SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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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 [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 2003 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF JACK HENRY & ASSOCIATES, INC.:
PLEASE TAKE NOTICE that the 2003 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
28, 2003, 11:00 a.m., local time, for the following purposes:
(1) To elect seven (7) directors to serve until the 2004 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 22, 2003, 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 23, 2003
TABLE OF CONTENTS
Voting................................................... 1
Stock Ownership of Certain Stockholders.................. 2
Election of Directors (Proposal 1)....................... 3
Corporate Governance..................................... 5
Audit Committee Report................................... 6
Executive Officers and Significant Employees............. 7
Section 16(a) Beneficial Ownership Reporting Compliance.. 7
Executive Compensation................................... 8
Equity Compensation Plan Information..................... 10
Compensation Committee Report............................ 10
Company Performance...................................... 11
Certain Relationships and Related Transactions........... 11
Independent Auditors..................................... 12
Stockholder Proposals.................................... 12
Cost of Solicitation and Proxies......................... 12
Financial Statements..................................... 12
Other Matters............................................ 13
Appendix A - Amended and Restated Audit Committee Charter 14
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JACK HENRY & ASSOCIATES, INC.
663 Highway 60, P.O. Box 807
Monett, Missouri 65708
PROXY STATEMENT
FOR THE 2003 ANNUAL MEETING OF STOCKHOLDERS
To Be Held Tuesday, October 28, 2003
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 2003 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 28, 2003. The
mailing of this Proxy Statement, the Proxy, the Notice of Annual Meeting and
the accompanying 2003 Annual Report to Stockholders is expected to commence
on or about September 25, 2003.
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 2003 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 22, 2003,
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 21, 2003, there were 88,560,346 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 19,034,727 shares of Common Stock, representing 21% of the shares
entitled to vote at the 2003 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 21, 2003, 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, 10,097,329 11.3%
$.01 par value Vicki Jo Henry (2)
Common Stock and JKHY Partners
663 Highway 60
Monett, MO
Jerry D. Hall 4,866,486 5.5%
663 Highway 60 (3)
Monett, MO
John W. Henry 3,215,706 3.6%
(4)
Tony L. Wormington 831,313 *
(5)
George R. Curry 746,616 *
(6)
James J. Ellis 568,630 *
(6)
John F. Prim 448,560 *
(7)
Burton O. George 340,136 *
(8)
Kevin D. Williams 198,567 *
(9)
Joseph J. Maliekel 10 *
All directors and 21,644,727 24.0%
executive officers (10)
as a group
(11 persons)
* Less than 1%
(1) Information is set forth as of August 21, 2003. 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 10,097,329 shares, including 148,836 shares held
in the Michael E. Henry Annuity Trust, 66,693 shares allocated
to his Retirement Plan accounts, 1,000,000 shares currently
acquirable by exercise of outstanding stock options, 4,990,200
shares held by JKHY Partners, 3,291,600 shares held in a living
trust and 600,000 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 197,400 shares held in the Retirement Plans for Mr.
Hall's account and 206,710 shares beneficially owned by his wife.
(4) Includes 171,429 shares held in the Retirement Plans for Mr.
Henry's account.
(5) Includes 310,000 shares that are currently acquirable by exercise
of outstanding stock options and 141,873 shares held in the
Retirement Plans for Mr. Wormington's account.
(6) Each includes 220,000 shares that are currently acquirable by
exercise of outstanding stock options.
(7) Includes 415,000 shares that are currently acquirable by exercise
of outstanding stock options and 11,337 shares held in the
Retirement Plans for Mr. Prim's account.
(8) Includes 180,000 shares that are currently acquirable by exercise
of outstanding stock options.
(9) Includes 190,000 shares that are currently acquirable by exercise
of outstanding stock options and 4,478 shares held in the
Retirement Plans for Mr. Williams' account.
(10) Includes 2,542,500 shares that are acquirable under outstanding
stock options, and 656,550 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 2004 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, Chief Executive 1986
Officer and Director
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
George R. Curry Director 1989
Joseph J. Maliekel Director 2002
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 42, Chairman of the Board, Chief Executive Officer 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 and Chief Executive Officer
since October, 1994. 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 68, Vice Chairman, Senior Vice President and Director.
Mr. Henry, a co-founder and principal stockholder of the Company, has served
as Vice Chairman since October, 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 60, Executive Vice President and Director. Mr. Hall, a
co-founder and principal stockholder of the Company, has served as Executive
Vice President since October, 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 69, 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 76, 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.
George R. Curry, age 78, Director. Mr. Curry, a director of the Company
since 1989, is Vice Chairman of Central Bank, Lebanon, Missouri, with which
he has been affiliated since 1949, as well as President of Central Shares,
Inc., a bank holding company.
Joseph J. Maliekel, age 42, 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.
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.
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 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
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, adopted by the Board in January of this year.
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.
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 Corporate Governance Guidelines and the Jack Henry Code of Conduct,
copies of the Compensation, Governance and Audit Committee charters, 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 five (5) meetings during the last fiscal year.
The Board maintains an Audit Committee of which Messrs. Curry, George, Ellis
and Maliekel 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 (formerly named the Nominating Committee) with Messrs.
Curry, George and Ellis as members of each committee. All members of the
Audit, Compensation and Governance Committees are independent directors
under relevant Nasdaq standards. Each director attended at least 75% of all
meetings of the Board of Directors and all committees on which they served.
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 in January of this
year.
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
in January of this year. The Governance Committee will consider nominees
recommended by stockholders, provided such recommendations are made in
accordance with the procedures set forth in this proxy statement at
"Stockholder Proposals."
The Audit Committee selects and retains the independent auditor, reviews the
scope and results of the audit with the independent auditor and management,
reviews critical accounting policies and practices, reviews and evaluates
our audit and control functions, reviews and pre-approves retention of the
independent auditor for any audit 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, recently amended and restated by the
Board of Directors, a copy of which is attached to this Proxy Statement
as Appendix A.
The Audit Committee met eleven (11) times and the Compensation Committee and
Nominating Committee each met once 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 governs 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, most recently amended and restated in January of this year.
The Amended and Restated Audit Committee Charter is attached to this Proxy
Statement as Appendix A. Among other changes, the Charter now requires the
Audit Committee to oversee and retain the independent auditors, pre-approve
the fees of the independent auditors, 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 auditors are
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 auditors the
Company's audited financial statements. The Audit Committee also has
discussed with the independent auditors 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 auditors 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
auditors their independence from the Company and its management, and has
considered whether the independent auditor's provision of non-audit services
to the Company is compatible with maintaining the auditor's independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Audit Committee
meets with the internal and independent auditors, 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.
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
2003 Annual Report to Shareholders and Annual Report on Form 10-K for the
year ended June 30, 2003 for filing with the Securities and Exchange
Commission.
George R. Curry James J. Ellis
Burton O. George Joseph J. Maliekel
Members of the Audit Committee
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
As of June 30, 2003, 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 and 1983
Chief Executive Officer
John F. Prim President 2001
Tony L. Wormington Chief Operating Officer 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 48, President. Mr. Prim has served as President since
January 2003. He previously served as Chief Operating Officer since July
2001. 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 41, Chief Operating Officer. Mr. Wormington has
served as Chief Operating Officer since January 2003. He previously served
as a Vice President since October 1998. Mr. Wormington joined the Company in
1980 and served as Research and Development Manager from 1993 to December
2002.
Kevin D. Williams, age 44, 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 55, 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, 2003, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were
complied with, except that James J. Ellis, Burton O. George and George R.
Curry reported their annual option grant 10 days late on Form 4.
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, 2003.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
--------------------------- ------------
Shares
Underlying
Name and Principal Position Year Salary Bonus (1) Options
--------------------------- ---- -------- -------- -------
Michael E. Henry 2003 $ 325,800 $ 5,000 -
Chairman and Chief 2002 286,400 5,000 -
Executive Officer 2001 255,800 5,000 -
John F. Prim 2003 285,800 5,000 50,000
President 2002 242,466 5,000 225,000
2001 164,967 5,000 -
Tony L. Wormington 2003 217,467 5,000 50,000
Chief Operating Officer 2002 150,800 5,000 -
2001 132,467 5,000 -
Kevin D. Williams 2003 180,800 5,000 50,000
Treasurer and Chief 2002 164,133 5,000 -
Financial Officer 2001 144,040 35,000 -
Marguerite P. Butterworth 2003 122,217 5,000 10,000
Vice President 2002 115,800 5,000 -
2001 114,967 5,000 -
Terry W. Thompson (2) 2003 167,050 5,000 -
Former President 2002 274,133 5,000 -
2001 210,176 45,000 -
(1) Includes corporate 401(k) matching contribution of $5,000 for each
executive officer in each period.
(2) Effective December 31, 2002, Mr. Thompson retired as President of the
Company.
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, 2003, together with the number of
options outstanding as of such date. Data, as appropriate, have been
adjusted for stock splits.
OPTION GRANTS IN FISCAL 2003
Individual Grants
------------------------------------------------
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of Stock
Shares Total Options Price Appreciation
Underlying Granted to for Option Term (1)
Options Employees in Exercise Expiration ---------------------
Name Granted Fiscal Year Price Date 5% 10%
------- ----------- -------- ---------- ---------------------
John F. Prim 50,000 1.3% $ 10.84 4/11/13 $ 340,861 $ 863,808
Michael E. Henry - - - - - -
Tony L. Wormington 50,000 1.3% 10.84 4/11/13 340,861 863,808
Kevin D. Williams 50,000 1.3% 10.84 4/11/13 340,861 863,808
Marguerite P.
Butterworth 10,000 0.26% 10.84 4/11/13 65,172 172,762
Terry W. Thompson - - - - - -
(1) The amounts in these columns are required to be disclosed by the
SEC at rates set by regulation and are not intended to forecast
possible future appreciation of our stock or amounts that may
ultimately be realized upon exercise. We have chosen not to use
an alternative formula for grant date valuations.
AGGREGATED OPTION EXERCISES IN FISCAL 2003 AND JUNE 30, 2003 OPTION VALUES
Number of Shares Value of
Shares Underlying Unexercised Unexercised In-the-Money
Acquired On Value Options at 6/30/03 Options at 6/30/03
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------ -------- -------- ----------- ------------- ----------- -------------
Michael E. Henry 70,000 $2,701,386 1,000,000 - $ 11,744,687 -
Kevin D. Williams - - 165,000 25,000 1,373,725 $ 173,750
Tony L. Wormington - - 285,000 25,000 3,414,150 173,750
John F. Prim - - 390,000 25,000 1,479,350 173,750
Marguerite P.
Butterworth - - 45,000 5,000 71,350 34,750
Terry W. Thompson 40,000 234,492 40,000 - 36,600 -
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of June 30, 2003 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 1,252,850 $3.55 0
Plan (Employees)
1995 Non-Qualified 627,500 $13.55 532,500
Stock Option Plan
(Non-employee
Directors)
1996 Stock Option 11,391,904 $14.23 2,420,815
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
executives 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 modestly
increased in our 2003 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 2003 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. There is no
element of compensation in these arrangements. In compliance with his
Aircraft Time Sharing Agreement, the Company billed to and collected from
Mr. Henry approximately $43,000 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.
George R. Curry
Burton O. George
James J. Ellis
Members of the Compensation Committee
COMPANY PERFORMANCE
The following graph presents a comparison for the five-year period ended
June 30, 2003, 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
1998 100.00 100.00 100.00
1999 115.00 116.15 122.76
2000 295.72 126.14 131.66
2001 367.40 150.53 112.13
2002 198.93 159.18 91.97
2003 215.76 159.26 92.20
This comparison assumes $100 was invested on July 1, 1998, 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, Crawford & Co., Electronic
Arts, First Data, Fiserv, Keane, National Data, Hyperfeed Technology,
Rainbow Technology and SEI Investments.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended June 30, 2003, the Company paid $1,356,957 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 and
Chief Executive Officer of the Company. Vicki Jo Henry is also a general
partner in JKHY Partners, a family partnership which owns 5.4% 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 AUDITORS
Deloitte & Touche LLP, certified public accountants, served as independent
auditors for the Company for the year ended June 30, 2003. The Audit
Committee has not selected the auditors 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 LLP 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 & Touch LLP for the audit of the Company's annual consolidated
financial statements for the fiscal years ending June 30, 2002 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. Certain amounts for 2002 have been reclsassified to conform to
this year's presentation.
2003 2002
------- -------
Audit Fees $208,300 $200,900
Audit-Related Fees 31,585 10,800
Tax Fees (1) 75,929 25,053
All Other Fees (2) 254,957 41,245
------- -------
Total Fees $570,771 $277,998
(1) Tax Fees for 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. Tax fees for 2002 included review of
the Company's federal and specific state income tax returns.
(2) Other fees for 2003 included services provided to perform a complete
review of the Company's health care program, audits of the 401(k) and
ESOP plans, and assistance with and review of other SEC filings and
communications. Other fees for 2002 included audits of the Company's
401(k) plans and assistance with and review of other SEC filings and
communications.
In making its decision to continue to retain Deloitte & Touche LLP as the
Company's independent accountants 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
auditors' independence.
STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals for inclusion in the proxy
statement and form of proxy for the 2004 Annual Meeting of Stockholders must
submit their proposals to the Company's Secretary on or before June 7, 2004.
A shareholder who wishes to present a proposal at the 2004 Annual Meeting,
but who does not request inclusion in the proxy statement, must submit the
proposal to the Company's Secretary by September 13, 2004.
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 2003
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 2003 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 23, 2003
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/.
Appendix A
----------
JACK HENRY & ASSOCIATES, INC.
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
(Revised January 24, 2003)
Organization
The Board of Directors of Jack Henry & Associates, Inc. (the "Company") has
established its Audit Committee. The Audit Committee shall be composed of
at least three (3) members of the Board of Directors who are all independent
of the management of the Company and are free of any relationship that, in
the opinion of the Board of Directors, would interfere with their exercise
of independent judgment as members of the Audit Committee. All members of
the Audit Committee must also qualify as independent under all relevant
rules and regulations of the Securities and Exchange Commission (the "SEC")
and under all relevant NASDAQ listing standards. A member of the Audit
Committee who enters into any transaction or relationship which causes such
member to no longer qualify as independent must immediately notify the other
members of the Committee and the Chairman of the Board and tender
resignation from the Committee.
All members of the Audit Committee must be capable of reading and
understanding the Company's financial statements. In addition, at all times
at least one member of the Committee shall be a "financial expert" under
relevant SEC rules and regulations and NASDAQ listing standards.
Members of the Audit Committee shall be appointed by the Board of Directors
and shall serve at the pleasure of the Board of Directors. Audit Committee
members shall be compensated for attendance at meetings as determined from
time to time by the Board of Directors. The Audit Committee chairman shall
be designated by the full Board of Directors at each annual meeting of the
Board of Directors. The Disclosure Committee may delegate specific tasks to
individual members of the Committee. The duties and responsibilities of a
member of the Audit Committee are in addition to those duties set out for
the Board of Directors.
Statement of Policy
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting
practices of the Company, and the quality and integrity of the financial
reports of the Company. In so doing, it is the responsibility of the Audit
Committee to oversee the independent auditor, and to oversee the Company's
system of financial and disclosure controls and compliance with legal and
regulatory requirements.
Statement of Support
The Board of Directors shall cause the Company to provide appropriate
funding and support, as determined by the Audit Committee, for the operation
of the Audit Committee and for payment of compensation to the independent
auditors and any other advisers, accountants or independent legal counsel
retained by the Audit Committee.
The officers and employees of the Company shall, upon request, meet with the
Audit Committee or any adviser to the Audit Committee.
Responsibilities
1. Provide an open avenue of communication between internal auditors,
internal compliance staff, the independent auditors, internal financial
management, the Disclosure Committee, and the Board of Directors.
2. Review and update the Audit Committee's charter annually.
3. Retain a registered public accounting firm (the "independent auditors")
to audit the financial statements of the Company and regulated
services, approve all audit and non-audit services, determine the
compensation of the independent auditors, review the qualifications
and quality control procedures of the independent auditors, oversee
their work, review their performance, and discharge the independent
auditors. The Audit Committee shall work to resolve any disagreements
between management of the Company and the independent auditors. The
terms of retention of the independent auditors shall require that the
accounting firm report directly to the Audit Committee.
4. Confirm the independence of the independent auditors as required under
applicable NASDAQ Stock Market, SEC and other regulatory rules,
including review of periodic reports provided by the independent
auditors as to independence and consideration of whether the provision
of non-audit services is compatible with independence. Review the
experience and qualifications of the senior members of the audit staff
of the independent auditors.
5. Inquire of management and the independent auditors at least annually
regarding significant risks or exposures and assess the steps
management has taken to minimize such risks to the Company.
6. Consider, in consultation with the internal financial management and
compliance staff of the Company and the independent auditors, the audit
scope and plan of the independent auditors.
7. Review with internal financial management and the independent auditors
the coordination of audit effort to assure completeness of coverage,
reduction of redundant efforts, and the effective use of audit
resources.
8. Consider with management and the independent auditors the rationale for
employing audit firms other than the principal independent auditors.
9. Regularly consider and review with the independent auditors and the
internal financial management:
* The adequacy and integrity of the Company's financial reporting
process (both internal and external) and the internal control
structure (including disclosure controls).
* The independent auditor's judgment as to the quality of the
Company's financial reporting principles, significant reporting
issues and judgments made in connection with the preparation of
the financial statements.
* Critical accounting policies and practices of the Company, and
alternatives thereto.
* The effect of alternative GAAP methods on the Company's financial
statements and a description of any transactions as to which
management obtained Statement on Auditing Standards No. 50
letters.
* Any related significant findings and recommendations of the
independent auditors, including any response of Company's
management thereto.
10. Review with management and the independent accountant at the completion
of the annual financial audit:
* The Company's annual financial statements and related footnotes.
* The independent accountant's audit of the financial statements and
the report thereon.
11. Obtain from the independent auditors assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
12. Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
13. Review filings with the SEC and other published documents containing
the Company's financial statements and consider whether the information
contained in these documents is consistent with the information
contained in the financial statements.
14. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
15. Review with management and the independent auditors each financial
report, including the "Management's Discussion and Analysis of
Financial Condition and results of Operations" and the results of the
independent accountant's review of the financial statements, before it
is filed with the SEC or other regulators.
16. Review legal and regulatory matters, related accounting initiatives,
and any off-balance sheet structures that may have a material impact on
the financial statements, as well as related Company compliance
policies, and programs, correspondence or reports received from banking
or other regulators which raise material issues regarding the Company's
financial statements or accounting policies. Receive reports from the
Company's Compliance Officer. Review and advise the Board with respect
to insider and affiliated party transactions and violations of the
Company's Code of Conduct.
17. Review selection of and changes to the Company's auditing and
accounting principles and practices as suggested by the independent
accountant, internal auditors or management.
18. Recommend to the Board guidelines for the Company's hiring of employees
or former employees of the independent auditors.
19. Meet at least annually with the independent auditors and management in
separate executive sessions to discuss any matters that the Committee
or these groups believe should be discussed privately with the
Audit Committee, including any disagreements with management, any
restrictions in the scope of activities or access to information, and
any management letter provided by the independent auditors and
management's response.
20. Review and pre-approve the retention and fees of the independent
auditors for any permitted non-audit service.
21. Review and approve all material related party transactions.
22. Report Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
23. Conduct or authorize investigations into any matters within the
Committee's scope of responsibilities. The Committee shall be
empowered to retain independent counsel, accountants, or other advisers
to assist it in the performance of its duties or the conduct of any
investigation.
24. Meet in person or telephonically at least four times per year or more
frequently as circumstances require.
25. Approve the Company's internal regulatory compliance audit plan, obtain
and review all internal regulatory audit reports and obtain and review
all regulatory review reports prepared by independent auditors,
including all reports prepared pursuant to Statement on Auditing
Standards No. 70. The Audit Committee shall perform all of the
functions and responsibilities set forth in this Charter with regard to
regulatory audits, including but not limited to the retention, review
and discharge of independent auditors, inquiry of and discussion with
management, review of changes in practices, review of regulatory
correspondence and reporting to the Board of Directors.
26. Establish procedures for the receipt, retention and treatment of
complaints received by the Committee or the Company regarding
accounting, internal accounting controls or auditing matters, and the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
27. The Committee will perform such other functions as assigned by law, the
Company's charter or bylaws, or the Board of Directors.
Limitation of Role
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements and
disclosures are complete and accurate and are in accordance with generally
accepted accounting principles and applicable laws and regulations. These
are the responsibilities of management and the independent auditor.
PROXY CARD
A New Way to Vote your Proxy
(In addition to voting by mail)
VOTE BY TELEPHONE
24 HOURS A Day - 7 Days a Week
Save Your Company Money - It's Fast and Convenient
TELEPHONE OR MAIL
--------- ----
1-800-758-6973
* Use any touch-tone telephone. * Mark, sign and date the proxy
* Have this proxy form in hand. card on the reverse side.
* Enter the Control Number located * Detach the proxy card.
on the reverse bottom of this card. * Return the proxy card in the
* Follow the simple recorded prepaid-postage envelope
instructions. provided.
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
Michael E. Henry 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 22,
2003, at the annual meeting of
shareholders to be held on October
28, 2003, 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 nominees name in the list below)
J. Henry, J. Hall, M. Henry, J. Ellis, B. George, G. Curry, J. Malekiel
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 the listed nominees.
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 ________________________, 2003
____________________________________
Signature
____________________________________
Signature if held jointly
PLEASE MARK SIGN DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
