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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
FIRST FINANCIAL MANAGEMENT CORPORATION
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(Name of Registrant as Specified in Charter)
BARRY W. BURT, VICE PRESIDENT & CORPORATE COUNSEL
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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FIRST FINANCIAL MANAGEMENT
CORPORATION
3 Corporate Square
Suite 700
Atlanta, Georgia 30329
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 27, 1994
The Annual Meeting of the Shareholders of First Financial Management
Corporation will be held at Hotel Nikko Atlanta, 3300 Peachtree Road, Atlanta,
Georgia on Wednesday, April 27, 1994, at 10:00 a.m., local time, for the
following purposes:
1. To elect eight directors.
2. To transact such other business as may properly come before the meeting.
March 11, 1994, is the record date for the determination of shareholders
entitled to notice of and to vote at such meeting or any adjournment thereof.
Only shareholders of record at the close of business on that date are entitled
to notice of and to vote at the meeting.
Whether or not you expect to be present in person at the meeting, please
sign and date the accompanying proxy and return it promptly to our transfer
agent in the enclosed postage-paid reply envelope. This will assist us in
preparing for the meeting.
By order of the Board of Directors.
March 25, 1994 STEPHEN D. KANE
Secretary
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE
UNITED STATES. IF A SHAREHOLDER RECEIVES MORE THAN ONE PROXY BECAUSE HE OR SHE
OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE
COMPLETED AND RETURNED. YOUR COOPERATION WILL BE APPRECIATED. YOUR PROXY WILL BE
VOTED WITH RESPECT TO THE MATTERS IDENTIFIED THEREON IN ACCORDANCE WITH ANY
SPECIFICATIONS ON THE PROXY.
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FIRST FINANCIAL MANAGEMENT
CORPORATION
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 27, 1994
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Financial Management Corporation
("FFMC") to be used at the Annual Meeting of Shareholders of FFMC(R) to be held
at Hotel Nikko Atlanta, 3300 Peachtree Road, Atlanta, Georgia, at 10:00 a.m.,
local time, on April 27, 1994, and any adjournment thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. This Proxy
Statement and accompanying form of proxy and FFMC's 1993 Annual Report to
Shareholders were first sent or given to shareholders on or about March 25,
1994.
SOLICITATION OF PROXIES
This proxy solicitation will be conducted principally by mail, and the cost
will be paid by FFMC. Proxies may also be solicited by officers and regular
employees of FFMC personally or by telephone, but such persons will not be
specifically compensated for such services. In addition, FFMC has retained
Wachovia Bank of North Carolina, N.A., of Winston-Salem, North Carolina
("Wachovia") to assist in soliciting proxies. For these services, FFMC will pay
Wachovia $1,825, plus reimbursement of expenses. Banks, brokers, nominees and
other custodians and fiduciaries will be requested to forward proxy solicitation
material to their principals and customers where appropriate, and FFMC will
reimburse such banks, brokers, nominees, custodians and fiduciaries for their
reasonable out-of-pocket expenses in sending the proxy material to beneficial
owners of the shares.
ACTIONS TO BE TAKEN UNDER THE PROXY
In voting by proxy, shareholders may vote in favor of all nominees or
withhold their votes as to some or all nominees. Unless other instructions are
contained in the spaces provided in the proxy form, all properly executed
proxies received by FFMC will be voted "FOR" the election of the eight nominees
for director set forth below under the heading "Election of Directors." The
election of directors will require the affirmative vote of a plurality of the
shares of FFMC Common Stock voting in person or by proxy at the Annual Meeting.
Any proxy authorized to be voted at the meeting, including on routine matters
pursuant to the discretionary authority granted in management's proxy, whether
or not votes are withheld, will be counted in establishing a quorum. Broker
non-votes (proxies submitted by a broker marked to indicate that the shares are
not voted on a proposal) are not anticipated because brokers are authorized to
vote on all matters covered by management's proxy and broker nonvotes will not
be included in vote totals for director nominees and will have no effect on the
outcome of the vote.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by giving written notice of revocation or a duly executed proxy
bearing a later date to FFMC's Secretary. In order to be effective, such notice
or later dated proxy must be received by FFMC prior to the exercise of the
earlier proxy. A shareholder may attend the meeting, revoke his proxy and vote
in person.
VOTING SECURITIES
The only class of securities entitled to vote at the meeting is FFMC's
Common Stock, $.10 par value ("FFMC Common Stock"). The close of business on
March 11, 1994, has been fixed as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting or at any
adjournment thereof. At March 11, 1994, there were 59,981,638 shares of FFMC
Common Stock outstanding, each of
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which is entitled to one vote at the meeting. A quorum will require a majority
of the outstanding shares of FFMC Common Stock to be represented at the meeting,
in person or by proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1993, certain
information with respect to the only persons or groups known by FFMC to
beneficially own, as defined in Rule 13d-3 ("Rule 13d-3") promulgated by the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, more than 5% of the outstanding shares of FFMC Common Stock, the only
class of voting securities presently outstanding. As of December 31, 1993, there
were 59,861,709 shares of FFMC Common Stock outstanding. The following
information is based on a Schedule 13G furnished to FFMC by the following
shareholder:
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
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Janus Capital Corporation/ 4,613,775 shares(1) 7.71%
Thomas H. Bailey
100 Fillmore Street
Suite 300
Denver, Colorado 80206
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(1) According to its Schedule 13G dated February 11, 1994, and provided to FFMC,
Janus Capital Corporation, a registered investment adviser, reported that
it may have shared voting and dispositive power with respect to 4,613,775
shares held by certain mutual funds in the Janus Group. Thomas H. Bailey
further separately reports in the same Schedule 13G that he owns
approximately 17.6% of Janus Capital Corporation and is President and
Chairman of the Board of Janus Capital Corporation and therefore may be
deemed to have the power to direct the exercise of voting and/or
dispositive power with respect to these 4,613,775 shares. Kansas City
Southern Industries, Inc., jointly filed the same Schedule 13G with Janus
Capital Corporation due solely to its approximately 81% stock ownership in
Janus Capital Corporation, but disclaimed any beneficial ownership of
shares of FFMC Common Stock in such Schedule 13G. In such Schedule 13G,
Janus Capital Corporation, Kansas City Southern Industries, Inc. and Thomas
H. Bailey have certified that the shares were acquired in the ordinary
course of business and were not acquired for the purpose of and do not have
the effect of changing or influencing the control of FFMC.
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The following table and related notes set forth certain information
concerning persons nominated as directors and the Named Officers (as that term
is hereinafter defined), including their beneficial ownership, as defined in
Rule 13d-3, of shares of FFMC Common Stock, and beneficial ownership of FFMC
Common Stock by all executive officers and directors as a group. All such
ownership is based on information furnished by these individuals as of January
31, 1994. As of January 31, 1994, there were 59,954,212 shares of FFMC Common
Stock outstanding.
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2)(3) PERCENT OF CLASS
- --------------------------- ----------------------------- ----------------
Patrick H. Thomas 728,846(4) 1.21%
George L. Cohen 11,893 *
Robert E. Coleman 13,638 *
Jack R. Kelly, Jr. 13,832 *
Henry A. Leslie 4,708 *
M. Tarlton Pittard 153,183 *
Charles B. Presley 3,426 *
Virgil R. Williams 501,888 *
Richard D. Jackson 86,318 *
Stephen D. Kane 77,694 *
O. G. Greene 13,034 *
All Executive Officers and
Directors as a Group
(15 persons) 1,720,381 2.85%
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* Less than 1%
(1) Except as otherwise indicated in Note 2, the persons included in the table
have sole voting and investment power with respect to the shares listed as
beneficially owned by them.
(2) The shares of FFMC Common Stock beneficially owned include: shares subject
to options exercisable currently or within 60 days (Mr. Thomas -- 241,700,
Mr. Pittard -- 69,210, Messrs. Cohen, Coleman and Kelly -- 4,500 each, Mr.
Leslie -- 1,500, Mr. Jackson -- 36,500, Mr. Kane -- 36,169, Mr.
Greene -- 6,000 and the Group -- 461,069); shares issued pursuant to
restricted share awards under the Incentive Stock Plans (as hereinafter
defined) and certain other restricted share awards, as to which the holders
have voting rights, but not the right to transfer until expiration of the
applicable restrictions (Mr. Thomas -- 0, Mr. Pittard -- 19,567, Mr.
Jackson -- 46,730, Mr. Kane -- 12,067, Mr. Greene -- 6,827 and the
Group -- 123,538); restricted shares issued under the Directors' Restricted
Stock Award Plan to each director not employed by FFMC, as to which the
participants have voting rights, but not the right to transfer until
expiration of applicable restrictions (Messrs. Cohen, Coleman, and
Kelly; -- 1,416 each; Mr. Leslie -- 1,475; Mr. Presley -- 825, Mr.
Williams -- 472 and the Group -- 8,436); shares held by wives or children
(Mr. Thomas -- 300, Mr. Cohen -- 451, Mr. Kane -- 10 and the Group -- 761);
2,850 shares held by one member of the Group as trustee of a trust
benefiting his minor children; and shares held by the trustee of the FFMC
Savings Plus Plan as to which the participants have voting rights and
limited withdrawal rights (Mr. Thomas -- 7,459, Mr. Pittard -- 2,705, Mr.
Jackson -- 1,080, Mr. Kane -- 7,384, Mr. Greene -- 207 and the
Group -- 19,791).
(3) None of FFMC's executive officers or directors owns any warrants to purchase
FFMC Common Stock.
(4) Does not include restricted stock awards made under the 1988 Plan (as
hereinafter defined) of 500,000 shares and of up to 472,500 shares made to
Mr. Thomas on March 22, 1994, or an option to purchase 500,000 shares of
FFMC Common Stock granted to Mr. Thomas under the 1988 Plan on the same
date (See "Employment Agreements").
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ELECTION OF DIRECTORS
It is the intention of the persons named in the accompanying proxy to vote
for the election of the nominees identified below to serve for a term of one
year and until their successors are elected and qualified.
DIRECTOR
POSITION WITH FFMC OF
NAME AGE AND PRINCIPAL OCCUPATION FFMC SINCE
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Patrick H. Thomas 51 Chairman of the Board, President and Chief Executive 1973
Officer
George L. Cohen 63 Director; Partner, Sutherland, Asbill & Brennan 1983
(attorneys and counsel for FFMC) (Atlanta, Georgia)
Robert E. Coleman 69 Director; Consultant (Retired Chairman and Chief 1986
Executive Officer of Riegel Textile Corporation)
(Greenville, South Carolina)
Jack R. Kelly, Jr. 59 Director; General Partner, Noro-Moseley Partners 1990
(venture capital firm) (Atlanta, Georgia)
Henry A. Leslie 72 Director; Attorney-at-Law (Retired President and Chief 1992
Executive Officer, Union Bank & Trust Co.) (Montgomery,
Alabama)
M. Tarlton Pittard 54 Director, Senior Executive Vice President and Chief 1992
Financial Officer
Charles B. Presley 71 Director; Retired Chairman of the Board, First Union 1993
National Bank of Georgia (Augusta, Georgia)
Virgil R. Williams 54 Director; Chairman and Chief Executive Officer, 1993
Williams Service Group, Inc. (industrial maintenance
services) and President, Williams Communications, Inc.
(magazine publishers) (Atlanta, Georgia)
With the exception of Virgil R. Williams, all of the nominees were elected
as directors at the 1993 Annual Meeting of FFMC's shareholders. Mr. Williams was
appointed a director by action of the Board of Directors taken on October 27,
1993, to fill the vacancy created by the action of the Board of Directors taken
on the same date increasing the number of directors of FFMC from eight to nine.
If any nominee for the office of director is unable or fails to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election in his stead of such other person as management
may recommend. If any shareholder desires to nominate another person for
election as director at the Annual Meeting, such person must be named in a
written notice by such shareholder delivered to the Secretary of FFMC at FFMC's
principal executive office not less than five days prior to the date of the
Annual Meeting, in accordance with Section 2.7 of FFMC's Bylaws, a copy of which
may be obtained from the Secretary.
Each nominee for director has been principally employed in his present
capacity (or substantially similar capacities with the same or predecessor
organizations) for at least five years except as indicated below.
Prior to his retirement in March 1991, Mr. Leslie had served for more than
four years as President and Chief Executive Officer of Union Bank & Trust Co.,
Montgomery, Alabama. He served as a director of FFMC's then-subsidiary Basis
Information Technologies, Inc. ("Basis"), from 1990 to 1992. Mr. Leslie
previously served as a director of FFMC from 1981 through 1989.
From 1986 through his retirement in August 1992, Mr. Presley served as
Chairman of the Executive Committee of the Board of Directors of First Union
National Bank of Georgia, as well as serving as Chairman of the Board of such
bank until February 1988. During such time Mr. Presley also held the same
positions
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with the bank's holding company, First Union Corporation of Georgia. Mr. Presley
previously served as a director of FFMC from 1972 through 1989.
Mr. Williams previously served as a director of FFMC from 1985 through
1989.
The nominees for director of FFMC who serve as directors of unaffiliated
public corporations are Mr. Coleman, who is a director of Boise Cascade
Corporation, Mr. Presley, who is a director of Merry Land & Investment Company,
Inc., and Mr. Williams, who is a director of BankSouth Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS
In addition to an Executive Committee, presently composed of Messrs.
Thomas, Cohen, Coleman and Presley, the Board of Directors has standing Audit,
Compensation and Nominating Committees.
The Audit Committee, presently composed of Messrs. Kelly, Leslie, Presley
and Jack A. Skarupa met three times in 1993. The functions of the Audit
Committee are to recommend each year the firm to be employed as FFMC's
independent auditor, to consult with the auditor regarding the plan of audit,
the report of the audit and the adequacy of internal accounting controls, to
monitor the independence of the auditor, to conduct a review of all FFMC
transactions with related parties and potential conflict of interest
transactions and to report to the Board of Directors at least annually.
The Compensation Committee, presently composed of Messrs. Coleman, Kelly,
Leslie and Skarupa, met six times in 1993. The functions of the Compensation
Committee are to approve compensation arrangements for FFMC's Chief Executive
Officer and upon recommendations by FFMC's Chief Executive Officer for FFMC's
Senior Executive Officers (for all executive officers during 1993); to approve
executive officer compensation plans; to grant options and other awards under
FFMC's Incentive Stock Plans and Performance Units Incentive Plan and to carry
out the duties and responsibilities of the Board of Directors regarding FFMC's
savings plans; and to carry out such other duties and responsibilities as may be
designated by the Board of Directors. (Senior Executive Officers are those
executive officers of FFMC who report directly to the Chief Executive Officer.)
COMPENSATION RELATED MATTERS
REPORT ON EXECUTIVE COMPENSATION BY THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS (1)
The Compensation Committee (the "Committee") of the Board of Directors of
FFMC is composed entirely of directors who are not employees of FFMC. The Board
of Directors has delegated to the Committee the authority:
1. To approve compensation arrangements for Patrick H. Thomas,
Chairman of the Board, President and Chief Executive Officer of FFMC ("Mr.
Thomas"), including discretionary awards under FFMC's incentive
compensation plans;
2. To approve, upon recommendations by the Chief Executive Officer,
the compensation arrangements for Senior Executive Officers of FFMC (for
all executive officers during 1993) and executive compensation plans and to
review generally the compensation of FFMC's other executive officers, as
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(1) Pursuant to Item 402(a)(9) of Regulation S-K, as promulgated by the
SEC, the material in this report shall not be deemed to be "soliciting
material," to be "filed" with the SEC or to be subject to Regulations 14A
or 14C, other than as provided in Item 402, or to the liabilities of
Section 18 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and no general incorporation of such material by reference
thereto, whether made before or after the date hereof, shall be deemed
specifically to request that it be treated as soliciting material or
specifically incorporate it by reference into a filing under the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act within
the meaning of Item 402(a)(9).
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determined by the Chief Executive Officer (Senior Executive Officers are
those executive officers of FFMC who report directly to the Chief Executive
Officer, namely Messrs. Kane, Jackson and Pittard, as listed in the Summary
Compensation Table included in this Proxy Statement); and
3. To administer FFMC's Incentive Stock Plans (as defined elsewhere in
this Proxy Statement) and make awards thereunder to FFMC employees and to
carry out the duties and responsibilities of the Board of Directors
regarding FFMC's other compensation and savings plans.
Pursuant to the proxy rules promulgated by the Securities and Exchange
Commission, this report describes the compensation policies of the Committee
applicable to the executive officers of FFMC including the specific relationship
of corporate performance to executive compensation for 1993. The report also
discusses the 1993 compensation of Mr. Thomas.
COMPENSATION POLICIES
FFMC's compensation policies for executive officers are designed to allow
FFMC to attract and retain highly qualified executive officers whose
contributions are necessary for the continued growth and success of FFMC. FFMC's
compensation policies for executive officers have two principal components: (1)
a significant portion of an executive officer's compensation depends on the
performance of the individual and FFMC; and (2) compensation in the form of
stock options, restricted stock awards and similar awards is contingent upon
continued employment of the executive officer over a specified period of time up
to five years. The Committee believes that ownership of FFMC stock by its
executive officers is desirable, and FFMC's compensation policies and plans are
designed to encourage such stock ownership. Specific information concerning the
implementation of these policies in connection with the compensation
arrangements of Mr. Thomas and the executive officers is provided below.
Based on the advice of counsel, the Compensation Committee believes that
all compensation paid to FFMC's executive officers for 1993 is deductible for
federal income tax purposes notwithstanding the provisions of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). The Compensation
Committee's policy with respect to compensation to be paid to FFMC's executive
officers after 1993 is to implement its compensation policies taking into
account any potential limitations on the deductibility of compensation in excess
of $1,000,000 per year imposed by Section 162(m), but not requiring that all
compensation qualify for exemption from such limitation.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Since 1986, Mr. Thomas's compensation as Chief Executive Officer has been
based on long-term employment agreements made with Mr. Thomas by the Committee
and ratified by the Board of Directors. (For a more complete description of Mr.
Thomas's employment agreement, see "Employment Agreements" in this Proxy
Statement.) The agreement in effect for 1993, entered into in 1989, provides for
a minimum annual salary (subject to annual review for increases) and a formula
incentive bonus equal to the lesser of the market value of 94,500 shares of FFMC
Common Stock (subject to adjustment for stock dividends, stock splits, etc.)
following the public announcement of FFMC's earnings for the year, or 2 1/2% of
FFMC's "pre-tax income," but not less than $1,800,000. For 1993, Mr. Thomas's
annual salary was increased to $875,000, an increase of $50,000 or 6.1% over his
1992 annual salary, which the Committee subjectively determined was appropriate
(giving approximately equal weight to each of the factors) in the light of
FFMC's continued outstanding performance, including increased pretax income and
earnings per share (excluding the write-down resulting from FFMC's 1992 sale of
Basis Information Technologies, Inc.), the successful completion of acquisitions
and a major realignment of FFMC's business through its sale of Georgia Federal
Bank and Basis. The amount of the salary increase was determined relative to the
percentage increase granted to other executive officers who did not undergo
significant changes in their duties. The incentive bonus for 1993 was
$5,410,125, equal to the value of 94,500 shares of FFMC Common Stock based on
the average closing price for the ten business days after the announcement of
FFMC's 1993 earnings ($57.25). The Committee did not consider awards to Mr.
Thomas of options or restricted stock in 1993 in light of awards made at or near
the beginning of the initial five-year term of his employment agreement (i.e.,
options covering 157,500 shares each
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in 1988 and 1989 and an award of 236,250 restricted shares in 1989, the
restrictions on which lapsed at the end of 1993).
ANNUAL SALARIES
The annual salaries of executive officers are fixed initially at amounts
that are deemed by the Chief Executive Officer in his discretion as necessary
and appropriate to attract executives of outstanding ability and experience.
Except with respect to Mr. Greene, the base salary of each of the Named Officers
(as defined below) was set pursuant to negotiated employment agreements with
such officers. Salaries of executive officers are reviewed annually, and
increases are made based on a subjective evaluation by the Chief Executive
Officer of the individual's overall performance. Salaries and salary increases
of executive officers (Senior Executive Officers after 1993) are subject to
approval by the Compensation Committee, based on recommendations of the Chief
Executive Officer.
INCENTIVE BONUSES
The compensation of FFMC's executive officers for 1993 included incentive
compensation based primarily on the growth in 1993 in FFMC's pre-tax income and
earnings per share and a general subjective evaluation by the Chief Executive
Officer of the individual's performance during the year, subject to approval by
the Compensation Committee of incentive bonuses of Senior Executive Officers
based upon the recommendations of the Chief Executive Officer, including in each
case the amount of the recommended bonus for each Senior Executive Officer.
Income from continuing operations rose 53% over the previous year (excluding the
write-down resulting from FFMC's 1992 sale of Basis Information Technologies,
Inc.) Earnings per share from continuing operations increased 48%, excluding the
Basis write-down.
RESTRICTED SHARES
Under the Incentive Stock Plans, the Committee has awarded to executive
officers from time to time restricted shares of FFMC stock that ordinarily vest
only upon the expiration of a specified period. When such awards are made, the
number of shares awarded to executive officers is based upon recommendations of
the Chief Executive Officer, taking into account his subjective evaluation of
the individual's performance, the amount of any cash bonus and awards of
restricted shares and options previously and contemporaneously granted to the
individual under the Incentive Stock Plans. If the executive officer's
employment terminates before vesting, generally the shares are forfeited. The
vesting period generally has been five years, so that the executive officer's
continued employment over the specified period of time is required in order to
obtain the shares. The value of all restricted stock awards is dependent upon
the market value of FFMC Common Stock as of the date on which the restrictions
on the awarded shares lapse. Because the value of all awards of restricted stock
depends upon the market price of the stock at a future date when the
restrictions terminate, the potential value of the award fluctuates with changes
in the per share value of FFMC Common Stock. No restricted shares were awarded
to the Named Officers in 1993 based upon the Chief Executive Officer's
recommendation of stock option grants for 1993.
STOCK OPTIONS
Under the Incentive Stock Plans, the Committee has awarded to executive
officers from time to time options to purchase FFMC Common Stock. When such
grants are made, the number of options granted to executive officers is based
upon recommendations of the Chief Executive Officer, taking into account his
subjective evaluation of the individual's performance, the amount of any cash
bonus and awards of options and restricted shares previously and
contemporaneously granted to the individual under the Incentive Stock Plans. The
options have generally vested at the rate of 20% of the underlying shares at the
end of six months following grant and an additional 20% each twelve months
thereafter. The options are exercisable for ten years, generally at a price
equal to 100% of fair market value at the date of grant. Options granted have
not had performance contingencies, but realization of the value provided through
the options has required the option holder to remain employed by FFMC until the
options vest, and the value of the amounts realizable through exercise of the
options depends on increases in the per share value of FFMC Common Stock, which
aligns the
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interests of the executive officers in regard to that element of compensation
with the interests of the shareholders over the life of the option.
OTHER COMPENSATION PLANS
FFMC has a number of other broad-based employee benefit plans in which
executive officers participate on the same terms as other employees meeting the
eligibility requirements, subject to any legal limitations on amounts that may
be contributed to or benefits payable under the plans. The matching contribution
by FFMC to the savings account portion of the Savings Plus Plan under Section
401(k) of the Code is invested in FFMC Common Stock, which further aligns the
employees' and shareholders' long-term financial interests.
Mr. Thomas and FFMC's executive officers participate in a life insurance
plan (more fully described in Note 4 to the Summary Compensation Table in this
Proxy Statement) that provides death benefits generally equal to three times the
executive's annual salary or larger amounts where required by employment
agreements, until the executive dies or reaches normal retirement age. Both FFMC
and the participants share in the payment of the premiums, except as otherwise
provided in certain employment agreements. FFMC will receive from the cash value
of the policy or the proceeds an amount equal to its total premiums paid plus
the cost of funds invested in premiums during the policy period. The executive
(or the executive's beneficiary) then receives the remainder of the proceeds or
cash value. FFMC's premium outlay is always exceeded by the increasing cash
values of the policies.
Submitted by the Compensation Committee of the Board of Directors:
ROBERT E. COLEMAN, Chairman
JACK R. KELLY, JR. (from April 27, 1993)
HENRY A. LESLIE (from April 27, 1993)
JACK A. SKARUPA
GEORGE L. COHEN (until April 27, 1993)
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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is presently comprised
of Messrs. Coleman, Kelly, Leslie and Skarupa. Mr. Cohen served as a member of
the Compensation Committee until April 27, 1993. Mr. Cohen is a partner in the
law firm of Sutherland, Asbill & Brennan, which receives fees for acting as
primary outside legal counsel to FFMC. Messrs. Kelly and Leslie became members
of the Compensation Committee on April 27, 1993.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long-term compensation
for services rendered in all capacities to FFMC and its subsidiaries for the
fiscal years ended December 31, 1993, 1992 and 1991, respectively, for those
persons who were, at December 31, 1993, (i) FFMC's Chief Executive Officer and
(ii) its four other most highly compensated executive officers (such five
individuals being hereinafter collectively referred to as the "Named Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -----------------------------------------
AWARDS PAYOUTS
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(H) (I)
LONG- ALL
(F) TERM OTHER
(A) (E) RESTRICTED (G) INCENTIVE COMP-
NAME AND (B) (C) (D) OTHER ANNUAL STOCK OPTIONS/ PAYOUTS ENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS ($)(1) SARS (#)(2) ($)(3) ($)(4)
- ------------------------ ---- ---------- ------------ ----------------- -------------- ----------- ---------- ---------
PATRICK H. THOMAS
Chairman of the Board, 1993 875,000 5,410,125(5) 0 0 0 0 15,836
President & Chief 1992 825,000 3,920,525(5) 0 0 0 0 16,012
Executive Officer 1991 775,000 2,972,813(5) 0 0 0 95,837 --
M. TARLTON PITTARD
Senior Executive Vice 1993 424,000 250,000 0 0 10,000 0 12,696
President & Chief 1992 400,000 200,000 0 142,515 0 51,353 13,314
Financial Officer 1991 375,000 0 0 180,000 7,500 51,353 --
RICHARD D. JACKSON
Senior Executive Vice 1993 424,000 300,000 0 0 10,000 0 51,331
President & Chief 1992 400,000 290,000 0 0 0 0 51,268
Operations Officer 1991 375,000 251,000 0 180,000 7,500 0 --
STEPHEN D. KANE
Senior Executive Vice 1993 350,000 250,000 0 0 10,000 0 8,521
President, Chief 1992 300,000 150,000 0 142,515 0 35,947 7,651
Administrative Officer & 1991 200,000 0 0 180,000 3,750 35,947 --
Secretary
O.G. GREENE
Senior Executive Vice 1993 325,000 100,000 0 0 10,000 0 9,687
President & Deputy Chief 1992 152,868 25,000 0 159,375 10,000 0 6,276
Operations Officer 1991 N/A N/A N/A N/A N/A N/A N/A
- ---------------
(1) All awards of restricted shares to the Named Officers have been made under
the 1988 Plan (as hereinafter defined) and are valued in the table based
upon the closing market prices of FFMC Common Stock on the grant dates.
Dividends are payable with respect to all awards of restricted shares
reported in this column. As of December 31, 1993, each individual held the
following aggregate number of restricted shares of FFMC Common Stock having
the values indicated, based upon the closing market price of $56.75 per
share of FFMC Common Stock on such date (Mr. Thomas -- 0 shares/$0; Mr.
Pittard -- 15,000 shares/$851,250; Mr. Jackson -- 41,250 shares/$2,340,938;
Mr. Kane -- 7,500 shares/$425,625 and Mr. Greene -- 5,000 shares/$283,750).
Does not include restricted stock awards made under the 1988 Plan of
500,000 shares and up to 472,500 shares made to Mr. Thomas on March 22,
1994 (See "Employment Agreements").
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(2) FFMC has no outstanding awards of Stock Appreciation Rights ("SARs"), thus
this column lists only options. All option awards granted to the Named
Officers in 1993 were made under the Incentive Stock Plans (See "Options
and Stock Appreciation Rights"). Does not include an option to purchase
500,000 shares of FFMC Common Stock granted to Mr. Thomas under the 1988
Plan on March 22, 1994 (See "Employment Agreements").
(3) All sums listed in this column were paid in cash pursuant to FFMC's
Performance Units Incentive Plan.
(4) Includes for each of the indicated individuals the following amounts for
1993 and 1992 representing (i) contributions by FFMC to the FFMC Savings
Plus Plan (for 1993: Messrs. Thomas, Pittard, Jackson, Kane and
Greene -- $2,973 each; for 1992: Messrs. Thomas, Pittard, Jackson and
Kane -- $2,182 each, and Mr. Greene -- $0), (ii) the dollar value of the
benefit to the Named Officer of the premium paid by or on behalf of FFMC
under its Key Executive Life Insurance Plan (or by or on behalf of a
subsidiary of FFMC with respect to a policy held by it on such individual)
for the year in question on split-dollar life insurance policies for the
benefit of the individual, determined for the period, projected on an
actuarial basis, between payment of the premium and the refund, as
hereinafter described (for 1993: Mr. Thomas -- $12,863; Mr.
Pittard -- $9,723; Mr. Jackson -- $17,819; Mr. Kane -- $5,548 and Mr.
Greene -- $6,714; for 1992: Mr. Thomas -- $13,830; Mr. Pittard -- $11,132;
Mr. Jackson -- $18,900; Mr. Kane -- $5,469 and Mr. Greene -- $6,276), and
(iii) for Mr. Jackson, the annual calendar-year dollar-value increase in
the accumulated cash value of the life insurance policy required to be
carried by FFMC pursuant to his employment agreement as discussed below,
representing accrued deferred compensation to Mr. Jackson for the years in
question (for 1993: $30,539; and for 1992: $30,186). As previously
discussed under "Other Compensation Plans," FFMC will receive from the cash
value of such policies or the proceeds thereof an amount equal to the total
premiums paid by FFMC plus the cost of funds invested in premiums during
the policy period. The Named Officer (or the Named Officer's beneficiary)
then receives the remainder of the proceeds or cash value. Each of the
Named Officers paid the amount of the premium associated with the portion
of the term life component of the insurance coverage in question in excess
of the minimum coverage required, if any, to be maintained at FFMC's
expense pursuant to existing employment agreements, and FFMC paid the
remainder of the premium associated with the required minimum term life
component, if any, and the whole life component of such coverage.
Specifically, the amounts listed in this footnote are the dollar values (as
determined above) of the respective benefits to the Named Officers of the
1993 and 1992 premiums actually paid by FFMC (or a subsidiary thereof) on
such split-dollar life insurance policies for the respective Named Officers
and for which FFMC was not reimbursed by the Named Officers. These amounts
constitute the company-paid portion of such premiums. The balances of the
premiums on these policies, while also paid directly to the carrier by
FFMC, were fully reimbursed to FFMC by payroll withholding on the
respective Named Officer, and are equal to the annual premium which the
Named Officer would pay for a policy of equal coverage amount under the
carrier's group term life insurance product, based upon the group term
rates supplied by the carrier to FFMC. As these amounts constitute the
employee-paid portion of the premiums on these policies, and thus are not
compensation to the Named Officer, such amounts are not listed herein. In
addition, Mr. Jackson's employment agreement with FFMC provides in part
that in the event his employment is terminated other than due to his death,
he will receive deferred compensation equal to the accumulated cash value
of such policy ($222,949 as of December 31, 1993) (See "Employment
Agreements"). Information for years prior to 1992 is not required to be
disclosed pursuant to SEC regulations.
(5) Incentive compensation for Mr. Thomas is set by his Employment Agreement
with FFMC (See "Employment Agreements") and neither the award nor the
amount thereof is discretionary during the term of the Agreement on the
part of the Compensation Committee.
OPTIONS AND STOCK APPRECIATION RIGHTS
All options to purchase FFMC Common Stock granted to the Named Officers
have been made under either the 1988 Incentive Stock Plan (the "1988 Plan") or
the 1982 Incentive Stock Plan (the "1982 Plan") (collectively, the "Incentive
Stock Plans"), or were options assumed by FFMC under the Endata Stock Option
Plan (the "Subsidiary Stock Plan") upon FFMC's acquisition of Endata, Inc., in
1987. Upon such acquisition, FFMC converted options outstanding under the
Subsidiary Stock Plan into options to acquire FFMC Common Stock. (All options
granted under the Incentive Stock Plans or assumed by FFMC under the
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Subsidiary Stock Plan being hereinafter collectively referred to as "Options.")
No stock appreciation rights ("SARs") were granted or outstanding under the
Incentive Stock Plans or the Subsidiary Stock Plan in 1993.
GRANTS IN 1993
Shown below is information concerning grants of Options during 1993 to the
Named Officers. As no SARs were granted in 1993, all numbers shown reference
only Options.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -----------------------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED
UNDERLYING TO EXERCISE
OPTIONS EMPLOYEES OR BASE GRANT DATE VALUE
GRANTED IN FISCAL PRICE EXPIRATION ------------------------------
NAME (#)(1) YEAR ($/SHARE) DATE GRANT DATE PRESENT VALUE($)(2)
- ----------------- --------- --------- --------- ---------- ------------------------------
Patrick H. Thomas 0 0 N/A N/A N/A
M. Tarlton Pittard 10,000 9.46 41.00 1/27/03 210,510
Richard D. Jackson 10,000 9.46 41.00 1/27/03 210,510
Stephen D. Kane 10,000 9.46 41.00 1/27/03 210,510
O. G. Greene 10,000 9.46 41.00 1/27/03 210,510
- ---------------
(1) These Options were granted under the 1988 Plan. The option agreements
governing these Options provide that during each of the five successive
twelve-month periods of continued employment commencing six months after
the date of grant, an Option becomes exercisable as to cumulative amounts
equal to one-fifth of the total shares covered by such Option. Pursuant to
the 1988 Plan, the Compensation Committee of the FFMC Board of Directors at
any time before the complete termination of an Option may accelerate the
time or times at which such Option may be exercised, in whole or in part.
(2) These estimated values have been developed solely for purposes of
comparative disclosure pursuant to the rules and regulations of the SEC.
The Black-Scholes option pricing methodology, on which the present values
of the stock options granted to the Named Officers are based, attempts to
portray the value of an option at the time of grant. In computing these
values by application of the Black-Scholes model, the following assumptions
were used: expected exercise period -- 10 years; risk-free rate of
return -- 6.480%; dividend yield -- .24%; and expected volatility -- .0579.
The resulting present value per option share is $21.051. The actual value,
if any, that may be realized from these options will depend solely upon the
increase in stock price over the exercise price of $41.00 when the options
are exercised.
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EXERCISES OF OPTIONS AND STOCK APPRECIATION RIGHTS IN 1993 AND AGGREGATE
YEAR-END OPTION VALUES
Shown below is information with respect to exercises of Options in 1993 by
the Named Officers and the year-end values of all Options held by the Named
Officers. No SARs were outstanding or exercised in 1993, and accordingly all
numbers shown reference only Options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
SECURITIES
UNDERLYING VALUE OF
NUMBER OF UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT OPTIONS AT FY-
SHARES FY-END(#) END($)(1)
ACQUIRED
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------ ----------- -------------- -----------------
Patrick H. Thomas 130,000 3,428,281 241,700/0 9,404,966/0
M. Tarlton Pittard N/A N/A 69,210/20,773 3,014,042/656,705
Richard D. Jackson N/A N/A 36,500/18,500 1,506,375/556,125
Stephen D. Kane 6,500 229,106 36,169/15,406 1,580,889/436,465
O. G. Greene N/A N/A 6,000/14,000 131,000/275,250
- ---------------
(1) Equal to the net value of the Option as of December 31, 1993, if the Option
at such time had a per-share exercise price less than the per share closing
market price of FFMC Common Stock (i.e., closing market price of $56.75 per
share of FFMC Common Stock on December 31, 1993, less the applicable per
share exercise price of the Option, multiplied by the number of outstanding
Options).
REPRICINGS OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Options were repriced during 1993. As stated above, no SARs were
outstanding in 1993.
LONG-TERM INCENTIVE PLAN AWARDS IN 1993
FFMC's only "long-term incentive plan" as defined by applicable SEC
regulations (which excludes the Incentive Stock Plans) that was in effect in
1993 was its Performance Units Incentive Plan (the "Units Plan"). However, no
awards of performance units or any other type of rights have been made under the
Units Plan since 1990.
PENSION PLAN
FFMC has no defined benefit or actuarial pension plan.
COMPARISON OF CUMULATIVE TOTAL RETURN TO SHAREHOLDERS ON FFMC COMMON STOCK OVER
PREVIOUS FIVE YEARS
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on FFMC Common Stock against the
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Computer Software and Services Index at year-end for the
calendar years 1989 through 1993.
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
Among FFMC, the S&P 500 Index and the
S&P Computer Software & Services Index(2)
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
FIRST FINANCIAL MANAGEMENT 100 125 94 160 240 333
S & P 500 100 132 128 166 179 197
S & P CMPTR SOFTWR & SVCS 100 122 95 145 172 219
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(1) Pursuant to Item 402(a)(9) of Regulation S-K, as promulgated by the SEC, the
material in this report shall not be deemed to be "soliciting material," to
be "filed" with the SEC or to be subject to Regulations 14A or 14C, other
than as provided in Item 402, or to the liabilities of Section 18 of the
Exchange Act and no general incorporation of such material by reference
thereto, whether made before or after the date hereof, shall be deemed
specifically to request that it be treated as soliciting material or
specifically incorporate it by reference into a filing under the Securities
Act or the Exchange Act within the meaning of Item 402(a)(9).
(2) Assuming (i) $100 invested in the applicable stock or index on December 31,
1988, (ii) 100% reinvestment of dividends, and (iii) respective fiscal
years ending December 31.
DIRECTOR COMPENSATION
All members of the Board of Directors who are not employed by FFMC (an
"Outside Director") receive compensation in the amount of $8,000 as an annual
retainer plus $1,500 for attendance at each meeting of the Board and $1,000 for
attendance at each committee meeting. In addition, the Directors' Restricted
Stock Award Plan provides for each Outside Director to receive 708 shares of
FFMC Common Stock (subject to adjustment to reflect future stock dividends or
stock splits) annually, or a prorated number of shares for any partial year of
service after the director's initial election or appointment, subject to
restrictions expiring on the date of the second annual meeting of FFMC
shareholders following the award. If a director's service terminates, other than
for death or disability, before the expiration of restrictions on any shares,
the shares are forfeited. Each Outside Director is entitled to receive under the
1990 Directors' Stock Option Plan (the "Directors' Stock Option Plan") an annual
grant of a stock option to purchase 1,500 shares of FFMC
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Common Stock (subject to adjustment to reflect future stock dividends, stock
splits, other changes in FFMC Common Stock, or in the event of a merger,
consolidation or similar transaction). The Directors' Stock Option Plan provides
for each option to be granted automatically on the date of the annual
organizational meeting of the Board held following FFMC's annual meeting of
shareholders. The option becomes exercisable twelve months after the grant at an
exercise price for each such option equal to 75% of the mean between the highest
and lowest selling prices of FFMC Common Stock on the New York Stock Exchange
composite tape on the date of grant. In order to exercise an option, the Outside
Director must pay the exercise price and any applicable withholding taxes. If a
director's service terminates during the twelve months following a grant, other
than through death or disability, a prorata portion of the option is cancelled.
Options expire 20 years after the date of grant, or sooner in the event of the
director's death. Director's options become exercisable and restrictions on
director's restricted shares lapse upon a change in control of FFMC as defined
in the applicable plan. No director received any compensation for his services
as a director with respect to 1993 other than pursuant to these standard
arrangements.
EMPLOYMENT AGREEMENTS
Mr. Thomas's employment by FFMC is governed by an employment agreement
entered into in 1989 (the "1989 Agreement") that provides for: (a) a salary at
an initial annual rate of $700,000, subject to annual review for increases
(currently $875,000); (b) annual additional incentive compensation equal to the
lesser of 2 1/2% of FFMC's income before income taxes (computed without
deduction of his bonus) or the market value of 94,500 shares of FFMC Common
Stock (subject to adjustment for stock dividends, stock splits, etc.) following
public announcement of FFMC's earnings for the year, but not less than
$1,800,000; (c) continued participation in stock option and other incentive
plans; (d) life insurance in the amount of $5,000,000 payable to his beneficiary
or estate; and (e) perquisites amounting to less than $50,000 annually, in
addition to health insurance and other benefits available generally to FFMC
employees. The agreement was for an initial five-year term ending December 31,
1993 and is subject to automatic renewals for successive one-year terms absent
notice of nonrenewal by FFMC or Mr. Thomas at least 180 days prior to the
expiration of the initial or any renewal term and continues in effect for 1994.
The agreement is terminable by either party and provides for severance pay based
on a multiple of current annual compensation (the greater of the previous year's
salary or current salary, plus the amount of additional incentive compensation
for the preceding calendar year, plus the amount then most recently earned under
the Performance Units Incentive Plan) plus any excise taxes attributable to
excess "parachute payments" under the Code, and continuation of group insurance
benefits for five years. The applicable multiples are: (a) 300% in the event of
termination by either party within three years after a "change in control" of
FFMC as defined in the agreement; (b) 200% in the event of termination by FFMC
at any other time, termination for disability or termination by Mr. Thomas
following certain changes in his authority or responsibilities, other than
following a change in control of FFMC; and (c) 100% in the event of other
voluntary termination by Mr. Thomas, in which case he is subject to certain
noncompetition provisions for one year.
Mr. Thomas recently executed a new employment agreement with FFMC (the "New
Agreement") covering the years 1995 through 1999 containing essentially the same
provisions as the 1989 Agreement, except that, in lieu of an annual cash bonus
equal to the lesser of the value of 94,500 shares of FFMC Common Stock or 2 1/2%
of pretax income for the year, he received an award of restricted shares under
the 1988 Plan providing that up to 94,500 shares may be earned for each year of
the New Agreement, depending on a formula established by the Compensation
Committee and similar to the cash bonus formula in the 1989 Agreement, and also
subject to his continued employment until December 31, 1999, except in the event
of disability, death or involuntary termination. As consideration for execution
of the New Agreement, Mr. Thomas also received an award under the 1988 Plan of
500,000 restricted shares, subject to FFMC's meeting a performance goal
established for 1994 by the Compensation Committee and to Mr. Thomas's continued
employment until December 31, 1999, except in the event of disability, death or
involuntary termination. By comparison Mr. Thomas was awarded 236,250 restricted
shares in 1989 in connection with the 1989 Agreement. Those shares vested on
December 31, 1993. Mr. Thomas was also granted an option to purchase 500,000
shares of FFMC Common Stock under the 1988 Plan. The new options are exercisable
at an option price of $57.25 per share (the market price on the date of grant)
and become exercisable at the rate of 100,000 shares at the end of each year
beginning with 1995. By comparison, Mr. Thomas was awarded options to purchase a
total of 315,000 shares in 1988 and 1989. All of the restricted shares vest and
all of the options
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become exercisable in the event of a change in control of FFMC. As an inducement
to Mr. Thomas to execute the New Agreement, the Compensation Committee has
agreed that it is in the best interests of FFMC and Mr. Thomas for him to be
able to make limited sales of FFMC Common Stock in the market at appropriate
times in compliance with Rule 144 under the Securities Act, in order to provide
him with liquidity and an opportunity for investment diversification, while at
the same time retaining a substantial equity interest in FFMC. Mr. Thomas agreed
that, until the termination of the New Agreement, he will not make any such
sales without prior approval of the Compensation Committee, except for sales not
in excess of 100,000 shares during each year of the term of the New Agreement
made during the period of ten business days beginning on the third business day
following the release for publication of FFMC's report of sales and earnings for
a quarter or year and except for sales of up to 100,000 shares to be made during
1994.
FFMC also entered into employment agreements with Mr. Pittard initially for
the years 1989 through 1993, and now extended at least through 1994, with Mr.
Jackson for the years 1991 through 1995, and with Mr. Kane for the years 1992
through 1996, in each case subject to automatic renewal for successive one-year
periods absent notice of nonrenewal in advance of the expiration of the initial
or any renewal term, and providing for: (a) a salary at an initial annual rate
of $300,000 for Mr. Pittard, $375,000 for Mr. Jackson, and $300,000 for Mr.
Kane, subject to annual review for increases; (b) annual additional incentive
compensation; (c) participation in stock option and other incentive plans; (d)
participation in employee benefit plans; (e) reimbursement of dues and costs of
club memberships; and (f) an automobile allowance. Each agreement is terminable
by either the officer or FFMC and provides for severance pay based on a multiple
of current annual compensation (computed as described above) plus any excise tax
attributable to excess "parachute payments" under the Code and continuation of
group insurance benefits for three years. The applicable multiples are: (a) 300%
in the event of termination by either party within three years after a "change
in control" of FFMC as defined in the agreements; and (b) 200% in the event of
termination of the officer's employment by FFMC other than for cause, in the
event of death or disability of the individual (except in the event of the death
of Mr. Jackson), or in the event of termination by the officer following certain
changes in his authority or responsibilities, except that no payment is to be
made with respect to the death of Messrs. Pittard or Kane provided that their
respective estates or beneficiaries receive a specified amount as proceeds of a
life insurance policy on each such individual, with premiums thereon to be paid
by FFMC during such individual's life. If employment is terminated for any other
reason, the severance payment shall be equal to unpaid salary through the
termination date. Mr. Jackson's agreement also provides for FFMC to maintain a
$900,000 life insurance policy on Mr. Jackson, which policy currently provides
for death benefits payable equally to FFMC and Mr. Jackson. The agreement
further provides that upon Mr. Jackson's termination of employment other than
due to his death, he will receive deferred compensation equal to the accumulated
cash value of the policy (currently estimated at approximately $222,949). Mr.
Jackson is also subject to certain noncompetition provisions upon the
termination of his employment, unless such termination is the result of (i) his
voluntary resignation following a change in control of FFMC, or (ii) his
election to terminate his employment for "good reason," as defined in the
agreement.
CERTAIN TRANSACTIONS
Certain executive officers of FFMC or members of their immediate families
had loans outstanding during 1993 from Georgia Federal Bank, FSB ("Georgia
Federal"), which was a subsidiary of FFMC until June 14, 1993. Except for loans
made to officers of Georgia Federal, such loans: (a) were made in the ordinary
course of business; (b) were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons; and (c) did not involve more than the normal
risk of collectibility or present other unfavorable features.
Prior to the adoption of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), Georgia Federal had a loan policy permitting
officers and directors, as well as employees, to obtain loans on preferential
terms in accordance with the then applicable Federal Home Loan Bank Board
regulations. After the adoption of FIRREA, Georgia Federal ceased making
preferential loans to its executive officers, directors or principal
shareholders, but a loan made under the prior policy to one individual who is
now an executive officer of FFMC was outstanding during a portion of 1993 while
such individual was an
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executive officer of FFMC. Georgia Federal's previous policy permitted first
mortgage loans to officers and other employees at adjustable rates equal to one
percent over the bank's cost of funds, subject to adjustment every September 1.
During the applicable portion of 1993 these rates were less than a percentage
point below rates on comparable loans to unrelated persons. Mr. Jackson was the
only executive officer of FFMC who had a loan which was made at special employee
rates under the Georgia Federal policy in effect prior to FIRREA and which was
outstanding during 1993 while such individual was an executive officer of FFMC.
Mr. Jackson had a 30-year first mortgage loan on a residence which originated
April 28, 1989, with the highest balance during 1993 being $196,425. Effective
January 28, 1993, at which time the outstanding balance and adjustable rate were
$196,208 and 7%, respectively, Mr. Jackson converted this loan to one with
Georgia Federal which does not have a preferential interest rate. In the opinion
of Georgia Federal, this loan did not involve more than the normal risk of
collectibility or present other unfavorable features during the period in which
it had a preferential interest rate.
George L. Cohen, a member of the Board of Directors, is a partner in the
law firm of Sutherland, Asbill & Brennan and served as a member of the
Compensation Committee until April 27, 1993. Sutherland, Asbill & Brennan acts
as primary outside legal counsel to FFMC.
On August 18, 1993, FFMC acquired through merger with a wholly-owned
subsidiary of FFMC all of the issued and outstanding stock of each of
International Banking Technologies, Inc. ("IBT") and Prime Consulting Group,
Inc. ("Prime") in exchange for 1,000,000 shares of FFMC Common Stock. The
transaction was accounted for as a pooling of interests. Virgil R. Williams, a
member of the Board of Directors of FFMC since October 27, 1993, and his
brother, James M. Williams, Jr. (collectively, the "Williamses"), each owned 50%
of the outstanding capital stock of IBT and each was an executive officer of
both IBT and Prime.
IBT and Monolith Construction Company, Inc. ("Monolith") are parties to an
agreement, dated August 17, 1993, pursuant to which Monolith agrees to provide
certain prefabricated minibranch banking units and related services to IBT for a
period of ten years from the date of the contract. Monolith is the preferred
supplier of such units and the contract calls for a fixed price per unit,
subject to adjustment only to reflect annual changes in a specified construction
cost index. The contract with IBT represents approximately 60% of Monolith's
revenues. Each of the Williamses is an executive officer of Monolith and holds
47.5% of Monolith's outstanding capital stock.
IBT and Prime lease the space for their executive offices from FWA
Associates, L.P. Both of the Williamses are limited partners in FWA Associates,
L.P., each holding a 24% direct and a 3.33% indirect interest in the
partnership. The IBT lease covers approximately 14,000 square feet and has a
term which commenced on May 1, 1988, and which is scheduled to expire on April
30, 1998. The IBT lease calls for an initial annual rental of $132,00, with
annual escalation over the term of the lease equal to the rate of annual
increase in the Consumer Price Index multiplied by the previous year's rent,
such increases not to exceed 6% per annum on a cumulative basis. The Prime lease
is for approximately 2,850 square feet contiguous to that of IBT, and has a term
which commenced on December 1, 1988, and which is also scheduled to expire on
April 30, 1998. Neither lease contains any renewal options. The Prime lease
provides for an initial annual rental of $42,750, with annual escalations over
the term of the lease at the same rate as that discussed above for the IBT
lease.
IBT had an agreement with Equipment Technologies, Inc. ("ETI"), the stock
of which is owned 50% by Virgil Williams and 50% by James Williams, pursuant to
which IBT agreed to loan ETI funds under a working capital line of credit in the
principal amount of up to $2,000,000, with interest at prime plus 1%. During
1993, the highest outstanding principal balance under the loan was $1,425,000.
From August 19, 1993, the date on which the acquisition of IBT was consummated,
no further advances under the line of credit were made to ETI by IBT. The
outstanding principal balance of $1,425,000 was repaid in full on February 28,
1994, and the line of credit was terminated.
At the time of the acquisition of IBT and Prime, IBT was in possession of
notes receivable (the "Notes") from its then shareholders, the Williamses. The
Notes are demand notes, bearing interest at 8%, and relate to funds withdrawn by
the shareholders for purposes unrelated to IBT. During 1993, the highest
outstanding principal balance on the notes was $1,773,490 in the aggregate
(Virgil Williams -- $1,405,990; James Williams -- $367,500). As of February 28,
1994, the outstanding principal balance on the notes was $1,773,490 in the
aggregate (Virgil Williams -- $1,405,990; James Williams -- $367,500).
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SECURITIES OWNERSHIP REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
FFMC's officers (as defined in Section 16 (a)) and directors, and persons who
own more than 10% of a registered class of FFMC's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Officers, directors and greater than
10% shareholders are required by SEC regulation to furnish FFMC with copies of
all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to FFMC, or
written representations that no Forms 5 were required, FFMC believes that during
or with respect to the year ended December 31, 1993, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
selected Deloitte & Touche as independent accountants of FFMC for 1994. Deloitte
& Touche, as successor by merger to Touche Ross & Co., has been FFMC's
independent public accountants since 1972.
Representatives of Deloitte & Touche are expected to be present at the
meeting and will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
A shareholder who wishes to submit a proposal for action at the 1995 Annual
Meeting and have the proposal included in the proxy statement for such meeting
must send his proposal sufficiently in advance so that it is received at FFMC's
principal executive offices by December 15, 1994. The shareholder should also
notify FFMC in writing regarding his intention to appear personally at the
meeting to present his proposal at the time he submits his proposal.
OTHER MATTERS
Management of FFMC is not aware of any other matters to be presented for
action at the Annual Meeting other than those mentioned herein. If any other
matters come before the meeting, it is the intention of the persons named in the
enclosed proxy to vote on such matters in accordance with their judgment.
If any shareholder desires to present a matter of business for action at
the 1994 Annual Meeting, such matter must be described in a written notice by
such shareholder delivered to the Secretary of FFMC at FFMC's principal
executive offices not less than five days prior to the date of the Annual
Meeting, in accordance with Section 2.7 of FFMC's Bylaws, a copy of which may be
obtained from the Secretary.
By Order of the Board of Directors
STEPHEN D. KANE
Secretary
17
20
VOTING INSTRUCTIONS FIRST FINANCIAL MANAGEMENT CORPORATION
SAVINGS PLUS PLAN
THIS CARD REQUESTS VOTING INSTRUCTIONS FOR THE PLAN TRUSTEE. IT
IS NOT A PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, BUT
THE BOARD OF DIRECTORS HAS RECOMMENDED A VOTE FOR THE NOMINEES
LISTED BELOW.
The undersigned participant in the Savings Plus Plan (the "Plan") of First
Financial Management Corporation ("FFMC") hereby instructs Wachovia Bank of
Georgia, N.A. (the "Trustee") to vote all shares of FFMC Common Stock credited
to the undersigned's account(s) under the Plan as of March 11, 1994 as
designated below at the annual meeting of shareholders to be held on April 27,
1994, or any adjournment thereof.
1) ELECTION OF DIRECTORS (Check applicable box.)
/ / FOR ALL NOMINEES listed below (except as marked to the contrary below). / / WITHHOLD AUTHORITY to vote for all
nominees listed below.
Patrick H. Thomas, George L. Cohen, Robert E. Coleman, Jack R. Kelly, Jr.,
Henry A. Leslie, M. Tarlton Pittard, Charles B. Presley and Virgil R.
Williams
INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.
- ----------------------------------------------------------------------------------------------
2) DISCRETIONARY AUTHORITY (Check applicable box)
/ / The Trustee is authorized to exercise its discretion to vote upon such other / / WITHHOLD AUTHORITY to vote on any
business as may properly come before the meeting. other business.
When this voting instruction card is properly executed and returned, the
shares covered hereby will be voted in the manner directed herein by the
undersigned Plan participant. If this voting instruction card is signed and
returned without otherwise specifying how the Trustee should vote, the Trustee
will vote the shares held in the participant's account(s) under the Plan FOR
the election of all the nominees for Director set forth above and the Trustee
may exercise its discretion to vote on any other business that may properly
come before the meeting. If no voting instruction card is returned, the shares
held in the participant's account(s) under the Plan will be voted with respect
to the above nominees in the same proportion as the shares held in the Plan for
which voting instructions are received from Plan participants.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS VOTING INSTRUCTION CARD IN THE
ENCLOSED PREPAID ENVELOPE
(Continued and to be signed and dated on reverse side)
(Continued from the other side)
THE TRUSTEE'S VOTE WITH RESPECT TO THE TOTAL NUMBER OF SHARES HELD FOR ALL PLAN
PARTICIPANTS WILL BE REPORTED TO FFMC ON AN AGGREGATE BASIS FOR ALL SUCH
SHARES. EACH PARTICIPANT'S VOTING INSTRUCTION CARD WILL BE TREATED AS
CONFIDENTIAL AND WILL NOT BE MADE KNOWN TO ANY DIRECTOR, OFFICER, EMPLOYEE OR
AGENT OF FFMC.
Please sign exactly as your name appears below. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
Dated:
----------------------, 1994
Please mark, sign, date and return this voting instruction card promptly
using the enclosed envelope which requires no postage if mailed in the United
States. It should be received by the Trustee no later than 5 p.m., April 25,
1994.
21
PROXY
FIRST FINANCIAL MANAGEMENT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Patrick H. Thomas and M. Tarlton Pittard,
and each of them, as Proxies, each with the power to appoint a substitute, and
hereby authorizes both or either of them to represent and to vote, as designated
below, all the shares of common stock of First Financial Management Corporation
held of record by the undersigned on March 11, 1994, at the annual meeting of
shareholders to be held on April 27, 1994, or any adjournment thereof.
1) ELECTION OF DIRECTORS (Check applicable box.)
/ / FOR ALL NOMINEES listed below (except as marked to the contrary below). / / WITHHOLD AUTHORITY to vote for all
Patrick H. Thomas, George L. Cohen, Robert E. Coleman, Jack R. Kelly, Jr., nominees listed below.
Henry A. Leslie, M. Tarlton Pittard, Charles B. Presley and Virgil R. Williams
INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.
- -----------------------------------------------------------------------------
2) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR the election of all of the nominees for Director set forth above.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN
THE ENCLOSED PREPAID ENVELOPE
(Continued and to be signed and dated on the reverse side)
(Continued from the other side)
PROXY - SOLICITED BY THE BOARD OF DIRECTORS
Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in the full corporate name by the President or other
authorized officer. If a partnership, please sign in the partnership name by an
authorized person.
------------------------------------
Signature
------------------------------------
Signature if held jointly
Dated -------------------------, 1994
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope which requires no postage if mailed in the United States.