SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Fourth Shift Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction 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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(4) Date Filed:
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FOURTH SHIFT CORPORATION
INTERNATIONAL PLAZA
7900 INTERNATIONAL DRIVE
MINNEAPOLIS, MN 55425
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 6, 1998
TO THE SHAREHOLDERS OF FOURTH SHIFT CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of Fourth
Shift Corporation (the "Company") will be held on Wednesday, May 6, 1998, at the
Marriott City Center, 30 South Seventh Street, Minneapolis, Minnesota 55402 at
3:30 p.m., Minneapolis, Minnesota time, for the following purposes:
1. To elect two directors.
2. To transact such other business as may properly come before the
meeting.
Only holders of record of the Company's Common Stock at the close of
business on March 20, 1998 will be entitled to receive notice of and to vote at
the meeting or any adjournment thereof.
You are cordially invited to attend the meeting. WHETHER OR NOT YOU PLAN
TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. If you
later desire to revoke your proxy, you may do so at any time before it is
exercised.
BY ORDER OF THE BOARD OF DIRECTORS
Marion Melvin Stuckey, Chairman of the Board
Minneapolis, Minnesota
April 1, 1998
-----------------
IMPORTANT - PLEASE MAIL YOUR PROXY CARD PROMPTLY
IN ORDER THAT THERE MAY BE A PROPER REPRESENTATION
AT THE MEETING, YOU ARE URGED, WHETHER YOU OWN ONE
SHARE OR MANY, TO COMPLETE, SIGN AND MAIL YOUR PROXY.
-----------------
FOURTH SHIFT CORPORATION
INTERNATIONAL PLAZA
7900 INTERNATIONAL DRIVE
MINNEAPOLIS, MN 55425
-----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 6, 1998
This Proxy Statement is furnished in connection with the solicitation of
the enclosed proxy by the Board of Directors of Fourth Shift Corporation (the
"Company") for use at the Annual Meeting of Shareholders to be held on May 6,
1998, at 3:30 p.m. Minneapolis time, at the Marriott City Center, 30 South
Seventh Street, Minneapolis, Minnesota 55402, and any adjournments thereof (the
"Annual Meeting"). Expenses in connection with the solicitation of proxies will
be paid by the Company. Proxies are being solicited primarily by mail, but, in
addition, officers and regular employees of the Company who will receive no
additional compensation for their services may solicit proxies by telephone,
telegraph or in person. This Proxy Statement and form of proxy enclosed are
being mailed to shareholders on or about April 1, 1998.
Those shares of the Company's Common Stock, $.01 par value (the "Common
Stock"), represented by proxies in the form solicited will be voted in the
manner directed by the holder of such shares, and, if no direction is made, such
shares will be voted for the election of the nominees for director named in this
Proxy Statement and for the approval of the other proposals discussed herein.
If a shareholder abstains from voting as to any matter, then the shares held by
such shareholder shall be deemed present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote with respect to
such matter, but shall not be deemed to have been voted in favor of such matter.
If a broker returns a "nonvote" proxy, indicating a lack of authority to vote on
such matter, then the shares covered by such nonvote shall be deemed present at
the meeting for purposes of determining a quorum but shall not be deemed to be
represented at the meeting for purposes of calculating the vote with respect to
such matter. Proxies may be revoked at any time before being exercised by
delivery to the Secretary of the Company of a written notice of termination of
the proxies' authority or a duly executed proxy bearing a later date.
A copy of the Company's Annual Report for the year ended December 31, 1997
is being furnished to each shareholder with this Proxy Statement.
Only the holders of the Common Stock whose names appear of record on the
Company's books at the close of business on March 20, 1998 will be entitled to
vote at the Annual Meeting. At the close of business on March 20, 1998, a total
of 9,900,653 shares of such Common Stock were outstanding, each share being
entitled to one vote.
ITEM 1--ELECTION OF DIRECTORS
NOMINEES
The Company's Articles of Incorporation provide for a "classified board" of
directors. The number of members of the Board of Directors is currently set at
eight, and the directors are divided into Class A (consisting of three
directors), Class B (consisting of two directors) and Class C (consisting of
three directors). Marion Melvin Stuckey, Michael J. Adams and David J. Allio
are the Class A directors whose terms expire at the Annual Meeting. The Board
of Directors has nominated Messrs. Stuckey and Adams for reelection to the Board
of Directors at the Annual Meeting for terms expiring at the annual meeting in
2001. The other directors of the Company will continue in office for their
existing terms.
Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted to elect Messrs. Stuckey and Adams. If a shareholder of
record returns a proxy withholding authority to vote the proxy with respect to
any of the nominees, then the shares of the Common Stock covered by such proxy
shall be deemed present at the Annual Meeting for purposes of determining a
quorum and for purposes of calculating the vote with respect to such nominee or
nominees, but shall not be deemed to have been voted for such nominee or
nominees. The affirmative vote of a majority of the outstanding shares of the
Common Stock is necessary to elect each nominee. Cumulative voting is not
permitted in the election of directors. In the unlikely event that any of the
nominees is not a candidate for election at the Annual Meeting, the persons
named in the accompanying form of proxy will vote for such other persons as the
Board of Directors may designate. The Board of Directors has no reason to
believe that any nominee will not be a candidate for election.
The following information is furnished with respect to each nominee and
director as of February 28, 1998:
PRINCIPAL OCCUPATION AND BUSINESS
NAME AGE EXPERIENCE FOR PAST FIVE YEARS
---- --- ---------------------------------
NOMINEE DIRECTORS: CLASS A - TERM EXPIRING 1998
Marion Melvin Stuckey. . 59 Mr. Stuckey is the founder of the Company and has
been the Chief Executive Officer and Chairman of
the Company since 1982. Prior to forming the
Company, Mr. Stuckey was an executive officer of
Control Data Corporation ("CDC"), a multinational
computer hardware, peripherals and services
company, from 1975 to 1982. Prior to that
Mr. Stuckey served in various sales, marketing and
management positions at IBM from 1960 to 1975.
Mr. Stuckey is also a director of ULTRADATA
Corporation, a computer software company
headquartered in California.
Michael J. Adams . . . . 52 Mr. Adams has been a Director of the Company since
1984. He has been a senior partner of Adams &
Cesario, P.A., a law firm engaged in a general
business practice in Minneapolis, for more than
five years.
-2-
PRINCIPAL OCCUPATION AND BUSINESS
NAME AGE EXPERIENCE FOR PAST FIVE YEARS
---- --- ---------------------------------
INCUMBENT DIRECTORS: CLASS C - TERM EXPIRING 2000
Anton J. Christianson. . 45 Mr. Christianson has been a Director of the
Company since 1984. He has been a principal of
Cherry Tree Investments, a venture capital
management firm, for more than five years. He has
also been a managing partner of Cherry Tree
Ventures II, a Limited Partnership ("Cherry
Tree"), since 1983. Mr. Christianson also serves
on the Board of Directors of Transport Corporation
of America and TRO Learning.
Steve J. Lair. . . . . . 51 Mr. Lair has been a director of the Company since
April 1997. He has been Senior Vice President of
Sales and Marketing and Service of NEC Computer
Corporation since March 1998. He was Senior Vice
President Marketing and Sales of Acer America
Corporation from March 1997 until March 1998; Vice
President, Worldwide Marketing and Sales, Personal
Productivity Products, of Texas Instruments, Inc.
from April 1995 to March 1997; Vice President of
Marketing, Toshiba America Information Systems
from April 1992 to April 1995; and Vice President,
Dataquest Microcomputer Systems Group from April
1988 to April 1992.
Robert M. Price. . . . . 67 Mr. Price has been a director of the Company since
1990. He has been President of PSV, Inc., a
technology consulting business located in
Burnsville, Minnesota, since 1990. From 1961 until
1990 he served in various executive positions,
including Chairman and Chief Executive Officer,
with CDC. Mr. Price also serves on the Board of
Directors of International Multifoods Corporation,
Tupperware Incorporated, Affinity Technology,
Inc., and Public Service Company of New Mexico.
INCUMBENT DIRECTORS: CLASS B - TERM EXPIRING 1999
Jimmie H. Caldwell . . . 58 Mr. Caldwell has been President, Chief Operating
Officer and a Director of the Company since 1984.
Prior to that time, Mr. Caldwell served in various
positions at CDC, from 1964 to 1984 and held the
position of Vice President of Operations for CDC's
Peripheral Products Company when he left to join
the Company.
Portia Isaacson. . . . . 55 Dr. Isaacson has been a director of the Company
since January 1994. She is currently the
President of Dream IT, Inc., a consulting firm
that she founded in 1987 that is engaged in
publishing business information for the computer
industry. Prior to that time she had been a
founder and President of Future Computing, a
leading computer market research firm.
MEETINGS
During the fiscal year ended December 31, 1997, the Board of Directors of
the Company held seven meetings. All incumbent directors except Mr. Price who
missed two meetings, and Mr. Lair who
-3-
missed two meetings, attended at least 75% of the meetings of the Board, and all
incumbent directors attended at least 75% of those meetings of the committees of
which they were members.
COMMITTEES
The Board of Directors of the Company has an audit committee which met four
times, a compensation committee which met three times, a strategy committee
which met two times, and a corporate governance committee which met one time
during 1997. The audit committee reviews the Company's arrangements with its
independent public accountants and the substance of the audits. The Company's
compensation committee determines policy with respect to compensation to
executive management, specifically reviews the performance and establishes the
compensation to the Company's Chief Executive Officer, reviews compensation to
directors, and administers the Company's stock-based employee benefit plans.
The corporate governance committee monitors compliance of the board with legal
responsibilities, monitors charter documents for legal compliance, and
recommends frequency of board meetings. The strategy committee reviews
strategic decisions related to allocation of resources, market segmentation and
size, product strategy, and marketing strategy. Mr. Adams, Mr. Price and Ms.
Isaacson are currently members of the Compensation Committee; Messrs. Allio,
Christianson and Lair are members of the Audit Committee; Messrs. Adams, Allio
and Christianson are currently members of the Corporate Governance Committee;
and Mr. Price, Mr. Lair and Ms. Isaacson are currently members of the Strategy
Committee.
DIRECTOR COMPENSATION
For the fiscal year ended December 31, 1997, directors who were not also
officers or employees of the Company were entitled to receive an annual fee of
$1,000 per quarter plus $1,200 per Board Meeting, and $500 per committee meeting
attended. All directors are entitled to participate in the Company's 1994
Employee Stock Purchase Plan and to contribute all (subject to limitations in
such plan), or any portion, of the directors fees they receive to that plan.
During 1997, Mr. Adams, Mr. Christianson, Ms. Isaacson, Mr. Lair and Mr. Price
elected to participate in the Employee Stock Purchase Plan and received 4,245,
4,136, 3,923, 3,182 and 3,770 shares, respectively, for directors fees
contributed to such plan.
Directors who are not also officers or employees of the Company also
receive stock options to purchase 3,500 shares of common stock under the
Company's 1993 Stock Incentive Plan at the time of the annual meeting of
shareholders. New directors receive an option to purchase 5,000 shares at the
first annual meeting after they are elected. In accordance with such plan, each
of Mr. Adams, Mr. Christianson, Ms. Isaacson, and Mr. Price received options to
purchase 3,500 shares of common stock, and Mr. Lair received an option to
purchase 5,000 shares of common stock, at an exercise price of $3.375 per share
on May 7, 1997.
Directors who provide consulting services to the Company may also receive
consulting fees of $2,500 per day. Only one director, Steve Lair who received
$5,000 for services rendered during the 1997 fiscal year, was compensated for
consulting services during 1997. Directors are also reimbursed for the expenses
they incur in attending meetings.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS ELECT THE NOMINEES
NAMED HEREIN TO THE TERMS AS DIRECTORS OF THE COMPANY DESCRIBED ABOVE. THE
PERSONS NAMED IN THE ACCOMPANYING PROXY INTEND TO VOTE THE PROXIES HELD BY THEM
IN FAVOR OF SUCH NOMINEES, UNLESS OTHERWISE DIRECTED. IF NO INSTRUCTION IS
GIVEN, THE ACCOMPANYING PROXY WILL BE VOTED FOR SUCH ELECTION. THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK IS REQUIRED FOR THE ELECTION OF
EACH DIRECTOR.
-4-
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT OF THE BOARD OF DIRECTORS
The Company's executive compensation policies are recommended and
administered by the Compensation Committee of the Board of Directors. During
1997, the Compensation Committee consisted of Robert Price, Michael Adams and
Portia Isaacson, independent, outside directors.
EXECUTIVE COMPENSATION POLICIES
The Company's objectives are to maximize shareholder value as well as to
ensure the stability and long-term success of the Company. Consistent
therewith, the Board of Directors has adopted the following standards and
policies relative to setting executive compensation:
- Total compensation should include a significant performance component
in addition to salary.
- Salary should have a relationship to salaries in industry peer groups.
- Total compensation should be adequate to attract, motivate and retain
quality talent.
- Performance measures should relate to key characteristics accepted
within the software/high technology industry.
- Performance should be measured over time periods adequate to evaluate
a particular executive's contribution to results.
- Stock options and other awards should be integrated with other
elements of compensation to formulate a package that helps to align
executive compensation with stockholder interests.
During the summer of 1996, the Committee considered the overall structure
of the Company's compensation plan. After studying statistics on overall levels
of executive compensation and the various forms of compensation, the Committee
determined to set executive compensation on a fifteen month rather than a twelve
month schedule. It specifically considered the history of the Company's
executive compensation versus industry statistics and the Company's performance,
and established in the fall of 1996 the level of the cash bonus that would be
paid executives based on achievement of budget.
1997 EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program comprises base salary,
annual cash incentive compensation, long-term incentive compensation in the form
of stock options, and various benefits, including medical and retirement savings
plans generally available to employees.
BASE SALARY. Base salaries for executive officers during 1997 were set at
levels designed to approximate industry average base salaries as established by
the statistical information from a compensation database for high technology
companies. In most cases, the level of industry average base compensation for
1997 represented an increase over salaries in 1996. Mr. Stuckey's base salary
was increased from $260,000 to $286,000 from 1996 to 1997, a 10% increase.
CASH INCENTIVE COMPENSATION. The Compensation Committee established the
template for the 1997 cash bonus plan for executive officers during the fall of
1996. The bonus plan was designed to tie a significant portion of executive
compensation to performance in accordance with budget. The factors
-5-
included in the bonus plan for 1997 focused primarily on operating income,
revenue, cash flow and in the case of one officer, on delivery dates for
development. The plan was designed to reward performance only if at least 85%
of budgeted performance was achieved. Because the Company did not achieve 85%
of budgeted performance during 1997, no executive, including Mr. Stuckey,
received a cash bonus during the year.
STOCK INCENTIVE COMPENSATION. The Company provides long-term incentive to
its executive officers primarily through the 1993 Stock Incentive Plan (the
"1993 Plan"). Vesting over a period of one to four years, options and
restricted stock have provided a significant incentive to remain with the
Company and to maximize the Company's performance. The Committee specifically
limited the number of option grants in 1997 to be consistent with its stated
longer-term objectives for options granted on an annual basis. Further, it
deferred grants of options to Mr. Stuckey pending performance at or near
budgeted performance for the first half of the fiscal year. No options were
granted to Mr. Stuckey in 1997.
Because of the significant product direction change at the beginning of
1998 and the overall decrease in market price of the Company's common stock, all
of the options held by executive officers were significantly under water. In
order to provide additional long-term incentive to such officers, the Committee
granted additional options at the then market price of the common stock to
employees, including executive officers. Mr. Stuckey received an additional
option to purchase 50,000 shares of common stock at $2.56 per share in January
1998.
BENEFITS. The Company provides medical and retirement savings benefits to
executive officers on terms generally available to employees. No executive
officer received perquisites in excess of 10% of salary during 1997.
SUMMARY
The Compensation Committee believes that the compensation program for
executive officers during the 1997 year was comparable to compensation programs
for similarly situated companies and that the aggregate compensation provided
under the program was appropriate.
Michael Adams
Robert Price
Portia Isaacson
-6-
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for the
last three fiscal years awarded to or earned by the Chief Executive Officer of
the Company and the Company's two other executive officers for services
rendered.
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------------------------------
----------------------------------------- AWARDS
NAME ------------------- PAYOUTS
AND OTHER RESTRICTED ------- ALL
PRINCIPAL ANNUAL STOCK LTIP OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION(1)
-------- ---- ------ ----- ------------ ------ ------- ------- ---------------
MARION MELVIN STUCKEY 1997 $280,000 $7,500
Chairman and Chief 1996 $260,000 20,000 $10,625
Executive Officer 1995 $230,000 100,000 $7,500
JIMMIE H. CALDWELL 1997 $212,000 15,000 $7,500
President and Chief 1996 $200,000 20,000 $10,625
Operating Officer 1995 $180,000 34,000 $7,500
DAVID G. LATZKE 1997 $148,000 10,000
Vice President, Secretary, 1996 $140,000 12,000 $3,133
Chief Financial Officer 1995 $120,000 11,000
and Treasurer
- ---------------
(1) The amounts reported in this column for 1996 include Company contributions
to the Company's 401(k) Plan of $3,125, $3,125 and $3,133 for Mr. Stuckey,
Mr. Caldwell and Mr. Latzke, respectively. The amounts reported for each of
Mr. Stuckey and Mr. Caldwell for each of the three years also include
$7,500 in benefits from split-dollar life insurance policies.
STOCK OPTIONS
The Company maintains a 1989 Stock Option Plan and a 1993 Stock Incentive
Plan. No additional options under the 1989 plan were granted during 1997. The
Company may grant stock options, and other stock-based awards, to executive
officers and other employees and consultants of the Company under the 1993 Stock
Incentive Plan. The following table sets forth information with respect to
options granted to the named executive officers in 1997:
OPTION GRANTS IN 1997
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OPTION TERM (1)
GRANTED TO EMPLOYEES PRICE PER EXPIRATION -------------------------
NAME (#) IN 1997 ($/SH) DATE 5%($) 10%($)
- ---- ------- --------------- --------- ---------- ----- ------
Mr. Stuckey -- -- -- -- -- --
Mr. Caldwell 15,000 3.9% $5.38 1/1/07 $50,705 $128,495
Mr. Latzke 10,000 2.6% $5.38 1/1/07 $33,803 $85,644
- ---------------
(1) These amounts represent the realizable value of the subject options ten
years from the date of grant (the term of each option), without discounting
to present value, assuming appreciation in the market value of the
Company's common stock from the market price on the date of grant at the
rates indicated. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, and overall stock
market conditions. The amounts reflected in this table may not necessarily
be achieved.
-7-
The following table sets forth information with respect to the exercise of
options and the value of options held by executive officers as of December 31,
1997:
AGGREGATED FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES ACQUIRED OPTIONS AT END OF 1997(1) IN-THE-MONEY OPTIONS (2)
ON EXERCISE VALUE --------------------------- ---------------------------
NAME OF OPTIONS REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------ --------------- -------- ----------- ------------- ----------- -------------
Mr. Stuckey 0 0 55,000 65,000 0 0
Mr. Caldwell 0 0 42,000 52,000 0 0
Mr. Latzke 0 0 27,500 35,500 0 0
- ---------------
(1) All of such options, except those issued to Mr. Stuckey in 1995 for 100,000
shares, which were granted with an exercise price of $6.50, which was in
excess of fair market value, are exercisable at a price equal to the fair
market value of the Common Stock on the date of grant.
(2) Represents the difference between the closing price of the Company's Common
Stock as reported on the Nasdaq National Market on December 31, 1997 and
the exercise price of the options.
LONG-TERM INCENTIVE PLAN AWARDS
Other than its 1993 Stock Incentive Plan, the Company does not maintain any
long-term incentive plans.
SEVERANCE AGREEMENTS
The Company has severance agreements with Messrs. Stuckey, Caldwell and
Latzke that provide for the payment to such executive officers of severance
benefits in the event such officers are terminated, or resign for "good reason,"
within two years after a "change of control" of the Company. Such severance
benefits range from one and one-half to three times annual compensation received
by such executives averaged over the five years prior to termination. Such
agreements define change of control as the acquisition by any person or persons
acting in concert of 30% or more of the Company's voting stock, a change of
control required to be reported under the Securities Exchange Act of 1934, or
certain changes in the board composition in connection with a hostile contest
for control. The Company does not have any other employment agreement with an
executive officer named in the summary compensation table.
-8-
SHAREHOLDER RETURN
The graph set forth below compares the cumulative total shareholder return
on the common stock of the Company since July 14, 1993 (the day when the Common
Stock commenced trading on the Nasdaq National Market) with the cumulative total
return on a broad market index (the Nasdaq NMS Index) and a peer group index
(the Nasdaq Computer and Data Processing Index). In each case, the cumulative
return is calculated assuming an investment of $100 on July 14, 1993, and
reinvestment of all dividends.
[GRAPH]
FOURTH SHIFT
STOCK PERFORMANCE CHART DATA
Nasdaq
Computer &
Data
DATE NASDAQ NMS PROCESSING FOURTH SHIFT
---- ---------- ---------- ------------
7/14/93 $100.00 $100.00 $100.00
9/30/93 $112.58 $105.30 $90.91
12/31/93 $114.80 $105.83 $122.73
3/31/94 $109.97 $107.33 $105.45
6/30/94 $104.83 $105.04 $89.10
9/30/94 $113.51 $116.94 $90.91
12/30/94 $112.21 $128.53 $40.00
3/31/95 $122.33 $144.68 $58.18
6/30/95 $139.93 $171.49 $49.09
9/29/95 $156.79 $187.33 $78.18
12/29/95 $158.70 $195.74 $54.55
3/29/96 $166.10 $204.91 $69.09
6/28/96 $179.66 $227.75 $96.36
9/30/96 $186.05 $232.29 $109.09
12/31/96 $195.19 $241.54 $83.64
3/31/97 $184.61 $224.20 $54.55
6/30/97 $218.45 $287.51 $69.09
9/30/97 $255.40 $314.40 $67.27
12/31/97 $239.53 $296.72 $43.64
-9-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 28, 1998, information
regarding the ownership of Common Stock by (i) each director, (ii) each
executive officer named in the Summary Compensation Table, (iii) all directors
and executive officers (including the named individuals) as a group, and (iv)
any other shareholder who is known by the Company to own beneficially more than
5% of the outstanding Common Stock of the Company. Except as otherwise
indicated, the shareholders listed in the table have sole voting and investment
powers with respect to the shares indicated.
SHARES BENEFICIALLY
OWNED
-------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER(1) PERCENT
------------------------------------ --------- -------
Perkins Capital Management, Inc.(2). . . . . . . . . . . 1,342,787 13.6%
730 East Lake Street
Wayzata, MN 55391-1769
Hathaway & Associates, Ltd. (3). . . . . . . . . . . . . 870,000 8.8%
119 Rowayton Avenue
Rowayton, CT 06853
U. S. Bancorp (4). . . . . . . . . . . . . . . . . . . . 502,829 5.1%
111 S.W. Fifth Avenue
Portland, OR 97204
Marion Melvin Stuckey (5). . . . . . . . . . . . . . . . 714,092 7.2%
7900 International Drive
International Plaza
Minneapolis, MN 55420
David R. Lamm(6) . . . . . . . . . . . . . . . . . . . . 871,850 8.8%
204 Marcin Lane
Burnsville, MN 55337
Michael J. Adams (7) . . . . . . . . . . . . . . . . . . 424,159 4.3%
Anton J. Christianson(8) . . . . . . . . . . . . . . . . 122,847 1.2%
Robert M. Price. . . . . . . . . . . . . . . . . . . . . 27,564 *
Portia Isaacson. . . . . . . . . . . . . . . . . . . . . 17,932 *
Steve J. Lair. . . . . . . . . . . . . . . . . . . . . . 3,182 *
Jimmie H. Caldwell(9). . . . . . . . . . . . . . . . . . 289,956 2.9%
David G. Latzke(10). . . . . . . . . . . . . . . . . . . 40,146 *
All executive officers and directors . . . . . . . . . . 1,639,878 16.3%
as a group (8 individuals)
- ---------------
* Less than 1%
(1) Includes 8,500 shares for each of Mr. Adams, Mr. Price and Dr. Isaacson,
60,000 shares for Mr. Stuckey, 55,750 shares for Mr. Caldwell, 35,900
shares for Mr. Latzke and 177,150 shares for all executive officers and
directors as a group, of Common Stock issuable upon the exercise of stock
options which are either currently exercisable or become exercisable within
60 days.
(2) Based upon information contained in the Schedule 13G of Perkins Capital
Management, Inc. ("PCM") filed February 12, 1998; includes 539,138 shares
over which PCM has sole disposition and voting power. PCM has sole
disposition power, but not voting power over the remaining shares.
(3) Based upon information contained in the Schedule 13G of Hathaway &
Associates, Ltd. dated January 10, 1994.
(4) Based upon information contained in the Schedule 13G of U. S. Bancorp filed
February 13, 1998; includes 477,740 shares over which such holder has sole
voting power, 21,089 shares over which it
-10-
has shared voting power, 474,440 shares over which it has sole power of
disposition, and 23,389 shares over which it has shared power of
disposition.
(5) Includes 168,863 shares held by a corporation for which Mr. Stuckey is the
President, sole director and sole shareholder.
(6) Based on 13D filed September 8, 1997; includes 664,750 shares held by a
limited partnership for which Mr. Lamm serves as general partner.
(7) Includes 10,827 shares owned by Mr. Adams' minor children, 9,600 shares
owned by Mr. Adams' spouse, 5,814 shares held in a self-directed HR-10
account, and 325,703 shares representing Mr. Adams' pro rata interest in a
limited partnership in which he is a limited partner. Mr. Adams disclaims
beneficial ownership of the shares held by his spouse and such limited
partnership.
(8) Includes 102,905 shares held by a partnership for which Mr. Christianson is
a general partner.
(9) Includes 7,178 shares and options to purchase shares owned by Mr.
Caldwell's wife. Mr. Caldwell disclaims beneficial ownership of these
shares.
(10) Includes 200 shares owned by Mr. Latzke's minor children.
Under federal securities laws, the Company's directors and officers, and
any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 1997. Based on
information contained in their forms 3, 4 and 5, all directors, officers and
beneficial holders of 10% of the Company's securities timely filed such reports
during 1997.
RELATIONSHIP WITH ACCOUNTANTS
Arthur Andersen LLP have served as the Company's independent public
accountants for more than five years and will serve as the Company's independent
public accountants for the year ending December 31, 1997. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting, will have
an opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions from shareholders.
GENERAL
The Board of Directors of the Company does not know of any matters other
than those described in this Proxy Statement which will be acted upon at the
Annual Meeting. In the event that any other matters properly come before the
meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment on such
other matters.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the annual meeting of
shareholders held in 1999 must be received at the Company's principal executive
offices, International Plaza, 7900 International Drive, Minneapolis, MN 55425,
before December 2, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Marion Melvin Stuckey, Chairman of the Board
Dated: April 1, 1998
FOURTH SHIFT CORPORATION
PROXY FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints M.M. Stuckey and J.H. Caldwell, and each of
them, with full power to appoint a substitute, to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Shareholders of Fourth
Shift Corporation to be held on May 6, 1998, and at all adjournments thereof, as
specified below on the matters referred to, and, in their discretion, upon any
other matters which may be brought before the meeting:
1. ELECTION OF CLASS A DIRECTORS: / / FOR all nominees (EXCEPT AS / / WITHHOLD AUTHORITY
MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
TO WITHHOLD AUTHORITY TO VOTE FOR A SPECIFIC NOMINEE, PLACE A LINE THROUGH SUCH
NOMINEE'S NAME BELOW:
Marion Melvin Stuckey, Michael J. Adams
2. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER BUSINESS AS MAY PROPERLY
BE PRESENTED AT THE MEETING.
(CONTINUED ON REVERSE SIDE)
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL DIRECTORS NAMED IN ITEM 1.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: _____________________, 1998
__________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.