SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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TRANSACTION SYSTEMS ARCHITECTS, INC.
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[TSA logo]
February 25, 2005
To Our Shareholders:
This letter supplements our Proxy Statement dated January 26, 2005.
On February 25, we filed a report on Form 8-K with the Securities and
Exchange Commission that reported the following:
As previously disclosed by the Company, its Board of Directors is actively
engaged in a search for a new President and CEO to replace its current CEO,
Gregory D. Derkacht, who has announced his intent to retire not later than June
30, 2006. The Board has now tentatively identified a leading candidate for the
position, and is in active negotiations with the candidate with an expectation
that a hiring may occur in the near future, most likely contemporaneously with
the Company's upcoming Annual Meeting on March 8.
The Company's proxy statement for the Annual Meeting at page 10 indicates the
possibility of making an equity award to a new CEO, either through the use of an
"inducement award" under an exception to NASDAQ's stockholder approval rules or,
if the hiring occurs after the Annual Meeting, and if stockholders approve the
proposed new 2005 Equity and Performance Incentive Plan ("2005 Incentive Plan")
at the Annual Meeting, under the 2005 Incentive Plan. Based on the current
negotiations with the candidate, the Company now no longer contemplates the use
of an "inducement award," and anticipates that the compensation package for the
new CEO will include, among other matters, and assuming stockholder approval of
the 2005 Incentive Plan, a grant of options for 1,000,000 shares under that Plan
with an exercise price fixed in accordance with the Plan and having a term of 10
years. The grant would consist of two portions: options for 600,000 shares
subject to vesting at the rate of 150,000 shares each year over four years based
on continued employment, and options for 400,000 shares that would vest on the
attainment by the Company, at any time following the second anniversary of the
date of grant, of a stock price of $50 per share for 60 consecutive days. The
options would be subject to accelerated vesting (subject in the case of the
performance options to achievement of the performance price target of $50 per
share prior to the second anniversary of the date of grant) in certain
circumstances involving termination of employment without "cause" or for "good
reason."
Safe Harbor Statement
The anticipated employment of a new CEO and the details of the anticipated
equity compensation package for the prospective CEO are forward-looking
statements and actual results may differ due to developments in the negotiations
with the prospective CEO, by the approval or disapproval by the Company's
stockholders of the 2005 Incentive Plan, or by events that impact either the
availability of the prospective CEO or the Company's decision to engage a new
CEO.
In addition, we would note the following clarification to language
contained at page 14 of our Proxy Statement for the Annual Meeting (new language
in bold):
The furtherance of many compensation and governance best practices. The 2005
Incentive Plan prohibits stock option re-pricing, contains a 2,500,000-share
limit on the number of shares that may be issued in connection with restricted
stock awards and performance awards during the life of the plan and contains a
1,000,000-share limit on the number of shares that may be issued to a
Participant in connection with stock options, stock appreciation rights,
restricted stock awards or other awards during any calendar year. The 2005
Incentive Plan does not contain an evergreen feature (evergreen features provide
for automatic replenishment of authorized shares available under the plan).
We look forward to seeing many of you at the Annual Meeting.
Sincerely,
/s/ Harlan F. Seymour
Harlan F. Seymour
Chairman of the Board of Directors