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]
Filed by Party other than Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-12
J.D. EDWARDS & COMPANY
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
[J. D. Edwards LOGO]
NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MARCH 26, 2002
10:00 A.M.
Dear J.D. Edwards Stockholder:
On Tuesday, March 26, 2002, J.D. Edwards & Company will hold its 2002
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 February 1, 2002 may vote at this meeting or any
adjournments that may take place. The purposes of the meeting are to:
1. Elect two Class II directors for a term of three years;
2. Ratify the appointment of PricewaterhouseCoopers LLP as J.D.
Edwards' independent accountants for the 2002 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' fiscal 2001 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
/s/ RICHARD G. SNOW, JR.
Richard G. Snow, Jr.
Vice President, General Counsel and
Secretary
February 19, 2002
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Questions and Answers....................................... 1
Proposals................................................... 3
Audit Fees.................................................. 3
Information About Nominees and Other Directors.............. 5
Board and Committee Meetings................................ 7
Directors' Compensation..................................... 8
Audit Committee Report...................................... 8
Beneficial Owners' and Management's Ownership of J.D.
Edwards Stock............................................. 10
Executive Compensation Report............................... 12
Compensation Committee Interlocks and Insider
Participation............................................. 13
Compensation of Executive Officers.......................... 14
Certain Relationships and Related Transactions.............. 18
Section 16(a) Beneficial Ownership Compliance............... 18
Stock Performance Graph..................................... 19
Other Matters............................................... 19
Exhibit A................................................... A-1
</Table>
(i)
QUESTIONS AND ANSWERS
Q. WHAT MAY I VOTE ON?
A. You may vote on the following two matters:
- the election of the Class II nominees to serve on our Board of Directors
- the approval of the appointment of the independent accountants for fiscal
2002
See "Proposals", beginning on page 3, and "Information About Nominees and
Other Directors", beginning on page 5, 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 II nominees and for the
appointment of PricewaterhouseCoopers LLP as J.D. Edwards' independent
accountants for fiscal 2002.
Q. WHO IS ENTITLED TO VOTE?
A. Holders of common stock of record as of the close of business on February
1, 2002, the Record Date, are entitled to vote at the Annual Meeting. As of
the Record Date, 119,221,072 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 ComputerShare Trust Co., Inc., 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 ComputerShare Trust Co. 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.
1
The 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 two Class II 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 2002 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 and Richard E. Allen, Executive Vice President, Finance and
Administration, Chief Financial Officer and Assistant Secretary, to vote on
these matters at their discretion.
Q. WHEN ARE THE STOCKHOLDER PROPOSALS FOR THE 2003 ANNUAL MEETING DUE?
A. All stockholder 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
18, 2002. Stockholder proposals must comply with Rule 14a-8 of the
Securities Exchange Act of 1934. Properly submitted stockholder nominees to
the Board of Directors will be considered by our Governance and Nominating
Committee.
Additionally, J.D. Edwards' advance notice bylaw provisions require that
any stockholder proposal to be presented from the floor of the 2003 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 stockholder; the
class and number of shares held; and any material interest the stockholder
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.
2
PROPOSALS
1. ELECTION OF DIRECTORS
There are two Class II nominees up for reelection this year. Detailed
information on each nominee is provided on page 5 of this proxy statement. One
of the three Classes of directors is elected each year, and directors serve for
three-year terms.
Two Class II directors are to be elected at this meeting for a three-year
period ending in 2005. The Board of Directors has nominated Richard E. Allen and
Robert C. Newman for reelection. If either of the nominees is unable or declines
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.
Class II director Harry T. Lewis has indicated to the Board of Directors
that he will not stand for reelection following the expiration of his current
term at the 2002 Annual Meeting. The Board of Directors is presently examining
potential candidates to fill this vacancy; however, no nomination has been made
as of the date of this proxy statement. Your proxies cannot be voted for a
greater number of persons than the number of nominees named in this proxy
statement.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE TWO 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 as our independent accountants for
fiscal 2002. PricewaterhouseCoopers LLP has unrestricted access to the Audit
Committee to discuss audit findings and other financial matters. Representatives
of PricewaterhouseCoopers LLP 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
2002.
AUDIT FEES
The aggregate fees billed by Pricewaterhouse Coopers LLP for professional
services related to the audit of our annual financial statements for fiscal 2001
included in our Annual Report on Form 10-K and for the review of the financial
statements for fiscal 2001 included in our Quarterly Reports on Form 10-Q were
$825,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed by PricewaterhouseCoopers LLP for professional services
related to information technology services design and implementation for fiscal
2001.
ALL OTHER FEES
The aggregate fees billed by PricewaterhouseCoopers LLP for all other
professional services provided to us for fiscal 2001, excluding those described
above under "Audit Fees", were $995,000. The other services consisted of tax
compliance and planning, international statutory audits and employee benefit
plan audits, merger and acquisition services, and other consultation services.
In the course of its meetings, the Audit Committee has considered whether these
other services are compatible with maintaining PricewaterhouseCoopers LLP's
independence.
3
These fees are comprised primarily of the following (in thousands):
<Table>
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Tax compliance and planning $530
- -----------------------------------------------------------------------
International statutory audits and employee benefit plan
audits 217
- -----------------------------------------------------------------------
Merger and acquisition services 113
- -----------------------------------------------------------------------
Other consultation services 135
- -----------------------------------------------------------------------
TOTAL ALL OTHER FEES $995
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
</Table>
4
INFORMATION ABOUT NOMINEES AND OTHER DIRECTORS
The Board of Directors currently 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 III directors whose terms
expire in 2003, three Class I directors whose terms expire in 2004, and three
Class II directors whose terms expire at this Annual Meeting (one of whom is not
standing for reelection 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. In January 2002, the Board
elected Robert M. Dutkowsky as a Class I director.
NOMINEES FOR CLASS II DIRECTORS
RICHARD E. ALLEN Director since September 1991
Age 44
Richard E. Allen has been the Executive Vice President, Finance and
Administration since May 2000 and the Chief Financial Officer and Assistant
Secretary since January 1990. Mr. Allen served as Senior Vice President, Finance
and Administration from November 1997 through April 2000, as Vice President,
Finance and Administration from January 1990 through October 1997, and as
Treasurer from January 1990 to April 2000. Mr. Allen served as Controller of
J.D. Edwards from August 1985 to September 1994 and as Secretary from March 1986
to January 1990. Mr. Allen holds a B.S. in business administration from Colorado
State University.
ROBERT C. NEWMAN Director since August 1978
Age 58
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 J.D. Edwards, 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, an M.B.A. from the University of California,
Los Angeles, and a Ph.D. in management from Golden Gate University.
INCUMBENT CLASS III DIRECTORS
MICHAEL J. MAPLES Director since January 1997
Age 59
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 an
M.B.A. from Oklahoma City University. He serves as a director of Lexmark
International, Inc., NetIQ Corporation and Concero, Inc.
C. EDWARD MCVANEY Director since March 1977
Age 61
C. Edward McVaney resigned as President and Chief Executive Officer of J.D.
Edwards on January 2, 2002, after having resumed those positions in April 2000.
He will resign as Chairman of the Board of Directors of J.D. Edwards, which he
co-founded, at this Annual Meeting. 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 an M.B.A. from
Rutgers University.
5
TRYGVE E. MYHREN Director since January 1997
Age 65
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 an M.B.A.
from the Amos Tuck School of Business Administration at Dartmouth College. He
serves on the boards of Advanced Marketing Services, Inc. and Dreyfus Founders
Funds.
INCUMBENT CLASS I DIRECTORS
GERALD HARRISON Director since January 1997
Age 69
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
an L.L.B. from the University of Colorado School of Law.
DELWIN D. HOCK Director since March 1997
Age 67
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 and Hathaway
Corporation.
ROBERT M. DUTKOWSKY Director since January 2002
Age 47
Robert M. Dutkowsky has been President and Chief Executive Officer of the
Company since January 2002. Mr. Dutkowsky joined J.D. Edwards from Teradyne,
Inc., where he was President of its Assembly Test Division. Previously he had
been Chairman, President, and Chief Executive Officer of GenRad, Inc., which was
acquired by Teradyne in October 2001. Prior to joining GenRad in 2000, Mr.
Dutkowsky was with EMC, where he served as Executive Vice President responsible
for global sales, marketing, alliances, and customer service. He served as
President of Data General in 1999, when it was acquired by EMC. Previously, Mr.
Dutkowsky held management positions at IBM during his 20-year employment with
the company. Mr. Dutkowsky holds a Bachelor of Science degree in Industrial and
Labor Relations from Cornell University. He serves as a director of Network
Associates.
6
BOARD AND COMMITTEE MEETINGS
The Board of Directors met, either in person or by telephone, 30 times
during fiscal 2001. Overall attendance at the Board and committee meetings was
96%. Attendance was at least 83% 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 Audit Committee Report for fiscal 2001 begins on page
8 of this proxy statement, and a copy of the Amended and Restated Audit
Committee Charter is included as an exhibit to this proxy statement.
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 2001:
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
GOVERNANCE AND
NAME AUDIT COMPENSATION FINANCE NOMINATING
- -----------------------------------------------------------------------------------------------------
Richard E. Allen X X
- -----------------------------------------------------------------------------------------------------
Robert M. Dutkowsky X
- -----------------------------------------------------------------------------------------------------
Gerald Harrison X X
- -----------------------------------------------------------------------------------------------------
Delwin D. Hock X X
- -----------------------------------------------------------------------------------------------------
Harry T. Lewis, Jr.* X X
- -----------------------------------------------------------------------------------------------------
Michael J. Maples X
- -----------------------------------------------------------------------------------------------------
C. Edward McVaney X
- -----------------------------------------------------------------------------------------------------
Trygve E. Myhren X X
- -----------------------------------------------------------------------------------------------------
Robert C. Newman X X
- -----------------------------------------------------------------------------------------------------
NUMBER OF MEETINGS IN FISCAL YEAR 2001 6 7 4 2
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</Table>
- ---------------
* Mr. Lewis is not standing for reelection at this Annual Meeting.
7
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
- $1,500 for each Board meeting attended
- $500 for each Board conference call attended
- $1,500 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 equal to the cash compensation they
otherwise would have received. Only one non-employee director in fiscal 2001
elected to receive stock options in lieu of cash 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 to directors during fiscal 2001.
AUDIT COMMITTEE REPORT
The J.D. Edwards & Company Audit Committee has (1) reviewed and discussed
the audited consolidated financial statements with management, (2) discussed
with PricewaterhouseCoopers LLP, its independent accountants, the matters
required to be discussed by the Statement on Auditing Standards No. 61, (3)
received the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1, and has discussed the
accountants' independence with the independent accountants, and (4) considered
whether the provision of non-audit services by the independent accountants is
compatible with maintaining the accountants' independence. Based upon these
discussions and reviews, the Audit Committee recommended to the Board that the
audited financial statements be included in J.D. Edwards' Annual Report on Form
10-K for the fiscal year ended October 31, 2001 and filed with the Securities
and Exchange Commission.
The Audit Committee is composed of the following three directors, all of
whom are independent directors as defined in Rule 4200(a)(14) of the National
Association of Securities Dealers listing standards:
- Harry T. Lewis, Jr.
- Delwin D. Hock
- Gerald Harrison
8
The Board has adopted an Amended and Restated Charter for the Audit
Committee. The Amended and Restated Charter will be included as an exhibit to
the proxy statement for the 2002 Annual Meeting of Stockholders.
Respectfully submitted by the members of the Audit Committee of the Board
of Directors
Harry T. Lewis, Jr.
Delwin D. Hock
Gerald Harrison
9
BENEFICIAL OWNERS' AND MANAGEMENT'S OWNERSHIP OF J.D. EDWARDS STOCK
The following table shows, as of February 1, 2002, how many shares of J.D.
Edwards common stock are 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.
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
NO. OF SHARES
OPTIONS OF RETIREMENT
EXERCISABLE SAVINGS PLAN PERCENT
SHARES BENEFICIALLY WITHIN 60 DAYS STOCK BENEFICIALLY BENEFICIALLY
NAME OWNED(1) (1)(2) OWNED OWNED
- -----------------------------------------------------------------------------------------------------------------
Richard E. Allen(3) 337,871 313,236 42,639 *
- -----------------------------------------------------------------------------------------------------------------
John H. "Hank" Bonde 500 62,500 -- *
- -----------------------------------------------------------------------------------------------------------------
Harry Debes 1,000 -- -- *
- -----------------------------------------------------------------------------------------------------------------
Robert M. Dutkowsky -- 309,375 -- *
- -----------------------------------------------------------------------------------------------------------------
Gerald Harrison 11,540 53,811 -- *
- -----------------------------------------------------------------------------------------------------------------
Delwin D. Hock 15,240 53,811 -- *
- -----------------------------------------------------------------------------------------------------------------
Harry T. Lewis, Jr. 22,500 67,811 -- *
- -----------------------------------------------------------------------------------------------------------------
Michael J. Maples 25,870 37,764 -- *
- -----------------------------------------------------------------------------------------------------------------
Richard Mathews -- 20,042 -- *
- -----------------------------------------------------------------------------------------------------------------
C. Edward McVaney(4) 8,309,102 -- 66,249 7.0%
- -----------------------------------------------------------------------------------------------------------------
Trygve E. Myhren 20,040 43,811 -- *
- -----------------------------------------------------------------------------------------------------------------
Robert C. Newman(5) 7,717,854 -- 59,861 6.5%
- -----------------------------------------------------------------------------------------------------------------
Kylee A. Fernalld(6) 7,680,268 -- -- 6.4%
- -----------------------------------------------------------------------------------------------------------------
Kevin E. McVaney(7) 7,236,138 -- -- 6.1%
- -----------------------------------------------------------------------------------------------------------------
All directors and executive
officers as a group (17
Persons including those
Named above) 16,503,862 1,212,656 200,239 15.0%
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</Table>
- ---------------
* 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
after February 1, 2002 through the exercise of any stock option or other
right. Unless otherwise indicated in the footnotes, each person or entity
has sole voting and investment power or shares voting and investment 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 February 1, 2002.
10
(3) Includes 299,011 shares held by the Allen Family Trust, 21,660 shares held
by the Allen Family Charitable Lead Trust, 3,200 shares held by the Allen
Family Foundation, and 14,000 shares held of record by Mr. Allen's
children.
(4) Includes 4,440,882 shares held by the C. Edward McVaney Revocable Trust and
3,868,220 shares held of record by Mr. McVaney's wife in the Carole Louise
McVaney Trust.
(5) Includes 4,843,619 shares held by Newkop Investments L.L.P., a company
affiliated with Mr. Newman, 101,766 shares held of record by Mr. Newman's
wife in each of the Judith Newman Grantor Retained Annuity Trusts 1 and 2,
and 101,766 shares held by Mr. Newman in each of the Robert Newman Grantor
Retained Annuity Trusts 1 and 2.
(6) As reflected on Ms. Fernalld's Form 13G filing for 2001.
(7) As reflected on Mr. McVaney's Form 13G filing for 2001.
11
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 J.D. Edwards' executive compensation program are to:
- Attract, retain, and motivate highly qualified executive talent
- Reward executives based on J.D. Edwards' performance
- Align the compensation and interests of executive officers with the
long-term interests of J.D. Edwards' 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.
The Compensation Committee reviews the base salaries of executive officers
annually. In its recommendation of base salary adjustments, the Committee
considers individual performance and experience, relative scope of
responsibility, and company performance, as well as the base salaries paid to
executives in the competitive marketplace.
J.D. Edwards amended the terms of its incentive compensation plan effective
in the second quarter of fiscal 2001. Under the revised plan, participants were
to receive bonus awards contingent upon the Company's attainment of certain
earnings per share ("EPS") thresholds. The EPS thresholds were not met in fiscal
2001. Bonus awards for fiscal 2002 will be contingent upon the Company's
achievement of specified revenue and operating income targets.
Ownership of J.D. Edwards common stock is a key and fundamental element of
executive compensation. Executive officers, as well as other employees, 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 generally have a term of 8 years and vest 25% at the end of the
first year and 1/48th each month thereafter until fully vested four years from
the date of grant. Options to purchase a total of 5,197,922 shares were granted
to employees in fiscal 2001.
The J.D. Edwards 1997 Employee Stock Purchase Plans for U.S. and Non-U.S.
Employees permit employees to acquire J.D. Edwards common stock through payroll
deductions and promote broad-based equity participation throughout the company.
The Committee believes that the stock plans align the interests of employees
with the long-term interests of stockholders.
J.D. Edwards 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. J.D. Edwards
generally matches 50% of an employee's eligible contributions up to a maximum
match of 3% of eligible compensation. This match is discretionary. The profit
sharing contribution portion of the Retirement Savings Plan is designed to
invest primarily in J.D. Edwards common stock for the benefit of the U.S.
employees. Company contributions are determined by the Board, in its discretion,
and, if made, may be in the form of cash or J.D. Edwards common stock.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 2001
C. Edward McVaney served as President and Chief Executive Officer during
fiscal 2001. Mr. McVaney earned a base salary of $120,000 and no cash
incentives. His base salary took into consideration the
12
performance factors described above. Mr. McVaney did not participate in J.D.
Edwards' bonus incentive compensation plan. Mr. McVaney received no option
grants during fiscal 2001. Mr. McVaney resigned from his positions as President
and Chief Executive Officer of the Company as of December 31, 2001. The Board of
Directors has appointed Robert M. Dutkowsky to succeed Mr. McVaney as President
and Chief Executive Officer.
Respectfully submitted by the members of the Compensation Committee of the
Board of Directors:
Trygve Myhren, Chairman
Michael J. Maples
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J.D. Edwards' 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 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.
13
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 2001, or the Named Executive Officers, for services rendered to J.D.
Edwards during the last three fiscal years. Robert M. Dutkowsky was appointed by
the Board of Directors to the positions of President and Chief Executive Officer
as of January 2, 2002, replacing C. Edward McVaney. Mr. Dutkowsky did not serve
in those capacities during fiscal 2001. Information pertaining to Mr.
Dutkowsky's Employment Agreement with the Company is provided on pages 17 and 18
of this proxy statement under the heading "Employment Contracts and Change in
Control Arrangements."
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM
OTHER ANNUAL COMPENSATION ALL OTHER
ANNUAL COMPENSATION COMPENSATION AWARDS COMPENSATION
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR BASE SALARY BONUS OPTIONS
- ------------------------------------------------------------------------------------------------------------------------
C. Edward McVaney 2001 $120,000 -- -- -- --
President and Chief 2000 120,000 -- -- -- --
Executive Officer 1999 120,000 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Richard E. Allen 2001 $331,000 $ 24,450 -- 84,800 --
Executive Vice President 2000 297,815 57,289 -- 250,000 --
and Chief Financial 1999 277,088 60,000 -- 45,000 --
Officer
- ------------------------------------------------------------------------------------------------------------------------
John H. "Hank" Bonde 2001 $371,212 -- $ 5,122 250,000 --
Executive Vice President -- -- -- -- -- --
and Chief Operating -- -- -- -- -- --
Officer(1)
- ------------------------------------------------------------------------------------------------------------------------
Harry Debes 2001 $ 72,917 $131,250 -- 80,000 $118,086(3)
Senior Vice President, -- -- -- -- -- --
Americas Sales and -- -- -- -- -- --
Consulting Services(2)
- ------------------------------------------------------------------------------------------------------------------------
Richard Mathews 2001 $226,949 $142,674 $67,600(6) 75,000 --
Senior Vice President, 2000 287,532 186,938 -- 43,050 --
International Sales(4)(5) 1999 271,023 159,425 -- -- --
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</Table>
- ---------------
(1) Mr. Bonde assumed the positions of Executive Vice President and Chief
Operating Officer of the Company during fiscal 2001. Mr. Bonde received no
compensation from the Company prior to that time.
(2) Mr. Debes assumed the position of Senior Vice President, Americas Sales and
Consulting Services during fiscal 2001. Mr. Debes provided services to the
Company on a consulting basis from May 20, 2001 through August 15, 2001. Mr.
Debes was neither an employee nor a consultant to the Company and received
no compensation from the Company prior to May 2001.
(3) Compensation paid to Mr. Debes from May 20, 2001 through August 15, 2001 for
services provided to the Company on a consulting basis.
(4) Mr. Mathews acted as Commercial Director of J.D. Edwards New Zealand
Limited, in which the Company then held a minority ownership position, from
November 1, 1998 until its acquisition by the Company in February 2000. Mr.
Mathews was appointed Vice President and Managing Director of J.D. Edwards
Australia Pty Limited in March 2000, following the acquisition, and served
in that capacity until May 2001, when he was appointed to his current
position. Portions of Mr. Mathew's fiscal 2000 compensation and all of his
fiscal 1999 compensation were paid to him as an employee by J.D. Edwards New
Zealand Limited or J.D. Edwards Australia Pty Limited, as applicable.
14
(5) Mr. Mathews' base salary, bonus and other compensation for November 2000
through April 2001 were paid in New Zealand dollars, and Mr. Mathews' base
salary, bonus and other compensation for May 2001 through October 2001 were
paid in Great Britain pounds sterling. The amounts shown have been converted
to U.S. dollars utilizing an average annualized exchange rate of U.S. $.4198
per 1 New Zealand dollar and U.S. $1.4431 per 1 Great Britain pound
sterling. Mr. Mathews' salary and bonus compensation for fiscal 2000 and
1999 were paid in Australian dollars, and the amounts shown have been
converted to U.S. dollars utilizing an average annualized exchange rate of
U.S. $.5941 and $.6377, respectively, per 1 Australian dollar.
(6) Includes $45,457 paid to Mr. Mathews as a housing allowance, $16,235 paid to
Mr. Mathews as a car allowance, and $5,908 paid on Mr. Mathews' behalf as
benefit plan expenses.
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth, as to the Named Executive Officers,
information concerning stock options granted during fiscal 2001. Mr. Dutkowsky
was appointed to the positions of President and Chief Executive officer as of
January 2, 2002, during fiscal 2002, replacing C. Edward McVaney. Mr. Dutkowsky
was neither an employee nor a consultant of J.D. Edwards during fiscal 2001. Mr.
Dutkowsky was awarded stock options to purchase a total of 1,600,000 shares of
J.D. Edwards common stock in fiscal 2002 in connection with an Employment
Agreement, effective as of January 2, 2002, between himself and the Company.
Information pertaining to Mr. Dutkowsky's stock option grants is contained in
the discussion of his Employment Agreement provided on pages 17 and 18 of this
proxy statement under the heading "Employment Contracts and Change in Control
Arrangements."
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
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%
- ------------------------------------------------------------------------------------------------------------------------
C. Edward McVaney -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Richard E. Allen 84,800 1.63% $ 12.63 05/21/09 $ 511,366 $1,224,811
- ------------------------------------------------------------------------------------------------------------------------
John H. "Hank"
Bonde(5) 250,000 4.81% $11.9375 02/07/09 $1,424,906 $3,412,898
- ------------------------------------------------------------------------------------------------------------------------
Harry Debes 80,000 1.54% $ 11.00 05/13/09 $ 420,161 $1,006,358
- ------------------------------------------------------------------------------------------------------------------------
Richard Mathews 75,000 1.44% $ 7.94 04/30/09 $ 284,325 $ 681,007
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</Table>
- ---------------
(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 J.D. Edwards common stock on the date of grant.
Except as otherwise noted, all options have 8-year terms and vest 25% on the
first anniversary date of the grant and 1/48th each month thereafter.
(2) J.D. Edwards granted options to purchase 5,197,922 shares of common stock to
employees in fiscal 2001.
(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 J.D. Edwards'
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.
(5) Mr. Bonde's options vest 25% on each of the first, second, third and fourth
anniversaries of the grant.
15
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, 2001. Mr. Dutkowsky was appointed to the positions of President and
Chief Executive officer as of January 2, 2002, during fiscal 2002, replacing C.
Edward McVaney. Mr. Dutkowsky was neither an employee nor a consultant of J.D.
Edwards during fiscal 2001. Mr. Dutkowsky was awarded stock options to purchase
a total of 1,600,000 shares of J.D. Edwards common stock in fiscal 2002 in
connection with an Employment Agreement, effective as of January 2, 2002,
between himself and the Company. Information pertaining to Mr. Dutkowsky's stock
option grants is contained in the discussion of his Employment Agreement
provided on pages 17 and 18 of this proxy statement under the heading
"Employment Contracts and Change in Control Arrangements."
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------
C. Edward McVaney -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Richard E. Allen 0 $ 0 299,303 343,318 $583,908 $ 0
- ---------------------------------------------------------------------------------------------------------------------
John H. "Hank" Bonde 0 0 0 250,000 0 0
- ---------------------------------------------------------------------------------------------------------------------
Harry Debes 0 0 0 80,000 0 0
- ---------------------------------------------------------------------------------------------------------------------
Richard Mathews 0 0 15,558 102,492 0 0
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</Table>
- ---------------
(1) Based on the fair market value of J.D. Edwards common stock at fiscal year
end less the exercise price payable for the shares.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
J.D. Edwards entered into an Employment Agreement with Richard E. Allen
("Mr. Allen"), effective as of May 1, 2000 and continuing for an initial term of
two years through May 1, 2002. Under the terms of his Agreement, Mr. Allen will
serve as Executive Vice President, Finance and Administration and Chief
Financial Officer for an initial period of two years. Mr. Allen will receive an
annual base salary of $326,000, as well as certain bonus compensation,
contingent upon his continued and satisfactory performance of the duties
specified in his Agreement. In addition, Mr. Allen was awarded stock options to
purchase 225,000 shares of J.D. Edwards common stock, which will vest one
hundred percent (100%) on May 1, 2002, or earlier if Mr. Allen is terminated for
reasons other than cause, performance or disability, as defined in his
Agreement. If Mr. Allen's employment is terminated for reasons of performance or
disability after May 1, 2001, his options will vest twenty-five percent (25%) as
of May 1, 2001, and 1/16th per month thereafter until the date of termination of
employment, at which time all unvested options will be cancelled. His options
will be immediately cancelled if he resigns or is terminated for cause any time
prior to May 1, 2002. Mr. Allen is entitled to certain severance payments in the
event of his termination of employment for reasons other than for cause. His
Agreement will automatically renew for successive one-year periods thereafter
unless either J.D. Edwards or Mr. Allen provides the other with written notice
of intent not to renew no later than 30 days prior to the end of any period.
Salary and bonus compensation, as well as subsequent option grants, if any, for
renewal periods will be established by a written addendum to Mr. Allen's
Employment Agreement to be approved by the Compensation Committee of the Board.
J.D. Edwards entered into an Employment Agreement with Harry Debes ("Mr.
Debes"), dated May 4, 2001 but effective as of August 16, 2001. Under the terms
of his Agreement, Mr. Debes will serve as Senior Vice President, Americas Sales
and Consulting Services for a period of at least one year, beginning May 1,
16
2001. Mr. Debes will receive an annual base salary of $350,000, along with
certain bonus compensation of up to seventy-five percent (75%) of his base
salary based upon achievement of certain objectives determined and approved by
the Compensation Committee of the Board. In addition, under the terms of his
Agreement, Mr. Debes received a guaranteed bonus for fiscal 2001 of $131,250.
Mr. Debes was awarded stock options to purchase 80,000 shares of J.D. Edwards
common stock on May 14, 2001, at an exercise price of $11.00. In addition, Mr.
Debes is entitled to receive a grant of 50,000 stock options, to be granted at
fair market value, on the first day on which the price of J.D. Edwards common
stock is at or above $24.00, as well as a grant of 50,000 stock options, to be
granted at fair market value, on the first day on which the stock price is at or
above $36.00. Mr. Debes is eligible to participate in all employee benefits
provided by the Company. In the event Mr. Debes' employment is terminated by the
Company for performance or disability, as defined in his Agreement, Mr. Debes
will be entitled to receive severance pay in the amount of his then current
twelve months base salary, conditioned upon Mr. Debes entering into a Separation
Agreement with the Company in the form appended to his Employment Agreement.
Should Mr. Debes voluntarily resign or be terminated for cause, as defined in
his Employment Agreement, he will not be entitled to any severance pay.
J.D. Edwards entered into an Employment Agreement with Robert M. Dutkowsky
("Mr. Dutkowsky"), dated and effective as of January 2, 2002. Under the terms of
his Agreement, Mr. Dutkowsky has agreed to serve as the President and Chief
Executive Officer of the Company for a period of not less than two years,
beginning on January 2, 2002. Mr. Dutkowsky was appointed to the Board of
Directors as of January 2, 2002, and will be appointed Chairman of the Board at
the Annual Meeting on March 26, 2002. Mr. Dutkowsky will receive an annual base
salary of $650,000, as well as certain bonus compensation, contingent upon Mr.
Dutkowsky's continued employment with the Company and achievement of certain
objectives determined and approved by the Compensation Committee of the Board.
In addition, Mr. Dutkowsky will receive guaranteed bonus payments of $162,500 on
each of March 31, June 30, September 30, and December 31, 2002, provided he
remains an employee of the Company on such dates. In the event of Mr.
Dutkowsky's death or disability, as defined in the Employment Agreement, or in
the event he is terminated without cause, also as defined in his Agreement, Mr.
Dutkowsky will receive certain guaranteed bonus payments. Mr. Dutkowsky was
awarded stock options to purchase 1,100,000 shares of J.D. Edwards common stock
on January 2, 2002, which vest as follows: (a) 275,000 on January 2, 2002; and
(b) 17,187.5 on the last day of each month, beginning in February 2002. Mr.
Dutkowsky was also awarded additional stock options to purchase 500,000 shares
of J.D. Edwards common stock on January 2, 2002, which vest in full on the fifth
anniversary of the effective date of the Agreement, or will vest earlier as
follows: (a) 250,000 on the date on which the average fair market value of J.D.
Edwards common stock, as defined in the Agreement, over any sixty consecutive
trading days has reached (or exceeded) two times the per share exercise price of
the stock options; and (b) 250,000 on the date on which the average fair market
value over any sixty consecutive trading days has reached (or exceeded) three
times the per share exercise price of the stock options. The exercise price of
all of the above stock options is $15.90. In addition, Mr. Dutkowsky was granted
a right to purchase 100,000 shares of restricted common stock of the Company at
a price of $.01 per share. Mr. Dutkowsky's restricted stock purchase right vests
as to 50,000 shares on January 2, 2003 and 50,000 on January 2, 2004, and is
contingent upon his continued employment with the Company. If Mr. Dutkowsky
voluntarily resigns from employment with the Company or is terminated for cause
at any time during the initial employment term, his stock options will be
cancelled as of the date of his resignation or termination and Mr. Dutkowsky
will have the right to exercise only those options which are vested as of the
date of his resignation or termination. If Mr. Dutkowsky's employment is
terminated by the Company without cause or because of Mr. Dutkowsky's death or
disability, all of his vested stock options and restricted stock, as well as any
stock options or restricted stock that are due to vest within one year after
such termination of employment, will be accelerated and vest on the date of
termination. In addition, if any of the share price goals of the options are
attained within sixty days after such termination of employment, then the
applicable options will vest on the date the goals are attained. Finally, if Mr.
Dutkowsky's employment is terminated without cause in connection with a change
in control, as defined in his Agreement, all of Mr. Dutkowsky's unvested stock
options and restricted stock will fully vest on the date of termination of his
employment. Mr. Dutkowsky will have a period of six months following his
termination of employment within which to exercise his vested stock options. Mr.
Dutkowsky may participate in all employee benefits provided by the Company. Mr.
Dutkowsky will be entitled to receive
17
severance pay in an amount equal to two years of his then current base salary
and two years of his target bonus, as defined in his Agreement, in the event his
employment is terminated without cause, contingent upon his entering into a
Separation Agreement in the form appended to his Employment Agreement.
J.D. Edwards entered into an Employment Agreement with Richard Mathews
("Mr. Mathews"), dated July 10, 2001 but effective as of May 1, 2001. Under the
terms of his Agreement, Mr. Mathews will serve as Senior Vice President,
International Sales for a period of three years, beginning May 1, 2001. Mr.
Mathews will receive an annual base salary of 180,000 pounds sterling and will
be entitled to earn certain bonus compensation, including a 75% performance
related bonus and a fiscal 2001 bonus of 10,000 pounds sterling based on target
revenue achievement. Mr. Mathews was awarded stock options to purchase 75,000
shares of J.D. Edwards common stock on May 1, 2001, at an exercise price of
$7.94. Mr. Mathews is eligible to participate in all employee benefits provided
by the Company. In the event the Company terminates Mr. Mathews' employment
without cause, Mr. Mathews will continue to be paid his base salary for twelve
months from the date of termination of his employment and the Company will pay
for Mr. Mathews to relocate back to New Zealand. If Mr. Mathews is terminated
for cause or for gross misconduct, as defined in the current employee handbook,
his salary compensation will cease immediately and he will not be entitled to
any further incentive payments.
J.D. Edwards maintains a Management Change in Control Plan in which the
executive officers participate. The Company's Management Change in Control Plan
provides for severance payments to be made to participants under circumstances
which, following a change in control of J.D. Edwards, as defined in the Plan,
are deemed to be an involuntary termination of such participant's employment
with J.D. Edwards. The severance payments are determined based upon a formula
that takes into account each participant's annual compensation at the time of
involuntary termination and the average bonus received by a participant over the
preceding three years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
J.D. Edwards 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 requires J.D. Edwards'
directors, executive officers, and holders of more than 10% of J.D. Edwards
common stock 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 2001, our executive officers, directors and 10%
stockholders complied with all applicable Section 16(a) Form 3 or Form 4 filing
requirements except that Messrs. Debes, Mathews, and McVaney each filed one late
report detailing initial ownership or reporting acquisitions or dispositions.
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 J.D. Edwards' 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.
COMPARISON OF 49 MONTH CUMULATIVE TOTAL RETURN*
AMONG J.D. EDWARDS & COMPANY, THE S&P 500 INDEX
AND THE MORGAN STANLEY TECHNOLOGY INDEX
(PERFORMANCE GRAPH)
<Table>
<Caption>
9/24/97 10/97 10/98 10/99 10/00 10/01
------- ------- ------- ------- ------- -------
J.D. Edwards & Company 100.0 97.19 93.61 68.42 73.96 20.27
S&P 500 100.0 101.9 124.3 156.3 165.8 124.5
Morgan Stanley Technology 100.0 91.24 129.1 235.4 261.7 127.4
</Table>
* $100 invested on 9/24/97 in stock or on 8/31/97 in index -- including
reinvestment of dividends. Fiscal year ending October 31.
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 persons 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 19, 2002
19
EXHIBIT A
AMENDED AND RESTATED CHARTER
FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF J.D. EDWARDS & COMPANY
I. PURPOSE:
The Audit Committee will make such examinations as are necessary to monitor
the corporate financial reporting and the internal and external audits of J.D.
Edwards & Company and its subsidiaries (the "Company"), to provide to the Board
of Directors the results of its examinations and recommendations, to monitor and
outline to the Board improvements made, or to be made, in internal accounting,
finance, legal compliance, and ethics controls, to select independent auditors,
and to provide to the Board such additional information and materials as it may
deem necessary to make the Board aware of significant financial matters that
require Board attention.
In addition, the Audit Committee has the authority to undertake the
specific duties and responsibilities listed below, and will have the authority
to undertake such other specific duties as the Board of Directors from time to
time prescribes.
II. MEMBERSHIP:
The Audit Committee shall consist of at least two (2) members of the Board,
all of whom shall be independent directors as defined in NASD listing standards
and in accordance with the rules of the Nasdaq Stock Market Inc.'s Nasdaq
National Market standards set forth in the SEC's Blue Ribbon Committee Report on
Improving the Effectiveness of Corporate Audit Committees. The members of the
Audit Committee shall be appointed by and shall serve at the discretion of the
Board of Directors.
III. RESPONSIBILITIES:
The Audit Committee has the authority to undertake the following duties and
responsibilities:
A. Documents/Reports Review
1. Review before release the unaudited quarterly operating results
in the Company's quarterly earnings release and discuss with the
independent auditors the quarterly review prior to filing the Form 10-Q;
2. Review and discuss with management before release the audited
financial statements and Management's Discussion and Analysis in the
Company's Annual Report on Form 10-K;
3. Review the reports prepared by Internal Audit and management's
responses to those reports; and
4. Review this Audit Committee Charter annually, and modify it as
necessary.
B. Independent Accountants
1. Review and recommend the selection and retention of the
independent auditors to the Board of Directors;
2. Review the performance of the independent auditors;
3. Review fee arrangements with the independent auditors;
4. Provide a forum for the independent auditors to meet in closed
session with the Audit Committee;
A-1
5. Review any dispute between management and the independent
auditors and recommend action to the Board of Directors;
6. Receive from and review the independent auditors quarterly
written disclosures and the letter required by the Independence
Standards Board Standard No. 1 delineating all relationships between the
auditor and the company and their potential impact on independence, as
may be modified or supplemented, and discuss with the independent
auditors their independence;
7. Review and discuss with the independent auditors and management
on a quarterly basis, the compatibility of non-audit services with
maintaining the auditor's independence;
8. Prior to the annual independent audit, review with the
independent auditors and management the auditors' proposed audit scope
and approach and areas of audit emphasis; and
9. Discuss with the independent auditors the matters required to be
discussed by SAS No. 61.
C. Internal Auditors
1. Review and concur in the appointment, replacement, reassignment,
or dismissal of the Director of Internal Audit; and
2. Review on a continuing basis, the activities, organizational
structure, and qualifications of the Internal Audit function.
D. Financial Organization
1. Review with senior management and the independent auditors the
Company's accounting and financial personnel resources.
E. Internal Controls and Process Improvement
1. Review on a continuing basis the adequacy of the Company's
system of internal controls, policies, and procedures;
2. Conduct a post-audit review of the financial statements and
audit findings, including any significant suggestions for improvements
provided to management by the independent auditors and their judgment
about the quality of the Company's accounting principles, the form and
content of the Company's financial statements and disclosures, and the
required communications from the independent auditors under generally
accepted auditing standards and SEC regulations; and
3. Provide oversight and review of the Company's asset management
policies, including an annual review of the Company's investment
policies and performance for cash and long-term investments.
F. Ethics and Legal Compliance
1. Review management's monitoring of compliance with the Company's
Business Ethics and Conduct Policy and with the Foreign Corrupt
Practices Act; and
2. Review with the General Counsel any legal matter that could have
a significant impact on the Company's financial statements.
G. Reporting
1. Include in the proxy statement an Audit Committee report stating
that the Committee:
a. has reviewed and discussed the audited consolidated financial
statements with management;
b. has discussed with the independent auditors the matters
required to be discussed by SAS No. 61;
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c. has received from the auditors disclosures regarding the
auditors' independence required by ISB No. 1 and discussed with the
auditors the auditors' independence;
d. based upon the review and discussions with management and the
independent auditors, including the independent auditors' disclosure
regarding independence, recommended to the Board of Directors that
the financial statements be included in the Annual Report on Form
10-K;
e. has a written charter adopted by the Board of Directors and
included a copy in the proxy statement at least every three years;
and
f. is comprised of members who are "independent".
2. Include in the proxy statement disclosure that the Audit
Committee has considered whether the provision of non-audit services is
compatible with maintaining the principal accountant's independence;
H. Other
1. Reviewing related party transactions for potential conflicts of
interest;
2. If necessary, instituting special investigations and, if
appropriate, hiring special counsel or experts to assist;
3. Coordinating with other committees to ensure responsibilities
are being allocated appropriately pursuant to the committees' respective
charters; and
4. Undertaking such other oversight duties as the Board of
Directors delegates to it, and will report, at least annually, to the
Board regarding the Committee's examination and recommendations.
IV. MEETINGS:
The Audit Committee will meet at least four times each year. Each meeting
will include a separate executive session with the Company's independent
auditors to discuss any matters that the Committee or auditors believe should be
discussed privately.
The Audit Committee will meet separately with the Chief Executive Officer
and separately with the Chief Financial Officer of the Company at least annually
to review the financial affairs of the Company. The Audit Committee will meet
with the independent auditors of the Company quarterly or at such other time as
it deems appropriate.
The Audit Committee is authorized, by majority vote, to adopt its own rules
of procedure, including the formalities of calling, noticing and holding
meetings and for the taking of action.
V. REPORTS:
The Audit Committee may report or record its summaries of recommendations
to the Board in written or oral form. The Audit Committee recommendations will
be incorporated as a part of the minutes of the Board of Directors meeting at
which those recommendations are presented.
VI. MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
VII. OTHER:
The Audit Committee shall have the right, as and when it shall determine to
be necessary or appropriate to the functions of the Audit Committee,
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(i) at the expense of the Company and not at the expense of the members
thereof, to retain counsel (which may be, but need not be, the regular
corporate counsel to the Company) and other advisors to assist it in
connection with its functions; and
(ii) to request from and/or rely upon advice on aspects of operations or
financial condition of the Company from the Chief Executive Officer, the
Chief Financial Officer, and from the independent auditors.
The officers of the Company are requested to cooperate with the Audit
Committee and to render assistance to it as it shall request in carrying out its
functions.
Approved By:
/s/ HARRY T. LEWIS, JR.
------------------------------------
February 28, 2001
/s/ DELWIN D. HOCK
------------------------------------
February 28, 2001
/s/ GERALD HARRISON
------------------------------------
February 28, 2001
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF J.D. EDWARDS & COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MARCH 26, 2002
By signing on the reverse side, you acknowledge receipt of the Notice of
Annual Meeting of Stockholders of J.D. Edwards & Company and the accompanying
proxy statement, each dated February 19, 2002, and appoint Richard G. Snow, Jr.
and Richard E. Allen, or either of them, proxies and attorneys-in-fact, each
with full power of substitution, to represent you at the Annual Meeting, to be
held Tuesday, March 26, 2002 at 10:00 a.m., local time, at J.D. Edwards &
Company's World Headquarters at One Technology Way, Denver, Colorado and at any
adjournment thereof, and to vote all shares of Common Stock of the Company held
of record by you on February 1, 2002, as specified upon the proposals listed on
the reverse side.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF
STOCKHOLDERS, PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
PROPOSALS AND AS DEEMED ADVISABLE BY THE PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE PROPOSALS.
J.D. EDWARDS & COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<Table>
WITHHOLD
AUTHORITY
FOR ALL TO VOTE FOR FOR ALL NOMINEES, EXCEPT
NOMINEES ALL NOMINEES VOTE WITHHELD FOR THOSE NAMED BELOW:
1. Election of Class II Directors [ ] [ ] [ ]
Nominees: 01 Richard E. Allen
02 Robert C. Newman
--------------------------------
Nominee Exceptions
2. Ratification of the appointment of
PricewaterhouseCoopers LLP as independent FOR AGAINST ABSTAIN
accountants of J.D. Edwards for the year [ ] [ ] [ ]
ending October 31, 2002.
Please sign exactly as your name appears
on this form. If your shares are
registered in more than one name,
whether as joint tenants, as community
property, or otherwise, each of you
should sign. When signing as attorney,
executor, administrator, trustee,
guardian, or in another fiduciary
capacity, please give your full title.
If a corporation, the president or
another authorized officer should sign
and indicate the full corporation name.
If a partnership, a general partner or
an authorized representative thereof
should sign and indicate his or her
title and the full partnership name.
------------------------------------------
Signature Date
------------------------------------------
Signature Date
- --------------------------------------------------------------------------------------------------------------------------
</Table>
* FOLD AND DETACH HERE *
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM
PROMPTLY USING THE ENCLOSED ENVELOPE.