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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [_] Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-12
Systems & Computer Technology Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO] SCT
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
Great Valley Corporate Center
Four Country View Road
Malvern, Pennsylvania 19355
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 21, 2003
-----------------
To Our Stockholders:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders
of Systems & Computer Technology Corporation. The meeting will be held at 10:00
a.m. Eastern time on February 21, 2003 at Two Country View Road, Malvern,
Pennsylvania. At the meeting, we will elect two directors and attend to any
other business properly presented at the meeting. We will also report on our
fiscal 2002 business results and other matters of interest to our stockholders.
You will have an opportunity at the meeting to ask questions, make comments and
meet our management team.
Only stockholders who owned shares of our common stock at the close of
business on January 10, 2003 are entitled to notice of, and to vote at, the
meeting and any adjournments or postponements that may take place. Eligible
stockholders may vote in person or by proxy. The stock transfer books of the
company will not be closed. The accompanying form of proxy is solicited by the
Board of Directors. Please use this opportunity to take part in our affairs by
voting on the business before this meeting. We consider your vote important and
encourage you to vote as soon as possible.
By Order of the Board of Directors
Richard A. Blumenthal
Secretary
January 21, 2003
EVEN IF YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE COMPLETE,
SIGN AND PROMPTLY RETURN YOUR PROXY. RETURNING THE PROXY WILL NOT PREVENT YOU
FROM VOTING IN PERSON AT THE MEETING. IT WILL, HOWEVER, HELP ASSURE A QUORUM
AND AVOID ADDED PROXY SOLICITATION COSTS.
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
Great Valley Corporate Center
Four Country View Road
Malvern, Pennsylvania 19355
-----------------
PROXY STATEMENT
2003 Annual Meeting of Stockholders
-----------------
Q: Why am I receiving this Proxy Statement?
A: The Board of Directors is soliciting proxies for the 2003 Annual Meeting of
Stockholders of Systems & Computer Technology Corporation ("we," "us," "our"
or "company"). Our Annual Meeting will be held at 10:00 a.m. Eastern time on
February 21, 2003 at Two Country View Road, Malvern, Pennsylvania, and at
the time of any adjournments or postponements that may take place. You are
receiving this Proxy Statement because you owned shares of our common stock
as of January 10, 2003. This Proxy Statement describes the matters on which
we would like you to vote and provides information on those matters so that
you can make an informed decision. The Notice of Annual Meeting, Proxy
Statement and proxy card are first being mailed to our stockholders on or
about January 21, 2003.
Q: Who can attend the meeting?
A: All stockholders are encouraged to attend the meeting. Admission tickets are
not required.
Q: What is a quorum?
A: A quorum is a majority of the outstanding shares. The shares may be
represented at the meeting either in person or by proxy. To hold the
meeting, there must be a quorum present.
Q: Who is entitled to vote?
A: Stockholders of record as of the close of business on January 10, 2003 may
vote at the Annual Meeting.
Q: How many shares can vote?
A: As of January 10, 2003, there were 33,576,639 shares of our common stock
issued and outstanding. Every stockholder of record as of January 10, 2003
may cast one vote for each share of common stock owned.
Q: What may I vote on?
A: You may vote on the election of two (2) directors who have been nominated to
serve on our Board of Directors for indicated term and on any other business
properly presented at the meeting.
Q: How does the Board of Directors recommend I vote?
A: The Board recommends a vote FOR each Board nominee.
Q: How do I vote?
A: Sign and date each proxy card you receive, mark the box indicating how you
wish to vote and return the proxy card in the prepaid envelope provided. If
you sign your proxy card, but do not mark the box showing how you wish to
vote, your shares will be voted for the election of the nominees for
director and as recommended by the Board of Directors on such other business
as may properly come before the Annual Meeting or any adjournments or
postponements of the meeting.
1
Q: What if I want to change my vote after I complete and submit a proxy card?
A: You may change your vote at any time before the meeting in any of the
following three ways:
1. Notify our Secretary, Richard Blumenthal, in writing;
2. Vote in person at the meeting; or
3. Submit a proxy card with a later date.
Q: What if I hold my shares in a brokerage account?
A: If you hold your shares through a broker, bank or other nominee, you will
receive a voting instruction form directly from them describing how to vote
your shares. If you hold your shares through a broker, bank or other nominee
and wish to vote at the meeting, you must obtain a legal proxy from that
nominee authorizing you to vote at the meeting. We will be unable to accept
a vote from you at the meeting without that form. If you hold your shares
directly and wish to vote at the meeting, no additional forms will be
required.
Q: How will directors be elected?
A: Our Board of Directors is divided into three classes with staggered
three-year terms. The terms of Gabriel A. Battista and Robert M. Gavin, Jr.
expire at the meeting and each is nominated to fill a term expiring at the
2006 Annual Meeting of Stockholders. The two nominees who receive the
highest number of affirmative votes at a meeting at which a quorum is
present will be elected as directors. If, for any reason, at the time of the
election, either Mr. Battista or Dr. Gavin should be unable to accept his
nomination or election, proxies cast for such nominee will be voted for the
election of a substituted nominee recommended by the Board of Directors. The
Board of Directors, however, has no reason to believe that either Mr.
Battista or Dr. Gavin will be unable to serve as a director. Stockholders
are not entitled to cumulative voting in the election of directors.
Q: Who will count the votes?
A: A representative of Mellon Investor Services LLC, our transfer agent, will
count the votes and act as the judge of election.
Q: What does it mean if I get more than one proxy card?
A: You may hold shares under different names or entities, or your shares may be
in more than one account. We encourage you to have all accounts registered
in the exact same name and address whenever possible. You may obtain
information about how to do this by contacting our transfer agent:
Mellon Investor Services LLC
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
Toll-free telephone: 1-800-851-9677
If you provide Mellon Investor Services with photocopies of the proxy cards
that you receive or with the account numbers that appear on each proxy card,
it will be easier to accomplish this. You may also find information on
transferring shares and other useful stockholder information on their Web
site at www.mellon-investor.com.
Q: What is the effect if I abstain or fail to give instructions to my broker?
A: If you submit a properly executed proxy, your shares will be counted as part
of the quorum even if you abstain from voting or withhold your vote for a
particular director or a particular proposal.
2
Broker non-votes are also counted as part of the quorum. A broker non-vote
occurs when brokers or other nominees holding shares on behalf of a
stockholder do not receive voting instructions from the stockholder by a
specified date before the meeting. In this event, brokers and other nominees
may vote those shares on routine matters, such as the election of directors.
Broker non-votes and withheld votes are not counted in the tally of votes
FOR or AGAINST a proposal, and abstentions have the same effect as a vote
against a proposal.
Q: Are there any expenses associated with collecting the stockholder votes?
A: The cost of soliciting proxies will be borne by us. In addition, we will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
their reasonable out-of-pocket expenses for forwarding proxy and other
materials to our stockholders. We do not anticipate hiring an agency to
solicit votes at this time.
Q: What is a stockholder proposal?
A: A stockholder proposal is a recommendation or requirement that we or our
Board of Directors take action on a matter that you intend to present at a
meeting of stockholders. However, under applicable rules, we have the
ability to exclude certain matters proposed, including matters relating to
our ordinary business operations.
Q: Can anyone submit a stockholder proposal?
A: To be eligible to submit a proposal, you must have continuously held shares
of our stock worth at least $2,000 in market value or 1% of our common stock
for at least one year by the date you submit your proposal. You also must
continue to hold those securities through the date of the meeting.
Q: If I wish to submit a stockholder proposal for the 2004 Annual Meeting of
Stockholders, what action must I take?
A: In order for your nomination for the election of a director or any other
proposal to be presented by you at the Annual Meeting of Stockholders to be
held in 2004, notice of your nomination or other proposal must be delivered
by you to the Secretary of the company at our address below either: (i) on
or before September 23, 2003; or (ii) not earlier than November 24, 2003 and
not later than December 23, 2003, and in the case of a proposal, the
proposal must be an appropriate subject for stockholder action under
applicable law. In the event that we receive notice of your stockholder
proposal within the time frame set forth above, then so long as we include
in our proxy statement for the 2004 Annual Meeting advice on the nature of
the matter and how the named proxyholders intend to vote the shares for
which they have received discretionary authority, such proxyholders may
exercise discretionary authority with respect to your proposal, except to
the extent limited by the SEC's rules governing stockholder proposals. In
order for your stockholder proposal to be considered for inclusion in our
proxy statement and form of proxy relating to our 2004 Annual Meeting, the
proposal must be received by the Secretary of the company at our address
below by not later than September 23, 2003. Send your proposal to:
Richard Blumenthal
Secretary
Systems & Computer Technology Corporation
Great Valley Corporate Center
Four Country View Road
Malvern, Pennsylvania 19355
Q: Can a stockholder nominate someone to be a director?
A: We will consider qualified candidates recommended by our stockholders. You
should submit your recommendation, including a detailed statement of the
individual's qualifications, to our Secretary at the company address above.
3
ELECTION OF DIRECTORS
Our Board of Directors is divided into three classes with staggered
three-year terms. There are two nominees for election this year. Each nominee
is currently serving as a director. The table below provides the following
information regarding each nominee and each other director: (i) his age; (ii)
all positions and offices he holds with the company; (iii) his principal
occupation or employment during the past five years; (iv) other directorships
he holds in public companies; (v) the period of time he has served as a
director of the company; and (vi) the expiration of his current term as a
director of the company.
Has Been
Positions with the Company, Principal a Director Expiration of
Name Age Occupation and Other Directorships Since Current Term
---- --- ------------------------------------- ---------- -------------
Nominees for Election
Gabriel A. Battista* #+ 58 Chairman of the Board, President and Chief 1996 2003 Annual
Executive Officer of Talk America, Inc., f/k/a Meeting (1)
Talk.com, Inc., f/k/a Tel--Save.Com, Inc., since
January 1999; Chief Executive Officer of Network
Solutions, Inc. from October 1996 through
December 1998. Mr. Battista is also a director of
Talk America, Inc. and Via Net.Works, Inc.
Robert M. Gavin, Jr.#+ 62 Independent educational consultant since September 2002 2003 Annual
2001; President, Cranbrook Education Community Meeting (1)
from July 1996 to September 2001. Dr. Gavin is
also a director of Hartford Mutual Funds.
Directors Continuing in Office
Michael D. Chamberlain 58 President and Chief Executive Officer of the 1989 2004
company since January 2002; President and Chief
Operating Officer of the company from October
2001 to January 2002; President, SCT Global
Operations from July 1999 to October 2001;
President, SCT Software Group from May 1994 to
July 1999. From September 1986 to May 1994, Mr.
Chamberlain served as President of the company's
education solutions business.
Thomas I. Unterberg*# 72 Co-Founder and Chairman of C.E. Unterberg, 1982 2004
Towbin since June 1989. Mr. Unterberg is also a
director of AES Corporation; Storage Engine, Inc.;
Rumson-Fairhaven Bank & Trust; and Electronics
For Imaging, Inc., for which Mr. Unterberg also
serves on the Compensation Committee.
Allen R. Freedman* #+ 62 Non-executive Chairman of the Board of the 1982 2005
company since January 2002. Mr. Freedman is also
a director of Fortis, Inc. He was Managing Director,
Fortis International N.V. from January 1987 until he
retired on July 31, 2000, and Chairman and Chief
Executive Officer of Fortis, Inc. from November
1990 until he retired on July 31, 2000.
Eric Haskell 56 Executive Vice President, Finance and 2002 2005
Administration, Treasurer and Chief Financial
Officer of the company since October 2002; Senior
Vice President, Finance and Administration,
Treasurer and Chief Financial Officer of the
company from July 1990 to October 2002; Vice
President, Finance and Administration, Treasurer
and Chief Financial Officer of the company from
March 1989 to July 1990.
--------
* Member of the Audit Committee
# Member of the Nominating Committee
4
+ Member of the Compensation Committee
(1) If elected at the Annual Meeting, this nominee will serve for a term ending
at the 2006 Annual Meeting of Stockholders, or until his successor is duly
elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES TO
THE BOARD OF DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT THE 2006 ANNUAL
MEETING.
Board Meetings and Committees
During the fiscal year ended September 30, 2002 ("fiscal 2002"), the Board
of Directors held thirteen meetings. Each director attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees of the Board of Directors on
which he served.
The Audit Committee consists of Messrs. Unterberg, Freedman and Battista.
During fiscal 2002, the function of the Audit Committee was to recommend to the
Board of Directors the accounting firm to be retained to audit our financial
statements and, once retained, to consult with, and review recommendations made
by, our accounting firm with respect to financial statements, financial records
and controls, and to make recommendations to the Board of Directors as it
deemed appropriate from time to time. The Audit Committee held six meetings
during fiscal 2002.
In November 2002, the Audit Committee adopted a revised charter. A copy of
the revised charter is attached to this Proxy Statement as Appendix A. The
function of the Audit Committee under our revised charter is to, among other
things: (i) appoint, compensate and oversee the work of the independent
auditors; (ii) pre-approve both audit and non-audit services; (iii) provide
oversight relating to the company's financial statements and financial
reporting process, the systems of internal accounting and financial controls,
the internal audit function, the annual independent audit of the company's
financial statements, and the legal compliance and ethics programs as
established by management and the Board of Directors; (iv) investigate any
matter or complaint brought to its attention, retaining outside counsel and
other experts for this purpose as necessary; (v) review and approve all
related-party transactions; and (vi) take appropriate corporate action to
provide for quality financial reporting, sound business risk practices and
ethical corporate behavior.
The Compensation Committee consists of Messrs. Freedman and Battista and Dr.
Gavin. The Compensation Committee considers recommendations of management
regarding compensation and fringe benefits of senior executives and determines
whether the recommendations of management are consistent with general policies,
practices, and compensation scales established by the Board of Directors.
During fiscal 2002, the Compensation Committee held two meetings.
In January 2002, we established a Nominating Committee of the Board of
Directors. The Nominating Committee consists of Messrs. Unterberg, Freedman and
Battista and Dr. Gavin. The function of the Nominating Committee is to
recommend qualified candidates for election as directors of the company. The
Nominating Committee held no meetings during fiscal 2002.
Each member of our Audit Committee, Compensation Committee and Nominating
Committee is considered an "independent director" under current NASDAQ national
market listing standards. In addition, all members of our Audit Committee are
financially literate and at least one member has accounting or related
financial management experience. The company anticipates making changes to the
composition of such committees as may be required from time-to-time by
then-current applicable laws, rules or regulations, and NASDAQ listing
standards.
5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the company's directors and executive officers, and persons who own more than
ten percent of a registered class of the company's equity securities
(collectively, "Reporting Persons"), to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the common stock and other equity securities of the company. Reporting Persons
are also required to furnish the company with copies of all Section 16(a) forms
they file.
To the company's knowledge, based solely upon review of the copies of
Section 16(a) reports furnished to us and written representations of Reporting
Persons that no other reports were required with respect to fiscal 2002, all
Section 16(a) filing requirements applicable to the Reporting Persons were met.
6
EXECUTIVE COMPENSATION
Cash and Non-Cash Compensation Paid to Certain Executive Officers
The following table sets forth, for the fiscal years ended September 30,
2000, 2001 and 2002, respectively, certain compensation information with
respect to: (a) the company's Chief Executive Officer; and (b) each of the four
other most highly compensated executive officers of the company whose total
annual salary and bonus for fiscal 2002 exceeded $100,000 and who (except as
noted below) were serving at the end of fiscal 2002, based on the salary and
bonus earned by such executive officers during fiscal 2002 (collectively, the
"named executive officers"):
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Other Annual Awards Securities
Bonus Compensation Underlying All Other
Name and Principal Position Year Salary ($) ($)(1) ($) (2) Options (#) Compensation($)(3)
--------------------------- ---- ---------- -------- ------------ ----------------- ------------------
Michael J. Emmi (4) 2002 $132,886 -0- $21,007 25,000 $2,190,045
Chairman of the Board, 2001 $507,500 $180,000 N/A 50,000 $ 54,160
President and Chief 2000 $477,500 -0- $73,952 16,500 $ 54,605
Executive Officer
Michael D. Chamberlain (5) 2002 $447,050 $392,600 N/A 20,000 $ 33,161
President and Chief 2001 $369,550 $109,500 N/A 40,000 $ 28,572
Executive Officer 2000 $345,800 -0- N/A 10,000 $ 28,332
Eric Haskell 2002 $345,200 $243,840 N/A 15,000 $ 20,392
Executive Vice President, 2001 $325,800 $ 80,000 N/A 30,000 $ 19,161
Finance and Administration, 2000 $305,800 -0- N/A 7,000 $ 18,452
Treasurer and Chief
Financial Officer
Richard A. Blumenthal 2002 $266,825 $186,410 N/A 12,500 $ 18,192
Executive Vice President, 2001 $252,050 $ 61,250 N/A 25,000 $ 16,457
General Counsel and 2000 $237,050 -0- N/A 4,500 $ 15,917
Secretary
Jerry A. Smith (6) 2002 $202,641 -0- N/A 10,000 $ 73,860
Senior Vice President and 2001 $247,050 $ 60,000 N/A -0- $ 13,574
Chief Technology Officer 2000 $235,800 -0- N/A -0- $ 38,751
Deirdre Wielgus (7) 2002 $146,385 $ 63,572 N/A 16,000 $ 56,934
Senior Vice President, 2001 $175,358 $ 43,750 N/A 34,000 $ 9,870
Human Resources and 2000 N/A N/A N/A N/A N/A
Organizational Strategy
--------
(1) The amounts shown for fiscal 2002 represent the sum of transaction bonuses
(discussed below) for Messrs. Chamberlain, Haskell and Blumenthal in the
amounts of $98,300, $88,840, and $67,710, respectively; and performance
bonuses for Messrs. Chamberlain, Haskell and Blumenthal in the amounts of
$294,300, $155,000 and $118,700, respectively.
(2) The amounts shown for fiscal 2002 represent the sum of the following: (a)
$10,251 for automobile expense allowance; (b) $4,000 for income tax
preparation professional services; and (c) $6,756 for spousal travel
allowance.
7
(3) The amounts shown for fiscal 2002 represent the sum of the following: (a)
with regard to the retirement arrangement between Mr. Emmi and the company,
discussed below: $1,364,750 in retirement payments; $621,275 representing
the cash surrender value of certain life insurance policies transferred to
Mr. Emmi; $19,489 in automobile expenses; $24,112 in life and health
insurance premiums that the company paid on Mr. Emmi's behalf; $78,400 in
loan reduction in lieu of payment of a transaction bonus (discussed below)
for the sale of the company's government software and services business;
and $36,124 in miscellaneous expenses and perquisites; (b) severance
compensation paid to Mr. Smith, in the amount of $64,050, and to Ms.
Wielgus, in the amount of $49,035, pursuant to separation agreements
between the company and each such named executive; (c) company matching
contributions to each of the named executive's accounts in the company's
401(k) retirement plan in the following amounts: Mr. Emmi, $83; Mr.
Chamberlain, $5,500; Mr. Haskell, $5,500; Mr. Blumenthal, $5,500; Mr.
Smith, $3,816; and Ms. Wielgus, $2,204; (d) the following premiums and
associated taxes paid by the company on life insurance policies under which
each named executive officer is the named insured and has the right to name
the beneficiary: Mr. Emmi, $19,837; Mr. Chamberlain, $5,738; Mr. Haskell,
$7,189; Mr. Blumenthal, $2,930; Mr. Smith, $1,107; and Ms. Wielgus, $1,077;
and (e) the following amounts which reflect the present value of the
imputed interest related to premiums which were paid by the company on
split dollar life insurance policies under which each named executive
officer is the named insured and has the right to name the beneficiary: Mr.
Emmi, $25,975; Mr. Chamberlain, $21,923; Mr. Haskell, $7,703; Mr.
Blumenthal, $9,762; Mr. Smith, $4,887; and Ms. Wielgus, $4,618.
(4) Mr. Emmi retired from the company effective January 2, 2002.
(5) Mr. Chamberlain was appointed to the office of President and Chief
Executive Officer effective January 2, 2002.
(6) Mr. Smith resigned from the company effective June 30, 2002.
(7) Ms. Wielgus became an executive officer of the company on February 23, 2001
and resigned from the company effective June 30, 2002.
Stock Options Granted to Certain Executive Officers During Last Fiscal Year
The following table sets forth certain information regarding options for the
purchase of the company's common stock that were awarded to the named executive
officers during fiscal 2002:
OPTION GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 2002
Potential Realizable
Value at
Assumed Annual Rates
of Stock Price
Appreciation For
Individual Grants Option Term (1)(2)
--------------------------------------------------- --------------------
% of
Total
Number of Options
Securities Granted to
Underlying Employees
Options in Fiscal Exercise or Expiration
Name Granted (#) Year Base Price ($/Sh) Date 5% ($) 10% ($)
---- ----------- ---------- ----------------- ---------- -------- --------
Michael J. Emmi....... 25,000 3.7% $12.29 01/02/04 $ 30,522 $ 66,064
Michael D. Chamberlain 20,000 2.9% $12.29 11/08/11 $150,510 $385,258
Eric Haskell.......... 15,000 2.2% $12.29 11/08/11 $112,883 $288,943
Richard A. Blumenthal. 12,500 1.8% $12.29 11/08/11 $ 94,069 $240,786
Jerry A. Smith........ 10,000 1.5% $12.29 06/30/03 $ 8,891 $ 19,346
Deirdre F. Wielgus.... 10,000 1.5% $12.29 06/30/03 $ 8,891 $ 19,346
Deirdre F. Wielgus.... 6,000 0.9% $13.60 06/30/03 $ 4,701 $ 9,754
--------
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon the exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the common stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, non-transferability or vesting over a period of years.
8
(2) All options reported in this table were granted pursuant to the company's
1994 Long-Term Incentive Plan, pursuant to which one-third (1/3) of the
options granted become exercisable on the first anniversary of the grant
date, and an additional one-third (1/3) become exercisable on each of the
second and third anniversaries of the grant date. The right to exercise the
options expires ten (10) years after the grant date. All of the options
were granted on November 8, 2001, excepting that the 6,000 options
separately reported for Ms. Wielgus were granted on April 11, 2002.
Further, the rights of Mr. Emmi, Mr. Smith and Ms. Wielgus to exercise
certain options, including the vesting dates for the exercise of the
options, and the expiration dates for the exercise of the options, were
modified pursuant to certain agreements between the company and each named
executive, as provided for in the discussions under Severance Agreements
and Retirement Arrangements, below.
Stock Options Exercised by Certain Executive Officers During Fiscal 2002 and
Held by Certain Executive Officers at September 30, 2002
The following table sets forth certain information regarding options for the
purchase of the company's common stock that were exercised and/or held by the
named executive officers during fiscal 2002:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR
ENDED SEPTEMBER 30, 2002 AND FISCAL YEAR-END 2002 OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options at
on Value Options at FY-End (#) FY-End ($) Exercisable/
Name Exercise (#) Realized Exercisable/Unexercisable Unexercisable(1)
---- ------------ -------- ------------------------- -----------------------
Michael J. Emmi....... -0- -0- 773,500/0 $159,375/-0-
Michael D. Chamberlain 32,942 $209,428 202,253/50,001 $119,334/-0-
Eric Haskell.......... 30,000 $324,825 273,466/37,334 -0-/-0-
Richard A. Blumenthal. 20,000 $216,550 264,533/30,667 -0-/-0-
Jerry A. Smith........ -0- -0- 75,000/10,000 -0-/-0-
Deirdre F. Wielgus.... -0- -0- 30,334/43,668 $ 1,000/-0-
(1) The values in this column are based on the closing price of the company's
common stock of $7.00 on September 30, 2002, the last trading day of fiscal
2002.
Transaction Bonus Compensation Arrangements
Messrs. Chamberlain, Haskell and Blumenthal are each a party to an agreement
with the company pursuant to which the named executive is entitled to a bonus
upon the sale of all or substantially all of the assets of any of the company's
business units, or upon a change in control of the Company in its entirety.
Prior to his retirement from the company, Mr. Emmi was also a party to such an
agreement with the company. Upon the occurrence of such a transaction, the
company will establish a transaction bonus pool, equal to .8% of the gross
value of all cash, securities and other property paid to the company or its
stockholders as the purchase price for the transaction in question. Under the
terms of their respective agreements with the company, in connection with the
sale of the company's government software and services business, Mr. Emmi was
entitled to 38%, Mr. Chamberlain was entitled to 25%, Mr. Haskell was entitled
to 21%, and Mr. Blumenthal was entitled to 16% of the applicable transaction
bonus pool. For all other eligible transactions, under the terms of their
respective agreements with the company, Mr. Chamberlain is entitled to 45%, Mr.
Haskell is entitled to 31%, and Mr. Blumenthal is entitled to 24% of the
applicable transaction bonus pool.
9
Upon Mr. Emmi's retirement from the company, in lieu of providing him with a
transaction bonus in connection with the sale of the government software and
services business, the company reduced Mr. Emmi's indebtedness pursuant to a
promissory note in favor of the company, as discussed under the Retirement
Arrangement and Indebtedness of Management sections below. Based upon the terms
of its agreement with each of the named executives, the company paid
transaction bonuses to Messrs. Chamberlain, Haskell and Blumenthal in
connection with the company's sale of its government and manufacturing software
and services businesses.
Severance Agreements
The company has Severance Agreements with Messrs. Chamberlain, Haskell, and
Blumenthal, as well as with certain other key management employees (together
with Messrs. Chamberlain, Haskell, and Blumenthal, the "Executives"), in order
to reinforce and encourage the continued attention and dedication of the
Executives to their assigned duties without the distraction which may arise in
the event of a change of control. Under the Severance Agreements, the company
agrees to pay the Executives certain specified severance payments and benefits
in the event that their employment with the company is terminated in connection
with a change in control. Each Executive, in turn, agrees, for a one-year
period following the date of his or her termination resulting from a change in
control, not to solicit or take away any customers or employees of the company
that are or were customers or employees during his employment with the company.
Among the benefits conferred, the Severance Agreements provide for the
payment to the Executives of a specified multiplier times the sum of: (i) the
higher of the Executive's annual base salary in effect immediately prior to the
notice of termination or immediately prior to the change in control; and (ii)
the higher of the target bonus for the year in which the termination occurs or
the highest bonus paid or payable to the applicable Executive for any of the
previous five years. With respect to this calculation, the applicable
multiplier for Messrs. Chamberlain, Haskell, and Blumenthal is three. In
addition to the payment described above, the Severance Agreement requires the
company, for a period of 36 months after the date of a covered termination, to
provide the named executive officers with life, disability, accident and health
insurance benefits substantially similar to those which the named executive
officer received immediately prior to the notice of termination, unless the
named executive officer is otherwise offered or provided comparable benefits
without cost during such period. The Severance Agreement also provides that the
company will indemnify the Executives from certain legal and other expenses
incurred in connection with a termination of his employment, as well as from
certain excise taxes which may be levied upon the severance payments and other
benefits conferred to the Executive upon a change of control.
Messrs. Chamberlain, Haskell and Blumenthal also have agreements with the
company that provide, among other things, that if such executive were
terminated without cause (other than in connection with a change in control of
the company), he would receive the following benefits: (1) two times his annual
base salary as in effect on the date of termination of employment; (2)
continuation of all employer-provided insurance coverage for two years
following the date of termination of employment; (3) all options to purchase
securities of the company held by him on the date of termination of his
employment immediately vest and may be exercised for two years following the
date of termination of employment; and (4) if applicable, an additional sum of
cash which compensates him in full for the imposition of any additional income
tax and/or excise tax or penalty which may be levied upon the severance
payments and other benefits conferred to him under the agreement.
Retirement Arrangement
Effective January 2, 2002, Mr. Emmi retired from the company and resigned as
the company's Chairman of the Board, President and Chief Executive Officer, as
a member of the company's Board of Directors and as an officer and director of
all the company's subsidiaries. In connection with his retirement, Mr. Emmi
agreed not to compete with the company's education business for three years or
with the company's remaining businesses for two years, and Mr. Emmi in turn
received compensation of approximately $1.5 million, inclusive of reduction of
indebtedness to the company in lieu of a transaction bonus for the sale of the
company's government software
10
and services business. The company agreed to continue to provide Mr. Emmi with
life and health insurance and other fringe benefits for periods ranging from
two to five years, as well as an assignment of life insurance policies covering
Mr. Emmi, and Mr. Emmi's rights under other compensation plans became vested.
All company stock options held by Mr. Emmi became vested and were amended to
permit Mr. Emmi to exercise them by the earlier of their original expiration
date or two years from the date of his resignation.
Separation Arrangements
Effective June 30, 2002, Mr. Smith and Ms. Wielgus resigned from their
respective positions with the company. In connection with such resignations,
the company agreed to pay each of Mr. Smith and Ms. Wielgus his or her
respective annual salary through June 30, 2003, and further agreed to pay Ms.
Wielgus a performance bonus for services rendered during fiscal 2002. The
company also agreed to continue to provide Mr. Smith and Ms. Wielgus with life
and health insurance and other fringe benefits through June 30, 2003. All
outstanding stock options held by Ms. Wielgus became fully vested as of June
30, 2002 and all options held by Ms. Wielgus and Mr. Smith were amended to
permit the exercise of the vested options by the earlier of the original
expiration date or June 30, 2003. In return, Mr. Smith and Ms. Wielgus agreed
not to compete with the company's business through June 30, 2003.
Indebtedness of Management
On May 21, 2001, Mr. Emmi signed a Secured Promissory Note providing for up
to six monthly advances by the company to Mr. Emmi in amounts not to exceed
$20,000 in any month. The note bears interest at 7% per annum and was secured
by 40,000 shares of company common stock owned by Mr. Emmi. On December 31,
2001, the principal amount outstanding under the note was $84,158.28, which was
the largest principal amount outstanding at any time during fiscal year 2002.
As part of the consideration received by Mr. Emmi upon his retirement from the
company, in lieu of paying Mr. Emmi a transaction bonus for the sale of the
company's government software and services business, the company reduced the
amount of the indebtedness under the note by $78,400 and the company released
37,333 of the shares that had secured Mr. Emmi's obligation under the note.
Accordingly, 2,667 of Mr. Emmi's shares of the company's common stock continue
to secure Mr. Emmi's obligation under the note. On December 31, 2002, the
principal amount outstanding under the note was $8,430.
Compensation of Directors
Members of the Board of Directors who are officers of the company are not
separately compensated for serving on the Board of Directors. Mr. Freedman
receives a monthly fee of $13,000 from the company for his services as the
company's non-executive Chairman of the Board. Each non-employee director
(including Mr. Freedman) receives an annual cash retainer of $40,000, payable
in four equal quarterly installments. All directors are reimbursed for
reasonable expenses incurred in connection with their attendance at Board and
committee meetings. Pursuant to the 1994 Non-Employee Director Plan, as amended
(the "Plan"), the Board of Directors is authorized to grant options to
non-employee directors in such amounts as the Board may determine, subject to
the limitation that no non-employee director will be eligible to receive an
option grant any sooner than five years after the date that such director was
last granted options under the Plan. One-fifth (1/5) of the options granted
under the Plan become exercisable on the first anniversary of the grant date,
and an additional one-fifth (1/5) become exercisable on each of the second,
third, fourth and fifth anniversaries of the grant date. The right to exercise
the options granted under the Plan expires ten (10) years after the grant date.
In November 2001, Mr. Battista was granted an option under the Plan to purchase
40,000 shares of company common stock at $12.52 per share. On January 15, 2002,
Dr. Gavin was granted an option under the Plan to purchase 30,000 shares of the
company's stock at $9.45 per share.
Related Party Transactions
Mr. Unterberg is a director of the company and a member of the Audit
Committee. During fiscal 2002, the company paid C.E. Unterberg, Towbin fees for
investment banking services rendered in connection with the
11
divestiture by the company of its manufacturing software and services business,
and has an agreement to pay the firm for services provided in connection with
future merger and acquisition activity of the company. Mr. Unterberg is
Chairman of C.E. Unterberg, Towbin.
We have confirmed, based upon a review of our internal records, that from
October 1, 2001 to the date of this Proxy Statement, there have not been any
transactions and there are currently no proposed transactions, between the
company and any executive officer, director, 5% beneficial owner of our common
stock, or member of the immediate family of the foregoing persons in which the
amount involved exceeded $60,000 and in which one of the foregoing individuals
or entities had a direct or indirect material interest, except as described
above. Both the Audit Committee and the Board of Directors have reviewed and
approved the related party transactions described above involving Unterberg
Towbin and believes such transactions were on terms that were reasonable and
fair to the company. No related party transaction had a material effect on our
consolidated financial position, results of operations or cash flows for fiscal
2002.
Report of the Compensation Committee on Executive Compensation
It is SCT's policy to offer competitive compensation opportunities for its
employees based on a combination of factors, including corporate performance
and the individual's personal contribution to the business.
The Compensation Committee of the Board of Directors of the company,
consisting solely of independent directors, annually reviews and approves the
compensation of the company's executive officers. A significant part of
executive officers' compensation may be dependent upon the company's annual
financial performance and the price of the company's stock.
There are three basic elements to executive officer compensation: base
salary, bonus and stock incentives, typically in the form of stock options that
are granted at market price and vest over a period of time. The stock option
program rewards executive officers for long-term strategic management and
enhancement of stockholder value by providing the executive officers an
opportunity to acquire equity in the company. The compensation program stresses
both annual and long-term performance, and supports a performance-oriented
environment. In combination, these elements help the company to attract and
retain qualified executive management personnel.
The Compensation Committee considers increases in executive officer base
salary on the recommendation of the Chief Executive Officer, taking into
consideration, among other things, salaries paid to executives of other
companies in comparable positions, the company's financial performance, and the
individual's personal contribution to the company.
During the period from October 1, 2001 through Mr. Emmi's retirement on
January 2, 2002, the company made no adjustments to Mr. Emmi's base salary.
Upon Mr. Emmi's retirement, Mr. Chamberlain was appointed to the position of
President and Chief Executive Officer. Based upon available salary survey
information regarding the compensation provided to chief executive officers of
similarly sized technology businesses, and after reviewing the history of Mr.
Chamberlain's salary increases during his tenure with the company, the
Compensation Committee determined to increase Mr. Chamberlain's salary to
$460,000 per annum in connection with his promotion to Chief Executive Officer.
The Compensation Committee awards bonuses to the company's executive
officers based predominantly on factors established prior to the commencement
of the company's fiscal year. During fiscal 2002, each executive officer was
eligible to receive a bonus depending on the achievement by the company of a
percentage of targeted earnings per share, revenue, license fees,
income-before-taxes (IBT) percentage and overall account "win rate." Each
executive officer is eligible to receive a bonus, based on an established
percentage of base salary, subject to increase or decrease based on the
recommendation of the Chief Executive Officer. The executive officers were
entitled to receive bonuses under the company's bonus plan during fiscal 2002
and information regarding such bonuses is provided in the above table under the
caption "Summary Compensation Table."
12
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), precludes a public corporation from taking a deduction for
compensation paid in excess of $1,000,000 per person to its Chief Executive
Officer or any of its four other highest paid officers. Certain
performance-based compensation, however, is specifically exempt from the
deduction limitation. Performance-based compensation must be determined by a
committee comprised solely of two or more independent directors. In order to
qualify as an independent director, a person may not be an employee of the
company and generally may not receive, directly or indirectly, compensation for
services other than in that person's capacity as a director. In the past, the
company from time to time has retained the services of entities with which
members of the Compensation Committee are affiliated. During fiscal 2002
through the present time, however, the company has not done so. The company may
do so in the future, at which time, in making such a determination, the company
shall consider the benefits derived from utilizing the services of such
entities and the impact of Section 162(m) of the Code.
The Board of Directors, based upon recommendations made to it by the
Compensation Committee, determines whether and when stock incentives should be
awarded to the Chief Executive Officer, the other named executive officers and
other employees of the company that the Board reasonably determines to be key
to the company's ability to perform. Consistent with such policy, the company
granted the executive officers stock options during fiscal 2002. The table
under the caption "Option Grants in Fiscal Year Ended September 30, 2002" above
provides information with respect to the grant of options to the Chief
Executive Officer and the other named executive officers during fiscal 2002.
During fiscal 2002, the company engaged an executive compensation consulting
firm to advise the company with regard to executive compensation for fiscal
2003. The consulting firm determined that changes to cash compensation were not
indicated for fiscal 2003, but recommended that the company (i) simplify the
factors used to determine executive bonus amounts and (ii) increase the number
of shares under stock option grants to executives. In accordance with such
recommendations, the company amended its executive bonus criteria and made
certain stock option grants to executives in connection with their fiscal 2003
compensation.
The foregoing constitutes the report on executive compensation of the
Compensation Committee and the Board of Directors for the company's fiscal year
ended September 30, 2002.
FOR THE COMPENSATION FOR THE BOARD OF
COMMITTEE: DIRECTORS:
Allen R. Freedman Allen R. Freedman
Gabriel A. Battista Michael D.
Chamberlain
Robert M. Gavin, Jr. Thomas I. Unterberg
Gabriel A. Battista
Eric Haskell
Robert M. Gavin, Jr.
Report of the Audit Committee
The Audit Committee appoints the accounting firm to be retained to audit the
company's financial statements, and once retained, the accounting firm reports
directly to the Audit Committee. The Audit Committee consults with and reviews
recommendations made by the accounting firm with respect to financial
statements, financial records, and financial controls of the company and to
make recommendations to the Board of Directors as it deems appropriate from
time to time. The Audit Committee is responsible for approving both audit and
non-audit services to be provided by the independent auditors. For fiscal 2002,
the Board had adopted a written charter setting forth the functions the
Committee is to perform and this report is pursuant to such charter. The
Committee's charter was reviewed and revised in November 2002. A copy of the
revised charter is attached to this Proxy Statement as Appendix A.
For fiscal 2002, the Audit Committee: (a) reviewed and discussed the audited
financial statements for the fiscal year ended September 30, 2002 with
management; (b) discussed with Ernst & Young LLP, the company's
13
independent auditors, the matters required to be discussed by Statement on
Auditing Standards No. 61; (c) received the written disclosures and the letter
from Ernst & Young LLP required by Independence Standards Board Standard No. 1;
and (d) discussed with Ernst & Young LLP the auditors' independence from
management and the company, including the matters in the written disclosures
required by the Independence Standards Board. The Audit Committee discussed
with the company's internal and independent auditors the overall scope and
plans for their respective audits. The Audit Committee met with management and
the internal and independent auditors 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.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the company's Annual Report on Form 10-K for the year
ended September 30, 2002.
Audit Fees; Financial Information Systems Design and Implementation Fees;
and All Other Fees
Ernst & Young has billed the company $275,000, in the aggregate, for
professional services for the audit of the company's financial statements for
fiscal 2002. Ernst & Young did not bill the company for any professional
services related to financial information systems design and implementation as
described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X. In addition
to its audit fees, Ernst & Young during fiscal 2002 has billed the company
$615,000, consisting of audit related services of $300,000 and non-audit
services of $315,000. Audit related services primarily include fees for benefit
plan and statutory audits, other accounting and auditing services and
divestiture related services. Non-audit services generally include fees for tax
advisory and compliance services.
In appointing Ernst & Young as the company's independent auditors for the
fiscal year ending September 30, 2003, the Audit Committee has considered
whether Ernst & Young's provision of services other than audit services are
compatible with maintaining their independence.
The foregoing constitutes the report on the audited financial statements of
the Audit Committee for the company's fiscal year ended September 30, 2002.
FOR THE AUDIT COMMITTEE:
Allen R. Freedman
Thomas I. Unterberg
Gabriel A. Battista
14
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the common stock during the five fiscal years ended
September 30, 2002 with the cumulative total return on the Standard & Poor's
500 Index and the Standard & Poor's Computer Software and Services Index. The
comparison assumes $100 was invested on September 30, 1997 in the common stock
and in each of the foregoing indices and assumes reinvestment of dividends. The
company has not paid any dividends on its common stock during this period
SYSTEMS & COMPUTER S & P 500
TECHNOLOGY CORP. S & P 500 APPLICATION SOFTWARE
---------------- --------- --------------------
1997 100.00 100.00 100.00
1998 57.14 109.05 48.58
1999 55.76 139.37 35.16
2000 77.95 157.88 52.19
2001 39.94 115.85 16.80
2002 31.07 92.12 12.19
Cumulative Total Return
-----------------------
9/97 9/98 9/99 9/00 9/01 9/02
---- ---- ---- ---- ---- ----
Systems & Computer
Technology Corp. .............. $100.00 $57.14 $55.76 $77.95 $39.94 $31.07
S & P 500 Index ................ $100.00 109.05 139.37 157.88 115.85 92.12
S & P 500 Application
Software ....................... $100.00 48.58 35.16 52.19 16.80 12.19
* $100 invested on 9/30/97 in stock or index-including reinvestment of
dividends. Fiscal year ending September 30.
15
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to the beneficial ownership of
the company's common stock (the only class of outstanding voting security of
the company) by each person or group known by the company, based upon filings
pursuant to Section 13(d) or (g) under the Securities Exchange Act of 1934, as
amended, to own beneficially more than 5% of the outstanding shares of the
company's common stock.
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class
------------------------------------ ---------- --------
ICM Asset Management, L.P............ 3,379,986(1) 10.1%
W. 601 Main Ave., Suite 600
Spokane, WA 99201
Liberty Wanger Asset Management, L.P. 2,130,000(2) 6.3%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Lord, Abbett & Co.................... 2,096,427(3) 6.2%
90 Hudson Street
Jersey City, NJ 07302
Tocqueville Asset Management, L.P.... 1,769,860(4) 5.3%
1675 Broadway
New York, NY 10019
--------
(1) The named beneficial owner has shared voting power with respect to
2,038,910 shares and no voting power with respect to the balance of the
shares; and shared dispositive power with respect to 3,379,986 shares.
(2) The named beneficial owner has shared voting power with respect to
2,130,000 shares, and shared dispositive power with respect to 2,130,000
shares.
(3) The named beneficial owner has sole voting power and sole dispositive power
with respect to 2,096,427 shares.
(4) The named beneficial owner has sole voting power and sole dispositive power
with respect to 1,769,860 shares.
Employee Stock Ownership Trust
While, as of December 31, 2002, 1,650,549 shares were owned of record by the
company's Employee Stock Ownership Trust, and Mr. Haskell, Mr. Chamberlain and
Mr. Blumenthal are members of the committee that administers the company's
Employee Stock Ownership Plan, that committee does not have investment power
with respect to the shares held by the Employee Stock Ownership Trust.
16
Security Ownership of Management
The following table sets forth information, as of December 31, 2002, with
respect to the beneficial ownership of the company's common stock by each
director or nominee for director, each of the executive officers identified
under the Summary Compensation Table and by all directors and executive
officers as a group:
Amount and Nature
of Beneficial Percent
Name Ownership(1) of Class
---- ----------------- --------
Michael J. Emmi............................................ 1,208,668(2) 3.6%
Michael D. Chamberlain..................................... 258,421(3) *
Thomas I. Unterberg........................................ 378,000(4) 1.1%
Gabriel A. Battista........................................ 32,000(5) *
Allen R. Freedman.......................................... 400,245(6) 1.2%
Robert M. Gavin, Jr........................................ 6,000(7) *
Eric Haskell............................................... 440,844(8) 1.3%
Richard A. Blumenthal...................................... 383,104(9) 1.1%
Jerry A. Smith............................................. 79,278(10) *
Deirdre F. Wielgus......................................... 75,489(11) *
All directors and executive officers as a group (9 persons) 2,073,889(12) 6.2%
--------
(1) Information with respect to beneficial ownership is based upon information
furnished by each director and officer. Unless otherwise specified, the
named stockholders have sole voting and investment power with respect to
all of the shares indicated.
(2) Includes 1,085 shares with respect to which Mr. Emmi does not have
investment power, and options currently exercisable, or which can be
exercised within sixty days of December 31, 2002, to purchase 723,500
shares.
(3) Includes options currently exercisable, or which can be exercised within
sixty days of December 31, 2002, to purchase 188,148 shares.
(4) Includes options currently exercisable, or which can be exercised within
sixty days of December 31, 2002, to purchase 92,000 shares.
(5) Represents options currently exercisable, or which can be exercised within
sixty days of December 31, 2002, to purchase 32,000 shares.
(6) Includes options currently exercisable, or which can be exercised within
sixty days of December 31, 2002, to purchase 92,000 shares.
(7) Represents options currently exercisable, or which can be exercised within
sixty days of December 31, 2002, to purchase 6,000 shares.
(8) Includes 12,000 shares owned by Mr. Haskell as custodian for his children
and options currently exercisable, or which can be exercised within sixty
days of December 31, 2002, to purchase 290,800 shares.
(9) Includes 176 shares with respect to which Mr. Blumenthal does not have
investment power, 36 shares owned by Mr. Blumenthal as custodian for his
daughter, and options currently exercisable, or which can be exercised
within sixty days of December 31, 2002, to purchase 278,532 shares.
(10) Includes options currently exercisable, or which can be exercised within
sixty days of December 31, 2002, to purchase 78,333 shares.
(11) Includes 113 shares with respect to which Ms. Wielgus does not have
investment power, and options currently exercisable, or which can be
exercised within sixty days of December 31, 2002, to purchase 74,002
shares.
(12) Includes options currently exercisable, or which can be exercised within
sixty days of December 31, 2002, to purchase 1,151,479 shares, and 274
shares with respect to which the group does not have investment power.
Does not include ownership interests and option exercise rights of Mr.
Emmi, Mr. Smith and Ms. Wielgus. Includes share ownership interests and
option exercise rights of executive officers appointed after the end of
fiscal 2002.
* Designates that the individual owns less than one percent of the Common
Stock of the Company.
17
SELECTION OF AUDITORS
The Audit Committee of the Board of Directors has selected Ernst & Young
LLP, independent auditors, to audit the consolidated financial statements of
the company for the fiscal year ending September 30, 2003. Ernst & Young LLP
has acted as independent auditors for the company since 1976. A representative
of Ernst & Young LLP is expected to be present at the Annual Meeting, will have
the opportunity to make a statement, and will be available to respond to
appropriate questions.
OTHER BUSINESS
Management knows of no other matters that will be presented at the Annual
Meeting. However, if any other matter properly comes before the Annual Meeting,
or any adjournment or postponement that may take place, it is intended that
proxies in the accompanying form will be voted in accordance with the judgment
of the persons named therein.
ANNUAL REPORT
A copy of the company's Annual Report to Stockholders for fiscal 2002
accompanies this Proxy Statement.
RESTRICTION ON INCORPORATION BY REFERENCE
The information contained in this Proxy Statement under the captions "Report
of the Compensation Committee/Board of Directors on Executive Compensation,"
"Report of the Audit Committee" and "Stock Performance Chart," shall not be
deemed to be incorporated by reference into any filing made by the company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, notwithstanding any general statement contained in any such
filing incorporating this Proxy Statement by reference, except to the extent
the company incorporates such report by specific reference.
It is important that your shares be represented at the Annual Meeting.
Therefore, whether or not you expect to be present in person, you are
respectfully requested to complete and sign the enclosed proxy card and
promptly return it in the enclosed stamped addressed envelope. This will not
prevent you from voting in person at the Annual Meeting. It will, however, help
to assure a quorum and avoid added proxy solicitation costs.
By Order of the Board of
Directors
Richard A. Blumenthal
Secretary
Dated: January 21, 2003
Malvern, Pennsylvania
18
APPENDIX A
Systems & Computer Technology Corp.
Audit Committee Charter
ORGANIZATION
This charter governs the operations of the audit committee. The audit
committee shall review and reassess the charter at least annually. The audit
committee shall be appointed by the board of directors and shall comprise at
least three directors, each of whom are independent of management and the
Company. Members of the audit committee shall be considered independent if they
do not accept any consulting, advisory, or other compensatory fee from the
Company other than in his or her capacity as a director, they are not an
affiliated person of the Company or any subsidiary other than in his or her
capacity as a director and they have no relationship that, in the opinion of
the board of directors, would interfere with the exercise of their independence
from management of the Company.
In addition, all committee members shall be financially literate, and at
least one member shall have accounting or related financial management
expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the stockholders, potential
stockholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board of
directors. In so doing, it is the responsibility of the audit committee to
maintain free and open communication between the audit committee, the
independent auditors, the internal auditors and management of the Company. In
discharging its oversight role, the audit committee is empowered to investigate
any matter brought to its attention with full access to all books, records,
facilities, and personnel of the Company and shall have the authority to retain
outside counsel and other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board of directors and
report the results of their activities to the board. Management is responsible
for preparing the Company's financial statements, and the Company's independent
auditors are responsible for auditing those financial statements. The audit
committee in carrying out its responsibilities believes its policies and
procedures should remain flexible, in order to best react to changing
conditions and circumstances. The audit committee should take the appropriate
actions to set the overall corporate "tone" for quality financial reporting,
sound business risk practices, and ethical behavior.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the audit committee may supplement
them as appropriate.
. The audit committee shall have a clear understanding with management and
the independent auditors that the independent auditors are ultimately
accountable to the board of directors and the audit committee, as
representatives of the Company's stockholders.
. The audit committee shall be directly responsible for the appointment,
compensation, and oversight of the work of the independent auditors
(including resolution of disagreements between management and
19
the independent auditors regarding financial reporting) for the purpose
of preparing or issuing an audit report or related work. The independent
auditors shall report directly to the audit committee.
. The audit committee shall pre-approve both audit and non-audit services
of the independent auditors, except that the audit committee shall be
prohibited from approving the following non-audit services:
. Bookkeeping or other services related to the accounting records or
financial statements
. Financial information systems design and implementation
. Appraisal or valuation services, fairness opinion, or
contribution-in-kind reports
. Actuarial services
. Internal audit outsourcing services
. Management functions or human resources work
. Broker-dealer, investment adviser, or investment banking services
. Legal services and expert services unrelated to the audit
. Any other service that the board determines is impermissible.
Any audit committee approval of non-audit services shall be disclosed in
periodic reports as required to be filed by the Company by the rules and
regulations promulgated by the Securities and Exchange Commission.
. Delegation of Authority--The audit committee may delegate pre-approval
authority to one or more of its members, in which event any such
services approved by such delegated member shall be presented to the
full audit committee at its next regularly scheduled meeting.
. The audit committee shall discuss with the independent auditors their
independence from management and the Company and the matters included in
the written disclosures required by the Independence Standards Board
Standard No. 1. Without limiting the foregoing, the audit committee
shall address with the independent auditors (i) the Company's critical
accounting policies, (ii) alternative treatments of financial
information within GAAP that the independent auditors have discussed
with Company management, and the alternative preferred by the
independent auditors and (iii) any material written communications
between the independent auditors and Company management, such as a
schedule of unadjusted differences.
. Annually, the audit committee shall appoint the Company's independent
auditors.
. The audit committee shall review and approve all related-party
transactions.
. The audit committee shall establish procedures for the handling of
complaints received by the Company regarding accounting controls,
auditing matters, or accounting irregularities and for the confidential,
anonymous submission by employees of complaints or concerns regarding
such matters.
. The audit committee shall discuss with the Company's internal auditors
and the Company's independent auditors the overall scope and plans for
their respective audits including the adequacy of staffing and
compensation. Also, the audit committee shall review the design and
effectiveness of the Company's internal controls and disclosure controls
and procedures and in this connection, shall discuss with management,
the internal auditors, and the independent auditors the adequacy and
effectiveness of the accounting, financial and disclosure controls,
including the Company's system to monitor and manage business risk, and
the Company's legal and ethical compliance programs. Further, the audit
committee shall meet separately with the internal auditors and the
independent auditors, with and without management present, to discuss
the results of their examinations.
. The audit committee shall review with the independent auditors and the
internal auditor the coordination of audit efforts to promote a
reduction of redundant efforts and the effective use of audit resources.
. The audit committee shall review the internal audit function of the
Company including the independence and authority of its reporting
obligations, and the proposed audit plans for the coming year.
20
. The audit committee may review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the audit committee may
also discuss the results of the quarterly review and any other matters
required to be communicated to the audit committee by the independent
auditors under generally accepted auditing standards. Any member of the
audit committee may represent the entire audit committee for the
purposes of the review described in this paragraph, in which event such
member will make a presentation to the full audit committee at its next
regularly scheduled meeting.
. The audit committee shall review with management and the independent
auditors the financial statements to be included in the Company's Annual
Report on Form 10-K (or the annual report to stockholders if distributed
prior to the filing of the Form 10-K), including their judgment about
the quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of the
disclosures in the financial statements. Also, the audit committee shall
discuss the results of the annual audit and any other matters required
to be communicated to the audit committee by the independent auditors
under generally accepted auditing standards.
. The audit committee may review with management and the independent
auditors the quarterly and annual press releases prior to the issuance
of the release by the Company. Any member of the audit committee may
represent the entire audit committee for the purposes of the review
described in this paragraph, in which event such member will make a
presentation to the full audit committee at its next regularly scheduled
meeting.
The committee shall provide a report, to be included in the Company's proxy
statement, as required by the rules and regulations of the NASD and SEC.
21
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION Please mark
your vote as [X]
indicated in
this example
1. Election of Directors:
FOR both nominee(s) WITHHOLD
(Except as marked to AUTHORITY
the contrary) to vote for both nominee(s)
[_] [_]
Nominees: 01 Gabriel A. Battista
02 Robert M. Gavin, Jr.
For a three-year term expiring at the 2006 Annual Meeting of Stockholders.
(Instructions: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below.)
________________________________________________________________________________
Please be sure to sign and date this Proxy below.
Dated:____________________________________________________________________, 2003
________________________________________________________________________________
Stockholder sign above
________________________________________________________________________________
Co-holder (if any) sign above
Detach below card, sign, date, and mail in postage paid envelope provided.
PLEASE ACT PROMPTLY AND SIGN, DATE AND MAIL TODAY
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
VOTING INSTRUCTIONS TO TRUSTEES
THE UNDERSIGNED PARTICIPANT IN SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT
AND NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, DATED JANUARY 21, 2003, AND HEREBY
INSTRUCTS THE TRUSTEES TO VOTE ALL SHARES WHICH THE UNDERSIGNED MAY BE ENTITLED
TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS OF THE CORPORATION TO BE HELD ON
FEBRUARY 21, 2003, AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
ANY SHARES HELD BY THE TRUSTEES FOR WHICH THE TRUSTEES HAVE NOT RECEIVED
VOTING INSTRUCTIONS PRIOR TO THE ANNUAL MEETING WILL BE VOTED BY THE TRUSTEES IN
THEIR DISCRETION CONSISTENT WITH THEIR FIDUCIARY DUTIES. ANY SHARES HELD BY THE
TRUSTEES FOR WHICH THEY HAVE BEEN INSTRUCTED TO SIGN MANAGEMENT'S PROXY WITH NO
ADDITIONAL INSTRUCTIONS TO THE CONTRARY INDICATED, WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE OF THIS CARD.
THIS ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION Please mark
your vote as [X]
indicated in
this example
1. Election of Directors:
FOR both nominee(s) WITHHOLD
(Except as marked to AUTHORITY
the contrary) to vote for both nominee(s)
[_] [_]
Nominees: 01 Gabriel A. Battista
02 Robert M. Gavin, Jr.
For a three-year term expiring at the 2006 Annual Meeting of Stockholders.
(Instructions: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below.)
________________________________________________________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE
SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES FOR
DIRECTOR LISTED. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT
TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
Please be sure to sign and date this Proxy below.
Dated:____________________________________________________________________, 2003
________________________________________________________________________________
Stockholder sign above
________________________________________________________________________________
Co-holder (if any) sign above
Detach below card, sign, date, and mail in postage paid envelope provided.
PLEASE ACT PROMPTLY AND SIGN, DATE AND MAIL TODAY
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
REVOCABLE PROXY
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
Proxy Solicited on Behalf Of The Board of Directors
The undersigned, revoking all previous proxies, hereby appoints Michael D.
Chamberlain and Richard A. Blumenthal, and each of them acting individually, as
attorney and proxy of the undersigned, with full power of substitution, to vote,
as indicated on the reverse side and in their discretion upon such other matters
as may properly come before the meeting, all shares which the undersigned would
be entitled to vote at the Annual Meeting of the Stockholders of the Company to
be held on February 21, 2003, and at any adjournment or postponement thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT.
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEAR ON YOUR STOCK
CERTIFICATE. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF SIGNOR IS A CORPORATION,
PLEASE SIGN WITH FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER OR OFFICERS
AND AFFIX THE CORPORATE SEAL. WHERE STOCK IS ISSUED IN THE NAME OF TWO (2) OR
MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN.
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION Please mark
your vote as [X]
indicated in
this example
1. Election of Directors:
FOR both nominee(s) WITHHOLD
(Except as marked to AUTHORITY
the contrary) to vote for both nominee(s)
[_] [_]
Nominees: 01 Gabriel A. Battista
02 Robert M. Gavin, Jr.
For a three-year term expiring at the 2006 Annual Meeting of Stockholders.
(Instructions: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below.)
________________________________________________________________________________
Please be sure to sign and date this Proxy below.
Dated:____________________________________________________________________, 2003
________________________________________________________________________________
Stockholder sign above
________________________________________________________________________________
Co-holder (if any) sign above
Detach below card, sign, date, and mail in postage paid envelope provided.
PLEASE ACT PROMPTLY AND SIGN, DATE AND MAIL TODAY
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
VOTING INSTRUCTIONS TO TRUSTEES
THE UNDERSIGNED PARTICIPANT IN SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
RETIREMENT SAVINGS PLAN (401k) ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS, DATED JANUARY 21, 2003, AND HEREBY
INSTRUCTS THE TRUSTEES TO VOTE ALL SHARES WHICH THE UNDERSIGNED MAY BE ENTITLED
TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS OF THE CORPORATION TO BE HELD ON
FEBRUARY 21, 2003, AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
ANY SHARES HELD BY THE TRUSTEES FOR WHICH THE TRUSTEES HAVE NOT RECEIVED
VOTING INSTRUCTIONS PRIOR TO THE ANNUAL MEETING WILL BE VOTED BY THE TRUSTEES IN
THEIR DISCRETION CONSISTENT WITH THEIR FIDUCIARY DUTIES. ANY SHARES HELD BY THE
TRUSTEES FOR WHICH THEY HAVE BEEN INSTRUCTED TO SIGN MANAGEMENT'S PROXY WITH NO
ADDITIONAL INSTRUCTIONS TO THE CONTRARY INDICATED, WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE OF THIS CARD.
THIS ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^