SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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[ ] Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [S] 240.14a-12
JACK HENRY & ASSOCIATES, INC.
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
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JACK HENRY & ASSOCIATES, INC.
663 Highway 60, P.O. Box 807
Monett, Missouri 65708
NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF JACK HENRY & ASSOCIATES, INC.:
PLEASE TAKE NOTICE that the 2004 Annual Meeting of Stockholders of Jack
Henry & Associates, Inc., a Delaware corporation, will be held in the
Company's Executive Conference Center, lower level (Building J-7) at the
company headquarters, 663 Highway 60, Monett, Missouri, on Tuesday, October
26, 2004, 11:00 a.m., local time, for the following purposes:
(1) To elect seven (7) directors to serve until the 2005 Annual Meeting of
Stockholders;
(2) To transact such other business as may properly come before the Annual
Meeting and any adjournments thereof.
The close of business on September 20, 2004, has been fixed as the record
date for the Annual Meeting. Only stockholders of record as of that date
will be entitled to notice of and to vote at said meeting and any
adjournment or postponement thereof.
The accompanying form of Proxy is solicited by the Board of Directors of the
Company. The attached Proxy Statement contains further information with
respect to the business to be transacted at the Annual Meeting.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU EXPECT TO ATTEND, PLEASE DATE AND SIGN THE ENCLOSED PROXY. IF YOU DECIDE
TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
By Order of the Board of Directors
Janet E. Gray
Secretary
Monett, Missouri
September 21, 2004
TABLE OF CONTENTS
Voting................................................... 1
Stock Ownership of Certain Stockholders.................. 2
Election of Directors (Proposal 1)....................... 3
Corporate Governance..................................... 5
Audit Committee Report................................... 7
Executive Officers and Significant Employees............. 8
Section 16(a) Beneficial Ownership Reporting Compliance.. 8
Executive Compensation................................... 9
Equity Compensation Plan Information..................... 10
Compensation Committee Report............................ 11
Company Performance...................................... 12
Certain Relationships and Related Transactions........... 12
Independent Registered Public Accounting Firm............ 12
Stockholder Proposals.................................... 13
Cost of Solicitation and Proxies......................... 14
Financial Statements..................................... 14
Other Matters............................................ 14
JACK HENRY & ASSOCIATES, INC.
663 Highway 60, P.O. Box 807
Monett, Missouri 65708
PROXY STATEMENT
FOR THE 2004 ANNUAL MEETING OF STOCKHOLDERS
To Be Held Tuesday, October 26, 2004
This Proxy Statement and the enclosed proxy card (the Proxy) are furnished
to the stockholders of Jack Henry & Associates, Inc., a Delaware corporation
(the Company), in connection with the solicitation of Proxies by the
Company's Board of Directors for use at the 2004 Annual Meeting of
Stockholders, and any adjournment or postponement thereof (the Annual
Meeting), to be held in the Company's Executive Conference Center, lower
level (Building J-7) at the company headquarters, 663 Highway 60, Monett,
Missouri, at 11:00 a.m., local time, on Tuesday, October 26, 2004. The
mailing of this Proxy Statement, the Proxy, the Notice of Annual Meeting and
the accompanying 2004 Annual Report to Stockholders is expected to commence
on or about September 24, 2004.
The Board of Directors does not intend to bring any matters before the
Annual Meeting except those indicated in the Notice and does not know of any
matter which anyone else proposes to present for action at the Annual
Meeting. If any other matters properly come before the Annual Meeting,
however, the persons named in the accompanying form of Proxy, or their duly
constituted substitutes, acting at the Annual Meeting, will be deemed
authorized to vote or otherwise to act thereon in accordance with their
judgment on such matters.
If the enclosed Proxy is properly executed and returned prior to voting at
the Annual Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. Each proposal, including
the election of directors, will require the affirmative vote of a majority
of the shares of common stock voting in person or by Proxy at the Annual
Meeting.
Any stockholder executing a Proxy retains the power to revoke it at any time
prior to the voting of the Proxy. It may be revoked by a stockholder
personally appearing at the Annual Meeting and casting a contrary vote, by
filing an instrument of revocation with the Secretary of the Company, or by
the presentation at the Annual Meeting of a duly executed later dated Proxy.
VOTING
At the 2004 Annual Meeting, Stockholders will consider and vote upon:
(1) The election of seven (7) directors; and
(2) Such other matters as may properly come before the Annual Meeting.
Only stockholders of record at the close of business on September 20, 2004,
the record date for the Annual Meeting, are entitled to notice of and to
vote at such meeting. Stockholders are entitled to one vote for each share
of Common Stock on each matter to be considered at the Annual Meeting.
The Company's authorized capital stock currently consists of 250,000,000
shares of common stock, par value $.01 per share (the Common Stock), and
500,000 shares of preferred stock, par value $1.00 per share (the Preferred
Stock). As of August 17, 2004, there were 90,268,193 shares of Common Stock
outstanding and no shares of Preferred Stock outstanding. At such date, our
executive officers and directors were entitled to vote, or to direct the
voting of 16,208,314 shares of Common Stock, representing 18% of the shares
entitled to vote at the 2004 Annual Meeting. Unless otherwise specified,
all share numbers and other share data have been adjusted to reflect all
prior stock splits.
All shares represented by Proxy and all Proxies solicited hereunder will be
voted in accordance with the specifications made by the stockholders
executing such Proxies. If a stockholder does not specify how a Proxy is to
be voted, the shares represented thereby will be voted: (1) FOR the election
as directors of the seven (7) persons nominated by the Board of Directors;
and (2) upon other matters that may properly come before the Annual Meeting,
in accordance with the discretion of the persons to whom the Proxy is
granted.
STOCK OWNERSHIP OF CERTAIN STOCKHOLDERS
The following table sets forth information as of August 17, 2004, concerning
the equity ownership of (a) those individuals who are known to be the
beneficial owners, as defined in Rule 13d-3 of the Securities Exchange Act
of 1934, of 5% or more of the Company's Common Stock, (b) the directors, (c)
the executive officers named in the Summary Compensation Table and (d) all
of our directors and executive officers as a group:
Number of Shares Percentage of Shares
Title of Class Beneficial Owner Beneficially Owned (1) Outstanding (1)
-------------- ------------------- ---------------------- ---------------
Michael E. Henry, 9,010,572 10.0%
$.01 par value Vicki Jo Henry (2)
Common Stock and JKHY Partners
663 Highway 60
Monett, MO
Jerry D. Hall 4,242,221 4.7%
663 Highway 60 (3)
Monett, MO
John W. Henry 2,599,406 2.9%
Tony L. Wormingto 833,101 *
(4)
James J. Ellis 530,000 *
(5)
John F. Prim 419,577 *
(6)
Burton O. George 340,136 *
(7)
Kevin D. Williams 199,497 *
(8)
Craig R. Curry 61,636 *
(9)
Joseph J. Maliekel 4,385 *
(10)
All directors and 18,527,077 20.6%
executive officers as (11)
a group (11 persons)
* Less than 1%
(1) Information is set forth as of August 17, 2004. The persons named in
the table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them, except as
noted below. With respect to shares held in the Company's 401(k) and
Employee Stock Ownership Plans (the "Retirement Plans"), a participant
has the right to direct the voting and disposition of shares allocated
to his account.
(2) Reflects information in filings with the SEC by Michael E. Henry, his
sister Vicki Jo Henry and JHKY Partners, their family partnership.
Michael E. Henry separately may be deemed to beneficially own 9,010,572
shares, including 148,836 shares held in the Michael E. Henry Annuity
Trust, 67,436 shares allocated to his Retirement Plan accounts,
1,000,000 shares currently acquirable by exercise of outstanding stock
options, 4,190,200 shares held by JKHY Partners, 3,291,600 shares held
in a living trust and 312,500 shares held by the Henry Family Limited
Partnership, both established by his mother, Eddina F. Mackey. Michael
E. Henry may be deemed to share beneficial ownership in the shares held
by JKHY Partners, by the Eddina F. Mackey Trust and by the Henry Family
Limited Partnership because he has been granted proxies to vote such
shares. Vicki Jo Henry does not beneficially own any shares of common
stock in her individual capacity and her business address is 6851 South
Holly Circle, Suite 270, Englewood, Colorado, 80112. The business
address of Michael E. Henry and JKHY Partners is reflected in the
table.
(3) Includes 203,446 shares beneficially owned by his wife.
(4) Includes 310,000 shares that are currently acquirable by exercise of
outstanding stock options and 143,661 shares held in the Retirement
Plans for Mr. Wormington's account.
(5) Includes 200,000 shares that are currently acquirable by exercise of
outstanding stock options.
(6) Includes 385,000 shares that are currently acquirable by exercise of
outstanding stock options and 12,354 shares held in the Retirement
Plans for Mr. Prim's account.
(7) Includes 190,000 shares that are currently acquirable by exercise of
outstanding stock options.
(8) Includes 190,000 shares that are currently acquirable by exercise of
outstanding stock options and 5,408 shares held in the Retirement Plans
for Mr. Williams' account.
(9) Includes 53,524 shares beneficially owned by his minor children and
7,996 shares held in trust for a family member for which Mr. Curry
serves as trustee.
(10) Includes 4,375 shares that are currently acquirable by exercise of
outstanding stock options.
(11) Includes 2,346,875 shares that are acquirable under outstanding
stock options, and 228,859 shares held in the Retirement Plans for the
accounts of the executive officers.
PROPOSAL 1
ELECTION OF DIRECTORS
PROCEDURE
At the meeting, the stockholders will elect seven (7) directors to hold
office for one-year terms ending at the 2005 Annual Meeting of Stockholders
or until their successors are elected and qualified. The Board of Directors
has nominated the Company's seven (7) current directors for reelection at
the Annual Meeting.
The stockholders are entitled to one vote per share on each matter submitted
to vote at any meeting of the Stockholders. Unless contrary instructions are
given, the persons named in the enclosed Proxy or their substitutes will
vote "FOR" the election of the nominees named below.
Each of the nominees has consented to serve as director for a one-year term.
However, if any nominee at the time of election is unable to serve or is
otherwise unavailable for election, and as a result other nominees are
designated by the Board of Directors, the persons named in the enclosed
Proxy or their substitutes intend to vote for the election of such
designated nominees.
NOMINEES FOR ELECTION
The directors and nominees for election as directors of the Company, as well
as certain information about them, are as follows:
Name Position with Company Director Since
---- --------------------- --------------
Michael E. Henry Chairman and Director 1986
John W. Henry Vice Chairman, Senior Vice 1977
President and Director
Jerry D. Hall Executive Vice President and 1977
Director
James J. Ellis Director 1985
Burton O. George Director 1987
Joseph J. Maliekel Director 2002
Craig R. Curry Director 2004
The following information relating to the Company's directors and nominees
for director, all of whom are United States citizens, is with respect to
their principal occupations and positions during the past five years:
Michael E. Henry, age 43, Chairman of the Board and Director. Mr. Henry, the
son of John W. Henry and a director of the Company since 1986, has served as
Chairman of the Board since 1994 and Chief Executive Officer from 1994 to
June 2004. He previously served as Vice Chairman and Senior Vice President
from 1993 to 1994. He served as Manager of Research and Development from
1983 to 1993. He joined the Company in 1979.
John W. Henry, age 69, Vice Chairman, Senior Vice President and Director.
Mr. Henry, a co-founder and principal stockholder of the Company, has served
as Vice Chairman since 1994. He previously served as Chairman of the Board
from 1977 through 1994. He also has been a director since the Company's
incorporation in 1977. He previously served as Chief Executive Officer from
1977 through 1988 and as President until 1989.
Jerry D. Hall, age 61, Executive Vice President and Director. Mr. Hall, a
co-founder and principal stockholder of the Company, has served as Executive
Vice President since 1994. He previously served as Chief Executive Officer
from 1990 through 1994. He also has been a director since the Company's
incorporation in 1977. He previously served as President from 1989 through
1993 and as Vice President-Operations from 1977 through 1988.
James J. Ellis, age 70, Director. Mr. Ellis, a director of the Company since
1985, has been Managing Partner of Ellis/Rosier Financial Services since
1992. Mr. Ellis served as general manager of MONY Financial Services,
Dallas, Texas, from 1979 until his retirement in 1992. Mr. Ellis also serves
as a director of Merit Medical Systems, Inc.
Burton O. George, age 77, Director. Mr. George, a director of the Company
since 1987, is retired. He previously had been in the banking business since
1958, and most recently served as Chairman of the Board and Chief Executive
Officer of First National Bank of Berryville, Berryville, Arkansas from 1985
through 1989.
Joseph J. Maliekel, age 43, Director. Mr. Maliekel became a director of the
Company in December 2002. He has been employed by Monsanto Company since
1999, currently as Director of External Reporting and previously as Manager
of Financial Audit for Monsanto's North American and Asia/Pacific businesses
and for its Global Seed Business. Prior to joining Monsanto, Mr. Maliekel
was a Senior Manager with Deloitte & Touche LLP, where he was employed from
1986 to 1999. Mr. Maliekel is a Certified Public Accountant.
Craig R. Curry, age 43, Director. Mr. Curry, a director of the Company since
March 2004, is Chairman and CEO of Central Bank, Lebanon, Missouri, with
which he has been affiliated since 1983.
CORPORATE GOVERNANCE
The Company and its businesses are managed under the direction of the Board
of Directors. The Board generally meets a minimum of four times during the
year, but has complete access to management throughout the year.
CORPORATE GOVERNANCE GUIDELINES
In August of 2003, the Board of Directors adopted Corporate Governance
Guidelines proposed by the Governance Committee. Among others, the
Guidelines address the following subjects:
- The majority of the Board should be independent under relevant
Nasdaq standards
- Independent directors should not be compensated by the Company
other than in the form of Director's fees (including director's
compensatory stock options)
- Membership on the Audit, Compensation and Governance Committees
should be limited to independent directors
- The Board should conduct an annual self-evaluation to determine
whether it and its committees are functioning properly
- Non-management directors may meet in executive session from time
to time without members of management
- The Chief Executive Officer shall provide an annual report to the
Board on succession planning
- The Governance Committee is responsible for determining skills and
characteristics of Board candidates, and should consider factors
such as independence, experience, strength of character, judgment,
technical skills, diversity and age
- The Board and its committees shall have the right at any time to
retain independent counsel
- Board members should not sit on more than 3 other boards
In August of 2004, the Board of Directors revised the Corporate Governance
Guidelines to address the following additional subjects:
- Board members are expected to attend all Annual Meetings of the
Stockholders
- Stockholders may communicate with the Board by submitting written
comments to the Secretary for the Company, who will screen out
inappropriate communications and forward same to the directors
NOMINATION POLICY
Also in August of 2004, the Board of Directors adopted a Nomination Policy
proposed by the Governance Committee with respect to the consideration of
director candidates recommended by stockholders. A candidate submission
from a stockholder will be considered at any time if the following
information is submitted to the Secretary of the Company:
- The recommending stockholder's name and address, together with the
number of shares, length of period held and proof of ownership
- Name, age and address of candidate
- Detailed resume of candidate, including education, occupation,
employment and commitments
- Description of arrangements or understandings between the
recommending stockholder and the candidate
- Statement describing the candidate's reasons for seeking election to
the Board and documenting candidate's satisfaction of qualifications
described in the Corporate Governance Guidelines
- A signed statement from the candidate, confirming willingness to
serve
- If the recommending stockholder has been a beneficial holder of more
than 5% of the Company's stock for more than a year, then it must
consent to additional public disclosures by the Company with regard
to the nomination
The Secretary of the Company will promptly forward complying nomination
submissions to the Chairman of the Governance Committee. The Governance
Committee may consider nominees submitted from a variety of sources
including but not limited to stockholder nominations. If a vacancy arises
or the Board decides to expand its membership, the Committee will evaluate
potential candidates from all sources and will rank them by order of
preference if more than one is identified as properly qualified. A
recommendation will be made to the Board by the Governance Committee based
upon qualifications, interviews, background checks and the Company's needs.
There is one nominee this year who has not previously been elected to the
Board by the stockholders. Craig Curry was appointed to the Board on March
1, 2004 upon the retirement from the Board of his father George Curry. At
that time he was recommended to the Governance Committee for consideration
by George Curry and Michael Henry.
CODE OF CONDUCT
The members of the Board of Directors, as well as the executive officers and
all other employees, are subject to and responsible for compliance with the
Jack Henry Code of Conduct. The Code of Conduct contains policies and
practices for the ethical and lawful conduct of our business, as well as
procedures for confidential investigation of complaints and discipline of
wrongdoers.
GOVERNANCE MATERIALS AVAILABLE
The Company has posted its significant corporate governance documents on its
website at www.jackhenry.com/ir/corpinfo/. There you will find copies of
the current Corporate Governance Guidelines, the Jack Henry Code of Conduct,
the Compensation Committee Charter, the Governance Committee Charter (with
attached Nomination Policy) and Audit Committee Charter, as well as
the Company's Certificate of Incorporation and By-Laws. Other investor
relations materials are also posted at www.jackhenry.com/ir, including SEC
reports, financial statements and news releases.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held seven meetings during the last fiscal year. The
Board has determined that four of its seven members, Messrs. George, Ellis,
Maliekel and Curry, are independent directors under applicable Nasdaq
standards. The Board maintains an Audit Committee of which Messrs. George,
Ellis, Maliekel and Curry are members. The Board has determined that Joseph
Maliekel is an audit committee financial expert and that he is independent
as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Securities Exchange Act of 1934. The Board also maintains a Compensation
Committee and a Governance Committee with Messrs. George, Ellis and Maliekel
as members of each committee. All members of the Audit, Compensation and
Governance Committees are independent directors. Each director attended at
least 75% of all meetings of the Board of Directors and all committees on
which they served. The independent directors met in one Executive Session
without management present during the last fiscal year.
The Compensation Committee establishes and reviews the compensation and
benefits of the Executive Officers, evaluates the performance of senior
executive officers, considers incentive compensation plans for our employees
and carries out duties assigned to the Committee under our stock option
plans and employee stock purchase plan. The Compensation Committee operates
under a written charter adopted by the Board.
The Governance Committee identifies, evaluates and recruits qualified
individuals to stand for election to the Board of Directors, recommends
corporate governance policy changes and evaluates Board performance. The
Governance Committee also operates under a charter adopted by the Board.
The Governance Committee will consider nominees recommended by stockholders,
provided such recommendations are made in accordance with the procedures set
forth in the "Governance Committee Nomination Policy" attached to its
charter, discussed in greater detail in "Corporate Governance," above.
The Audit Committee selects and retains the independent registered public
accounting firm, reviews the scope and results of the audit with the
independent registered public accounting firm and management, reviews
critical accounting policies and practices, reviews and evaluates our audit
and control functions, reviews and pre-approves retention of the independent
registered public accounting firm for any audit, audit related and non-audit
services, reviews and approves all material related party transactions, and
regularly reviews regulatory compliance matters, including our outsourcing
services and business recovery operations. The Audit Committee operates
under a written Audit Committee Charter.
The Audit Committee met ten times and the Compensation Committee and
Governance Committee each met three times during the last fiscal year.
DIRECTORS COMPENSATION
The directors who are employed by the Company do not receive any separate
compensation for service on the Board of Directors. Each non-employee
director receives an annual compensation of $25,000 per year plus $1,200 for
each Board of Directors meeting, $800 for each in-person committee meeting
and $400 for each telephone committee meeting attended and is reimbursed for
out-of-pocket expenses incurred in attending such meetings. Under the 1995
Non-Qualified Stock Option Plan, each non-employee director is also
compensated by the annual grant of non-statutory stock options to purchase
10,000 shares of Common Stock, subject to an overall grant limitation under
the plan of 300,000 shares to each individual director.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is composed of four
independent directors. The Board has determined that Audit Committee member
Joseph J. Maliekel is a financial expert under relevant SEC standards
because of his extensive accounting and auditing experience. The Board of
Directors and the Audit Committee believe that the Audit Committee's current
member composition satisfies the rules of the National Association of
Securities Dealers, Inc. (the "NASD") that govern audit committee
composition, including the requirement that audit committee members all be
"independent directors" as that term is defined by NASD Rule 4200(a)(15).
The Audit Committee operates under a written charter adopted by the Board of
Directors. Among other changes, the Charter now requires the Audit
Committee to oversee and retain the independent registered public accounting
firm, pre-approve the services and fees of the independent registered public
accounting firm, regularly consider critical accounting policies of the
Company, review and approve material related party transactions, receive
reports from the Company's Compliance Officer, and establish procedures for
receipt and handling of complaints and anonymous submissions regarding
accounting or auditing matters. The amended charter also contains the
commitment of the Board of Directors to provide funding and support for the
operation of the Audit Committee, including funding for independent counsel
for the Committee if the need arises.
The role of the Audit Committee is to assist the Board of Directors in its
oversight of the Company's financial reporting process. Management has the
primary duty for the financial statements and the reporting process,
including the systems of internal controls. The independent registered
public accounting firm is responsible for auditing the Company's financial
statements and expressing an opinion as to their conformity to accounting
principles generally accepted in the United States.
In the performance of its oversight function, the Audit Committee has
reviewed and discussed with management and the independent registered public
accounting firm the Company's audited financial statements. The Audit
Committee also has discussed with the independent registered public
accounting firm the matters required to be discussed by Statement on
Auditing Standards No. 61 relating to communication with audit committees.
In addition, the Audit Committee has received from the independent
registered public accounting firm the written disclosures and letter
required by Independence Standards Board Standard No. 1 relating to
independence discussions with audit committees, has discussed with the
independent registered public accounting firm their independence from the
Company and its management, and has considered whether the independent
registered public accounting firm's provision of non-audit services to the
Company is compatible with maintaining the firm's independence.
The Audit Committee discussed with the Company's independent registered
public accounting firm the overall scope and plans for their respective
audits. The Audit Committee meets with the internal auditors and the
independent registered public accounting firm, with and without management
present, to discuss the results of their examinations, their evaluations of
the Company's internal controls and the overall quality of the Company's
financial reporting. These meetings without management present are held at
least once each year, and were held twice in the fiscal year just ended.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the Company's audited financial statements be included in the Company's
2004 Annual Report to Shareholders and Annual Report on Form 10-K for the
year ended June 30, 2004 for filing with the Securities and Exchange
Commission.
Burton O. George James J. Ellis
Joseph J. Maliekel Craig R. Curry
Members of the Audit Committee
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The executive officers and significant employees of the Company, as well as
certain biographical information about them, are as follows:
Officer/Significant
Name Position with Company Employee Since
------------------------- ------------------------- --------------
Michael E. Henry Chairman of the Board 1983
John F. Prim Chief Executive Officer 2001
Tony L. Wormington President 1998
John W. Henry Vice Chairman and Senior 1977
Vice President
Jerry D. Hall Executive Vice President 1977
Kevin D. Williams Chief Financial Officer 2001
and Treasurer
Marguerite P. Butterworth Vice President 1993
The following information is provided regarding the executive officers and
significant employees not already described herein, all of whom are United
States citizens:
John F. Prim, age 49, Chief Executive Officer. Mr. Prim has served as Chief
Executive Officer since July 1, 2004. He served as President from January
2003 to July 2004 and as Chief Operating Officer from July 2001 to January
2003. Mr. Prim joined the Company in 1995 as part of the acquisition of the
Liberty division of Broadway & Seymour, Inc. He previously served as
General Manager of the E-Services Division from July 2000 to June 2001 and
as General Manager of the OutLink Services Division from 1995 to 2000.
Tony L. Wormington, age 42, President. Mr. Wormington has served as
President since July 1, 2004. He previously served as Chief Operating
Officer from January 2003 to June 2004 and as a Vice President from 1998 to
2002. Mr. Wormington joined the Company in 1980 and served as Research and
Development Manager from 1993 to December 2002.
Kevin D. Williams, age 45, Chief Financial Officer and Treasurer. In
January 2001, Mr. Williams was appointed by the Board of Directors to serve
as Chief Financial Officer and Treasurer of the Company. He previously
served as Controller of the Company since joining the Company in 1998.
Marguerite P. Butterworth, age 56, Vice President. Ms. Butterworth has
served as Vice President since February of 1993. Ms. Butterworth joined the
Company in 1983 and has been Hardware Manager since 1984.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to identify any director, officer or greater than
ten percent beneficial owners who failed to timely file with the Securities
and Exchange Commission a report required under Section 16(a) of the
Securities Exchange Act of 1934 relating to ownership and changes in
ownership of the Company's common stock. The required reports consist of
initial statements on Form 3, statements of changes on Form 4 and annual
statements on Form 5.
To the Company's knowledge, based solely on its review of the copies of such
forms received by it, the Company believes that during the fiscal year ended
June 30, 2004, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were
complied with in a timely fashion, except for (a) one late filing on a
single transaction by Mr. Ellis because of a technical problem encountered
with his EDGAR filing code, and (b) one late filing by Michael E. Henry due
to clerical error. Mr. Henry's late filing reflected his proportionate
interest in three transactions by an affiliated family partnership that had
been timely filed with respect to the partnership.
EXECUTIVE COMPENSATION
The following table sets forth certain information with regard to the
compensation paid to the Chief Executive Officer and to the Company's other
four most highly compensated executive officers for the three years ended
June 30, 2004.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
--------------------------- ------------
Shares
Underlying
Name and Principal Position Year Salary Bonus (1) Options
--------------------------- ---- -------- -------- -------
Michael E. Henry 2004 $ 384,133 $ 5,000 -
Chairman of the Board 2003 325,800 5,000 -
2002 286,400 5,000 -
John F. Prim 2004 340,800 5,000 -
Chief Executive Officer 2003 285,800 5,000 50,000
2002 242,466 5,000 225,000
Tony L. Wormington 2004 292,467 5,000 -
President 2003 217,467 5,000 50,000
2002 150,800 5,000 -
Kevin D. Williams 2004 204,133 5,000 -
Chief Financial Officer 2003 180,800 5,000 50,000
and Treasurer 2002 164,133 5,000 -
Marguerite P. Butterworth 2004 131,967 5,000 -
Vice President 2003 122,217 5,000 10,000
2002 115,800 5,000 -
(1) Corporate 401(k) matching contribution of $5,000 for each executive
officer in each period.
Following is information with respect to stock options granted to and
exercised by the executive officers named in the Summary Compensation Table
during the fiscal year ended June 30, 2004, together with the number of
options outstanding as of such date. Data, as appropriate, has been adjusted
for stock splits.
OPTION GRANTS IN FISCAL 2004
The Company did not grant options to any of the executive officers named in
the Summary Compensation Table during the fiscal year ended June 30, 2004.
AGGREGATED OPTION EXERCISES IN FISCAL 2004 AND JUNE 30, 2004 OPTION VALUES
Number of Shares Value of
Shares Underlying Unexercised Unexercised In-the-Money
Acquired On Value Options at 6/30/04 Options at 6/30/04
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------ -------- -------- ----------- ------------- ----------- -------------
Michael E. Henry - - 1,000,000 - $ 14,054,687 -
Kevin D. Williams - - 190,000 - 1,986,375 -
Tony L. Wormington - - 310,000 - 4,304,000 -
John F. Prim 30,000 491,125 385,000 - 1,623,375 -
Marguerite P. - - 50,000 - 221,600 -
Butterworth
Terry W. Thompson - - 40,000 - 36,600 -
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of June 30, 2004 with respect
to the Company's equity compensation plans under which our Common Stock is
authorized for issuance:
Number of securities
remaining available
for future issuance
under equity
Number of Weighted- compensation
securities to average plans (excluding
be issued upon exercise price securities in
exercise of of outstanding the first column
outstanding options options of this table)
------------------- -------------- --------------------
Equity Compensation
Plans approved by
security holders:
1987 Stock Option 1,159,500 $3.50 0
Plan (Employees)
1995 Non-Qualified 644,167 $14.45 485,833
Stock Option Plan
(Non-employee
Directors)
1996 Stock Option 9,552,669 $14.81 2,373,706
Plan (Employees)
Equity Compensation 28,000 $13.78 0
Plans not approved
by security holders
(Plan assumed in
acquisition and
individual option
contracts)
COMPENSATION COMMITTEE REPORT
The Company's executive officer compensation program is administered and
reviewed by the Compensation Committee. The Compensation Committee consists
of three independent, non-employee directors of the Company. There was no
insider participation on the Compensation Committee.
The objectives of our executive officer compensation program are to:
* Encourage continuation of JHA's entrepreneurial spirit;
* Attract and retain highly qualified and motivated executives; and
* Encourage esprit de corps and reward outstanding performance.
In meeting the foregoing objectives, the Compensation Committee strives
for the interests of management and stockholders to be the same - the
maximization of stockholder value. The components of the executive
compensation program which are employed by the Committee to meet these goals
include base salary, discretionary bonuses, and stock options.
Salaries and bonuses are established at levels to compensate for the
position held and contributions made by each executive. Recommendations
regarding bonuses and increases in salary are based upon subjective
evaluations of each individual's performance and contribution.
Longer term incentives are provided by the award of stock options because
the ultimate value of options granted will be determined by long-term growth
in the Company's stock price. Awards of options are believed to help focus
executive attention on managing the Company from the perspective of an owner
with an equity stake in the business. This component of executive
compensation is provided through the 1996 Stock Option Plan, under which the
executive officers, and all other employees of the Company and its
subsidiaries, are eligible to receive options. The Committee has discretion
to designate optionees and to determine the terms of the options granted.
However, option prices shall be fixed at not less than 100% of fair market
value of the stock at the date of grant, and options may not be exercisable
more than ten years after the date of grant.
In employing the foregoing three elements of compensation, the Compensation
Committee considers the experience, prior compensation levels, personal
performance, number and value of previously granted options, and other
subjective factors relating to each individual and seeks to optimize the
balance between base salary, short-term and long-term incentives.
The base salary of Chief Executive Officer Michael E. Henry was increased in
our 2004 fiscal year as a part of our efforts to bring the Company's low
executive salaries closer to industry norms. No stock options were granted
to Mr. Henry during our 2004 fiscal year.
The Company has entered into Aircraft Time Sharing Agreements with Mr. Henry
and certain other executives and members of the Board of Directors. These
agreements have been prepared in accordance with Federal Aviation
Regulations and provide for sharing of operational costs. In compliance
with his Aircraft Time Sharing Agreement, the Company billed to and
collected from Mr. Henry approximately $34,000 during the fiscal year for
personal use of aircraft.
The Compensation Committee notes that there is a $1,000,000 cap on the
income tax deduction which may be taken with respect to any individual
officer's compensation. While current cash compensation paid to our
executive officers is substantially less than the cap, the ultimate value of
stock options is not now known, and thus the cap may be important in some
future year. The cap has been considered by the Committee and we intend to
take the steps necessary to conform the Company's compensation structure to
comply with the cap if the issue arises in a future period.
Burton O. George, James J. Ellis, and Joseph J. Maliekel
Members of the Compensation Committee
COMPANY PERFORMANCE
The following graph presents a comparison for the five-year period ended
June 30, 2004, of the market performance of the Company's common stock with
the S & P 500 Index and an index of peer companies selected by the Company:
The following information depicts a line graph with the following values:
JKHY Peer Group S&P 500
1999 100.00 100.00 100.00
2000 257.15 101.24 107.25
2001 319.48 122.33 91.34
2002 172.98 132.20 74.92
2003 187.62 132.14 75.12
2004 212.35 150.56 89.46
This comparison assumes $100 was invested on July 1, 1999, and assumes
reinvestments of dividends. Total returns are calculated according to
market capitalization of peer group members at the beginning of each period.
Peer companies selected are in the business of providing specialized
computer software, hardware and related services to financial institutions
and other businesses. Companies in the peer group are Bisys Group, Elite
Information, Cerner Corp., Computer Science, First Data, Fiserv, National
Data, Fidelity National Financial, Intercept, Euronet, Open Solutions, M &
I, EFunds, Fair Issac, John Harland and SEI Investments.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended June 30, 2004, the Company paid $862,678 to
Ripcord, LLC for marketing and advertising services. Ripcord is owned by
Christopher Harding and Vicki Jo Henry who are husband and wife. Vicki Jo
Henry is the daughter of John W. Henry, Director and Senior Vice President
of the Company and the sister of Michael E. Henry, Chairman of the Board of
the Company. Vicki Jo Henry is also a general partner in JKHY Partners, a
family partnership which owns 4.5% of the common stock of the Company. The
Company believes that the rates and charges incurred in the transactions
with Ripcord are reasonable and competitive with other marketing and
advertising providers of comparable services.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP, certified public accountants, served as the
independent registered public accounting firm for the Company for the year
ended June 30, 2004. The Audit Committee has not selected the independent
registered public accounting firm for the current year, because the
selection will not be made until after the final Audit Committee meeting on
the prior year's audit is held. Representatives of Deloitte & Touche are
expected to be present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and to be available to respond to
appropriate questions.
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional audit services rendered
by Deloitte & Touche for the audit of the Company's annual consolidated
financial statements for the fiscal years ended June 30, 2004 and 2003 and
reviews of the financial statements included in the Company's Forms 10-Q for
those fiscal years, and fees for other services rendered during those
periods.
2004 2003
------- -------
Audit Fees $224,500 $208,300
Audit-Related Fees (1) 97,180 31,585
Tax Fees (2) 147,014 75,929
All Other Fees (3) 87,143 254,957
------- -------
Total Fees $555,837 $570,771
(1) Audit-related fees for 2004 included audits of two employee
benefit plans and audits performed in accordance with SAS 70.
Audit- related fees for 2003 included audits of two employee
benefit plans and assistance with SEC filings and communications.
(2) Tax Fees for 2004 and 2003 included review of the Company's federal
and specific state income tax returns, assistance with research and
development credits taken on income tax returns and review of other
tax credits and deductions.
(3) Other fees for 2004 included services provided to review the
Company's internal control documentation relative to Section 404
of the Sarbanes-Oxley Act of 2002, and review the Company's health
care program plan documentation. Other fees for 2003 included
services provided to perform a complete review of the Company's
health care program.
In making its decision to continue to retain Deloitte & Touche as the
Company's independent registered public accounting firm for the next fiscal
year, the Audit Committee will consider the above information to ensure that
the provision of non-audit services will not negatively impact the
maintenance of the firm's independence.
The Audit Committee has in its Charter expressed its policy governing the
engagement of the Company's independent registered public accounting firm
for audit and non-audit services. Under the terms of the Charter, the Audit
Committee is required to pre-approve all audit, audit related and non-audit
services performed by the Company's independent registered public accounting
firm. All non-audit services for 2004 were pre-approved by the Audit
Committee.
At the beginning of each fiscal year, the Audit Committee reviews with
management and the independent registered public accounting firm the types
of services that are likely to be required throughout the year. Those
services are comprised of four categories: audit services, audit-related
services, tax services and all other permissible services. The independent
registered public accounting firm provides documentation for each proposed
specific service to be provided. At that time, the Audit Committee pre-
approves a list of specific services that may be provided within each of
these categories, and sets fee limits for each specific service or project.
Management is then authorized to engage the independent registered public
accounting firm to perform the pre-approved services as needed throughout
the year, subject to providing the Audit Committee with regular updates.
The Audit Committee reviews all billings submitted by the independent
registered public accounting firm on a regular basis to ensure that their
services do not exceed pre-defined limits. The Audit Committee or its
Chairman reviews and approves in advance, on a case-by-case basis, all other
projects, services and fees to be performed by or paid to the independent
registered public accounting firm. The Audit Committee also approves in
advance any fees for pre-approved services that exceed the pre-established
limits, as described above.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals for inclusion in the proxy
statement and form of proxy for the 2005 Annual Meeting of Stockholders must
submit their proposals to the Company's Secretary on or before June 7, 2005.
A shareholder who wishes to present a proposal at the 2005 Annual Meeting,
but who does not request inclusion in the proxy statement, must submit the
proposal to the Company's Secretary by September 13, 2005.
COST OF SOLICITATION AND PROXIES
Proxy solicitation is being made by mail, although it may also be made by
telephone, telegraph, or in person by officers, directors and employees of
the Company not specifically engaged or compensated for that purpose. The
Company will bear the entire cost of the Annual Meeting, including the cost
of preparing, assembling, printing and mailing the Proxy Statement, the
Proxy and any additional materials furnished to stockholders. Copies of the
solicitation materials will be furnished to brokerage houses, fiduciaries
and custodians for forwarding to the beneficial owners of shares held of
record by them and, upon their request, such persons will be reimbursed for
their reasonable expenses incurred in completing the mailing to such
beneficial owners.
FINANCIAL STATEMENTS
Consolidated financial statements of the Company are contained in the 2004
Annual Report which accompanies this Proxy Statement, and are incorporated
herein by reference.
OTHER MATTERS
The Board of Directors knows of no matters that are expected to be presented
for consideration at the 2004 Annual Meeting which are not described herein.
However, if other matters properly come before the meeting, it is intended
that the persons named in the accompanying Proxy will vote thereon in
accordance with their best judgment.
By Order of the Board of Directors
/s/ Michael E. Henry
--------------------
Michael E. Henry
Chairman of the Board
Monett, Missouri
September 21, 2004
A copy of the Company's Annual Report is included herewith. The Company will
furnish without charge a copy of its Annual Report on Form 10-K as filed
with the Securities and Exchange Commission upon written request directed to
Kevin D. Williams, Chief Financial Officer, Jack Henry & Associates, Inc.,
663 Highway 60, Post Office Box 807, Monett, Missouri, 65708. The Form 10-K
is also available at our investor relations website, www.jackhenry.com/ir/.
[ PROXY CARD ]
VOTING INSTRUCTIONS
You can vote your shares in one of three ways:
TELEPHONE *** INTERNET *** MAIL
24 hours a day - 7 days a week
Your vote is important. Please vote as soon as possible.
---------------------------------- ----------------------------------
Vote-by-Internet Vote-by-Telephone
Log on to the Internet and go to Call toll-free (in the U.S.)
http://www.eproxyvote.com/jkhy OR 1-800-758-6973
Have your proxy card in hand when Have your proxy card in hand
you access the website and follow when you call and follow
the instructions. the instructions.
Internet votes must be received Telephone votes must be received
by 5:00 p.m. (Central Time) on by 5:00 p.m. (Central Time) on
October 24, 2004. October 24, 2004.
---------------------------------- ----------------------------------
Your Internet or telephone vote works in the same manner as if you marked,
signed and returned your proxy card by mail.
---------------------------------------------------------------------------
Vote-by-Mail
Mark, sign and date the proxy card on the reverse side. Detach the proxy
card and return it in the postage-paid envelope.
YOUR VOTE IS IMPORTANT
---------------------------------------------------------------------------
IF YOU VOTE BY MAIL PLEASE MARK, DATE AND SIGN THIS PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
PROXY
Jack Henry & Associates, Inc. This proxy is solicited on
663 Highway 60 behalf of the Board of Directors.
P.O. Box 607
Monett, Missouri 65708 The undersigned hereby appoints
John F. Prim and Kevin D. Williams
as Proxies, each with the power to
appoint his or her substitute, and
hereby authorizes them to represent
and to vote, as designated below,
all the shares of common stock of
Jack Henry & Associates, Inc. held
of record by the undersigned on
September 20, 2004, at the annual
meeting of shareholders to be
held on October 26,2004, or any
adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee 's name in the list below)
J. Henry, J. Hall, M. Henry, J. Ellis, B. George, J. Malekiel, C. Curry
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted FOR Proposal 1.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership please sign in partnership name by
authorized person.
Dated ________________________, 2004
____________________________________
Signature
____________________________________
Signature if held jointly
PLEASE MARK SIGN DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.