SCHEDULE 14A INFORMATION
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ACXIOM CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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ACXIOM CORPORATION
1 Information Way
Little Rock, Arkansas 72202
501.342.1000
www.acxiom.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 4, 1999
[GRAPH OMITTED]
Please join us for the 1999 Annual Meeting of Stockholders of Acxiom
Corporation. The meeting will be held on Wednesday, August 4, 1999, at 10:30
a.m., local time at the DoubleTree Hotel, 424 West Markham Street, Little Rock,
Arkansas.
We are holding this meeting:
1. to elect three directors to serve until the 2002 annual meeting
of stockholders; and
2. to transact any other business that properly comes before the
meeting.
To vote at the meeting, you must be a stockholder of record at the
close of business on June 14, 1999.
By Order of the Board of Directors
Catherine L. Hughes
Secretary
Little Rock, Arkansas
June 25, 1999
YOUR VOTE IS IMPORTANT!
PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY OR VOTE BY
TELEPHONE OR THROUGH THE WEB SITE LISTED IN THE
VOTING INSTRUCTIONS.
PROXY STATEMENT
This Proxy Statement is being mailed beginning June 25, 1999, in
connection with the solicitation of proxies by the Board of Directors of Acxiom
Corporation, a Delaware corporation, for use at the 1999 Annual Meeting of
Stockholders. The Meeting will be held at the DoubleTree Hotel, 424 West Markham
Street, Little Rock, Arkansas on Wednesday, August 4, 1999, at 10:30 a.m., local
time.
TABLE OF CONTENTS
PAGE
Questions and Answers . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Proposal You May Vote On . . . . . . . . . . . . . . . . . . . . . . . . . 4
Information About The Board of Directors . . . . . . . . . . . . . . . . . . 5
Nominees For Director . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Board Meetings and Committees . . . . . . . . . . . . . . . . . . . . . 7
Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Ownership of Major Stockholders . . . . . . . . . . . . . . . . . . . . 8
Holdings of Officers and Directors . . . . . . . . . . . . . . . . . . 9
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . 10
Option Grants For Last Fiscal Year . . . . . . . . . . . . . . . . . . 11
Option Exercises and Fiscal Year End Option Values . . . . . . . . . . . 12
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . 12
Compensation Committee Interlocks and Insider Participation . . . . . . 12
Report of Compensation Committee . . . . . . . . . . . . . . . . . . . . 12
Stock Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 16(a) Reporting Delinquencies . . . . . . . . . . . . . . . . . . . 18
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . 18
Submission of Stockholder Proposals . . . . . . . . . . . . . . . . . . . . 18
Additional Information Available . . . . . . . . . . . . . . . . . . . . . . 19
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2
QUESTIONS AND ANSWERS
Q: Who can vote?
A: If you owned any shares of Acxiom at the close of business on June 14,
1999, you are entitled to vote.
Q: How many shares can vote?
A: Every stockholder is entitled to one vote for each share held. As of June
14, 1999, our record date, 83,085,032 shares of common stock were issued
and outstanding and are eligible to vote. A list of our stockholders will
be available for examination at our principal offices, 1 Information Way,
Little Rock, Arkansas 72202, for at least 10 days prior to the 1999 Annual
Meeting.
Q: What may I vote on?
A: The election of William T. Dillard II, Harry C. Gambill, and Thomas F.
(Mack) McLarty, III to the Board of Directors.
Q: How does the Board recommend I vote on the proposal?
A: The Board recommends a vote FOR each of the nominees.
Q: How do I vote?
A: You can vote by proxy, which gives the proxy holder the right to vote your
shares on your behalf. There are three ways for you to send in your proxy:
o Mail the proxy voting card in the enclosed return envelope;
o Call the 800 number listed in your proxy voting instructions to vote
by telephone; or
o Log on to the Internet at the web site listed in your proxy voting
instructions and follow the instructions at that site.
You may also vote in person at the Annual Meeting, even if you have already
sent in your proxy.
Q: Who will count the votes?
A: A representative of First Chicago Trust Company, a Division of EquiServe,
our transfer agent, will count the votes and act as the inspector of
election.
Q: What does it mean if I get more than one proxy card?
A: If your shares are registered differently and in more than one account, you
will receive more than one card. Follow the voting instructions on each
proxy card to ensure that all of your shares are voted.
3
Q: What vote is required to pass an item of business?
A: A majority of the holders of our outstanding common stock must be present
in person or represented by proxy to hold the meeting. A majority of
present or represented stockholders' votes is required to elect any
director.
Unless you indicate otherwise on your proxy card, the persons named as your
proxies will vote your share(s) for all of the nominees for director.
Q: Can I revoke my proxy?
A: Yes. There are three ways for you to revoke your proxy before your proxy
holder votes your shares:
o File a written revocation with Acxiom's Secretary before the meeting;
o Sign and deliver a proxy bearing a later date; or
o Vote in person at the meeting.
PROPOSAL YOU MAY VOTE ON
1. Election of Directors
There are three nominees for election this year. William T. Dillard II,
Harry C. Gambill, and Thomas F. (Mack) McLarty, III currently are members
of the Acxiom Board of Directors with terms that expire at the meeting.
Detailed information on each is provided below.
Your Board unanimously recommends a vote for each of these directors.
The enclosed form of proxy provides a method for you to (1) vote for all
nominees together, (2) vote only for certain nominees while withholding
authority to vote for other nominees, or (3) withhold authority for all
nominees. Please read the voting instructions contained in the attached proxy
for information on how to withhold authority for any or all nominees. If you
withhold authority for all nominees, your vote will be treated as an abstention
and accordingly your shares will neither be voted for nor against a director,
but they will be counted for quorum purposes. Broker "non-votes" are not
relevant to the determination of a quorum or whether the proposal to elect
directors has been approved.
A majority of the holders of our outstanding common stock must be present
in person or represented by proxy to establish a quorum for the meeting. A
majority of shares present or represented by stockholder votes at the meeting is
required to elect any director.
4
INFORMATION ABOUT THE BOARD OF DIRECTORS
William T. Dillard II, Harry C. Gambill, and Thomas F. (Mack) McLarty, III
currently are members of the Acxiom Board of Directors with terms that expire at
the meeting. If elected, Messrs. Dillard, Gambill and McLarty will serve with
the other five Board members: Dr. Ann H. Die and Charles D. Morgan, whose terms
will expire at the 2000 Annual Meeting, and Rodger S. Kline, Robert A. Pritzker
and James T. Womble, whose terms expire at the 2001 Annual Meeting.
Your proxy holder will vote your shares for the nominees unless you
instruct otherwise. If a nominee is unable to serve as a director, your proxy
holder may vote for any substitute nominee proposed by the Board unless you
withhold this authority. In the event of any director's death, disqualification
or inability to serve, the Board will fill the vacancy.
Nominees For Director
The Board nominates the following candidates.
Director
Name Age Business Experience Since
William T.
Dillard II 54 Mr. Dillard has served since 1968 as a member of 1988
the Dillard's, Inc. Board of Directors and is
Chief Executive Officer of Dillard's, Inc. of
Little Rock, Arkansas, a regional chain of
traditional department stores with 270 retail
outlets in 27 states in the Southeast,
Southwest and Midwest areas of the United
States. In addition to Dillard's, Inc., Mr.
Dillard is also a director of Barnes & Noble, Inc.
and Chase Bank of Texas, N.A. He holds a master's
degree in business administration from Harvard
University and a bachelor's degree in the same
field from the University of Arkansas.
Harry C.
Gambill 53 Mr. Gambill is a director and has held the positions 1992
of Chief Executive Officer and President of Trans
Union LLC, a company engaged in the business of
providing consumer credit reporting services, since
April 1992. Mr. Gambill joined Trans Union in
1985 as Vice President/General Manager of the
Chicago Division. In 1987 he was named Central
Region Vice President. In 1990 he was named
President of TransAction, and assumed the added
title of President of TransMark in 1991. Mr.
Gambill is also a director of Associated Credit
Bureaus and the International Credit Association.
He holds degrees in business administration and
economics from Arkansas State University.
Thomas F.
(Mack)
McLarty, III 52 Mr. McLarty was appointed to fill a vacancy on the 1999
Company's Board of Directors in 1999. He is Chairman
of The McLarty Companies, a third generation family
business and one of the nation's leading automotive
dealership groups. He is a board member of the
Financial Times Advisory Board of London, England,
the Americas Society of New York City, the Inter-
American Dialogue of Washington, D.C., and the M.D.
Anderson Cancer Center in Houston. He has also
recently joined the board of Entergy System
Companies. In 1983 he became chairman and chief
5
executive officer of Arkla, a Fortune 500
natural gas company. He was appointed by President
Bush to the National Petroleum Council and the
National Council on Environmental Quality, and he
was a member of the St. Louis Federal Reserve Board
from 1989 through 1992. Beginning in 1992, he
served President Clinton in several key positions:
Chief of Staff, Counselor to the President, and
Special Envoy for the Americas, with over five years
of service in the President's Cabinet and on the
National Economic Council. He holds a degree in
business administration from the University
of Arkansas.
Other Directors
Director
Name Age Business Experience Since
Dr. Ann H.
Die 54 Dr. Die has served as President of Hendrix 1993
College in Conway, Arkansas since 1992. She is
a member of the Board of Directors of the National
Merit Scholarship Corporation, the Foundation for
Independent Higher Education, and the American
Council on Education. She is also Chair of the
National Collegiate Athletic Association (NCAA)
Division III Presidents Council and a member of
the NCAA Executive Committee. She is Past Chair
of the Board of Directors of the National
Association of Independent Colleges and
Universities. Prior to coming to Hendrix, she
served as Dean of the H. Sophie Newcomb Memorial
College and Associate Provost at Tulane University.
Dr. Die graduated summa cum laude from Lamar
University, earned a master's degree from the
University of Houston, and a Ph.D. in Counseling
Psychology from Texas A&M University.
Rodger S.
Kline 56 Mr. Kline joined Acxiom in 1973 and serves as 1975
Acxiom's Treasurer and Chief Operating Officer
(Operations Leader). Prior to joining Acxiom,
Mr. Kline was employed by IBM Corporation. He
holds an electrical engineering degree from
the University of Arkansas.
Charles D.
Morgan 56 Mr. Morgan joined Acxiom in 1972. He has been 1975
Chairman of the Board of Directors since 1975,
and serves as Acxiom's President (Company
Leader). He is also a director of Fairfield
Communities, Inc. and of the Direct Marketing
Association. In addition, he serves as Chairman
of the Board of Hendrix College. He was employed
by IBM Corporation prior to joining Acxiom. Mr.
Morgan holds a mechanical engineering degree
from the University of Arkansas.
Robert A.
Pritzker 72 Mr. Pritzker was appointed to fill a newly created 1994
position on Acxiom's Board of Directors in 1994
and was elected a director in 1996. Mr. Pritzker
is a director and the Chairman of Trans Union LLC,
a company engaged in the business of providing
consumer credit reporting services, a director
6
and the President of each of Union Tank Car
Company, a company principally engaged in the
leasing of railway tank cars and other railcars,
and Marmon Holdings, Inc., a holding company
of diversified manufacturing and services
businesses. Mr. Pritzker is also a director of
Hyatt Corporation, a company which owns and
operates domestic and international hotels,
and a director of Southern Peru Copper
Corporation, a company which mines, smelts,
refines, and markets copper. Mr. Pritzker
holds an industrial engineering degree from
the Illinois Institute of Technology.
James T.
Womble 56 Mr. Womble joined Acxiom in 1974 and serves as 1975
one of Acxiom's four Division Leaders. Mr.
Womble is also a director of Sedona Corporation.
Prior to joining Acxiom, he was employed by IBM
Corporation. He holds a degree in civil
engineering from the University of Arkansas.
Board Meetings and Committees
The Board holds quarterly meetings to review significant developments
affecting Acxiom and to act on matters requiring Board approval. The Board
currently has three standing committees to assist it in the discharge of its
responsibilities. The committees are:
The Audit Committee
Reviews the reports of the auditors and has the authority to investigate
the financial and business affairs of Acxiom.
The members are outside directors Dr. Ann H. Die, William T. Dillard II,
Harry C. Gambill, Thomas F. (Mack) McLarty, III, and Robert A. Pritzker.
The Compensation Committee
Administers certain of Acxiom's employee benefit plans and approves the
compensation paid to Acxiom's senior leaders.
The members are William T. Dillard II and Thomas F. (Mack) McLarty, III.
The Executive Committee
Implements the policy decisions of the Board and handles routine matters
which have been delegated to the Executive Committee by the Board.
The members are Rodger S. Kline, Charles D. Morgan, and James T. Womble.
During the past fiscal year, the Board met five times, the Audit
Committee met one time and the Compensation Committee met one time. Action
pursuant to unanimous written consent in lieu of a meeting was taken four times
by the Board, two times by the Compensation Committee and thirteen times by the
Executive Committee. All of the incumbent directors attended at least
three-fourths of the aggregate number of meetings of the Board and of the
committees on which they served during the past fiscal year except for Robert A.
Pritzker.
7
STOCK OWNERSHIP
The following tables show the ownership of Acxiom common stock by major
stockholders, directors and executive officers.
Ownership of Major Stockholders
The following table lists the persons known by Acxiom to be the beneficial
owners of 5% or more of Acxiom common stock. The percentages of outstanding
shares listed below are calculated based upon 82,995,032 shares of Acxiom common
stock issued and outstanding as June 7, 1999.
Number of Shares
of Common Stock Percent of
Name and Address of Beneficial Owner Beneficially Owned Outstanding Shares
T. Rowe Price Associates, Inc. . . . . . 10,206,965 12.3%
P.O. Box 89000
Baltimore, MD 21289
William Blair & Company . . . . . . . . 5,861,449 7.1%
222 West Adams Street
Chicago, IL 60606
Based upon information contained in a Schedule 13G filed by T. Rowe Price
as of February 12, 1999 and certain information provided by T. Rowe Price
as of March 31, 1999 in its capacity as trustee for certain employee
benefit plans of Acxiom and its subsidiaries. 6,283,665 of the shares
reported are held by T. Rowe Price in its capacity as trustee for Acxiom
employee benefit plans. Except for participants under the Non-Qualified
Deferred Compensation Plan who have approximately 9,257 shares allocated to
their accounts, the participants under each of these employee benefit plans
are entitled to vote the shares of Acxiom common stock allocated to their
accounts on all matters submitted to Acxiom stockholders for approval.
Based on information contained in a Schedule 13G filed with the Securities
and Exchange Commission.
8
Holdings of Officers and Directors
This table shows the amount of Acxiom common stock held by each director
and the named executive officers on June 7, 1999. It also shows the common stock
held by all of Acxiom's directors and executive officers as a group on that
date.
Number of Shares
of Common Stock Percent of
Name of Beneficial Owner Beneficially Owned Outstanding Shares
Dr. Ann H. Die . . . . . . . . . . . . . 11,655 *
C. Alex Dietz . . . . . . . . . . . . . 450,430 *
William T. Dillard II . . . . . . . . . 20,000 *
Harry C. Gambill . . . . . . . . . . . . 400 *
Rodger S. Kline . . . . . . . . . . . . 1,934,480 2.3%
Thomas F. McLarty, III . . . . . . . . . 1,000 *
Charles D. Morgan . . . . . . . . . . . 3,809,871 4.6%
Robert A. Pritzker . . . . . . . . . . . 3,600 *
James T. Womble . . . . . . . . . . . . 1,603,653 1.9%
Paul L. Zaffaroni . . . . . . . . . . . 341,410 *
All directors, nominees and executive
officers, as a group (14 persons) . . . 8,452,396 10.2%
- ----------------------------
* Denotes less than 1%.
Includes 2,163 shares held by Mr. Dietz's wife and 251,585 shares subject
to currently exercisable options (35,734 of which are held by Mrs. Dietz),
of which 251,161 are in the money.
Includes 291,828 shares subject to currently exercisable options and all
are in the money.
Includes 388,863 shares subject to currently exercisable options and all
are in the money.
The 3,600 shares were issued to Mr. Pritzker as part of his director fees
for serving on Acxiom's Board of Directors. Of these, 1,000 shares are
owned by Mr. Pritzker's wife.
Includes 232,403 shares subject to currently exercisable options and all
are in the money.
Includes 320,883 shares subject to currently exercisable options and all
are in the money.
Includes 1,709,197 shares subject to currently exercisable options, of
which 1,706,831 are in the money.
9
EXECUTIVE COMPENSATION
This table shows the compensation during each of Acxiom's last three fiscal
years paid to Mr. Morgan, the Company Leader, and the four other most highly
compensated executive officers based on compensation earned during the fiscal
year ended March 31, 1999.
Summary Compensation Table
Long Term Compensation
------------------------
Annual Compensation Awards Payouts
---------------------- ---------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securi-
ties
Other Re- Under- All
Annual stricted lying Other
Name and Comp- Stock Options/ LTIP Compen-
Principal Salary Bonus ensation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ----------------- ---- ------- ----- -------- -------- ------- ------- -------
Charles D. Morgan 1999 485,000 ___ 292,300 ___ 49,678___ 24,020
Chairman of the 1998 375,000 ___ 267,857 ___ 0 ___ 14,813
Board and 1997 325,000 ___ 63,476 ___ 33,545 ___ 8,239
Company Leader
Rodger S. Kline 1999 322,000 ___ 194,063 ___ 33,483___ 15,956
Operations 1998 250,000 ___ 178,571 ___ 0 ___ 9,869
Leader 1997 213,000 ___ 41,601 ___ 21,985 ___ 2,817
James T. Womble 1999 264,000 ___ 159,107 ___ 31,782___ 12,719
Division Leader 1998 202,000 ___ 126,250 ___ 0 ___ 7,829
1997 183,500 ___ 35,340 ___ 18,900 ___ 5,329
Paul L. Zaffaroni 1999 242,000 ___ 127,617 ___ 7,415___ 11,468
Division Leader 1998 193,000 ___ 120,625 ___ 0 ___ 7,564
1997 172,300 ___ 33,652 ___ 17,784 ___ 2,563
C. Alex Dietz 1999 242,000 ___ 70,898 ___ 4,483___ 11,445
Division Leader 1998 191,000 ___ 119,375 ___ 0 ___ 7,328
1997 168,300 ___ 32,871 ___ 17,371 ___ 4,986
- --------------------------
This amount represents the named individuals' at-risk pay for each fiscal
year. See discussion of "At-Risk Base Pay" below under "Report of
Compensation Committee."
No restricted stock grants were made to the named individuals during the
last three fiscal years.
See footnotes to "Option Grants For Last Fiscal Year" on the following
page.
This amount represents Acxiom's contribution on behalf of each named
executive officer to Acxiom's 401(k) and supplemental executive retirement
plans.
10
Option Grants For Last Fiscal Year
This table contains information concerning options to acquire shares of
Acxiom stock granted to the named executive officers.
Individual Grants
(a) (b) (c) (d) (e) (h)
Percent of
Total
Options/
Number of SARs
Securities Granted
underlying to Grant Date
Options/SARs Employees Exercise or Present
Granted in Fiscal Base Price Expiration Value
Name (#) Year ($/Sh) Date ($)
Charles D. Morgan .... 8,577 .560% 26.03 11/9/13 144,196.52
4,980 .325% 39.04 11/9/13 72,095.46
5,663 .369% 52.05 11/9/13 72,095.65
13,473 .879% 26.08 5/25/14 94,446.76
16,985 1.108% 26.08 5/25/14 119,081.84
Rodger S. Kline ...... 5,912 .386% 26.03 11/9/13 99,392.54
3,433 .224% 39.04 11/9/13 49,699.54
3,904 .255% 52.05 11/9/13 49,701.82
8,958 .584% 26.08 5/25/14 62,792.69
11,276 .736% 26.08 5/25/14 79,056.04
James T. Womble ...... 4,198 .274% 26.03 5/25/14 70,568.38
2,438 .159% 39.04 11/9/13 35,302.24
2,772 .181% 52.05 11/9/13 35,287.56
13,129 .856% 26.08 11/9/13 92,031.10
9,245 .603% 26.08 5/25/14 64,816.70
Paul L. Zaffaroni .... 7,415 .484% 26.08 5/25/14 51,986.57
C. Alex Dietz ........ 4,483 .292% 26.08 5/25/14 31,430.31
On November 10, 1998, these long-term incentive options were granted to
reflect a level change in the officer's compensation. These options vest
incrementally over nine years.
Options were granted on May 26, 1999 to some members of the leadership
team, including this executive officer, in lieu of cash payments made from
the "incentive bank." Under Acxiom's long term incentive plan, half of any
amounts achieved over and above the annual EVA targets may be retained in
the incentive bank. Up to 1/3 of any overattainment balance may be paid out
annually in cash or stock options. The exercise price was the fair market
value of the Company's common stock on the day of grant. These options are
fully vested and became immediately exercisable upon the grant date.
Options were granted on May 26, 1999 to the leadership team, including the
named individuals, in lieu of a portion of the at-risk base pay which was
to have been paid to them in cash for the fiscal year ended March 31, 1999
as a part of their annual compensation. The exercise price was the fair
market value of the Company's common stock on the day of grant. These
options are fully vested and became immediately exercisable upon the grant
date. (4) The grant date present value was based on the Black-Scholes
Option Valuation Model, a widely recognized method of valuing options. The
following underlying assumptions were used to derive the present value of
these options: expected volatility of Acxiom's common stock of 40.75% to
46.34%, based upon the actual monthly volatility as
11
represented by the standard deviation in the stock price variance for
the two years prior to the grant date; a risk-free rate of return of
4.93% to 5.27%, based on the yield of the two year U.S. treasury notes
as of the grant date; and exercise of the option two years after the
grant date. The actual value, if any, the named individuals may realize
will depend on the excess of the stock price over the exercise price on
the date the option is exercised; consequently, there is no assurance
the value realized by the named individuals will be at or near the
value estimated by the Black-Scholes Option Valuation Model.
Option Exercises and Fiscal Year End Option Values
This table shows all stock options exercised by the named executives
during the fiscal year ended March 31, 1999, and the number and value of options
they held at fiscal year end.
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options/SARs Options/SARs
Shares at Fiscal Year-End at Fiscal Year-End
Acquired (#) ($)
Name on Value Exer- Unexer- Exer- Unexer-
Exercise Realized cisable cisable cisable cisable
(#) ($)
Charles D. Morgan 0 0 358,405 269,398 6,185,831 3,149,075
Rodger S. Kline 0 0 271,594 178,514 4,958,694 2,091,708
James T. Womble 0 0 210,029 155,227 3,656,160 1,874,913
Paul L. Zaffaroni 25,000 539,375 313,468 136,668 6,291,912 1,762,428
C. Alex Dietz 24,000 535,500 241,456 134,813 4,587,786 1,757,439
Compensation of Directors
Each outside director receives 1,000 shares of unregistered common
stock as an annual retainer fee. In addition, each outside director receives a
$1,500 fee for each meeting he or she attends. Inside directors do not receive
any additional compensation for their service as directors.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are William T. Dillard II and
Thomas F. (Mack) McLarty, III. No compensation committee interlocks exist with
respect to the Board's Compensation Committee, nor do any present or past
officers of Acxiom serve on the Compensation Committee.
Report of Compensation Committee
The Compensation Committee of the Board of Directors makes decisions on the
compensation of Acxiom's leadership team. The Compensation Committee members are
non-employee, outside directors pursuant to Securities and Exchange Commission
rules and applicable Treasury regulations. Set forth below is a report submitted
by William T. Dillard II and Thomas F. (Mack) McLarty, III, in their capacity as
members of the Board's Compensation Committee, addressing the compensation
policies for Acxiom's leadership team, for the individuals named in the tables
above, and for Mr. Morgan.
12
Compensation Policies
Compensation for Acxiom's leadership is based upon principles designed to
align leadership compensation with business strategy, Acxiom values and
management initiatives. The plan is designed to:
o align the leaders' interests with the stockholders' and investors'
interests
o motivate the leaders to achieve the highest level of performance
o retain key leaders by linking executive compensation to Acxiom
performance
o attract the best candidates through competitive, growth-oriented plans
The resulting compensation strategy is targeted to provide an overall
level of compensation opportunity that is competitive within the markets in
which Acxiom competes, as well as within a broader group of companies of
comparable size and complexity. Actual compensation levels may eventually be
greater than or less than the average competitive market levels, based upon the
achievement of Acxiom, as well as upon individual performance. The Compensation
Committee uses its discretion to set the parameters of the leadership
compensation plan when external, internal and/or individual circumstances
warrant it. Increased orientation of leadership compensation policies toward
long-term performance has been accompanied by increased utilization of objective
performance criteria. See "Components of Compensation" below.
The Compensation Committee also endorses the position that stock
ownership by management and stock-based performance compensation arrangements
are beneficial in aligning management's and stockholders' interests and the
enhancement of stockholder value. Thus, the Committee has also increasingly
utilized these elements in Acxiom's compensation program for its leadership
team.
Components of Compensation
Compensation paid to Acxiom's leaders in fiscal 1999, the separate elements
of which are discussed below, consisted of the following: not-at-risk base pay,
at-risk base pay, and long-term incentive compensation granted under Acxiom's
stock option plans. The Compensation Committee's increasing emphasis on tying
pay to long-term performance criteria is reflected in a change to Acxiom's
leadership compensation plan effective for the past two fiscal years. The plan
contains five possible compensation levels with base pay being established based
on the 75th percentile of market for senior leaders and the 50th percentile for
all other leaders, which provides flexibility in establishing appropriate
compensation packages for Acxiom's leadership. The plan provides for
increasingly large percentages of total compensation being weighted towards
at-risk pay and, to an even greater degree, toward long-term incentive
compensation. The higher the compensation level, the greater the overall
percentage of at-risk and LTI. Under the plan, the compensation for Acxiom's
senior leaders, who participate in the top two levels of the plan, is as
follows: not-at-risk base pay (35-40%); at-risk base pay (25%); and LTI
compensation (35-40%).
Not-At-Risk Base Pay - Base pay levels are largely determined through
market comparisons. Actual salaries are based on individual performance
contributions and the use of market surveys for comparable companies and
positions. Base salaries for Acxiom's senior leadership were targeted in fiscal
1999 to represent 35-40% of total compensation, which includes the annual
at-risk base pay and LTI compensation. For other corporate, group and business
unit level leaders, base salaries were targeted at 40-70% of total compensation.
At-Risk Base Pay - The at-risk base pay for all of Acxiom's leaders is
funded after Acxiom achieves its earnings per share target. Attainment of
targeted at-risk base pay is largely determined by using the EVA(R) (Economic
Value Added) model. (EVA is a registered trademark of Stern Stewart & Co.) EVA
measures a Company's performance by taking its after-tax operating profit and
subtracting the cost of the capital. In fiscal 1999, at-risk base pay was
targeted to represent 25% of total compensation for the senior leadership team
and 15-25% for other corporate, group and business unit leaders. Acxiom's
diluted earnings per share goal for the year was $.78 per share, excluding
special charges, which was achieved.
13
Long-Term Incentive Compensation - The Committee's long-term incentive
compensation plan is composed of awards of stock options designed to align
long-range interests between Acxiom's leadership team and its stockholders and
to assist in the retention of key people. During fiscal 1999, the long-term
incentives were targeted to represent 35-40% of total compensation for senior
leadership and 15-35% for other corporate, group and business unit leaders. On
May 26, 1999, senior leadership members were awarded the equivalent of three
years' worth of non-statutory stock options to induce them to adopt the
long-term view of stockholders. One-half of the options awarded were priced at
the then current market value, one-fourth were priced at a 25% premium over the
then current market value, and the remaining one-fourth were priced at a 50%
premium over the then current market value. Senior leadership members will not
be eligible for new grants of LTI options until 2002.
Under the Committee's current guidelines, which were adopted in May 1999,
the terms of long-term incentive non-statutory options are 15 years, and the
exercise prices are: one-half at the fair market value on the date of grant,
one-fourth at a 25% premium over market, and one-fourth at a 50% premium over
market. For the six years prior to the adoption of the current guidelines, LTI
options were granted one-half at fair market value, one-fourth at a 50% premium
over market, and one-fourth at a 100% premium over market. The LTI vesting
period for options granted after the adoption of the new guidelines was changed
from nine to six years, with 20% of the options becoming vested on each of the
second through the sixth anniversaries. These changes were made in order to make
Acxiom more competitive with other companies in the information technology
industry.
Supplemental Executive Retirement Plan - All members of Acxiom's leadership
team are eligible to participate in the Supplemental Executive Retirement Plan
("SERP"), which was adopted in fiscal 1996, by contributing up to 100% of their
pretax income into the plan. Acxiom matches at a rate of $.50 on the dollar up
to the first 6% of the leadership team members' combined contributions under
both the SERP and Acxiom's 401K Retirement Plan. The Acxiom match is paid in
Acxiom common stock.
Other Compensation Plans - Acxiom maintains certain broad-based employee
benefit plans in which leadership team members are permitted to participate on
the same terms as non-leadership team associates who meet applicable eligibility
criteria, subject to any legal limitations on the amounts that may be
contributed or the benefits that may be payable under the plans.
Mr. Morgan's Compensation
In fiscal 1999, Acxiom's revenue increased 28%, and earnings (before
special charges) increased 34%, a record year in both revenue and earnings for
Acxiom. Additionally, the return on stockholders' equity for fiscal 1999 was
21.5%, excluding special charges, in line with Acxiom's goal of achieving a 20%
return. In the prior year, Acxiom's revenue and earnings increased 19% and 22%,
respectively.
Because of Acxiom's performance and Mr. Morgan's performance in the prior
year, Mr. Morgan's fiscal 1999 base pay was increased by 29% over fiscal 1998.
His base pay for fiscal 2000 was increased 23% over fiscal 1999. This increase
was due in part to the success of Acxiom in fiscal 1999, and in part as the
second of four proposed annual increases designed to make the salaries of Mr.
Morgan (and other Acxiom leaders) competitive with comparable market
compensation (i.e., within the 75th percentile of competitive companies) by the
end of the four-year adjustment period.
In fiscal 1999, the Company's earnings per share results and the Company's
EVA attained were the primary basis for determining the at-risk base pay earned
by Mr. Morgan. A portion of Mr. Morgan's at-risk payments were made in cash.
(See "Summary Compensation Table - Other Annual Compensation" above.) On May 26,
1999, the Compensation Committee of the Company's Board of Directors granted
16,985 non-statutory stock options to Mr. Morgan in lieu of the remaining
portion of his at-risk compensation. On the same date, Mr. Morgan was also
granted 13,338 options in lieu of a cash payment from the "incentive bank"
maintained under the leadership compensation plan. The plan permits the
retention in the bank of half of any amounts achieved over and above the annual
EVA targets. Up to 1/3 of any overattainment balance may be paid out annually in
cash or stock options. All of the options referred to above were granted at an
exercise price of $26.08, the market value on the date of grant, and were fully
14
vested as of the date of grant. The actual value, if any, Mr. Morgan may
ultimately realize will depend on the excess of the stock price over the
exercise price on the date he exercises the options. In any event, until the
price of the Company's stock reaches $33.09, Mr. Morgan will be unable to
realize the full value of this portion of his pay.
On November 10, 1998, Mr. Morgan received 19,220 options which reflected an
adjustment which had previously been made to his level of compensation. These
non-statutory options have exercise prices as follows: one-half at the then
current market price of $26.03, one-fourth at a 50% premium over market
($39.04), and the remaining one-fourth at a 100% premium over market ($52.05).
Thus, the full value of these options will not be realized until the stock price
doubles. These options have a term of 15 years and vest over nine years in equal
parts beginning on the first anniversary of the grant date. The grant was
intended to further encourage Mr. Morgan's long-term performance while aligning
his interests with those of Acxiom's other stockholders with regard to the
performance of Acxiom's common stock.
Omnibus Budget Reconciliation Act of 1993
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") generally prevents
public corporations from deducting as a business expense that portion of the
compensation paid to the named individuals in the Summary Compensation Table
that exceeds $1,000,000. However, this deduction limit does not apply to
"performance-based compensation" paid pursuant to plans approved by
stockholders. The Board has modified its compensation plans so as to comply with
OBRA and thereby retain the deductibility of executive compensation, and it is
Acxiom's intention to continue to monitor its compensation plans to comply with
OBRA in the future.
William T. Dillard II Thomas F. (Mack) McLarty, III
15
STOCK PERFORMANCE GRAPH
The graph below compares for each of the last five fiscal years the
cumulative total return on Acxiom's common stock, the Nasdaq Stock Market - U.S.
Index, and the Nasdaq Stock Market - Computer and Data Processing Index. The
cumulative total return on Acxiom's common stock assumes $100 invested on March
31, 1994 in Acxiom's common stock.
The following table is submitted in lieu of the required graph:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ACXIOM CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
YEAR 1994 1995 1996 1997 1998 1999
Acxiom Corporation $100 $161 $230 $277 $494 $511
NASDAQ - US Index 100 111 151 168 254 342
NASDAQ - Computer & Data Processing 100 135 191 209 365 593
* $100 INVESTED ON 03/31/92 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MARCH 31.
16
CERTAIN TRANSACTIONS
1. Acxiom entered into an agreement to be a corporate sponsor of RM
Promotions, LLC in the 1999 NASCAR truck racing series. Rob Morgan, an employee
and majority owner of RM Promotions, is the son of Company Leader Charles D.
Morgan, who has a minority interest in RM Promotions. Under the agreement, RM
Promotions will support Acxiom customers and promote Acxiom products and
services at the NASCAR events. RM Promotions will also assist Acxiom in
providing hospitality facilities for Acxiom customers at selected events. The
total 1999 sponsorship fee to be paid by Acxiom to RM Promotions is $500,000.
2. Acxiom uses the temporary staffing services of the national staffing
firm, Norrell Staffing Services, Inc. for its strategic staffing and contingency
workforce needs. Susie P. Morgan, wife of Company Leader Charles D. Morgan, owns
the Little Rock, Arkansas franchise of Norrell. The total annual fees received
by Ms. Morgan's franchise from Norrell, based on payments to be made by Acxiom
to Norrell, were approximately $102,000 in fiscal 1999.
3. On January 5, 1996, Acxiom leased an aircraft from MorAir, Inc., a
corporation controlled by Charles D. Morgan, Acxiom's Company Leader, for
$66,385 per month, plus maintenance and insurance. The term of this aircraft
lease expires January 4, 2001. The terms of the lease have been found by the
Board to be as good or better than those which could have been obtained from an
unrelated third party.
4. In accordance with a data center management agreement dated July 27,
1992 between Acxiom and Trans Union LLC, Acxiom (through its subsidiary, Acxiom
CDC, Inc.) acquired all of Trans Union's interest in its Chicago data center and
agreed to provide Trans Union with various data center management services. The
term of the agreement expires in 2005. In the past fiscal year, we received
approximately $70 million in revenue from Trans Union.
As part of the 1992 agreement, Acxiom issued 1,920,000 shares of its common
stock to Trans Union. At the same time, Acxiom also issued a warrant to Trans
Union to purchase up to 4,000,000 additional shares prior to August 31, 2000, at
exercise prices ranging from $2.9125 per share to $3.5625 per share. In August
1998, Trans Union exercised the warrant and acquired the shares for $3.0625 per
share. In June 1999, Trans Union sold 400,000 of these shares in the open
market.
In 1994, Acxiom and Trans Union's parent company, Marmon Industrial LLC,
entered into a stock purchase agreement under which Marmon Industrial bought
2,000,000 shares of Acxiom stock for $5.98 per share. In 1997, Trans Union
transferred its 1,920,000 shares (together with an additional 1,000 shares it
had previously acquired from Mr. Gambill) to the Pritzker Foundation, a private
foundation. At the same time, Marmon Industrial transferred its 2,000,000 shares
to the Pritzker Foundation. As a result of these transfers, the Pritzker
Foundation currently owns 3,921,000 shares of common stock, which it has
registered for sale to the public, the completion of which is expected to occur
in July or August, 1999. Trans Union currently owns 3,603,500 shares of common
stock.
Under the 1992 agreement, Trans Union has preemptive rights whereby it may,
under certain circumstances, purchase shares of Acxiom common stock in the event
Acxiom issues additional shares. These rights provide Trans Union with the
ability to maintain its percentage ownership of common stock acquired under the
1992 agreement.
In a 1992 letter agreement, Acxiom agreed to use its best efforts to cause
one person designated by Trans Union to be elected to Acxiom's Board of
Directors. Trans Union designated its CEO and President, Harry C. Gambill, who
was appointed to fill a vacancy on the Board in November 1992 and was elected at
the 1993 Annual Meeting of Stockholders to serve a three-year term. He was
elected to serve a second three-year term at the 1996 Annual Meeting, and is a
nominee for election to another three-year term at this year's Annual Meeting.
Under a second letter agreement, executed in 1994 in connection with an
amendment to the 1992 agreement which continued the term through 2002, Acxiom
agreed to use its best efforts to cause two people designated by Trans Union to
be elected to Acxiom's Board of Directors. In addition to Mr. Gambill, Trans
17
Union designated Robert A. Pritzker, an executive officer of Marmon Industrial
Corporation, who was appointed to fill a newly created position on Acxiom's
Board of Directors on October 26, 1994. Mr. Pritzker was elected to serve a
three-year term at the 1995 Annual Meeting of Shareholders. He was elected to
serve a second three-year term at the 1998 Annual Meeting. These undertakings by
Acxiom are in effect until 2005.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires Acxiom's
executive officers, directors, and persons who own more than ten percent (10%)
of Acxiom's stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. These reports are also filed with the
National Association of Securities Dealers, Inc. A copy of each report is
furnished to Acxiom.
SEC regulations require Acxiom to identify anyone who filed a required
report late during the most recent fiscal year. Based solely on our review of
reports furnished to us and the written representations that no other reports
were required during the fiscal year ended March 31, 1999, we believe that all
Section 16(a) filing requirements were met.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has been selected as Acxiom's independent accountants and
auditors. KPMG LLP has held this position since Acxiom went public in 1983. They
will have the opportunity to make a statement at the 1999 Annual Meeting if they
desire to do so and to respond to appropriate questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
If you want to present a proposal at the 2000 Annual Meeting, you should
send the proposal to Catherine L. Hughes, Secretary of Acxiom, 1 Information
Way, Little Rock, Arkansas 72202.
Acxiom's bylaws contain an advance notice provision which provides that any
matter may not be brought by a stockholder before Acxiom's annual meeting unless
the proposal is delivered in writing to the Secretary of Acxiom no later than
120 days prior to the anniversary date of the immediately preceding annual
meeting. Accordingly, for any stockholder proposal to be considered at the 2000
Annual Meeting it must be submitted no later than April 6, 2000.
Additionally, for a stockholder proposal to be included in the Acxiom proxy
statement and form of proxy for the 2000 Annual Meeting, the proposal must be
received on or before February 18, 2000 and must otherwise comply with Rule
14a-8 of the Securities Exchange Act of 1934.
18
ADDITIONAL INFORMATION AVAILABLE
Acxiom will furnish, without charge, a copy of Acxiom's most recent Annual
Report on Form 10-K, as filed with the United States Securities and Exchange
Commission, including any financial statements and schedules. Your written
request should be sent to Catherine L. Hughes, Secretary of Acxiom, 1
Information Way, Little Rock, Arkansas 72202.
OTHER MATTERS
The Board does not intend to present any items of business other than those
stated in the Notice of Annual Meeting of Stockholders. If other matters are
properly brought before the meeting, the persons named in the accompanying proxy
will vote the shares represented by it in accordance with their best judgment.
Discretionary authority to vote on other matters is included in the Proxy.
By Order of the Board of Directors
Catherine L. Hughes
Secretary
Little Rock, Arkansas
June 25, 1999
19
PROXY CARD
(Side 1)
PROXY PROXY
ACXIOM CORPORATION
This Proxy Is Solicited on Behalf of The Board of Directors
for the Annual Meeting of Stockholders
to be Held on August 4, 1999
The undersigned hereby appoints Catherine L. Hughes and Robert S. Bloom as
Proxies, or either of them, with the power to appoint their substitutes, and
hereby authorizes them to represent and vote, as designated below, all of the
shares of common stock of Acxiom Corporation held of record by the undersigned
on June 14, 1999, at the Annual Meeting of Stockholders to be held at the
DoubleTree Hotel, 424 West Markham Street, Little Rock, Arkansas on August 4,
1999, or any postponement or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
FOR ALL PROPOSALS.
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
SEE REVERSE
SIDE
(Side 2)
[X] Please mark your
votes as in this
example.
The Board of Directors recommends a vote FOR all proposals
FOR all nominees WITHHOLD
listed at right AUTHORITY
1. Election of [ ] [ ] (INSTRUCTION: To withhold
Directors authority to vote for an
individual nominee, strike a
line through the nominee's name
in the list below.)
Nominees: William T. Dillard II
Harry C. Gambill
Thomas F. (Mack) McLarty, III
2. In their discretion, the proxies are authorized to consider and vote upon
such other business that may come before the meeting or any postponement or
adjournment thereof.
SIGNATURE(S)_________________________ DATED:_____________________, 1999
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.