SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 Section240.14a-11(c) or
Section240.14a-12
FIRST DATA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(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)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which 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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[LOGO]
FIRST DATA CORPORATION
5660 NEW NORTHSIDE DRIVE
SUITE 1400
ATLANTA, GEORGIA 30328-5800
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First Data
Corporation, a Delaware corporation (the "Company"), will be held at the
Inverness Hotel, 200 Inverness Drive West, Englewood, Colorado 80112, on
Wednesday, May 9, 2001, at 11:30 a.m. (M.T.), for the following purposes:
1. The election of three directors;
2. The approval of an amendment to the Company's Shareholder Value Plan;
3. The approval of an amendment to the Company's Senior Executive Incentive
Plan;
4. The approval of amendments to the 1993 Director's Stock Option Plan and
the allocation of 1,000,000 shares of the Company's Common Stock to the Plan;
5. The ratification of the selection of Ernst & Young LLP as independent
auditors of the Company for 2001; and
6. The transaction of such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Shareholders of record at the close of business on March 12, 2001 (the
"Record Date") will be entitled to vote at the meeting and any adjournment or
postponement thereof.
You are cordially invited to attend the meeting, but whether or not you
expect to attend in person, you are urged to mark, date and sign the enclosed
proxy and return it in the enclosed prepaid envelope or follow the alternative
voting procedures described on the proxy.
By Order of the Board of Directors
/s/ Michael T. Whealy
Michael T. Whealy
CORPORATE SECRETARY
March 26, 2001
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN YOUR PROXY OR FOLLOW ANY
ALTERNATIVE VOTING PROCEDURES DESCRIBED ON THE PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND SO THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. YOUR PROMPT ACTION WILL AID THE COMPANY IN REDUCING THE EXPENSE OF
PROXY SOLICITATION.
FIRST DATA CORPORATION
PROXY STATEMENT
The Board of Directors of First Data Corporation ("FDC" or the "COMPANY") is
soliciting your proxy to vote at the Annual Meeting of Stockholders to be held
on May 9, 2001, at 11:30 a.m. (M.T.), and any adjournment or postponement of
that meeting. The meeting will be held at the Inverness Hotel, 200 Inverness
Drive West, Englewood, Colorado 80112. This Proxy Statement and the accompanying
Proxy Card, Notice of Meeting, and Annual Report to Shareholders was first
mailed on or about March 26, 2001 to all shareholders of record as of March 12,
2001 (the "RECORD DATE"). The only voting securities of the Company are shares
of the Company's Common Stock, $.01 par value per share (the "COMMON STOCK"), of
which there were 395,190,402 shares outstanding as of the Record Date (excluding
treasury stock).
The Company's Annual Report to Shareholders, which contains financial
statements for the year ended December 31, 2000, accompanies this Proxy
Statement. You may also obtain a copy of the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission without charge by
writing to Investor Relations, First Data Corporation, 5660 New Northside Drive,
Suite 1400, Atlanta, Georgia, 30328-5800.
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TABLE OF CONTENTS
PAGE
--------
The Proxy Process and Shareholder Voting.................... 2
Questions and Answers About the Proxy Process............... 2
Proposals Submitted for Shareholder Vote.................... 5
Proposal 1 -- Election of Directors..................... 5
Proposal 2 -- Approval of an amendment to the Company's
Shareholder Value Plan................................. 5
Proposal 3 -- Approval of an amendment to the Company's
Senior Executive Incentive Plan........................ 7
Proposal 4 -- Approval of amendments to the 1993
Director's Stock Option Plan and
allocation of 1,000,000 shares of the
Company's Common Stock to the Plan........ 8
Proposal 5 -- Ratification of selection of auditors..... 11
Security Ownership of Directors and Executive Officers...... 12
Board of Directors.......................................... 13
Governance of the Company................................... 15
Committees of the Board of Directors........................ 16
Report of the Audit Committee............................... 17
Compensation of Directors................................... 18
Executive Compensation Report by the Compensation and
Benefits Committee........................................ 18
Summary Compensation Table.................................. 21
Option Grants in 2000....................................... 22
Aggregated Option Exercises in 2000 and Year-End 2000 Option
Values.................................................... 23
Long-Term Incentive Plans -- Grants in 2000................. 24
Retirement Plans............................................ 24
Performance Graph........................................... 25
Certain Transactions and Other Matters...................... 26
Section 16(a) Beneficial Ownership Reporting Compliance..... 27
Principal Holders of Common Stock........................... 27
Exhibit A -- First Data Corporation Senior Executive
Incentive Plan............................................ A-1
Exhibit B -- First Data Corporation 1993 Director's Stock
Option Plan............................................... B-1
Exhibit C -- Audit Committee Charter........................ C-1
THE PROXY PROCESS AND SHAREHOLDER VOTING
The proxy process is the means by which corporate shareholders can exercise
their rights to vote for the election of directors and other strategic corporate
proposals. This PROXY STATEMENT provides notice of a scheduled shareholder
meeting, describes the proposals presented for shareholder action and includes
information required to be disclosed to shareholders. The accompanying PROXY
CARD provides shareholders with a simple means to vote on the described
proposals without having to attend the shareholder meeting in person. By
executing the Proxy Card, you authorize Henry C. Duques and Michael T. Whealy to
act as your PROXIES to vote your shares as specified.
The proxy voting mechanism also is vitally important to the Company. In
order for the Company to obtain the necessary shareholder approval of proposals,
a "QUORUM" of shareholders (a majority of the issued and outstanding shares
entitled to vote, excluding treasury stock) must be represented at the meeting
in person or by proxy. Since few shareholders can spend the time or money to
attend shareholder meetings in person, voting by proxy is necessary to obtain a
quorum and complete the shareholder vote.
It is important that you vote your shares to assure a quorum is obtained so
corporate business can be transacted. If a quorum is not obtained, the Company
must postpone the meeting and solicit additional proxies; this is an expensive
and time-consuming process that is not in the best interest of the Company or
its shareholders.
QUESTIONS AND ANSWERS ABOUT THE PROXY PROCESS
WHY DID I RECEIVE THESE MATERIALS?
Shareholders of the Company as of the close of business on the March 12,
2001 Record Date are entitled to vote at the Company's Annual Meeting. The
Company is required by law to distribute these proxy materials to all
shareholders as of the Record Date.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE SET OF MATERIALS?
This means you own shares of the Company that are registered under different
names. For example, you may own some shares directly as a "REGISTERED
HOLDER" and other shares through a broker or you may own shares through more
than one broker. In these situations you will receive multiple sets of proxy
materials. It is necessary for you to vote, sign and return all of the Proxy
Cards or follow the instructions for any alternative voting procedure on
each of the Proxy Cards you receive in order to vote all of the shares you
own. Each Proxy Card you received came with its own prepaid return envelope;
if you vote by mail make sure you return each Proxy Card in the return
envelope which accompanied that Proxy Card.
HOW DO I VOTE?
You may vote by mail or follow any alternative voting procedure described on
the Proxy Card. To use an alternative voting procedure, follow the
instructions on each Proxy Card that you receive. To vote by mail, sign and
date each Proxy Card you receive, indicating your voting preference on each
proposal, and return each Proxy Card in the prepaid envelope which
accompanied that Proxy Card. If you return a signed and dated Proxy Card but
you do not indicate your voting preferences, your shares will be voted in
favor of the director nominees and in favor of the other proposals. All
outstanding shares of Common Stock represented by your signed and dated
Proxy Card or for which you have provided instructions by the alternative
voting procedure that are received in time for the 2001 Annual Meeting will
be voted.
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DOES MY VOTE MATTER?
Absolutely! Corporations are required to obtain shareholder approval for the
election of directors and other important matters. Shareholder participation
is not a mere formality. It is essential for the Company to continue to
function. Each share of Common Stock is entitled to one vote and every share
voted has the same weight. It is also important that you vote to assure that
a quorum is obtained so corporate business can be transacted.
WHAT PERCENTAGE OF VOTES IS REQUIRED TO ELECT DIRECTORS?
If a quorum is obtained, the three nominees receiving the greatest number of
votes will be elected.
WHAT PERCENTAGE OF VOTES IS REQUIRED TO APPROVE OTHER PROPOSALS?
If a quorum is obtained, proposals other than the election of directors
require the affirmative vote of a majority of shares of Common Stock
represented at the meeting and entitled to vote. Since majority approval is
required, an "ABSTAIN" vote has the effect of a vote against the proposal.
WHAT IS THE EFFECT OF NOT VOTING?
It depends on how ownership of your shares is registered. If you own shares
as a Registered Holder, rather than through a broker, your unvoted shares
will not be represented at the meeting and will not count toward the quorum
requirement. Assuming a quorum is obtained, your unvoted shares will not
affect whether a proposal is approved or rejected.
If you own shares through a broker and do not vote, your broker may
represent your shares at the meeting for purposes of obtaining a quorum. As
described in the answer to the following Question, in the absence of your
voting instruction, your broker may or may not vote your shares.
IF I DON'T VOTE, WILL MY BROKER VOTE FOR ME?
If you own your shares through a broker and you don't vote, your broker may
vote your shares in its discretion on some "routine matters." With respect
to other proposals, however, your broker may not vote your shares for you.
With respect to these proposals, the aggregate number of unvoted shares is
reported as the "BROKER NON-VOTE." "Broker non-vote" shares are counted
toward the quorum requirement but they do not affect the determination of
whether a matter is approved. The Company believes that the proposals set
forth in this Proxy Statement are routine matters on which brokers will be
permitted to vote unvoted shares.
IS MY VOTE CONFIDENTIAL?
It is the policy of the Company that all shareholder meeting proxies,
ballots and voting records that identify the particular vote of a
shareholder are confidential. The vote of any shareholder will not be
revealed to anyone other than a non-employee tabulator of votes or an
independent election inspector, except (i) as necessary to meet applicable
legal and stock exchange listing requirements, (ii) to assert claims for or
defend claims against the Company, (iii) to allow the inspectors of election
to certify the results of the shareholder vote, (iv) in the event a proxy
solicitation in opposition to the Company or the election of the Board of
Directors takes place, (v) if a shareholder has requested that their vote be
disclosed, or (vi) to respond to shareholders who have written comments on
Proxy Cards.
IF I OWN MY SHARES THROUGH A BROKER, HOW IS MY VOTE RECORDED?
Brokers typically own shares of Common Stock for many shareholders. In this
situation the Registered Holder on the Company's stock register is the
broker or its nominee. This often is referred to as holding shares in
"STREET NAME." The "BENEFICIAL OWNERS" do not appear in the Company's
shareholder register. Therefore, for shares held in Street Name,
distributing the proxy materials and tabulating votes are both two-step
processes. Brokers inform the Company how many of their clients
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are Beneficial Owners and the Company provides the broker with that number
of proxy materials. Each broker then forwards the proxy materials to its
clients who are Beneficial Owners to obtain their votes. When you receive
proxy materials from your broker, the accompanying return envelope is
addressed to return your executed Proxy Card to your broker. Shortly before
the meeting, each broker totals the votes and submits a Proxy Card
reflecting the aggregate votes of the Beneficial Owners for whom it holds
shares.
CAN I REVOKE MY PROXY AND CHANGE MY VOTE?
You have the right to revoke your proxy at any time prior to the time your
shares are voted. If you are a Registered Holder, your proxy can be revoked
in several ways: (i) by timely delivery of a written revocation delivered to
the Corporate Secretary, (ii) by submitting another valid proxy bearing a
later date, or (iii) by attending the meeting and giving the Inspector of
Elections notice that you intend to vote your shares in person. If your
shares are held by a broker, you must contact your broker in order to revoke
your proxy.
WILL ANY OTHER BUSINESS BE TRANSACTED AT THE MEETING? IF SO, HOW WILL MY PROXY
BE VOTED?
Management does not know of any business to be transacted at the Annual
Meeting other than those matters described in this Proxy Statement. The
period specified in the Company's By-Laws for submitting proposals to be
considered at the meeting has passed and no proposals were submitted.
However, should any other matters properly come before the meeting, and any
adjournments and postponements thereof, shares with respect to which voting
authority has been granted to the Proxies will be voted by the Proxies in
accordance with their judgment.
WHO COUNTS THE VOTES?
Votes will be counted and certified by the Inspectors of Election, who are
employees of Wells Fargo Bank Minnesota, National Association, the Company's
independent Transfer Agent and Registrar. If you are a Registered Holder,
your executed Proxy Card is returned directly to Wells Fargo for tabulation.
As noted above, if you hold your shares through a broker, your broker
returns one Proxy Card to Wells Fargo on behalf of its clients.
HOW MUCH DOES THE PROXY SOLICITATION COST?
The Company has engaged the firm of Morrow & Co. to assist in distributing
and soliciting proxies for a fee of $7,000, plus expenses. However, the
proxy solicitor fee is only a small fraction of the total cost of the proxy
process. The largest expense in the proxy process is printing and mailing
the proxy materials. Proxies also may be solicited on behalf of the Company
by directors, officers or employees of the Company in person or by mail,
telephone or facsimile transmission. No additional compensation will be paid
to such directors, officers, or employees for soliciting proxies.
WHAT IS THE DEADLINE FOR SUBMITTING PROPOSALS TO BE CONSIDERED FOR INCLUSION IN
THE 2002 PROXY STATEMENT?
Shareholder proposals requested to be included in the Company's 2002 Proxy
Statement must be received by the Company not later than November 26, 2001.
Proposals should be directed to Michael T. Whealy, Corporate Secretary,
First Data Corporation, 5660 New Northside Drive, Suite 1400, Atlanta,
Georgia, 30328-5800.
IF I DO NOT SUBMIT A PROPOSAL IN TIME TO BE INCLUDED IN THE 2002 PROXY
STATEMENT, MAY I STILL NOMINATE SOMEONE TO BE A DIRECTOR OF THE COMPANY OR
SUBMIT ANY BUSINESS TO BE CONSIDERED AT THE COMPANY'S ANNUAL SHAREHOLDER MEETING
IN 2002?
Even if a proposal is not submitted in time to be considered for inclusion
in the Company's 2002 Proxy Statement, a proper shareholder proposal or
director nomination may still be considered at the Company's 2002 annual
meeting but only if the proposal or nomination is received by the Company no
sooner than January 9, 2002 but not later than February 8, 2002. All
proposals should be directed to Michael T. Whealy, Corporate Secretary,
First Data Corporation, 5660 New Northside Drive, Suite 1400, Atlanta,
Georgia, 30328-5800.
4
PROPOSALS SUBMITTED FOR SHAREHOLDER VOTE
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes serving staggered
three-year terms. The terms of office of three current directors, Mr. Duques,
Mr. Fote and Ms. Spero, expire at the 2001 Annual Meeting of Stockholders. They
have been nominated for reelection through the 2004 Annual Meeting of
Stockholders or until a successor is elected and qualified. (See the Board of
Directors section for information concerning all Directors). In the case of a
vacancy occurring during the year in any class, the Board of Directors may elect
another director as a replacement, may leave the vacancy unfilled or may reduce
the number of directors.
The terms of Mr. Robinson, Mr. Schwartz, Mr. Staglin and Mr. Weinbach expire
at the 2002 Annual Meeting of Stockholders. The terms of Mr. Jones,
Mr. Levenson and Mr. Russell expire at the 2003 Annual Meeting of Stockholders.
A shareholder may (i) vote for the election of any one or more of the
nominees, or (ii) withhold authority to vote for one or more of the nominees by
so indicating on the Proxy Card. Your shares will be voted as you specify on the
enclosed Proxy Card or as you instruct via the alternative voting procedure
described on the Proxy Card. If you sign, date and return the Proxy Card without
specifying how you want your shares voted, they will be voted for the election
of the Director nominees. If unforeseen circumstances (such as death or
disability) require the Board of Directors to substitute another person for any
of the Director nominees, your shares will be voted for that other person.
Directors are elected by a plurality of votes of the shares represented at
the meeting and entitled to vote. Therefore, if a quorum is present, the three
nominees receiving the greatest number of votes will be elected. The effects of
unvoted shares, abstentions and "broker non-votes" are discussed in the
preceding Questions and Answers.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO REELECT MR. DUQUES,
MR. FOTE AND MS. SPERO AS DIRECTORS FOR A THREE-YEAR TERM.
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S SHAREHOLDER VALUE PLAN
The Compensation Committee and the Board have approved an amendment to the
Company's Shareholder Value Plan, a long-term incentive program for certain
executive officers established by the Compensation Committee pursuant to the
1992 Long-Term Incentive Plan. The proposed amendment would create a new maximum
unit value for the recently created position of Senior Executive Vice President.
The position of Senior Executive Vice President represents the highest position
within the Company below those of Chief Executive Officer and Chief Operating
Officer and those persons filling the position will typically manage large
segments of the Company's business activities. The Compensation Committee and
the Board of Directors believe that this significant responsibility should be
reflected with a higher maximum unit value under the Shareholder Value Plan than
that for Executive Vice President in order to attract and retain qualified
candidates for this important position.
Because the amendment alters a material term of the Shareholder Value Plan,
Section 162(m) of the Internal Revenue Code requires approval of the
shareholders in order for the Company to deduct the full
5
amount of incentives paid under this program to any executive officer named in
the Summary Compensation Table whose compensation for the taxable year exceeds
$1,000,000.
PROPOSED AMENDMENT
Under the Shareholder Value Plan, a unit value is established by the
Committee at the end of a two-year performance period based on performance of
the Company's Common Stock compared to that of the companies in the S&P 500
Index during the performance period. The maximum unit values are $3,600,000 for
the Chief Executive Officer, $2,000,000 for the Chief Operating Officer and
$750,000 for the other eligible executives. The amendment would create a new
maximum unit value of $900,000 for the position of Senior Executive Vice
President.
SUMMARY OF THE SHAREHOLDER VALUE PLAN
The following is a description of the Shareholder Value Plan as proposed to
be amended.
The class of eligible individuals consists of the members of the Company's
Executive Committee. There are currently ten eligible individuals. Annually, the
Compensation Committee makes performance grants to eligible executives pursuant
to which they may receive awards dependent on the achievement of performance
goals established for a two-year performance period. The goals measure the
Company's total shareholder return, defined as the percentage change in the
Common Stock price, plus dividends, as compared to the total stockholder return
of the companies in the S&P 500 Index over the performance period.
At the end of the two-year performance period, a unit value is assigned
based on the performance criteria. Although the unit value is generally
determined pursuant to the plan formula, the Compensation Committee does retain
discretion to reduce the amount of the unit value based on factors it selects.
The maximum unit values are $3,600,000 for the Chief Executive Officer,
$2,000,000 for the Chief Operating Officer, $900,000 for Senior Executive Vice
Presidents under the proposed amendment, and $750,000 for the other eligible
executives. The maximum unit values may be assigned only if the Company's
performance as measured by the performance goal described above exceeds that of
75% of the companies in the S&P 500 Index.
No unit value is assigned if the percentage increase in the Common Stock
price, plus dividends, does not exceed the rate of return during the performance
period of the average two-year treasury note for the sixty day period ending on
the last business day preceding the first day of the performance period.
Additionally, no unit value is assigned if the Company's performance does not
exceed that of 50% of the companies in the S&P 500 Index. If the thresholds are
met, but not exceeded, the minimum unit values are assigned. The minimum unit
values are $660,000 for the Chief Executive Officer, $500,000 for the Chief
Operating Officer, $300,000 for Senior Executive Vice Presidents under the
proposed amendment, $250,000 for Executive Vice Presidents and $100,000 for the
other eligible executives.
After the unit value is assigned, the amount is banked for another two-year
period during which it is entirely forfeitable in the event of the executive's
termination of employment for reasons other than death, disability or
retirement. During this banking period the amount is increased by an amount
equal to 50% of the shareholders' return on equity each year or, if return on
equity is negative, decreased by an amount equal to 100% of the shareholders'
return on equity each year. Return on equity is defined as net income before
dividends divided by shareholders' equity at the beginning of such fiscal year.
The Compensation Committee has adopted specific guidelines for dealing with
business combinations, such as increasing beginning shareholders' equity and
disregarding direct merger costs in certain instances in the calculation of net
income.
6
In February 2001, the Compensation Committee made a performance grant to
Mr. Adams and another Senior Executive Vice President, for the two-year
performance period beginning January 1, 2001, with a potential maximum unit
value of $900,000. No unit value has been or will be established under that
grant until the end of the two-year performance period. If the shareholders do
not approve this amendment, the maximum unit value of the grant to Mr. Adams and
the other Senior Executive Vice President will be reduced to $750,000. The
Compensation Committee may amend or terminate this program at any time.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S SENIOR EXECUTIVE INCENTIVE PLAN
The Compensation Committee and the Board have approved an amendment to the
Company's Senior Executive Incentive Plan, an annual cash incentive program for
the Company's top two executive officers established by the Compensation
Committee. The proposed amendment would increase the maximum annual award to the
Chief Executive Officer and the Chief Operating Officer. The Compensation
Committee and the Board of Directors believe that the proposed amendment
reflects market competitive compensation and will allow the Company to attract
and retain qualified individuals for these two positions.
Because the amendment alters a material term of the Senior Executive
Incentive Plan, Section 162(m) of the Internal Revenue Code requires approval of
the shareholders in order for the Company to deduct the full amount of
incentives paid under this program to any executive officer named in the Summary
Compensation Table whose compensation for the taxable year exceeds $1,000,000.
PROPOSED AMENDMENT
The purpose of the Senior Executive Incentive Plan is to tie a significant
portion of the Chief Executive Officer's and Chief Operating Officer's annual
pay directly to the annual financial performance of the Company. The Senior
Executive Incentive Plan provides a direct incentive in the form of bonus
targets linked to the performance of Company earnings before interest expense
and taxes (EBIT). The amendment would increase the maximum annual award for the
Chief Executive Officer from $900,000 to $2,000,000 and the Chief Operating
Officer from $750,000 to $1,500,000.
SUMMARY OF THE SENIOR EXECUTIVE INCENTIVE PLAN
The following is a description of the Senior Executive Incentive Plan, as
proposed to be amended. This description is qualified in its entirety by
reference to the Senior Executive Incentive Plan, as proposed to be amended, a
copy of which is attached to this Proxy Statement as Exhibit A.
ELIGIBILITY. The class of eligible individuals consists of the Chief
Executive Officer and Chief Operating Officer of the Company.
EBIT BUSINESS CRITERIA. Based on the EBIT business criteria, the
Compensation Committee will annually pre-establish performance goals for
eligible executives under which they may receive annual cash incentive awards
dependent on the achievement of the goals. The Compensation Committee will
establish target EBIT performance levels and will specify levels of payment for
levels of performance expressed as a percentage of the target amount (the
"formula").
AWARD DETERMINATION. At the end of the annual performance period, award
payments will be determined based on actual performance against the formula.
Although the annual award amount
7
generally will be determined pursuant to the formula, the Compensation Committee
does retain discretion to reduce the amount of an award based on factors it
selects. The maximum annual award amounts under the Senior Executive Incentive
Plan are $2,000,000 for the Chief Executive Officer and $1,500,000 for the Chief
Operating Officer under the proposed amendment. No amount will be awarded for
actual performance that falls below 90% of target EBIT performance.
2001 GOALS ESTABLISHED. In February 2001, the Compensation Committee
established performance goals for 2001, subject to approval of the amendment of
the Senior Executive Incentive Plan by the shareholders. If the shareholders do
not approve this amendment, the maximum award amount for 2001 will be $900,000
for the Chief Executive Officer and $750,000 for the Chief Operating Officer,
the current limits under the Senior Executive Incentive Plan, and the Committee
will consider other approaches to Mr. Duques' and Mr. Fote's annual incentive
compensation.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3.
PROPOSAL 4
THE APPROVAL OF AMENDMENTS TO THE 1993 DIRECTOR'S STOCK OPTION PLAN AND
ALLOCATION OF 1,000,000 SHARES OF THE COMPANY'S COMMON STOCK TO THE PLAN
The Compensation Committee and the Board have adopted amendments to the 1993
Director's Stock Option Plan (the "Director Plan"), subject to approval of the
shareholders, to (1) extend the date the Director Plan will terminate from
May 11, 2004 to May 9, 2011; (2) increase the number of shares of Common Stock
reserved for issuance under the Director Plan by 1,000,000 shares, from
1,500,000 to 2,500,000 shares (subject to adjustment as provided in the Director
Plan); (3) provide an annual grant of 2,000 non-qualified stock options (NQOs)
(subject to adjustment as provided in the Director Plan) to purchase the
Company's Common Stock to each non-employee director who at the request of the
Company is appointed to serve, and each year such non-employee director
continues to serve, on the governing board of an entity in which the Company has
a significant ownership or business interest; (4) permit the transfer of stock
options to certain family members as determined by the Compensation Committee;
(5) provide that, for so long as a director remains a non-employee director, the
director will receive NQOs for 10,000 shares upon initial election to the Board,
14,000 shares on the fourth annual shareholder meeting after the initial
election and on each third annual shareholder meeting thereafter, and 4,000
shares on the day of each other annual shareholder meeting during their term;
(6) provide that options granted on or after March 7, 2001 to a non-employee
director who becomes an employee of the Company immediately after serving as a
non-employee director will continue to vest and be exercisable during such
employment in the same manner as if the director remained a non-employee
director of the Company; (7) provide for the automatic vesting of all options
granted or purchased under the Director Plan upon the death of the director;
(8) provide that options granted on or after March 7, 2001 may be exercised at
any time until expiration of such option pursuant to its terms notwithstanding
death, disability, retirement or other termination of service of a director,
(9) provide for the immediate vesting of all options granted or purchased on or
after March 7, 2001; (10) provide that purchased stock options ("PSOs") granted
on or after March 7, 2001 will expire ten years from the date of grant; and
(11) provide that the exercise price of any NQOs and PSOs may not be reduced
except to adjust for certain dilutive events.
The Board believes that the proposed amendments will provide a market
competitive directors stock option plan and will allow the Company to recruit
and retain board members as well as, in the case of certain amendments, avoid
adverse accounting treatment. The Board further believes that granting stock
options at market value under the Director Plan advances the interests of the
Company and its shareholders by (1) strengthening the link between the interests
of the non-employee directors and shareholders and (2) allowing an additional
means for the Company to attract and retain experienced and knowledgeable people
to serve as directors of the Company. The amendments will allow the Director
Plan to continue operating for ten years on terms that the Board of Directors
deems advisable to further these important interests.
8
SUMMARY OF THE DIRECTOR PLAN
The following is a description of the Director Plan, as proposed to be
amended. This description is qualified in its entirety by reference to the
Director Plan, as proposed to be amended, a copy of which is attached to this
Proxy Statement as Exhibit B.
SHARES AVAILABLE. Under the proposed amendments, the total number of shares
of Common Stock that may be subject to options granted pursuant to the Director
Plan would increase from 1,500,000 to 2,500,000 shares. The number and kind of
authorized shares, the number and kind of shares subject to outstanding options,
the exercise price per share subject to outstanding options, and the number and
kind of shares subject to initial and annual grants to non-employee directors,
are subject to automatic adjustment in the event of reorganization, merger,
consolidation, recapitalization, stock split, combination or exchange of shares,
stock dividend or other similar events. As of March 1, 2001, the Company had
issued options to purchase 988,850 shares of Common Stock under the Director
Plan and, under the proposed amendments, 1,511,150 shares would be available for
future grants.
OPTION GRANTS. Under the Director Plan as proposed to be amended, each
person who becomes a non-employee director shall receive NQOs for 10,000 shares
upon initial election to the Board ("Initial Grant"), 14,000 shares on the
fourth annual shareholder meeting following the initial election and on each
third annual shareholder meeting thereafter, and 4,000 shares on the day of each
other annual shareholder meeting during their term. Prior to the proposed
amendment, the non-employee directors received the grants for 14,000 shares only
on the fourth and seventh shareholder meetings following the Initial Grant. In
addition, under the proposed amendments, each non-employee director who serves
at the request of the Company on the governing board of an entity in which the
Company has a significant ownership or business interest would receive NQOs for
2,000 shares upon initial appointment to that board. The non-employee director
would receive NQOs for 2,000 shares each year thereafter as long as he or she
remained a non-employee director and continued to serve on such board at the
request of the Company.
Each NQO will have a ten-year term and, under the proposed amendments, all
grants made on or after March 7, 2001 will be immediately exercisable. Grants
made previous to that date generally will continue to become exercisable in four
equal annual installments beginning on the first anniversary of the date of
grant. All NQOs have an option exercise price equal to the average of the
closing prices of the Company's Common Stock on each trading day within the
thirty-day calendar period ending on the date of the grant.
In addition, the Plan provides for PSOs which non-employee directors of the
Company may elect to purchase by irrevocably waiving, prior to the beginning of
the year, all or a portion of their annual retainer for services performed as a
non-employee director. The number of PSOs granted is equal to the nearest whole
number determined by a fraction, the numerator of which is equal to the dollar
amount of the waived retainer (generally during the period from annual
stockholders meeting to annual stockholders meeting) and the denominator of
which is equal to ten percent of the average of the closing prices of the
Company's Common Stock on each trading day within the thirty-day calendar period
ending on the date of the grant. Under the proposed amendment, PSOs purchased on
or after March 7, 2001 will be immediately exercisable and expire ten years
after the date of grant. PSOs purchased prior to that date generally will
continue to become exercisable in three equal annual installments beginning on
the first anniversary of the date of the grant and expire five years after the
option becomes exercisable. PSOs have an exercise price equal to the average of
the closing prices of the Company's Common Stock on each trading day within the
thirty-day calendar period ending on the date of the grant. If an individual
ceases to be a non-employee director for any reason other than death or
disability and the fair market value of the Company's Common Stock is greater
than the exercise price of such PSOs, such non-employee director shall be
entitled to receive the PSO purchase price plus simple interest credited at the
ten-year U.S. Government Treasury Bond Rate for all shares of Common Stock for
which the PSO is not then exercisable.
9
The exercise price of the NQOs and PSOs must be paid in full upon exercise.
Payment may be made in cash, check, in common shares of the Company already
owned by the person exercising the option valued at fair market value on the
date of exercise or by a combination of such payment methods. The Plan as
amended also provides that the exercise price of the NQOs and PSOs generally may
not be reduced after they are granted, except upon the occurrence of certain
dilutive events.
Under the proposed amendments, any NQOs or PSOs granted on or after
March 7, 2001 generally will expire ten years after the date of grant. For
grants made prior to March 7, 2001, the following terms of the Director Plan
that were in place prior to the amendments will still apply. If an eligible
director's service is terminated due to disability, the NQOs and PSOs held by
the director will expire after three years. In the event of the death of the
director, the NQOs and PSOs held by the director will expire after one year. If
a person ceases to serve as a non-employee director for any reason other than
the death or disability of the director, NQOs and PSOs held by the director that
were granted prior to March 7, 2001 will expire 120 days after the director no
longer qualifies as a non-employee director.
TRANSFERABILITY. Under the proposed amendments, NQOs and PSOs will be
transferable to certain family members of the non-employee director as
determined by the Compensation Committee. Otherwise, NQOs and PSOs will not be
transferable except by will or the laws of descent and distribution and only
non-employee directors may exercise them during the non-employee directors'
lifetime.
TERM AND ADMINISTRATION OF THE DIRECTOR PLAN. The Director Plan is
administered by the Compensation Committee. If the amendments are approved by
shareholders, the Director Plan will terminate on May 9, 2011, otherwise the
Director Plan will terminate on May 11, 2004. The Board of Directors may amend
the Director Plan.
TAX CONSEQUENCES. A director to whom NQOs are granted will not recognize
income at the time of grant of such option. When a director exercises the NQO,
the director will recognize ordinary compensation income equal to the excess, if
any, of the fair market value, as of the date of exercise, of the shares the
director receives over the exercise price paid. A director to whom a PSO is
granted will, similarly, recognize no income at the time of grant. When the PSO
is exercised, the director will generally recognize ordinary compensation income
equal to the excess, if any, of the fair market value, as of the date of
exercise, of the shares the director receives over the exercise price paid. The
tax basis of such shares to the director received as a result of the exercise of
NQOs or PSOs will equal the exercise price paid plus the amount includable in
the director's gross income as compensation, and the director's holding period
for such shares will commence on the day on which the director recognizes
taxable income in respect of such shares. Subject to applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code") and regulations
thereunder, the Company will generally be entitled to a federal income tax
deduction in respect of NQOs and PSOs in an amount equal to the ordinary income
recognized by the director as described above.
The discussion set forth above does not purport to be a complete analysis of
the potential tax consequences relevant to recipients of options or to the
Company or to describe tax consequences based on particular circumstances. It is
based on federal income tax law and interpretational authorities as of the date
of this Proxy Statement, which are subject to change at any time.
ELIGIBILITY. All directors of the Company who are not employees of the
Company, its subsidiaries or affiliates are eligible to participate in the
Director Plan. The Company currently has six non-employee directors, all of whom
currently have elected to waive all or a portion of their annual retainer in
connection with services performed as a director of the Company in exchange for
PSOs. Additionally, the Company has two non-employee directors who, at the
request of the Company, have been appointed to serve on the governing board of
an entity in which the Company has a significant ownership or business interest
and they have been granted 2,000 NQOs subject to shareholder approval of these
amendments.
10
The current non-employee directors would have been entitled to receive the
following numbers of NQOs and PSOs if the Director Plan, as amended, had been in
effect for the fiscal year ending December 31, 2000:
NAME(1) NQOS PSOS
------- -------- --------
Non-Employee Director Group(2).............................. 44,000 48,568
---------
(1) No executive, nonexecutive officers or employees of the Company will be
granted or be entitled to purchase any options under the Director Plan.
(2) The exercise price for all NQOs and PSOs is the average of the closing
prices of the Company's Common Stock on each trading day within the
thirty-day calendar period ending on the date of the grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 4.
PROPOSAL 5
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors recommends to the shareholders the ratification of
the selection of Ernst & Young LLP, independent auditors, to audit the accounts
of the Company and its subsidiaries for 2001. Ernst & Young LLP has served as
the independent auditors for the Company or its predecessor entities since 1980.
Ernst & Young LLP follows a policy of rotating the partner in charge of the
Company's audit every seven years. Other partners and non-partner personnel are
rotated on a periodic basis.
A representative of Ernst & Young LLP will be present at the meeting with
the opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
SUMMARY OF AUDITOR'S FEES FOR 2000
AUDIT FEES. Ernst & Young LLP's fees for the Company's 2000 annual audit
were $1.9 million.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. Ernst & Young
did not render any professional services to the Company in 2000 with respect to
financial information systems design and implementation.
ALL OTHER FEES. Ernst & Young LLP's fees for all other professional
services rendered to us during 2000 were $3.9 million, including audit-related
services of $2.1 million. Audit-related services generally include fees for
service auditor reviews, subsidiary and employee benefit plan audits, business
acquisitions, accounting consultations and SEC registration statements.
In the event the shareholders fail to ratify the appointment, the Board of
Directors will consider it a direction to select other auditors for the
subsequent year. Even if the selection is ratified, the Board of Directors, in
its discretion, may select a new independent accounting firm at any time during
the year if the Board of Directors feels that such a change would be in the best
interest of the Company and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 5.
11
SECURITY OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following tables sets forth, as of January 1, 2001, the beneficial
ownership of equity securities in the Company or its subsidiaries by all
directors and nominees, each of the executive officers named in the Summary
Compensation Table contained in this Proxy Statement and all directors and
executive officers as a group. Each person has sole voting and investment power
of the shares, except as noted.
AMOUNT AND NATURE OF
TITLE OF CLASS NAME BENEFICIAL OWNERSHIP(1)
-------------- --------------------------------- -----------------------
Company Eula L. Adams 205,698(2)
Common Stock David P. Bailis 495,791(3)
Henry C. Duques 2,982,083(4)
Charles T. Fote 1,265,320
Courtney F. Jones 140,965
Robert J. Levenson 729,515
James D. Robinson III 154,865(5)
Charles T. Russell 64,413
Bernard L. Schwartz 132,149
Joan E. Spero 22,089
Garen K. Staglin 173,483
Arthur F. Weinbach 0
Michael T. Whealy 223,761
All directors and executive
officers as a group (13 persons) 6,590,132
---------
(1) The number of shares reported includes shares covered by options that are
exercisable within 60 days of January 1, 2001 as follows: Mr. Adams,
198,932; Mr. Bailis, 491,580; Mr. Duques, 2,974,902; Mr. Fote, 1,197,315;
Mr. Jones, 138,965; Mr. Levenson, 718,197; Mr. Robinson, 132,695;
Mr. Russell, 64,013; Mr. Schwartz, 123,697; Ms. Spero, 22,089; Mr. Staglin,
148,375; Mr. Whealy, 222,780; all directors and executive officers as a
group; 6,433,540.
(2) Includes 640 shares held by Mr. Adams' wife.
(3) Includes 950 shares held by Mr. Bailis' wife.
(4) Includes 4,268 shares held by Mr. Duques' wife.
(5) Includes 5,000 shares held by Mr. Robinson's wife.
(6) The percent of outstanding Common Stock beneficially owned by all directors
and executive officers as a group is approximately 1.7%. The percentage
beneficially owned by any director or nominee does not exceed 1%.
AMOUNT AND NATURE OF
TITLE OF CLASS NAME BENEFICIAL OWNERSHIP(1)
-------------- --------------------------- -----------------------
Class B Common Limited Garen K. Staglin 4,221,657
Partnership Interests in
eONE Global, LP
---------
(1) Mr. Staglin owns 89.4% of this class of non-voting partnership interests.
12
BOARD OF DIRECTORS
PRINCIPAL OCCUPATION, BUSINESS DIRECTOR
NAME AND AGE EXPERIENCE AND DIRECTORSHIPS SINCE
------------ ------------------------------ --------
Henry C. Duques.......... Chairman and Chief Executive Officer of the Company since 1989
Age 57 April 1989 and Chairman of the Board of eONE Global, LLC,
a majority-owned subsidiary of the Company, since
November 2000. He joined American Express in
September 1987 as President and Chief Executive Officer of
the Data Based Services Group of American Express Travel
Related Services Company, Inc. ("TRS"), the predecessor of
the Company, and served in that capacity until
April 1989. Mr. Duques was Group President Financial
Services and a member of the Board of Directors of
Automatic Data Processing, Inc. ("ADP") from 1984 to 1987.
He is a director of theglobe.com, Unisys Corporation and
CheckFree Corporation, as well as a member of the Board of
Trustees of The George Washington University.
Charles T. Fote.......... Director of the Company since May 2000 and President and 2000
Age 52 Chief Operating Officer of the Company since
September 1998. He served as Executive Vice President of
the Company from its initial public offering in
April 1992 until September 1998. He was a Director of the
Company from the time of its formation in April 1989 as a
subsidiary of American Express Company until its initial
public offering. Mr. Fote also served as President of
Integrated Payment Systems ("IPS") from December 1989
through December 1991. From 1985 until 1989, he was
Executive Vice President of the Payment Products division
of TRS, the predecessor of IPS.
Courtney F. Jones........ Managing Director in charge of the New World Banking Group 1992
Age 61 of Bankers Trust from December 1997 to July 1999. He was a
Managing Director in Merrill Lynch's Investment Banking
Division from July 1989 to December 1990. Prior thereto,
he served as Chief Financial Officer, Executive Vice
President and a member of the Board of Directors for
Merrill Lynch & Co. Inc. From February 1982 to
September 1985, Mr. Jones served as Treasurer and
Secretary of the Finance Committee of the Board of
Directors of General Motors Corporation. He also was
formerly a Director of General Motors Acceptance
Corporation and General Motors Insurance Company.
Robert J. Levenson....... Managing Member of the Lenox Capital Group L.L.C. 1992
Age 59 Mr. Levenson was an Executive Vice President of the Company
from 1993 to 2000 and he continues to perform certain
functions for the Company under the Agreement dated
June 6, 2000. Former Senior Executive Vice President,
Chief Operating Officer, and Member of the Office of the
President and Director of Medco Containment
Services, Inc., a provider of managed care prescription
benefits, from October 1990 to December 1992. From 1985
until October 1990, he was a Group President and Director
of ADP. Mr. Levenson is a Director of Emisphere
Technologies, Inc., Superior Telecom, Inc. and Vestcom
International, Inc.
13
PRINCIPAL OCCUPATION, BUSINESS DIRECTOR
NAME AND AGE EXPERIENCE AND DIRECTORSHIPS SINCE
------------ ------------------------------ --------
James D. Robinson III.... Director of eONE Global, LLC, a majority-owned subsidiary of 1992
Age 65 the Company, since November 2000. He is the Chairman and
Chief Executive Officer of RRE Investors, LLC, a private
information technology venture investment firm, and a
General Partner of RRE Ventures, L.P. He is also
non-executive Chairman of Violy, Byorum & Partners
Holdings, LLC, a private investment firm specializing in
financial advisory and investment banking activities in
Latin America. Mr. Robinson previously served as Chairman
and Chief Executive Officer and as a Director of American
Express from 1977 until February 1993. He is a Director of
Bristol-Myers Squibb Company, The Coca-Cola Company,
Cambridge Technology Partners, Screaming Media, and
Sunbeam Corporation. Mr. Robinson is a member of the
Business Council and the Council on Foreign Relations. He
is Honorary Co-Chairman of Memorial Sloan-Kettering Cancer
Center, an honorary Trustee of the Brookings Institution
and Chairman Emeritus of the World Travel and Tourism
Council Institution.
Charles T. Russell....... Director of eONE Global, LLC, a majority-owned subsidiary of 1994
Age 71 the Company, since November 2000. He served as President and
Chief Executive Officer of Visa International from 1984 to
January 1994. Mr. Russell joined Visa in 1971. He serves
on the Board of Visitors at the University of Pittsburgh's
Joseph M. Katz School of Business.
Bernard L. Schwartz...... Chairman of the Board of Directors and Chief Executive 1992
Age 75 Officer of Loral Space & Communications Ltd., a
high-technology company concentrating on satellite
manufacturing and satellite-based services. He served as
Chairman of the Board of Directors and Chief Executive
Officer of Loral Corporation, a leading defense
electronics business, from 1972 to 1996. Mr. Schwartz is
member of the Board of Directors of Globalstar
Telecommunications Limited, which offers global, mobile
satellite-based digital telecommunications services. In
addition, Mr. Schwartz is a member of the Advisory Council
at the Paul H. Nitze School of Advanced International
Studies at Johns Hopkins University where he established a
chair in political economy, a director of Reliance Group
Holdings, Inc., a trustee of Mount Sinai-New York
University Medical Center, a trustee of Thirteen/WNET and
vice chairman of the New York Film Society.
14
PRINCIPAL OCCUPATION, BUSINESS DIRECTOR
NAME AND AGE EXPERIENCE AND DIRECTORSHIPS SINCE
------------ ------------------------------ --------
Joan E. Spero............ President of the Doris Duke Charitable Foundation since 1998
Age 56 January 1997. Ms. Spero was Undersecretary of State for
Economic, Business and Agricultural Affairs from 1993 to
1997. From 1981 to 1993, Ms. Spero held several offices
with American Express Company, the last being Executive
Vice President, Corporate Affairs and Communications.
Prior to that Ms. Spero was Ambassador to the United
Nations for Economic and Social Affairs from 1980 to 1981
and she was an Assistant Professor at Columbia University
from 1973 to 1979. She is a member of the Board of
Trustees of the Brookings Institution, the Wisconsin
Alumni Research Foundation, and Columbia University. She
serves as a Director/Trustee of certain Scudder Kemper
Funds. Ms. Spero was a member of the Board of Directors of
Hercules Incorporated from 1985 to 1993 and acted as Chair
of the Audit and Compensation Committees for periods of
that time.
Garen K. Staglin......... President and Chief Executive Officer of eONE Global, LLC, a 1992
Age 56 majority-owned subsidiary of the Company since
October 2000. Mr. Staglin served as the Chairman of the
Board of Directors of Safelite Glass Corporation, a
manufacturer and retailer of auto glass, from August 1991
to September 2000 and he was the Chief Executive Officer
of Safelite Glass Corporation from August 1991 to
April 1997. From April 1980 until August 1991 Mr. Staglin
served as the Corporate Vice President and General Manager
of ADP's Automotive Services Group. He serves as a
Director of Quick Response Services, Inc. and several
private companies. Mr. Staglin serves on the Advisory
Council of the Stanford Graduate School of Business and as
a Vice President - Trustee of the American Center for
Wine, Food and the Arts.
Arthur F. Weinbach....... Chairman and Chief Executive Officer of Automatic Data 2000
Age 57 Processing Inc. ("ADP") since 1998. Mr. Weinbach joined
ADP in 1980 and has served as an ADP Director since 1989.
He is also a Director of HealthPlan Services and
Schering-Plough Corp. as well as serving on the boards of
Boys Hope, New Jersey Seeds and the United Way of
Tri-State.
GOVERNANCE OF THE COMPANY
In accordance with applicable Delaware law, the business of the Company is
managed under the direction of its Board of Directors. Pursuant to the Company's
Restated Certificate of Incorporation, the Board of Directors is to consist of
not less than one nor more than fifteen Directors. Directors are divided into
three classes and Directors in each class are elected for a three-year term.
During 2000, the Board of Directors met eight times (not including Committee
meetings). Each of the Directors attended at least 75 percent of the aggregate
number of meetings of the Board and Board committees on which they served during
2000.
15
COMMITTEES OF THE BOARD OF DIRECTORS
The members of the Audit Committee are Courtney F. Jones (Chairperson), Joan
E. Spero and Arthur F. Weinbach. The Audit Committee consists solely of
directors who, in the opinion of the Board of Directors, are free from any
relationship that would interfere with the exercise of independent judgment in
the discharge of the Audit Committee's duties. All Audit Committee members must
be financially literate, and at least one member must have accounting or related
financial management expertise. The Audit Committee has general responsibility
for reviewing with management the financial controls, accounting, compliance
with law, audit and reporting activities of the Company and its subsidiaries as
well as reviewing the contingency plans for business continuity undertakings.
The Audit Committee also (i) evaluates and recommends to the Board of Directors
the selection and, if appropriate, termination of the independent auditors,
(ii) reviews and discusses the audited financial statements with management,
(iii) discusses with the independent auditors the matters required to be
discussed by the Statement of Auditing Standards No. 61, (iv) reviews with the
independent auditors the nature and scope of any relationships between the
auditors and the Company as well as the professional services provided by the
independent auditors and takes appropriate action to ensure the continuing
independence of the auditors, (vi) recommends to the Corporation's Board of
Directors whether the audited financial statements should be included in the
Corporation's Annual Report on Form 10-K to be filed with the Securities and
Exchange Commission, (vii) approves any special assignments given to independent
auditors and fees relating thereto, (viii) reviews the planned scope of the
annual audit, the fees relating thereto, the independent auditors' report of
audit, the accompanying management letter, if any, and management's responses,
(ix) reviews the planned scope and results of the Corporation's internal audit
examinations and assessments, (x) consults with the internal auditors and the
independent auditors regarding the adequacy of the Corporation's internal
accounting controls, the effectiveness and efficiency of the Corporation's
internal audit staff, and legal compliance matters, (xi) reviews and
investigates possible violations of law and of the Corporation's Code of
Conduct, retains outside counsel and other experts to assist in such
investigations and directs that appropriate remedial steps are taken if such
violations are detected, (xii) reviews and oversees related-party transactions,
(xiii) reviews any major accounting changes made or contemplated by the
Corporation, and (xiv) reviews interim financial information with management and
the independent auditors. During 2000, the Audit Committee met five times.
The members of the Compensation and Benefits Committee (the "Compensation
Committee") are Charles T. Russell (Chairperson), Bernard L. Schwartz, and Joan
E. Spero. The Compensation Committee consists solely of directors who are not
current or former employees of the Company or any subsidiary. The Compensation
Committee is responsible for (i) the administration of all salary and incentive
compensation plans for the officers and key employees of the Company and its
subsidiaries, (ii) reviewing management organization, development and succession
planning, (iii) reviewing senior management compensation, and (iv) granting and
otherwise administering specific awards under the Corporation's 1992 Long-Term
Incentive Plan and comparable plans. The Compensation Committee may exercise all
of the powers and authority of the Board with respect to the Company's employee
pension benefit plans and employee welfare benefit plans. The Compensation
Committee regularly consults with independent compensation advisors in
performing its duties. The Compensation Committee also has responsibility for
screening and nominating new Director candidates. In exercising its Director
nomination responsibilities, the Committee shall consider women and minority
candidates consistent with the Company's nondiscrimination policies. In
addition, the Committee will consider persons recommended by shareholders.
Shareholder recommendations may be submitted to the Secretary of the Company at
5660 New Northside Drive, Suite 1400, Atlanta, Georgia 30328, and they will be
forwarded to the Compensation Committee members for their consideration. During
2000, the Compensation Committee met five times.
16
The members of the Executive Committee are James D. Robinson III
(Chairperson), Henry C. Duques, and Courtney F. Jones. The Executive Committee
meets in place of the full Board of Directors in intervals between meetings of
the Board. The Committee may act on behalf of the Board of Directors on all
matters permitted by the General Corporation Law of the State of Delaware. The
Executive Committee met once in 2000.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company oversees the
Company's financial reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. The Company's
Board of Directors has adopted a written charter for the Audit Committee, which
is included as Exhibit C to this proxy statement.
In fulfilling its oversight responsibilities, the Audit Committee reviewed
and discussed the audited financial statements of the Company and its
subsidiaries to be set forth in the Company's 2000 Annual Report to Shareholders
and the Company's Annual Report on Form 10-K for the year ended December 31,
2000 with management of the Company. The Audit Committee also discussed with
Ernst & Young LLP, independent accountants for the Company who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, the matters required
to be discussed by the Statement on Auditing Standards No. 61, "Communication
with Audit Committees," as amended. The Statement on Auditing Standards No. 61
includes, among other items, matters relating to the conduct of an audit of the
Company's financial statements under generally accepted auditing standards.
The Audit Committee has received the written disclosures and the letter from
Ernst & Young LLP required by Independence Standards Board Standard No. 1, has
considered the compatibility of nonaudit services with the auditors'
independence, and has discussed with Ernst & Young LLP their independence from
the Company.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for 2000 for
filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Courtney F. Jones (Chairperson)
Joan E. Spero
Arthur F. Weinbach
17
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its affiliates were paid
an annual retainer of $50,000. In addition, a non-employee chairman of a
standing committee receives an annual retainer of $8,000. Non-employee directors
have the option of electing to receive all or a portion of the annual retainer
fees in the form of stock option grants pursuant to the First Data Corporation
1993 Director's Stock Option Plan. Non-employee directors also receive annual
grants of non-qualified options pursuant to the same plan. Each non-employee
director receives options for 10,000 shares of Common Stock upon commencing
services as a director and options for 4,000 shares of Common Stock on the date
of each annual shareholders' meeting thereafter, except that on the fourth and
seventh annual shareholders' meetings thereafter, instead of options for 4,000
shares, each non-employee director receives options for 14,000 shares. Directors
are reimbursed for their actual expenses incurred in attending Board, committee
and shareholder meetings, including those for travel, food and lodging.
EXECUTIVE COMPENSATION REPORT BY THE COMPENSATION
AND BENEFITS COMMITTEE
The Compensation Committee establishes compensation policies and employee
benefits plans. It also sets the bonus awards for senior management, including
the Named Executives.
COMPENSATION PHILOSOPHY. The Company's executive compensation programs are
based on the belief that the interests of its Chief Executive Officer (CEO) and
senior management should be aligned with those of the shareholders. For these
executives, the Compensation Committee has determined that a significant portion
of total compensation should be comprised of "at-risk," performance-based
components. The at-risk components provide longer-term rewards that are not
earned unless specific, pre-established goals are met.
In furtherance of its objectives, the Compensation Committee has structured
the CEO and senior management's total compensation as a combination of base
salary, annual incentive compensation, stock options and a long-term incentive
award.
The Compensation Committee seeks to set executive compensation at levels
sufficient to attract, retain and motivate highly qualified executive personnel
in light of the compensation practices of a group comprised of companies of
comparable size and complexity and top-performing companies in various business
sectors in which the Company operates (the "Comparator Group"). An independent
consultant surveys the Comparator Group to determine compensation practices and
provides the Compensation Committee with comparative evaluations and advice.
The Comparator Group includes the companies in the peer group included in
the Performance Graph in this Proxy Statement. As it did in prior years, the
Performance Graph uses a Company-selected group of ten computer services
companies. The Comparator Group also includes other companies that are in the
same business or are of a similar revenue size, reflecting the Compensation
Committee's belief that the broader group is representative of the Company's
main competition for executive talent.
The Compensation Committee's philosophy is that base salary and annual
incentive compensation should be competitive with the Comparator Group, and,
based upon the Company's financial performance both as a whole and relative to
specific targets, that long-term incentive compensation must promote corporate
performance which exceeds both a minimum rate of return and objectively
identified targets relative to the S&P 500 Index.
BASE SALARY. It is the Compensation Committee's policy, in setting total
compensation, that while base salary should remain competitive, annual and
long-term incentive compensation should be emphasized.
18
Accordingly, Mr. Duques' salary is targeted to reflect salaries between the 50th
and 75th percentile paid by the Comparator Group. The salaries of the other
Named Executives are targeted to reflect salaries at approximately the 75th
percentile paid by the Comparator Group. The Committee targets the total
compensation to be paid when pre-established performance goals are achieved to
be at or above the 75th percentile paid by the Comparator Group.
ANNUAL INCENTIVE COMPENSATION. The Compensation Committee implemented a
separate annual incentive plan for Mr. Duques and Mr. Fote in 1999, after
obtaining shareholder approval to maintain the tax deductibility of the
incentive plan payments. The Senior Executive Annual Incentive Plan provides an
annual incentive opportunity based on the performance of Company earnings before
interest expense and taxes (EBIT) and is designed to focus attention and efforts
on this important financial measurement.
For executive management, except Mr. Duques and Mr. Fote, the Company
adopted an annual management incentive program with bonus targets payable if
specific goals are achieved. The annual incentive opportunity is based on the
overall performance of the Company and on the performance of a business unit or
staff function. The purpose of this incentive is to tie a significant portion of
annual pay directly to key financial results and other important objectives.
STOCK OPTIONS. The Compensation Committee has established an annual option
grant program under which the number of option grants made each February to the
Named Executives and other senior management is performance driven. For 2000,
the CEO was eligible for up to 100,000 options, Mr. Fote was eligible for up to
75,000 options and each of the other Named Executives was eligible for up to
50,000 options. One-half of the total possible grant is based on the performance
of the Company's common stock as compared to that of the companies in the S&P
500 Index and one-half is based on the achievement of business unit and
individual performance objectives.
LONG-TERM INCENTIVE COMPENSATION. Because the Compensation Committee
considers a long-term orientation essential for the CEO and members of executive
management, a major part of their incentive compensation is based on the
Company's Shareholder Value Plan. Under the plan, a unit value (award amount) is
determined at the end of each year based on the performance of the Company's
common stock as compared to that of the companies in the S&P 500 Index during
the preceding two years (subject to the Committee's discretion to adjust
downward). The award amount is banked for a two-year period and increases
annually by an amount equal to 50% of the Company's return on equity percentage
or, if the return on equity is negative, decreases by an amount equal to 100% of
the Company's return on equity percentage. The maximum unit value is awarded if
the percentage increase in the price of the Company's common stock, plus
dividends, exceeds that of 75% of the companies in the S&P 500 Index.
The increase in the Company's common stock during the performance period
ended December 31, 2000 was greater than that of 75% of the companies in the S&P
500 Index, resulting in the maximum unit value of $3,600,000 being awarded to
Mr. Duques, $2,000,000 to Mr. Fote, and $750,000 for other named executives.
PERFORMANCE REVIEWS. Although the CEO's annual and long-term incentive
award is formula driven (subject to the Compensation Committee's discretion to
make a downward adjustment), the Compensation Committee has developed a
formalized process for providing performance review and feedback to Mr. Duques.
For 2000, the outside Board members and Mr. Duques mutually developed goals for
him in several major areas including strategy and long-term objectives and
executive development and succession planning. In December 2000, Mr. Duques
submitted a self-assessment to the outside Board members. In February 2001, the
outside Board members met separately to discuss the assessment, then conducted a
performance review with Mr. Duques. Performance goals for 2001 also were set at
this meeting. Similarly, in February 2001, Mr. Duques reviewed his assessment of
each of the other Named Executives with the outside Board members and received
their input. Mr. Duques then met with each of the Named Executives to discuss
performance and set performance goals for 2001.
19
POLICY ON DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal
Revenue Code limits the Company's tax deduction to $1 million for compensation
paid to any of the Named Executives unless certain requirements are met. The
Company's 1992 Long-Term Incentive Plan, Shareholder Value Plan, and the
Company's Senior Executive Annual Incentive Plan are designed to meet those
requirements. The Compensation Committee's present intention is to comply with
the requirements of Section 162(m) to the extent necessary to obtain full
deductibility of executive compensation unless the Compensation Committee
determines that such compliance would not be in the best interest of the Company
and its shareholders.
COMPENSATION AND BENEFITS COMMITTEE
Charles T. Russell (Chairperson)
Bernard L. Schwartz
Joan E. Spero
20
SUMMARY COMPENSATION TABLE
The following table shows the cash and other compensation paid or earned and
certain long-term awards made to the Named Executives for all services to the
Company in all capacities for 2000, 1999, and 1998.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- ----------------------------
AWARDS PAYOUTS
-------------- ------------
OTHER ANNUAL SECURITIES LTIP ALL OTHER
NAME AND COMPENSATION UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) OPTIONS (#) ($) ($)(1)
------------------ -------- ----------- ------------ ------------- -------------- ------------ ------------
Henry C. Duques............. 2000 950,000 836,000 1,895 403,042(2) 0 134,818
Chairman of the Board and 1999 812,308 762,000(3) 0 600,557(4) 0 109,406
Chief Executive Officer 1998 800,000(5) 0(6) 0 567,383(7,8) 2,492,910(9) 140,707
Charles T. Fote............. 2000 700,000 750,000(10) 0 300,117(2) 0 96,612
President and Chief 1999 700,000 610,000(3) 0 271,783(4) 0 84,600
Operating Officer 1998 611,138 200,000 0 434,345(8) 679,885(9) 97,834
Eula L. Adams............... 2000 402,500 300,000 0 254,875(2) 0 55,747
Senior Executive Vice 1999 337,885 289,000 0 66,783(4) 0 42,493
President 1998 264,423 200,000 0 90,000 0 40,175
David P. Bailis............. 2000 450,000 300,000 0 181,533(2) 0 76,011
Executive Vice President 1999 450,000 337,400 0 71,783(4) 0 52,636
1998 428,367 170,000 159,928(10) 238,447(8) 0 46,542
Michael T. Whealy........... 2000 400,000 350,000 0 179,875(2) 0 54,706
Executive Vice President, 1999 335,962 273,000(3) 0 66,783(4) 0 37,996
Chief Administrative 1998 259,616 125,000 0 130,000(8) 0 39,093
Officer, Secretary, and
General Counsel
------------
(1) Amounts shown for Messrs. Fote, Adams, Bailis, and Whealy include Company
contributions to defined contribution plans and the dollar value of above
market interest accrued on the Supplemental Savings Plan. For 2000, these
amounts were, respectively, as follows: Mr. Fote: $93,980/$2,632;
Mr. Adams: $54,629/$1,118; Mr. Bailis: $74,023/$1,988; and Mr. Whealy:
$53,167/$1,539. The amount shown for Mr. Duques consists of Company
contributions to defined contribution plans ($93,980), the dollar value of
split dollar life insurance ($20,005), the dollar value of above market
interest for amounts not paid or payable during the year in the Salary
Deferral Plan ($16,944), and the dollar value of above-market interest
accrued on the Supplemental Savings Plan ($3,889).
(2) Includes options to purchase shares of the common stock of the Company and
options to purchase Limited Partnership Interests (shares) of eONE Global,
LP (a subsidiary) under the eONE Global, LP Long-Term Incentive Plan,
respectively, as follows: Mr. Duques: 100,000/303,042, Mr. Fote:
75,000/225,117, Mr. Adams: 125,000/129,875, Mr. Bailis: 43,000/138,533 and
Mr. Whealy: 50,000/129,875.
(3) Includes discretionary bonuses. In addition to the amounts determined by the
plan, the Committee directed that discretionary bonuses also be paid in the
following amounts: Mr. Duques: $150,000, Mr. Fote: $100,000, and
Mr. Whealy: $20,000.
(4) Includes options granted in lieu of a portion of the Shareholder Value Plan
"banked" award for the 1998-1999 performance period.
(5) The Committee directed that $200,000 of this amount be awarded in the form
of a stock option which is included among those reported in this table.
(6) Mr. Duques did not have an annual bonus plan in 1998.
(7) Includes stock options which the executive received in lieu of cash
compensation.
(8) A portion of these are purchased stock options which the executive elected
to purchase under a special offering in early 1998.
(9) Awards in 1998 were payouts of amounts "banked" at the end of the two-year
performance period ended December 31, 1995. Messrs. Adams, Bailis and Whealy
were not eligible to participate at that time.
(10) Includes relocation, moving expenses and associated reimbursement amounts.
21
OPTION GRANTS IN 2000
The following table contains information concerning options to purchase
common stock of the Company under the First Data Corporation 1992 Long-Term
Incentive Plan and Limited Partnership Interests in eONE Global (a subsidiary)
under the eONE Global, LP Long-Term Incentive Plan that were granted to each of
the Named Executives during 2000.
INDIVIDUAL GRANTS
-------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT
OPTIONS EMPLOYEES IN PRICE EXPIRATION DATE PRESENT
NAME GRANTED 2000(1) ($/SHARE) DATE VALUE(2)
---- ---------- ------------ --------- ---------- ------------
Henry C. Duques......................... 100,000(3) 3.3126 49.9688 02/02/10 1,966,440
303,042(4) 3.5718 4.0000 11/15/10 600,023
Charles T. Fote......................... 75,000(3) 2.4845 49.9688 02/02/10 1,474,830
225,117(4) 2.6534 4.0000 11/15/10 445,732
Eula L. Adams........................... 50,000(3) 1.6563 49.9688 02/02/10 983,220
75,000(3) 2.4845 54.9688 12/13/10 1,622,400
129,875(4) 1.5308 4.0000 11/15/10 257,153
David P. Bailis......................... 43,000(3) 1.4244 49.9688 02/02/10 845,569
138,533(4) 1.6328 4.0000 11/15/10 274,295
Michael T. Whealy....................... 50,000(3) 1.6563 49.9688 02/02/10 983,220
129,875(4) 1.5308 4.0000 11/15/10 257,153
---------
(1) Based on options to purchase an aggregate of 3,018,766 shares granted to
employees under the First Data Corporation 1992 Long-Term Incentive Plan
during 2000, and an aggregate of 8,484,219 limited partnership interests
granted to employees under the eONE Global, LP Long-Term Incentive Plan
during 2000.
(2) These values were calculated using the Black-Scholes single option pricing
model, a formula widely used and accepted for valuing traded stock options.
The model is based on immediate exercisability and transferability, which
are not features of the options shown in the table. Any ultimate value will
depend on the market value of the Company's stock at a future date. The
following assumptions were used to calculate the values for grants under the
First Data Corporation 1992 Long-Term Incentive Plan: estimated future
dividend yield of .17%; expected price volatility of 35.279%; risk-free rate
of return of 4.976%; and option holding period of 5 years. The following
assumptions were used to calculate the values for grants under the eONE
Global, LP Long-Term Incentive Plan: estimated future dividend yield of
0.0%; expected price volatility of 50%; risk-free rate of return of 4.976%;
and option holding period of 5 years.
(3) Options were granted under the First Data Corporation 1992 Long-Term
Incentive Plan and carry an exercise price of 100% of the fair-market value
of the underlying common stock on the date of grant and become exercisable
in increments of one-fourth each year beginning on the first anniversary of
the date of the grant.
(4) Options were granted under the eONE Global, LP Long-Term Incentive Plan to
purchase Limited Partnership Interests (shares) of eONE Global, LP (a
subsidiary). One-fourth of the options granted vest on the first anniversary
of the grant date, and 1/36th of the remaining options granted vest on the
last day of each calendar month thereafter.
22
AGGREGATED OPTION EXERCISES IN 2000 AND
YEAR-END 2000 OPTION VALUES
The following table sets forth information for the Named Executives
regarding the exercise of stock options during 2000 and unexercised stock
options held as of the end of 2000:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 2000 AT DECEMBER 31, 2000(1)
ACQUIRED --------------------------------- ---------------------------------
ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
---- ----------- ----------- -------------- ---------------- -------------- ----------------
Henry C. Duques (2) 587,073 16,286,998 2,875,958 1,108,678 89,307,105 11,707,527
(3) 0 0 0 303,042 0 0
Charles T. Fote (2) 66,148 1,936,880 1,151,500 564,440 33,886,307 6,706,998
(3) 0 0 0 225,117 0 0
Eula L. Adams (2) 15,709 468,812 170,671 243,366 4,787,062 2,499,725
(3) 0 0 0 129,875 0 0
David P. Bailis (2) 42,998 1,218,657 449,901 221,784 7,522,694 3,111,854
(3) 0 0 0 138,533 0 0
Michael T. Whealy (2) 0 0 195,697 122,438 3,134,957 1,282,702
(3) 0 0 0 129,875 0 0
---------
(1) The amounts shown reflect the $53.9688 fair market value of the Company's
stock on December 31, 2000 less the option exercise price, but they do not
reflect the impact of taxes.
(2) Options to purchase Common Stock of the Company which were granted under the
First Data Corporation 1992 Long-term Incentive Plan.
(3) Options to purchase Limited Partnership Interests of eONE Global, LP (a
subsidiary) under the eONE Global, LP Long-Term Incentive Plan.
23
LONG-TERM INCENTIVE PLANS -- GRANTS IN 2000
The following table sets forth information regarding grants made in 2000
under the Shareholder Value Plan to the Named Executives for the four-year
period beginning January 1, 2000:
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCES UNDER NON-STOCK PRICE-BASED
SHARES, OR OTHER PLANS
UNITS PERIOD UNTIL --------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#)(1) PAYOUT ($)(2) ($)(3) ($)(4)
---- ------------ ------------- --------- -------- ---------
Henry C. Duques.......................... 0 4 years 660,000 N/A 3,600,000
Charles T. Fote.......................... 0 4 years 500,000 N/A 2,000,000
Eula L. Adams............................ 0 4 years 250,000 N/A 750,000
David P. Bailis.......................... 0 4 years 250,000 N/A 750,000
Michael T. Whealy........................ 0 4 years 250,000 N/A 750,000
---------
(1) The Company's long-term incentives under the Shareholder Value Plan are not
based on shares, units or rights. Under the terms of the plan, at the end of
a two-year performance period, a unit value, i.e. the award, is established
for each executive based on the performance of the Company's Common Stock as
compared to the performance of companies in the S&P 500 Index, subject to
the Committee's discretion to reduce the award produced by the formula based
on factors it determines in its discretion. Those unit values or awards are
banked for an additional two-year period, until payout of the award, during
which time the amount will be increased by a percentage equal to 50% of the
shareholders' return on equity each year, or, if return on equity is
negative, decreased by a percentage equal to 100% of the shareholders'
return on equity each year. For the two-year performance period ended
December 31, 2000, the formula produced a unit value of $750,000 for
Messrs. Adams, Bailis and Whealy, a unit value of $2,000,000 for Mr. Fote
and a unit value of $3,600,000 for Mr. Duques.
(2) Two thresholds must be met before any unit value is established for any of
the Named Executives. First, the rate of total shareholders' return must
exceed the average two-year treasury note rate of return for the 60-day
period prior to the performance period. Second, no unit value is established
if the percentage increase in the Common Stock price, plus dividends, does
not exceed the percentage increase of at least 50% of the companies in the
S&P 500 Index. Amounts shown are the unit values which would be established
under the plan formula applicable to each executive if the thresholds are
met, but not exceeded. As noted in footnote (1), these amounts will increase
or decrease during the two-year banking period after they are set based on
the Company's return on equity.
(3) No performance level or pay level has been identified as a target.
(4) Amounts shown are the maximum unit values which may be established at the
end of the performance period. The ultimate payout is determined by the
Company's return on equity over the two-year banking period after the unit
value is established, and may be greater or less than the amount shown. No
limit has been placed on the potential increase or decrease.
RETIREMENT PLANS
The Company's defined benefit retirement plans were frozen in 1997. Each of
the Named Executives has a frozen benefit which would provide for an annual
payment at age 65 of approximately: $37,700 for Mr. Duques, $97,246 for
Mr. Fote, $6,948 for Mr. Adams, $9,582 for Mr. Bailis and $5,618 for
Mr. Whealy. All of the Company's executives participate in the Company's defined
contribution plans. The Company's contributions to its defined contribution
plans on behalf of the Named Executives are shown in the "All Other
Compensation" column of the Summary Compensation Table.
24
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
total shareholder return on Common Stock of the Company since December 31, 1995
with the cumulative total return over the same period of (i) the S&P 500 Index,
and (ii) a peer group selected by the Company composed of the following ten
computer services companies with market capitalizations over one billion dollars
(Automatic Data Processing Inc., Ceridian Corp., Computer Sciences Corp., DST
Systems Inc., Electronic Data Systems Corp., Equifax Inc., Fiserv Inc.,
Paychex Inc., Sunguard Data Systems Inc., and Total System Services Inc.) (the
"Peer Group").
Pursuant to rules of the Securities and Exchange Commission ("SEC"), the
comparison assumes $100 was invested on January 1, 1996 in the Company's Common
Stock and in each of the indices and assumes reinvestment of dividends, if any.
Also pursuant to SEC rules, the returns of each of the companies in the Peer
Group are weighted according to the respective company's stock market
capitalization at the beginning of each period for which a return is indicated.
Historic stock price is not indicative of future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FDS PEER GROUP S&P 500
12/31/1995 100 100 100
12/31/1996 109.29 106.30 122.96
12/31/1997 87.78 127.68 163.98
12/31/1998 95.91 165.16 210.84
12/31/1999 148.64 197.50 255.22
12/31/2000 159.09 222.11 231.98
FDC PEER GROUP S&P 500
-------- ----------- --------
12/31/1995 100 100 100
12/31/1996 109.29 106.30 122.96
12/31/1997 87.78 127.68 163.98
12/31/1998 95.91 165.16 210.84
12/31/1999 148.64 197.50 255.22
12/31/2000 159.09 222.11 231.98
25
CERTAIN TRANSACTIONS AND OTHER MATTERS
In the ordinary course of business, the Company and its subsidiaries from
time to time engage in transactions with other corporations or financial
institutions whose officers or directors are also directors or officers of the
Company or a subsidiary. Transactions with such corporations and financial
institutions are conducted on an arm's-length basis and may not come to the
attention of the directors or officers of the Company or of the other
corporations or financial institutions involved.
RRE INVESTORS. In the fourth quarter of 1996, the Company made a commitment
to invest up to $3 million as a limited partner in RRE Investors, L.P. As of
December 31, 2000, the Company had fully funded the commitment, however, capital
that has been called and distributed within an eighteen month period is subject
to recall. The Company is required to pay RRE Advisors, LLC an annual management
fee of 2% of its capital commitment as well as its pro rata share of certain
organizational and other expenses. In addition, the Limited Partnership
Agreement provides that the general partner is entitled to receive 20% of all
distributions after satisfaction of certain distribution preferences in favor of
the limited partners. During 2000, the Company incurred $30,000 in management
fees and $5,716 of other expenses. As of December 31, 2000, the gross annualized
internal rate of return for RRE Investors, L.P. was approximately 78% per year.
The Company contributed this investment to eONE Global, LP, a majority owned
subsidiary, in November 2000.
In the second quarter of 1999, the Company made a commitment to invest up to
$5 million as a limited partner in RRE Ventures II, L.P. As of December 31,
2000, the Company had funded $3,654,600 of the commitment. The Company is
required to pay RRE Advisors, LLC an annual management fee of 2.5% of its
capital commitment as well as its pro rata share of certain organizational and
other expenses. In addition, the Limited Partnership Agreement provides that the
general partner is entitled to receive 20% of all distributions after
satisfaction of certain distribution preferences in favor of the limited
partners. During 2000, the Company incurred $125,000 in management fees and
$11,268 in other expenses. As of December 31, 2000, the gross annualized
internal rate of return for RRE Ventures II, L.P. was approximately 38% per
year. The Company contributed this investment to eONE Global, LP, a majority
owned subsidiary, in November 2000.
Mr. Robinson and members of his family control and have equity interests in
RRE Investors, L.P.; RRE Ventures II, L.P.; RRE Partners LLC; and RRE Advisors,
LLC. Prior to authorizing the investments as described above, Mr. Robinson
disclosed his interests in the transactions to the Board and the Board
unanimously approved the investments.
COMPANY LOANS. On November 10, 2000, the Company loaned Mr. Fote, an
executive officer and director of the Company, $1,995,724.98 at 6.10% interest.
The loan was made to allow Mr. Fote to exercise options to purchase and hold
Common Stock of the Company which were expiring. The loan was approved by the
Executive Committee of the Board of Directors and the full amount remained
outstanding as of March 1, 2001.
On February 1, 2001, eONE Global, LP, a majority owned subsidiary of the
Company ("eONE"), loaned Mr. Staglin, a director of the Company and Chairman and
Chief Executive Officer of eONE, $16,886,628 at 7.4% interest. The loan was made
to allow Mr. Staglin to exercise his options to purchase Class B Common Limited
Partnership Interests ("Class B Units") of eONE. The Class B Units are
nonvoting, restricted interests which will vest over a four-year period. The
loan is secured by the Class B Units, is fifty percent recourse to Mr. Staglin
as to principal and one hundred percent recourse as to interest and matures upon
the sale of any of the interests or ten years from the date of the note. The
full amount of the loan remained outstanding as of March 1, 2001.
CONSULTING AGREEMENT. From May 2000 through November 2000, Mr. Staglin, a
director of the Company, provided consulting services to the Company whereby
Mr. Staglin pursued e-commerce and
26
internet related business opportunities on behalf of the Company. Mr. Staglin
was paid $207,629 for his services and was reimbursed for travel expenses
incurred in pursuing those opportunities.
EXECUTIVE SEARCH AGREEMENT. In 2000, the Company paid $139,685 to Lee &
Burgess Associates of Colorado, LLC to perform executive search services. Thomas
Haller is employed by and owns approximately 50% of the outstanding equity
interests of the LLC. Mr. Haller is married to Kimberly Patmore, the Chief
Financial Officer and Executive Vice President of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of the
Company's Common Stock ("Section 16 Persons") to file reports of ownership and
changes in ownership in the Company's Common Stock with the SEC and the New York
Stock Exchange. The Company inadvertently caused one report for Arthur F.
Weinbach to be filed late with respect to one grant of an option to purchase
Common Stock. Based on the Company's records and other information, the Company
believes, with the one exception noted above, that all Section 16(a) filing
requirements for the Section 16 Persons have been complied with during or with
respect to the fiscal year ended December 31, 2000.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth, based on the number of shares outstanding as
of December 31, 2000, the percentage of ownership of the Common Stock by the
persons believed by the Company to own beneficially more than 5% of the Common
Stock based solely upon filings with the Securities and Exchange Commission.
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP PERCENT OF CLASS
---------------- -------------------- ----------------
A I M Management Group Inc.(1) 23,822,973 6.0%
11 Greenway Plaza (sole voting and
Suite 100 dispositive power)
Houston, Texas 77046
---------
(1) A Schedule 13G dated February 9, 2001, was filed by A I M Management
Group Inc. on behalf of itself and its wholly-owned subsidiaries A I M
Advisors, Inc., A I M Capital Management, Inc. and A I M Private Asset
Management, Inc.
* * *
You are urged to mark, date, sign and return the enclosed Proxy Card in the
prepaid envelope provided for such purpose or follow any alternative voting
procedure described on the Proxy Card. Your prompt action may save the Company
the expense of a second mailing.
We encourage all shareholders to attend the Annual Meeting of Stockholders
on May 9, 2001. If, due to a disability, you desire this document in an
alternative, accessible format or you will need special assistance at the
meeting, please contact the Corporate Secretary.
HENRY C. DUQUES
CHAIRMAN
27
EXHIBIT A
FIRST DATA CORPORATION
SENIOR EXECUTIVE INCENTIVE PLAN
(as amended through March 26, 2001)
I. PURPOSE
The purposes of the First Data Corporation Senior Executive Incentive
Plan (the "Plan") are (i) to encourage teamwork and individual
performance by providing annual incentive compensation contingent upon
the achievement of certain corporate objectives, (ii) to advance the
interests of the Company by attracting and retaining certain key
employees and (iii) to motivate such persons to act in the long-term best
interests of the shareholders of the Company.
II. DEFINITIONS
The following terms, when used herein and capitalized, shall have the
following respective meanings:
A. BOARD. The Board of Directors of the Company.
B. COMPENSATION COMMITTEE. The Compensation and Benefits Committee of
the Board or a duly appointed subcommittee of the Compensation and
Benefits Committee, each member of which may be an "outside director"
within the meaning of Section 162(m) of the Code.
C. CODE. The Internal Revenue Code of 1986, as amended.
D. EBIT. The net earnings of the Company, before reduction on account of
interest expense and taxes, as determined pursuant to generally
accepted accounting principles and consistently applied by the
Compensation Committee.
E. INCENTIVE AWARD. An incentive compensation award paid to a
Participant pursuant to the Plan.
F. PARTICIPANTS. The Chief Executive Officer of the Company and Chief
Operating Officer of the Company.
G. PLAN YEAR. The calendar year.
III. INCENTIVE AWARDS
(A) PERFORMANCE OBJECTIVES. The payment of Incentive Awards to
Participants under the Plan shall be determined by the extent to
which certain corporate performance objectives based on EBIT (the
"Performance Objectives") in relation to a target incentive level
(the "Target Incentive Level") have been attained with respect to
each Plan Year. Prior to the beginning of each Plan Year, or as soon
thereafter as is reasonably practicable, but in no event more than
90 days after the beginning of such Plan Year, the Compensation
Committee shall (i) establish the performance objectives expressed as
dollar amounts of EBIT for such Plan Year and the Target Incentive
Level expressed as a dollar amount of incentive compensation for each
Participant for such Plan Year and (ii) specify the percentage of
such Target Incentive Level for levels of performance based on the
Performance Objectives and expressed as a percentage of the Target
Incentive Level for the Plan Year. The maximum Incentive Award
payable to the Chief Executive Officer of the Company for any Plan
Year shall be $2,000,000 and the maximum Incentive Award payable to
the Chief Operating Officer of the Company for any Plan Year shall be
$1,500,000. No Incentive Award shall be
A-1
payable with respect to a Plan Year if actual performance is less
than 90% of the Target Incentive Level established for such Plan
Year.
(B) EVALUATION OF PERFORMANCE. As soon as practicable following the end
of each Plan Year, the Compensation Committee shall determine the
degree to which the Performance Objectives have been met for such
Plan Year in relation to the applicable Target Incentive Level for
purposes of determining the amounts of any Incentive Awards payable
under the Plan. Notwithstanding the foregoing, the Compensation
Committee shall be entitled to reduce the amount of any Incentive
Award payable under the Plan or to determine that no such award shall
be payable.
(C) PAYMENT OF INCENTIVE AWARDS. Incentive Awards shall be payable to
Participants as soon as administratively practicable, but not later
than March 15, following the applicable Plan Year. Unless otherwise
determined by the Compensation Committee, all Incentive Awards shall
be paid in cash. Notwithstanding anything in the Plan to the
contrary, a Participant may, subject to approval of the Compensation
Committee, waive the cash payment of an Incentive Award and elect
instead to receive payment of such Incentive Award in the form of a
stock option to purchase shares of common stock of First Data
Corporation under the 1992 Long-Term Incentive Plan. If a Participant
makes such an election, the Committee shall determine in its sole
discretion the terms and the conditions of such stock option,
including, but not limited to, the number of shares of common stock
subject to the option.
IV. TERMINATION OF EMPLOYMENT
Unless otherwise determined by the Compensation Committee, a Participant
whose employment in his current position with the Company terminates for
any reason prior to the end of a Plan Year shall not be entitled to
receive an Incentive Award for such Plan Year.
V. ADMINISTRATION
The Plan shall be administered by the Compensation Committee, which shall
have full power and authority to interpret, construe and administer the
Plan in accordance with the provisions herein set forth. The Compensation
Committee's interpretation and construction hereof, and actions
hereunder, or the amount or recipient of the payments to be made here
from, shall be binding and conclusive on all persons for all purposes. In
this connection, the Compensation Committee may delegate to any
corporation, committee or individual, regardless of whether the
individual is an employee of the Company, the duty to act for the
Compensation Committee hereunder. No officer or employee of the Company
shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of the Plan unless
attributable to his or her own willful misconduct or lack of good faith.
The expenses of administering the Plan shall be paid by the Company and
shall not be charged against the Plan. The Incentive Awards are intended
to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code and shall be interpreted in a manner
consistent with such intent.
VI. AMENDMENT OR TERMINATION
The Plan shall not become effective unless and until it is approved by
the Company's shareholders, and upon such approval shall become effective
for the Plan Year in which such approval occurs and each subsequent Plan
Year. The Plan may be amended or terminated at any time and for any
reason by the Compensation Committee. The Compensation Committee may, in
its sole discretion, reduce or eliminate an Incentive Award to any
Participant at any time and for any reason. The Plan is specifically
designed to guide the Company in granting Incentive Awards and shall not
create any contractual right of any employee to any Incentive Award prior
to the payment of such award.
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VII. NONTRANSFERABILITY
No Incentive Award payable hereunder, nor any right to receive any future
Incentive Award hereunder, may be assigned, alienated, sold, transferred,
anticipated, pledged, encumbered, or subjected to any charge or legal
process, and if any such attempt is made, or a person eligible for any
Incentive Award hereunder becomes bankrupt, the Incentive Award under the
Plan which would otherwise be payable with respect to such person may be
terminated by the Compensation Committee which, in its sole discretion,
may cause the same to be held or applied for the benefit of one or more
of the dependents of such person or make any other disposition of such
award that it deems appropriate.
VIII. INCOME TAX WITHHOLDING/RIGHTS OF OFFSET
The Company shall have the right to deduct and withhold from all
Incentive Awards all federal, state and local taxes as may be required by
law. In addition to the foregoing, the Company shall have the right to
set off against the amount of any Incentive Award which would otherwise
be payable hereunder, the amount of any debt, judgment, claim, expense or
other obligation owed at such time by the Participant to the Company or
any Subsidiary.
IX. CLAIM TO INCENTIVE AWARDS AND EMPLOYMENT RIGHTS
Nothing in this Plan shall require the Company to segregate or set aside
any funds or other property for purposes of paying all or any portion of
an Incentive Award hereunder. No Participant shall have any right, title
or interest in or to any Incentive Award hereunder prior to the actual
payment thereof, nor to any property of the Company. Neither the adoption
of the Plan nor the continued operation thereof shall confer upon any
employee any right to continue in the employ of the Company or shall in
any way affect the right and power of the Company to dismiss or otherwise
terminate the employment of either Participant at any time for any
reason, with or without cause.
X. CONSTRUCTION
Titles and headings of sections in the Plan are for convenience of
reference only, and in the event of any conflict, the text of the Plan,
rather than such titles or headings, shall control.
XI. GOVERNING LAW
All questions pertaining to the construction, validity and effect of the
Plan shall be determined in accordance with the laws of the State of
Delaware.
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EXHIBIT B
FIRST DATA CORPORATION
1993 DIRECTOR'S STOCK OPTION PLAN
(as amended through March 26, 2001)
1. PURPOSE. The purpose of the First Data Corporation 1993 Director's Stock
Option Plan (the "Plan") is to advance the interest of First Data Corporation
(the "Company") and its stockholders by encouraging increased stock ownership by
members of the Board of Directors of the Company (the "Board") who are not
employees of the Company or any of its subsidiaries, in order to promote
long-term stockholder value through continuing ownership of the Company's common
stock.
2. ADMINISTRATION. The Plan shall be administered by the Compensation and
Benefits Committee of the Board (the "Committee"). The Committee shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority (within the limitations described herein) to prescribe the form of the
agreement embodying awards of nonqualified stock options ("NQOs") and purchased
stock options ("PSOs"). The Committee shall, subject to the provisions of the
Plan, grant NQOs and PSOs under the Plan and shall have the power to contrue the
Plan, to determine all questions arising thereunder and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable. Any decisions of the Committee in the administration of the Plan, as
described herein, shall be final and conclusive. The Committee may act only by a
majority of its members in office, except that the members thereof may authorize
any one or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Committee. No member
of the Committee shall be liable for anything done or omitted to be done by him
or by any other member of the Committee in connection with the Plan, except for
his own willful misconduct or as expressly provided by statute.
3. PARTICIPATION. Each member of the Board who is not an employee of the
Company, any of its subsidiaries or any of its affiliates ("Non-Employee
Director") shall be eligible to receive NQOs and PSOs in accordance with
Paragraphs 5 and 6 below. As used herein, the term "subsidiary" means any
corporation or other trade or business at least 50% of whose outstanding voting
stock is owned, directly or indirectly, by the Company. As used herein, the term
"affiliate" means any person who owns, directly or indirectly, at least 10% of
the outstanding voting stock of the Company.
4. AWARDS UNDER THE PLAN. (a) TYPE OF AWARDS. Awards under the Plan shall
include only NQOs and PSOs, which are, in both instances, rights to purchase
shares of common stock of the Company having a par value of $.01 per share (the
"common stock") which are awarded or sold, respectively, to participants. All
NQOs and PSOs are subject to terms, conditions and restrictions specified in
Paragraphs 5 and 6 below.
(b) MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED. Subject to adjustment
as provided in Paragraph 7 below, 2,500,000 shares of common stock shall be
available for awards under this Plan, reduced by the sum of the aggregate
number of shares of common stock which become subject to outstanding NQOs
and PSOs. To the extent that shares of common stock subject to an
outstanding NQO or PSO are not issued or delivered by reason of the
expiration, termination, cancellation or forfeiture of such NQO or PSO, then
such shares of common stock shall again be available for awards under this
Plan.
(c) RIGHTS WITH RESPECT TO SHARES. A Non-Employee Director to whom an
NQO or PSO is granted (and any person succeeding to such a Non-Employee
Director's rights pursuant to the Plan) shall have no rights as a
stockholder with respect to any shares of common stock issuable pursuant to
any such NQO or PSO until the date of exercise of such NQO or PSO. Except as
provided in Paragraph 7 below, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or
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extraordinary, and whether in cash, securities or other property) for which
the record date is prior to the date of such exercise.
5. NONQUALIFIED STOCK OPTIONS. Each NQO granted under the Plan shall be
evidenced by an agreement in such form as the Committee shall prescribe from
time to time in accordance with the Plan and shall comply with the following
terms and conditions:
(a) The NQO exercise price shall be the fair market value of the common
stock subject to such NQO on the date the NQO is granted, which shall be the
average of the closing prices of a share of common stock on each trading day
within the 30 calendar day period ending on the date of grant as reported on
the New York Stock Exchange Composite Transactions Tape.
(b) Each person who becomes a Non-Employee Director shall be granted on
the date such person commences services as a Non-Employee Director (or as
soon as practicable after such date), NQOs for 10,000 shares of common stock
(the "Initial Grant"). On the date of each annual meeting of the
stockholders of the Company (a "Stockholder's Meeting") occurring after the
Initial Grant (or as soon as practicable after such date), each such person
who is a Non-Employee Director immediately after such meeting shall be
granted NQOs for 4,000 shares of common stock. Notwithstanding the
foregoing, (i) each person who was eligible to receive NQOs under this Plan
in 1993 shall be granted NQOs for 14,000 shares of common stock on the date
of the third and seventh Stockholders' Meetings following the Initial Grant
(or as soon as practicable after such date), provided such person is a
Non-Employee Director immediately after such meetings and (ii) each person
who became or becomes eligible to receive NQOs under this Plan after 1993
shall be granted NQOs for 14,000 shares of common stock on the date of the
fourth annual Stockholder's Meeting following the Initial Grant (or as soon
as practicable after such date) and on the date of the Stockholder's Meeting
occurring every third year after such fourth Stockholder's Meeting (or as
soon as practicable after each such date), provided such person is a
Non-Employee Director immediately after each such meeting. The grants of
NQOs for 14,000 shares of common stock shall be in lieu of the grants for
4,000 shares which would otherwise be made at the same time. Each
Non-Employee Director who at the request of the Company is appointed to
serve on the governing board of an entity in which the Company has a
significant ownership or business interest shall be granted NQOs for 2,000
shares of common stock on the date of approval of such appointment by the
Committee (or as soon as practicable after such date). As long as such
Non-Employee Director continues to serve, at the request of the Company, on
the governing board of such an entity, such Non-Employee Director shall be
granted NQOs for 2,000 shares of common stock on the date of each annual
anniversary of such appointment (or as soon as practicable after such date).
(c) Except for transfers by the Non-Employee Director to certain family
members as determined by the Committee, the NQO shall not be transferable by
the optionee other than by will or the laws of descent and distribution, and
shall be exercisable during a Non-Employee Director's lifetime only by the
Non-Employee Director; and
(d) The NQO shall not be exercisable:
(i) after the expiration of ten years from the date it is granted,
and may be exercised during such period as follows: for a NQO granted
prior to March 7, 2001, one-fourth (25%) of the total number of shares of
common stock covered by the NQO shall become exercisable each year
beginning with the first anniversary of the date it is granted, except as
provided in Subparagraph (d)(iii)(B) in the event of the death of the
Non-Employee Director; and for a NQO granted on or after March 7, 2001,
100% of the total number of shares of common stock covered by the NQO
shall become exercisable on the date it is granted;
(ii) unless payment in full is made for the shares of common stock
being acquired thereunder at the time of exercise, which payment shall be
made
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(A) in United States dollars by cash or check, or
(B) in lieu thereof, by tendering to the Company shares of common
stock owned by the person exercising the NQO and having a fair market
value equal to the cash exercise price applicable to such NQO, such
fair market value to be the average of the closing prices of a share
of common stock on each trading day in the 30 calendar day period
ending on the date of exercise as reported on the New York Stock
Exchange Composite Transactions Tape; or
(C) by a combination of United States dollars and shares of
common stock as aforesaid; and
(iii) unless the person exercising the NQO at all times during the
period beginning with the date of grant of the NQO and ending on the date
of such exercise, has been a Non-Employee Director, or otherwise has
performed services for the Company or any of its subsidiaries or
affiliates (as defined in Paragraph 3), except that:
(A) if such person shall cease to be a Non-Employee Director or
cease to perform such services for reasons other than death,
disability or Retirement while holding a NQO that has not expired and
has not been fully exercised, unless otherwise determined by the
Committee, such person may exercise the NQO with respect to any
shares of common stock as to which such person could have exercised
the NQO on the date such person ceased to be a Non-Employee Director
or ceased to perform such services, or with respect to a greater
number of shares as determined by the Committee, as follows: for a
NQO granted prior to March 7, 2001, at any time within 120 days of
the date the person ceased to be such a Non-Employee Director or
ceased to perform such services (but in no event after the NQO has
expired under the provisions of Subparagraph 5(d)(i) above); and for
a NQO granted on or after March 7, 2001, at any time before the NQO
expires in accordance with the provisions of Subparagraph
5(d)(i) above; or
(B) if a Non-Employee Director to whom a NQO has been granted
shall die while holding a NQO that has not expired and has not been
fully exercised, such person's executors, administrators, heirs or
distributees, as the case may be, may exercise the NQO with respect
to the total number of shares covered by the NQO, as follows: for a
NQO granted prior to March 7, 2001, at any time within one year after
the date of such death (but in no event after the NQO has expired
under the provisions of Subparagraph 5(d)(i) above); and for a NQO
granted on or after March 7, 2001, at any time before the NQO expires
in accordance with the provisions of Subparagraph 5(d)(i) above; or
(C) if a Non-Employee Director to whom a NQO has been granted
shall become disabled (as determined by the Committee) while holding
a NQO that has not expired and has not been fully exercised, such
person may exercise the NQO with respect to any shares of common
stock as to which such person could have exercised the NQO on the
date of the onset of disability or which become exercisable within
the three year period after the date of the onset of disability, or
with respect to a greater number of shares as determined by the
Committee, as follows: for a NQO granted prior to March 7, 2001, at
any time within three years after the date of the onset of such
disability (but in no event after the NQO has expired under the
provisions of Subparagraph 5(d)(i) above); and for a NQO granted on
or after March 7, 2001, at any time before the NQO expires in
accordance with the provisions of Subparagraph 5(d)(i) above; or
(D) if a Non-Employee Director to whom a NQO has been granted
shall terminate service as a Non-Employee Director due to Retirement,
which for purposes of this subparagraph (d)(iii)(D) shall mean after
at least 60 months of continuous service on the Board and on or after
the date the Non-Employee Director attains age 60, and while holding
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a NQO that has not expired and has not been fully exercised, such
person may exercise the NQO with respect to any shares of common
stock as to which such person could have exercised the NQO on the
date of such Retirement, or with respect to a greater number of
shares as determined by the Committee, as follows: for a NQO granted
prior to March 7, 2001, at any time within 120 days of the date of
termination due to Retirement (but in no event after the NQO has
expired under the provisions of Subparagraph 5(d)(i) above); and for
a NQO granted on or after March 7, 2001, at any time before the NQO
expires in accordance with the provisions of Subparagraph
5(d)(i) above.
6. PURCHASED STOCK OPTIONS. Each PSO purchased under the Plan shall be
evidenced by an agreement in such form as the Committee shall prescribe from
time to time in accordance with the Plan. Except as set forth below, PSOs shall
be governed by the terms and conditions governing NQOs;
(a) The PSO exercise price shall be an amount equal to the fair market
value of the shares of common stock subject to such PSO on the date such PSO
is purchased as described in Subparagraph 6(d) below, which shall be the
average of the closing prices of a share of common stock on each trading day
in the 30 calendar day period ending on the date of such purchase as
reported on the New York Stock Exchange Composite Transactions Tape;
(b) The PSO purchase price shall be an amount equal to ten (10%) percent
of the PSO exercise price;
(c) Each calendar year, each person who is a Non-Employee Director shall
be entitled to purchase PSOs entitling such Non-Employee Director to
purchase a maximum number of shares of common stock equal to the nearest
whole number determined by a fraction, the numerator of which is equal to
the dollar value of the annual retainer to which such Non-Employee Director
would be entitled during such year and the denominator of which is equal to
the PSO purchase price.
(d) Each Non-Employee Director who desires to purchase PSOs shall make
an election, prior to a date set by the Committee which shall be prior to
the beginning of a year to forgo part or all of his annual retainer for such
year in exchange for PSOs. If no election is made, the election in place for
the preceding year shall be deemed to continue in effect. The Board of
Directors or the Committee or the delegate of either shall approve the PSO
purchase and the date of purchase shall be the date of such approval.
(e) If a PSO is purchased prior to March 7, 2001, the PSO shall not be
exercisable after the expiration of five years from the date it first become
exercisable, and may be exercised during such period as follows: one-third
(33 1/3%) of the total number of shares of common stock covered by the PSO
shall become exercisable each year beginning with the first anniversary of
the date it is purchased, as described in Subparagraph 6(c), except as
provided in Subparagraph 6(f)(ii) in the event of the death of the
Non-Employee Director. If a PSO is purchased on or after March 7, 2001, the
PSO shall not be exercisable after the expiration of ten years from the date
it first becomes exercisable, and may be exercised during such period as
follows: 100% of the total number of shares of common stock covered by the
PSO shall become exercisable on the date it is purchased, as described in
Subparagraph 6(c);
(f) The PSO shall not be exercisable unless the person exercising the
PSO at all times during the period beginning with the date of purchase of
the PSO and ending on the date of such exercise, has been a Non-Employee
Director, or otherwise has performed services for the Company or any of its
subsidiaries or affiliates (as defined in paragraph 3), except that:
(i) if such person shall cease to be a Non-Employee Director or cease
to perform such services for reasons other than death, disability or
Retirement while holding a PSO that has not expired and has not been
fully exercised, unless otherwise determined by the Committee, such
person may exercise the PSO with respect to any shares of common stock as
to which such person
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could have exercised the PSO on the date such person ceased to be a
Non-Employee Director or ceased to perform such services, or with respect
to a greater number of shares as determined by the Committee, as follows:
for a PSO granted prior to March 7, 2001, at any time within 120 days of
the date the person ceased to be such a Non-Employee Director or ceased
to perform such services (but in no event after the PSO has expired under
the provisions of Subparagraph 6(e) above); and for a PSO granted on or
after March 7, 2001, at any time before the PSO expires in accordance
with the provisions of Subparagraph 6(e) above; and, solely with respect
to a PSO granted prior to March 7, 2001:
(A) in the event that the PSO exercise price is less than the
fair market value of the shares of common stock at the time such
person ceases to be a Non-Employee Director, such person shall be
entitled to receive the PSO purchase price plus simple interest
credited at the 10 year U.S. Government Treasury Bond Rate from the
PSO purchase date to the date such person ceases to be a Non-Employee
Director for all shares of common stock for which the PSO is not then
exercisable; and
(B) in the event that the PSO exercise price is greater than the
fair market value of the shares of common stock at the time such
person ceases to be a Non-Employee Director, the PSO that is not then
exercisable shall lapse and such person shall not be entitled to a
return of the PSO purchase price with respect to shares of common
stock for which the PSO is not then exercisable; or
(ii) if a Non-Employee Director to whom a PSO has been granted shall
die while holding a PSO that has not expired and has not been fully
exercised, such person's executors, administrators, heirs or
distributees, as the case may be, may exercise the PSO with respect to
the total number of shares covered by the PSO, as follows: for a PSO
granted prior to March 7, 2001, at any time within one year after the
date of such death (but in no event after the PSO has expired under the
provisions of Subparagraph 6(e) above); and for a PSO granted on or after
March 7, 2001, at any time before the PSO expires in accordance with the
provisions of Subparagraph 6(e) above; or:
(iii) if a Non-Employee Director to whom a PSO has been granted shall
become disabled (as determined by the Committee) while holding a PSO that
has not expired and has not been fully exercised, such person may
exercise the PSO with respect to any shares of common stock as to which
such person could have exercised the PSO on the date of the onset of
disability or which become exercisable within the three year period after
the date of the onset of disability, or with respect to a greater number
of shares as determined by the Committee, as follows: for a PSO granted
prior to March 7, 2001, at any time within three years after the date of
the onset of such disability (but in no event after the PSO has expired
under the provisions of Subparagraph 6(e) above); and for a PSO granted
on or after March 7, 2001, at any time before the PSO expires in
accordance with the provisions of Subparagraph 6(e) above; or
(iv) if a Non-Employee Director to whom a PSO has been granted shall
terminate service as a Non-Employee Director due to Retirement, which for
purposes of this Subparagraph (f)(iv) shall mean after at least
60 months of continuous service on the Board and on or after the date the
Non-Employee Director attains age 60, and while holding a PSO that has
not expired and has not been fully exercised, such person may exercise
the PSO with respect to any shares of common stock as to which such
person could have exercised the PSO on the date of such Retirement, or
with respect to a greater number of shares as determined by the
Committee, as follows: for a PSO granted prior to March 7, 2001, at any
time within 120 days of the date of termination due to Retirement (but in
no event after the PSO has expired under the provisions of Subparagraph
6(e) above); and for a PSO granted on or after March 7, 2001, at any time
before the PSO expires in accordance with the provisions of Subparagraph
6(e) above.
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7. DILUTION AND OTHER ADJUSTMENTS. In the event of any stock split, stock
dividend, split-up, spin-off, recapitalization, merger, consolidation,
reorganization, combination or exchange of shares, a sale by the Company of all
or part of its assets, any distribution to stockholders, other than a regular
cash dividend, or other similar change in capitalization or change in the common
stock, the number and kind of shares or other securities that may be issued
under the Plan pursuant to Subparagraphs 4(b) and 5(b) above, and the number and
kind of shares or other securities subject to, and the exercise price per share
under, all outstanding NQOs or PSOs shall be appropriately adjusted by the
Committee; such adjustment in outstanding NQOs and PSOs shall be made without
change in the total NQO and PSO exercise price applicable to the unexercised
portion of such NQOs and PSOs and with an adjustment in the NQO and PSO exercise
price per share, and such adjustment shall be conclusive and binding for all
purposes of the Plan.
8. MISCELLANEOUS PROVISIONS.
(a) Except as expressly provided for in the Plan, no Non-Employee
Director or other person shall have any claim or right to be granted an NQO
or PSO under the Plan. Neither the Plan nor any action taken hereunder shall
be construed as giving any Non-Employee Director any right to be retained in
the service of the Company.
(b) Except for transfers by the Non-Employee Director to certain family
members as determined by the Committee, a participant's rights and interest
under the Plan may not be assigned or transferred, hypothecated or
encumbered in whole or in part either directly or by operation of law or
otherwise (except in the event of a participant's death, by will or the laws
of descent or distribution), including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any participant in the Plan shall
be subject to any obligation or liability of such participant.
(c) No shares of common stock shall be issued hereunder unless counsel
for the Company shall be satisfied that such issuance will be in compliance
with applicable federal, state, local and foreign securities, securities
exchange and other applicable laws and requirements.
(d) It shall be a condition to the obligation of the Company to issue
shares of common stock upon exercise of an NQO or PSO, that the participant
(or other beneficiary or person entitled to act under Subparagraph
5(d)(iii)(B) or 6(f) above) pay to the Company, upon its demand, such amount
as may be requested by the Company for the purpose of satisfying any
liability to withhold federal, state, local or foreign income or other
taxes. If the amount requested is not paid, the Company may refuse to issue
such shares.
(e) The expense of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares upon exercise of NQOs or PSOs under
the Plan, and rights to the issuance of shares upon exercise of NQOs or PSOs
shall be subordinate to the claims of the Company's general creditors.
(g) By accepting any NQO or PSO or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of,
and consent to, any action taken under the Plan by the Company or the Board.
(h) The masculine pronoun means the feminine and the singular means the
plural in the Plan, wherever appropriate.
(i) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding NQOs or PSOs hereunder or
any shares of common stock issued pursuant hereto as may be required by
Section 13 or 15(d) of the securities Exchange Act of 1934, as amended, or
any other applicable statute, rule or regulation.
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(j) Notwithstanding any other provision in this Plan to the contrary and
subject to Paragraph 7 of this Plan, neither the Committee nor the Board
shall, without stockholder approval, amend the terms of any outstanding NQO
or PSO in order to reduce the exercise price of such NQO or PSO.
9. AMENDMENT OR DISCONTINUANCE. The Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable. No amendment
of the Plan shall materially and adversely affect any right of any participant
with respect to any NQO or PSO theretofore granted without such participant's
written consent.
10. TERMINATION. The Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan;
or
(b) ten years from the date the Plan is approved and adopted by
shareholders of the Company in accordance with Paragraph 11 below.
No termination of the Plan shall materially and adversely affect any of the
rights and obligations of any person, without his consent, under any NQO or PSO
theretofore granted under the Plan.
11. STOCKHOLDER APPROVAL AND ADOPTION. The Plan shall be submitted to the
stockholders of the Company for their approval and adoption on or before the
2001 Stockholder's Meeting. The effective date set forth herein and any awards
granted hereunder shall be subject to such stockholder approval. The
stockholders shall be deemed to have approved and adopted the Plan only if it is
approved and adopted at a meeting of the stockholders duly held on or before
that date (or any adjournment of said meeting occurring subsequent to such date)
by vote taken in the manner required by the laws of the State of Delaware. In
the event that the Plan is not approved by the stockholders of the Company, the
Plan and any awards hereunder shall be void and of no force or effect.
B-7
EXHIBIT C
AUDIT COMMITTEE CHARTER
ORGANIZATION
The Audit Committee of the Board of Directors shall be comprised of three or
more directors who have no relationship to the Corporation that may interfere
with the exercise of their independence from management and the Corporation. All
Audit Committee members will be financially literate, and at least one member
will have accounting or related financial management expertise.
RESPONSIBILITIES
The Audit Committee shall have general responsibility for reviewing with
management the financial controls, accounting, compliance with law, audit and
reporting activities of the Corporation and its subsidiaries as well as the
review of contingency plans for business continuity undertakings. In carrying
out its responsibilities, the Audit Committee believes its policies and
procedures should remain flexible, in order to best react to changing conditions
and to ensure to the directors and shareholders that the corporate accounting
and reporting practices of the Corporation are in accordance with all
requirements.
In carrying out its responsibilities, the Audit Committee will:
- Review and reassess the adequacy of this Charter on an annual basis.
- Have a clear understanding with the independent auditors that they are
ultimately accountable to the Board of Directors and the Audit Committee,
as the shareholders' representatives, who have the ultimate authority and
responsibility to select, evaluate and, if appropriate, terminate their
services.
- Review and discuss the audited financial statements with management.
- Discuss with the independent auditors the matters required to be discussed
by SAS 61, as it may be modified or supplemented.
- On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships with the Corporation and
professional services they provided to the Corporation as required by
Independence Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees), as
modified or supplemented. The Audit Committee will review with the
independent auditors the nature and scope of any disclosed relationships
and professional services and take, or recommend that the Board of
Directors take, appropriate action to ensure the continuing independence
of the auditors.
- Recommend to the Corporation's Board of Directors whether the audited
financial statements should be included in the Corporation's Annual Report
on Form 10-K to be filed with the Securities and Exchange Commission.
- Review and approve the report of the Audit Committee in the Corporation's
Annual Report on Form 10-K and the proxy statement for its annual meeting
of shareholders.
ADDITIONAL POWERS
In carrying out its responsibilities, the Audit Committee also shall have
the power to:
- Approve any special assignments given to independent auditors and fees
relating thereto.
C-1
- Review the planned scope of the annual audit, the fees relating thereto,
the independent auditors' report of audit, the accompanying management
letter, if any, and management's responses thereto.
- Review the planned scope and results of the Corporation's internal audit
examinations and assessments.
- Consult with the internal auditors and the independent auditors regarding
the adequacy of the Corporation's internal accounting controls, the
effectiveness and efficiency of the Corporation's internal audit staff,
and legal compliance matters.
- Review and conduct investigations regarding possible violations of law and
of the Corporation's Code of Conduct, to retain outside counsel and other
experts to assist in such investigations and to direct that appropriate
remedial steps are taken if such violations are detected.
- Review and oversee related-party transactions.
- Review any major accounting changes made or contemplated by the
Corporation.
- Review interim financial information with management and the independent
auditors.
C-2
----------------------
[LOGO] COMPANY #
CONTROL #
----------------------
THERE ARE TWO WAYS TO VOTE YOUR PROXY.
VOTE BY PHONE -- CALL TOLL FREE -- 1-800-240-6326
- Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week until 12 p.m. on May 8, 2001.
- You will be prompted to enter your 3-digit Company Number and 7-digit
Control Number located above.
- Then follow the instructions of the automated program.
- YOUR TELEPHONE VOTE AUTHORIZES YOUR SHARES TO BE VOTED IN THE SAME MANNER
AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY.
VOTE BY MAIL
- Mark, sign and date your proxy card, and return it in the postage-paid
envelope we've provided or return it to FIRST DATA CORPORATION,
c/o Shareowner Services-SM-, P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE, PLEASE DO NOT MAIL YOUR PROXY CARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
1. Election of directors: 01 Henry C. Duques 03 Joan E. Spero
02 Charles T. Fote
___ Vote FOR ____ Vote WITHHELD
all nominees from all nominees
(except as marked)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED
NOMINEE, WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX / /
PROVIDED TO THE RIGHT.)
PLEASE FOLD HERE
2. The approval of an amendment to the Company's Shareholder Value Plan.
___ For ___ Against ___ Abstain
3. The approval of an amendment to the Company's Senior Executive Incentive
Plan.
___ For ___ Against ___ Abstain
4. The approval of amendments to the 1993 Director's Stock Option Plan and the
allocation of 1,000,000 shares of the Company's Common Stock to the Plan.
___ For ___ Against ___ Abstain
5. The ratification of the selection of Ernst & Young LLP as independent
auditors of the Company for 2001.
___ For ___ Against ___ Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box / /
Indicate Changes below:
Date:
---------------------------------
/ /
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority.
Corporations should provide full name of
corporation and title of authorized
officer signing the proxy.
FIRST DATA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY 9, 2001
FIRST DATA CORPORATION PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF FIRST DATA
CORPORATION (FDC) FOR USE AT THE ANNUAL MEETING ON MAY 9, 2001.
By signing this proxy, you revoke all prior proxies and appoint Henry C.
Duques and Michael T. Whealy, and each of them, with each having the full
power to appoint his substitute, to represent and to vote all the shares of
Common Stock of FDC you held in your account on March 12, 2001 at the Annual
Meeting of Stockholders of FDC, and any adjournment or postponement of such
meeting, in the manner specified on the other side of this proxy. In their
discretion, Mr. Duques and Mr. Whealy are also authorized to vote upon such
other matters as may properly come before the meeting. Management presently
is not aware of any such matters to be presented for action.
SEE REVERSE FOR VOTING INSTRUCTIONS.
----------------
[LOGO] COMPANY #
CONTROL #
----------------
THERE ARE TWO WAYS TO VOTE YOUR PROXY.
VOTE BY PHONE -- CALL TOLL FREE -- 1-800-240-6326
- Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week until 12 p.m. on May 4, 2001.
- You will be prompted to enter your 3-digit Company Number and 7-digit
Control Number located above.
- Then follow the instructions of the automated program.
- YOUR TELEPHONE VOTE AUTHORIZES YOUR SHARES TO BE VOTED IN THE SAME MANNER AS
IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY.
VOTE BY MAIL
- Mark, sign and date your proxy card, and return it in the postage-paid
envelope we've provided or return it to FIRST DATA CORPORATION, c/o
Shareowner Services-SM-, P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE, PLEASE DO NOT MAIL YOUR PROXY CARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4, AND 5.
1. Election of Directors: 01 Henry C. Duques 03 Joan E. Spero
02 Charles T. Fote
___ Vote FOR ____ Vote WITHHELD
all nominees from all nominees
(except as marked)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED
NOMINEE, WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX / /
PROVIDED TO THE RIGHT.)
PLEASE FOLD HERE
2. The approval of an amendment to the Company's Shareholder Value Plan.
___ For ___ Against ___ Abstain
3. The approval of an amendment to the Company's Senior Executive Incentive
Plan.
___ For ___ Against ___ Abstain
4. The approval of amendments to the 1993 Director's Stock Option Plan and the
allocation of 1,000,000 shares of the Company's Common Stock to the Plan.
___ For ___ Against ___ Abstain
5. The ratification of the selection of Ernst & Young LLP as independent
auditors of the Company for 2001.
___ For ___ Against ___ Abstain
IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. MANAGEMENT PRESENTLY IS NOT
AWARE OF ANY SUCH MATTERS TO BE PRESENTED FOR ACTION.
Address Change? Mark Box / /
Indicate Changes below:
Date
----------------------------------
/ /
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority.
Corporations should provide full name of
corporation and title of authorized
officer signing the proxy.
FIRST DATA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY 9, 2001
FIRST DATA CORPORATION PROXY
--------------------------------------------------------------------------------
EMPLOYEE PROXY VOTING CARD IN CONNECTION WITH THE FIRST DATA CORPORATION IN
CENTIVE SAVINGS PLAN (ISP)/EMPLOYEE STOCK PURCHASE PLAN (ESPP)/RESTRICTED
STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST DATA
CORPORATION (FDC).
Shown on the opposite side of this card are the number of shares of FDC
stock, if any, beneficially held for you (1) in the ISP, (2) the ESPP, and
(3) as Restricted Stock, as of March 12, 2001. Shares held in the ISP were
provided by The American Express Company. Shares held in the ESPP were
provided by Charles Schwab. Shares of Restricted Stock were provided by FDC
Stock Plan Administration.
By completing and mailing this card in time for delivery before May 4, 2001,
you will have voted all of your shares held in the ISP, the ESPP and as
Restricted Stock. If you own FDC shares outside of these plans, you will
receive separate proxy materials which you should complete and return in the
envelope provided with those materials.
VOTING AUTHORIZATION FOR ISP SHARES - I hereby instruct American Express
Company ("American Express"), as Trustee under the FDC ISP, to vote, in
person or by proxy, all shares of Common Stock of FDC allocated to my account
under the ISP at the Annual Meeting of Stockholders of FDC to be held on May
9, 2001, and at any postponement or adjournment thereof, in the manner
specified on the reverse side of this card. American Express will vote the
ISP shares represented by the voting instruction if properly completed and
signed by me and received back by May 4, 2001. THE ISP TRUST AGREEMENT
INSTRUCTS AMERICAN EXPRESS TO VOTE FDC SHARES ALLOCATED TO MY ISP ACCOUNT FOR
WHICH AMERICAN EXPRESS HAS NOT RECEIVED INSTRUCTIONS FROM ME IN THE SAME
PROPORTION ON EACH ISSUE AS IT VOTES THOSE SHARES CREDITED TO PARTICIPANTS'
ACCOUNTS FOR WHICH AMERICAN EXPRESS RECEIVED INSTRUCTIONS FROM PARTICIPANTS.
VOTING AUTHORIZATION FOR ESPP SHARES AND RESTRICTED STOCK - I hereby appoint
Henry C. Duques and Michael T. Whealy, as Proxies, each with the power to
appoint his substitute, and hereby authorize them to represent and to vote,
as designated below, all the shares of Common Stock of FDC beneficially held
by me in the ESPP or as Restricted Stock on March 12, 2001, at the Annual
Meeting of Stockholders of FDC to be held on May 9, 2001, and at any
adjournment or postponement thereof, in the manner specified on the reverse
side of this card. With respect to ESPP Shares and Restricted Stock, this
Proxy, when properly executed, will be voted as directed by the undersigned
stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE DIRECTORS INDICATED AND FOR THE APPROVAL OF ALL PROPOSALS
PRESENTED.
(CONTINUED, AND TO BE SIGNED AND DATED, ON THE REVERSE SIDE)
FIRST DATA CORPORATION PROXY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
1. Election of directors: 01 Henry C. Duques 03 Joan E. Spero
02 Charles T. Fote
/ / Vote FOR / / Vote WITHHELD
all nominees from all nominees
(except as marked)
/ /
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, WRITE
THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
2. The approval of an amendment to the Company's Shareholder Value Plan.
/ / For / / Against / / Abstain
3. The approval of an amendment to the Company's Senior Executive
Incentive Plan.
/ / For / / Against / / Abstain
4. The approval of amendments to the 1993 Director's Stock Option Plan
and the allocation of 1,000,000 shares of the Company's Common Stock
to the Plan.
/ / For / / Against / / Abstain
5. The ratification of the selection of Ernst & Young LLP as independent
auditors of the Company for 2001.
/ / For / / Against / / Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Dated: ______________________________
/ /
Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy. If held in joint
tenancy, all persons must sign. Trustees, administrators, etc., should
include title and authority. Corporations should provide full name of
corporation and title of authorized officer signing the proxy.
FIRST DATA CORPORATION PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF FIRST DATA CORPORATION
(FDC) FOR USE AT THE ANNUAL MEETING ON MAY 9, 2001.
By signing this proxy, you revoke all prior proxies and appoint Henry C.
Duques and Michael T. Whealy, and each of them, with each having the full
power to appoint his substitute, to represent and to vote all the shares of
Common Stock of FDC you held in your account on March 12, 2001 at the Annual
Meeting of Stockholders of FDC, and any adjournment or postponement of such
meeting, in the manner specified on the other side of this proxy. In their
discretion, Mr. Duques and Mr. Whealy are also authorized to vote upon such
other matters as may properly come before the meeting. Management presently
is not aware of any such matters to be presented for action.
See reverse for voting instructions.