requirements or to permit payroll deductions at
a rate in excess of 20%. The Purchase Plan will terminate when the available
shares of Common Stock have been so substantially exhausted as to make an
offering impracticable.
The number of shares of Common Stock reserved for issuance or covered by
outstanding options, and the purchase price thereof, will be adjusted for any
subdivision or consolidation of shares, the payment of a stock dividend or
similar changes affecting the Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan is intended to satisfy the requirements of Section 423 of
the Code. The following is a very general summary of the federal income tax
consequences to an employee subject to such taxes and to the Company, assuming
that the Purchase Plan satisfies such requirements.
Amounts deducted from pay to purchase shares under the Purchase Plan are
generally included in taxable income for the calendar year in which deducted.
The purchase of shares at a discount does not result in any taxable income to
the employee at that time.
If the shares are sold or otherwise disposed of more two years from the
first day of the Offering Period (the "grant date"), the employee generally will
recognize ordinary income at that time equal to the lesser of (1) the excess of
the fair market value of such shares at such time over the employee's purchase
price or (2) 15% of the fair market value thereof on the grant date. If the
employee disposes of the shares within two years of the grant date, the employee
generally will recognize ordinary income at that time in an amount equal to the
excess of the fair market value of such shares on the date of purchase over the
employee's purchase price. In either case, the employee's tax basis in such
shares will be increased by the amount of ordinary income reportable by the
employee, and any additional gain or loss on such disposition will be treated as
long-term or short-term capital gain or loss, depending upon the holding period.
The Company is not entitled to a federal income tax deduction unless the
employee disposes of the shares within two years of the grant date. Any such
deduction will be equal to the amount of the employee's ordinary income on such
disposition.
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ANNUAL REPORT TO SHAREHOLDERS
The annual report for the year ended December 31, 2000 accompanies this
Proxy Statement.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge, at the written request of any
shareholder, a copy of the Company's Annual Report on Form 10-K, including the
financial statements and financial statement schedules, as filed with the
Securities and Exchange Commission, except exhibits thereto. The Company may
impose a reasonable fee for providing such exhibits. Requests should be mailed
to:
JOHN H. HARLAND COMPANY
Box 105250
Atlanta, Georgia 30348
Attention: John C. Walters
Telephone: (770) 593-5617
Facsimile: (770) 593-5619
E-mail: jwalters@harland.com
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the Company's 2002
annual meeting of shareholders must be received no later than November 16, 2001
in order to be considered for inclusion in the proxy statement to be distributed
in connection with such meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. However, if any other matters should come before the meeting, the
persons named in the proxy will vote such proxy in accordance with their
judgment.
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the meeting as possible, special
solicitation of proxies may be made by employees of the Company personally or by
telephone, facsimile or other electronic means. The Company will reimburse
brokers, banks, nominees and other fiduciaries for their expenses of forwarding
the proxy material to beneficial owners. In addition, the Company has retained
Georgeson & Co., Inc. to assist in the solicitation of proxies, at a fee of
$5,500 plus expenses.
John C. Walters
Vice President and Secretary
March 16, 2001
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EXHIBIT A
JOHN H. HARLAND COMPANY
AUDIT COMMITTEE CHARTER
Adopted April 28, 2000
I. PURPOSE AND RESPONSIBILITIES
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Corporation to
the shareholders or any governmental body, the Corporation's systems of internal
controls established by management and the Board, and the Corporation's
auditing, accounting and financial reporting processes generally.
The Committee's primary duties and responsibilities are to serve as an
independent and objective party to monitor the Corporation's financial reporting
process and internal control system; to review and appraise the audit efforts of
the Corporation's independent accountants and internal auditors; and to provide
an open avenue of communication among the independent accountants, financial and
senior management, the internal auditors and the Board. In carrying out its
responsibilities, the Committee believes its policies and procedures should
remain flexible, in order to best react to changing conditions and to ensure to
the Board and shareholders that the accounting and reporting practices of the
Corporation are in accordance with all requirements.
II. COMPOSITION
The Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, free from any
relationship that would interfere with the exercise of his or her independent
judgment as a member of the Committee, and otherwise shall meet the requirements
of the New York Stock Exchange. All members of the Committee shall have a basic
understanding of finance and accounting practices, and at least one member of
the Committee shall, to the extent possible, have accounting or related
financial management expertise. Committee members may enhance their familiarity
with finance and accounting and stay current as to relevant developments by
participating in training and education programs. Unless a Chair is elected by
the full Board, the members of the Committee may designate a Chair by majority
vote of the Committee.
III. MEETINGS
The Committee shall hold such regular meetings as may be necessary and such
special meetings as circumstances dictate. As part of its job to foster open
communication, the Committee should meet at least annually with management, the
internal auditors and the independent accountants in separate executive sessions
to discuss any matters that the Committee or each of these groups believes
should be discussed privately. In addition, the Committee or at least its Chair
should meet with the independent accountants and management quarterly to review
the Corporation's financials.
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IV. DUTIES AND RESPONSIBILITIES
To fulfill its duties and responsibilities the Committee shall:
Review of Documents and Reports
1. Review the adequacy of this Charter at least annually.
2. Review the Corporation's annual financial statements and other
financial reports prior to filing or submission to the shareholders or any
governmental body, including any report, opinion or review rendered by the
independent accountants.
3. Review the regular internal reports to management prepared by the
internal auditors and management's response.
4. Review with financial management and the independent accountants
the Corporation's quarterly financial results prior to the earnings release
and the filing of the SEC Form 10-Q. The Chair of the Committee may
represent the entire Committee for purposes of this review.
5. Prepare a report for inclusion in the annual Proxy Statement
stating whether the Committee has reviewed and discussed the financial
statements with management and the independent auditors, and whether the
Committee recommended to the Board that the audited financials be included
in the Form 10-K.
6. File this Charter as an appendix to the Proxy Statement at least
once every three years.
Independent Accountants
7. Recommend to the Board the selection of the independent
accountants, considering independence and effectiveness, and approve the
fees and other compensation to be paid to them. On an annual basis, the
Committee should review and discuss with such accountants all significant
relationships they have with the Corporation to determine their
independence.
8. Review the performance of the independent accountants and approve
the discharge of such accountants when circumstances warrant. The
independent auditors are ultimately accountable to the Audit Committee and
the Board.
9. Discuss with the independent accountants their judgments about the
quality, not just the acceptability, of the accounting principles used in
the Corporation's financial reporting, including the consistency of
accounting policies and the clarity and completeness of the financial
statements and related disclosures.
10. Meet with the independent accountants, the internal auditors and
financial management of the Corporation to review the audit scope and plan
of the internal auditors and the independent accountants for the current
year and the audit procedures to be utilized, and at the conclusion thereof
review the year end audit, including any comments or recommendations of the
independent accountants.
11. Review with the independent accountants, the internal auditors and
financial and accounting management, the adequacy and effectiveness of the
accounting and financial controls of the Corporation, and elicit any
recommendations for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Emphasis should be given to the
A-2
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adequacy of such internal controls to expose any payments, transactions or
procedures that might be deemed illegal or improper.
Financial Reporting Processes
12. Discuss with management, the independent accountants and the
internal auditors any significant risks or exposures affecting the
Corporation, and assess the steps management has taken to minimize such
risks and exposures.
13. Consider and approve (where appropriate) major changes to the
Corporation's auditing and accounting principles and practices as suggested
by the independent accountants, management or the internal auditors.
Process Improvement
14. Establish regular and separate systems of reporting to the
Committee by management, the independent accountants and the internal
auditors regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
appropriateness of such judgments.
15. Following completion of the annual audit, review separately with
management, the independent accountants and the internal auditors any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
16. Review any significant disagreement among management and the
independent accountants or the internal auditors in connection with the
preparation of the financial statements.
17. Review with the independent accountants, the internal auditors and
management the extent to which changes or improvements in financial or
accounting practices, as approved by the Committee, have been implemented.
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(HARLAND LOGO)
(RECYCLED PAPER LOGO)
26
JOHN H. HARLAND COMPANY
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED THROUGH DECEMBER 14, 2000)
1. PURPOSE
This document amends and restates the John H. Harland Company Employee
Stock Purchase Plan (the "Plan") effective for offerings beginning on or after
April 1, 1996. The Plan is intended as an incentive and to encourage stock
ownership by all employees of John H. Harland Company (the "Company") and
(subject to the conditions hereinafter set forth) of its Subsidiaries, so that
they may acquire or increase their proprietary interest in the success of the
Company, and to encourage them to remain in the employ of the Company and its
Subsidiaries. It is further intended that the Plan qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986 (the "Code"). However, this Plan is not intended to constitute a plan
described in Section 401 of the Code or to constitute an "employee benefit plan"
as described in the Employee Retirement Income Security Act of 1974, as amended.
As used herein, the term "Subsidiary" shall include each corporation that
the Committee may designate from time to time as eligible to participate in this
Plan; provided such corporation as of the applicable Offering Date is a
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company, with each of the corporations in such chain other
than the last corporation owning stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board"). The Committee shall
consist of not less than three members of the Board. Each member must be a
"disinterested person" under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or any successor to such rule ("Rule 16b-3").
The Board may from time to time remove members from, or add eligible individuals
as members to, the Committee who are "disinterested persons" under Rule 16b-3.
Vacancies on the Committee, howsoever caused, shall be filled by the Board. The
Committee shall select one of its members as Chairman, and shall hold meetings
at such times and places as it may determine. Minutes of all meetings shall be
made and preserved. A majority of the Committee shall control its actions at any
meeting.
The Committee shall have the power to delegate the duty to perform
recordkeeping, and such other administrative functions as the Committee deems
appropriate under the circumstances, to an officer of the Company, a third party
administrator (a "Third Party Administrator") or to any other person or entity.
Any person or entity to whom the duty to perform an administrative function is
delegated shall act on behalf of and shall be responsible to the Committee for
such function.
3. ELIGIBILITY
Any employee, as defined below, of the Company or any Subsidiary of the
Company shall be eligible to participate in the Plan on an Offering Date.
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The term "employee" shall have the same meaning as the term "employee" as
defined by Section 3401(c) of the Code and shall include officers and directors
who are also employees but shall exclude individuals whose customary employment
is for not more than twenty hours per week or for not more than five months in
any calendar year.
Any provision of the Plan to the contrary notwithstanding, no employee
shall be granted an option:
(i) if, immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company, of any parent corporation of the Company or of any subsidiary,
determinations of employee stock ownership being made for this purpose in
accordance with Section 423(b)(3) of the Code; or
(ii) which permits his or her rights to purchase stock under all
employee stock purchase plans of the Company, of any parent corporations of
the Company and of any subsidiaries to accrue at a rate which exceeds
$25,000 of fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such stock option would
be outstanding at any time, within the meaning of Section 423(b)(8) of the
Code.
4. COMMON STOCK
The stock to be sold to participants under the Plan (the "Common Stock")
shall be $1 par value common stock of the Company and may, at the election of
the Company, be either treasury stock or stock originally issued for such
purpose. The maximum number of shares of Common Stock which shall be made
available for sale under the Plan during all offerings under the Plan shall be
5,100,000 shares subject to adjustment upon changes in capitalization of the
Company as provided in paragraph 16.
The participant will have no interest in Common Stock covered by his or her
option until such option has been exercised.
Any shares which are subject to sale pursuant to an option granted under
the Plan but which are not purchased on the Termination Date of the related
offering shall again become available for sale pursuant to options granted under
the Plan.
5. OFFERING DATES
The Plan will be implemented by a continuous series of offerings, each of
which shall commence on the first business day of a calendar quarter (the
"Offering Date") and shall terminate on the last business day of such quarter
(the "Termination Date").
No offering shall be made if in the opinion of the Committee the Common
Stock made available under the Plan has been so substantially exhausted as to
make an offering to all eligible employees impractical under the Plan.
6. PARTICIPATION
An eligible employee may become a participant by properly completing and
filing with his or her employer an authorization for payroll deductions to
purchase shares of Common Stock on the form approved by the Committee or its
delegate.
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Payroll deductions shall become effective on the first Offering Date after
a participant has filed his or her authorization and shall terminate upon the
earlier to occur of (a) the participant's written request to cease payroll
deductions or terminate participation in the Plan as described in paragraph 11
or (b) the participant's failure to satisfy the eligibility requirements
described in paragraph 3.
7. PAYROLL DEDUCTIONS
At the time a participant files his or her authorization for a payroll
deduction, he or she shall elect to have deductions made from his or her
Annualized Cash Compensation, as hereinafter defined, on each payday during the
time he or she is a participant in an offering at the annual rate of from 3 to
20% (in whole number percentage increments only) of his or her Annualized Cash
Compensation.
The term "Annualized Cash Compensation" shall mean the participant's
current annualized cash compensation from the Company or any Subsidiary,
including overtime, bonuses, commissions and other cash incentives and any
pre-tax deferrals under the Company's or any Subsidiary's employee benefit
plans.
All payroll deductions made for a participant shall be credited to the
bookkeeping account (the "payroll account") maintained for such participant by
the Company or a Subsidiary. A participant may not make any contributions under
the Plan other than by payroll deduction.
A participant may cease payroll deductions during an offering as provided
in paragraph 11, but no other change can be made during an offering and,
specifically, a participant may not otherwise alter the rate of his or her
payroll deduction for that offering.
A participant may change the amount of his or her payroll deductions for
any future offering by filing a new authorization with his or her employer in
accordance with this paragraph prior to commencement of the offering.
8. GRANTING OF OPTION
On each Offering Date, each participant shall be granted an option to
purchase the number of full and partial shares of Common Stock equal to the
quotient obtained by dividing $6250 by the fair market value of a share of
Common Stock as determined below as of the Offering Date. However, if the number
of shares of Common Stock available for purchase under the Plan is insufficient
to grant to each participant an option to purchase the maximum number of shares
determined under the preceding sentence or if on the Termination Date the number
of shares available for purchase is insufficient to permit each participant to
purchase such maximum number of shares, then each option shall be reduced to
equal the total number of available shares multiplied by a fraction the
numerator of which is such participant's Annualized Cash Compensation and the
denominator of which is the total Annualized Cash Compensation of all
participants.
The option price of each share of Common Stock for a particular offering
shall be the lower of:
(i) 85% of the fair market value per share of the Common Stock on the
Offering Date of such offering, or
(ii) 85% of the fair market value per share of the Common Stock on the
Termination Date of such offering.
The fair market value per share shall be (a) the mean of the highest and
lowest quoted selling prices of a share of Common Stock on the New York Stock
Exchange on the applicable valuation date as reported by The Wall Street Journal
or, if the Common Stock is no longer traded on The New York Stock Exchange,
29
under the quotation system under which such prices are reported or, if The Wall
Street Journal no longer reports such prices, the mean of such prices as
reported by a newspaper or trade journal selected by the Committee, or, if no
such prices are available on such date, (b) the mean of the highest and lowest
selling prices of a share of Common Stock as so reported or quoted in accordance
with clause (a) above for the immediately preceding business day, or, if no
newspaper or trade journal reports such prices or if no such price quotations
are available, (c) the price which the Committee acting in good faith determines
through any reasonable valuation method that a share of Common Stock might
change hands through a willing buyer and a willing seller, neither being under
any compulsion to buy or to sell and both having reasonable knowledge of the
relevant facts.
9. EXERCISE OF OPTION
A participant's option will be exercised automatically for him or her on
the Termination Date for the purchase of as many full and partial shares of
Common Stock subject to the option granted to him or her (determined in
accordance with paragraph 8) as the accumulated payroll deductions in his or her
payroll account at that time will purchase at the option price for such
offering.
The amount credited to a participant's payroll account in excess of that
which will purchase the number of shares for which his or her option was granted
shall be paid over to the participant (without interest) as soon as practicable
following the Termination Date for the offering period.
10. DELIVERY
As promptly as practicable after each Termination Date, any Common Stock
purchased upon the exercise of a participant's option will be registered in the
name of the participant or, if the participant so directs, in the names of the
participant and one such other person as may be designated by the participant as
joint tenants with rights of survivorship, but no certificates will be issued
until requested by the participant or as required under paragraph 11. A
bookkeeping account will be maintained for each Participant (the "stock
account"), which may consist of one or more accounts to record his or her shares
purchased under the Plan. Statements shall be provided to each participant
showing the shares purchased for his or her stock account and such other
information as the Committee or its delegate deems appropriate to satisfy any
reporting obligations under the Plan.
A participant will be a fully vested, beneficial owner of all shares of
Common Stock registered to him or her (or to him or her and another person as
permitted under this paragraph) under the Plan.
Proxy material, meeting announcements, tender offer materials and other
communications distributed to holders of Common Stock will be distributed to
participants with respect to their shares purchased under this Plan in the same
manner and at the same time as such materials are distributed to other holders
of Common Stock while they remain the registered owners of such shares.
A participant at any time may request that certificates be issued to him or
her with respect to any number of whole shares credited to his or her stock
account. No fees will be charged to the participant for such certificates.
If a Third Party Administrator that maintains the stock account for a
participant also provides brokerage services, the participant may request that
the Third Party Administrator arrange for the sale of any whole shares of Common
Stock registered to him or her under the Plan; provided, all transaction costs
of such sale will be paid by the participant.
30
11. CESSATION OF PAYROLL DEDUCTIONS AND TERMINATION OF EMPLOYMENT
A participant may cease payroll deductions at any time during an offering
by giving written notice to his or her employer. A participant who ceases
payroll deductions during any offering shall not be allowed to resume payroll
deductions during such offering but may recommence participation in any
succeeding offering for which he or she is otherwise eligible in accordance with
paragraph 3 if he or she files with his or her employer an authorization for
payroll deductions in accordance with paragraph 7.
Upon termination of a participant's employment with the Company and all
Subsidiaries for any reason, including retirement or death, he or she shall
immediately cease to be a participant, any option which he or she may have been
granted under the Plan shall immediately expire and shall not be exercised, and
the payroll deductions credited to his or her payroll account will be returned
to him or her within 30 days after the effective date of the termination
(without interest), or, in the case of his or her death, to the personal
representative of his or her estate. Certificates representing the whole shares
of Common Stock credited to the participant's stock account and a check for the
value of any partial shares will be issued to the participant. In the event of
the participant's death prior to the issuance of such certificates, the shares
shall be issued to the personal representative of the participant's estate or if
the shares were registered to the participant and another person as joint
tenants, to the surviving joint tenant or if both the participant and the joint
tenant are deceased, to the personal representative of the estate of the last to
die. If a Third Party Administrator that maintains the stock account for the
participant also provides brokerage services and if so requested by the
participant within 60 days of the termination, the Third Party Administrator
will arrange for the sale of the whole shares credited to the participant's
stock account and issue a check to the participant for the value of any partial
shares credited to his or her stock account and the proceeds of the sale of
whole shares less any transaction costs of the sale.
12. DIVIDENDS
Any dividend with respect to the shares of Common Stock credited to a
participant's stock account under the Plan will be paid to the participant to
the extent such dividend is paid in cash or credited to his or her stock account
to the extent such dividend is paid in Common Stock. However, upon the
participant's written request, cash dividends will be reinvested in additional
shares of Common Stock pursuant to the Company's dividend reinvestment plan.
13. TRANSFERABILITY
Neither payroll deductions credited to a participant's payroll account nor
any rights with regard to the exercise of an option or to receive stock under
the Plan may be assigned, transferred, pledged, or otherwise disposed of in any
way by the participant. Any such attempted assignment, transfer, pledge, or
other disposition shall be without effect, except that the Company may treat
such act as an election to cease payroll deductions during the offering in
accordance with paragraph 11.
14. USE OF FUNDS
All payroll deductions received or held by the Company (or by any
Subsidiary as agent for the Company) under the Plan may be used by the Company
for any corporate purpose and the Company shall not be obligated to segregate
such payroll deductions.
31
15. CHANGES IN CAPITALIZATION
The number of shares of Common Stock covered by each outstanding option and
the price per share thereof in each such option and the number of shares of
Common Stock issuable through options granted pursuant to the Plan for which
options have not been granted shall be proportionately adjusted for any increase
or decrease in the number of issued and outstanding shares of Common Stock of
the Company resulting from a subdivision or consolidation of shares or the
payment of a Common Stock dividend (but only such a payment with respect to the
Common Stock of the Company) or any other increase or decrease in the number of
shares of Common Stock effected without receipt of consideration by the Company.
If any adjustment to the number of shares of Common Stock issuable through
options granted pursuant to the Plan would create a fractional share, such
fractional share shall be disregarded and the number of shares available under
the Plan shall be the next lower number of whole shares, rounding all fractions
downward.
16. SECURITIES REGISTRATION
In the event that the Company shall deem it necessary to register under the
Securities Act of 1933 or other applicable statutes any shares with respect to
which an option shall have been exercised, or to qualify any such shares for
exemption from the Securities Act of 1933, then the Company shall take such
action at its own expense before delivery of such shares. In the event the
shares of Common Stock shall be listed on any national stock exchange at the
time of the exercise of an option under the Plan, then whenever required, the
Company shall make prompt application for the listing on such stock exchange of
such shares, at the sole expense of the Company.
17. AMENDMENT OR TERMINATION
The Board may at any time terminate or amend the Plan. No such termination
can affect options previously granted, nor may an amendment make any change in
any option theretofore granted which would adversely affect the rights of any
participant unless (a) each participant consents in writing to such amendment or
(b) the Board acting in good faith deems that such action is required under
applicable law. No amendment may be made without prior written approval of the
shareholders of the Company if such amendment would:
(i) permit the sale of more shares of Common Stock than are authorized
under paragraph 4 of the Plan;
(ii) effect any change in the designation of eligible employees under
paragraph 3 of the Plan;
(iii) permit payroll deductions at a rate in excess of 20% of a
participant's Annualized Cash Compensation; or
(iv) be subject to shareholder approval under the laws of the State of
Georgia or Rule 16b-3.
Finally, no provision of this Plan shall be amended more than once every 6
months if more frequent amendment of such provision would result in a loss of
exemption under Rule 16b-3.
18. COMPLIANCE WITH RULE 16B-3
All elections and transactions under the Plan by persons subject to Section
16 of the Securities Exchange Act of 1934 involving shares of Common Stock are
intended to comply with all exemptive conditions under Rule 16b-3. The Committee
may establish and adopt written administrative guidelines, designed to
facilitate
32
compliance with Rule 16b-3, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of business
thereunder. To the extent that any provision of the Plan, the administrative
guidelines or any action or omission with respect to the Plan (including any
action by an eligible employee) does not satisfy the exemptive conditions under
Rule 16b-3 or otherwise is inconsistent with Rule 16b-3, the provision,
guidelines or action or omission shall be deemed null and void, as permitted by
applicable law.
19. NOTICES
All notices or other communications by a participant under or in connection
with the Plan shall be deemed to have been duly given when received in the form
specified by the Committee or its delegate at the location, or by the person,
designated by the Committee or its delegate for the receipt thereof.
20. EMPLOYMENT
No offering under the Plan shall constitute an offer of employment, and no
participation in an offering under this plan shall constitute an employment
agreement. Any offering or participation in the Plan shall have no bearing
whatsoever on the employment relationship between any employee and the Company
or any of its Subsidiaries. No employee shall be induced to participate in the
Plan by the expectation of employment or continued employment.
21. HEADINGS AND CONSTRUCTION
The headings to paragraphs in the Plan have been included for convenience
of reference only. The Plan shall be interpreted and construed in accordance
with the laws of the State of Georgia.
33
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
JOHN H. HARLAND COMPANY
APRIL 27, 2001
The undersigned hereby appoints TIMOTHY C. TUFF and JOHN C. WALTERS,
and each of them, proxies, with full power of substitution and resubstitution,
for and in the name of the undersigned, to vote all shares of Common Stock of
John H. Harland Company, which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders to be held on Friday,
April 27, 2001 at 10:00 a.m., at The Georgian Court, 659 Peachtree Street, NE,
Atlanta, Georgia, and at any adjournment thereof, upon the matters described in
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement,
receipt of which is hereby acknowledged, and upon any other business that may
properly come before the meeting or any adjournment thereof. Said proxies are
directed to vote on the matters described in the Notice of Annual Meeting and
Proxy Statement as follows, and otherwise in their discretion upon such other
business as may properly come before the meeting and any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED
THE PROXY WILL BE VOTED "FOR" THE STATED PROPOSALS
(Continued, and to be marked, dated and signed, on other side.)
SEE REVERSE
SIDE
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As a member of the investment community you need access to
specific information about Harland - the latest press releases,
SEC filings and more. You may access all this and more through
the Investor Relations section of www.harland.net every time
you visit Harland on-line.
We hope you will visit our Web site often. If there is anything
you would like to see added to the site, drop us a line at
invest@harland.net. If you are not Internet active and would
like to be placed on our mailing list for information to be
sent via regular mail, please fill out and return the
following:
My Name and Mailing Address is: I would be interested
(Please print legibly) in receiving:
(Please check all that apply)
[ ] Quarterly Earnings &
------------------------------- Press Releases
[ ] SEC Form 10K
-------------------------------
[ ] SEC Form 10Q
-------------------------------
[ ] Dividend Reinvestment
------------------------------- Information
34
[X] PLEASE MARK YOUR 0525
VOTES AS IN THIS
EXAMPLE.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. To elect three FOR WITHHELD John J. McMahon Jr. 2. To ratify the appointment of [ ] [ ] [ ]
directors: [ ] [ ] Larry L. Prince Deloitte & Touche LLP as the
Jesse J. Spikes Company's independent certified
public accountants for the year
ending December 31, 2001.
For, except vote withheld from the following nominee(s): 3. To amend the Company's Employees [ ] [ ] [ ]
Stock Purchase Plan to increase
the number of shares available
----------------------------------------------------- thereunder by 750,000 shares
--------------------------------------------------------------
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.
--------------------------------------------------
--------------------------------------------------
SIGNATURE (S) DATE
- -----------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
John H. Harland Company
Investor Relations Department
PO Box 105250
Atlanta, GA 30348
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
-------------------------------------------------
BUSINESS REPLY MAIL
FIRST-CLASS MAIL PERMIT NO. 323 ATLANTA, GA
-------------------------------------------------
POSTAGE WILL BE PAID BY ADDRESSEE
ATTENTION: INVESTOR RELATIONS
JOHN H. HARLAND CO.
PO BOX 105250
ATLANTA GA 30348