ROSS SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 8, 2004
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Ross
Systems, Inc., a Delaware corporation (the "Company"), will be held on Thursday,
July 8th, 2004 at 10:00 a.m., local time, at the Company's executive offices in
Atlanta, Georgia located at Two Concourse Parkway, Suite 800, Atlanta, Georgia,
30328, for the following purposes:
1. To elect directors. The Board of Directors has nominated for
re-election the five directors identified in the accompanying Proxy
Statement.
2. To ratify the appointment of BDO Seidman, LLP as independent
auditors of the Company for the fiscal years ending June 30, 2004
and June 30, 2003.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on June 4, 2004 are
entitled to vote at the meeting.
FOR THE BOARD OF DIRECTORS
/s/ J. Patrick Tinley
---------------------------------------
J. Patrick Tinley
Chairman of the Board
Atlanta, Georgia
June 11, 2004
IMPORTANT
To ensure your representation at the meeting. Your are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the postage
paid envelope enclosed for that purpose. If you attend the meeting, you may vote
in person even if you return a proxy.
ROSS SYSTEMS, INC.
TWO CONCOURSE PARKWAY
SUITE 800
ATLANTA, GEORGIA 30328
ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Ross Systems, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held July 8, 2004 at
10:00 a.m., local time, or at any and all continuation(s) and adjournment(s)
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Stockholders. The Annual Meeting will be held at the Company's
executive offices in Atlanta, Georgia located at Two Concourse Parkway, Suite
800, Atlanta, Georgia 30328. The telephone number at that location is (770)
351-9600.
These proxy solicitation materials were mailed on or about June 14, 2004
to all stockholders entitled to vote at the Annual Meeting.
Purposes of the Annual Meeting
The purposes of the Annual Meeting are to: (1) elect five directors to
serve for the ensuing year and until their successors are duly qualified and
elected; (2) ratify the appointment of BDO Seidman, LLP as the Company's
independent accountants for the 2003 and 2004 fiscal years; and (3) transact
such other business as may properly come before the meeting and any and all
continuations and adjournments thereof.
Please note that the Company's proposed merger with chinadotcom is not
addressed by this proxy statement and will not be addressed at the Annual
Meeting. There will be a separate, special meeting concerning the merger vote. A
separate proxy statement will be sent to you in connection with the special
meeting.
Record Date, Voting Securities and Share Ownership by Principal Stockholders and
Management
Only stockholders of record at the close of business on June 4, 2004,(the
"Record Date") are entitled to receive notice and vote at the Annual Meeting. At
the Record Date, 2,883,591 shares of the Company's Common Stock were issued and
outstanding and held of record by 465 registered stockholders. At the Record
Date, 500,000 of the Company's voting A-Series Convertible Preferred shares were
issued and outstanding. The closing price of the Company's Common Stock on the
Record Date, as reported by the NASDAQ National Market, was $18.26 per share.
1
The following table sets forth the beneficial ownership of Common Stock of
the Company as of June 4, 2004 by (a) each director, (b) each of the executive
officers identified in the Summary Compensation Table, (c) all directors and
executive officers as a group and (d) each person known by the Company to
beneficially own more than 5% of any class of the Company's voting securities.
Under the rules of the United States Securities and Exchange Commission (the
"SEC"), beneficial ownership includes any shares as to which the individual has
sole or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of June 4, 2004 through the
exercise of any stock option. Shares which the individual has the right to
acquire within 60 days of June 4, 2004 are shown in the table below under the
column, "Number of Options".
-----------------------------------------------------------------------------------------------------------------------------
Name (3) Common Stock Preference Shares(2)
-----------------------------------------------------------------------------------------------------------------------------
Number of Number of Percentage Number of Percentage
Shares(1) Options of Class Shares of Class
-----------------------------------------------------------------------------------------------------------------------------
Alvin Johns ...................................... 52,159 9,851 2.2% -- *
-----------------------------------------------------------------------------------------------------------------------------
Robert B. Webster ** ............................. 68,777 143,500 7.5% -- *
-----------------------------------------------------------------------------------------------------------------------------
J. Patrick Tinley ** ............................. 31,041 221,470 8.7% -- *
-----------------------------------------------------------------------------------------------------------------------------
Oscar Pierre Prats ............................... 3,625 3,800 * -- *
-----------------------------------------------------------------------------------------------------------------------------
Gary Nowacki ..................................... 22 5,000 * -- *
-----------------------------------------------------------------------------------------------------------------------------
Eric W. Musser ................................... -- 23,850 * -- *
-----------------------------------------------------------------------------------------------------------------------------
Verome M. Johnston ............................... 4,120 18,000 * -- *
-----------------------------------------------------------------------------------------------------------------------------
Bruce J. Ryan .................................... -- 8,800 * -- *
-----------------------------------------------------------------------------------------------------------------------------
Frank M. Dickerson ............................... -- 18,000 * -- *
-----------------------------------------------------------------------------------------------------------------------------
J. William Goodhew, III .......................... -- 8,800 * -- *
-----------------------------------------------------------------------------------------------------------------------------
Rick Marquardt ................................... 123 12,500 * -- *
-----------------------------------------------------------------------------------------------------------------------------
Richard Thomas ................................... 1,448 3,750 * -- *
-----------------------------------------------------------------------------------------------------------------------------
All officers and directors as a group (12
persons) ...................................... 161,315 477,321 16.8% -- *
-----------------------------------------------------------------------------------------------------------------------------
Benjamin W. Griffith III *** ..................... 152,500 -- 19.3% 500,000 100%
-----------------------------------------------------------------------------------------------------------------------------
* Less than 1%.
** Number of options exercisable within 60 days includes accelerated
vesting of certain options due to a change of control pursuant to
the proposed merger between Ross Systems, Inc. and chinadotcom.
*** Total ownership is 652,500 common and common equivalent shares.
(1) The table is based upon information supplied by executive officers,
directors and principal stockholders. Unless otherwise indicated, each of
the stockholders named in the table has sole voting investment and /or
dispositive power with respect to all shares of Common Stock shown as
beneficially owned, subject to community property laws where applicable
and to the information contained in the footnotes to this table.
(2) These are Series A Convertible Preference Shares with Common Stock voting
rights equal to the number of preference shares held on the day of voting.
These shares may be converted after June 29, 2002 at the rate of one
preference share for one common stock share. These shares must be
converted by June 29, 2006.
(3) Each of the above name shareholders can be reached by U.S. mail at Ross
Systems, Inc., Two Concourse Parkway, Suite 800, Atlanta, Georgia 30328.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Corporate Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date, or by attending the meeting and voting in person.
2
Voting; Quorum; Abstentions and Broker Non-Votes
Each stockholder is entitled to one vote for each share held as of the
Record Date. Stockholders will not be entitled to cumulate their votes in the
election of directors (Proposal One). A plurality of the Votes Cast (see
definition below) at the Annual Meeting is required for the election of
directors (Proposal One). For all other proposals, the affirmative vote of the
majority of the Votes Cast at the Annual Meeting is required for approval.
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock issued and outstanding on the Record
Date and entitled to vote at the Annual Meeting, present in person or
represented by proxy. Shares that are voted "FOR," "AGAINST" or "ABSTAIN" from a
matter are treated as being present at the Annual Meeting for purposes of
establishing a quorum and are also treated as votes eligible to be cast by the
Common Stock, present in person or represented by proxy, at the Annual Meeting
and "entitled to vote on the subject matter" (the "Votes Cast") with respect to
such matter. If a quorum is not present or represented, then either the chairman
of the Annual Meeting or the stockholders entitled to vote at the Annual
Meeting, present in person or represented by proxy, will have the power to
adjourn the Annual Meeting from time to time, without notice other than an
announcement at the Annual Meeting, until a quorum is present. At any adjourned
Annual Meeting at which a quorum is present, any business may be transacted that
might have been transacted at the Annual Meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned Annual Meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
adjourned Annual Meeting.
Although there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both the presence or
absence of a quorum for the transaction of business and the total number of
Votes Cast with respect to a particular matter. Therefore, in the absence of
controlling precedent to the contrary, the Company intends to treat abstentions
in this manner.
Broker non-votes, however, shall be treated differently. In a 1988
Delaware case, Berlin v. Emerald Partners, the Delaware Supreme Court held that,
while broker non-votes may be counted for purposes of determining the presence
or absence of a quorum for the transaction of business, broker non-votes should
not be counted for purposes of determining the number of Votes Cast with respect
to the particular proposal on which the broker has expressly not voted.
Consequently, broker non-votes with respect to proposals set forth in this Proxy
Statement will not be considered Votes Cast and, accordingly, will not affect
the determination as to whether the requisite majority of Votes Cast has been
obtained with respect to a particular matter.
Therefore, for purposes of the election of directors (Proposal One),
neither abstentions nor broker non-votes will have any effect on the outcome of
the vote. For all other proposals, abstentions will have the same effect as
votes against these proposals and broker non-votes will not have any effect on
the outcome of the vote.
Proxies in the accompanying form that are properly executed and returned
will be voted at the Annual Meeting in accordance with the instructions on the
proxy. Any properly executed proxy on which there are no instructions indicated
about a specified proposal will be voted as follows: (i) for the election of the
five persons named in this proxy statement as the board of directors' nominees
for election to the board of directors; (ii) for the ratification of the
appointment of BDO Seidman, LLP as independent auditors of the Company for the
2003 and 2004 fiscal years. No business other than that set forth in the
accompanying notice of annual meeting of stockholders is expected to come before
the Annual Meeting. Should any other matter requiring a vote of stockholders
properly arise, the persons named in the proxy will vote the shares they
represent as the board of directors may recommend. The persons named in the
proxy may also, at their discretion, vote the proxy to adjourn the annual
meeting from time to time.
Solicitation
The cost of soliciting proxies will be borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, facsimile or telegram.
3
Deadline for Receipt of Stockholder Proposals for Next Annual Meeting
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the eligibility and other requirements of the proxy
rules promulgated by the SEC. The next annual meeting, if any, would likely not
be held within 30 days of the anniversary of this Annual Meeting. Therefore,
proposals of stockholders of the Company that are intended to be presented by
such stockholders at the Company's next annual meeting would have to be received
by the Company a reasonable time before the Company begins to print and mail the
proxy materials for such next annual meeting, in order for them to be considered
for inclusion in the proxy statement and form of proxy relating to that meeting.
The Company will identify this deadline in a Quarterly Report on Form 10-Q.
Assuming that the proposed merger with chinadotcom is completed, there will be
no such meeting.
If a stockholder intends to submit a proposal at the next annual meeting,
which is not eligible for inclusion in the proxy statement and form of proxy
relating to that meeting, the stockholder must give timely notice in proper
written form of his intent to make such nomination or nominations or to propose
such business. To be timely, such stockholder's notice must be delivered to or
mailed and received by the Secretary of the corporation not less than
thirty-five (35) days nor more than sixty (60) days prior to the meeting;
provided, however, that in the event that less than forty-five (45) days notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. If such stockholder fails to comply with the foregoing notice provision,
the proxy holders will be allowed to use their discretionary voting authority
when the proposal is raised at the meeting.
4
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
A board of five directors has been nominated by the Nominating Committee
for election at the Annual Meeting. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for management's five nominees
named below, all of who are presently directors of the Company. In the event
that any nominee of the Company is unable or declines to serve as a director at
the time of the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the vacancy. It is
not expected that any nominee will be unable or will decline to serve as a
director. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them to
assure the election of as many of the nominees listed below as possible. In such
event, the specific nominees to be voted for will be determined by the proxy
holders. The term of office of each person elected as a director will continue
until the next Annual Meeting of Stockholders or until his successor has been
elected.
Principal Director
Name of Nominee Age Occupation Since
--------------- --- ---------------------------------------------------------------- ---------
J. Patrick Tinley............ 56 Chairman of the Board of the Company, and Chief Executive 1993
Officer of the Company
J. William Goodhew, III...... 66 Vice President of Intelligent Systems Corporation 1997
Frank M. Dickerson.......... 56 Chief Operating Officer of MWH Energy & Infrastructure, Inc. 2001
Bruce J. Ryan................ 61 Executive Vice President, Finance and Administration of Global 1992
Knowledge Network, Inc.
Robert B. Webster............ 56 Executive Vice President Operations, and Secretary of the 2001
Company
There are no family relationships among any directors or executive
officers of the Company.
Mr. Tinley was promoted to Chairman & CEO in December 2000. He served as
President and Chief Operating Officer from 1995 to June 2000 and President and
CEO from July through December 2000. He has been a director of the Company since
1993. Mr. Tinley joined the Company in November 1988 as Executive Vice
President, Business Development and has served as Executive Vice President,
Product Development and Executive Vice President, Product Development & Client
Services. Prior to 1988, Mr. Tinley held management positions with Management
Science of America, Inc. and Royal Crown Companies. Mr. Tinley received a
Bachelors in Science from Columbus University.
Mr. Goodhew joined Intelligent Systems Corporation, a publicly traded
technology product and services company, as Vice President in January 1997.
Prior to that, Mr. Goodhew was President of Peachtree Software, Inc., a
privately held software company, from 1984 to 1994. In 1994, Peachtree Software
was purchased by Automatic Data Processing, Inc., a publicly traded company
providing computerized services. Mr. Goodhew remained at Peachtree Software,
Inc. in a managerial capacity until joining Intelligent Systems Corporation.
Mr. Dickerson is the Chief Operating Officer of MWH Energy &
Infrastructure, Inc., a division of MWH Global, Inc., and a member of the Board
of MWH Global, Inc. The MWH group was formed out of a merger between Montgomery
Watson and Harza Engineering, a power engineering group. Mr. Dickerson was
Chairman of the Board of Harza Engineering International, and has also served as
Chief Financial Officer and General Counsel of the Group. Prior to joining Harza
in 1992, Mr. Dickerson had been Executive Vice President and Chief Financial
Officer of Long Lake Energy Company, and Vice President and Chief Financial
Officer of Texas International Company. Mr. Dickerson received his Bachelor of
Arts in Economics from Washington Square College of New York University in 1970,
his Master of Arts in Economics from the University of Chicago in 1972, and his
Juris Doctor from the University of Georgia in 1975.
Mr. Ryan is currently the chairman and interim CEO of InfiniCon Systems,
Inc., a solutions provider for InfiniBand technology. Mr. Ryan served as
Executive Vice President and Chief Financial Officer of Global
5
Knowledge Network, Inc., an independent information technology education company
from 1998 to 2002. Prior to that, Mr. Ryan was Executive Vice President and
Chief Financial Officer of Amdahl Corporation, a computer solutions company.
Prior to that, Mr. Ryan was an executive for Digital Equipment Corporation from
1969 to 1994. Mr. Ryan holds a BA in Business Administration from Boston College
and an MBA from Suffolk University.
Mr. Webster, Executive Vice President Operations is also Secretary and a
director of the Company. Mr. Webster joined the Company in June 1998 as its CFO
and was promoted to his current role in December 2000 and later elected director
in August 2001. Mr. Webster is responsible for the consulting services function
as well as the administrative, legal, human resource and financial operations of
the company worldwide. Mr. Webster holds a BS degree in Accounting and Computer
Science, as well as an MBA specialized in Information Systems from St. Peter's
College. Mr. Webster is a Certified Public Accountant in the State of Georgia
and a member of the AICPA. Mr. Webster, prior to joining the Company served in a
progression of more senior financial and general management positions with both
Unisys Corporation and Wang Laboratories, Inc. over a twenty year period.
Board Meetings and Committees
The board of directors of Ross held a total of fifteen meetings including
four regularly scheduled quarterly meetings and eleven special and committee
meetings during the fiscal year ended June 30, 2003. During fiscal 2003, each
director attended at least 93% of the aggregate of (1) the total number of
meetings of the board of directors and (2) the total number of meetings held by
all committees of the board of directors on which such person served. The board
of directors has an Audit Committee, a Compensation Committee, and a Nominating
Committee, each of which is composed of independent directors.
During the year ended June 30, 2003, the Audit Committee of the board
consisted of three directors Ryan, Dickerson and Goodhew, none of whom are
employees of Ross. The Audit Committee held four meetings during the fiscal year
ended June 30, 2003. Following the annual meeting, the board intends to
re-appoint directors Dickerson, Ryan and Goodhew, with director Ryan as
Committee Chairman. The primary purpose of the Audit Committee is to assist the
board of directors in fulfilling its responsibility to oversee Ross' internal
and external financial reporting processes so as to ensure the objectivity of
Ross' financial statements and its system of internal accounting controls. The
Audit Committee recommends engagement of Ross' independent auditors and is
primarily responsible for approving the services performed by Ross' independent
auditors.
The Nominating Committee consisted of directors Dickerson, Ryan, and
Goodhew. Following the annual meeting, the board intends to re-appoint directors
Dickerson, Goodhew, and Ryan, with director Dickerson as Committee Chairman. The
Nominating Committee is responsible for making recommendations for the
nomination of directors for replacement of resigning members and annual
nominations for re-election where appropriate. The committee also monitors the
composition of Ross' board of directors to ensure that it meets generally
acceptable standards of competence, skills and experience. The Nominating
Committee met once during the year ended June 30, 2003. The recommendation of
the committee was to nominate existing directors, Ryan, Goodhew, Dickerson,
Tinley and Webster for re-election.
The Compensation Committee of the board consisted of directors Goodhew,
Ryan and Dickerson and held seven meetings during the fiscal year ended June 30,
2003. Following the annual meeting, the board intends to re-appoint directors
Goodhew, Ryan and Dickerson, with director Goodhew as Committee Chairman. The
Compensation Committee makes recommendations to the board regarding Ross'
executive compensation policy and grants stock options and administers the 1998
Stock Option Plan.
Compensation of Directors
For the fiscal year ended June 30, 2003, non-employee directors were
compensated $2,000 for each board of directors meeting attended and $1,000 for
participating in any telephonic board of directors meetings which were not
regularly scheduled. In addition, directors are reimbursed for travel expenses
incurred in connection with attending board of directors meetings. Annually,
each non-employee director is automatically granted 4,000 stock options to
purchase shares of Ross' common stock pursuant to the terms of the 1998 Stock
Option Plan, or the Option Plan.
6
Options granted to non-employee directors under the Option Plan are not intended
by Ross to qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended, or the Code. Pursuant to the
Option Plan, on the annual meeting date, each non-employee director who is
elected or re-elected at the meeting is granted options in accordance with the
automatic grant. In addition, any non-employee director newly elected to the
Board of Directors receives an option for 10,000 shares of Ross' common stock.
The 10,000-share option vests 25% a year over four years and the 4,000 share
options are fully vested on the dates of grant. The price of all options granted
is equal to the closing price of Ross' common stock, as quoted on the NASDAQ
National Market, on the date of grant. During fiscal 2003, outside directors
were granted a total of 12,000 stock options at an exercise price of $13.16.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF, FRANK M. DICKERSON, J. WILLIAM GOODHEW III, BRUCE J. RYAN, J.
PATRICK TINLEY, AND ROBERT B. WEBSTER AS DIRECTORS.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On July 10, 2002, the Company dismissed Arthur Andersen LLP ("Andersen")
as independent public accountants. The Company also engaged BDO Seidman, LLP to
serve as the Company's independent public accountants for the year ended June
30, 2002. The audit committee of our board of directors participated in and
approved the decision to change independent accountants. Andersen's reports on
the Company's financial statements as of and for the years ended June 30, 2000
and June 30, 2001 did not contain an adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles. During the two most recent fiscal years through the date of their
dismissal, there were no disagreements with Andersen on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to Andersen's satisfaction, would have caused
them to make reference to the subject matter in connection with their report on
the Company's financial statements. Also, there were no reportable events, as
defined in Item 304(a)(1)(v) of Regulation S-K. On July 10, 2002, the Company
provided Andersen with a copy of the foregoing disclosures. Subsequently,
Andersen verbally informed the Company that, effective June 30, 2002, Andersen
has stopped responding to notices of changes in certifying accountants due to
lack of personnel. Therefore, Andersen did not supply a letter which states
whether or not they agree with the Company's disclosures contained in its Form
8-K that initially disclosed this matter.
The Board appointed BDO Seidman, LLP, ("BDO Seidman") independent
certified accountants, as auditors of the consolidated financial statements of
the Company for the years ending June 30, 2003 and June 30, 2002.
The Board has also appointed BDO Seidman, LLP, as auditors of the
Company's 2004 fiscal year which will end June 30, 2004. The Board requests
ratification of BDO Seidman, LLP, as the Company's 2003 auditors and the
appointment of BDO Seidman, LLP, as the Company's 2004 auditors.
Representatives of BDO Seidman, LLP, are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
Audit and Related Fees Billed to us during Fiscal 2003
Audit Fees
BDO Seidman billed Ross Systems an aggregate of $186,000 for professional
services rendered for the (i) audit of the annual consolidated financial
statements for fiscal year 2003 included in our Annual Report on Form 10-K and
(ii) the review of the consolidated financial statements included in our
quarterly reports on Form 10-Q.
7
Financial Information Systems Design and Implementation Fees We did not
engage BDO Seidman to provide advice to us regarding financial information
systems design and implementation during the fiscal year ended June 30, 2003.
All Other Fees
BDO Seidman billed Ross Systems an aggregate of $92,000 for all other non-audit
services rendered to us during fiscal 2003, including accounting advice,
statutory audits and tax services and litigation support.
The following table summarizes the approximate aggregate accounting fees billed
to Ross Systems for our 2003 fiscal year:
Audit Fees ......................................................... $186,000
--------
Financial Information Systems Design and Implementation Fees ....... $ --
--------
All Other Fees:
Audit-Related Fees(1) ........................................... $ 11,000
--------
Other Fees(2) ................................................... $ 81,000
--------
Total Fees ......................................................... $278,000
========
----------
(1) Includes fees for assistance with SEC filings and various accounting
consultation.
(2) Includes fees for (i) various advisory services related principally to tax
preparation services and tax consultation services associated with the
development and implementation of international tax strategies and sales
taxes ($67,000), and an executive compensation analysis prepared at the
request of the independent Board members ($14,000).
The audit committee has considered and believes that the provision of the
other non-audit services by BDO Seidman is compatible with maintaining the
auditor's independence. As routine practice, the Audit Committee pre-approves
all audit and permissible non-audit services before the Company engages BDO
Seidman to perform such services.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
YEAR ENDED JUNE 30, 2003, AND THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 2004.
Code of Ethics
To obtain a copy of the Company's code of ethics, send a letter of request to
Verome Johnston, CFO at Two Concourse Parkway, Suite 800, Atlanta, Georgia,
30328.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years ended June 30 by the
Company's Chief Executive Officer, and each of the Company's four other most
highly compensated executive officers, based on salary and bonus earned during
fiscal 2003 (the "Named Executive Officers").
Long Term
Annual Compensation Compensation Awards
------------------------ -----------------------------
Other Securities
Annual Underlying All Other
Fiscal Compensation Options/ Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(3) SARs (#)(1) ($)(2)
--------------------------- ------ --------- -------- ------------ ----------- -------------
J. Patrick Tinley ....................... 2003 $315,000 $165,600(4) $12,000 100,000 $2,000
Chairman and Chief Executive ......... 2002 307,500 114,000 10,400 15,000 2,000
Officer ........................ 2001 292,500 41,400 10,400 12,000 1,000
Robert B. Webster ....................... 2003 $210,000 $110,400(4) $12,000 70,000 $2,000
Executive Vice President, and ........ 2002 205,000 100,000 12,000 10,000 2,000
Secretary ...................... 2001 195,000 43,000 12,000 9,000 1,000
Gary Nowacki ............................ 2003 $179,800 $120,006(5) $10,000 5,000 $2,000
VP, North American Sales ............. 2002 179,800 56,481 10,000 10,000 2,000
2001 142,000 67,500 10,000 6,500 1,000
Rick Marquardt .......................... 2003 $200,000 $ 62,540(6) $10,000 10,000 $2,000
Senior VP, World Wide Sales and
Marketing ......................... 2002 141,160 14,123 7,500 10,000 $2,000
Eric W. Musser .......................... 2003 $175,000 $ 44,275(4) $10,000 10,000 $2,000
VP, Development ..................... 2002 $178,875 50,000 10,000 10,000 $2,000
2001 151,125 19,000 10,000 9,000 1,000
(1) The Company has not granted any stock appreciation rights (SARs).
(2) Represents amounts contributed to the Company's 401(k) plan, on behalf of
the officer by the Company and premiums paid by the Company on behalf of
the officer for term life insurance.
(3) The amounts included in Other Annual Compensation include auto allowance.
(4) Represents a bonus earned in fiscal 2002 and paid in fiscal 2003.
(5) Includes a bonus in the amount of $22,997 earned in fiscal 2002 and paid
in fiscal 2003.
(6) Includes a bonus in the amount of $6,490 earned in fiscal 2002 and paid in
fiscal 2003
9
Option/SAR Grants in Last Fiscal Year
The following table describes the grant of options to the Named Executive
Officers during fiscal 2003.
Potential Realizable Value at
Assumed Annual Rates
of Stock Price
Appreciation for Option
Individual Grants in Fiscal 2003 Term (4)
-------------------------------------------- ------------------------------
Number of Percent of
Securities Total
Underlying Options/SARs
Options/SARs Granted to Exercise
Granted Employees in Price Expiration
Name (#)(1) Fiscal Year (2) ($/Sh) (3) Date (2) 5% 10%
---- ------------ --------------- ---------- ----------- ------- ---------
J. Patrick Tinley......... 50,000 19.8% 7.26 9/24/2012 591,289 941,529
J. Patrick Tinley......... 50,000 19.8% 7.95 12/5/2012 647,486 1,031,013
Robert B. Webster......... 50,000 19.8% 7.26 9/24/2012 591,289 941,529
Robert B. Webster......... 20,000 7.9% 7.95 12/5/2012 258,994 412,405
Rick Marquardt............ 10,000 4% 7.26 9/24/2012 118,258 188,306
Eric W. Musser............ 10,000 4% 7.26 9/24/2012 118,258 188,306
Gary Nowacki.............. 5,000 2% 7.25 11/4/2012 59,047 94,023
(1) The Company has not granted any SARs
(2) Based on an aggregate of 252,828 options granted to all employees during
fiscal year. Options granted in fiscal year 2003 expire in 2012 or 2013
and typically vest annually over four years from the date of grant.
(3) All options were granted at an exercise price equal to the fair market
value based on the closing market value of Common Stock on the Nasdaq
National Market on the date of grant.
(4) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
terms assuming the specified compounded rates of appreciation on the
Company's Common Stock over the terms of the options. These numbers are
calculated based on SEC rules and do not reflect the Company's estimate of
future stock price appreciation. Actual gains, if any are dependent on the
timing of option exercises and the future performance of the Company's
Common Stock. There can be no assurances that the rates of appreciation
assumed in this table can be achieved or that the individuals will realize
the amounts reflected.
10
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table provides information related to options exercised by
the Named Executive Officers during fiscal 2003 and the number and value of
options held at June 30, 2003. The Company has not granted any SARs.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
June 30, 2003 June 30, 2003(2)
---------------------------- -----------------------------
Shares
Acquired Value
on Realized
Name Exercise(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
-------------------------------- ----------- --------- ----------- ------------- ----------- -------------
J. Patrick Tinley .............. -- $ -- 36,870 119,350 $58,005 $809,345
Robert B. Webster .............. 3,750 18,900 5,300 83,200 1,760 580,490
Rick Marquardt ................. -- -- 2,500 17,500 23,650 139,150
Eric W. Musser ................. -- -- 11,300 23,700 51,797 164,352
Gary Nowacki ................... 1,250 14,725 5,125 16,375 26,697 144,247
(1) Based upon the fair market value of one share of the Company's Common
Stock on the date the option was exercised, less the exercise price per
share multiplied by the number of shares received upon exercise of the
option.
(2) Value is based on the difference between the option exercise price and the
fair market value at June 30, 2003 ($14.08 per share) multiplied by the
number of shares underlying the option.
10-Year Stock Option Repricing
The following table sets forth certain information regarding the
participation of any executive officer in the Company's repricing of stock
options for the previous 10 fiscal years.
Length of
Number of Original Option
Securities Term Remaining
Underlying Market Price of Exercise Price at Date of
Options/SARs Stock at Time of at Time of New Repricing or
Repricing Repriced or Repricing or Repricing or Exercise Amendment
Name and Title Date Amended (#) Amendment ($) Amendment ($) Price ($) (In Years)
-------------- --------- ------------ ---------------- -------------- --------- ---------------
Verome M. Johnston........ 9/28/98 1,000 $25.94 $44.38 $25.94 9.9
VP, CFO
Eric W. Musser............ 9/28/98 5 $25.94 $36.25 $25.94 5.9
VP, Development 9/28/98 95 $25.94 $52.50 $25.94 6.2
9/28/98 120 $25.94 $41.25 $25.94 6.6
9/28/98 630 $25.94 $41.25 $25.94 6.6
9/28/98 1,000 $25.94 $55.00 $25.94 7.9
9/28/98 200 $25.94 $38.13 $25.94 8.6
9/28/98 300 $25.94 $38.75 $25.94 8.9
9/28/98 650 $25.94 $38.75 $25.94 9.1
9/28/98 500 $25.94 $44.38 $25.94 9.9
Oscar Pierre Prats........ 9/28/98 1,800 $25.94 $50.63 $25.94 6.6
VP, Global Channels 9/28/98 1,800 $25.94 $65.00 $25.94 8.3
J. Patrick Tinley......... 8/29/94 278 $36.25 $52.60 $36.25 1.5
Chairman, CEO 8/29/94 1,022 $36.25 $52.60 $36.25 1.5
8/29/94 1,200 $36.25 $64.00 $36.25 2.0
8/29/94 4,000 $36.25 $72.50 $36.25 3.4
11
Length of
Number of Original Option
Securities Term Remaining
Underlying Market Price of Exercise Price at Date of
Options/SARs Stock at Time of at Time of New Repricing or
Repricing Repriced or Repricing or Repricing or Exercise Amendment
Name and Title Date Amended (#) Amendment ($) Amendment ($) Price ($) (In Years)
-------------- --------- ------------ ---------------- -------------- --------- ---------------
8/29/94 1,875 $36.25 $87.50 $36.25 4.5
9/28/98 250 $25.94 $36.25 $25.94 5.9
9/28/98 1,689 $25.94 $36.25 $25.94 5.9
9/28/98 920 $25.94 $36.25 $25.94 5.9
9/28/98 1,080 $25.94 $36.25 $25.94 5.9
9/28/98 5 $25.94 $36.25 $25.94 5.9
9/28/98 563 $25.94 $36.25 $25.94 5.9
9/28/98 3,288 $25.94 $63.75 $25.94 6.8
9/28/98 1,213 $25.94 $63.75 $25.94 6.8
9/28/98 4,500 $25.94 $55.00 $25.94 7.9
9/28/98 3,931 $25.94 $50.63 $25.94 9.6
9/28/98 2,820 $25.94 $50.63 $25.94 9.6
Robert B. Webster......... 9/28/98 900 $25.94 $46.25 $25.94 9.7
Executive VP, Secretary 9/28/98 3,600 $25.94 $46.25 $25.94 9.7
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of June 30, 2003 about the
common stock of Ross that may be issued upon the exercise of options, warrants
and rights under all of Ross' existing equity compensation plans, including the
Ross Systems Inc. 1988 Incentive Stock Plan, the 1998 Stock Option Plan and the
1991 Employee Stock Purchase Plan, each as amended.
Number of Securities
Remaining Available for
Future Issuance Under
Number of Securities to Weighted-Average (1) Equity Compensation Plans
be Issued upon Exercise Exercise Price of (Excluding Securities
of Outstanding Options, Outstanding Options, Reflected in the First
Warrants and Rights Warrant and Rights Column)
Plan Category (#) ($)(1) (#)
--------------------- ----------------------- -------------------- -------------------------
Equity compensation
plans approved by
security holders 576,063 $9.62 266,960
Equity compensation
plans not approved by
security holders -- -- --
Total 576,063 $9.62 266,960
(1) Pursuant to a resolution passed by Ross stockholders at the annual meeting
held November 15, 2001, the number of shares available for issuance under
the 1991 Employee Stock Purchase Plan was automatically increased annually
by the lesser of 35,000 shares or 1.5% of the outstanding shares of Ross
common stock.
12
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board is comprised of three outside
directors of the Company, J. William Goodhew, III, Frank M. Dickerson and Bruce
J. Ryan. Together the committee is responsible for the overall compensation
plans which govern the compensation of the Chief Executive Officer and
President, as well as the Executive Vice President Operations of the Company.
The Company's executive pay programs are designed to provide a strong and
direct link between Company performance and executive compensation. The Company
believes that in order to attract and retain the most qualified executives in
the industry, its compensation policies must be competitive with companies in a
similar business and of similar size. Accordingly, executive compensation is
based on Company and individual performance in relation to annual goals for the
executives and the Company. The annual goals set for the executive are based on
revenue growth, profitability, cash flow, and stock value appreciation as
appropriate for the executive's responsibilities. Executives are provided with a
combination of one or more of the following types of compensation: salary,
profit sharing and annual bonus, and long-term incentives.
Salary: All executive officers (other than the Chief Executive Officer)
are provided with a fixed annual salary that is reviewed on an annual basis by
the Compensation Committee and the Chief Executive Officer. Salary and increases
in salary are determined partially by comparison of the executive's salary to
salaries for similar positions at comparable companies, the executive's annual
performance review, the value of contributions made by the executive and the
executive's and the Company's performance in relation to goals established at
the beginning of the period.
In addition to considering the above factors when setting compensation
increases, the Compensation Committee also considers the overall financial
health of the Company. In years where corporate performance does not equal or
exceed Company expectations, executive salary increases for the coming fiscal
year may be either reduced or deferred.
Annual Bonus: The Company motivates its executives to make contributions
of outstanding value by providing them the opportunity to earn an annual bonus.
These bonuses, if paid, can represent a significant portion of certain
executives' salaries. In fiscal 2003, individual executive bonuses were targeted
to be a percentage of the executive's salary. Each executive can potentially
earn a percentage of his or her target bonus based on the achievement of the
Company's and his or her organization's goals. For all executives, except Mr.
Tinley and Mr. Webster, the executive's achievements in relation to established
goals are evaluated by the Chief Executive Officer. The Compensation Committee
evaluates the performance of the Chief Executive Officer and Executive Vice
President. Like other executives, the decision to grant these executives a bonus
is based on the performance of the Company and their contributions to the
Company in the past fiscal year. The bonus plan is designed such that the
executive earns a proportionally higher award if the Company and the executive's
organization exceed their goals and a smaller or no award if the Company and the
executive's organization do not exceed their goals.
Long-Term Incentives: The Compensation Committee of the Board believes
that employee equity ownership provides significant additional motivation to
officers and employees to maximize value for the Company's stockholders, and
therefore periodically grants stock options under the 1998 Stock Option Plan.
The Committee grants stock options to executive officers at the prevailing
market price after considering the recommendation of the Chief Executive
Officer, the positive effects the executive has made on the overall performance
of the Company, stock option granting policies at companies of similar size in
similar industries, and certain other factors. The stock options granted only
have value to the executive if the Company's stock price increases over the
exercise price. Therefore, the Committee believes that stock options serve to
align the interests of option holders closely with those of stockholders because
of the direct benefit executive officers receive through improved stock
performance. During fiscal 2003, the Committee considered and granted stock
options to the executive officers of the Company, including J. Patrick Tinley,
the Company's Chairman of the Board. Each of the officers received stock options
based on his performance, level of responsibility, and historical and expected
contribution to the Company's success.
13
Compensation of the Chairman of the Board and Chief Executive Officer: The
Salary, and Annual Bonus and Long-Term Incentives of J. Patrick Tinley, the
Company's Chairman of the Board and Chief Executive Officer, were determined in
accordance with the criteria described in the "Salary", "Annual Bonus," and
"Long-Term Incentives" sections of this report. These amounts were designed to
compensate Mr. Tinley at prevailing market rates when revenue growth,
profitability, cashflow, and stock value appreciation targets are met, and at
above market rates when those same targets were exceeded.
Compensation Limitations: Under Section 162(m) of the Code and regulations
adopted thereunder by the Internal Revenue Service in August 1993, publicly-held
companies may be precluded from deducting certain compensation in excess of $1.0
million paid to an executive officer in a single year. The regulations exclude
from this limit performance-based compensation and stock options, provided
certain requirements, such as stockholder approval, are satisfied. The Company
believes that none of its employee compensation plans approached this limit
during fiscal 2003.
COMPENSATION
COMMITTEE
J. William Goodhew, III
Bruce J. Ryan
Frank M. Dickerson
The foregoing Compensation Committee Report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Exchange Act, except to the
extent the Company specifically incorporates it by reference into such
filing.
Compensation Committee Interlocks and Insider Participation
For the fiscal year ended June 30, 2003, directors Goodhew, Ryan and
Dickerson served as members of the Compensation Committee of the Board of
Directors. No member of the Compensation Committee was or is an officer or
employee of the Company or any of its subsidiaries. In addition, during the
fiscal year ended June 30, 2003, no officer of the Company had an "interlock"
relationship, as the SEC defines that term, to report.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires Ross' executive officers and
directors to file initial reports of share ownership and report changes in share
ownership with the Commission. Such persons are required by Commission
regulations to furnish Ross with copies of all Section 16(a) forms, which they
file. Based solely on Ross' review of such forms furnished to Ross and written
representations from certain reporting persons, Ross believes that for the
period July 1, 2002 to June 30, 2003, all Section 16(a) filings were made on a
timely basis, except that Mr. Oscar Pierre was late to file a Form 4 with the
Commission.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The following report of the Audit Committee shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall this
information be incorporated by reference by any general statement
incorporating by reference this Proxy into any filing under the Securities
Act of 1933, as amended, or the Securities and Exchange Act of 1934, as
amended, except to the extent that we specifically incorporate this
information by reference.
Note that the Audit Committee's charter is included as appendix A of this
document. Further note that the Board of Directors has determined that Bruce
Ryan is an "audit committee financial expert" as defined in item 401(h)(2) of
Regulation S-K promulgated by the SEC and is independent of management within
the meaning of the Marketplace Rules.
Below is the report of the Audit Committee with respect to our audited
financial statements for the fiscal year ended June 30, 2003, which include our
consolidated balance sheets as of June 30, 2003 and 2002, and the related
14
consolidated statements of operations, comprehensive income (loss),
shareholders' equity, and cash flows for each of the three years in the period
ended June 30, 2003 and the notes thereto.
In accordance with the written charter adopted by the Board of Directors,
the Audit Committee of the Board of Directors, which is comprised of three
independent directors, has the primary responsibility of overseeing our
financial reporting, accounting principles and system of internal accounting
controls, and reporting its observations and activities to the Board. It also
recommends to the Board of Directors the appointment of our independent
accountants and approves the services performed by the independent auditors. The
members of the Audit Committee have been determined to be independent in
accordance with the applicable rules of the SEC and Rule 4200(a)(14) of the
National Association of Securities Dealers listing standards, i.e., the
"Marketplace Rules".
Review and Discussion with Management
The Audit Committee has reviewed and discussed with management our audited
financial statements for the fiscal year ended June 30, 2003.
Review and Discussions with Independent Accountants
The Audit Committee has discussed with BDO Seidman, LLP, our independent
accountants, the matters the Audit Committee is required to discuss pursuant to
Statement on Auditing Standards No. 61 (Communications with Audit Committee),
which includes, among other items, matters related to the conduct of the audit
of our financial statements.
Independent Accountant Written Disclosures
The Audit Committee also has received written disclosures and a letter
from BDO Seidman, LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committee) and has discussed with BDO
Seidman, LLP its independence from Ross Systems.
Conclusion
Based on the review and discussions referred to above, the Audit Committee
recommended to our Board of Directors that our audited consolidated financial
statements for the fiscal year ended June 30, 2003 be included in our Annual
Report on Form 10-K.
Respectfully submitted by:
The Audit Committee of the Board of Directors
Bruce J. Ryan
J. William Goodhew, III
Frank M. Dickerson
CERTAIN TRANSACTIONS
Under the terms of indemnification agreements with each of Ross' officers
and directors, Ross is obligated to indemnify each officer and director against
certain claims and expenses for which the director might be held liable in
connection with past or future service on behalf of Ross. In addition, Ross'
Certificate of Incorporation provides that, to the extent permitted by Delaware
law, the officers and directors shall not be liable for monetary damages for
breach of fiduciary duty as an officer or director. In fiscal 2003, Ross renewed
and modified employment agreements with J. Patrick Tinley and Robert B. Webster.
The employment agreements provide the executives with severance payments and
accelerated vesting of stock options and other incentive awards if the
executive's employment is terminated without "cause" at any time. If Mr. Tinley
is terminated without "cause," he would be entitled to (1) a severance payment
of 300% of his base compensation plus 300% of his targeted bonus, (2) employee
benefit coverage applicable to the executive at the time of termination for
three years following the termination and (3) ninety days to exercise all vested
and unvested stock options and other incentive awards. If Mr. Webster is
terminated without "cause," he would be entitled to (A) a severance payment of
200% of his base
15
compensation plus 200% of his targeted bonus, (B) employee benefit coverage
applicable to the executive at the time of termination for two years following
the termination and (C) ninety days to exercise all vested and unvested stock
options and other incentive awards. The employment agreements also provide the
executives with severance payments and accelerated vesting of stock options and
other incentive awards if the executive terminates his employment with Ross for
"good reason" or is terminated for any reason other than "cause" or "disability"
within nine months immediately following a "change of control" of Ross. In such
a case, Mr. Tinley would be entitled to a severance payment of 300% of his base
compensation plus 300% of his targeted bonus, each at the time of termination,
and ninety days to exercise all vested and unvested stock options and other
incentive awards, and Mr. Webster would be entitled to a severance payment of
200% of his base compensation plus 200% of his targeted bonus, each at the time
of termination, and ninety days to exercise all vested and unvested stock
options and other incentive awards. The employment agreements define "cause" to
include a willful act by the executive which constitutes fraud and which is
injurious to Ross, conviction of, or a plea of "guilty" or "no contest" to, a
felony or the executive's continuing repeated willful failure or refusal to
perform his material duties required by the employment agreement which is
injurious to Ross.
The employment agreements define "good reason" to include a material
reduction in the executive's powers or duties, one or more reductions in the
executive's base compensation in the cumulative amount of five percent (5%) or
more or notifying the executive that his principal place of work will be
relocated by a distance of 50 miles or more. The employment agreements define
"disability" as the executive's eligibility to receive immediate long-term
disability benefits under Ross' long-term disability insurance plan or, if there
is no such plan, under the federal Social Security program.
The employment agreements define "change of control" to mean the
occurrence of any of the following events: (a) any "person" (as such term in
used in sections 13(d) and 14(d) of the Exchange Act) by the acquisition or
aggregation of securities is or becomes the beneficial owner (within the meaning
of Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of
Ross representing fifty percent (50%) or more of the combined voting power of
Ross' then outstanding securities ordinarily (and apart from rights accruing
under special circumstances) having the right to vote at elections of directors,
referred to as "Base Capital Stock"; except that any change in the relative
beneficial ownership of Ross' securities by any person resulting solely from a
reduction in the aggregate number of outstanding shares of Base Capital Stock,
and any decrease thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly or indirectly,
such person's beneficial ownership of any securities of Ross, or (b) the
stockholders of Ross approve a definitive agreement: - to merge or consolidate
Ross with or into another corporation in which the holders of the securities of
Ross before such merger or reorganization will not, immediately following such
merger or reorganization, hold as a group on a fully diluted basis both the
ability to elect at least a majority of the directors of the surviving
corporation and at least a majority in value of the surviving corporation's
outstanding equity securities; or - to sell or otherwise dispose of all or
substantially all of the assets of Ross or dissolve or liquidate Ross.
REPORT OF THE DIRECTOR NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS
During the year ended June 30, 2003, the Director Nominating Committee of
the Board consisted of three directors, Ryan, Goodhew and Dickerson, none of
whom are employees of the company and each of whom is independent. The
Nominating Committee held one meeting during the fiscal year ended June 30,
2003. The primary purposes of the Nominating Committee, as set out in the
Director Nominating Committee Charter, is to insure that the Board of Directors
is composed of appropriately competent and experienced members, and is
structured to facilitate sound corporate governance and decision making. The
Director Nominating Committee reviewed the composition of the Board, the
members' experience and their areas of core competency. The Committee concluded
that collectively and individually the members of the Board, namely, Mr. Ryan,
Mr. Goodhew, Mr. Dickerson, Mr. Tinley and Mr. Webster appropriately fulfill
acceptable standards of competence and diversity of experience for performance
as the Company's board of directors, and should therefore be nominated for
re-election.
16
Stockholders may nominate one or more persons for election as directors at
a meeting if they give timely notice in proper written form of the intent to
make such nomination. To be timely, such stockholder's notice must be delivered
to or mailed and received by the Secretary of the corporation not less than
thirty-five (35) days nor more than sixty (60) days prior to the meeting;
provided, however, that in the event that less than forty-five (45) days notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. The Board of Directors has not adopted a formal nominating committee
charter because it has determined that, due to size, composition, independence,
long tenure and low turnover, there would be limited benefit to the Company or
its shareholders to do so. The members of the nominating committee have been
determined to be independent in accordance with the applicable rules of the SEC
and Rule 4200(a)(14) of the Marketplace Rules. Additionally, the Nominating
Committee has not adopted formal policies regarding stockholder nominations. The
Committee will evaluate any director candidate nominated by stockholders and,
based on the results of that evaluation, will determine whether to include the
candidate in its recommended slate of director nominees in the proxy statement.
COMMUNICATING WITH THE BOARD OF DIRECTORS
Stockholders can communicate with the members of the Board of Directors by
writing to: Board of Directors, Ross Systems Inc., Two Concourse Parkway, Suite
800, Atlanta, Georgia 30328. Summaries of communications received (other than
junk mail) will be shared with the Board of Directors at its regularly scheduled
meetings.
17
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
ROSS SYSTEMS, INC., NASDAQ COMPOSITE INDEX, AND NASDAQ COMPUTER AND DATA
PROCESSING INDEX
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the NASDAQ Composite Index, the NASDAQ Computer and Data
Processing Index for the period commencing on June 30, 1998 and ending on June
30, 2003.
[PERFORMANCE GRAPH APPEARS HERE, GRAPHIC PLOTTED POINTS BELOW]
--------------------------------------------------------------------------------------
1998 1999 2000
---- ---- ----
--------------------------------------------------------------------------------------
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
--- --- --- --- --- --- --- --- --- --- ---
--------------------------------------------------------------------------------------
Ross 100.0 64.2 94.8 67.9 59.7 65.7 79.1 58.9 32.1 17.2 4.5
----- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
--------------------------------------------------------------------------------------
NASDAQ
Market 100.0 91.3 118.6 133.0 145.4 148.9 220.0 247.2 215.0 198.3 132.8
Index ----- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
--------------------------------------------------------------------------------------
NASDAQ
Computer 100.0 97.1 126.1 152.1 158.2 164.7 277.4 274.0 223.6 206.8 127.7
& Data ----- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
Processing
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
2001 2002 2003
---- ---- ----
--------------------------------------------------------------------------------------
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun
--- --- --- --- --- --- --- --- --- ---
--------------------------------------------------------------------------------------
Ross 6.0 7.1 7.0 13.5 26.5 19.1 15.2 19.5 31.3 33.6
---- ----- ---- ----- ---- ---- ---- ---- ---- ----
--------------------------------------------------------------------------------------
NASDAQ
Market 99.1 116.8 81.1 105.4 99.8 79.6 63.9 72.9 73.3 88.4
Index ---- ----- ---- ----- ---- ---- ---- ---- ---- ----
--------------------------------------------------------------------------------------
NASDAQ
Computer 93.1 121.3 74.2 102.8 94.9 75.4 58.3 70.9 69.1 80.1
& Data ---- ----- ---- ----- ---- ---- ---- ---- ---- ----
Processing
--------------------------------------------------------------------------------------
Assumes that $100.00 was invested on June 30, 1998 in the Company's Common
Stock and each index, and that all dividends paid by companies whose shares are
components of the index were reinvested. No dividends have been declared on the
Company's Common Stock. Stockholder returns over the period indicated should not
be considered indicative of future stockholder returns.
The foregoing Stock Performance Graph shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act or
the Exchange Act, except to the extent the Company specifically incorporates it
by reference into such filing.
18
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the shares
they represent as the Board of Directors may recommend.
The Company will mail, without charge to any stockholder upon request, a
copy of its most recent annual report on Form 10-K, including the financial
statements, schedules and a list of exhibits. Requests should be sent to the
Corporate Secretary, Ross Systems, Inc., Two Concourse Parkway, Suite 800,
Atlanta, Georgia 30328.
19
APPENDIX A
ROSS SYSTEMS, INC.
AUDIT COMMITTEE CHARTER
PURPOSE:
The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") in fulfilling its responsibility to oversee the
Company's internal and external financial reporting processes so as to ensure
the objectivity of the Company's financial statements. This independent and
objective oversight responsibility for the Company's accounting functions and
internal controls includes overseeing the financial reports and other financial
information provided by the Company to any governmental body, regulatory body,
the public and other users.
In performing this oversight role, the Committee is empowered to investigate any
matter brought to its attention and shall have full access to all books,
records, facilities and personnel of the Company as well as the power to retain
outside counsel, auditors or other experts for this purpose. The Board and the
Committee are in place to represent the Company's shareholders; accordingly, the
outside auditor is ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis and
shall include it in the Proxy not less than once every three years.
MEMBERSHIP:
The Committee shall be comprised of at least three members of the Board, and the
Committee's composition will meet the requirements of the Audit Committee Policy
of the NASD as well as the independence and experience requirements of the SEC
and NASDAQ. Those rules require among other things that all of the committee
members will be outside directors:
1. Who have no relationship to the Company that may interfere with the exercise
of their independence from management and the Company other than as a director;
and
2. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee. In addition, at
least one member of the Committee shall have accounting or related financial
management expertise adequate to be qualified as a "financial expert".
3. No member may receive consulting or other fees (other than Board or committee
fees) from the company.
4. No member may serve as a member of the audit committee of more than two other
public company Boards of directors.
In the event a Committee member faces a potential or actual conflict of interest
regarding a matter before the Committee, that Committee member shall be
responsible for alerting the Committee Chairman. In the case where the Committee
Chairman faces a potential or actual conflict of interest, the Committee
Chairman shall advise the Chairman of the Board of Directors. In the event that
the Committee Chairman, or the Chairman of the Board of Directors, concurs that
a potential or actual conflict of interest exists, an independent substitute
Director shall be appointed as a Committee member until the matter, posing the
potential or actual conflict of interest, is resolved.
PRIMARY RESPONSIBILITIES:
The Committee's role is in an oversight capacity and it recognizes that the
Company's management is primarily responsible for preparing the Company's
financial statements and that the outside auditors are responsible for auditing
those financial statements. Further, the outside auditors shall be accountable
to the Board and to the Committee. The Board and the Committee have the
authority and responsibility to select, evaluate and, where
20
necessary, replace the outside auditors.
In carrying out its oversight responsibilities, the Committee is not providing
any expert or special assurance as to the Company's financial statements or any
professional certification as to the outside auditor's work. The Committee is
not expected to define the scope of the annual audit, control the Company's
accounting practices or define the standards to be used in preparation of the
Company's financial statements.
The following functions shall be the standard recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may exercise judgment to
diverge from this guide as appropriate given the circumstances.
1. As a whole, or through a Committee representative, the Committee shall review
with management and the outside auditors the audited financial statements to be
included in the Company's Annual Report on Form 10-K (or the Annual Report to
Shareholders if distributed prior to the filing of Form 10-K). The Committee
shall, with the outside auditors, review and consider the matters required to be
discussed by Statement of Auditing Standards ("SAS") No. 61.
2. As a whole, or through a Committee representative, the Committee shall review
with the outside auditors the Company's interim financial results to be included
in the Company's quarterly reports that are filed with the Securities and
Exchange Commission on Form 10-Q. The Committee shall also review those matters
required to be discussed by SAS No. 100. This review and discussion will occur
prior to the Company's filing of the Form 10-Q.
3. At scheduled Audit Committee meetings, or at such other times as deemed
appropriate, the Committee shall discuss with management and the outside
auditors the quality and adequacy of the Company's internal controls and the
adequacy of the Company's accounting and financial personnel. This frank and
open dialog shall include the outside accountant's judgment on the quality, not
just acceptability, of the Company's accounting principles as applied in the
financial statements as well as cooperation received from management in the
conduct of the audit.
4. The Committee shall consult with management on the establishment and
maintenance of an environment that promotes ethical behavior, including the
establishment, communication and maintenance of codes of conduct to guard
against dishonest, unethical or illegal activities.
5. The Committee shall remain current on significant developments in generally
accepted accounting principles. To this end, the Committee shall periodically
review any significant changes in accounting principles with the outside
auditors.
6. Annually, the Committee shall request from the outside auditors a formal
written statement delineating all relationships between the auditor and the
Company consistent with Independence Standards Board Standard Number 1. The
Committee shall also discuss with the outside auditors any such disclosed
relationships or services and their impact on the outside auditor's independence
and shall have responsibility to recommend that the Board take appropriate
action to oversee the independence of the outside auditor.
7. The Committee, subject to any action that may be taken by the full Board,
shall have the ultimate authority and responsibility to select, oversee,
evaluate and, where appropriate, replace the outside auditor who shall report
directly to the committee.
8. The committee shall have the authority to engage outside legal, accounting
and other advisors without Board approval.
QUORUMS AND MEETINGS:
A quorum of the Committee shall be declared when a majority of the appointed
members of the Committee are in attendance. The Committee shall meet on a
regular basis. Meetings shall be scheduled at the discretion of the Chairman
provided that at least one meeting is conducted quarterly. Notice of the
meetings shall be provided at least ten days in advance. The Committee may ask
members of management or others to attend the meeting and provide pertinent
information as necessary. The committee shall meet separately and periodically
at least twice per year with
21
the independent auditor.
REPORTS:
The Committee will report to the Board regularly on at least a quarterly basis
with respect to its activities and its recommendations. When presenting any
recommendation or advice to the Board, the Committee will provide such
background and supporting information as may be necessary for the Board to make
an informed decision. The Committee will keep minutes of its meetings and will
make such minutes available to the full Board for its review. The Committee
shall report to shareholders in Company's proxy statement for its annual meeting
whether the Committee has satisfied its responsibilities under this Charter in
compliance with item 306 of the SEC's regulation S-K:
o Review and discuss the audited financial statements with management;
o Discuss with the independent auditor the matters required to be
discussed by AICPA SAS61;
o Receive the written disclosures from the auditor relating to its
independence required by Independence Standards Board Standard No,
1;
o Recommend to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K.
The Committee shall receive the quarterly disclosures required to be made to the
committee by the CEO and CFO in their certifications included in the Company's
Form 10-Q and 10-K relating to:
o All significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to
record, process, summarize, and report financial data; and
o Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal controls.
The Committee shall establish and implement procedures to receive, retain and
address complaints regarding accounting and auditing matters, including
procedures for employees' anonymous submissions of concerns.
The Committee shall review with management and the independent auditor
compliance with laws, regulations and internal procedures and contingent
liabilities and discuss policies with respect to risk assessment and risk
management. The committee shall periodically discuss with the company's counsel
legal matters that may have a material impact on the financial statements or the
Company's compliance policies.
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REVOCABLE PROXY
ROSS SYSTEMS, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
2003 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned stockholder of Ross Systems, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated June 11, 2004 and June 15, 2004 respectively, and
hereby appoints J. Patrick Tinley, proxy and attorney-in-fact, with full power
of substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 2003 Annual Meeting of Stockholders of Ross Systems, Inc. to
be held on July 8, 2004, and at any adjournment(s) thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote if then
and there personally present, on the matters set forth on the reverse side. Such
attorney or substitute (if present and acting at said meeting or any
adjournment(s) thereof) shall have and may exercise all of the powers of said
attorney-in-fact hereunder.
1. Election of Directors
Nominees: Frank M. Dickerson, J. William Goodhew, III,
Bruce J. Ryan, J. Patrick Tinley, Robert B. Webster
With- For All
For hold Except
[_] [_] [_]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
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2. Proposal to ratify the appointment of BDO Seidman, LLP as the independent
auditors of Ross Systems, Inc. for the fiscal year ending June 30, 2004.
For Against Abstain
[_] [_] [_]s
And in their discretion upon such other matter(s) which may properly come before
the meeting or any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, AND FOR THE APPOINTMENT OF ANDERSEN
LLP, OR AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING, INCLUDING, AMONG OTHER THINGS, CONSIDERATION OF ANY
MOTION MADE FOR ADJOURNMENT OF THE MEETING.
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Please be sure to sign and date this Proxy in the box below.
----------------------------------------
Date
----------------------------------------
Stockholder sign above
----------------------------------------
Co-holder (if any) sign above
ROSS SYSTEMS, INC.
Two Concourse Parkway, Suite 800, Atlanta, GA 30328
(This Proxy should be marked, dated, and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as a community property, both should sign).
PLEASE ACT PROMPTLY-- SIGN, DATE & MAIL YOUR PROXY CARD TODAY