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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X] [ ] Confidential, for Use of the
Filed by Party other than Registrant [ ] Commission Only (as permitted by Rule
14a-6(e)(2))
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-12
J.D. EDWARDS & COMPANY
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(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 Appropriate Box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[J.D. Edwards Logo]
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MARCH 29, 2000
10:00 A.M.
Dear J.D. Edwards Stockholder:
On Wednesday, March 29, 2000, J.D. Edwards & Company will hold its 2000
Annual Meeting of Stockholders at its World Headquarters at One Technology Way,
Denver, Colorado 80237. The meeting will begin at 10:00 a.m., local time.
Only stockholders of record who owned shares of J.D. Edwards' common stock
at the close of business on January 24, 2000 may vote at this meeting or any
adjournments that may take place. The purposes of the meeting are to:
1. Elect three Class III directors for a term of three years;
2. Ratify the appointment of PricewaterhouseCoopers LLP as J.D.
Edwards' independent accountants for the 2000 fiscal year; and
3. Transact other business as may properly come before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE TWO PROPOSALS
DISCUSSED IN THIS PROXY STATEMENT.
At the meeting we will also report on J.D. Edwards' 1999 business results
and other matters of interest to stockholders.
Your vote is important to us. Whether you plan to attend the meeting or
not, please complete, date, sign, and return the enclosed proxy card promptly.
If you attend the meeting and prefer to vote in person, you may do so.
We look forward to seeing you at the meeting.
By Order of the Board of Directors
[RICHARD G. SNOW, JR.]
Richard G. Snow, Jr.
Vice President, General Counsel and
Secretary
February 11, 2000
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TABLE OF CONTENTS
PAGE
----
Questions and Answers....................................... 1
Proposals................................................... 3
Information About Nominees and Other Directors.............. 4
Board and Committee Meetings................................ 6
Directors' Compensation..................................... 7
Beneficial Owners and Management's Ownership of J.D. Edwards
Stock..................................................... 8
Executive Compensation Report............................... 10
Compensation Committee Interlocks and Insider
Participation............................................. 12
Compensation of Executive Officers.......................... 12
Certain Relationships and Related Transactions.............. 14
Section 16(a) Beneficial Ownership Compliance............... 14
Stock Performance Graph..................................... 15
Other Matters............................................... 15
(i)
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QUESTIONS AND ANSWERS
Q. WHAT MAY I VOTE ON?
A. You may vote on the following two matters:
- the election of the Class III nominees to serve on our Board of
Directors
- the approval of the appointment of the independent accountants for
fiscal 2000
See page 4 for more details.
Q. HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A. The Board recommends a vote for each of the Class III nominees and for the
appointment of PricewaterhouseCoopers LLP as J.D. Edwards' independent
accountants for fiscal 2000.
Q. WHO IS ENTITLED TO VOTE?
A. Stockholders of record as of the close of business on January 24, 2000, the
Record Date, are entitled to vote at the Annual Meeting. As of the Record
Date, 108,306,608 shares of J.D. Edwards' common stock were outstanding.
Q. HOW MANY VOTES DO I HAVE?
A. You are entitled to one vote for each share of J.D. Edwards' common stock
that you own as of the Record Date. The proxy card or cards indicate the
number of shares of common stock that you own as of the Record Date.
Q. HOW DO I VOTE?
A. Complete, sign, and date each proxy card you receive and return it in the
prepaid envelope. If you return your signed proxy card, but do not mark the
boxes showing how you wish to vote, your shares will be voted "FOR" the two
proposals.
Q. WHAT SHARES ARE INCLUDED ON THE PROXY CARD(S)?
A. The shares on your proxy card or cards represent all of your shares of J.D.
Edwards' common stock that you owned on the Record Date. If you are an
employee of J.D. Edwards, this also includes those shares in your J.D.
Edwards Employee Stock Purchase Plan account and shares held in custody for
your account by Fidelity Investment, as trustee for the J.D. Edwards &
Company Retirement Savings Plan.
Q. HOW DO I REVOKE MY PROXY?
A. You have the right to revoke your proxy at any time before the meeting by
doing one of the following:
- delivering a later dated proxy card to J.D. Edwards' Secretary
- notifying J.D. Edwards' Secretary in writing before the meeting
- voting in person at the meeting
Any written notice or subsequent proxy should be delivered to J.D. Edwards
& Company, One Technology Way, Denver, Colorado 80237, Attention:
Secretary, or hand delivered to the Secretary of the Company before the
vote is taken at the meeting.
Q. WHO WILL COUNT THE VOTE?
A. Representatives of Harris Trust Company, our transfer agent, will count the
votes and act as the inspector of election.
Q. IS MY VOTE CONFIDENTIAL?
A. Proxy cards, ballots, and voting tabulations that identify individual
stockholders are mailed or returned directly to Harris Trust Company and
handled in a manner that protects your voting privacy. The transfer agent
will not disclose your vote to management unless it is necessary to meet
legal requirements. The
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transfer agent will, however, forward to management any written comments
you make on the proxy card or elsewhere without disclosing your name unless
it is necessary to meet legal requirements.
Q. WHAT IS A QUORUM?
A. A quorum of stockholders is necessary to hold a valid meeting. A quorum
will exist if stockholders entitled to cast at least a majority of all the
votes entitled to be cast at the meeting are present at the meeting or
represented by proxy.
Q. WHAT IS THE REQUIRED VOTE TO TAKE ACTION ON THE TWO PROPOSALS?
A. The three Board nominees receiving the highest number of votes cast will be
elected. The affirmative vote of a majority of votes cast is required to
ratify the appointment of the independent accountants.
Q. HOW ARE ABSTENTIONS AND BROKER NON-VOTES TREATED?
A. Abstaining votes and broker non-votes are counted as present for
determining whether a quorum exists. Abstaining votes are deemed to be
votes cast and are included in the tabulation of the voting results. Broker
non-votes are not deemed to be votes cast and as a result, broker non-votes
are not included in the tabulation of the voting results on the election of
directors or the appointment of the independent accountants and do not
count as votes against such matters. A broker non-vote occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner as to how to vote on that item.
Q. HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A. Although we do not know of any business to be considered at the 2000 Annual
Meeting other than the proposals described in this proxy statement, if any
other business is presented at the meeting, your signed proxy card gives
authority to Richard G. Snow, Jr., Vice President, General Counsel, and
Secretary, to vote on these matters at his discretion.
Q WHEN ARE THE SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING DUE?
A All shareholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to J.D. Edwards & Company, One
Technology Way, Denver, Colorado 80237, Attention: Secretary by October 14,
2000. Shareholder proposals must comply with Rule 14a-8 of the Securities
Exchange Act of 1934.
Additionally, J.D. Edwards' advance notice bylaw provisions require that
any shareholder proposal to be presented from the floor of the 2001 annual
meeting must be submitted in writing to J.D. Edwards' Secretary, at the
above address, not less than 60 days prior to the meeting. The advance
notice must be accompanied by a brief description of the business to be
brought before the meeting; the name and address of the shareholder; the
class and number of shares held; and any material interest the shareholder
has in the business. Proposals may be presented after our Board of
Directors has determined that it is a proper matter for consideration under
our bylaws. In addition to these procedures, a stockholder's notice with
regard to nominations for the election of directors must contain specific
information concerning the nominees.
Q. WHO PAYS FOR THE PROXY SOLICITATION COSTS?
A J.D. Edwards will pay all the costs of soliciting proxies. In addition to
mailing proxy solicitation material, J.D. Edwards' directors and employees
may also solicit proxies in person, by telephone, or by other electronic
means of communication. J.D. Edwards will ask banks, brokers, other
institutions, nominees, and fiduciaries to forward the proxy material to
their principals and to obtain authority to execute proxies. J.D. Edwards
will reimburse them for expenses.
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PROPOSALS
1. ELECTION OF DIRECTORS
There are three Class III nominees up for reelection this year. Detailed
information on each nominee is provided on pages 4 to 5. One of the three
Classes of directors is elected each year and directors serve for three-year
terms.
Three Class III directors are to be elected at this meeting for a
three-year period ending in 2003. The Board of Directors has nominated Michael
J. Maples, C. Edward McVaney, and Trygve E. Myhren for reelection. If any of the
nominees are unable or decline to serve as a director at the time of the
meeting, the proxies will be voted for a nominee designated by the present Board
to fill the vacancy. We are not aware that any nominee will be unable or will
decline to serve as a director.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THREE NOMINEES.
2. APPROVAL OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT
ACCOUNTANTS
The Audit Committee has recommended, and the Board has approved, the
appointment of PricewaterhouseCoopers LLP (PwC) as our independent accountants
for fiscal 2000 subject to your approval. They have unrestricted access to the
Audit Committee to discuss audit findings and other financial matters.
Representatives of PwC will attend the Annual Meeting to answer appropriate
questions. They may also make a statement.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR FISCAL
2000.
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INFORMATION ABOUT NOMINEES AND OTHER DIRECTORS
The Board of Directors consists of nine members divided into three classes,
with members of each class holding office for staggered three-year terms. There
are currently three Class I directors whose terms expire in 2001, three Class II
directors whose terms expire in 2002, and three Class III directors whose terms
expire at this Annual Meeting. Each director serves in office until his
respective successor is duly elected and qualified or until his earlier death or
resignation. Any additional directors added to the Board will be distributed
among the three classes so that, as nearly as possible, each class will consist
of an equal number of directors.
NOMINEES FOR CLASS III DIRECTORS
MICHAEL J. MAPLES Director since January 1997
Age 57
Michael J. Maples is currently retired and is operating a ranch. From April
1988 to July 1995, Mr. Maples held various management positions at Microsoft
Corporation, most recently as Executive Vice President of the Worldwide Products
Group. Prior to that, he served as a Director of Software Strategy for IBM. Mr.
Maples holds a B.S. in electrical engineering from Oklahoma University and a
M.B.A. from Oklahoma City University. He serves as a director of Lexmark
International, Inc. and PSW Technologies.
C. EDWARD MCVANEY Director since March 1977
Age 59
C. Edward McVaney is Chairman of the Board of Directors of the Company,
which he co-founded. Mr. McVaney held the positions of President and Chief
Executive Officer from the Company's inception in March 1977 to October 1998,
except that Mr. McVaney did not act as President of the Company from September
1987 through September 1991. Mr. McVaney holds a B.S. in mechanical engineering
from the University of Nebraska and a M.B.A. from Rutgers University.
TRYGVE E. MYHREN Director since January 1997
Age 63
Trygve E. Myhren is currently President of Myhren Media, Inc., which
invests in media, telecommunications, Internet, and consumer products companies.
From November 1990 to March 1996, he served as President of The Providence
Journal Company, a company that owned and managed newspapers, broadcast
television stations, cable television systems, programming networks, and
interactive and multimedia ventures. During this same time, he was also Chief
Executive Officer of King Holdings, an owner and manager of broadcast and cable
television properties. From 1981 to 1988, Mr. Myhren served as Chairman and
Chief Executive Officer of American Television and Communications Corporation, a
publicly traded subsidiary of Time, Inc. During 1986 and 1987, Mr. Myhren also
served as Chairman of the National Cable Television Association. Mr. Myhren has
a B.A. in political science and philosophy from Dartmouth College and a M.B.A.
from the Amos Tuck School of Business Administration at Dartmouth College. He
serves on the boards of Peapod, Ltd., Advanced Marketing Services, Inc., Verio,
Inc., and Founders Funds, Inc.
INCUMBENT CLASS I DIRECTORS
GERALD HARRISON Director since January 1997
Age 67
Gerald Harrison has been engaged in private research and writing since
1984. From 1982 to 1984, he was President and Chief Executive Officer of
Stearns-Roger World Corporation, an engineering and construction firm, and for
14 years prior to that, he served in various other positions. Mr. Harrison holds
a LL.B. from the University of Colorado School of Law.
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DELWIN D. HOCK Director since March 1997
Age 65
Delwin D. Hock has been self-employed as a business consultant and private
investor since July 1997. He retired from his positions as Chief Executive
Officer of Public Service Company of Colorado, a utility services company, in
January 1996 and as Chairman of the Board of Directors in July 1997. From
September 1962 to January 1996, Mr. Hock held various management positions with
the Public Service Company including President and Chief Operating Officer,
President and Chief Executive Officer, and Chairman, President and Chief
Executive Officer. Mr. Hock received his B.S. in accounting from the University
of Colorado. He serves as a director of American Century Investors, Rocky
Mountain Internet, and Hathaway Corporation.
DOUGLAS S. MASSINGILL Director since November 1998
Age 42
Douglas S. Massingill has been President and Chief Executive Officer since
November 1998. From March 1997 to October 1998, he was Executive Vice President
and Chief Operating Officer. From February 1994 to March 1997, he was Executive
Vice President of Worldwide Operations, and from January 1993 to March 1994, Mr.
Massingill was Vice President and General Manager of the South Area. He joined
the Company in June 1990 as Account Executive for the large Accounts Program.
Mr. Massingill holds a B.A. in accounting from Shorter College and a M.B.A. from
Georgia Southern University.
INCUMBENT CLASS II DIRECTORS
RICHARD E. ALLEN Director since September 1991
Age 42
Richard E. Allen has been Senior Vice President, Finance and Administration
since November 1997 and Chief Financial Officer, Treasurer, and Assistant
Secretary since January 1990. From January 1990 through October 1997, he was
Vice President, Finance and Administration. From August 1985 to September 1994,
Mr. Allen served as Controller of the Company and as Secretary from March 1986
to January 1990. Mr. Allen holds a B.S. in business administration from Colorado
State University.
HARRY T. LEWIS, JR. Director since March 1995
Age 67
Harry T. Lewis, Jr. has been self-employed as a private investor and
financial consultant since April 1988. From January 1981 to March 1988, he was
Senior Vice President for Dain Bosworth Incorporated, an investment banking
firm. Prior to that, Mr. Lewis was a partner with Boettcher & Company, an
investment banking firm. Mr. Lewis has an A.B. from Dartmouth College and a
M.B.A. from the Amos Tuck School of Business Administration at Dartmouth
College. He serves as a director of The Berger Mutual Funds.
ROBERT C. NEWMAN Director since August 1978
Age 56
Robert C. Newman is one of the co-founders of the Company. He is currently
a professor at the University of Denver and manages private investments through
his firm Greenwood Gulch Ventures LLC. From August 1978 until June 1997, he
served in a number of management roles with the Company, including Vice
President of Complementary Technologies and Managing Director of J.D. Edwards &
Company, Ltd. (U.K.). Dr. Newman holds a B.S. in industrial engineering from the
University of California, Berkeley, a M.B.A. from the University of California,
Los Angeles, and a Ph.D. in management from Golden Gate University.
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BOARD AND COMMITTEE MEETINGS
The Board of Directors met 4 times during fiscal 1999. Overall attendance
at the Board and committee meetings was 97%. Attendance was at least 80% for
each director.
The Board of Directors has an Audit, Compensation, Finance, and Governance
and Nominating Committee.
The Audit Committee reviews and reports to the Board on the quality and
performance of both the internal and external accountants and auditors, the
reliability of financial information, and the adequacy of financial controls and
policies. The committee also initiates and approves changes in any of these
areas when necessary.
The Compensation Committee reviews and reports to the Board on compensation
and personnel policies and plans, including management development and
succession plans, employee compensation and benefits, and administration of
stock plans.
The Finance Committee reviews and reports to the Board on J.D. Edwards'
capital structure, capital expenditures, financing arrangements, risk
management, and long range financial planning.
The Governance and Nominating Committee acts on behalf of the Board in
between Board meetings and periodically considers potential candidates to be
nominated to the Board. The committee then reports any actions taken at the next
regular Board meeting. Actions of the committee are generally limited to
handling legal formalities and technicalities concerning administrative
operations.
The following table sets forth the members of each committee and the number
of meetings held in fiscal 1999:
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GOVERNANCE AND
NAME AUDIT COMPENSATION FINANCE NOMINATING
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Richard E. Allen X X
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Gerald Harrison X X
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Delwin D. Hock X X
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Harry T. Lewis, Jr. X X
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Michael J. Maples X
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Douglas S. Massingill X
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C. Edward McVaney
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Trygve E. Myhren X X
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Robert C. Newman X X
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NUMBER OF MEETINGS IN FISCAL 1999 4 5 6 1
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DIRECTORS' COMPENSATION
J.D. Edwards compensates each of its directors who are not employees of
J.D. Edwards or its subsidiaries as follows:
- $15,000 per year as an annual retainer
- $1,000 for each Board meeting attended
- $1,000 for each committee meeting attended (directors do not receive a
fee for a committee meeting attended that is held in conjunction with
a Board meeting)
Additionally, non-employee directors may elect to receive stock options,
instead of the cash amounts described above, to purchase shares of J.D. Edwards'
common stock having a fair market value of the cash compensation they otherwise
would have received. Only one non-employee director in fiscal 1999 elected to
receive stock options as compensation. Non-employee directors are also
reimbursed for expenses incurred in attending meetings. J.D. Edwards does not
compensate directors who are employees of J.D. Edwards or its subsidiaries.
J.D. Edwards also grants non-employee directors non-qualified stock options
to purchase 35,000 shares of J.D. Edwards common stock at the annual meeting at
which the director is first elected to the Board and non-qualified stock options
to purchase 7,000 shares of J.D. Edwards common stock each successive year they
remain a director. These shares vest 25% on the first anniversary date of the
grant and 1/48th each month thereafter. The exercise price for all options
granted to non-employee directors is equal to the market price of the common
stock on the date of grant. Non-employee directors are also eligible to receive
discretionary grants under the J.D. Edwards 1997 Equity Incentive Plan. No
discretionary grants were made during fiscal 1999.
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BENEFICIAL OWNERS AND MANAGEMENT'S OWNERSHIP OF J.D. EDWARDS STOCK
The following table shows, as of January 24, 2000, how many shares of J.D.
Edwards common stock is owned by (1) each person or entity known to beneficially
own more than 5% of the outstanding shares; (2) each of the officers named in
the Summary Compensation Table; (3) each director; and (4) all directors and
executive officers as a group. Each stockholder listed can be reached at J.D.
Edwards' principal offices, unless otherwise noted.
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NO. OF SHARES OF
RETIREMENT
OPTIONS SAVINGS PLAN
EXERCISABLE STOCK PERCENT
SHARES BENEFICIALLY WITHIN 60 DAYS BENEFICIALLY BENEFICIALLY
NAME OWNED(1) (1)(2) OWNED OWNED
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Richard E. Allen(3) 320,115 384,704 42,942 *
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David E. Girard 73,602 341,512 7,541 *
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Gerald Harrison 11,540 26,832 *
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Delwin D. Hock 15,240 26,832 *
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Harry T. Lewis, Jr. 20,000 49,232 *
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Michael J. Maples 15,240 27,344 *
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Douglas S. Massingill 155,680 530,862 19,229 *
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C. Edward McVaney(4) 5,729,751 66,967 5.4%
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Trygve E. Myhren 20,040 26,832 *
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Robert C. Newman(5) 8,487,830 60,703 7.9%
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Michael A. Schmitt 192,842 136,031 12,007 *
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Daniel B. Snyder 159,646 337,711 12,428 *
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J.D. Edwards & Company
Retirement Savings Plan 6,922,692 6.4%
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Kylee A. Fernalld(6) 12,097,651 11.2%
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Kevin E. McVaney(6) 12,087,653 11.2%
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Jack L. Thompson 9,204,520 8.5%
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All directors and executive
officers as a group (19
persons including those
named above) 15,466,882 2,735,343 314,250 16.7%
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* Less than 1% of the Company's common stock
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934 and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under this rule, beneficial ownership includes any shares as
to which the individual or entity has voting power or investment power and
any shares which the individual has the right to acquire within 60 days of
January 24, 2000 through the exercise of any stock option or other right.
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Unless otherwise indicated in the footnotes, each person or entity has sole
voting and investment power or shares voting power with his or her spouse
with respect to the shares shown as beneficially owned.
(2) The amounts shown in this column represent shares of J.D. Edwards common
stock that each person has the right to acquire as a result of the exercise
of stock options within 60 days after January 24, 2000.
(3) Includes 277,381 shares held by the Allen Family Trust, 23,869 shares held
by the Allen Family charitable Lead Trust, 1,791 shares held by the Allen
Family Foundation, and 14,000 shares held of record by Mr. Allen's children.
(4) Includes 4,715,417 shares held by the C. Edward McVaney Trust and 1,014,334
shares held of record by Mr. McVaney's wife in the Carole Louise McVaney
Trust.
(5) Includes 5,135,000 shares held by Newkop Investments L.L.P., a company
affiliated with Mr. Newman.
(6) As reflected on Ms. Fernalld and Mr. McVaney's Form 4 filings for December
1999.
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EXECUTIVE COMPENSATION REPORT
The Compensation Committee of the Board has responsibility to review and
report to the Board on compensation and personnel policies, programs and plans,
including management development and succession plans, employee compensation and
benefits, and administration of stock plans. The purpose of this report is to
summarize the principles, specific program objectives, and other factors
considered by the Committee in reaching its determinations regarding executive
compensation.
EXECUTIVE COMPENSATION POLICIES
The objectives of the Company's executive compensation program are to:
- Attract, retain, and motivate highly qualified executive talent
- Reward executives based on the Company's performance
- Align the compensation and interests of executive officers with the
long-term interests of the Company's stockholders
The Company's executive compensation program consists of base salary, cash
bonuses, long-term incentives in the form of stock options, and the benefit
programs generally available to all full-time employees of the Company.
The Compensation Committee reviews the base salaries of the Company's
executive officers annually. The Committee considers individual performance and
experience, relative scope of responsibility, Company performance, as well as
the base salaries paid to executives in the competitive marketplace in its
recommendation of base salary adjustments.
The Company's incentive compensation plan bonus awards in fiscal 1999 were
based on the following measures of the Company's performance:
- Customer satisfaction
- Achievement of corporate profit
- Achievement of license revenue
The Company establishes target levels of performance for the above measures
under its annual business plans. Using the Company's annual business plan, the
Company funded a total bonus opportunity cash pool based upon the Company's
percentage performance against the annual business plan's target levels for the
above measures. Then, an individual performance "management factor" of 0 to 2.0
times each individual's bonus opportunity, based upon achievement of the above
Company performance measures, was applied to calculate the actual bonus award
for the year for each eligible employee. The management factor for each eligible
employee was subjectively determined on the basis of an assessment of the
individual's performance against qualitative performance factors, the financial
performance of the specific business unit for which results the executive is
responsible, or a combination of both. The management factor for the executive
officers was determined by Douglas Massingill, the Company's Chief Executive
Officer, except for his own management factor and bonus, which was determined by
the Compensation Committee. Additionally in 1999, the Compensation Committee
authorized a special bonus pool to encourage retention of certain key employees.
Based upon executive management's recommendations, the special bonus pool was
allocated to employees who were believed to be critical to the long-term success
of the Company and who, in the current highly competitive market place, could be
attracted to leave the Company for higher compensation and equity opportunities.
Ownership of the Company's common stock is a key and fundamental element of
executive compensation. Executive officers, as well as other employees of the
Company, are eligible to receive grants under the J.D. Edwards 1997 Equity
Incentive Plan. This plan permits the Board or the Compensation Committee to
grant stock options to officers and employees on terms the Board or the
Committee may determine. Options granted have a term of 8 years and vest 25% at
the end of the first year and 1/48th each month thereafter until
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fully vested four years from the date of grant. Options to purchase a total of
5,975,428 shares were granted to employees in fiscal 1999.
The Company's 1997 Employee Stock Purchase Plans for U.S. and Non-U.S.
Employees permit employees to acquire common stock of the Company through
payroll deductions and promote broad-based equity participation throughout the
Company. The Committee believes that the Company's stock plans align the
interests of employees with the long-term interests of stockholders.
The Company maintains the J.D. Edwards & Company Retirement Savings Plan to
provide retirement benefits to its employees. The 401(k) portion of the
Retirement Savings Plan provides benefits through tax deferred salary deductions
for its U.S. employees who meet certain eligibility requirements. The Company
generally matches 50% of an employee's eligible contributions up to a maximum
match of 3% of eligible compensation. This match is discretionary. The
discretionary contribution portion of the Retirement Savings Plan is designed to
invest primarily in the Company's common stock for the benefit of the Company's
U.S. employees. Company contributions are determined by the Board, are
discretionary, and, if made, may be in the form of cash or the Company's common
stock. The Company may continue to make contributions of Company common stock or
cash to the discretionary contribution portion of the Retirement Savings Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 1999
Douglas S. Massingill is President and Chief Executive Officer of the
Company, a position he was promoted to in November 1998. During fiscal 1999, Mr.
Massingill earned a base salary of $438,667 and cash incentives of $240,000.
Cash incentives approximated 54.7% of his base salary. His base salary increase
of 22% and his bonus took into consideration his promotion, as well as the
performance factors described above. Mr. Massingill received 200,000 options
during fiscal 1999.
Respectfully submitted by the members of the Compensation Committee of the
Board of Directors:
Michael J. Maples
Trygve E. Myhren
11
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was formed to review and report to the
Board on compensation and personnel policies, programs and plans, including
management development and succession plans, employee compensation and benefits,
and administration of stock plans. The Committee is currently composed of Mr.
Myhren and Mr. Maples. No interlocking relationship exists between any member of
the Company's Board or Compensation Committee and the board of directors or
compensation committee of any other company, nor has any interlocking
relationship existed in the past.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officer and each of the four most
highly compensated executive officers who served in those capacities during
fiscal 1999, the Named Executive Officers, for services rendered to J.D. Edwards
during the last three fiscal years.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-----------------------------------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR BASE SALARY BONUS OPTIONS
- ------------------------------------------------------------------------------------------------------
Douglas S. Massingill............................ 1999 $438,667 $240,000 200,000
President and Chief Executive Officer 1998 328,125 133,088 --
1997 277,875 276,209 42,000
- ------------------------------------------------------------------------------------------------------
David E. Girard.................................. 1999 $327,092 $200,000 120,000
Executive Vice President and 1998 236,708 118,562 33,000
Chief Operating Officer 1997 190,042 306,000 42,000
- ------------------------------------------------------------------------------------------------------
Richard E. Allen................................. 1999 $277,088 $ 60,000 45,000
Senior Vice President and 1998 245,000 74,529 10,000
Chief Financial Officer 1997 205,833 271,436 28,000
- ------------------------------------------------------------------------------------------------------
Daniel B. Snyder................................. 1999 $248,558 $155,774 45,000
Senior Vice President 1998 236,708 120,012 10,000
1997 172,792 342,262 42,000
- ------------------------------------------------------------------------------------------------------
Michael A. Schmitt............................... 1999 $232,000 $ 65,796 40,000
Senior Vice President 1998 216,667 115,000 33,000
1997 164,667 162,690 28,000
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
12
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OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth, as to the Named Executive Officers,
information concerning stock options granted during the 1999 fiscal year.
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(4)
--------------------------------------------------------------------------------------------
NO. OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED(1) FISCAL YEAR(2) SHARE DATE(3) 5% 10%
- ----------------------------------------------------------------------------------------------------------------------
Douglas S.
Massingill............ 200,000 3.35% $24.25 12.14.06 $2,315,659 $ 5,546,406
- ----------------------------------------------------------------------------------------------------------------------
David E. Girard........ 120,000 2.01% 24.25 12.14.06 1,389,395 3,327,843
- ----------------------------------------------------------------------------------------------------------------------
Richard E. Allen....... 45,000 0.75% 24.25 12.14.06 521,023 1,247,941
- ----------------------------------------------------------------------------------------------------------------------
Daniel B. Snyder....... 45,000 0.75% 24.25 12.14.06 521,023 1,247,941
- ----------------------------------------------------------------------------------------------------------------------
Michael A. Schmitt..... 40,000 0.67% 24.25 12.14.06 463,132 1,109,281
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ---------------
(1) The options in this table are nonqualified stock options granted under the
J.D. Edwards 1997 Equity Incentive Plan and have exercise prices equal to
the fair market value of the Company's common stock on the date of grant.
All options have 8-year terms and vest 25% on the first anniversary date of
the grant and 1/48th each month thereafter.
(2) The Company granted options to purchase 5,975,428 shares of common stock to
employees in fiscal 1999.
(3) The options in this table may terminate before their expiration as a result
of the termination of the optionee's status as an employee or upon the
optionee's disability or death.
(4) Under rules promulgated by the SEC, the amounts in these two columns
represent the hypothetical gain or option spread that would exist for the
options in this table based on an assumed stock price appreciation from the
date of grant until the end of the options' eight-year term at assumed
annual rates of 5% and 10%. The 5% and 10% assumed annual rates of
appreciation are specified in SEC rules and do not represent the Company's
estimate or projection of future stock price growth. There can be no
assurance that the actual stock price appreciation over the 8-year option
term will be at the assumed 5% and 10% annual rates of compounded stock
appreciation or at any other defined rate.
13
17
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, as to the Named Executive Officers, certain
stock option information concerning the number of shares subject to both
exercisable and unexercisable stock options and the value of the options as of
October 31, 1999.
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END ($)(1)
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------
Douglas S.
Massingill 98,790 $1,894,800 424,962 282,600 $8,608,841 $1,384,490
- ---------------------------------------------------------------------------------------------------------------------
David E. Girard 73,000 896,185 295,548 223,225 5,600,929 1,384,490
- ---------------------------------------------------------------------------------------------------------------------
Richard E. Allen 48,680 666,245 354,000 125,451 7,068,670 1,273,414
- ---------------------------------------------------------------------------------------------------------------------
Daniel B. Snyder 56,680 1,025,645 279,207 133,851 5,437,263 1,384,490
- ---------------------------------------------------------------------------------------------------------------------
Michael A. Schmitt 85,010 1,293,302 154,495 134,825 2,653,379 1,273,414
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------
(1) Based on the fair market value of the Company's common stock at fiscal year
end less the exercise price payable for the shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company did not enter into any transactions nor did any business
relationships exist during the last fiscal year that require disclosure under
this section. Any future transactions between the Company and any director or
executive officer will be subject to approval by a majority of the disinterested
members of the Board.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers, and holders of more than 10% of the
common stock of the Company to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of J.D. Edwards. Except as described below, based
solely upon a review of reports submitted, and representations made to J.D.
Edwards, we believe that during fiscal 1999, our executive officers, directors
and 10% stockholders complied with all applicable Section 16(a) filing
requirements except for Messrs. Richard E. Allen, Paul E. Covelo, Michael J.
Maples, Richard G. Snow, Jr., Daniel B. Snyder, and Ms. Pamela L. Saxton.
14
18
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders on
J.D. Edwards' common stock with the cumulative total return of the S&P 500 Index
and the Morgan Stanley Technology Index. The graph assumes that $100 was
invested on September 23, 1997 (the day of the Company's initial public
offering) in J.D. Edwards' common stock, the S&P 500 Index, and the Morgan
Stanley Technology Index, including reinvestment of dividends. No dividends have
been declared or paid on J.D. Edwards' common stock. Note that historic stock
price performance is not necessarily indicative of future stock price
performance.
[Performance Graph]
JD EDWARDS MS HI-TECH S&P 500
---------- ---------- -------
7/30/97
10/31/97 102.4480 87.3931 96.7627
1/30/98 99.5292 89.9007 103.7090
4/30/98 107.3450 110.9510 117.6180
7/31/98 113.5590 117.4960 120.9190
10/30/98 98.6817 120.5570 116.2340
1/29/99 61.2053 198.2780 135.3800
4/30/99 40.4896 196.8600 141.2560
7/30/99 45.5744 216.8490 140.5730
10/29/99 72.1281 251.2190 144.1920
1/21/00 119.3970 360.8700 152.4890
1/31/00
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting other than what has been described
above. If any other matters are properly presented at the Annual Meeting, it is
the intention of the person named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment on these matters.
THE BOARD OF DIRECTORS
Denver, Colorado
February 11, 2000
15
19
J.D. EDWARDS & COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
WITHHOLD
AUTHORITY
FOR all to vote for FOR all nominees, except
nominees all nominees vote withheld for those named below:
1. Election of Class III Directors [ ] [ ] [ ]
Nominees: 01 Michael J. Maples, 02 C.
Edward McVaney, and 03 Trygve E. Myhren
------------------------------
Nominee Exceptions
2. Ratification of the appointment of
PricewaterhouseCoopers LLP as independent FOR AGAINST ABSTAIN
accountants of the Company for the year [ ] [ ] [ ]
ending October 31, 2000.
Please sign exactly as your name
appears hereon. When shares are
registered in the names of two or more
persons, whether as joint tenants, as
community property, or otherwise, both
or all of such persons should sign.
When signing as attorney, executor,
administrator, trustee, guardian, or
another fiduciary capacity, please
give full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized person. If a partnership,
please sign in partnership name by
authorized person.
--------------------------------------
Signature Date
--------------------------------------
Signature Date
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.