DEF 14A: Definitive proxy statements
Published on March 30, 2001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
DELUXE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
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:
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[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
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DELUXE CORPORATION
3680 Victoria Street N.
Shoreview, MN 55126-2966
P.O. Box 64235
St. Paul, MN 55164-0235
www.dlx.com
[LOGO]
DELUXE
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NOTICE OF MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 2001
To the Shareholders of Deluxe Corporation:
The 2001 regular meeting of shareholders will be held in the Continental
Room at the Holiday Inn - St. Paul at 1201 W. County Road E, St. Paul, Minnesota
55112 on Tuesday, May 8, 2001, at 1:30 p.m. Central Daylight Time for the
following purposes:
1. to elect 10 Directors to hold office until the 2002 regular meeting of
shareholders;
2. to consider and act upon a proposal to ratify the selection of
PricewaterhouseCoopers LLP as independent auditors of the Company for
the year ending December 31, 2001; and
3. to take action on any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 12, 2001 are
entitled to vote at the meeting and at any adjournment thereof.
Whether or not you expect to be present at the meeting, please complete,
sign, date and return the enclosed proxy card as soon as possible to ensure the
presence of a quorum and save the Company further solicitation expense. For your
convenience, a return envelope is enclosed that requires no postage if mailed in
the United States. If you attend the meeting in person, your proxy will be
returned to you upon request. Telephonic and Internet voting are also permitted
in accordance with the instructions set forth on your proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Anthony C. Scarfone
Anthony C. Scarfone
Dated: March 30, 2001 Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE OR TAKE ADVANTAGE OF
THE OPTION TO VOTE BY TELEPHONE OR VIA THE INTERNET. THANK YOU.
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DELUXE CORPORATION
3680 VICTORIA STREET N., SHOREVIEW, MINNESOTA 55126-2966
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PROXY STATEMENT
2001 REGULAR MEETING OF SHAREHOLDERS TO BE HELD
MAY 8, 2001
INFORMATION CONCERNING SOLICITATION AND VOTING
The Board of Directors (the "Board") and management of Deluxe Corporation
(the "Company") are asking you to return the enclosed proxy card. It is your
ballot for voting on the items of business at the 2001 Meeting of Shareholders
(the "Meeting"). The items of business are discussed in this proxy statement and
in the Notice of Meeting of Shareholders, which you received along with this
proxy statement.
The Meeting will be held in the Continental Room at the Holiday Inn - St.
Paul at 1201 W. County Road E, St. Paul, Minnesota 55112 on Tuesday, May 8,
2001, at 1:30 p.m., Central Daylight Time. If for some reason the Meeting is
rescheduled to a later date or time, your proxy will continue to be valid unless
expressly cancelled or changed.
Your shares will be voted at the Meeting according to your proxy
instructions. IF YOUR PROXY INSTRUCTIONS DO NOT SPECIFY HOW YOU WANT TO VOTE,
YOUR PROXY WILL BE VOTED IN FAVOR OF EACH OF THE ITEMS OF BUSINESS. These proxy
solicitation materials are first being sent to shareholders on or about April 6,
2001.
In order to vote at the Meeting, you must be a shareholder of record of the
Company as of the close of business on March 12, 2001. As of that date, there
were 70,646,880 shares of the Company's Common Stock outstanding. The Company
does not have any other class of capital stock outstanding.
You have one vote for each share you own and you can vote those shares for
each item of business addressed at the Meeting. Shareholders have the option to
vote using the Internet, by telephone or by mailing back the enclosed proxy
card. If you want to vote using the Internet or by telephone, please see the
proxy card for instructions.
The total number of votes cast by all shareholders either present at the
Meeting or voting by proxy will determine whether an item of business is
approved. A majority of the outstanding shares must be represented in person or
by proxy in order to consider the items of business at the Meeting. Shares as to
which the holder has abstained on any matter (or has withheld authority as to a
director) will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the Meeting and, for
purposes of determining the approval of each matter as to which the shareholder
has abstained, as having not been voted in favor of such matter. If a broker
submits a proxy that indicates the broker does not have discretionary authority
as to certain shares to vote on one or more matters, those shares will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the Meeting, but will not be considered
as present and entitled to vote with respect to such matters.
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A shareholder may revoke his or her proxy at any time before it is voted by
written notice addressed to the Secretary at the offices of the Company, by
filing another proxy bearing a later date with the Secretary, by submitting a
new proxy by telephone or through the Internet, or by appearing at the Meeting
and voting in person.
The Company pays all of the costs of sending out proxy materials and
encouraging shareholders to vote. The Company's directors, officers and regular
employees may use mail, Internet, telephone and personal calls to encourage
shareholders to vote. They do not, however, receive additional compensation for
soliciting shareholder proxies. The Company has also retained, at its expense,
Corporate Investor Communications, Inc., a proxy solicitation firm, to assist in
the solicitation of proxies. The cost of such proxy solicitation services is
expected to be less than $8,500. The Company may also reimburse brokers, banks
and others holding shares in their names that are beneficially owned by others
for the cost of forwarding proxy materials and obtaining proxies from their
principals.
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ITEM 1: ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Board of Directors has set the size of the Board at 10 persons and
recommends that the persons listed below be elected directors to serve until the
2002 regular meeting of the Company's shareholders. The affirmative vote of the
holders of a majority of the shares of Common Stock entitled to vote and present
in person or by proxy at the Meeting will be necessary to elect each of the
nominees listed below. All of the nominees are presently directors of the
Company whose terms of office will expire at the Meeting.
CALVIN W. AURAND, JR., age 70, has been a director of the Company since November
1996. He has been the Chief Executive Officer of Premier Graphics, Inc. since
February 2001 and the Chairman since March 2001. He was the Chairman of the
board of directors, President and Chief Executive Officer of Banta Corporation
("Banta") from July 1989 until his retirement in April 1995. Banta is a printing
and supply-chain management services company.
RONALD E. EILERS, age 53, has been a director of the Company since August 2000.
He has served as President and Chief Operating Officer of the Company since
December 29, 2000. From August 1997 to December 2000, Mr. Eilers was a Senior
Vice President of the Company and managed its Paper Payment Systems business.
From February 1997 to August 1997, Mr. Eilers was President of Deluxe Direct,
Inc., a subsidiary of the Company, and from October 1996 was Vice President of
Deluxe Direct, Inc. In 1995, Mr. Eilers became President of PaperDirect, Inc., a
subsidiary of the Company, and the manager of the Company's business forms
division.
DANIEL D. GRANGER, age 52, has been a director of the Company since November
2000. He has been the Chief Executive Officer of Catalina Marketing Corporation
("Catalina") since July 1998 and became Chairman in July 2000. Catalina provides
strategic targeted marketing solutions for consumer goods companies and
retailers. He served as President and Chief Operating Officer of Catalina from
April 1998 to July 1998 and has also served as a director since April 1998.
Previously, Mr. Granger served as President of Catalina Marketing Services from
January 1996 to April 1998.
BARBARA B. GROGAN, age 53, has been a director of the Company since 1991. She is
the founder of Western Industrial Contractors of Denver, Colorado ("Western
Industrial") and has served as its President and Chief Executive Officer since
1982. Western Industrial specializes in the moving and installation of heavy
industrial equipment. Ms. Grogan also serves as a director of Pentair, Inc. and
Apogee Enterprises, Inc.
CHARLES A. HAGGERTY, age 59, has been a director of the Company since December
2000. He was chairman of the board of directors of Western Digital Corporation
("Western Digital") from July 1993 until his retirement in June 2000. Mr.
Haggerty was also Chief Executive Officer of Western Digital from July 1993 to
January 2000 and was President from June 1992 to July 1993. Western Digital is a
manufacturer of hard disk drives. Mr. Haggerty is also a director of Beckman
Coulter, Inc., Pentair, Inc., and Vixel Corporation.
DONALD R. HOLLIS, age 65, has been a director of the Company since November
1996. He has served as President of DRH Strategic Consulting, Inc., a consulting
firm which assists technology firms and financial institutions in developing and
improving their products based on information technology, since January 1996.
Mr. Hollis also serves as President of Hollis Enterprises of Vermont, Inc.,
which provides services to consumers and small businesses. Mr. Hollis is also a
director of the Illinois Institute of Technology and Advocate Health Care.
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CHERYL E. MAYBERRY, age 45, has been a director of the Company since November
2000. Since December 2000, she has been the Chairperson and Chief Executive
Officer of NiaOnline, LLC., an interactive communications company for diversity
marketing and services, of which she is also a founder. From November 1997 to
November 2000, Ms. Mayberry served as Senior Vice President and General Manager
of worldwide sales and marketing for Open Port Technology, Inc., a provider of
Internet infrastructure messaging solutions. From September 1992 to July 1997,
she served as Vice President of Sales (Americas) for 3Com Corporation (formerly
US Robotics), a provider of networking products and solutions.
LAWRENCE J. MOSNER, age 59, has been a director of the Company since August
1999. He has served as Chairman of the Board and Chief Executive Officer of the
Company since the spin-off of eFunds Corporation from the Company, which was
completed on December 29, 2000. Prior to this position, Mr. Mosner served as
Vice Chairman, a position he assumed in August 1999. Before being named as Vice
Chairman, Mr. Mosner served as Executive Vice President of the Company with
overall responsibility for all of the Company's day-to-day operations from July
1997 until April 1999, at which point he was designated to lead the Company's
initiative to restructure the Company's various businesses and evaluate
strategic alternatives for enhancing shareholder value. From February to July
1997, Mr. Mosner was Senior Vice President of the Company and served as
President of its Paper Payment Systems business. From November 1995 until
February 1997,Mr. Mosner served as Senior Vice President of the Company and
President of Deluxe Direct, Inc. ("DDI"), a subsidiary of the Company that
included all of its business units selling direct to consumers and direct to
small business customers.
STEPHEN P. NACHTSHEIM, age 56, has been a director of the Company since November
1995. He is a corporate vice president of Intel Corporation ("Intel") and has
served as the co-director of Intel Capital since 1998. Mr. Nachtsheim has
publicly announced his intention to retire from Intel in July 2001. From 1994
until he transferred to his current position, Mr. Nachtsheim served as the
General Manager of Intel's mobile/handheld products group. Intel designs and
manufactures integrated circuits, microprocessors and other electronic
components. Mr. Nachtsheim has been employed by Intel since 1981.
ROBERT C. SALIPANTE, age 44, has been a director of the Company since November
1996. He has been General Manager and Chief Executive Officer of ING US Retail
Financial Services, a financial service company ("ING"), since September 2000
when it acquired ReliaStar Financial Corp. ("ReliaStar"). Mr. Salipante was
President and Chief Operating Officer of ReliaStar, a holding company
specializing in financial services, from July 1999 through August 2000. Prior to
this position, Mr. Salipante served as Senior Vice President, Personal Financial
Services of ReliaStar from November 1996 through July 1999. He joined ReliaStar
in July 1992 as Senior Vice President and Chief Financial Officer.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF EACH NOMINEE NAMED ABOVE. You may vote for all, some or none of the nominees
for election to the Board. However, you may not vote for more individuals than
the number nominated. Unless authority to vote is withheld, the persons named as
proxies will vote FOR the election of each of the above-listed nominees. If any
of the nominees are not candidates for election at the Meeting, which is not
presently anticipated, the persons named as proxies will vote for such other
person or persons as they may, in their discretion, determine.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
There were 11 meetings of the Board of Directors in 2000.
In 2000, the Board of Directors had an Audit Committee, a Compensation
Committee and a Committee on Board Affairs, each comprised entirely of directors
who are not employees of the Company ("Independent Directors"). Each director
attended, in person or by phone, at least 75% of the meetings of both the Board
and Board committees on which he or she served during the period in which they
served in such capacities. No family relationship exists between any of the
nominees for director of the Company. These committees of the Board have
responsibilities as follows:
AUDIT COMMITTEE
The Audit Committee reviews the Company's audited financial statements with
management and significant accounting matters with the Company's outside
auditors; receives and evaluates disclosures from the outside auditors relating
to their independence; reviews the performance of the outside auditors and
recommends the engagement or replacement of those auditors; annually reviews and
assesses the adequacy of its charter; takes such other actions as may be
required of audit committees under rules promulgated by the Securities and
Exchange Commission (the "Commission") or the New York Stock Exchange; and is
authorized to take such other actions as the Committee determines to be
necessary or appropriate relating to the Company's financial management, systems
of financial record keeping and financial reporting.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for, among other things,
developing an executive compensation philosophy and related administrative
policies; reviewing comparative market data for the CEO and the other officers
and ensuring that the Company's compensation programs are competitive; approving
the design of short- and long-term incentive compensation programs for the
officers and the other key management personnel; establishing performance
measurements and compensation awards under the Company's short- and long-term
incentive compensation programs for the officers and other key management
personnel; determining the compensation of the CEO; reviewing and approving the
compensation of the Company's other officers; and administering the Company's
equity-based compensation programs.
COMMITTEE ON BOARD AFFAIRS
The Committee on Board Affairs, in consultation with the Company's
management, identifies prospective nominees for election to the Board and
reviews their qualifications. The Committee on Board Affairs will consider
nominees to the Board of Directors recommended by shareholders. Such
recommendations should be submitted by mail, addressed to the Committee on Board
Affairs in care of the Secretary of the Company. Shareholders wishing to
nominate directors must comply with the procedures set forth in the Company's
Bylaws. The Committee on Board Affairs also considers matters relating to
corporate governance and management succession, and reports on such matters to
the Board of Directors.
FINANCE COMMITTEE
The Board of Directors established a Finance Committee comprised solely of
Independent Directors on January 26, 2001. The Finance Committee provides
assistance to the Board of Directors in evaluating financing strategies,
financial policies and other matters affecting the capital structure of the
Company. The Finance Committee is responsible for, among other things,
evaluating large acquisitions and divestitures, reviewing and recommending
policies concerning corporate finance matters and shareholder
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dividends, and reviewing and recommending strategies to the Board of Directors
concerning Company securities.
The following table shows the number of meetings during the last fiscal
year and the names of the directors serving on each committee as of March 12,
2001.
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* Committee Chairperson
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive compensation for
their service on the Board other than their compensation as employees. During
2000, Independent Directors of the Company each received a $50,000 annual Board
retainer, payable quarterly. An additional $12,500 annual committee retainer was
paid to the chair of each committee and a $7,500 annual committee retainer was
paid to each other member of a committee. Fees are not paid for attendance at
meetings. In addition to the foregoing, Independent Directors may receive
compensation for the performance of duties assigned by the Board or its
committees that are considered beyond the scope of the ordinary responsibilities
of Directors or committee members.
In November 1997, the Company adopted the Deluxe Corporation Non-Employee
Director Stock and Deferral Plan (the "Director Plan"). The purpose of the
Director Plan is to provide an opportunity for Independent Directors to increase
their ownership of Common Stock and thereby align their interest in the
long-term success of the Company with that of the Company's other shareholders.
Under the Director Plan, each Independent Director must irrevocably elect to
receive, in lieu of cash, shares of Common Stock having a fair market value
equal to at least 50% of his or her annual board and committee retainer
(collectively, the "Retainer"). The shares of Common Stock receivable pursuant
to the Director Plan are issued quarterly or, at the option of the Independent
Director, credited to the director in the form of deferred restricted stock
units. These units vest and are converted into shares of Common Stock on the
earlier of the tenth anniversary of February 1st of the year following the year
in which the Independent Director ceases to serve on the Board or such other
date as is elected by the Independent Director in his or her deferral election.
Each restricted stock unit receives dividend equivalent payments equal to
the dividend payment on one share of Common Stock. Any restricted stock units
issued pursuant to the Director Plan will vest and be converted into shares of
Common Stock in connection with certain defined changes of control of the
Company. All shares of Common Stock issued pursuant to the Director Plan are
issued under the Stock
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Incentive Plan and must be held by the Independent Director receiving them for a
minimum period of six months from the date of issuance, or such longer period as
may be required by the Securities Exchange Act of 1934.
Each new Independent Director elected to the Board after December 31, 2000
receives a one-time grant of 1,000 shares of restricted stock under the Stock
Incentive Plan as of the date of his or her initial election to the Board of
Directors. The restricted stock vests in equal installments on the dates of the
Company's regular shareholders' meetings in each of the three years following
the date of grant, provided that the Director remains in office immediately
following the regular meeting. Restricted stock awards also vest immediately
upon an Independent Director's retirement from the Board in accordance with the
Company's policy with respect to mandatory retirement.
Under the provisions of a previous Board retirement plan that has been
replaced by the Director Plan, Independent Directors with at least five years of
service as an Independent Director who resign or are not nominated for
re-election will receive an annual payment equal to the annual Board retainer in
effect on July 1, 1997 ($30,000 per year) for the number of years during which
the retiree served on the Board as an Independent Director prior to October 31,
1997. In calculating a Director's eligibility for benefits under this plan,
partial years of service are rounded up to the nearest whole number. Retirement
payments do not extend beyond the lifetime of the retiree and are contingent
upon the retiree's remaining available for consultation with management and
refraining from engaging in any activity in competition with the Company.
Independent Directors Aurand, Grogan, Hollis, Nachtsheim and Salipante are
eligible for benefits under this plan. Allen F. Jacobson, who retired from the
Board in January 1999, is entitled to receive benefits under this plan for up to
seven years following his retirement and Whitney MacMillan, who retired from the
Board in May 1999, is eligible to receive benefits for up to 10 years following
his retirement. Dr. Renier, who retired from the Board in August 2000, is
eligible to receive benefits for up to eight years following his retirement.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 12, 2001, the number of shares
of Common Stock beneficially owned by i) each person who is known by the Company
to beneficially own more than five percent of the Company's outstanding Common
Stock, ii) each director of the Company, iii) each person named in the Summary
Compensation Table that appears elsewhere in this Report (the "Named Executive
Officers"), and iv) all of the current directors and executive officers of the
Company as a group. Except as otherwise indicated, the shareholders listed in
the table have sole voting and investment powers with respect to the Common
Stock owned by them.
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* Less than 1%.
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(1) Based on a Schedule 13G, filed with the Commission on February 14, 2001, by
ESL Partners, L.P. (5,854,562 shares), ESL Limited (1,362,910 shares), ESL
Institutional Partners, L.P. (152,435 shares) and ESL Investors, L.L.C.
(1,791,293 shares). These entities (the "ESL Reporting Group") each have sole
voting and dispositive power with respect to the number of shares indicated
after their respective names and the members of the ESL Reporting Group are,
collectively, the beneficial owners of an aggregate of 9,161,200 shares of the
Company's Common Stock, or 12.97% of outstanding shares on March 12, 2001.
(2) Based on a Schedule 13G, filed with the Commission on February 13, 2001, by
FMR Corp. ("FMR"), Edward C. Johnson 3d, chairman of FMR, Abigail P. Johnson, a
director of FMR, and Fidelity Management & Research Company ("Fidelity"), an
investment advisor and wholly owned subsidiary of FMR. According to such
Schedule 13G, Mr. Johnson and FMR, through its control of Fidelity, which serves
as investment advisor to various registered investment companies (the "Funds"),
and the Funds each has sole power to dispose of 3,217,820 shares (or 4.55% of
the outstanding shares on March 12, 2001) owned by the Funds. Neither Mr.
Johnson nor FMR has the sole power to vote or direct the voting of the shares
held by the Funds, which power resides with the Funds' Boards of Trustees under
written guidelines. Mr. Johnson and FMR, through its control of Fidelity
Management Trust Company, a bank which is a wholly owned subsidiary of FMR
("FMTC"), may also be deemed the beneficial owners of an additional 726,238
shares (or 1.03% of the outstanding shares on March 12, 2001), held by
institutional accounts managed by FMTC. FMR and Mr. Johnson each have sole
dispositive and voting power with respect to 115,938 of such shares and sole
dispositive and no voting power with respect to 610,300 of such shares. Members
of the Johnson family, including Edward C. Johnson 3d and Abigail P. Johnson,
may be deemed to form a controlling group with respect to FMR. Strategic
Advisers, Inc., an investment adviser and a wholly owned subsidiary of FMR has
sole dispositive power, but not the sole voting power, with respect to certain
securities held for its clients. As such, FMR's beneficial ownership of shares
of Common Stock may include shares beneficially owned through Strategic
Advisers, Inc. Edward C. Johnson is the chairman of Fidelity International
Limited ("FIL") and Mr. Johnson and his family own shares of FIL representing
approximately 39.89% of the total voting power of FIL's outstanding securities.
FIL is the beneficial owner of 272,100 shares, or .385% of the outstanding
shares on March 12, 2001. FMR and FIL are each of the view that they are not
required to attribute to other the beneficial ownership of securities
beneficially owned by them. However, in the February 13, 2001 Schedule 13G, FMR
voluntarily included the shares beneficially owned by FIL in the number of
shares beneficially owned by FMR.
(3) Includes 278,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days.
(4) Includes 102,133 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days. Excludes 7,451
restricted stock units granted on January 26, 2001.
(5) Includes 42,433 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days.
(6) Includes 35,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days.
(7) Includes 40,344 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days.
(8) Includes 796,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days. Mr. Blanchard
left the employ of the Company on December 29, 2000.
(9) Includes 26,200 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days. Ms. Martin left
the employ of the Company on January 31, 2001.
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(10) Includes 1,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days. Excludes 3,525
restricted stock units received in lieu of directors' fees pursuant to the
deferral option under the Deluxe Corporation Non-Employee Stock and Deferral
Plan.
(11) Includes 1,000 shares of restricted stock that vest in equal installments
on the dates of the Company's regular shareholders' meetings in each of the
three years following the date of grant. Excludes 502 restricted stock units
received in lieu of directors' fees pursuant to the deferral option under the
Deluxe Corporation Non-Employee Stock and Deferral Plan.
(12) Includes 4,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days. Excludes 5,048
restricted stock units received in lieu of directors' fees pursuant to the
deferral option under the Deluxe Corporation Non-Employee Stock and Deferral
Plan.
(13) Includes 10,000 shares held by the Haggerty Family Foundation (as to which
Mr. Haggerty disclaims beneficial ownership) and 1,000 shares of restricted
stock that vest in equal installments on the dates of the Company's regular
shareholders' meetings in each of the three years following the date of the
grant. Excludes 99 restricted stock units received in lieu of directors' fees
pursuant to the deferral option under the Deluxe Corporation Non-Employee Stock
and Deferral Plan.
(14) Includes 1,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days and 3,036 shares
held by the Hollis Family Limited Partnership I.
(15) Includes 1,000 shares of restricted stock that vest in equal installments
on the dates of the Company's regular shareholders' meetings in each of the
three years following the date of grant.
(16) Includes 2,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days and 1,000 shares
held by the Nachtsheim Family Trust. Excludes 5,103 restricted stock units
received in lieu of directors' fees pursuant to the deferral option under the
Deluxe Corporation Non-Employee Stock and Deferral Plan.
(17) Includes 1,000 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days.
(18) Includes 577,361 shares receivable upon the exercise of options that are
currently exercisable or will become exercisable within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
related regulations requires the Company's directors, executive officers, and
any persons holding more than 10% of the Company's Common Stock (collectively,
"Reporting Persons") to report their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership to the Commission and the New
York Stock Exchange. Specific due dates for these reports have been established,
and the Company is required to disclose in this proxy statement any failure of a
Reporting Person to file a required report by the applicable due date during
2000. Based on its review of the reports and written representations submitted
to it, the Company believes that each Reporting Person timely filed all required
reports during this period.
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COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Company's officer compensation program is designed to attract and
retain highly skilled and capable executives and other individuals who will be
responsible for ensuring the Company's future success. The compensation program
is intended to align the interests of shareholders and management by linking
both short- and long-term compensation to corporate performance, encouraging
stock ownership by management and rewarding financial performance that increases
total shareholder return.
The Compensation Committee (the "Compensation Committee") of the Board of
Directors has overall responsibility for compensation actions affecting the
Company's senior executives. The Compensation Committee is currently composed of
four members of the Board of Directors who are not current or former officers or
employees of the Company (Mr. Aurand, Chair, Mr. Granger, Mr. Nachtsheim and Mr.
Hollis). Messrs. Granger and Nachtsheim are new members of the Compensation
Committee who were appointed in December 2000, replacing Dr. James J. Renier and
Barbara J. Grogan.
The Compensation Committee is responsible for:
* Developing an executive compensation philosophy and related
administrative policies;
* Reviewing comparative market data for the Chief Executive Officer
(the "CEO") and the Company's other senior executives (together
with the CEO, the "Officers") and ensuring that the Company's
compensation programs are competitive;
* Approving the design of short- and long-term incentive
compensation programs for the Officers and certain other key
management personnel (the "Key Managers");
* Establishing performance measurements and compensation awards
under the Company's short- and long-term incentive compensation
programs for the Officers and Key Managers;
* Determining the compensation of the CEO;
* Reviewing and approving the compensation of the Company's other
Officers; and
* Administering the Company's equity-based compensation programs.
The Compensation Committee has access to and meets with independent
compensation consultants regarding industry and geographic compensation levels
and practices. For 2000, the Compensation Committee used compensation survey
(the "Compensation Survey") data from two peer groups selected from among
publicly-traded companies to provide comparative data on the appropriate mix of
compensation elements and overall compensation levels. The first peer group
included companies engaged in similar industries or facing similar business
challenges to those faced by the Company or which met other selected financial
and quantitative criteria. The second peer group consisted of a general industry
group. In either case, the comparative compensation data was interpolated to
most nearly approximate an industrial company with sales approximately equal to
those of the Company in order to make appropriate compensation comparisons.
OFFICER COMPENSATION PROGRAM
BASE SALARIES - As part of its overall short- and long-term compensation
program, base salaries of the Officers during 2000 were generally set at or near
the median of similar positions in the Compensation Survey.
12
ANNUAL INCENTIVE COMPENSATION - Management and highly compensated employees
selected by the Compensation Committee also participate in the Company's 1996
Annual Incentive Plan (as amended, the "Annual Incentive Plan"). For 2000, a
total of 13 employees received awards pursuant to the Annual Incentive Plan.
The 2000 performance criteria adopted by the Compensation Committee were
intended to provide bonus cash compensation and total cash compensation (base
salary plus incentive) at or around the median of the companies in the
Compensation Survey if the target goals were achieved, rising above such level
if the goals were exceeded. A reduced level of compensation was to have been
paid if the performance goals were not attained, and no incentive compensation
would have been paid if the Company's performance fell below certain thresholds.
For the Named Executive Officers, other than Mr. Eilers, Mr. Feltz, and Mr.
Schlais, the only performance factor that was considered in determining
incentive compensation for 2000 under the Annual Incentive Plan was Deluxe Value
Added ("DVA"), a criterion designed to measure the Company's financial return in
excess of a charge for capital employed. One hundred percent of Mr. Eilers', Mr.
Feltz' and Mr. Schlais' incentive compensation for 2000 was linked to the
financial performance of the Company's former Paper Payment Systems segment, the
operations of which were directed by Mr. Eilers. In establishing performance
measurements for 2000, the Compensation Committee considered that certain
extraordinary or one-time gains and charges and the discontinuation or sale of
certain business units could affect 2000 earnings and, as a consequence, DVA and
business unit performance. The performance measurements were adjusted to
eliminate the impact of such events, although the Compensation Committee
retained the ability to reduce payments to the Officers in its discretion.
As the Company's adjusted DVA and the applicable business unit performances
met or exceeded targeted levels during 2000, incentive compensation payments to
the Officers under the Annual Incentive Plan for 2000 were generally at twice
the targeted award levels, with the exception of Mr. Eilers, Mr. Feltz, and Mr.
Schlais, whose awards were at the targeted level.
LONG-TERM INCENTIVE COMPENSATION - The third element of the Company's
compensation program involves stock options issued under the Company's Stock
Incentive Plan (as amended, the "Stock Incentive Plan"). Each Named Executive
Officer received an option grant in 2000, and the awards are described elsewhere
herein under the caption "Option/SAR Grants in Last Fiscal Year." The level of
long-term incentive grants for 2000 was targeted at or around the median of the
long-term incentive compensation provided by companies in the Compensation
Survey, with the exception of Mr. Blanchard, who received a below-median level
grant due to award caps.
2000 CEO COMPENSATION
Mr. Blanchard became President and Chief Executive Officer of the Company
effective May 1, 1995 and was elected Chairman of the Board of Directors on May
6, 1996. For 2000, Mr. Blanchard received base compensation of $680,000. Mr.
Blanchard also earned incentive compensation of $1,360,000 under the Annual
Incentive Plan. As more fully described above, Mr. Blanchard's 2000 incentive
compensation was determined by a comparison between the Company's adjusted DVA
and the performance standards set by the Compensation Committee.
Mr. Blanchard was also awarded a 10-year, non-qualified stock option to
purchase 200,000 shares of Deluxe Common Stock in 2000. These options are
exercisable at $20.3769 per share (price adjusted for the spin-off of eFunds
Corporation) and vested immediately upon the spin-off of eFunds Corporation. Mr.
Blanchard was also awarded a 10-year, non-qualified option to purchase 110,270
shares of eFunds Common Stock exercisable at $11.445 per share. This grant
vested immediately upon the spin-off of eFunds Corporation. The Compensation
Committee believes that the terms and amount of Mr. Blanchard's compensation are
reasonable given the scope of Mr. Blanchard's duties and responsibilities.
13
On December 29, 2000, in tandem with the spin-off of eFunds Corporation,
Mr. Lawrence Mosner became Chairman of the Board of Directors and Chief
Executive Officer of the Company. For 2000, Mr. Mosner received base
compensation of $578,750. Mr. Mosner also earned incentive compensation of
$1,113,500 under the Annual Incentive Plan. As more fully described above, Mr.
Mosner's 2000 incentive compensation was determined by a comparison between the
Company's adjusted DVA and the performance standards set by the Compensation
Committee.
Mr. Mosner was also awarded a 10-year, non-qualified stock option to
purchase 80,000 shares of Deluxe Common Stock in 2000 exercisable at $20.3769
(price adjusted for the spin-off of eFunds Corporation) per share and vests in
three equal annual installments commencing on January 14, 2000. Mr. Mosner was
also awarded a 10-year, non-qualified option to purchase 42,500 shares of Deluxe
Common Stock exercisable at $20.3769 per share. This grant vests in three equal
annual installments beginning January 14, 2000 or when the closing price of
Deluxe's Common Stock averages $25.96 per share for 20 consecutive Trading Days,
whichever comes first. The Compensation Committee believes that the terms and
amount of Mr. Mosner's compensation are reasonable given the scope of Mr.
Mosner's duties and responsibilities.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of four Independent
Directors. The Company has no compensation committee interlocks - that is, no
officer of the Company serves as a director or a compensation committee member
of a company that has an officer or former officer serving on the Company's
Board of Directors or the Compensation Committee.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE
The Compensation Committee believes that it is important for the Company to
continue to be able to take all available tax deductions with respect to the
compensation paid to its executive officers. Therefore, the Company has taken
such actions as may be necessary under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), to continue to qualify for all available
tax deductions related to executive compensation. The Omnibus Budget
Reconciliation Act of 1993 created limitations governing the deductibility of
compensation in excess of $1 million paid to the five Named Executive Officers
of publicly traded companies. The Committee expects that all performance-based
compensation paid in 2000 to the Named Executive Officers under the plans
described above will qualify for deductibility, either because the compensation
is below the threshold for non-deductibility provided in Section 162(m) or
because the payment of such compensation complies with the provisions of Section
162(m), and provide the Company's senior management team with a competitive
level of compensation.
MEMBERS OF THE
COMPENSATION COMMITTEE
CALVIN W. AURAND, JR., CHAIR
DANIEL D. GRANGER
DONALD R. HOLLIS
STEPHEN P. NACHTSHEIM
14
SUMMARY COMPENSATION TABLE
The following table shows the cash and non-cash compensation for each of
the last three fiscal years awarded to or earned during the period by the Chief
Executive Officer of the Company, the next four most highly compensated
executive officers of the Company and two former executive officers of the
Company who would have been among the most highly compensated executives of the
Company but for the fact that they were not executive officers as of the end of
fiscal year 2000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
- ------------------
(1) Amounts shown as base salary and bonus are before any deferrals. Bonus
compensation is earned under the Company's Annual Incentive Plan. Recipients of
awards under the Annual Incentive Plan are entitled to elect to receive all or a
portion of their incentive compensation in the form of shares of restricted
stock or restricted stock units (whichever option is made available by the
Compensation Committee). If an election is made to receive shares of restricted
stock or restricted stock units, the amount of the cash forgone is increased by
25 percent in determining the number of shares of restricted
15
stock or restricted stock units awarded. For awards earned during 2000 under the
Annual Incentive Plan, restricted stock units were granted on January 26, 2001
in lieu of cash compensation as follows: 7,451 units ($150,813) to Mr. Eilers.
For awards earned during 1999 under the Annual Incentive Plan, restricted stock
units were granted on January 28, 2000 in lieu of cash compensation as follows:
16,801 units ($440,000) to Mr. Mosner; 2,386 units ($62,500) to Mr. Schlais; and
3,093 units ($81,000) to Ms. Martin. For awards earned during 1998 under the
Annual Incentive Plan, restricted stock units were granted on January 29, 1999
in lieu of cash compensation as follows: 24,701 units ($880,000) to Mr. Mosner;
4,608 units ($164,184) to Mr. Eilers; 3,510 units ($125,044) to Mr. Schlais; and
3,929 units ($140,000) to Ms. Martin. The imputed value of the restricted stock
units received by such persons is included in the bonus compensation amounts
shown above and is based on the closing price of the Company's Common Stock on
the date of grant of such units ($20.24 on January 26, 2001, $26.1875 on January
28, 2000 and $35.625 on January 29, 1999). The units vest on the anniversary of
the date of grant, subject to acceleration in the event of the death, disability
or approved retirement of the holder and upon certain defined changes of control
of the Company. If the employment of the holder is terminated without cause or
if the holder voluntarily resigns prior to the vesting of the holder's
restricted stock units, the holder will be entitled to receive a cash payment
equal to the amount of incentive compensation foregone in exchange for such
units. Following the vesting of a restricted stock unit, the holder thereof is
entitled to receive one share of Common Stock for each restricted stock unit
that vests. Each restricted stock unit also entitles the holder to receive
payments prior to the vesting date in an amount equal to the dividend payment on
one share of Common Stock. Such amount is payable at the time the corresponding
dividend is paid to the Company's shareholders.
(2) Other annual compensation for the year 2000 includes dividend equivalents
paid in cash to those officers that held restricted stock units at the time of
the spin-off of eFunds Corporation, pursuant to the terms of their restricted
stock unit agreements in amounts equal to the value of the eFunds stock that
they would have received had the restricted stock units been shares of Deluxe
Common Stock outstanding on the record date of the spin-off, along with an
additional payment to compensate the recipient with respect to income taxes
related to the dividend equivalent amounts. The dividend equivalent amounts and
the additional tax payments for each such officer were as follows: Mr. Mosner:
$85,114 and $11,794; Mr. Feltz: $40,528 and $10,416; Mr. Schlais: $12,087 and
$1,675; and Ms. Martin: $15,669 and $2,171.
(3) The valuation shown in the table is based on the closing price of the Common
Stock on the date the awards indicated were granted. In addition to the awards
described in footnote 1, a grant of 8,000 restricted shares was made to Mr.
Feltz on October 29, 1999. This grant was modified on August 3, 2000 to
accelerate the vesting of the shares to December 30, 2000. The value of the
restricted shares on the date of the grant modification was $21.75. At the time
that the restriction lapsed on December 30, 2000, the value of the shares was
$20.20 per share.
(4) The exercise price of the options, but not the number of securities
underlying the options, was adjusted in connection with the spin-off of eFunds
Corporation, which was completed on December 29, 2000. This does not include
options to acquire eFunds Common Stock, which were issued in connection with the
spin-off with respect to options to acquire the Company's Common Stock for each
of fiscal years 2000, 1999 and 1998 respectively: Mr. Mosner: 111,651, 44,109,
and 44,109 options; Mr. Eilers: 36,527, 19,637, 27,568 options; Mr. Feltz:
13,784, 5,514, 5,514 options; Ms. St. Charles: 8,270, 13,784, 8,271 options; Mr.
Schlais: 8,270, 8,270, 9,924 options; Mr. Blanchard: 110,271, 102,001, 97,039
options; and Ms. Martin: 19,298, 8,270, 4,411 options.
(5) All Other Compensation consists of (a) contributions to qualified retirement
plans, (b) amounts credited to a non-qualified, supplemental retirement plan
(defined contribution and profit sharing allocations in excess of Employee
Retirement Income Security Act of 1974 (ERISA) limitations) and (c) amounts
credited to a non-qualified deferred compensation plan as benefit plan
equivalents. For 2000, these amounts were as follows: for Mr. Mosner $21,500,
$36,475 and $4,532, respectively; for Mr. Eilers $15,420, $20,120 and $8,333,
respectively; for Mr. Feltz $16,400, $7,910 and $0, respectively; for Ms. St.
Charles $15,750, $7,700 and $2,060, respectively; for Mr. Schlais $17,000,
$6,621 and $0, respectively; for Mr. Blanchard $22,100, $119,000 and $0,
respectively; and for Ms. Martin $21,500, $11,855 and $0, respectively. The
qualified retirement plans referred to in clause (a) above, consisting of a
defined
16
contribution plan and profit sharing plan, and the non-qualified, supplemental
retirement plan referred to in clause (b) above provide that contributions vest
when made or declared.
All Other Compensation also includes income recognized from relocation expense
reimbursement in excess of deductible amounts, incidental relocation
compensation and guaranteed minimum resale price allowances in respect of
residences sold that is paid to executives under the Company's relocation
program. The persons named above recognized income in the following amounts
under this program: Mr. Feltz, $37,039 (2000)and $78,045 (1999); and Mr. Mosner,
$27,123 (1998). Taxes reimbursed as a result of such recognition are reported
under Other Annual Compensation in the corresponding years.
All Other Compensation also includes income associated with the termination of
employment of Mr. Blanchard and Ms. Martin in the following amounts for 2000:
Mr. Blanchard, $3,761,632 paid out under his Supplemental Retirement Plan and
$106,801 in accrued vacation pay; and Ms. Martin, payments totaling $335,000
under her Retention and Executive Severance Agreements and $51,450 in accrued
vacation pay.
(6) Ms. St. Charles' 1999 all other compensation amount includes an additional
$25,000 retention payment.
(7) Mr. Schlais' 2000 all other compensation amount includes a retention payment
of $200,000 (equal to 12 months of his May 1, 1999 salary) paid in January 2001.
Mr. Schlais' 1999 all other compensation amount includes an additional $25,000
retention payment.
(8) Mr. Blanchard left the employ of the Company on December 29, 2000.
(9) Ms. Martin ceased being an executive officer of the Company as of December
29, 2000 and left the employ of the Company on January 31, 2001.
17
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants during 2000 to the Named
Executive Officers and the value of the options held by these officers at the
end of fiscal year 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
(1) The price, but not the number, of all outstanding options was adjusted in
connection with the spin-off of eFunds Corporation on December 29, 2000, in
order to preserve the intrinsic value of the options. The options shown were
granted at an exercise price not less than the fair market value of the Common
Stock on the date of grant.
(2) Except as indicated below, options are exercisable in cumulative
installments of 33-1/3 percent on each anniversary of the date of grant,
provided that the option holder is then employed by the Company. The vesting of
all of the options is subject to acceleration in the event of the death,
disability or approved retirement of the optionee and each option will remain
exercisable for a five year period following any such event, although no option
may be exercised after the expiration of its originally scheduled term. In
addition, the vesting of the options is subject to acceleration in the event of
certain defined changes of control of the Company. If the employment of the
holder is terminated by the Company without cause, the holder's options will
remain exercisable for a five-year period following such termination, although
no option may be exercised after the expiration of its term. No stock
appreciation rights ("SARs") were granted to any of the Named Executive Officers
during 1998/1999/2000. All of the options shown contain a reload feature.
(3) The 5 and 10 percent assumed annual rates of compounded stock price
appreciation are mandated by the rules of the Commission and do not represent
the Company's estimate or projection of the Company's future Common Stock
prices. These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock and overall stock market conditions.
18
(4) On December 11, 2000, in connection with the spin-off of eFunds, each holder
of options to purchase Deluxe Common Stock received an option to purchase eFunds
Common Stock, which was intended to preserve the value of the original Deluxe
options. This table excludes eFunds options granted to the Named Executive
Officers as follows: Mr. Mosner 264,929 options with a weighted average exercise
price of $12.8099 and a weighted average expiration date of 10/27/2008; Mr.
Eilers 90,082 options with a weighted average exercise price of $13.3866 and a
weighted average expiration date of 10/31/2008; Mr. Feltz 34,424 options with a
weighted average exercise price of $13.1312 and a weighted average expiration
date of 4/13/2008; Ms. St. Charles 33,632 options with a weighted average
exercise price of $13.9493 and a weighted average expiration date of 10/31/2008;
Mr. Schlais 27,567 options with a weighted average exercise price of $13.6155
and a weighted average expiration date of 12/01/2008; Mr. Blanchard 438,880
options with a weighted average exercise price of $13.4521 and a weighted
average expiration date of 1/31/2006; and Ms. Martin 36,500 options with a
weighted average exercise price of $13.0831 and a weighted average expiration
date of 3/28/2009.
(5) These options are exercisable in full on January 14, 2005.
(6) The vesting of the options shown as granted to Mr. Blanchard and Ms. Martin
was accelerated in connection with their terminations of employment with the
Company.
AGGREGATED FISCAL YEAR-END OPTION/SAR VALUES(1)
(1) None of the Named Executive Officers exercised any options or held or
exercised any SARs in 2000.
(2) The value of unexercised options at December 31, 2000 is determined by
multiplying the difference between the exercise prices of the options and the
closing price of the Company's Common Stock on the New York Stock Exchange on
December 29, 2000 ($20.20 per share) by the number of shares underlying the
options.
(3) All of the unexercisable options described above will vest and become fully
exercisable upon certain changes of control of the Company.
19
EMPLOYMENT CONTRACTS, RETENTION AGREEMENTS, SEVERANCE AGREEMENTS AND CHANGE OF
CONTROL ARRANGEMENTS
EXECUTIVE RETENTION AGREEMENTS
On December 18, 2000, the Company entered into Executive Retention
Agreements (the "Retention Agreements") with each of Messrs. Mosner, Eilers,
Feltz and Schlais and Ms. St. Charles. (collectively, the "Executives"). The
Retention Agreements are intended to ensure that the Company will receive the
continued dedication and service of the Executives notwithstanding the
possibility or occurrence of a change of control of the Company and to encourage
the full support and participation of the Executives in formulating and
implementing the Company's strategic objectives. The Retention Agreements are
designed to diminish the distractions that could be caused by personal
uncertainties and risks associated with changes of control of the Company by
providing the Executives with assurances regarding their compensation and
benefits expectations under such circumstances.
Under the Retention Agreements, each of the Executives agrees to remain in
the employ of the Company, and the Company agrees to continue to employ each
Executive, until the second anniversary following a "Change of Control" of the
Company (as such term is defined in the Retention Agreements). During such
two-year period (the "Employment Period"), each Executive is entitled to
maintain a position, authority, duties and responsibilities at least
commensurate with the most significant of those held by the Executive during the
180-day period prior to the date (the "Effective Date") of the Change of
Control. The annual base salary of an Executive may not be reduced below that
earned by the Executive during the twelve month period preceding the Effective
Date, provided, however, that the annual base salary may be reduced to an amount
not less than ninety percent (90%) of the base salary in effect on the Effective
Date pursuant to an across-the-board reduction of base salary similarly
affecting all senior officers of the Company. In determining any increase in an
Executive's base salary during the Employment Period, the Executive is to be
treated in a manner consistent with other peer executives. The Executives are
also entitled to receive annual incentive payments during the Employment Period
on the same objective basis as other peer executives (although in no event may
an Executive's annual target bonus opportunity be less favorable to the
Executive than that provided by the Company in the last fiscal year prior to the
Effective Date, and if the bonuses payable to other peer executives during the
Employment Period are not wholly based on objective criteria, the Executive's
annual incentive payment must be at least equal to an amount determined with
reference to Executive's average annual incentive payments for certain periods
ending prior to the Effective Date). During the Employment Period, each
Executive is also entitled to participate in the Company's stock incentive,
savings, retirement, welfare and fringe benefit plans on the same basis as the
Company's other executives, and the opportunities for and benefits to the
Executives under such plans may not generally be reduced from those provided
during the one-year period prior to the Effective Date.
If, during the Employment Period, the Company terminates an Executive's
employment other than for "cause" or "disability" or the Executive terminates
his or her employment for "good reason" (as such terms are defined in the
Retention Agreements), the Executive is entitled to a lump sum payment equal to
the sum of any unpaid base salary, deferred compensation and accrued vacation
pay through the date of termination, plus a prorated annual incentive payment
for the year of termination based on the greater of (I) the Executive's target
bonus under the Company's annual incentive plan in respect of the year in which
the termination occurs or, if greater, for the year in which the Change of
Control occurs (the" Target Bonus") and (II) the annual incentive payment that
the Executive would have earned for the year in which the termination occurs
based upon projecting to the end of such year the Company's actual performance
through the termination date. In addition, the Executive is entitled to receive
a lump sum payment equal to three times the sum of the Executive's annual base
salary and the higher of Target Bonus or the average of Executive's annual
incentive payments for the last three full fiscal years prior to the Effective
Date, plus three times the amount that would have been contributed by the
Company or its affiliates to the retirement and supplemental retirement plans in
which the Executive participated prior to his or her termination in respect of
such sum. Certain resignations and terminations in anticipation of changes of
control also constitute qualifying terminations. The Executives are also
entitled to the continuation of their
20
medical, disability, life and other health insurance benefits for up to a
three-year period after a qualifying termination and to certain out-placement
services.
The Retention Agreements also provide that if any payment or benefit
received or to be received by an Executive, whether or not pursuant to his or
her Retention Agreement, would be subject to the federal excise tax on "excess
parachute payments," the Company will pay to the Executive such additional
amount as may be necessary so that the Executive realizes, after the payment of
such excise tax and any income tax or excise tax on such additional amount, the
amount of such compensation.
The foregoing summary is qualified in its entirety by reference to the
complete text of the Retention Agreements, copies of which were filed as
Exhibits to the Company's Annual Report on Form 10-K for the year ended December
31, 2000.
OTHER MANAGEMENT AGREEMENTS
Under a prior Retention Agreement, Mr. Mosner would have been entitled to
terminate his employment as a result of the Company's restructuring and receive
payment of the benefits provided in that agreement. To retain Mr. Mosner's
services and ensure a smooth and effective transition to the Company's new
structure, the Company has agreed to pay Mr. Mosner the $2.9 million accrued
under this Retention Agreement (plus interest thereon at 8% per annum from April
2000), provided Mr. Mosner remains in the Company's employ through December 31,
2002, unless his employment should be terminated earlier due to his death,
disability or by the Company without cause.
Under an agreement dated May 23, 1999, in order to recognize her efforts in
ensuring a smooth and effective transition to the Company's new organization
structure, Ms. St. Charles will receive a retention bonus in an amount equal to
18 months of her May 1, 1999 salary if she remains an active employee of the
Company through December 31, 2001. Such bonus will be paid out within 30 days of
December 31, 2001.
John A. Blanchard was entitled to receive certain supplemental retirement
benefits from the Company intended to be paid to him annually over a 15 year
period. Upon the spin-off of eFunds Corporation, the Company made a lump-sum
cash payment of $3,761,632 to Mr. Blanchard in satisfaction of its obligations
related to these supplemental retirement benefits.
DEFERRED COMPENSATION PLAN
The Company's Deferred Compensation Plan permits eligible officers to defer
annually receipt of up to 100% of hiring bonuses, up to 100% of base salary and
up to 50% of any annual incentive payment or payments. Amounts deferred under
the Plan are payable on the earliest to occur of the participant's termination
of employment, disability, death or the date for payment selected by the
participant. Deferred amounts are credited with gains and losses based on the
performance of deemed investment options selected by the participant. The
Company may make additional contributions if the deferrals made by a participant
under this Deferred Compensation Plan have the effect of reducing Company
contributions to other compensation-based benefit plans of the Company. During
fiscal year 2000, Mr. Mosner, Mr. Eilers and Ms. St. Charles participated in the
Plan.
EXECUTIVE SEVERANCE AGREEMENTS
The Company entered into an Executive Severance Agreement dated May 12,
2000 with Ms. Martin under which she will receive severance benefits of twelve
months of severance pay based on her salary as of January 31, 2001, and for a
period of six months following the severance payment Ms. Martin may receive an
additional monthly payment during each month in such period equal to the amount,
if any, that her monthly base compensation as of January 31, 2001 exceeds the
monthly compensation earned during that month.
21
On March 1, 2001, the Company entered into Executive Severance Agreements
(the "Severance Agreements") with each of Messrs. Mosner, Eilers, Feltz, Schlais
and Ms. St. Charles (collectively, the "Executives"). The Severance Agreements
are intended to facilitate each Executive's attention to the affairs of the
Company and to recognize the key role they serve within the Company. Under the
Severance Agreements, if an Executive is terminated without cause by the Company
or by the Executive with Good Reason, and provided the Executive signs a
separation and release agreement, that Executive is entitled to receive the
benefits described below. Under these agreements, "Good Reason" includes i) a
material diminution of position, authority, duties or responsibilities; ii) a
material reduction in aggregate compensation and incentive opportunities; iii) a
requirement to relocate more than 50 miles from his or her then-current
location; iv) termination by the Company of the Executive's employment which is
not effected pursuant to written notice specifying the cause of termination; or
v) any request or requirement by the Company that the Executive take any action
or omit to take any action that is inconsistent with or in violation of the
Company's policies.
The Severance Agreements provide for the following benefits in the event
the Executive is terminated by the Company without cause or such Executive
terminates his or her employment for Good Reason: i) twelve months of severance
pay at his or her then-current level of base monthly salary; ii) for a period of
six months following the severance payment (twelve months for Mr. Mosner), an
additional monthly payment during each month in such period equal to the amount,
if any, that his or her monthly base compensation as of termination exceeds the
monthly compensation earned during that month; iii) executive-level outplacement
services for up to twelve months and iv) an additional lump sum payment of
$13,000 to assist with other costs and expenses that may be incurred in
connection with his or her employment transition.
CHANGE OF CONTROL
In addition to the change of control features applicable to some of the
equity-based awards described elsewhere in this Proxy Statement, the Company
utilizes a form of stock option agreement under which the three-year vesting
schedule of the options granted to officers of the Company is subject to
acceleration upon certain defined changes of control of the Company.
22
COMPARATIVE STOCK PERFORMANCE
The table below compares the cumulative total shareholder return on our
Common Stock for the last five fiscal years with the cumulative total return on
the S&P 500 Index and a peer group of companies comprised of the following 10
companies: Banta Corporation, Bowne & Co., John H. Harland Company, Mail-Well,
Inc., Moore Corporation, New England Business Services, Inc., Reynolds &
Reynolds Co., RR Donnelley & Sons Company, Standard Register & Co., and Wallace
Computer Systems, Inc. (the "Peer Group Index"). The companies in the peer group
have been chosen due to their similar lines of business. The Peer Group Index is
also used by the Company to evaluate performance for incentive compensation
purposes.
The graph also presents a comparison to the old peer group index, the S&P
Publishing Industry Group. Due to recent changes to the S&P Global Industry
Classification Standard, the Company believes that the S&P Publishing Industry
Group no longer represents a peer group comparable to the Company because it
represents a much broader and diverse industry grouping, and prospectively, the
Peer Group Index will replace the S&P Publishing Industry Group.
TOTAL SHAREHOLDER RETURN*
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
(DIVIDENDS REINVESTED)
[PLOT POINTS CHART]
* The graph assumes that $100 was invested on December 31, 1995 in each of
Deluxe Common Stock, the S&P 500 Stock Index, the S&P Publishing Industry Group
and the Peer Group Index and that all dividends were reinvested. The Peer Group
Index is weighted by market capitalization.
23
AUDIT COMMITTEE
AUDIT COMMITTEE REPORT
Effective January 31, 2000, the Securities and Exchange Commission adopted
new rules and amendments to current rules relating to the disclosure of
information about companies' audit committees. The new rules require that, for
all votes of shareholders occurring after December 15, 2000, the proxy statement
must contain a report of the Audit Committee addressing several issues
identified in the rules. In addition, the charter of the Audit Committee must be
included as an attachment to the proxy statement at least once every three
years. The Audit Committee Charter is included in this proxy statement as
Appendix A.
The Audit Committee presently consists of four directors. The Board of
Directors has reviewed Rule 303.01 of the New York Stock Exchange and has
determined that all members of the Audit Committee are independent as defined
under the Rule.
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2000, which include the consolidated balance sheets of the Company as of
December 31, 2000 and 1999, and the related consolidated statements of income,
comprehensive income and cash flows for each of the three years in the period
ended December 31, 2000, and the notes thereto. The information contained in
this report shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act of
1933, as amended, or the 1934 Securities Exchange Act, as amended, except to the
extent that the Company specifically incorporates it by reference in such
filing.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS
The Audit Committee has discussed with the Company's independent
accountants the matters required to be discussed by SAS No. 61 (Codification of
Statements on Accounting Standards) which includes, among other items, matters
related to the conduct of the audit of the Company's financial statements. The
Audit Committee has also received from the independent accountants written
disclosures and the letter required by Independence Standards Board Standard No.
1 (which relates to the accountant's independence from the Company and its
related entities) and has discussed with the accountants their independence from
the Company. No persons other than the independent accountant's full-time
employees were used in conducting the independent accountant's audit engagement.
CONCLUSION
Based on the review and discussions referred to above, the committee
recommended to the Company's Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
MEMBERS OF THE AUDIT COMMITTEE
ROBERT C. SALIPANTE, CHAIR
BARBARA B. GROGAN
DANIEL D. GRANGER
CHARLES A. HAGGERTY
24
AUDIT FEES
Fees billed or expected to be billed to the Company by Deloitte & Touche
for the audit of the Company's annual financial statements, including those of
eFunds Corporation, for the year ended December 31, 2000 and for reviews of
those financial statements included in the Company's quarterly reports on Form
10-Q, total $464,000. This total is comprised of $264,000 paid for the recurring
audit of the Company and $200,000 for the recurring audit of eFunds Corporation.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Fees billed or expected to be billed to the Company by Deloitte & Touche
for services provided during the Company's 2000 fiscal year for Financial
Information Systems Design and Implementation Fees total $231,000.
ALL OTHER FEES
Fees billed or expected to be billed to the Company by Deloitte & Touche
for services provided during the Company's 2000 fiscal year for all other
non-audit services rendered to the Company, including tax related services,
total $1,363,000, which includes $850,000 paid in connection with the initial
public offering and subsequent spin-off of eFunds Corporation.
25
ITEM 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
On March 16, 2001, the Company determined not to re-engage Deloitte &
Touche LLP ("Deloitte"), and appointed PricewaterhouseCoopers LLP as its new
independent auditors, for the fiscal year ending December 31, 2001. This
determination followed the Company's decision to seek proposals from independent
accounting firms, including Deloitte, with respect to the engagement of
independent accountants to audit the Company's financial statements for the
fiscal year ending December 31, 2001 and to perform other accounting services.
The decision not to re-engage Deloitte and to retain PricewaterhouseCoopers was
approved by the unanimous vote of the Company's Board of Directors upon the
recommendation of its Audit Committee.
The reports of Deloitte on the financial statements of the Company for
its fiscal years ended December 31, 2000 and December 31, 1999 did not contain
any adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles. During the Company's
two most recent fiscal years and the subsequent interim period through March 16,
2001, (i) there were no disagreements between the Company and Deloitte on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure which, if not resolved to the satisfaction of
Deloitte, would have caused Deloitte to make reference to the subject matter of
the disagreement in connection with its reports (a "Disagreement") and (ii)
there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation
S-K of the Securities and Exchange Commission (a "Reportable Event").
The Company has not, during the Company's two most recent fiscal years
or the subsequent interim period through March 16, 2001, consulted with
PricewaterhouseCoopers regarding (i) the application of accounting principles to
a specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, and no
written or oral advice was provided to the Company that PricewaterhouseCoopers
concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing or financial reporting issue, or (ii)
any matter that was either the subject of a Disagreement with Deloitte or a
Reportable Event.
The Company reported the change in accountants on Form 8-K on March 21,
2001. The Form 8-K contained a letter from Deloitte addressed to the Securities
and Exchange Commission stating that it agreed with the comments set forth in
the second paragraph of this Item.
Pursuant to the Audit Committee Charter, the Board of Directors is
submitting the selection of PricewaterhouseCoopers as the Company's independent
auditors to the shareholders for ratification. The Company anticipates that
representatives of both Deloitte and PricewaterhouseCoopers will be present at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF ITS SELECTION OF PRICEWATERHOUSECOOPERS AS INDEPENDENT AUDITORS.
Unless a contrary choice is specified or a shareholder abstains for votes "no",
persons named as proxies will vote FOR the ratification of the selection of
PricewaterhouseCoopers. If the selection is not ratified, the Board of Directors
will reconsider its selection of PricewaterhouseCoopers.
26
OTHER BUSINESS
The Board of Directors does not intend to present any business at the
Meeting other than the matters specifically set forth in this proxy statement
and knows of no other business scheduled to come before the Meeting. If any
other matters are brought before the Meeting, the persons named as proxies will
vote on such matters in accordance with their judgment of the best interests of
the Company and its shareholders. The proxies solicited by the Company will
confer discretionary authority on the persons named therein as proxies to vote
on any matter presented at the meeting of which the Board of Directors did not
have knowledge a reasonable time before the Company printed and mailed these
proxy materials.
2002 SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be included in the proxy statement
for the annual shareholder meeting in 2002 must be received by the Secretary of
the Company at 3680 Victoria Street N., Shoreview, Minnesota 55126-2966, not
later than the close of business on November 30, 2001. Proposals received by
that date will be included in the 2002 Proxy Statement if the proposals are
proper for consideration at an annual meeting and are required for inclusion in
the proxy statement by, and conform to, the rules of the Commission.
By order of the Board of Directors:
/s/ Anthony C. Scarfone
Anthony C. Scarfone
March 30, 2001 Secretary
27
Appendix A
DELUXE CORPORATION
AUDIT COMMITTEE CHARTER
The Audit Committee is elected by the Company's Board of Directors
("Board") to assist the Board in monitoring the (i) integrity of the financial
statements of the Company; (ii) compliance of the Company with legal and
regulatory requirements; and (iii) independence and performance of the Company's
internal auditors and outside auditors.
The members of the Audit Committee will be selected based on the
recommendations of the Committee on Board Affairs and shall consist of a minimum
of three members, all of whom meet the independence and experience requirements
of the New York Stock Exchange ("NYSE").
The outside auditors will be ultimately accountable to the Board and
Audit Committee which will have the ultimate authority and responsibility to
select, evaluate, and where appropriate, replace the outside auditors. The
Board, on the recommendation of the Audit Committee, shall, however, each year
submit the selection of the outside auditors to the Company's shareholders for
ratification at the Company's regular meeting of shareholders.
It is anticipated that the Audit Committee will meet at least four
times during each fiscal year. In the performance of its duties, the Audit
Committee shall make regular reports to the Board.
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, determine that the Company's financial statements are complete and
accurate or in accordance with generally accepted accounting principles or
assure the operating effectiveness of internal controls or accounting systems.
These matters are the responsibility of management, the outside auditors and
other professional experts, such as legal counsel. Also, it is not the duty of
the Committee to conduct investigations, resolve disagreements, if any, between
management and the outside auditors or assure compliance with laws, regulations
or the Company's legal and ethical standards.
In order to accomplish its objectives, the Audit Committee will do the
following:
A. review and discuss the Company's audited financial statements with
management;
B. discuss with the outside auditors matters required to be discussed
by Statement of Auditing Standards No. 61, as the same may be modified or
supplemented;
C. ensure that the Committee receives the written disclosures and the
letter from the outside auditors required by Independence Standards Board
Standard No. 1, as the same may be modified or supplemented, including written
statements delineating all relationships between the outside auditors and the
Company;
D. actively engage in dialogues with the outside auditors with respect
to any disclosed relationships or services that may impact the objectivity and
independence of the outside auditors and make recommendations to the Board with
respect to appropriate action to ensure the independence of the outside
auditors;
E. review the performance and recommend the engagement or replacement
of the outside auditors;
F. at least annually, review and assess the adequacy of this charter;
and
A-1
G. make and file such reports or statements and take such further
actions as may be required by the NYSE or rules promulgated by the Securities
and Exchange Commission.
To the extent not covered by the foregoing, in order further to
accomplish its objectives, in consultation with management, legal counsel, the
director of internal audit and the Company's outside auditors, as the Audit
Committee determines to be desirable, the Audit Committee will engage in any or
all of the following activities to the extent it deems necessary or appropriate:
1. concur in arrangements with the Company's outside auditors,
including compensation;
2. approve the audit scope and plan of the internal auditors and
outside auditors;
3. concur in the appointment and replacement of the director of
Internal Audit;
4. consider the adequacy of internal controls, including
computerized information system controls and security and
review the findings and recommendations of the internal audit
department and outside auditors with respect thereto and
management's responses;
5. at the completion of the annual examination, review:
a. the Company's annual financial statements and related
footnotes,
b. the outside auditor's audit of the financial
statements and report thereon,
c. complex and/or unusual transactions such as
restructuring charges and those involving significant
judgement,
d. management's handling of proposed audit adjustments
by the outside auditors, and
e. significant changes in the outside auditor's audit
plan, serious disagreements with management or
difficulties encountered in the course of the audit
work, and other matters related to the audit which
are customarily communicated to the Audit Committee
under generally accepted auditing standards;
6. consider with the director of internal audit and review with
management as determined necessary:
a. recommendations of the Company's internal audit
department,
b. significant findings by the internal audit department
during the year and management's responses,
c. difficulties and limitations encountered in the
course of audit activities,
d. changes in the audit scope or plan of the internal
audit department,
e. internal audit department staffing and budget, and
f. compliance by the internal audit department with
applicable professional standards;
7. overview and review the implementation of the recommendations
of the outside auditors and internal audit department by aging
analysis and other means;
A-2
8. review the annual report to shareholders and SEC Form 10-K; be
advised of quarterly results of operations and SEC filings
with respect thereto;
9. review the implementation and effectiveness of the Company's
legal and ethical compliance program and the results of
management's investigation and follow-up on any fraudulent
acts or accounting irregularities;
10. discuss with outside auditors whether Section 10A of the
Private Securities Litigation Reform Act of 1995 has been
implicated;
11. consider legal and regulatory matters and major financial risk
exposures that may have a material impact on financial
statements and/or related Company compliance programs;
12. have direct access to the internal audit department,
management and outside auditors and have meetings with these
parties whenever deemed necessary;
13. review non-audit services provided by the Company's outside
auditors;
14. consider the conduct by the Company of its relationship with
shareholders; and
15. perform other functions that may be delegated by the Board of
Directors or be required by law, the rules of any exchange on
which the Company's securities are listed for trading and the
Company's articles of incorporation and bylaws.
The scope of authority delegated herein to the Audit Committee shall
include the power to conduct or authorize investigation into any matters within
the Audit Committee's general scope of responsibilities. The Audit Committee
shall be empowered to retain independent counsel, accountants and others to
assist it in the conduct of any such investigation or otherwise in activities
within its general scope.
A-3
REGULAR MEETING OF SHAREHOLDERS
Shareholders are invited to attend Deluxe's regular shareholder meeting. It
will be held Tuesday, May 8, 2001, in the Continental Room at the Holiday Inn
- -- St. Paul North, 1201 W. County Rd. E, St. Paul, Minn., at 1:30 p.m.
TOLL-FREE SHAREHOLDER INFORMATION LINE
The Company no longer distributes printed quarterly reports because of a lack of
timeliness and increased printing and distribution costs. However, you may dial
1-888-359-6397 (1-888-DLX-NEWS) to listen to the latest quarterly financial
results, dividend news, and other information about Deluxe.
Information about Deluxe can also be found on our Web site at
http://www.dlx.com.
DIVIDEND DIRECT DEPOSIT
Deluxe Corporation directly deposits dividends into the accounts of its employee
shareholders. This service is also available to shareholders who are not
employees. It allows shareholders to have their dividends automatically
deposited into an account at the financial institution they designate. Direct
deposit provides convenient, fast access to dividend payments.
For additional information about dividend direct deposit or to change the
account to which your dividend is currently being deposited, please contact
Wells Fargo Bank Minnesota, N.A. by telephone at (800) 468-9716 or by e-mail at
stocktransfer@wellsfargo.com.
[LOGO] DELUXE CORPORATION
DELUXE 3680 Victoria Street N.
Shoreview, MN 55126-2966
P.O. Box 64235
St. Paul, MN 55164-0235 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Lawrence J. Mosner, Ronald E. Eilers, and Anthony
C. Scarfone as proxies, each with the power to appoint his substitute, and
authorizes each of them to represent and to vote, as designated on the reverse
side hereof, all shares of common stock of Deluxe Corporation held of record by
the undersigned on March 12, 2001 at the regular meeting of shareholders to be
held on May 8, 2001, and at any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO CONTRARY DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE
SIDE HEREOF AND EACH OF THE LISTED PROPOSALS. ALSO, BY SIGNING THIS PROXY, YOU
AUTHORIZE THE ABOVE-NAMED PROXIES TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING. THE COMPANY ANTICIPATES THAT NO OTHER BUSINESS
WILL BE CONDUCTED AT THE MEETING.
(Continued and to be SIGNED on the reverse side)
--------------------------
COMPANY #
CONTROL #
--------------------------
THERE ARE THREE WAYS TO VOTE.
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- IT'S TOLL-FREE. IT'S QUICK, EASY, AND IMMEDIATE. 1-800-240-6326
* Use any touch-tone telephone to grant your proxy 24 hours a day, 7 days a
week, until 12:00 p.m. on May 7, 2001.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number that is located above.
* Follow the simple instructions provided by the voice.
VOTE BY INTERNET -- IT'S QUICK, EASY AND IMMEDIATE. http://www.eproxy.com/dlx
* Use the Internet to grant your proxy 24 hours a day, 7 days a week, until
12:00 p.m. on May 7, 2001.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number that is located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Deluxe Corporation, c/o Shareowner Services(SM),
P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS LISTED BELOW.