SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</Table>
Per-Se Technologies, Inc.
- --------------------------------------------------------------------------------
(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.:
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(4) Date Filed:
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(Per-Se Logo)
April 2, 2002
Dear Stockholder:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders
of Per-Se Technologies, Inc. (the "Company") to be held at 10:00 a.m. on
Thursday, May 2, 2002, at the Renaissance Waverly Hotel, 2450 Galleria Parkway,
Atlanta, Georgia 30339.
At the Annual Meeting, seven people will be elected to the Board of
Directors. The Board of Directors recommends that you vote FOR the election of
the seven nominees named in the Proxy Statement.
In addition, the Company will ask the stockholders to approve a deferred
stock unit plan. The Board has determined that the plan is in the best interests
of the Company and its stockholders and has unanimously approved the plan. The
Board recommends that you vote FOR the proposal to approve this plan.
You may also be asked to consider a stockholder proposal, which is
described in the Proxy Statement. The Board has determined that the proposal is
not in the best interests of the Company and its stockholders and the Board
recommends that you vote AGAINST that proposal.
Your vote is very important. Please vote by telephone, over the Internet or
by completing and signing the proxy card and mailing it back even if you plan to
attend the Annual Meeting. If you attend the Annual Meeting, you may vote in
person if you wish, even if you have previously submitted your proxy. Your
prompt cooperation will be greatly appreciated.
Sincerely,
(/s/ Philip M. Pead)
Philip M. Pead
President and Chief Executive Officer
<Table>
Per-Se Technologies, Inc. 770/444-5300
2840 Mt. Wilkinson Parkway 877/73 PER-SE toll free
Atlanta, Georgia 30339 www.per-se.com
</Table>
(Per-Se Logo)
PER-SE TECHNOLOGIES, INC.
2840 MT. WILKINSON PARKWAY
ATLANTA, GEORGIA 30339
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 2, 2002
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Per-Se
Technologies, Inc. (the "Company") will be held at 10:00 a.m. on Thursday, May
2, 2002, at the Renaissance Waverly Hotel, 2450 Galleria Parkway, Atlanta,
Georgia 30339:
(1) To elect seven (7) directors;
(2) To approved a deferred stock unit plan;
(3) To consider one stockholder proposal, if presented to the meeting;
and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
March 18, 2002, as the record date for the determination of stockholders
entitled to receive notice of, and to vote at, the meeting and any adjournment
thereof.
Your attention is directed to the Proxy Statement submitted with this
Notice.
By Order of the Board of Directors,
/s/ Paul J. Quiner
Paul J. Quiner
Senior Vice President,
General Counsel and Secretary
Atlanta, Georgia
April 2, 2002
PLEASE VOTE YOUR PROXY PROMPTLY VIA MAIL, THE INTERNET OR BY TELEPHONE,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. PLEASE REFER TO YOUR
SPECIFIC VOTING INSTRUCTIONS ON THE ENCLOSED PROXY OR VOTING INSTRUCTIONS CARD.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY SUBMITTED YOUR PROXY.
PER-SE TECHNOLOGIES, INC.
2840 MT. WILKINSON PARKWAY
ATLANTA, GEORGIA 30339
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 2, 2002
GENERAL INFORMATION
The enclosed form of proxy is solicited by the Board of Directors (the
"Board") of Per-Se Technologies, Inc. (the "Company" or "Per-Se"), which has its
principal executive offices at 2840 Mt. Wilkinson Parkway, Atlanta, Georgia
30339, for use at the Annual Meeting of Stockholders to be held at 10:00 a.m. on
Thursday, May 2, 2002, at the Renaissance Waverly Hotel, 2450 Galleria Parkway,
Atlanta, Georgia 30339, and any adjournment thereof. It is anticipated that this
proxy statement ("Proxy Statement") and the accompanying proxy will first be
mailed to stockholders on or about April 2, 2002.
Only stockholders of record as of the close of business on March 18, 2002
(the "Record Date"), will be entitled to vote at the Annual Meeting. As of that
date, the Company had outstanding 29,996,891 shares of common stock, $.01 par
value ("Common Stock"). Each share of Common Stock is entitled to one vote. No
cumulative voting rights are authorized and appraisal rights for dissenting
stockholders are not applicable to the matter being proposed. The Company
effected a 1-for-3 reverse split of the Common Stock on November 23, 1999. The
numbers of shares, per share amounts and market prices of the Common Stock set
forth herein are presented on a post-split basis, except where specifically
indicated otherwise.
When a proxy is properly executed and returned, the shares it represents
will be voted as directed at the meeting and any adjournment thereof or, if no
direction is indicated, such shares will be voted according to the
recommendations of the Board. The Board's recommendations are set forth in this
Proxy Statement with the descriptions of the matters to be voted on. In summary,
the Board recommends a vote FOR each of the director nominees, FOR the proposal
to approve the deferred stock unit plan, and AGAINST the stockholder proposal if
voted on at the meeting. Any stockholder giving a proxy has the power to revoke
it at any time before it is voted. Revocation of a proxy is effective upon
receipt by the Secretary of the Company of either (i) an instrument revoking
such proxy or (ii) a duly executed proxy bearing a later date. Furthermore, if a
stockholder attends the Annual Meeting and elects to vote in person, any
previously executed proxy is thereby revoked, except that beneficial owners who
hold their stock in street name cannot revoke their proxies in person at the
meeting because the stockholders of record who have the right to cast the votes
will not be present. If they wish to change their votes after returning voting
instructions, such beneficial owners should contact their brokers or other
agents before the Annual Meeting to determine whether they can do so.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector of elections appointed for the meeting who will also determine
whether a quorum is present for the transaction of business. The Company's
Restated By-laws (the "By-laws") provide that a quorum is present if the holders
of a majority of the issued and outstanding stock of the Company entitled to
vote at the meeting are present in person or represented by proxy. Abstentions
will be counted as shares that are present and entitled to vote for purposes of
determining whether a quorum is present, and thus will have the effect of a vote
against a proposal that requires the affirmative vote of a majority of the votes
cast by the stockholders of Common Stock present in person or by proxy and
entitled to vote thereon. Shares held by nominees for beneficial owners will
also be counted for purposes of determining whether a quorum is present if the
nominee has the discretion to vote on at least one of the matters presented and
even though the nominee may not exercise discretionary voting power with respect
to other matters and voting instructions have not been received from the
beneficial owner (a "broker non-vote"). Abstentions may be specified on any
proposal other than the election of directors, but will have no effect on the
vote for election of directors. Broker non-votes will not be counted as votes
for or against matters presented for stockholder consideration.
Most stockholders have a choice of voting over the Internet, by telephone
or by using a traditional proxy card. Please check your proxy or voting
instructions card to see which specific voting methods are available to
you. Voting instructions are included on the proxy or voting instructions card.
The Internet and telephone voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to vote and to allow
stockholders to confirm that their instructions have been properly recorded.
Most stockholders can elect to view proxy statements, annual reports and
other stockholder communications over the Internet instead of receiving paper
copies in the mail. Information about making that election is available by
following the instructions on your proxy card, or by following the prompts if
voting over the Internet or by telephone. Please consider making that election
when voting your proxy.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board recommends the election of each of the nominees listed below for
the office of director to hold office until the next Annual Meeting and until
his successor is elected and qualified. All of such nominees are members of the
present Board. Each of such nominees was elected by the stockholders at the last
Annual Meeting, with the exception of Stephen A. George, M.D. and Craig Macnab,
each of whom was elected to the Board on January 31, 2002, by the Board to fill
vacancies resulting from the resignations of Kevin E. Moley and Roderick M.
Hills.
The Board has no reason to believe that any of the director nominees will
be unavailable for election as a director. If, however, at the time of the
Annual Meeting any of the nominees should be unable or decline to serve, the
persons named in the proxy will vote for such substitute nominees, 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. In
no event, however, can the proxy be voted to elect more than seven directors.
The election of the nominees to the Board requires the affirmative vote of a
plurality of the votes cast by stockholders present at the Annual Meeting in
person or by proxy. With respect to the election of directors, votes may be cast
or withheld for each nominee. Votes that are withheld will have no effect on the
election of directors. Stockholders eligible to vote at the Annual Meeting do
not have cumulative voting rights with respect to the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE SEVEN NOMINEES NAMED IN THIS PROXY STATEMENT
MANAGEMENT OF THE COMPANY
DIRECTOR NOMINEES
The Company currently has seven directors, each of whom holds office until
the Annual Meeting of Stockholders and until his successor is elected and
qualified. All seven of the Company's directors are standing for reelection at
the Annual Meeting.
Set forth below is the name of each nominee for election to the Board. Also
set forth below as to each nominee is his age, the year in which he first became
a director, a brief description of his principal occupation and business
experience during the past five years, directorships of certain companies
presently held by him, and certain other information, which information has been
furnished by the respective nominees.
STEPHEN A. GEORGE, M.D.
Age 50
Director since 2002
Dr. George has been the Chairman and Chief Executive Officer of NexCura,
Inc. ("NexCura") since October 2000. NexCura is a software development, medical
informatics and e-communications firm which serves the treatment decision
support needs of patients suffering from chronic diseases. Dr. George also has
been the President of Medvice, Inc., a provider of advisory services and
investment capital to healthcare and technology companies, since October 1998.
From June 1993 to July 1998, Dr. George held the positions of Chairman and Chief
Executive Officer of First Physician Care, Inc., a privately held physician
management company that he founded in 1993, which was sold to a publicly-held
physician practice management company in 1998.
2
DAVID R. HOLBROOKE, M.D.
Age 61
Director since 1994
Dr. Holbrooke has been the President and Chief Executive Officer of
Advocates Rx, Inc., a medical management and healthcare venture development
company, since 1995. From 1983 to 1995, Dr. Holbrooke served as President and
Chief Executive Officer of Holbrooke & Associates. Dr. Holbrooke has a 25-year
history of entrepreneurship, management, medical practice, and new business
development experience in the healthcare services industry. He currently is
active as a board member and investor in several privately held healthcare
companies.
CRAIG MACNAB
Age 46
Director since 2002
Mr. Macnab has served as the Chief Executive Officer of JDN Realty
Corporation ("JDN Realty") since April 2000, and as the President of JDN Realty
since September 2000. He has been a member of the Board of Directors of JDN
Realty since April 1994. JDN Realty is an Atlanta-based real estate investment
trust specializing in the development and management of retail shopping centers.
From 1997 to 1999, Mr. Macnab was the President of Tandem Capital, a venture
capital firm.
DAVID E. MCDOWELL
Age 59
Director since 1996
Mr. McDowell was appointed to the Board in May 1996 and has served as
Chairman of the Board from October 1996 to the present. From October 1996 to
July 1998, Mr. McDowell also served as Chief Executive Officer of the Company.
From 1992 to 1996, he was President, Chief Operating Officer and a director of
McKesson Corporation. Prior to 1992, Mr. McDowell served for over 25 years as a
senior executive at IBM, including as an IBM Vice President and President of the
National Services Division.
PHILIP M. PEAD
Age 49
Director since 2000
Mr. Pead was elected to the Board in November 2000. Also, in November 2000,
Mr. Pead became the President and Chief Executive Officer of the Company. From
August 1999 to November 2000, Mr. Pead served as Executive Vice President and
Chief Operating Officer of the Company. Mr. Pead joined the Company in April
1997 as a senior executive in the Application Software and e-Health Solutions
divisions of the Company's business, and he served as the President of those
divisions from May 1997 until August 1999. From May 1996 to April 1997, Mr. Pead
was employed by Dun & Bradstreet Application Software as a senior executive with
responsibility for international operations.
JOHN C. POPE
Age 52
Director since 1997
Mr. Pope has been Chairman of PFI Group, a private investment group, since
July 1994. From December 1995 to November 1999, Mr. Pope was Chairman of the
Board of MotivePower Industries, Inc., a manufacturer of locomotives and
locomotive components. From April 1992 to July 1994, Mr. Pope was President,
Chief Operating Officer and a Director of UAL Corporation and its subsidiary,
United Airlines, Inc. Mr. Pope is also a member of the Board of Directors of Air
Canada, Dollar Thrifty Automotive Group, Inc., Federal-Mogul Corporation, Kraft
Foods Inc., Wallace Computer Services, Inc., and Waste Management, Inc.
3
C. CHRISTOPHER TROWER
Age 53
Director since 1997
Mr. Trower, a member of the Georgia and Kentucky bars, is engaged in the
private practice of law. Since June 1997, he has been the owner of the Atlanta
law firm of electriclaw.com. From 1988 to June 1997, Mr. Trower was a partner in
the Atlanta law firm of Sutherland, Asbill & Brennan.
OPERATION OF THE BOARD OF DIRECTORS
The Company has an Audit Committee of the Board (the "Audit Committee")
which is composed of John C. Pope, Chairman, David R. Holbrooke, M.D., and C.
Christopher Trower. All of the members of the Audit Committee have been
determined by the Board to be independent pursuant to Rule 4200(a)(14) of the
National Association of Securities Dealers' marketplace rules. The Audit
Committee operates under a written charter adopted by the Board. The
responsibilities of the Audit Committee, which are described in detail in its
charter, include responsibility for recommending which firm to engage as the
Company's principal independent auditors, meeting with the Company's auditors to
review the Company's financial statements and internal accounting controls,
oversight of management's fulfillment of its financial reporting and disclosure
responsibilities, and oversight of the Company's internal audit function. A
provision has been added to the Audit Committee's charter to elaborate on the
responsibilities of the Audit Committee and the Board to ensure that the
independence of the Company's independent auditors is not compromised, and to
establish in writing the Company's policy of prohibiting its independent
auditors from being engaged to perform non-financial consulting services such as
information technology consulting and internal audit outsourcing. A copy of the
Audit Committee's charter, as amended to reflect that policy, is attached hereto
as Appendix A.
The Company has a Compensation Committee of the Board (the "Compensation
Committee"), which is composed of C. Christopher Trower, Chairman, David R.
Holbrooke, M.D., and John C. Pope. The Compensation Committee makes
determinations at least annually regarding the compensation of the officers and
directors of the Company. The Compensation Committee may exercise such
additional authority as may be prescribed from time to time by resolution of the
Board. The Compensation Committee's policies applicable to compensation of the
Company's executive officers during 2001 are described herein under the caption
"Compensation Committee Report on Executive Compensation."
The Company has a Governance Committee of the Board (the "Governance
Committee"), which is composed of David R. Holbrooke, M.D., Chairman, Stephen A.
George, M.D., Craig Macnab, John C. Pope and C. Christopher Trower. The
Governance Committee is responsible for reviewing and assessing the composition
and performance of the Board and formulating policies with respect to corporate
governance. The Governance Committee also serves as a nominating committee to
select management's nominees for election to the Board. The nominating committee
will consider nominees recommended by stockholders if submitted to the Board in
accordance with the procedures specified in the By-laws. The Governance
Committee may exercise such additional authority as may be prescribed from time
to time by resolution of the Board.
During 2001, the Board met ten (10) times, the Audit Committee met nine (9)
times, the Compensation Committee met eight (8) times and the Governance
Committee met four (4) times. Each of the incumbent directors attended 75% or
more of the aggregate number of meetings of the Board and all committees on
which he served during 2001 (during the periods that he served).
4
NON-EMPLOYEE DIRECTORS' COMPENSATION
The Company maintains a non-employee director compensation plan, which is
intended to compensate non-employee members of the Board fairly for their
talents and time spent on behalf of the Company. The plan provides both cash and
equity compensation. The cash compensation consists of an annual retainer for
Board membership in the amount of $16,000, and a fee in the amount of $1,000 for
each Board meeting attended. In addition, the Board committee chairmen receive
annual retainers, and the members of the committees including the committee
chairmen receive fees for each committee meeting attended. The annual retainer
for the Audit Committee chair is $4,000, and the annual retainer for the other
committee chairs is $2,000. The Audit Committee meeting fee is $2,000 per
meeting attended, and the meeting fee for the other committees is $1,000 per
meeting attended.
The Company reimburses each director for out-of-pocket expenses associated
with each Board or committee meeting attended and for each other business
meeting at which the Company has requested the director's presence.
Equity compensation under the non-employee director compensation plan
consists of an initial grant of 10,000 stock options (upon first election or
appointment to the Board) and an annual grant of 10,000 stock options for each
year of service thereafter. The stock option plan under which these options are
granted is the Company's Non-Employee Director Stock Option Plan, as amended
(the "Director Stock Option Plan").
Non-employee directors may elect to defer receipt and taxation of their
cash fees and retainers by participating in the Company's Non-Employee Director
Deferred Stock Credit Plan (the "Deferred Stock Credit Plan"), under which
deferred amounts are converted to phantom "stock credits" that are payable in
cash upon the director's retirement from the Board, based on the fair market
value of the Common Stock at that later time (i.e., one phantom stock credit
represents the fair market value of one hypothetical share of Common Stock, and
varies with fluctuations in the Common Stock value over time). As of March 1,
2002, the non-employee directors participating in the Deferred Stock Credit Plan
and the total cash-based phantom stock credits accumulated by each of them were
as follows:
<Table>
<Caption>
PHANTOM
NAME STOCK CREDITS
- ---- -------------
Craig Macnab................................................ 11.23
John C. Pope................................................ 15,646.21
C. Christopher Trower....................................... 15,353.97
</Table>
Effective as of October 1, 2001, and subject to the approval of the
stockholders of the Company at the Annual Meeting, the Board adopted the Per-Se
Technologies, Inc. Deferred Stock Unit Plan (the "Deferred Stock Unit Plan").
See "Proposal to Approve the Per-Se Technologies, Inc. Deferred Stock Unit
Plan." (Proposal 2.) The full text of the Deferred Stock Unit Plan is attached
hereto as Appendix B.
If the Deferred Stock Unit Plan is approved by the stockholders, then each
non-employee director of the Company and certain selected key employees will be
permitted to defer a portion of their cash compensation in the form of deferred
"stock units," each of which will be deemed to be equivalent to one share of
Common Stock. At a designated future distribution date selected by the
participant, the stock units accumulated in the participant's account under the
Deferred Stock Unit Plan will be distributed in the form of Common Stock, and
will be taxable to the participant at that time based on the fair market value
of the Common Stock.
If a participant in the Deferred Stock Credit Plan (currently, Messrs.
Macnab, Pope and Trower) elects to participate in the Deferred Stock Unit Plan,
and the stockholders approve the plan, then his entire account balance under the
Deferred Stock Credit Plan as of the date of stockholder approval will be
automatically rolled over to an account for him under the Deferred Stock Unit
Plan. In that event, the hypothetical number of shares of Common Stock credited
to his account under the Deferred Stock Credit Plan will be converted to stock
units on a one-for-one basis and credited to his rollover account under the
Deferred Stock Unit Plan. From and after such rollover event, that non-employee
director would cease to be eligible to participate in the Deferred Stock Credit
Plan.
5
MANAGEMENT COMMON STOCK OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of Common Stock, as of March 1, 2002, by (i) each of the Company's
directors, (ii) the Company's named executive officers (as defined herein under
the caption "Certain Information Regarding Executive Officers--Executive
Compensation"), and (iii) such directors and all executive officers as a group.
<Table>
<Caption>
BENEFICIAL PERCENT
NAME OWNERSHIP(1) OF CLASS
- ---- ------------ --------
Stephen A. George, M.D. .................................... -- *
David R. Holbrooke, M.D. ................................... 126,897(2) *
Craig Macnab................................................ -- *
David E. McDowell........................................... 853,019(3) 2.8%
Philip M. Pead.............................................. 590,744(4) 2.0%
John C. Pope................................................ 36,731(5) *
C. Christopher Trower....................................... 26,219(6) *
Chris E. Perkins............................................ 155,670(7) *
Karen B. Andrews............................................ 154,168(8) *
William N. Dagher........................................... 150,553(9) *
Frank B. Murphy............................................. 153,017(10) *
All executive officers and directors as a group (11
persons).................................................. 2,247,018 7.5%
</Table>
- ---------------
* Beneficial ownership represents less than 1% of the outstanding Common
Stock.
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or to direct the
voting of such security, or "investment power," which includes the power to
dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities which that person has the
right to acquire within sixty (60) days. Under these rules, more than one
person may be deemed to be a beneficial owner of the same securities and a
person may be deemed to be a beneficial owner of securities as to which he
has no economic or pecuniary interest. Except as set forth in the footnotes
below, the persons named above have sole voting and investment power with
respect to all shares of Common Stock shown as being beneficially owned by
them.
(2) Includes 500 shares held in a bank account for the benefit of Dr.
Holbrooke's son. Also includes 26,397 shares that are not currently
outstanding, but which may be acquired under the Director Stock Option
Plan.
(3) Includes 7,100 shares held in a trust for Mr. McDowell's son. Also includes
436,709 shares that are not currently outstanding, but which may be
acquired upon the exercise of stock options granted under the Company's
Second Amended and Restated Stock Option Plan, as amended (the "Restated
Stock Option Plan").
(4) Includes 2,116 shares held by family members, for which Mr. Pead disclaims
beneficial ownership. Also includes 482,779 shares that are not currently
outstanding, but which may be acquired under the Restated Stock Option
Plan.
(5) Includes 25,065 shares that are not currently outstanding, but which may be
acquired under the Director Stock Option Plan. Does not include 15,646.21
stock credits payable in cash under the Deferred Stock Credit Plan, which
may become convertible to stock units under the Deferred Stock Unit Plan on
a one-for-one basis, as described elsewhere in this Proxy Statement. If Mr.
Pope's stock credits had been payable in stock as of March 1, 2002, the
total number of shares shown as being beneficially owned by him would be
52,377 shares.
(6) Includes 1,883 shares held by family members, for which Mr. Trower
disclaims beneficial ownership. Also includes 23,866 shares that are not
currently outstanding, but which may be acquired under the Director Stock
Option Plan. Does not include 15,353.97 stock credits payable in cash under
the Deferred Stock Credit Plan, which may become convertible to stock units
under the Deferred Stock Unit Plan on a one-for-one basis, as described
elsewhere in this Proxy Statement. If Mr. Trower's stock credits had been
payable in stock as of March 1, 2002, the total number of shares shown as
being beneficially owned by him would be 41,572 shares.
6
(7) Includes 155,003 shares that are not currently outstanding, but which may
be acquired under the Restated Stock Option Plan.
(8) Includes 2,500 shares held by Ms. Andrews' husband. Also includes 151,668
shares that are not currently outstanding, but which may be acquired under
the Restated Stock Option Plan.
(9) Includes 148,334 shares that are not currently outstanding, but which may
be acquired under the Restated Stock Option Plan.
(10) Includes 3,681 shares purchased under an employee stock purchase plan. Also
includes 138,335 shares that are not currently outstanding, but which may
be acquired under the Restated Stock Option Plan.
PRINCIPAL STOCKHOLDERS
The table below sets forth certain information as of December 31, 2001
concerning each person known to the Board to be a "beneficial owner," as such
term is defined by the rules of the Securities and Exchange Commission, of more
than 5% of the outstanding shares of the Common Stock.
<Table>
<Caption>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED(1) OF CLASS
- ---------------- ------------ --------
Basil P. Regan and Regan Partners, L.P.(2).................. 4,147,134 13.8%
600 Madison Ave., 26th Floor, New York, NY 10022
VA Partners, L.L.C., and affiliates(3)...................... 3,466,456 11.6%
One Maritime Plaza, Suite 1400, San Francisco, CA 94111
Whitehall Asset Management, Inc.(4)......................... 2,765,109 9.2%
320 Park Avenue, 10th Floor, New York, NY 10022
</Table>
- ---------------
(1) See Note (1) under "Management Common Stock Ownership."
(2) The information shown is derived from a Form 13F Holdings Report filed on
November 14, 2001, by Basil P. Regan and Regan Partners, L.P.
(3) The information shown is derived from a Form 13F Holdings Report filed on
February 14, 2002, by VA Partners, L.L.C. ("VA Partners"). Shares reported
as beneficially owned by VA Partners are also beneficially owned in whole or
in part by certain of its affiliates, information about which is contained
in a Schedule 13D/A filed on October 1, 2001, by ValueAct Capital Partners,
L.P., ValueAct Capital Partners II, L.P., ValueAct Capital International,
Ltd., VA Partners, Jeffrey W. Ubben, George F. Hamel, Jr., and Peter H.
Kamin.
(4) The information shown is derived from a Schedule 13G/A filed on February 11,
2002, by Whitehall Asset Management, Inc.
7
CERTAIN INFORMATION REGARDING EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and the four other most highly compensated executive
officers of the Company as of December 31, 2001 (collectively, the "named
executive officers") for 2001, 2000 and 1999.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION OTHER SECURITIES
------------------- ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- ---------------------------- ---- -------- -------- --------------- ------------ ---------------
Philip M. Pead................ 2001 $310,000 $219,325(3) -- 875,000 $12,065
President and Chief Executive 2000 279,040 111,616 -- 200,000 9,783
Officer 1999 256,155 205,000 -- 66,666 8,704
Chris E. Perkins.............. 2001 243,846 140,194(4) -- 375,000 10,639
Executive Vice President and 2000 163,654 65,461 -- 100,000 --
Chief Financial Officer 1999 -- -- -- -- --
Karen B. Andrews.............. 2001 225,000 64,980(5) -- 275,000 11,983
President of the Company's 2000 197,883 59,365 -- 140,000 9,694
Application Software division 1999 179,230 90,000 -- -- 9,369
William N. Dagher............. 2001 215,000 85,398(6) -- 275,000 14,154
President of the Company's 2000 201,731 80,692 -- 90,000 10,981
e-Health Solutions division 1999 200,000 165,000 -- -- 10,680
Frank B. Murphy............... 2001 225,962 170,465(7) -- 275,000 5,370
President of the Company's 2000 204,577 81,830 -- 155,000 5,316
Physician Services division 1999 180,691 123,414 -- -- 2,929
</Table>
- ---------------
(1) Did not exceed, for each named officer, the lesser of $50,000 or 10% of such
officer's total annual salary and bonus for such year.
(2) Includes amounts paid by the Company on behalf of each named executive
officer for matching 401(k) plan contributions, and life, medical and dental
insurance premiums. Company contributions under the 401(k) plan for the 2001
fiscal year were as follows: $5,100 for Mr. Pead, $1,567 for Mr. Perkins,
$5,100 for Ms. Andrews, $5,100 for Mr. Dagher and $5,100 for Mr. Murphy. The
amount of life, medical and dental insurance premiums paid for each of the
named executive officers for the 2001 fiscal year was: $6,965 for Mr. Pead,
$9,072 for Mr. Perkins, $6,883 for Ms. Andrews, $9,054 for Mr. Dagher and
$270 for Mr. Murphy. No matching non-qualified deferred compensation plan
contributions were made to any of the named executive officers for the 2001
fiscal year.
(3) Includes $109,663 deferred at the election of Mr. Pead under the Deferred
Stock Unit Plan, subject to approval of that plan by the Company's
stockholders.
(4) Includes $70,097 deferred at the election of Mr. Perkins under the Deferred
Stock Unit Plan, subject to approval of that plan by the Company's
stockholders, and $17,524 deferred at the election of Mr. Perkins under the
Company's Executive Deferred Compensation Plan.
(5) Includes $12,996 deferred at the election of Ms. Andrews under the Deferred
Stock Unit Plan, subject to approval of that plan by the Company's
stockholders, and $5,198 deferred at the election of Ms. Andrews under the
Company's Executive Deferred Compensation Plan.
(6) Includes $42,699 deferred at the election of Mr. Dagher under the Deferred
Stock Unit Plan, subject to approval of that plan by the Company's
stockholders, and $4,270 deferred at the election of Mr. Dagher under the
Company's Executive Deferred Compensation Plan.
8
(7) Includes $85,233 deferred at the election of Mr. Murphy under the Deferred
Stock Unit Plan, subject to approval of that plan by the Company's
stockholders, and $81,432 deferred at the election of Mr. Murphy under the
Company's Executive Deferred Compensation Plan.
STOCK OPTION GRANTS
The following table sets forth information with respect to stock options
granted to each of the named executive officers during 2001.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT
NUMBER ASSUMED ANNUAL
OF PERCENT OF RATES OF
OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE (PER EXPIRATION ------------------------
NAME GRANTED 2001 SHARE)(1) DATE 5% 10%
- ---- ---------- ------------ ---------- ---------- ---------- ----------
Philip M. Pead............ 291,667 6.86% $6.7200 3/07/12 $1,033,095 $3,032,958
291,667 6.86 6.0000 3/07/12 1,243,095 3,242,958
291,666 6.86 7.5300 3/07/12 796,842 2,796,698
Chris E. Perkins.......... 100,000 2.35 6.2500 2/07/12 443,962 1,158,198
91,667 2.16 6.7200 3/07/12 324,688 953,218
91,667 2.16 6.0000 3/07/12 390,688 1,019,218
91,666 2.16 7.5300 3/07/12 250,435 878,958
Karen B. Andrews.......... 91,667 2.16 6.7200 3/07/12 324,688 953,218
91,667 2.16 6.0000 3/07/12 390,688 1,019,218
91,666 2.16 7.5300 3/07/12 250,435 878,958
William N. Dagher......... 91,667 2.16 6.7200 3/07/12 324,688 953,218
91,667 2.16 6.0000 3/07/12 390,688 1,019,218
91,666 2.16 7.5300 3/07/12 250,435 878,958
Frank B. Murphy........... 91,667 2.16 6.7200 3/07/12 324,688 953,218
91,667 2.16 6.0000 3/07/12 390,688 1,019,218
91,666 2.16 7.5300 3/07/12 250,435 878,958
</Table>
- ---------------
(1) All options were granted at an exercise price not less than the fair market
value of the Common Stock on the date of grant. Such options may not be
exercised later than 11 years, or earlier than six months, after the
original date of grant.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock and overall market conditions. The amounts
reflected in this table may not necessarily be achieved.
9
STOCK OPTION EXERCISES
None of the named executive officers exercised any stock options during
2001. The table below shows the number of shares of Common Stock covered by both
exercisable and unexercisable stock options held by the named executive officers
as of December 31, 2001. The table also reflects the values for in-the-money
options based on the positive spread between the exercise price of such options
and the last reported sale price of the Common Stock on December 31, 2001.
AGGREGATED OPTION EXERCISES IN 2001 AND YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2001 DECEMBER 31, 2001
OPTIONS VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- -------- ----------- ------------- ----------- -------------
Philip M. Pead.................. -- -- 274,444 1,030,554 $499,833 $4,197,563
Chris E. Perkins................ -- -- 33,334 441,666 170,837 1,891,664
Karen B. Andrews................ -- -- 86,666 368,333 274,376 1,570,625
William N. Dagher............... -- -- 83,332 335,000 197,291 1,442,501
Frank B. Murphy................. -- -- 76,666 378,333 269,948 1,613,854
</Table>
EMPLOYMENT AGREEMENTS
In November 2000, in connection with his promotion to President and Chief
Executive Officer of the Company, the Company and Philip M. Pead entered into a
three-year employment agreement, which contains certain non-competition,
non-solicitation and change in control provisions. Pursuant to that agreement,
which replaced a two-year employment agreement entered into in June 1999 between
Mr. Pead and one of the Company's subsidiaries, Mr. Pead's base salary was
increased from $250,000 to $310,000 per year (subject to adjustments by any
increases given in the normal course of business), and the annual incentive
compensation payment that he is eligible to receive, which is payable at the
discretion of the Board, was increased from a maximum of 80% of his base salary
to a maximum of 100% of his base salary. Upon early termination of Mr. Pead's
employment other than for cause or by Mr. Pead for "good reason," Mr. Pead is
entitled to severance consideration equal to two years of salary continuation at
his then current salary level, but without the right to receive any incentive
bonus payments, and two years of health and welfare benefits continuation. In
the event Mr. Pead's employment is terminated in connection with a change in
control, he is entitled to receive a severance payment equal to two years of
salary and benefits, including incentive bonus payments. A "change in control"
is generally defined in the agreement as any consolidation, merger,
reorganization or other transaction in which the Company is not the surviving
entity or certain changes in the composition of the Board. In all such events of
termination, Mr. Pead is entitled to a tax equalization payment with respect to
any tax which may be imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"). The Company also agreed to loan Mr. Pead the
amount of $250,000 to purchase shares of Common Stock, and Mr. Pead used that
amount in November 2000 to purchase an aggregate of 74,000 shares of Common
Stock. The loan, which is evidenced by a promissory note executed by Mr. Pead
and secured by those shares, is payable in full upon the earlier to occur of the
termination of Mr. Pead's employment by the Company or the sale of all or any
part of the shares. The terms of the promissory note provide that any overdue
payment shall bear interest at a rate equal to the rate of interest then imputed
by the Internal Revenue Service plus 4% per annum, or the maximum rate permitted
by law, whichever is lower, but such terms do not otherwise require the payment
of interest.
10
In April 2000, the Company and Chris E. Perkins, then the Senior Vice
President, Corporate Development of the Company, entered into a three-year
employment agreement, which contains certain non-competition, non-solicitation
and change in control provisions. That agreement provides that Mr. Perkins will
be paid a base salary of $230,000 per year, subject to adjustments in the normal
course of business, and that he is eligible for an annual incentive compensation
payment of up to 80% of his base salary, payable at the discretion of the Board.
Upon early termination of Mr. Perkins' employment other than for cause or by Mr.
Perkins for "good reason," Mr. Perkins is entitled to elect severance
consideration equal to the greater of two years of salary or his then current
monthly salary multiplied by the number of months remaining in the initial term
of the agreement, in each case excluding any incentive bonus payments, plus
benefit continuation for the lesser of eighteen months and the number of months
remaining in the initial term of the agreement. In the event Mr. Perkins'
employment is terminated in connection with a change in control, he is entitled
to receive a severance payment equal to two years of salary, including incentive
bonus payments. A "change in control" is generally defined in the agreement as
any consolidation, merger, reorganization or other transaction in which the
Company is not the surviving entity or certain changes in the composition of the
Board. Mr. Perkins also received options to purchase up to 100,000 shares of
Common Stock. In February 2001, in connection with his promotion to Executive
Vice President and Chief Financial Officer of the Company, the employment
agreement was amended to increase Mr. Perkins' base salary to $250,000 per year,
and to provide for Mr. Perkins to receive options to purchase an additional
100,000 shares of Common Stock.
In March 2001, the Company and Karen B. Andrews, a Senior Vice President of
the Company and President of the Company's Application Software division,
entered into a two-year employment agreement, which contains certain
non-competition, non-solicitation and change in control provisions. That
agreement provides that Ms. Andrews will be paid a base salary of $225,000 per
year (subject to adjustments by any increases given in the normal course of
business), and that she is eligible for an annual incentive compensation payment
of up to 80% of her base salary, payable at the discretion of the Board. Upon
early termination of Ms. Andrews's employment other than for cause or by Ms.
Andrews for "good reason," Ms. Andrews is entitled to receive a severance
payment equal to her then current monthly salary multiplied by the greater of
the number of months remaining in the term of the agreement or twelve, and she
is also entitled to continuation of certain health and welfare benefits. In the
event Ms. Andrews's employment is terminated in connection with a change in
control, she is entitled to receive a severance payment equal to one year of
salary continuation at her then current base salary, or the payments due and
owing to her under the remaining term of the agreement, whichever is greater. A
"change in control" is generally defined in the agreement as any consolidation,
merger, reorganization or other transaction in which the Company is not the
surviving entity.
In January 1998, the Company and William N. Dagher, then the Senior Vice
President and Chief Information Officer of the Company, entered into a two-year
employment agreement, which contains certain non-competition, non-solicitation
and change in control provisions. That agreement provides that Mr. Dagher will
be paid a base salary of $175,000 per year (subject to adjustments by any
increases given in the normal course of business), and that he is eligible for
an annual incentive compensation payment of up to 50% of his base salary,
payable at the discretion of the Board. Upon early termination of Mr. Dagher's
employment other than for cause, Mr. Dagher is entitled to receive salary
continuation and health benefit continuation for the balance of the term of the
agreement, or nine months of salary in a lump sum, whichever is greater. In the
event Mr. Dagher's employment is terminated in connection with a change in
control, he is entitled to receive a severance payment equal to nine months of
salary continuation at his then current base salary, or the payments due and
owing to him under the remaining term of the agreement, whichever is greater. A
"change in control" is generally defined in the agreement as any consolidation,
merger, reorganization or other transaction in which the Company is not the
surviving entity. Mr. Dagher also received options to purchase up to 25,000
shares of Common Stock. As provided in the agreement, the term thereof has
continued in effect beyond the initial two-year term for successive one-year
terms. The current term of the agreement extends to January 31, 2003. Mr. Dagher
currently serves as Senior Vice President of the Company and President of the
Company's e-Health Solutions division.
11
In June 1998, the Company and Frank B. Murphy, then the Senior Vice
President -- Physician Management of the Company, entered into a two-year
employment agreement, which contains certain non-competition, non-solicitation
and change in control provisions. That agreement provides that Mr. Murphy will
be paid a base salary of $180,000 per year (subject to adjustments by any
increases given in the normal course of business), and that he is eligible for
an annual incentive compensation payment of up to 80% of his base salary,
payable at the discretion of the Board. Upon early termination of Mr. Murphy's
employment other than for cause or for "good reason," Mr. Murphy is entitled to
receive a severance payment equal to his then current monthly salary multiplied
by the greater of the number of months remaining in the term of the agreement or
twelve months, and he is also entitled to continuation of certain health and
welfare benefits. In the event Mr. Murphy's employment is terminated in
connection with a change in control, he is entitled to receive a severance
payment equal to one year of salary continuation at his then current base
salary, or the payments due and owing to him under the remaining term of the
agreement, whichever is greater. A "change in control" is generally defined in
the agreement as any consolidation, merger, reorganization or other transaction
in which the Company is not the surviving entity. Mr. Murphy also received
options to purchase up to 24,999 shares of Common Stock. As provided in the
agreement, the term thereof has continued in effect beyond the initial two-year
term for successive one-year terms. The current term of the agreement extends to
June 15, 2002. Mr. Murphy currently serves as Senior Vice President of the
Company and President of the Company's Physician Services division.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is certain information as of December 31, 2001, regarding
an outstanding loan made in November 2000 pursuant to the employment agreement
between the Company and Philip M. Pead, the Company's President and Chief
Executive Officer and a member of the Board.
<Table>
<Caption>
LARGEST AGGREGATE AMOUNT BALANCE AS
NAME AND POSITION NATURE OF INDEBTEDNESS OUTSTANDING IN 2001 OF 12/31/01 INTEREST
- ----------------- ------------------------ ------------------------ ----------- -------------
Philip M. Pead,
President and CEO..... Common Stock purchase(1) $250,000 $250,000 (2)
</Table>
- ---------------
(1) The loan is secured by an aggregate of 74,000 shares of Common Stock, and is
payable in full upon the earlier to occur of the termination of Mr. Pead's
employment or the sale of all or any part of those shares.
(2) The terms of the loan provide that any overdue payment shall bear interest
at a rate equal to the rate of interest then imputed by the Internal Revenue
Service plus 4% per annum, or the maximum rate permitted by law, whichever
is lower, but such terms do not otherwise require the payment of interest.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
more than 10% percent of the Common Stock to file certain reports with respect
to each such person's beneficial ownership of the Common Stock, including
statements of changes in beneficial ownership on Form 4. In addition, Item 405
of Regulation S-K requires the Company to identify in its Proxy Statement each
reporting person that failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year or prior
fiscal years. Based solely upon a review of Forms 3, 4 and 5 and amendments
thereto, for such persons there were no late reports, no transactions that were
not reported on a timely basis, and no known failures to file a required form.
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described earlier in this Proxy Statement, the Company has a
Compensation Committee, which is composed of C. Christopher Trower, Chairman,
David R. Holbrooke, M.D., and John C. Pope. Each member of the Compensation
Committee is a "non-employee director" as defined in Rule 16b-3 of the Exchange
Act, and is an "outside director" as provided for in Section 162(m) of the Code.
There are no "interlocks," as defined by the Securities and Exchange Commission,
with respect to any member of the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee determines each executive officer's compensation
annually. As of the date hereof, the Compensation Committee consists of the
three Board members whose names appear below. The Compensation Committee also
receives input from the Chairman of the Board regarding compensation of all
executive officers, and from the Chief Executive Officer regarding compensation
of all executive officers other than himself, based in each case on
consideration of the same criteria as those considered by the Compensation
Committee, as described below.
Compensation Components and Philosophy. The components of the Company's
executive compensation program consist of base salaries, benefits and
perquisites, cash bonuses, stock options, and other long-term incentives. The
Company's compensation program is structured and administered to support the
Company's business mission, which is to develop an organization that efficiently
and effectively delivers integrated business management outsourcing services,
application software and Internet-enabled connectivity to healthcare providers
and payers, and generates favorable returns for its stockholders. The program is
designed to provide total compensation that represents competitive compensation
for the Company's executive officers, including incentive compensation and other
long-term incentives that motivate the Company's executive officers to achieve
strategic business objectives over the long term.
Base Salary. Each executive officer's base salary, including the base
salary of the Chief Executive Officer, is based primarily upon the competitive
market for the executive officer's services. In addition to competitive
compensation information, the Compensation Committee evaluates certain
qualitative factors, such as the Chief Executive Officer's and the Compensation
Committee's perceptions of each executive officer's performance (i.e.,
experience, responsibilities assumed, demonstrated leadership ability, and
overall effectiveness) during the preceding year. Other factors considered by
the Compensation Committee in evaluating base salary include the level of an
executive's compensation in relation to other executives in the Company with the
same, more and less responsibilities than the particular executive, inflation,
the performance of the executive's division or group in relation to established
operating budgets, and the Company's guidelines for salary increases for
non-executive employees determined during the Company's annual budgeting and
planning process. Additionally, for executive officers, compensation
arrangements are often set forth in employment contracts with specified terms.
Cash Bonus Awards. Each executive officer is eligible to receive an annual
cash bonus award. These cash bonuses generally are paid pursuant to an incentive
compensation plan established at the beginning of each fiscal year in connection
with the Company's preparation of its annual operating budget for such year. The
amounts of such awards are based on the performance of the Company, the
performance of the business units reporting to the executive, and the
performance of the executive, measured in each case against attainment of
established objectives.
Stock Option Awards. The Company maintains stock option plans which are
designed to align executives' and stockholders' interests in the enhancement of
stockholder value. Stock options are granted under these plans by the
Compensation Committee. Executive officers, including the Chief Executive
Officer, are eligible to receive options under these plans. To encourage
long-term performance, executive options typically vest over a three to five
year period and remain outstanding for eleven years.
13
In making its decisions to approve stock option awards to executives, the
Compensation Committee evaluates the Company's consolidated profitability for
the year, the Company's growth plans, the desirability of long-term service from
an executive, the number of options held by other executives in the Company with
similar responsibilities as the executive at issue, the amount and terms of
options already held by the executive, and the compensation practices of the
Company's competitors.
Deductibility of Certain Compensation. Section 162(m) of the Internal
Revenue Code generally disallows a tax deduction to publicly held corporations
for compensation in excess of $1 million in any taxable year that is paid to the
corporation's chief executive officer or to the four other most highly
compensated executive officers. The Company's compensation plans permit the
grant of stock options and other awards that are fully deductible under Code
Section 162(m). It is the Compensation Committee's intent to maximize the
deductibility of executive compensation while retaining the discretion necessary
to compensate executive officers in a manner commensurate with performance and
the competitive market for executive talent. No executive of the Company
received compensation in 2001 that was subject to the Section 162(m) limitation.
Chief Executive Officer Compensation. Mr. Pead's compensation is paid in
accordance with the terms of his employment agreement, the terms of which are
described elsewhere in this Proxy Statement. In 2001, the Compensation Committee
granted Mr. Pead options to acquire 875,000 shares of Common Stock, awarded him
an annual cash bonus for 2001 in the amount of $219,325, and increased his
annual salary to $350,000 effective as of December 1, 2001, in each case in
recognition of his continuing contributions toward attainment of the Company's
financial and strategic objectives.
Stock Ownership Guidelines. In 2001, the Board adopted stock ownership
guidelines for directors and certain key executive officers. The stock ownership
guidelines reflect the Company's view that the best way to reinforce the link
between the interests of the directors and executive officers, on the one hand,
and the interests of the stockholders, on the other, is for the directors and
executives to own significant amounts of the Company's Common Stock. It is
expected that the Company's directors and executives will demonstrate their
confidence in the Company's future by increasing ownership of the Common Stock
in accordance with these guidelines. The target ownership levels are as follows:
<Table>
Directors: 5x annual retainer
Chief Executive Officer: 5x base salary
CFO and Division Presidents: 2x base salary
</Table>
For example, if an executive has a base salary of $200,000, and the target
ownership level is 2x base salary, then the value of the Common Stock owned by
that executive should be $400,000. The target ownership levels are intended to
be achieved by 2006. The shares owned at that time will be valued for compliance
purposes at their then-fair market value (rather than historical cost or
investment). The then-applicable target stock ownership levels will, likewise,
be based on compensation in effect in 2006 (therefore, if compensation
increases, the target ownership levels will also increase). Shares that count
toward reaching target ownership levels include stock owned outright, vested
shares in qualified benefit plans (e.g., a 401(k) or employee stock purchase
plan), and vested stock units held in the Deferred Stock Unit Plan. Unexercised
stock options will not be counted toward target stock ownership. Progress toward
compliance with the target stock ownership levels will be monitored quarterly by
the Compensation Committee.
Deferred Stock Unit Plan. Effective as of October 1, 2001, and subject to
the approval of the stockholders of the Company at the Annual Meeting, the Board
adopted the Deferred Stock Unit Plan. See "Proposal to Approve the Per-Se
Technologies, Inc. Deferred Stock Unit Plan." (Proposal 2.) The full text of the
Deferred Stock Unit Plan is attached hereto as Appendix B.
The purpose of the Deferred Stock Unit Plan is to further align the
interests of the Company's non-employee directors and a select group of key
employees of the Company and its affiliates with the interests of stockholders
by encouraging additional ownership of the Common Stock, and to provide the
non-employee
14
directors and such key employees with an opportunity to defer taxation of income
in consideration of the valuable services that they provide. It is expected that
participation in the Deferred Stock Unit Plan will facilitate achievement of the
target stock ownership levels described above.
Executive Deferred Compensation Plan. Effective as of January 1, 2002, the
Board adopted the Per-Se Technologies, Inc. Executive Deferred Compensation Plan
(the "Deferred Compensation Plan"). The purpose of the Deferred Compensation
Plan is to recognize the value to the Company of the services rendered by
certain management and/or highly compensated employees, and to encourage and
assure their continued service with the Company by making more adequate
provisions for their future retirement security.
The Deferred Compensation Plan will allow the eligible employees the
opportunity to accumulate deferred compensation, including deferrals of base
salary, bonus awards pursuant to the Company's 2001 incentive compensation plan,
and other forms of remuneration that the Compensation Committee and/or the Board
may from time to time designate as available for deferral. The Company is not
required to seek stockholder approval for such a plan, and it does not intend to
seek such approval for the Deferred Compensation Plan.
COMPENSATION COMMITTEE
C. Christopher Trower, Chairman
David R. Holbrooke, M.D.
John C. Pope
April 2, 2002
The report of the Compensation Committee 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, as amended (the
"Securities Act"), or the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
15
STOCK PRICE PERFORMANCE GRAPH
The graph below reflects the cumulative stockholder return on the Common
Stock compared to the return of the Center for Research in Security Prices Total
Return Index for the Nasdaq Stock Market (U.S. Companies) (the "Nasdaq
Composite") and the Company's peer group indices for the periods indicated. The
graph reflects the investment of $100 on December 31, 1996 in the Common Stock,
the Nasdaq Composite and the Company's peer group indices. The Company's current
peer group index consists of the following companies: Cerner Corporation, IDX
Systems Corporation, Eclipsys Corporation, National Data Corporation, and WebMD
Corporation (the "Peer Group").
(PERFORMANCE GRAPH)
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/29/2000 12/31/2001
- -------------------------------------------------------------------------------------------------------
Per-Se Technologies,
Inc. 100 58 29 25 10 32
Peer Group Index 100 113 163 155 69 64
Nasdaq Composite 100 122 170 315 191 151
</Table>
The stock price 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 or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
16
AUDIT COMMITTEE REPORT
The Audit Committee is composed of three independent directors and operates
under a written charter adopted by the Board. A provision has been added to the
Audit Committee's charter to elaborate on the responsibilities of the Audit
Committee and the Board to ensure that the independence of the Company's
independent auditors is not compromised, and to establish in writing the
Company's policy of prohibiting its independent auditors from being engaged to
perform non-financial consulting services such as information technology
consulting and internal audit outsourcing. A copy of the Audit Committee's
charter, as amended to reflect that policy, is attached hereto as Appendix A.
Management of the Company is responsible for the Company's internal
controls and the financial reporting process. The Company's independent
accountants are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and for issuing a report thereon. The Audit Committee's responsibility
is to monitor and oversee those processes.
It is not the Audit Committee's duty or responsibility to conduct auditing
or accounting reviews or procedures. The members of the Audit Committee do not
represent themselves to be accountants or auditors by profession or experts in
the fields of accounting or auditing.
As part of its oversight of the Company's financial statements, the Audit
Committee has met and held discussions with management and the Company's
independent accountants. Management has represented to the Audit Committee that
the Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Audit Committee has reviewed
and discussed the consolidated financial statements with management and the
independent accountants. The Audit Committee also discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
The Company's independent accountants also provided to the Audit Committee
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee discussed with the independent accountants that firm's independence.
Based on the Audit Committee's discussions with management and the
independent accountants and the Audit Committee's review of the representations
of management and the report of the independent accountants to the Audit
Committee, and without any independent verification, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001, filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
John C. Pope, Chairman
David R. Holbrooke, M.D.
C. Christopher Trower
April 2, 2002
The report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
17
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected the firm of Ernst & Young LLP ("Ernst & Young") to
serve as the Company's principal independent accountants for 2001. Ernst & Young
has served in that capacity since June 14, 2001. One or more representatives of
Ernst & Young will be present at the Annual Meeting, will have the opportunity
to make a statement if he or she so desires and will be available to respond to
appropriate questions.
On June 14, 2001, following a competitive review and request for proposal
process in which a number of nationally recognized accounting firms were
requested to participate, the Company dismissed PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as the Company's principal accountants and engaged
Ernst & Young as the Company's new principal accountants. The decision to change
accountants was recommended by the Audit Committee and approved by the Board.
The reports of PricewaterhouseCoopers on the Company's financial statements
for the two fiscal years ended December 31, 1999 and 2000 do not contain an
adverse opinion or a disclaimer of opinion, nor were such reports qualified or
modified as to uncertainty, audit scope or accounting principles. During the
Company's December 31, 1999 and 2000 fiscal years and the subsequent interim
periods preceding the date of the Company's change in principal accountants,
there were no disagreements with PricewaterhouseCoopers on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure as described in paragraph (a)(1)(iv) and Instructions 4 and 5
of Item 304 of the Securities and Exchange Commission's Regulation S-K, and
there were no "reportable events" as described in paragraph (a)(1)(v) of Item
304.
ACCOUNTANTS' FEES FOR 2001
AUDIT FEES
The aggregate fees billed by Ernst & Young for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2001 and for the reviews of the financial
statements included in the Company's Forms 10-Q filed for the second and third
quarter of 2001 was $476,974. The aggregate fees billed by
PricewaterhouseCoopers for professional services rendered for the review of the
financial statements included in the Company's Form 10-Q for the first quarter
of 2001 was $77,527.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed by Ernst & Young for services rendered to the Company
during the fiscal year ended December 31, 2001, in connection with operating, or
supervising the operation of, the Company's information system or managing the
Company's local area network, or designing or implementing a hardware or
software system that aggregates source data underlying the Company's financial
statements or generates information that is significant to the Company's
financial statements.
ALL OTHER FEES
The aggregate fees billed by Ernst & Young for services rendered to the
Company during the fiscal year ended December 31, 2001, other than those
services described above, were $26,620 (primarily for consulting on the effects
of accounting changes and adoption of new accounting pronouncements).
AUDIT COMMITTEE REVIEW
The Audit Committee has reviewed the services rendered and the fees billed
by Ernst & Young for the fiscal year ended December 31, 2001. The Audit
Committee has determined that the services rendered and the fees billed last
year that were not related to the audit of the Company's financial statements
are compatible with the independence of Ernst & Young as the Company's
independent accountants.
18
PROPOSAL TO APPROVE THE
PER-SE TECHNOLOGIES, INC. DEFERRED STOCK UNIT PLAN
(PROPOSAL 2)
BACKGROUND
Effective as of October 1, 2001, and subject to the approval of the
stockholders at the Annual Meeting, the Board adopted the Per-Se Technologies,
Inc. Deferred Stock Unit Plan (the "plan"). The purpose of the plan is to
further align the interests of the Company's non-employee directors and a select
group of key employees of the Company and its affiliates with the interests of
stockholders by encouraging additional ownership of the Common Stock, and to
provide the non-employee directors and such key employees with an opportunity to
defer taxation of income in consideration of the valuable services that they
provide. Non-employee directors of the Company are automatically eligible to
participate in the plan. The Compensation Committee may select key employees of
the Company and its affiliates from time to time as eligible participants.
Currently, five non-employee directors and six executives (including two
employee directors) are eligible to participate in the plan.
A summary of the plan is set forth below. This summary is qualified in its
entirety by the full text of the plan, which is attached to this Proxy Statement
as Appendix B.
If the stockholders do not approve the plan, it will be terminated
immediately, and all incentive compensation previously elected to be deferred
under the plan will be distributed to the employee participants, and no
non-employee director account balances under the Per-Se Non-Employee Director
Deferred Stock Credit Plan will be rolled over to the plan.
SUMMARY OF THE PLAN
Administration. The Compensation Committee of the Board administers the
plan. Subject to the provisions of the plan, the Compensation Committee is
authorized to interpret the plan, to determine the eligibility of employees for
participation, determine the status and rights of all persons under the plan
and, in general, to decide any disputes. At the discretion of the Board, the
plan may be administered by the full Board, rather than the Compensation
Committee. During any time that the Board is acting as administrator of the
plan, it shall have all the powers of the Compensation Committee under the plan.
Conversion of Compensation, Enhancement Bonus and Dividend Equivalents into
Stock Units. Pursuant to the plan, a non-employee director may elect to defer
up to 100% of his Board and committee meeting fees and annual retainer amounts
each year. Eligible employees may elect each year to defer up to 50% of their
annual incentive bonus and receive an enhancement bonus equal to $0.25 for each
dollar of compensation deferred. The Compensation Committee may also from time
to time in its sole discretion designate such other enhancement bonus
contributions as it deems appropriate. The cash amount of such deferrals and, in
the case of employee participants, the enhancement bonuses will be converted to
stock units, by dividing the amount to be deferred, plus any enhancement bonus,
by the fair market value of the Common Stock on the date the amounts are
credited to the participant's account. A stock unit is a hypothetical investment
representing one share of the Common Stock. Each stock unit represents an
unsecured right to receive one share of the Common Stock at a designated future
date.
If any cash dividends are paid on the Common Stock during the deferral
period, an amount equal to the per-share dividend will be credited with respect
to each stock unit in a participant's plan account. Those dividend equivalent
amounts will be converted to additional stock units on the dividend payment
date, based on the fair market value of the Common Stock on that date.
If a non-employee director elects to participate in this plan, the balance,
if any, in his account under the Per-Se Non-Employee Director Deferred Stock
Credit Plan will be automatically rolled over to his account under this plan. In
that case, the hypothetical number of shares of Common Stock credited to his
account under the Non-Employee Director Deferred Stock Credit Plan as of that
date will be converted to stock units on a one-for-one basis and credited to his
account under this plan.
19
Vesting of Accounts. Participants are always fully vested in the stock
units converted from deferrals of compensation, including any additional stock
units converted from dividend equivalents on such stock units, and including any
rollover account from the Per-Se Non-Employee Director Deferred Stock Credit
Plan. However, stock units that are converted from an enhancement bonus credited
to an employee participant, and any related dividend equivalent stock units,
will vest at the rate of 20% each year over a period of five years from the date
of deferral of the related compensation. If a participant's employment is
terminated for "cause" (as defined in the plan) or if he or she resigns without
"good reason" (as defined in the plan) before the enhancement bonus stock units
are vested, he or she will forfeit any such unvested stock units.
Notwithstanding that normal vesting schedule, the enhancement bonus stock units
will become fully vested on the date the employee participant terminates
employment by reason of his or her death, retirement, disability or resignation
for good reason or if he or she is terminated without cause. Such units will
also become fully vested if the participant is terminated for any reason after
the occurrence of a change in control of the Company (as defined in the plan) or
if the plan is terminated after a change in control.
Deferral and Distribution Elections. Elections to defer compensation for
any plan year must be made by a deadline established by the Compensation
Committee. The plan year for non-employee director participants is the 12-month
period between the annual meetings of stockholders. Non-employee directors must
file their deferral elections with the Compensation Committee's designee prior
to the beginning of the plan year with respect to which the compensation is to
be earned (or no later than 30 days after the director's initial term of
office). The plan year for employee participants is the calendar year. Employee
participants must file their deferral elections with the Compensation
Committee's designee no later than November 30 of each calendar year with
respect to the bonus to be earned for that year. The Compensation Committee may
establish earlier deadlines for future deferral elections.
In the deferral election, a participant must select a date to begin
receiving distributions of stock from his or her account and whether to receive
such shares in one, five or ten installments. The distribution date may begin,
at the election of the participant, on either the participant's termination of
service or an anniversary of the deferral date, which shall be not less than the
second anniversary in the case of stock units converted from deferred
compensation and not less than the fifth anniversary in the case of stock units
converted from enhancement bonuses. In the event of a participant's death, his
or her resignation without good reason or termination for cause, the
participant's vested account balance will be distributed as soon as
administratively possible in one installment, regardless of a contrary election
by the participant as to the timing and method of distribution.
A participant may change his or her election as to distribution date and/or
method of distribution for the account with respect to a plan year. However,
such new election will not be effective until one year after it is filed with
the Compensation Committee. Participants are limited to one changed election for
each separate plan year.
The Compensation Committee may, in its sole discretion, accelerate the
distribution to a participant of an amount reasonably necessary to handle a
severe financial hardship of a sudden and unexpected nature due to causes not
within the control of the participant. All such distributions will be made in
cash in a lump sum, by converting stock units to cash based on the fair market
value of the Common Stock on the business day immediately before the date of the
distribution.
At the end of the deferral period, a participant's entire vested account
will be paid in whole shares of Common Stock, with any fractional shares paid in
cash. Participants will have no rights as a stockholder until actual shares of
stock are distributed to them.
Adjustments. In the event of certain changes in the Company's capital
structure or transactions that affect the Common Stock, the Compensation
Committee will make equitable and corresponding adjustments to the stock units
in participant accounts under the plan.
Source and Limit on Shares. The shares of Common Stock to be distributed
pursuant to the plan will be shares that have been previously issued and
reacquired by or on behalf of the Company in public or private transactions.
Subject to adjustments required or permitted by the plan, the maximum number of
shares that
20
may be distributed pursuant to the plan is 600,000 shares. If any stock units
granted under the plan are forfeited by a participant, the shares of Common
Stock represented by such stock units will not count against such maximum number
of shares that may be distributed.
Funding of Benefits. Benefits under the plan will be distributed by the
Company out of the Company's general assets and no separate fund will be
established to secure such benefits. Rights of participants and their
beneficiaries under the plan are no greater than the rights of any of the
Company's unsecured general creditors. However, the Company may establish a
grantor trust to defray the obligations under the plan and, to the extent that
any payment is made from such trust to a participant or his or her beneficiary,
such payment will be in satisfaction of the Company's obligations under the
plan.
Termination and Amendment. The Board or the Compensation Committee may at
any time amend or terminate the plan without stockholder approval, but may
condition any amendment on the approval of the stockholders if such approval is
necessary or advisable with respect to tax, securities or other applicable laws,
policies or regulations. No amendment to the plan may adversely affect any
benefit that has accrued on the effective date of such amendment, without the
consent of the affected participant(s).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
Since its adoption, five executive officers (including one employee
director) have elected to participate in the plan, and three non-employee
directors are expected to participate. If the plan is approved by the
stockholders, then such participants will be credited with stock units under the
plan as shown below. Any future participation in the plan will be voluntary.
Therefore, it is not presently possible to determine the benefits or amounts
that will be received by such persons or other persons or groups pursuant to the
plan in the future.
<Table>
<Caption>
DEFERRED STOCK UNIT PLAN
-------------------------------------------
NAME AND POSITION DOLLAR VALUE(1) NUMBER OF STOCK UNITS(2)
- ----------------- --------------- ------------------------
Philip M. Pead.......................................... $219,325.00(3) 18,650.09
President and Chief Executive Officer
Chris E. Perkins........................................ $140,194.00(3) 11,921.26
Executive Vice President and
Chief Financial Officer
Karen B. Andrews........................................ $ 16,245.00 1,381.38
President of the Company's
Application Software division
William N. Dagher....................................... $ 53,373.75 4,538.58
President of the Company's
e-Health Solutions division
Frank B. Murphy......................................... $106,540.63 9,059.58
President of the Company's
Physician Services division
All Executive Officers as a Group....................... $535,678.38 45,550.88
(including the above)
All Non-Employee Directors as a Group................... $364.694.18(4) 31,011.41(4)
(assumes three participants)
All Non-Executive Employees as a Group.................. -- --
</Table>
- ---------------
(1) Reflects for each participating employee the amount of 2001 annual bonus
compensation deferred by that employee under the plan, plus an enhancement
bonus equal to $0.25 for each dollar of compensation deferred.
(2) Estimated for each participating employee based on the closing price of the
Common Stock on March 1, 2002, of $11.76 per share. If the plan is approved
by the stockholders at the Annual Meeting on May 2,
21
2002, the number of stock units credited to the participating employees will
be determined based on the closing price of the Common Stock on that date.
(3) Includes a one-time, additional enhancement bonus contribution designated by
the Compensation Committee on February 8, 2002, for the benefit of each of
Messrs. Pead and Perkins equal to $0.75 for each dollar of 2001 annual bonus
compensation deferred by them under the plan, resulting in a 100% match of
their 2001 deferral amounts.
(4) Reflects rollover of account balances from the Per-Se Non-Employee Director
Deferred Stock Credit Plan. The number of stock units is estimated based on
account balances in the Non-Employee Director Deferred Stock Credit Plan as
of March 1, 2001. The dollar value is estimated based on the closing price
of the Common Stock on March 1, 2002, of $11.76 per share. If the plan is
approved by the stockholders at the Annual Meeting on May 2, 2002, the
number of stock units credited to non-employee directors will depend on the
number of stock credits held in accounts under the Non-Employee Director
Deferred Stock Credit Plan that are rolled over to the plan on May 2, 2002,
and the dollar value of the stock units credited to non-employee directors
will depend on the closing price of the Common Stock on that date.
CERTAIN FEDERAL INCOME TAX EFFECTS
Under present federal income tax regulations, a participant receiving a
stock unit, which represents the unsecured right to receive stock in the future,
will not recognize income, and the Company will not be allowed a tax deduction,
at the time such stock unit is granted. When Common Stock is actually granted or
the participant otherwise has the right to receive such stock, the participant
will recognize ordinary income equal to the fair market value of the stock, and
the Company will be entitled to a corresponding tax deduction at that time,
subject to the limitations of Section 162(m) of the Code.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE PLAN
Approval of the plan will require the affirmative vote of the holders of a
majority of the shares of Common Stock which are represented in person or by
proxy at the Annual Meeting and entitled to vote at the meeting. Proxies will be
voted in accordance with the specifications marked thereon, and if no
specification is made, will be voted "FOR" approval of the plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE THE PLAN.
22
STOCKHOLDER PROPOSAL
(PROPOSAL 3)
The approval of the stockholder proposal described below would require the
affirmative vote of the holders of a majority of the shares of Common Stock
which are represented in person or by proxy at the Annual Meeting and entitled
to vote at the meeting.
Robert W. Walter, Esq., on behalf of the Berliner Zisser Walter & Gallegos,
P.C. 401(k) FBO Robert Walter (the "Retirement Account"), and in Mr. Walter's
capacity as both the beneficiary and trustee thereof, has submitted the proposal
set forth below for inclusion in this Proxy Statement. The Retirement Account is
a beneficial holder of 3,466 shares of the Common Stock. Mr. Walter's address is
Robert W. Walter, Esq., Berliner Zisser Walter & Gallegos, P.C., Wells Fargo
Center, Suite 4700, 1700 Lincoln Street, Denver, Colorado 80203-4547. The
stockholder proposal is as follows:
"Resolved, that the shareholders of Per-Se Technologies, Inc. (the
"Company") request that the Board of Directors adopt a policy stating that the
public accounting firm retained by our Company to provide audit services, or any
affiliated company, should not also be retained to provide non-audit services to
our Company.
Statement of Support: The role of independent auditors in ensuring the
integrity of the financial statements of public corporations is fundamentally
important to the efficient and effective operation of the financial markets. The
U.S. Securities and Exchange Commission recently stated:
Independent auditors have an important public trust. Investors must be able
to rely on issuers' financial statements. It is the auditor's opinion that
furnishes investors with critical assurance that the financial statements
have been subjected to a rigorous examination by an objective, impartial
and skilled professional, and that investors, therefore, can rely on them.
If investors do not believe that an auditor is independent of a company,
they will derive little confidence from the auditor's opinion and will be
far less likely to invest in that public company's securities. (Exchange
Act Release No. 43602, November 21, 2000; the "Auditor Independence
Release")
It is critically important to the integrity of the auditing process and the
confidence of investors that those firms performing audits for public
corporations avoid business relationships that might compromise their
independence or raise the perception of compromised judgment. At the heart of
the challenge to auditor independence is the growing level of business and
financial relationships developing between audit firms and their clients. The
Auditor Independence Release identifies these growing business relationships
that threaten auditor independence:
Accounting firms have woven an increasingly complex web of business and
financial relationships with their audit clients. The nature of the
non-audit services that accounting firms provide to their audit clients has
changed, and the revenues from these services have dramatically increased.
The growth of non-audit revenues represents a trend that has been
accelerating dramatically in the last several years, with non-audit fees for
consulting or advisory services exceeding audit fees at many companies. Our
Company is in the category of companies that pays its audit firm more for
non-audit advisory services than it does for audit services. The Company's most
recent proxy statement indicated that PricewaterhouseCoopers LLP received or
billed $477,500 for audit services, while it billed $481,355 for non-audit
services rendered.
I believe that this financial "web of business and financial relationships"
may at a minimum create the perception of a conflict of interest that could
result in a lack of owner and investor confidence in the integrity of the
Company's financial statements. As a long-term shareowner, I believe that the
best means of addressing this issue is to prohibit any audit firm retained by
our Company to perform audit services from receiving payment for any non-audit
services performed by the firm. I urge your support for this resolution designed
to protect the integrity of the Company's auditing and financial reporting
processes."
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
23
As noted above under the caption "Selection of Independent Accountants," in
June 2001, following a competitive review and request for proposal process in
which a number of nationally recognized accounting firms were requested to
participate, the Company dismissed PricewaterhouseCoopers as the Company's
principal accountants, and engaged Ernst & Young as the Company's new principal
accountants. The decision to change accountants was recommended by the Audit
Committee and approved by the Board. This change was reported in the Company's
Current Report on Form 8-K filed on June 21, 2001.
For 2000, PricewaterhouseCoopers billed the Company $477,500 for audit
services, nothing for information technology consulting, and $481,355 for other
services (most of which were for internal and compliance audit outsourcing). For
2001, PricewaterhouseCoopers billed the Company $77,527 for audit services,
nothing for information technology consulting, and $39,000 for other services.
In contrast, for 2001, Ernst & Young has billed the Company $476,974 for audit
services, nothing for information technology consulting, and $26,620 for other
services (primarily for consulting on the effects of accounting changes and
adoption of new accounting pronouncements).
The Company does not engage Ernst & Young to perform non-financial
consulting, such as information technology consulting or internal audit
outsourcing. The Company does, however, engage Ernst & Young to perform
financial consulting on a number of matters in addition to its core auditing
functions, such as on the effects of accounting changes and adoption of new
accounting pronouncements, SEC registrations, and similar services. These
engagement decisions are made only when two conditions are met. The first is a
determination by management that Ernst & Young's particular expertise, coupled
with its knowledge of the Company and the Company's management and financial
systems, provides substantial assurance of high-quality, focused, timely and
useful results. The second is a determination by the Audit Committee that the
engagement does not compromise Ernst & Young's independence in performing their
audit services.
Such engagements are in accordance with the Company's policy, as noted
above under the caption "Audit Committee Report," and as reflected in the Audit
Committee's charter, which is attached hereto as Appendix B, of prohibiting the
Company's independent auditors from being engaged to perform non-financial
consulting services such as information technology consulting and internal audit
outsourcing, and are consistent with the Company's policy of ensuring that the
independence of the Company's independent auditors is not compromised.
Having the discretion to determine the best allocation of tasks among
accounting (and other) firms is an essential component of the ability of
management, the Audit Committee and the Board to discharge their
responsibilities to the Company and its stockholders. We believe that retaining
this discretion does not in any way undermine the independence of its auditors.
Management and the Audit Committee continually monitor and evaluate the
performance of Ernst & Young in both its auditing services and its non-audit
services, the fees paid for all such services and the compatibility of the
non-audit services with the maintenance of that firm's independence. Moreover,
in many instances, such as consulting on accounting changes, adoption of new
accounting pronouncements and SEC registrations, engaging Ernst & Young is a
much more efficient and cost-effective approach than engaging other firms, which
lack Ernst & Young's knowledge of the Company.
Furthermore, in accordance with guidelines of the American Institute of
Certified Public Accountants and Ernst & Young's internal control procedures,
Ernst & Young has procedures established to ensure that its audits are conducted
in an objective and impartial manner, including the mandatory rotation of the
engagement partner, an independent concurring partner review of each audit,
periodic review by another major accounting firm of its audit practices,
involvement of qualified persons separate from the audit team for consultation
on complex accounting issues and performance of audit quality reviews.
Given the safeguards in effect, we believe there is no benefit to the
Company or its stockholders from an arbitrary limitation on the ability of
management, the Audit Committee and the Board of Directors to exercise business
judgment in the engagement of independent auditors or other outside vendors.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL,
AND YOUR PROXY WILL BE SO VOTED IF THE PROPOSAL
IS PRESENTED, UNLESS YOU SPECIFY OTHERWISE.
24
OTHER MATTERS
The minutes of the Annual Meeting of Stockholders held on May 3, 2001, will
be presented to the meeting, but it is not intended that action taken under the
proxy will constitute approval of the matters referred to in such minutes. The
Board 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.
STOCKHOLDER PROPOSALS
Other than the stockholder proposal described above, no stockholder
proposals were received for inclusion in this Proxy Statement. If a stockholder
wishes to present a proposal to be included in the proxy statement for the next
Annual Meeting of Stockholders, such proposal must be submitted in writing in
accordance with the following requirements and procedures.
Advance Notice Procedures. Under the By-laws, no business may be brought
before an annual meeting of stockholders unless it is specified in the notice of
the meeting or is otherwise brought before the meeting by or at the direction of
the Board or by a stockholder entitled to vote who has delivered notice to the
Company (containing certain information specified in the By-laws) not less than
90 days prior to the first anniversary of the preceding year's annual meeting.
These requirements are separate from and in addition to the Securities and
Exchange Commission's requirements that a stockholder must meet in order to have
a stockholder proposal included in the Company's proxy materials.
Stockholder Proposals for the 2003 Annual Meeting. Stockholders interested
in submitting a proposal for inclusion in the proxy materials for the 2003
Annual Meeting of Stockholders may do so by following the procedures prescribed
by the Securities and Exchange Commission in Rule l4a-8 under the Exchange Act.
To be eligible for inclusion, stockholder proposals must be received by the
Company's Secretary no later than December 2, 2002.
ANNUAL REPORTS
The Company's annual report to stockholders for the year ended December 31,
2001, which includes the Company's Annual Report on Form 10-K, accompanies this
Proxy Statement. The Company's Annual Report on Form 10-K includes audited
consolidated financial statements and a financial statement schedule, as filed
with the Securities and Exchange Commission, except various exhibits thereto.
The Company will provide copies of the exhibits, should they be requested by
eligible stockholders, and the Company may impose a reasonable fee for providing
such exhibits. Requests for copies of those materials should be mailed to:
Per-Se Technologies, Inc., 2840 Mt. Wilkinson Parkway, Atlanta, Georgia 30339,
Attention: Michele L. Howard, Vice President, Investor Relations and Corporate
Communications.
25
EXPENSES OF SOLICITATION
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, in certain instances, be made personally or by
telephone, facsimile or mail by one or more employees of the Company. The
Company also may reimburse brokers, banks, nominees and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy material to
their principals who are beneficial owners of the Company's Common Stock.
/s/ Paul J. Quiner
PAUL J. QUINER
Senior Vice President,
General Counsel and
Secretary
April 2, 2002
26
APPENDIX A
PER-SE TECHNOLOGIES, INC.
AUDIT COMMITTEE CHARTER
I. AUDIT COMMITTEE MISSION
The Audit Committee has oversight responsibility for the Company's
financial reporting, internal controls, and business ethics. It serves as the
interface with the Company's external and internal auditors. The key to
successful performance of its functions is independence from Company management
combined with an understanding of the Company's business and material financial
reporting and internal control policies and procedures.
II. MEMBERSHIP AND QUALIFICATIONS OF AUDIT COMMITTEE MEMBERS
A. Number of Members. The Audit Committee shall at all times contain a
minimum of three members.
B. Qualifications.
1. Independence. All Audit Committee members shall be non-management
directors of the Company. Each must be free from any relationship that
would interfere with the exercise of his or her independent judgment.
Employees, advisors, or consultants to the Company shall not be eligible
for membership on the Audit Committee.
2. Experience. Each member shall have or gain sufficient
understanding of the Company's financial reporting and internal control
policies and procedures to enable them to give consideration to material
financial reporting and control issues as they arise. At least one member
of the Committee shall have accounting or related financial management
expertise as determined by the Board of Directors.
III. AUDIT COMMITTEE MEETINGS
A. Frequency. The Audit Committee shall meet at least four times annually.
B. Time of Meetings. Meetings shall occur at the following times, among
others: prior to commencement of the annual audit, prior to completion of the
annual audit, and prior to the release of each quarterly financial report.
C. Executive Session. Each Audit Committee meeting shall include an
opportunity for an executive session held without management present.
D. Written Agendas and Minutes. Each Audit Committee meeting shall have a
written agenda, and written minutes of the meeting shall be prepared and
maintained.
E. Reporting to Board of Directors. The Audit Committee shall keep the
Board of Directors apprised of its activities and shall advise the Board in
detail of its material findings on a regular basis.
IV. DIRECT ACCESS TO ADVISORS AND INTERNAL INFORMATION
The Audit Committee shall at all times have direct access to the Company's
financial and legal advisors, including the Company's independent auditors and
outside counsel. In fulfilling its functions, the Audit Committee shall have the
right to hire counsel, public accountants, and other advisors, although such
retention would normally occur only when special circumstances arise. The Audit
Committee shall likewise have direct and unrestricted access to all relevant
internal Company information.
V. AUDIT COMMITTEE RESPONSIBILITIES
The independent auditors are ultimately accountable to the Board of
Directors and to the Audit Committee, as representatives of the stockholders,
and the Board of Directors and the Committee have the
ultimate authority and responsibility to select, evaluate, and, where
appropriate, replace the independent auditors. The following list of Audit
Committee responsibilities is illustrative only. The Audit Committee shall
discharge responsibilities in addition to those enumerated below as it deems
prudent in light of the state of the Company's financial reporting and internal
control structure and other relevant circumstances.
A. Responsibilities Regarding Outside Auditors.
1. Recommending which firm to engage as the Company's principal
independent auditors and whether to terminate that relationship.
2. Reviewing the independent auditors' compensation, proposed terms of
engagement and independence. This evaluation shall include review of a
formal written statement delineating all relationships between the
independent auditors and the Company consistent with Independence Standards
Board Standard 1, discussion with the independent auditors with respect to
any disclosed relationships, and consideration of any effect that
relationships or non-audit services provided by the independent auditors to
the Company may have on the auditors' objectivity and independence.
3. Taking or recommending that the Board take appropriate action to
ensure the independence of the independent auditors. Actions taken to
ensure the independence of the Company's independent auditors shall
include, without limitation, prohibiting the engagement of the independent
auditors to perform non-financial consulting, such as information
technology consulting, and internal audit outsourcing; however, such
actions need not include prohibiting the engagement of the independent
auditors to perform financial consulting with respect to effects of
accounting changes and adoption of new accounting pronouncements, employee
benefit plans audits, SEC registrations, audits of statutory filings of
foreign subsidiaries, technology audit and security services, tax
compliance and planning, due diligence reviews, and similar services,
provided that all such non-audit services shall be monitored to ensure that
such work does not compromise the independent auditors' independence in
performing their audit services.
4. Serving as a channel of communication between the independent
auditors and the Board of Directors.
5. Reviewing the results of each independent audit, including any
qualifications in the independent auditors' opinion, and any related
management letter, and requiring a review by the independent auditors
pursuant to SAS 71 of the Company's quarterly financial statements and
reviewing the results of such review with the independent auditors prior to
public announcement of financial results for the quarter.
6. Reviewing the Company's annual financial statements and any
material disputes which have arisen between management and the independent
auditors in connection with the preparation of those financial statements.
7. Reviewing the Statements of Adjustments Passed, if any, prepared by
the independent auditors in connection with their review of the Company's
financial statements.
8. Periodic meetings with the independent auditors, in which the
following subject areas, along with such other subject areas as the Audit
Committee deems appropriate, should be discussed at least once each year.
a. What are the Company's primary internal control risks and areas
of financial reporting weaknesses, and how they can be improved.
b. Whether the independent auditors have noticed any end of the
year or unusually large transactions, which require further
investigation.
c. Whether the independent auditors have had any material
disagreement with management regarding financial reporting or internal
control matters.
d. Whether the independent auditors have had the full cooperation
of management in connection with the audit.
e. The quality of the Company's accounting principles as applied in
its financial reporting.
A-2
B. Responsibilities Regarding Company Management.
1. Ascertaining from senior management the Company's primary business
and financial exposure risks.
2. Reviewing senior management's responses to the recommendations of
the independent and internal auditors.
3. Periodic meetings with senior management in which the following
matters should be discussed at least annually.
a. Company budgets and forecasts.
b. Company compliance with internal codes of ethics and other
internal procedures.
c. Regulatory compliance.
C. Responsibility Regarding Internal Auditor.
1. To oversee the establishment of an internal audit function either
at the Company or through some independent third party and the retention of
qualified personnel to staff and manage such department or the retention of
a qualified third party to provide internal audit services.
2. Ascertaining the nature of and reviewing the internal audit plan.
3. Ascertaining appropriate staffing levels or service levels for the
internal audit function.
4. Reviewing the appointment and replacement of the senior auditing
executive or the provider of internal audit services, as appropriate.
5. Serving as a channel of communication between the internal auditors
and the Board.
6. Regular meetings with the internal auditing staff, in which the
following subject areas, along with such other subject areas, as the Audit
Committee deems appropriate, should be discussed.
a. What are the strengths and weaknesses of the Company's internal
financial controls.
b. What efforts have been taken to uncover errors or
irregularities, and what has been the result of those efforts.
D. Responsibilities Regarding Disclosure.
1. To prepare a report from the Committee, such report to include all
information required by federal securities laws and regulations, as in
effect from time to time, for inclusion in the Company's proxy statements,
commencing no later than the first proxy statement with respect to a
stockholder vote occurring after December 31, 2001.
2. To review at least annually the Charter of the Committee, making
such amendments and modifications as it deems appropriate from time to
time, and to file a copy of the then-current Committee Charter as an
appendix to the Company's proxy statement at least once every three years.
A-3
APPENDIX B
PER-SE TECHNOLOGIES, INC.
DEFERRED STOCK UNIT PLAN
Effective as of October 1, 2001
PER-SE TECHNOLOGIES, INC.
DEFERRED STOCK UNIT PLAN
Per-Se Technologies, Inc. ("Per-Se") hereby establishes the Per-Se
Technologies, Inc. Deferred Stock Unit Plan (the "Plan") effective as of October
1, 2001, subject to approval of the Plan by the stockholders of Per-Se at the
2002 Annual Meeting of Stockholders. Per-Se intends for this Plan to provide its
Non-Employee Directors (as that term is defined in Article I) and a select group
of key employees of the Company (as that term is defined in Article I) with an
opportunity to defer income in consideration of the valuable services provided
by such persons to the Company and to further align the interests of such
persons with those of the Company's stockholders by encouraging ownership of
Per-Se's common stock. The Company intends that the Plan shall not be treated as
a "funded" plan for purposes of either the Code or the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
ARTICLE I
DEFINITIONS
Defined terms used in this Plan shall have the meanings set forth below:
1.01 Account
"Account" means the memorandum account maintained for each Participant to
which shall be credited all Deferred Amounts elected by a Participant, all
Enhancement Bonus made on behalf of a Participant, and all dividend credits with
respect to Stock Units in the Account, and other adjustments thereto.
1.02 Affiliated Entity
"Affiliated Entity" means any legal entity that is treated as a single
employer with Per-Se pursuant to Code sections 414(b), 414(c), 414(m) or 414(o).
1.03 Board
"Board" means the Board of Directors of Per-Se.
1.04 Cause
"Cause" as a reason for an employee Participant's termination of employment
shall have the meaning assigned such term in the employment agreement, if any,
between such Participant and the Company or an affiliated company, provided,
however that if there is no such employment agreement in which such term is
defined, "Cause" shall mean any of the following acts by the Participant, as
determined by the Committee: (i) the Participant materially breaches any of the
terms or conditions set forth in an agreement between the Company and the
Participant, (ii) the Participant commits an act materially detrimental to the
business or reputation of the Company; or (iii) the Participant commits or is
convicted of any crime involving fraud, deceit or moral turpitude.
1.05 Change in Control
"Change in Control" means and includes the occurrence of any one or more of
the following events:
(i) a consolidation or merger of Per-Se with or into any other
corporation, or any other entity or person, other than a wholly-owned
subsidiary of Per-Se, excluding any transaction in which the shares of
Per-Se's common stock outstanding immediately prior to any such
consolidation or merger represents immediately thereafter more than 50% of
the combined voting power of the resulting entity after the transaction;
(ii) any corporate reorganization, including an exchange offer, in
which Per-Se shall not be the continuing or surviving entity resulting from
such reorganization, excluding any transaction in which the shares of
Per-Se's common stock outstanding immediately prior to any such
reorganization represents immediately thereafter more than 50% of the
combined voting power of the resulting entity after the transaction; or
B-2
(iii) the sale of a substantial portion of Per-Se's assets, which
shall be deemed to occur on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
persons) assets from Per-Se that (a) have a total fair market value equal
to more than 50% of the total fair market value of all the assets of Per-Se
immediately prior to such acquisition or acquisitions, or (b) represents a
majority of the common stock of any (1) subsidiary of Per-Se, the revenues
of which, in the most recent fiscal year, represent more than 75% of the
consolidated gross revenues of Per-Se and its subsidiaries. Notwithstanding
the foregoing, a transfer of assets or common stock in a subsidiary by
Per-Se will not be treated as a sale of a substantial portion of Per-Se's
assets if the assets are transferred to an entity, 50% or more of the total
value or voting power of which is owned, directly or indirectly, by Per-Se.
1.06 Code
"Code" means the Internal Revenue Code of 1986, as amended.
1.07 Committee
"Committee" means the Compensation Committee of the Board.
1.08 Company
"Company" means (i) Per-Se, and (ii) any Affiliated Entity that, with
approval of the Board, has adopted the Plan.
1.09 Compensation
"Compensation" in the case of a Non-Employee Director means the director's
committee, meeting and annual retainer fees otherwise payable to such director
during his current term as a director. "Compensation" in the case of an employee
Participant means incentive compensation payable under the Per-Se Technologies
2001 Incentive Plan or any successor annual incentive compensation plan or
plans. The Committee may from time to time designate other forms of remuneration
that are available for deferral into the Plan.
1.10 Deferred Amounts
"Deferred Amounts" means the amount of a Participant's Compensation that he
elects to defer and have allocated to his Account pursuant to Section 3.01.
1.11 Deferred Amount Stock Units
"Deferred Amount Stock Units" means Stock Units credited to a Participant's
Account that result from (i) the conversion to Stock Units of any Deferred
Amounts in accordance with Section 4.01, or (ii) the conversion to additional
Stock Units of dividend equivalents payable with respect to such Deferred Amount
Stock Units pursuant to Section 4.02.
1.12 Disability
"Disability" means the mental or physical incapacity or disability of a
Participant that renders him unable to perform his duties to the Company, as
reasonably determined by the Committee. The Committee may require such medical
or other evidence as it deems necessary to judge the nature and permanency of
the Participant's condition. A Participant's inability adequately to perform
such services for a period of 60 consecutive days will be conclusive evidence of
such mental or physical incapacity or disability, unless such inability
adequately to perform such services is pursuant to a mental or physical
incapacity or disability covered by the Family Medical Leave Act, in which case
such 60-day period shall be extended to a one hundred and 120-day period.
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1.13 Election Agreement
"Election Agreement" means an application for participation in the Plan,
execution of which by a Participant is required under Article III for the
Participant to elect Deferred Amounts.
1.14 Enhancement Bonus
"Enhancement Bonus" means the allocations to an employee Participant's
Account made pursuant to Sections 3.02 and 4.01.
1.15 Enhancement Bonus Stock Units
"Enhancement Bonus Stock Units" means Stock Units credited to an employee
Participant's Account that result from (i) the conversion to Stock Units of any
Enhancement Bonus in accordance with Section 4.01, or (ii) the conversion to
additional Stock Units of dividend equivalents payable with respect to such
Enhancement Bonus Stock Units pursuant to Section 4.02.
1.16 Fair Market Value
"Fair Market Value", on any date, means the average closing price, for the
five business days prior to the date for which the determination is being made,
of a share of Stock on the Nasdaq Stock Market, or on the principal national
securities exchange on which such shares are listed, or in the event such shares
are not listed, the value established by the Committee in good faith.
1.17 Good Reason
"Good Reason" for a Participant's termination of employment shall have the
meaning assigned such term in the employment agreement, if any, between such
Participant and the Company or an affiliated company, provided, however that if
there is no such employment agreement in which such term is defined, "Good
Reason" shall mean any of the following acts by the Company without the consent
of the Participant: (i) a reduction of greater than 10% in the Participant's
annual base salary; (ii) a change in the Participant's work location to a work
location more than 50 miles from his existing work location, except for required
travel on the Company's business to an extent consistent with the Participant's
then current business travel obligations; (iii) an assignment to any duties
inconsistent in any material adverse respect with the Participant's current
position, duties or responsibilities, other than an insubstantial and
inadvertent act that is remedied by the Company promptly after receipt of notice
thereof given by the Participant; or (iv) the failure by the Company to continue
any material benefit or compensation plan in which the Participant is
participating unless the Participant is provided with comparable benefits.
1.18 Non-Employee Director
"Non-Employee Director" means any member of the Board who is not a common
law employee of the Company or any other affiliated entity of Per-Se.
1.19 Non-Employee Director Deferred Stock Credit Plan
"Non-Employee Director Deferred Stock Credit Plan" means the Non-Employee
Director Deferred Stock Credit Plan maintained by Per-Se, effective as of
November 19, 1997, as amended.
1.20 Participant
"Participant" means any Non-Employee Director who has elected to
participate in the Plan and any eligible employee selected to participate in the
Plan pursuant to Section 2.01 and who has elected to participate in the Plan.
B-4
1.21 Plan
"Plan" means this Per-Se Technologies, Inc. Deferred Stock Unit Plan, as
amended from time to time.
1.22 Plan Year
"Plan Year" means each annual period with respect to which Compensation may
be earned. The Plan Year shall be the calendar year with respect to employee
Participants, and shall be the approximate twelve-month periods between annual
meetings of the stockholders of Per-Se with respect to Participants who are
Non-Employee Directors.
1.23 Retirement
"Retirement" of an employee Participant means his termination of employment
with the Company or an Affiliated Entity after attaining any normal or early
retirement age specified in any pension, profit sharing or other retirement
program sponsored by the Company or such Affiliated Entity, or, in the event of
the inapplicability thereof with respect to the person in question, as
determined by the Committee in its reasonable judgment. "Retirement" of a
Non-Employee Director means his retirement from the Board after having attained
the mandatory retirement age for directors, as may be applicable from time to
time, or, if there is no such mandatory retirement age, as determined by the
Committee in its reasonable judgment.
1.24 Stock
"Stock" means the $0.01 par value common stock of Per-Se.
1.25 Stock Units
"Stock Units" means investment units, each of which is deemed to be
equivalent to one share of Stock. Stock Units shall include the "Deferred Amount
Stock Units" and the "Enhancement Bonus Stock Units."
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility and Participation
Non-Employee Directors are automatically eligible to participate in the
Plan. The Committee shall from time to time in its sole discretion select those
employees of the Company who are eligible to participate in the Plan from those
employees who are among a select group of key employees.
2.02 Election to Participate
In order to participate in the Plan, Participants shall complete the
election procedure specified by the Committee. The election procedure may
include form(s) for the Participant to (a) designate his Beneficiary (pursuant
to Article V), (b) designate Deferred Amounts by entering into an Election
Agreement with the Company (pursuant to Article III), (c) select a payment
option and date for the eventual distribution of his Account (pursuant to
Article III), and (d) provide such other information as the Committee may
reasonably require.
2.03 Failure of Eligibility
The Committee shall have the authority to determine that an employee
Participant is no longer eligible to participate in the Plan. No Enhancement
Bonus shall be made, no Deferred Amounts shall be withheld from a Participant's
Compensation, and no dividend amounts shall be credited to a Participant's
Account after he ceases to be eligible to participate in the Plan. The
determination of the Committee with respect to the termination of participation
in the Plan shall be final and binding on all parties affected thereby. Any
benefits accrued hereunder, however, at the time the Participant becomes
ineligible to continue participation, shall be distributable in accordance with
the provisions of the Plan.
B-5
ARTICLE III
CONTRIBUTION DEFERRALS
3.01 Participant Deferrals
(a) Elections to Defer. A Participant may elect to defer Compensation by
filing the appropriate Election Agreement with the Committee's designee. A
Non-Employee Director may elect to defer up to 100% of his Compensation, in 25%
increments. An employee Participant may elect to defer up to 50% of his eligible
Compensation, in 1% increments. Deferred Amounts shall be deducted through
payroll withholding from the Participant's cash Compensation payable by the
Company. Deferred Amounts shall be credited to the Participant's Account in
accordance with Article IV.
(b) Initial Enrollment. When a person first becomes eligible to
participate in the Plan, pursuant to Section 2.01, the Committee's designee
shall provide him with an election form, which, when properly completed and
timely returned to the Committee's designee shall constitute an Election
Agreement. The Election Agreement shall be effective immediately upon receipt by
the Committee's designee; provided, however, that (i) in the case of
Non-Employee Directors, the Election Agreements relating to any Compensation
must be completed and returned prior to first day of the Plan Year with respect
to which such Compensation will be earned (or in the case of a Non-Employee
Director's initial term of office, no later than 30 days after such initial term
has begun), and (ii) in the case of employee Participants, Election Agreements
must be completed and returned not less than 30 days in advance of the end of
the Plan Year for which such Compensation will be earned. The Committee from
time to time may impose any earlier deadlines for the submission of Election
Agreements as it deems appropriate or advisable.
In the Election Agreement, the Participant shall indicate the beginning
date for distribution of his Account for such Plan Year. The selected date may
be either the date of the Participant's termination of service or an anniversary
of the date of deferral, which shall be at least the second anniversary in the
case of Deferred Amount Stock Units and at least the fifth anniversary in the
case of Enhancement Bonus Stock Units. The Election Agreement shall also
indicate one of the following methods of distribution: (i) one installment of
the full vested balance of Stock Units in the Account as of the distribution
date, or (ii) five or ten annual installments beginning on the distribution
date.
(c) Continuing Elections. A Participant may enter into a separate Election
Agreement for each Plan Year. An Election Agreement filed with respect to one
Plan Year shall remain effective for all following Plan Years during the term of
the Plan, unless (i) a new Election Agreement with respect to a subsequent Plan
Year is timely filed with the Committee's designee, (ii) the Committee's
designee is notified in writing that the Participant does not which participate
in the Plan for a subsequent Plan Year, or (iii) the Participant becomes
ineligible to participate in the Plan.
(d) Rollover Deferrals from the Non-Employee Director Deferred Stock Credit
Plan. If a Non-Employee Director elects to participate in this Plan, the
balance, if any, in such Non-Employee Director's account under the Non-Employee
Director Deferred Stock Credit Plan will be automatically rolled over to his
Account under this Plan (the "Rollover Account"). In that case, the hypothetical
number of shares of Stock credited to his account under the Non-Employee
Director Deferred Stock Credit Plan as of that date will be converted to Stock
Units on a one-for-one basis and credited to his Rollover Account under this
Plan. The Non-Employee Director's most recent election under the Non-Employee
Director Deferred Stock Credit Plan as to the date for payment and method of
payment (single distribution or installments) shall continue to apply with
respect to such Rollover Account unless changed by the Non-Employee Director in
accordance with Section 3.01(e) below.
(e) Changing a Prior Election. A Participant may, by filing a new Election
Agreement with the Committee's designee, change his election as to distribution
date and/or method of distribution for the Account with respect to a Plan Year.
Such new Election Agreement shall not be effective until one year after it is
properly filed with the Committee's designee. Participants are limited to one
changed Election Agreement for each separate Plan Year and one changed Election
Agreement for the Participant's Rollover Account.
B-6
(f) Participant Becomes Ineligible. A Participant's Election Agreement
shall be canceled immediately when he becomes ineligible to participate in the
Plan.
3.02 Enhancement Bonus
The Company shall grant to an employee Participant (but not to a
participant who is a Non-Employee Director) an Enhancement Bonus equal to 25% of
the Participant's Deferred Amount for a Plan Year. The Committee may from time
to time in its sole discretion designate such other Enhancement Bonus
contributions as the Committee deems appropriate. The Enhancement Bonus shall be
converted to Stock Units and credited to the Participant's Account as specified
in Article IV.
ARTICLE IV
Stock Units
4.01 Conversion of Deferred Amounts and Enhancement Bonus to Stock Units
All Deferred Amounts and Enhancement Bonus shall be converted to Stock
Units and credited to Participants' Accounts on the later of (i) the date that
the Deferred Amounts are deducted, through payroll withholding, from the
Participant's cash Compensation payable by the Company, or (ii) the date of the
annual meeting of stockholders of Per-Se at which the Plan is approved by the
stockholders. The number of Stock Units to be credited shall be determined by
dividing the Deferred Amount and Enhancement Bonus by the Fair Market Value of
one share of Stock as of the date on which the amount is credited to the
Participant's Account.
4.02 Conversion of Dividend Equivalents to Stock Units
Participants' Accounts will be credited with additional Stock Units as of
the payment date of any cash dividends declared on the Stock. The number of
additional Stock Units credited to an Account shall be determined by dividing
(i) the product of the per-share dividend amount times the number of Stock Units
credited to the Account as of the record date for such dividend, by (ii) the
Fair Market Value of one share of Stock as of the dividend payment date.
Non-cash dividends shall not be converted to Stock Units or credited to
Accounts, except as provided in Section 8.08 hereof. For purposes of the Plan,
the deferral date and the vesting date of Stock Units converted from dividend
equivalents shall be deemed to the same as the applicable deferral date and
vesting date of the underlying Stock Units with respect to which such dividend
equivalents were credited.
4.03 Voting
Participants shall have no right to vote any Stock Units prior to the date
on which such Stock Units are subject to distribution and shares of Stock are
distributed therefor.
4.04 No Other Investment Alternatives
Nothing contained in this Plan shall be construed to give any Participant
any power or control to make investment decisions with respect to Deferred
Amounts other than the conversion to Stock Units as provided in this Article IV.
Nothing contained in the Plan shall be construed to require the Company or the
Committee to fund any Participant's Account.
ARTICLE V
DISTRIBUTIONS
5.01 Vesting
(a) A Participant shall be fully vested at all times in the Deferred Amount
Stock Units credited to his Account.
B-7
(b) Except as provided below in this Article V, an employee Participant
shall vest in the Enhancement Bonus Stock Units credited to his Account as
follows: 20% on each of the first five anniversaries of the date on which such
Enhancement Bonus Stock Units were credited to his Account, except that Stock
Units converted from dividend equivalents shall vest at the same time as the
corresponding Enhancement Bonus Stock Units vest.
(c) If an employee Participant is terminated without Cause or if his
employment is terminated due to his death, Disability, Retirement or resignation
for Good Reason, then any unvested portion of his Account shall be immediately
vested.
(d) If an employee Participant is terminated for Cause or resigns without
Good Reason, then no further vesting of unvested portions of his Account shall
occur and unvested portions of his Account shall be forfeited immediately.
(e) The effect of this Section 5.01 shall be limited to determining the
consequences of a termination of service and nothing herein shall restrict or
otherwise interfere with Company's discretion with respect to termination of any
employee or director.
(f) Change in Control. If the Plan is terminated after a Change in
Control, all Participants shall thereupon become 100% vested in their Accounts.
5.02 Distributions During Service
(a) Timing. The timing of the distribution shall be pursuant to the terms
of the Participant's applicable Election Agreement(s). Except as otherwise
provided in Section 5.03, distributions shall begin at a date designated by the
Participant in the Election Agreement.
(b) Form of Distribution. The Participant's entire vested Account shall be
paid in whole shares of Stock, with any fractional shares paid in cash,
delivered in the number of installments designated pursuant to the Election
Agreement(s), except as otherwise provided in Section 5.03.
5.03 Distributions After Service
(a) Death, Resignation without Good Reason or Termination for
Cause. Regardless of the distribution election in the Participant's Election
Agreement(s), the Participant's entire vested Account shall be distributed as
soon as administratively feasible after the Participant's death, resignation
without Good Reason or termination for Cause. The Account shall be paid in whole
shares of Stock, with any fractional shares paid in cash, delivered in one
installment.
(b) Termination for Any Other Reason. In the case of the Participant's
termination as a director or employee for any other reason (including, for
example, Retirement, Disability, termination without Cause, resignation for Good
Reason, or expiration of term in office as a director), the timing of the
distribution shall be pursuant to the terms of the Participant's applicable
Election Agreement(s). The Account shall be paid in whole shares of Stock, with
any fractional shares paid in cash, delivered in the number of installments
designated in the applicable Election Agreement(s).
(c) Change in Control. Upon the termination of a Participant for any
reason after a Change in Control, the Participant's entire vested Account shall
be distributed within three months after the Participant terminates service with
the Company. The Account shall be paid in whole shares of Stock, with any
fractional shares paid in cash, delivered in one installment.
5.04 Distributions After Participant's Death
(a) Each Participant shall designate one or more persons, trusts or other
entities as his beneficiary (the "Beneficiary") to receive any amounts
distributable under the Plan at the time of the Participant's death. In the
absence of an effective beneficiary designation as to part or all of a
Participant's interest in the Plan, such amount shall be distributed to the
Participant's surviving spouse, if any, otherwise to the personal representative
of the Participant's estate.
B-8
(b) A beneficiary designation may be changed by the Participant at any time
and without the consent of any previously designated Beneficiary. If a
Participant has designated his spouse as a Beneficiary or as a contingent
Beneficiary, and the Participant and that spouse subsequently divorce, then such
beneficiary designation shall be void and of no effect with respect to such
spouse on the day such divorce is final.
(c) When a Participant dies, his remaining Account balance shall be
distributed to his Beneficiary as soon as administratively possible after his
death, regardless of the payment schedule the Participant elected, and
regardless of whether installment payments had begun. Such distribution shall be
paid in whole shares of Stock, with any fractional shares paid in cash.
5.05 Financial Hardship
The Committee may, in its sole discretion, accelerate the distribution to a
Participant of an amount reasonably necessary to handle a severe financial
hardship of a sudden and unexpected nature due to causes not within the control
of the Participant. The determination of whether an unforeseeable hardship has
occurred, as well as the application of the facts making such determination,
shall be made by the Committee in its sole and absolute discretion and shall not
be overturned unless such decision is arbitrary and capricious. All financial
hardship distributions shall be made in cash in a lump sum, by the conversion of
Stock Units to cash based on the Fair Market Value of the Stock on the business
day immediately preceding the date of the distribution.
5.06 Withholding
At the time of deferral or distribution, the Company shall withhold any
taxes or other amounts that are required to be withheld pursuant to any
applicable law. The Committee may direct the Company to withhold additional
amounts from any payment under the Plan, either because the Participant so
requested or to repay the Participant's debt or obligation to the Company.
ARTICLE VI
ADMINISTRATION
6.01 The Committee -- Plan Administrator
The Plan shall be administered by the Committee or, at the discretion of
the Board from time to time, the Plan may be administered by the Board. During
any time that the Board is acting as administrator of the Plan, it shall have
all the powers of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 6.01) shall include the Board.
6.02 Committee Powers
The Committee shall have all discretion and powers necessary to administer
the Plan, including, but not by way of limitation, full discretion and power to
interpret the Plan, to determine the eligibility, status and rights of all
persons under the Plan and, in general, to decide any dispute. The Committee
shall direct the Company concerning distributions in accordance with the
provisions of the Plan. The Committee's designee shall maintain all Plan
records.
6.03 Organization of Committee
The Committee shall adopt such rules as it deems desirable for the conduct
of its affairs and for the administration of the Plan. It may appoint designees
and/or agents (who need not be members of the Committee) to whom it may delegate
such powers as it deems appropriate, except that the Committee shall determine
any dispute. The Committee may make its determinations with or without meetings.
The Committee may authorize one or more of its members, designees or agents to
sign instructions, notices and determinations on its behalf. The action of a
majority of the Committee's members shall constitute the action of the
Committee.
B-9
6.04 Agent for Process
Per-Se's General Counsel and Corporate Secretary shall be the agent of the
Plan for service of all process.
6.05 Determination of Committee Final
The decisions made by the Committee shall be final and conclusive on all
persons.
ARTICLE VII
AMENDMENT AND TERMINATION
7.01 Amendment
The Board or the Committee may, at any time and from time to time, amend,
modify or terminate the Plan without stockholder approval; provided, however,
that the Board or Committee may condition any amendment or modification on the
approval of stockholders of the Company if such approval is necessary or deemed
advisable with respect to tax, securities or other applicable laws, policies or
regulations. No amendment to the Plan shall adversely affect any benefit that
has accrued on the effective date of such amendment, without the consent of the
affected Participant(s).
Each amendment of the Plan shall be in writing and shall be approved by the
Committee and/or the Board. An officer of Per-Se to whom the Committee and/or
the Board has delegated the authority to execute Plan amendments shall execute
each such amendment.
7.02 Successors and Assigns; Termination of Plan
The Plan is binding upon Per-Se and its successors and assigns. The Plan
shall continue in effect from year to year unless and until terminated by the
Board or the Committee. Any such termination shall operate only prospectively
and shall not reduce any vested benefit that has accrued on the effective date
of such termination.
7.03 Change in Control
The Plan shall not be automatically terminated by a Change in Control, but
the Plan shall be continued thereafter by such successor organization. All
rights to amend, modify, suspend or terminate the Plan shall be transferred to
the successor organization, effective as of the date of the Change in Control.
ARTICLE VIII
MISCELLANEOUS
8.01 Stock Subject to the Plan
All benefits payable under the Plan shall be distributed in whole shares of
Stock, with any fractional shares paid in cash. The shares of Stock to be
distributed pursuant to the Plan shall be shares that have been previously
issued and reacquired by the Company in public or private transactions. Subject
to adjustment in accordance with the provisions of Section 8.08, the maximum
number of shares of Stock that may be distributed pursuant to the Plan shall be
600,000 shares. In the event that any Stock Units granted under the Plan are
forfeited by a Participant, the shares of Stock represented thereby shall not
count against such maximum number of shares of Stock that may be distributed
under the Plan.
8.02 Funding of Benefits -- No Fiduciary Relationship
Benefits shall be distributed by the Company out of its general assets and
no separate fund shall be established to secure payment. Nothing contained in
the Plan shall be deemed to create any fiduciary relationship between the
Company and the Participants. Notwithstanding anything herein to the contrary,
to the extent that any person acquires a right to receive benefits under the
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Company. Notwithstanding the foregoing, the
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Company may establish a grantor trust for the purpose of helping to defray the
obligations under the Plan and to the extent that any payment is made from any
such trust to a Participant or Beneficiary, such payment will be in satisfaction
of the Company's obligations hereunder.
8.03 Right to Terminate Employment or Service as a Director
The Company may terminate the employment or directorship of any Participant
as freely and with the same effect as if the Plan were not in existence.
8.04 Inalienability of Benefits
No Participant shall have the right to assign, transfer, hypothecate,
encumber or anticipate his interest in any benefits under the Plan, nor shall
the benefits under the Plan be subject to any legal process to levy upon or
attach the benefits for payment for any claim against the Participant or his
spouse or Beneficiary. If, notwithstanding the foregoing provision, any
Participant's benefits are garnished or attached by the order of any court, the
Company may bring an action for declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to be distributed
pursuant to the Plan. During the pendency of the action, any benefits that
become distributable shall be paid into the court, as they become distributable,
to be distributed by the court to the recipient it deems proper at the
conclusion of the action.
8.05 Claims Procedure
(a) Notice of Claim. Any Participant or Beneficiary, or the duly
authorized representative of a Participant or Beneficiary, may file with the
Committee a claim for a Plan benefit. Such a claim must be in writing on a form
provided by the Committee and must be delivered in person or by mail, postage
prepaid, to the Committee c/o Per-Se's General Counsel and Corporate Secretary,
as agent for the Committee. Within 90 days after the receipt of such a claim,
the Committee shall send to the claimant, by mail, postage prepaid, a notice of
the granting or the denying, in whole or in part, of such claim, unless special
circumstances require an extension of time for processing the claim. In no event
may the extension exceed 90 days from the end of the initial period. If such an
extension is necessary, the claimant will be given a written notice to this
effect prior to the expiration of the initial 90 day period. The Committee shall
have full discretion to deny or grant a claim in whole or in part in accordance
with the terms of the plan. If notice of the denial of a claim is not furnished
in accordance with this Section, the claim shall be denied and the claimant
shall be permitted to exercise his or her right to review pursuant to Sections
8.05(c) and 8.05(d) of the Plan, as applicable.
(b) Action on Claim. The Committee shall provide to every claimant who is
denied a claim for benefits a written notice setting forth, in a manner
calculated to be understood by the claimant:
(i) The specific reason or reasons for the denial;
(ii) A specific reference to the pertinent Plan provisions on which
the denial is based;
(iii) A description of any additional material or information
necessary of the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(iv) An explanation of the Plan's claim review procedure.
(c) Review of Denial. Within 60 days after the receipt by a claimant of
written notification of the denial (in whole or in part) of a claim, the
claimant or the claimant's duly authorized representative, upon written
application to the Committee, delivered in person or by certified mail, postage
prepaid, may review pertinent documents and may submit to the Committee, in
writing, issues and comments concerning the claim.
(d) Decision on Review. Upon the Committee's receipt of a notice of a
request for review, the Committee shall make a prompt decision on the review and
shall communicate the decision on review in writing to the claimant. The
decision on review shall be written in a manner calculated to be understood by
the claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based. The
decision on review shall be made not later than 60 days after the Committee's
receipt of a request for a review, unless special circumstances require an
extension of time for
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processing, in which case a decision shall be rendered not later than 120 days
after receipt of the request for review. If an extension is necessary, the
claimant shall be given written notice of the extension by the Committee prior
to the expiration of the initial 60-day period. If notice of the decision on
review is not furnished in accordance with this Section, the claim shall be
denied on review.
8.06 Disposition of Unclaimed Distributions
Each Participant must file with the Company from time to time in writing
his post office address and each change of post office address. Any
communication, statement or notice addressed to a Participant at his last post
office address on file with the Company, or if no address is filed with the
Company, then at his last post office address as shown on the Company's records,
will be binding on the Participant and his Beneficiary for all purposes of the
Plan. The Company shall not be required to search for or locate a Participant or
his Beneficiary. Whenever the Committee cannot, within a reasonable time after
payments are to commence, locate any person to or for the benefit of whom such
payments are to be made, after making a reasonable effort to locate such person,
the Committee may direct that the payment and any remaining payments otherwise
due to the Participant be cancelled on the records of the Plan, except that in
the event the Participant later notifies the Committee of his whereabouts and
requests the payments due to him under the Plan, the Company shall re-credit the
Participant's account and provide for payment of the re-credited amount to the
Participant as soon as administratively feasible.
8.07 Distributions Due Infants or Incompetents
If any person entitled to a distribution under the Plan is an infant, or if
the Committee determines that any such person is incompetent by reason of
physical or mental disability, whether or not legally adjudicated an
incompetent, the Committee shall have the power to cause the distributions
becoming due to such person to be made to another for his benefit, without
responsibility of the Committee to see to the application of such distributions.
Distributions made pursuant to such power shall operate as a complete discharge
of the Company and the Committee.
8.08 Equitable Adjustments
In the event of an increase or reduction in the number of shares of Stock,
or any change (including, but not limited to, a change in value) in the shares
of Stock or exchange of shares of Stock for a different number or kind of shares
or other securities of Per-Se, by reason of a stock dividend, stock split,
combination or exchange of shares, reclassification, recapitalization, merger,
consolidation, reorganization, or the distribution of property of Per-Se
(including interests in subsidiaries) to stockholders of record pursuant to
spin-offs, split-ups, the issuance of warrants or other rights or debentures, or
extraordinary dividends, or otherwise, the Committee will adjust the number of
Stock Units credited to a Participant's Account under the Plan in the same
manner as a share of Stock is adjusted. In the event that the change of
capitalization involves the issuance of cash, securities or property to the
holders of Stock of record, an amount equivalent to the cash and the fair market
value of the property and securities distributed with respect to a share of
Stock will be credited to each Participant's Account for each Stock Unit held in
the Account as of the record date for such distribution. All such amounts shall
be converted to additional Stock Units as of the date of such distribution. The
Committee may make such other equitable adjustments to outstanding Accounts,
whether or not in pay status, as it shall determines to be equitable.
8.09 Use and Form of Words
When any words are used herein in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and vice versa. Whenever any words are used herein in
the singular form, they shall be construed as though they were also used in the
plural form in all cases where they would so apply, and vice versa.
8.10 Headings
Headings of Articles and Sections are inserted solely for convenience and
reference, and constitute no part of the Plan.
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8.11 Governing Law
The Plan and all Election Agreements shall be construed in accordance with
the Code and, to the extent applicable, the laws of the State of Georgia
excluding any conflicts-of-law provisions.
The foregoing is hereby acknowledged as being the Per-Se Technologies, Inc.
Deferred Stock Unit Plan, as adopted by the Board of Directors of Per-Se on
December 6, 2001, to be effective as of October 1, 2001, subject to approval by
the stockholders of Per-Se at the 2002 Annual Meeting of Stockholders.
<Table>
ATTEST: PER-SE TECHNOLOGIES, INC.
/s/ PAUL J. QUINER /s/ PHILIP M. PEAD
- ---------------------------------------------- -------------------------------------------
Paul J. Quiner Philip M. Pead
Corporate Secretary President and Chief Executive Officer
</Table>
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PROXY PER-SE TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 2, 2002
The undersigned hereby appoints PHILIP M. PEAD and CHRIS E. PERKINS 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 stock of Per-Se Technologies,
Inc. which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Stockholders to be held at 10:00 a.m. on Thursday, May 2,
2002, at the Renaissance Waverly Hotel, 2450 Galleria Parkway, Atlanta, Georgia
30339, and at any adjournment thereof, upon the matters described in the
accompanying Notice of Annual Meeting of Stockholders 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 or any adjournment thereof.
ELECTION OF DIRECTORS
<Table>
1. Directors recommend a vote FOR election of the following seven (7) nominees:
[ ] FOR ALL NOMINEES
01 -- Stephen A. George, M.D.
02 -- David R. Holbrooke, M.D.
[ ] WITHHOLD ALL NOMINEES
03 -- Craig Macnab
04 -- David E. McDowell
[ ] WITHHOLD AUTHORITY TO VOTE
05 -- Philip M. Pead
FOR AN INDIVIDUAL NOMINEE. WRITE
06 -- John C. Pope
NUMBER(S) OF NOMINEE(S) BELOW:
07 -- C. Christopher Trower
-----------------------------------
Use Number(s) Only
</Table>
(Continued, and to be signed, on the other side)
(Continued from other side)
VOTE ON PROPOSALS -- Directors recommend a vote FOR Proposal 2 and AGAINST
Proposal 3.
2. To approve the Company's Deferred Stock Unit Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the stockholder proposal relating to independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED ON THE
REVERSE SIDE; FOR PROPOSAL 2; AGAINST PROPOSAL 3; AND ACCORDING TO THE
DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Date: -----------------, 2002
------------------------------
Please sign exactly as your
name or names appear hereon.
For more than one owner as
shown above, each should sign.
When signing in a fiduciary or
representative capacity,
please give full title. If
this proxy is submitted by a
corporation, it should be
executed in the full corporate
name by a duly authorized
officer; if a partnership,
please sign in partnership
name by authorized person.
PLEASE VOTE YOUR PROXY PROMPTLY VIA MAIL, THE INTERNET OR BY TELEPHONE, WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ON MAY 2, 2002. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
SUBMITTED YOUR PROXY.