April 14, 1995
Dear Shareholder:
The Annual Meeting of Shareholders of Cerner Corporation (the
"Company") will be held at 10:00 a.m., local time, on May 16,
1995 at the American Heartland Theater located at 2450 Grand
Avenue, Kansas City, Missouri 64108. The enclosed notice of
the meeting and proxy statement contains detailed information
about the business to be transacted at the meeting.
The Board of Directors has nominated two Class III Directors to
continue service on the Board and one new Class III director to
serve on the Board. The Board recommends that you vote for the
nominees.
In addition to the election of the Board of Directors, you are
being asked to approve an amendment to the Nonqualified Stock
Option Plan which would increase the number of shares of Common
Stock of the Company for which options could be issued under
such plan from 450,000 to 1,300,000 and make Neal L. Patterson
and Clifford W. Illig eligible under the plan and to approve
the appointment of KPMG Peat Marwick LLP as independent public
accountants of the Company for 1995. The Board of Directors
recommends that you vote for these proposals.
On behalf of the Board of Directors and Management, I cordially
invite you to attend the Annual Meeting of Shareholders.
The prompt return of your Proxy in the enclosed business reply
envelope will help insure that as many shares as possible are
represented.
Very truly yours,
CERNER CORPORATION
/S/Clifford W. Illig
Clifford W. Illig
President and Chief Operating Officer
Enclosures
CERNER CORPORATION
2800 Rockcreek Parkway
Kansas City, Missouri 64117
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Cerner Corporation, a Delaware corporation (the
"Company"), will be held at the American Heartland Theater
located at 2450 Grand Avenue, Kansas City, Missouri 64108, on
May 16, 1995, at 10:00 a.m., local time, and thereafter as it
may from time to time be adjourned, for the following purposes:
a. to elect three Class III Directors to serve for a
three year term until the 1998 Annual Meeting of
Shareholders and until their respective successors are
duly elected and qualified;
b. to amend the Nonqualified Stock Option Plan to
increase the number of shares of Common Stock for which
options could be issued from 450,000 shares to 1,300,000
shares, to make Neal L. Patterson and Clifford W. Illig
eligible under the Plan and to extend the duration of the
Plan to January 1, 2005;
c. to consider and act upon ratification and approval of
the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December
30, 1995; and
d. to consider and act upon any other matters which may
properly come before the Annual Meeting of Shareholders or
any adjournment thereof.
The foregoing matters are more fully described in the
accompanying Proxy Statement.
In accordance with the provisions of the Bylaws of the
Company, the Board of Directors has fixed the close of business
on March 28, 1995, as the record date for the determination of
the holders of Common Stock entitled to notice of, and to vote
at, the Annual Meeting of Shareholders.
The Board of Directors of the Company solicits you to
sign, date and promptly mail the proxy in the enclosed postage
prepaid envelope, regardless of whether or not you intend to be
present at the Annual Meeting of Shareholders. You are urged,
however, to attend the Annual Meeting of Shareholders.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/Richard J. Wall, Jr.
Richard J. Wall, Jr.
Secretary, Vice President
and General Counsel
Kansas City, Missouri
April 14, 1995
CERNER CORPORATION
2800 Rockcreek Parkway
Kansas City, Missouri 64117
___________________________
PROXY STATEMENT
___________________________
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Cerner
Corporation, a Delaware corporation (the "Company"), for use at
the Annual Meeting of Shareholders of the Company to be held on
May 16, 1995, commencing at 10:00 a.m., local time, at the
American Heartland Theater, 2450 Grand Avenue, Kansas City,
Missouri 64108, and any adjournment thereof (the "Annual
Meeting"). The Company anticipates mailing this Proxy
Statement, the accompanying form of Proxy and the Notice of
Annual Meeting of Shareholders to the holders of record of
outstanding shares of Common Stock, par value $.01 per share,
of the Company (the "Common Stock") as of March 28, 1995, on or
about April 14, 1995.
Only the holders of record of shares of Common Stock as of
the close of business on March 28, 1995 are entitled to vote on
the matters to be presented at the meeting, either in person or
by proxy. Holders of shares of Common Stock are entitled to
one vote per share outstanding in their names on the record
date with respect to such matters. At the close of business on
March 28, 1995, there were outstanding and entitled to vote a
total of 14,146,564 shares of Common Stock, constituting all of
the outstanding voting securities of the Company.
You are requested to complete, date and sign the
accompanying Proxy and return it promptly in the enclosed
postage prepaid envelope. Such Proxy may be revoked at any
time prior to its exercise by written notice of revocation
delivered to the Secretary of the Company. Attendance at the
Annual Meeting will not in and of itself constitute a
revocation of a Proxy, but your Proxy will not be used if you
attend the Annual Meeting and prefer to vote in person. The
persons designated as proxies were selected by the Board of
Directors and are officers and directors of the Company.
Proxies duly executed and received in time for the Annual
Meeting will be voted in accordance with shareholders'
instructions. If no instructions are given, Proxies will be
voted as follows:
a. to elect Clifford W. Illig, Gerald E. Bisbee, Jr. and
Michael E. Herman as Class III Directors to serve for a
three year term until the 1998 Annual Meeting of
Shareholders and until their respective successors are
duly elected and qualified;
b. to amend the Nonqualified Stock Option Plan to
increase the number of shares of Common Stock for which
options could be issued from 450,000 shares to 1,300,000
shares, to make Neal L. Patterson and Clifford W. Illig
eligible under the Plan and to extend the duration of the
Plan to January 1, 2005;
c. to ratify and approve the selection of KPMG Peat
Marwick LLP as the Company's independent auditors for the
fiscal year ending December 30, 1995; and
d. in the discretion of the proxy holder as to any other
matter coming before the Annual Meeting.
If the proposed amendment to the Nonqualified Stock Option
Plan is approved by the Shareholders, the Board of Directors
intends to discontinue the use of Stock Option Plan C.
Currently options for 597,500 shares could be issued under
Stock Option Plan C.
QUORUM REQUIREMENTS
The presence in person or by proxy of holders of record of
a majority of the outstanding shares of Common Stock is
required for a quorum to transact business at the Annual
Meeting, but if a quorum should not be present, the Annual
Meeting may be adjourned from time to time until a quorum is
obtained.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The table below sets forth information, as of March 1,
1995 (unless otherwise indicated below), with respect to the
beneficial ownership of the issued and outstanding shares of
Common Stock by (i) each person known to the Company to own
beneficially more than 5% of the aggregate shares of Common
Stock outstanding, (ii) each director and nominee for election
as a director, (iii) each executive officer named in the
Summary Compensation Table, and (iv) the executive officers and
directors of the Company as a group. Each of the persons, or
group of persons, in the table below has sole voting power and
sole dispositive power as to all of the shares shown as
beneficially owned by them, except as otherwise indicated.
Amount and Nature
of Beneficial Percent of Shares
Name and Address of Beneficial Owner Ownership Outstanding
- ------------------------------------------- ----------------- ------------------
Neal L. Patterson 1,713,674(1) 12.15%
Clifford W. Illig 1,858,447(2) 13.18%
The Prudential Insurance Company of America 1,111,375(3) 7.88%
Jennison Associates Capital Corp. 1,111,300(4) 7.88%
David M. Margulies, M.D. 136,982(5) *
Charles S. Runnion, III 96,796 *
Jeffrey C. Reene 48,804(6) *
Gerald E. Bisbee, Jr. 40,700(7) *
Thomas C. Tinstman, M.D. 40,300(8) *
David J. Hart 30,000(9) *
Michael E. Herman 6,800(10) *
All directors and executive officers as a group
(13 persons) 4,084,662(11) 28.46%
____________________
* Less than one percent
(1) Excludes 72,000 shares held in trust for minor children
with a third party serving as trustee and 23,279 shares
held by Jeanne Lillig-Patterson, wife of Neal L. Patterson,
as to which Mr. Patterson disclaims beneficial ownership.
Includes 50,000 shares, which Mr. Patterson gifted to a
charitable foundation, of which he has shared voting and
dispositive power. The address for Mr. Patterson is Cerner
Corporation, 2800 Rockcreek Parkway, Kansas City, Missouri
64117.
(2) Includes 72,000 shares held in trust for minor children
with Bonne A. Illig, wife of Clifford W. Illig, serving as
trustee and 50,000 shares, which Mr. Illig gifted to a
charitable foundation, of which he has shared voting and
dispositive power. The address for Mr. Illig is Cerner
Corporation, 2800 Rockcreek Parkway, Kansas City, Missouri
64117.
(3) According to Schedule 13G, dated, February 6, 1995, and
filed by The Prudential Insurance Company of America
("Prudential"), Prudential may be deemed an Insurance
Company as defined in Section 3(a)(19) of the Securities
Exchange Act of 1934, a Broker-dealer registered under
Section 15 of that Act and an Investment Adviser registered
under Section 203 of the Investment Advisers Act of 1940.
Prudential has sole dispositive and voting power with
respect to 62,800 shares of Common Stock and shared voting
power with respect to 887,475 shares of Common Stock and
shared dispositive power with respect to 1,048,575 shares
of Common Stock. The address for Prudential is Prudential
Plaza, Newark, New Jersey 07102-3777.
(4) According to Schedule 13G, dated, February 1, 1995, and
filed by Jennison Associates Capital Corp. ("Jennison"),
Jennison may be deemed an Investment Advisor registered
under Section 203 of the Investment Advisers Act of 1940.
Jennison has sole voting power with respect to 106,700
shares of Common Stock and shared voting power with respect
to 842,700 shares of Common Stock. Jennison has shared
dispositive power with respect to 1,111,300 shares of
Common Stock. The address for Jennison is 466 Lexington
Avenue, New York, New York 10017.
(5) Includes 40,000 shares issuable under presently exercisable
stock options.
(6) Includes 44,000 shares issuable under presently exercisable
stock options.
(7) Includes 40,000 shares issuable under presently exercisable
stock options.
(8) Includes 40,000 shares issuable under presently exercisable
stock options.
(9) Includes 30,000 shares issuable under presently exercisable
stock options.
(10)Includes 5,000 shares held by the Herman Family
Trading Company, a partnership in which Mr. Herman is a
general partner, and 1,800 shares owned jointly with his
spouse.
(11)Includes 252,100 shares issuable under presently
exercisable stock options, but excludes 35,753 shares
beneficially owned solely by spouses.
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of the Company
provides that the number of directors of the Company shall be
fixed by, or in the manner provided in, the Bylaws of the
Company and divided into three classes as nearly equal as
possible, each having a term of three years. Each year the
term of office of one class of directors expires. Immediately
following the Annual Meeting the number of directors will be
eight.
The Board of Directors intends to present for action at
the Annual Meeting the election of Clifford W. Illig and Gerald
E. Bisbee, Jr., the present Class III Directors, whose present
terms expire at the Annual Meeting, and Michael E. Herman to
serve for a three year term until the 1998 Annual Meeting of
Shareholders and until their successors are duly elected and
qualified.
The Board of Directors believes that it is in the best
interests of the Company to increase the number of directors
who are not employees of the Company in order to bring a
greater diversity of views and experiences to the Board. The
nomination of Mr. Herman is the first step in meeting this
goal. The Board of Directors expects to further increase the
percentage of directors who are not employees of the Company
but does not now have any other candidates and will not
nominate any further nominees at the Annual Meeting.
The Directors in Class I (Charles S. Runnion, III, Neal
L. Patterson and David J. Hart) and in Class II (David M.
Margulies, M.D. and Thomas C. Tinstman, M.D.) have been elected
to terms expiring at the time of the Annual Meetings of
Shareholders in 1996 and 1997, respectively. No shareholder
may vote in person or by proxy for greater than three nominees
at the Annual Meeting. Shareholders do not have cumulative
voting rights in the election of directors. Directors will be
elected by the plurality vote of the holders of shares of
Common Stock entitled to vote at the Annual Meeting and present
in person or by proxy.
Three directors are to be elected as the only members of
Class III at this meeting, for a term of three years and until
their respective successors are duly elected and qualified. It
is intended that shares represented by a Proxy given pursuant
to this solicitation will be voted in favor of the election of
Clifford W. Illig, Gerald E. Bisbee, Jr. and Michael E. Herman
as the Class III Directors, unless such authority is
specifically withheld. In the event that any of such persons
should become unavailable for election, it is intended that the
shares of Common Stock represented by the Proxy will be voted
for such substitute nominees as may be nominated by the Board
of Directors. All of the above named persons have indicated
willingness to serve if elected and it is not anticipated that
any of them will become unavailable for election.
The Restated Certificate of Incorporation and Bylaws of
the Company provide that advance notice of shareholder
nominations for an election of directors must be given.
Written notice of the shareholder's intent to make a nomination
at a meeting of shareholders must be received by the Secretary
of the Company not later than 120 days in advance of the date
of such meeting in the case of an annual meeting and, in the
case of a special meeting, not more than seven days following
the date of notice of the meeting. The notice must contain (i)
the name and address of the shareholder who intends to make the
nomination and of the person to be nominated, (ii) a
representation that the shareholder is a holder of record of
stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person specified in the notice, (iii) the names
and addresses, as they appear in the Company's books, of such
shareholder, (iv) the class and number of shares beneficially
owned by such nominating shareholder and each nominee proposed
by such shareholder, (v) a description of all arrangements or
understandings between the nominating shareholder and each
nominee and any other person or persons (naming such person or
persons), pursuant to which the nomination or nominations are
to be made, (vi) such other information regarding each nominee
proposed by such shareholder as would have been required to be
included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, as then in effect,
if the Company were soliciting proxies for the election of such
nominees, and (vii) the consent of the nominee to serve as a
director of the Company if so elected. No such notice has been
received, and the chairman of the Annual Meeting is entitled to
refuse to acknowledge the nomination of any person which is not
made in compliance with the foregoing procedure. In any event,
the Board of Directors has no reason to believe that anyone
will attempt to nominate another candidate for director.
The following table sets forth certain information as to
the persons nominated by the Board of Directors for election as
the Class III Directors of the Company and each director whose
term of office will continue after the Annual Meeting:
Director Since/
Name Age Term Expires
- -------------------------------------- ----- -----------------
Nominees to Serve in Office
Until 1998
Clifford W. Illig (1)(2) 44 1980/1998
Gerald E. Bisbee, Jr. (3)(4) 52 1988/1998
Michael E. Herman 54 /1998
Directors to Continue in Office
Until 1997
David M. Margulies, M.D. 43 1991/1997
Thomas C. Tinstman, M.D. (2)(3)(4) 50 1989/1997
Directors to Serve in Office
Until 1996
Neal L. Patterson (1)(2) 45 1980/1996
Charles S. Runnion, III (1) 47 1989/1996
David J. Hart (3)(4) 58 1991/1996
____________________
(1) Member of Executive Committee.
(2) Member of Stock Option Committee.
(3) Member of Audit Committee.
(4) Member of Compensation Committee.
Gerald E. Bisbee, Jr. has been a Director of the Company
since February 1988. He has been Chairman of the Board of
Directors and Chief Executive Officer of Apache Medical
Systems, Inc. since December 1989. Apache Medical Systems,
Inc. implements and analyzes healthcare support systems for
intensive care units. Mr. Bisbee has served as a director of
Geriatric and Medical Centers, Inc. since 1988, and has served
as a director of Yamarchi Capital Funds since 1989.
David J. Hart has been a Director of the Company since May
1991. He was the President and Chief Executive Officer of The
General Hospital (Grey Nuns) of Edmonton, a hospital with 1,100
beds located in Edmonton, Canada, from 1981 until his
retirement in December, 1991.
Michael E. Herman is a nominee for Director of the
Company. He is President of the Kansas City Royals Baseball
Team, Chairman of the Finance Committee of the Ewing-Marion
Kauffman Foundation (President from 1985 to 1990) and was the
Executive Vice President and Chief Financial Officer of Marion
Laboratories, Inc. from 1974 to 1990. Mr. Herman is a director
of Lab One, Inc., Janus Capital Corporation, Seafield Capital
Corporation and Agouron Pharmaceuticals, Inc.
Clifford W. Illig was Executive Vice President, Secretary,
Treasurer and Chief Financial Officer and a Director of the
Company from its incorporation to May 1987. From May 1987 to
May 1993, he was a Director, President, Chief Operating Officer
and Chief Financial Officer of the Company. Since May 1993, he
has been a Director, President and Chief Operating Officer.
David M. Margulies, M.D. joined the Company in February
1991 and since that date has been an Executive Vice President
of the Company. Prior to joining the Company, for four years
he was Vice President in charge of information systems at
Children's Hospital, a health care institution located in
Boston, Massachusetts. During this time, Dr. Margulies also
was the Director of the Program in Medical Information Sciences
at Harvard Medical School. Dr. Margulies has served as a
Director of the Company since May 1991.
Neal L. Patterson was President, Chairman of the Board of
Directors and Chief Executive Officer of the Company from its
incorporation to May 1987. Since May 1987, he has been
Chairman of the Board of Directors and Chief Executive Officer
of the Company. Mr. Patterson has served as a director of Lab
One, Inc. since August 1988.
Charles S. Runnion, III joined the Company in July 1989
and since that date has been an Executive Vice President and
Director of the Company. Prior to working at the Company, he
spent fourteen years with the IBM Corporation in a variety of
marketing and management positions.
Thomas C. Tinstman, M.D. has been a Director of the
Company since May 1989. Since February, 1994, Dr. Tinstman has
been Director of Medical Informatics with University of Texas
Medical Branch in Galveston, Texas. Prior to that he was a
physician in private practice with Internal Medicine
Associates, P.C. in Omaha, Nebraska. From 1977 to January,
1994, Dr. Tinstman served as Associate Medical Director of
Pulmonary Medical Services at Bishop Clarkson Memorial Hospital
and as Medical Director of the Respiratory Therapy Department
of Midland Hospital, both in Omaha, Nebraska. Dr. Tinstman has
served as a director of Smith-Haynes Trust, Inc. since 1988.
Meetings of the Board and Committees
The Board of Directors has established Executive, Audit,
Compensation and Stock Option Committees of the Board of
Directors, but does not have a Nominating Committee. During
1994, the Board of Directors held six meetings, the Audit
Committee held one meeting and the Compensation Committee held
three meetings. The Executive Committee did not meet during
1994. The Stock Option Committee met once during 1994. Each
incumbent director attended at least seventy five percent of
the meetings of the Board of Directors and each committee of
the Board of Directors of which he was a member.
The Executive Committee acts in place of the Board of
Directors when the Board of Directors is not in session and may
exercise all of the powers of the Board of Directors, except
with respect to certain corporate matters, including mergers,
dissolution, sale of property, issuance of stock, declaring
dividends or amending the Restated Certificate of Incorporation
or Bylaws of the Company.
The Audit Committee assists the Board of Directors in
fulfilling its responsibilities with respect to the accounting
and financial reporting practices of the Company and in
addressing the scope and expense of audit and related services
provided by the Company's independent accountants.
The Compensation Committee reviews and approves the
Company's compensation policies and practices, establishes
compensation for directors and Mr. Illig and Mr. Patterson,
reviews and approves the compensation of the other executive
officers of the Company, and approves major changes in the
Company's benefit plans.
The Stock Option Committee administers the Company's stock
option plans and, among other matters, approves grants of
options under such plans.
EXECUTIVE COMPENSATION
The following table sets forth certain information with
respect to the Chief Executive Officer and the four most highly
compensated executive officers of the Company as to whom the
total salary and bonuses for the fiscal year ended December 31,
1994 exceeded $100,000:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
--------------------------- ----------------
Securities All Other
Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options/SARs(1) ($)(2)
- ---------------------------- ---- --------- -------- ---------------- ------------
Neal L. Patterson 1994 293,750 66,016 --- 654
Chairman of the Board 1993 246,875 62,423 --- 660
of Directors and Chief 1992 160,312 75,000 --- 660
Executive Officer
Clifford W. Illig, 1994 264,500 66,016 --- 654
President, Chief Operating 1993 226,625 62,423 --- 660
Officer and Director 1992 160,312 75,000 --- 660
Charles S. Runnion, III 1994 147,425 102,383 --- 654
Executive Vice President, 1993 143,150 36,564 --- 660
Area General Manager 1992 140,000 33,600 --- 660
and Director
Jeffrey C. Reene, 1994 152,675 52,083 --- 654
Executive Vice President 1993 148,225 36,738 --- 660
and Area General Manager 1992 145,000 50,400 --- 660
David M. Margulies, M.D. 1994 150,000 34,450 --- 654
Executive Vice President 1993 150,000 27,300 20,000 660
of Product Engineering 1992 150,000 --- --- 60
and Director
____________________
(1)The numbers in Securities Underlying Options/SARs reflect
the number of shares of Common Stock into which the options
are exercisable.
(2)Consists of $600, being the Company's matching contribution
to the named individual's account in the Cerner Corporation
Associate 401(k) Retirement Plan, and $60, being the
insurance premiums paid by the Company with respect to term
life insurance for each named individual.
Stock Option Plans
The Company has three stock option plans pursuant to which
options are outstanding, Stock Option Plan B ("Stock Option
Plan B"), Stock Option Plan C ("Stock Option Plan C") and the
Nonqualified Stock Option Plan ("Nonqualified Plan" and
together with Stock Option Plan B and Stock Option Plan C,
collectively, the "Stock Option Plans"). No stock options were
granted during 1994 to any of the named executive officers in
the Summary Compensation Table.
The following table reports information with respect to
the December 31, 1994 option values for each of the named
executive officers in the Summary Compensation Table:
Aggregated Option Exercises in Last Fiscal Year
and December 31, 1994 Option Values
Number of
Securities
Underlying
Unexercised
Options/SARs at Value of Unexercised
December 31, In-the-Money Options at
1994(#) December 31, 1994 ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable (1) Unexercisable (1)
- ----------------------- --------------- ----------- ----------------- -----------------------
Neal L. Patterson --- --- --- ---
Clifford W. Illig --- --- --- ---
Charles S. Runnion, III 80,000 1,905,000 --- ---
Jeffrey C. Reene 4,000 89,500 44,000/32,000 1,771,000/1,288,000
David M. Margulies, M.D. 55,000 1,316,563 81,000/36,000 3,293,188/1,238,750
____________________
(1)The numbers in the column headed Number of Securities
Underlying Unexercised Options/SARs at December 31, 1994
and the dollar amounts in the column headed Value of
Unexercised In-the-Money Options at December 31, 1994
reflect (i) the number of shares of Common Stock into which
options are exercisable and (ii) the difference between the
fair market value of such shares of Common Stock and the
exercise price of the options, respectively.
Director Compensation
Nonemployee directors of the Company receive compensation
of $2,500 for each meeting of the Board of Directors attended
and an additional $500 for each committee meeting attended,
plus reimbursement for expenses incurred in connection with
attendance at Board of Directors meetings. During 1994,
payments, excluding expense reimbursements, were $10,500 to Dr.
Tinstman, $10,000 to Mr. Bisbee and $10,500 to Mr. Hart. If
Mr. Herman is elected a director of the Company he will be
granted options for 24,000 shares of Common Stock under the
Nonqualified Plan. The exercise price will be $37.75 (market
value on the date that he agreed to become a director) per
share and the options will vest proportionally over a six year
period so long as Mr. Herman is a director of the Company at
each vesting point.
Executive Compensation and Stock Option Committee Report
The Compensation Committee of the Board of Directors (the
"Compensation Committee") is composed of the individuals listed
below who are outside directors of the Company. The Stock
Option Committee of the Board of Directors (the "Stock Option
Committee") is comprised of the individuals listed below who
are directors of the Company. Messrs. Patterson and Illig are
not currently eligible to receive stock options under either of
the Company's stock option plans. The Compensation Committee
reviews and approves the Company's compensation policies and
practices, establishes compensation for directors and Mr. Illig
and Mr. Patterson, reviews and approves the compensation of the
other executive officers of the Company, and approves major
changes in the Company's benefit plans. The Stock Option
Committee administers the Company's stock option plans and,
among other matters, approves grants of options under such
plans.
The compensation policies of the Company have been
designed to enable the Company to attract, motivate and retain
experienced and qualified executives. The Company seeks to
provide competitive salaries based upon individual performance,
together with annual cash bonuses awarded for the achievement
of goals established by the Compensation Committee. In
addition, it is the policy of the Company to grant stock
options to executives upon their commencement of employment
with the Company or their becoming such executive officers in
an effort to strengthen the mutuality of interests between such
executives and the Company's shareholders.
Annual Compensation
Total annual cash compensation for executive officers of
the Company consists of base salary and a potential annual cash
bonus based upon an incentive plan adopted each year by the
Compensation Committee. Total annual cash compensation varies
each year based on changes in base salary and in the cash
bonus. The Company's compensation levels are established on a
plan year of April 1 through March 31. Therefore, salaries and
bonuses earned during 1994 are the result of three months under
the 1993 plan and nine months under the 1994 plan.
The incentive plan for executive officers other than Mr.
Patterson and Mr. Illig, consists of various objective goals,
both related to areas for which such executive officer has
responsibility and for Company wide performance. Attainment of
each goal is objective, but the amount of the bonus is also
affected by a subjective analysis of the executive's overall
performance. For Mr. Patterson and Mr. Illig, the goals
consisted of earnings per share, client satisfaction, employee
satisfaction and cost control for the 1993 plan and earnings
per share, employee satisfaction and client satisfaction for
the 1994 plan. Satisfaction by Messrs. Patterson and Illig of
these goals is done on an objective basis without any
subjective analysis of their overall performance. Under the
incentive plan, each executive may earn up to a maximum amount
approved by the Compensation Committee on a subjective basis
designed to create a significant incentive in relation to such
executive's salary. During 1994 the Company's executive
officers, as a group, earned approximately 56 percent of the
bonuses available.
The salary of each executive officer is approved on a
subjective basis by the Compensation Committee at a level
sufficient to attract and retain qualified individuals. In
making this determination, the Compensation Committee considers
the executive's performance, salary levels at other competing
businesses and the Company's performance. In approving
salaries and incentive plan payments for 1994, the Compensation
Committee considered, among other matters, the compensation of
the five most highly compensated officers for 1992 and 1993 of
the six companies included in the peer company index shown
under the heading "Company Performance", although the
Compensation Committee did not target compensation to any
particular group of these companies. The factors impacting
base salary levels are not independently assigned specific
weights but are subjectively considered by the Compensation
Committee.
Mr. Patterson's compensation during the year ended
December 31, 1994 consisted of $293,750 in salary and $66,016
in payments earned under the Company's incentive plan. Mr.
Patterson earned approximately 60 percent of the incentives
available during 1994. In determining Mr. Patterson's salary
and incentive plan payments for 1994, the Compensation
Committee considered, among other matters, the Company's
performance and the compensation of the five most highly
compensated officers for 1992 and 1993 of the six companies
included in the peer company index shown under the heading
"Company Performance", although the Compensation Committee did
not target his compensation to any particular group of these
companies.
Long-Term Incentive Compensation
The long-term incentive compensation for executive
officers have consisted of awards of stock options granted
under the Company's stock option plans typically only upon
their commencement of employment with the Company or promotion
to executive officer and creates an incentive for executive
officers to contribute to sustained, long-term growth in the
Company's performance. The Stock Option Committee and the
Compensation Committee believe that stock options create a
mutuality of interest between the Company's executive officers
and shareholders.
Stock option grants provide the right to purchase shares
of Common Stock at a specified exercise price. All stock
options issued to executive officers to date have exercisable
prices equal to the fair market value of the Common Stock on
the date of the grant of the stock option.
Compensation Committee Interlocks and Insider
Participation
The Company owns approximately four percent of the
outstanding equity securities of Apache Medical Systems, Inc.
Mr. Patterson is the Company's representative on the board of
directors of that corporation and serves on its compensation
committee. Mr. Bisbee is Chairman of the Board of Directors
and Chief Executive Officer of that corporation. As a result,
Mr. Patterson is one of the individuals determining the
compensation of Mr. Bisbee at Apache Medical Systems, Inc.
Committee Members
Members of the Compensation Committee:
Gerald E. Bisbee, Jr.
Thomas C. Tinstman, M.D.
David J. Hart
Members of the Stock Option Committee:
Neal L. Patterson
Clifford W. Illig
Thomas C. Tinstman, M.D.
Company Performance
The following graph presents a comparison for the five-
year period ended December 30, 1994 of the performance of the
Common Stock of the Company with the NASDAQ Stock Market (as
calculated by The Center for Research in Security Prices) and
an index of peer companies selected by the Company:
12/29/89 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94
-------- -------- -------- -------- -------- --------
Cerner Corporation 100.00 78.00 200.00 884.00 1392.00 1412.00
Peer Group 100.00 103.10 163.60 211.00 162.50 224.10
NASDAQ Stock Market 100.00 84.90 136.30 158.60 180.90 176.90
The above comparison assumes $100 was invested on December
29, 1989 in Common Stock of the Company and in each of the
foregoing indices and assumes reinvestment of dividends. The
results of each component issuer of each group are weighted
according to such issuer's stock market capitalization at the
beginning of each year.
The peer group of companies was selected based upon their
being in the business of providing large scale software
programs and information system related services. Companies in
the peer group are Cycare Systems, HBO & Company, Hogan
Systems, Keane, Inc., Policy Management Systems and Shared
Medical Systems. The peer group of companies included in the
Company's 1994 Proxy Statement included Ask Group, Inc. and
Medstat Systems in addition to those referred to above. Ask
Group, Inc. and Medstat Systems were each acquired during 1994
by other companies that the Company does not consider
consistent with its peer group and therefore have been
eliminated from the peer group.
AMENDMENT OF NONQUALIFIED STOCK OPTION PLAN
The Board of Directors of the Company is recommending to
the shareholders an amendment to the Nonqualified Plan which
would increase the number of shares of Common Stock for which
options could be granted under the Nonqualified Plan from
450,000 to 1,300,000, make Neal L. Patterson and Clifford W.
Illig eligible under the Nonqualified Plan and extend the
duration of the Nonqualified Plan to January 1, 2005. The
Board of Directors has voted to discontinue granting options
under Stock Option Plan C if the shareholders approve the
proposed amendment to the Nonqualified Plan. The increase in
the number of shares of Common Stock subject to the
Nonqualified Plan would be offset by 597,500 shares by
discontinuance of the use of Stock Option Plan C. No further
options may be granted under Stock Option Plan B.
During the period 1990 through 1993, the Company made only
limited use of stock options as a method of rewarding its
employees but relied principally upon the Company's cash based
incentive plans. The Board of Directors believes that the use
of stock options to create a broad based, long-term orientation
for the Company's employees is appropriate and plans to use the
Nonqualified Plan to achieve this goal. The Board of Directors
believes that the use of relatively long vesting schedules
combined with long option expiration dates will facilitate the
Company's hiring and retaining good employees. The required
ten year limit on the duration of options granted under Stock
Option Plan C does not meet the Company's objectives. During
1994 the Company granted options under the Nonqualified Plan
for approximately 113,225 shares to nineteen of its employees
as the initial phase of this program. The Board of Directors
also believes that Mr. Patterson and Mr. Illig should be
eligible under the Nonqualified Plan so that they may also
participate in this program.
Under the Nonqualified Plan stock options may be granted
to employees, directors, advisors and consultants to the
Company and any of its subsidiaries. Under Stock Option Plan C
options may only be granted to employees of the Company and its
subsidiaries (other than Mr. Illig and Mr. Patterson) and the
options are subject to certain limitations, such as they must
be exercised within ten years or they expire, imposed
principally by the Internal Revenue Code. The principal
purpose for the Nonqualified Plan is to allow the Company to
issue options for shares under circumstances where the use of
options under Stock Option Plan C is not available, such as
where the terms under which the options are granted would
either not meet the qualifications under Stock Option Plan C or
the sections of the Internal Revenue Code applicable to Stock
Option Plan C or where the recipient does not meet the
qualifications under Stock Option Plan C.
During 1994 the Board of Directors and the members of the
Stock Option Committee determined, based principally upon
experience from options granted under Stock Option Plan B, that
due to the ten year limitation on the duration of the options
granted under Stock Option Plan C, options granted under Stock
Option Plan C would not meet the Company's goal of establishing
a broad based, long-term orientation for the Company's high
performance employees. Due to income tax ramifications upon
employees upon exercise of options granted under Stock Option
Plan B, which is substantially identical to Stock Option Plan
C, employees were being forced to sell stock well before the
ten year expiration date in order to minimize the impact of
income taxes. Although the same will be true for options
granted under the Nonqualified Plan, the Stock Option Committee
intends to increase the duration of options granted under that
plan to as much as twenty five years. The Stock Option
Committee also intends to lengthen vesting schedules under
Nonqualified Plan options and cause the options to expire as to
any unexercised shares upon the employee's termination of
employment. Although the number of shares of Common Stock for
which options can be issued under the Nonqualified Plan, as
proposed to be amended, is greater than the combined number
under Stock Option Plan C and the Nonqualified Plan before the
proposed amendment, the Company believes that the combination
of longer vesting schedules and the requirement that the
optionee be employed by the Company at the time of exercise
will cause a smaller percentage of the option to be exercised
than would be the case for options granted under Stock Option
Plan C.
Description of the Nonqualified Plan
Shares Subject to Options. Currently a maximum of 450,000
shares of Common Stock may be issued upon exercise of options
under the Nonqualified Plan. If the amendment is approved a
maximum of 1,300,000 shares of Common Stock may be issued upon
exercise of options granted under the Nonqualified Plan.
Options for 353,224 shares have been granted under the
Nonqualified Plan. As of March 1, 1995 the market value of the
shares for which options could be issued under the Nonqualified
Plan was $4,645,248. If the amendment is approved, the market
value of the shares for which options could be granted under
the Nonqualified Plan will increase to $45,445,248. The number
of shares subject to the Nonqualified Plan and any outstanding
options and the option price of outstanding options may be
adjusted in the event of any stock dividend, stock split,
reorganization, merger, consolidation, liquidation or any
combination or exchange of shares of Common Stock.
Administration. The Nonqualified Plan is administered by
the Stock Option Committee consisting of not less than two nor
more than five members of the Board of Directors who are
appointed by the Board. The Stock Option Committee is
currently composed of Neal L. Patterson, Clifford W. Illig and
Dr. Thomas C. Tinstman. Under the terms of the Nonqualified
Plan, Messrs. Patterson and Illig are not currently eligible to
receive options. If the amendment is approved, Mr. Patterson
and Mr. Illig will become eligible to receive options under the
Nonqualified Plan. Any options granted to Mr. Patterson or Mr.
Illig will be approved by a majority of the outside Directors.
Subject to the provisions of the Nonqualified Plan, the Stock
Option Committee has sole authority to determine who will be
granted options, when the options will be granted, the time or
times when options will be exercisable, the duration of the
options and the form of the option agreement.
Option Price. The option price of each option is
determined by the Stock Option Committee. All outstanding
options have been issued at the fair market value of the shares
subject to the options on the date of grant. The Company
expects to continue to follow this pricing procedure.
Eligible Option Holders. Subject to selection by the Stock
Option Committee, any employee, director, advisor or consultant
to the Company or any of its subsidiaries is eligible to be
granted one or more options pursuant to the Nonqualified Plan.
Maximum Option Term. Options may be granted for whatever
period of time is determined by the Stock Option Committee.
Nontransferability. No option is transferable by the
optionee except by will or by the laws of descent or
distribution.
Exercise of Options. Options under the Nonqualified Plan
are exercisable at the times and on the terms and conditions
set forth in the option agreement authorized by the Stock
Option Committee.
Termination of Options. Options will terminate
concurrently with termination of employment for any reason
other than death.
Amendments. The Stock Option Committee may amend, modify
or terminate the Nonqualified Plan without the approval of
shareholders, except that shareholder approval will be required
for any amendment which would (i) increase the maximum number
of shares of Common Stock subject to the Nonqualified Plan,
except adjustments made by reason of stock splits, stock
dividends or made upon changes in capitalization, (ii) alter
the eligibility requirements for the optionees under the
Nonqualified Plan and (iii) extend the duration of the
Nonqualified Plan.
Duration. Currently no option may be granted under the
Nonqualified Plan after January 1, 2000. If the amendment is
approved the date will be extended to January 1, 2005.
Federal Income Tax Consequences. In general, the grant of
an option under the Nonqualified Plan does not result in any
Federal income tax consequences to the Company or to the
optionee. The exercise by an optionee of an option under the
Nonqualified Plan will generally result in Federal income tax
consequences to the optionee. The excess, if any, of the fair
market value of the Common Stock received upon the exercise of
the option at the time of exercise over the amount paid for
such Common Stock is included in the taxable income of the
optionee for the year in which the option is exercised. Upon
exercise of an option by an optionee, the Company may deduct an
amount equal to the amount included in the optionee's ordinary
income, provided the Company satisfies applicable information
reporting and income and payroll tax withholding requirements.
Miscellaneous Information. To the extent that any option
remains unexercised upon its termination or expiration, the
shares subject to such option will again be available for the
granting of other options under the Nonqualified Plan.
The Nonqualified Plan does not contain any provisions
requiring an optionee to hold the optioned stock for any period
after exercise of the option. However, such a provision may be
included in any option granted by the Stock Option Committee.
Nonqualified Plan Benefits
Five (seven if the amendment is approved) current
directors of the Company, seven (nine if the amendment is
approved) current executive officers of the Company (including
those that are directors) and approximately 1,122 employees of
the Company are eligible to receive options under the
Nonqualified Plan. The dollar value and number of options
which will be received by such directors and the five
individuals named in the Summary Compensation Table, all
current executive officers and all employees (other than
employees who are executive officers) is not currently
determinable due to the discretionary nature of the
Nonqualified Plan. The Nonqualified Plan provides that all
employees of the Company are eligible to receive Nonqualified
Plan benefits and that the Stock Option Committee has sole
authority to determine which employees will be granted options
under the Nonqualified Plan. As of the date hereof, the Stock
Option Committee has not decided which additional employees
will be granted such options.
The affirmative vote of a majority of the shares of Common
Stock present or represented at the Annual Meeting is required
to approve the amendment to the Nonqualified Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND THE NONQUALIFIED STOCK OPTION PLAN.
RATIFICATION OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of KPMG Peat
Marwick LLP as the Company's independent certified public
accountants to audit the financial statements of the Company
for the fiscal year ending December 30, 1995. KPMG Peat
Marwick LLP has served as auditors for the Company since 1983.
It is expected that representatives of KPMG Peat Marwick
LLP will be present at the Annual Meeting. They will have the
opportunity to make a statement, if they desire to do so, and
also will be available to respond to appropriate questions.
The affirmative vote of a majority of the shares of Common
Stock present or represented at the Annual Meeting is required
for the ratification of the selection of KPMG Peat Marwick LLP
as independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL AND RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK
LLP.
CERTAIN TRANSACTIONS
The Company trip leases an airplane from a company owned
by Mr. Neal L. Patterson and Mr. Clifford W. Illig. The
airplane is leased on a per mile basis with no minimum usage
guarantee. The Company has a right of first refusal on usage
of the airplane to guarantee its availability to the Company.
The lease rate is believed to approximate fair market value for
this type of aircraft. During 1994 the Company paid an
aggregate of $175,830 for rental of the airplane. The airplane
is used principally by Mr. Patterson to increase the number of
client visits he can make and to reduce the physical strain of
his heavy travel schedule.
In January of 1995, the Company entered into a license
agreement with Apache Medical Systems, Inc.("Apache") allowing
the Company to license certain products of Apache to the
Company's clients. Royalty payments to Apache are based upon
the number and size of the Company's clients that license the
Apache products. To date no royalties have been earned under
the agreement. The Company owns approximately four percent of
Apache's outstanding equity securities and Mr. Gerald W.
Bisbee, a director of the Company, is the chief executive
officer, a director and stockholder of Apache.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of
the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock and other
equity securities of the Company. Executive officers,
directors and holders of ten percent or more of the Company's
equity securities are required to furnish the Company with
copies of all Section 16(a) reports they file.
Based solely on review of the copies of such reports
furnished to the Company or written representations that no
other reports were required, the Company believes that during
the fiscal year ended December 31, 1994, all Section 16(a)
filing requirements applicable to its executive officers,
directors and holders of ten percent or more of the Company's
equity securities were complied with.
FINANCIAL STATEMENTS
The Annual Report to Shareholders of the Company for the
fiscal year ended December 31, 1994, is enclosed with this
Proxy Statement.
GENERAL INFORMATION
Other Matters
The Bylaws of the Company require that for business to be
properly brought before an annual shareholders' meeting, the
Company must have received prior written notice of such
business not later than 120 days in advance of the date of such
meeting. The notice must describe the proposed business, the
shareholders' name and address, a description of the class and
number of shares of stock of the Company which are beneficially
owned (as that term is defined in the Restated Certificate of
Incorporation of the Company) by the shareholder, any material
interest of the shareholder in such business and all other
information regarding the proposal which the Company would be
required to provide in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission if
proxies for the proposal were being solicited by the Company.
Because no such notice has been received in a timely manner,
the only business which may be properly brought before the
Annual Meeting are the matters set forth herein or those
brought before the meeting by or at the direction of the Board
of Directors.
The Board of Directors does not intend to present any
matter for action at the annual meeting other than the matters
referred to in this Proxy Statement. If any other matters
properly come before the Annual Meeting, it is intended that
the holders of the proxies hereby solicited will act in respect
of such matters in accordance with their best judgment.
Deadline for Shareholder Proposals
Proposals by holders of the shares of Common Stock which
are intended to be presented at the 1995 Annual Meeting of
Shareholders must be received by the Company no later than
December 20, 1995 to be eligible for inclusion in the Company's
Proxy Statement and form of proxy relating to that meeting.
Such proposals must also comply in full with the requirements
of Rule 14a-8 under the Securities Act of 1934 and must comply
with the advance notice and information requirement described
under the heading "GENERAL INFORMATION -- Other Matters" above
to be presented at that meeting.
Voting Matters
In accordance with Delaware law, a shareholder entitled to
vote in the election of directors can withhold authority to
vote for all nominees for directors or can withhold authority
to vote for certain nominees for directors. Abstentions from
the proposal to approve the amendment to the Nonqualified Plan
or the proposal to approve and ratify the selection of the
Company's independent auditors are treated as votes against the
particular proposal. Broker non-votes on the election of
directors, the proposal to amend the Nonqualified Stock Option
Plan or the proposal to approve and ratify the selection of the
Company's independent auditors are treated as shares of Common
Stock as to which voting power has been withheld by the
respective beneficial holders and, therefore, as shares not
entitled to vote on the proposal as to which there is the
broker non-vote.
Expenses of Solicitation
All costs of this solicitation will be borne by the
Company. In addition to the use of the mails, proxies may be
solicited personally or by telephone or telegraph by some of
the regular employees of the Company. The Company has engaged
Morrow & Co., Inc. ("Morrow") as paid solicitors in connection
with the Annual Meeting. Morrow will be paid to solicit
proxies and distribute proxy materials to nominees, brokers and
institutions. The anticipated cost of such services is $
3,500, plus expenses. The Company may reimburse brokers and
other persons holding stock in their names, or in the names of
nominees, for their expenses incurred in sending proxy
materials to their principals and obtaining their proxies. The
Company requests that brokerage houses and other custodians,
nominees and fiduciaries forward the soliciting materials to
the beneficial owners of the shares of Common Stock held of
record by such persons.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/Richard J. Wall, Jr.
Richard J. Wall, Jr.
Secretary, Vice President
and General Counsel
Kansas City, Missouri
April 14, 1995
----- Please mark
| X | your vote as in
----- this example
This proxy when properly executed will be voted in the
manner directed herein by the undersigned shareholder(s).
If no direction is made, this proxy will be voted "FOR" the
following proposals.
- --------------------------------------------------------------------------
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3. |
- --------------------------------------------------------------------------
FOR Withheld as to all nominees
---- ----
1. Election of Directors. | | | |
---- ----
To withhold authority to vote for
any nominee(s), mark the "FOR" box
and write the name of each such
nominee with respect to which you
intend to withhold authority to
vote on the line provided below.
- ------------------------------------
Unless authority to vote for each
nominee is withheld, this Proxy
will be deemed to confer authority
to vote "FOR" each nominee whose
name is not written on the line
provided.
FOR AGAINST ABSTAIN
---- ---- ----
2. Amendment of the Nonqualified | | | | | |
Stock Option Plan. ---- ---- ----
FOR AGAINST ABSTAIN
3. Ratification and approval of ---- ---- ----
the selection of Peat Marwick | | | | | |
LLP as the independent auditors ---- ---- ----
of Cerner Corporation for the
fiscal year ending
December 30, 1995.
In their discretion, the proxies are to
vote upon such other business as may
properly come before the meeting which
the board of directors does not have
knowledge of a reasonable period of time
before the solicitation of this proxy.
Please date and sign as name appears
hereon. If shares are held jointly or
by two or more persons, each shareholder
named should sign. Executors,
administrators, trustees, etc. should so
indicate when signing. If the signer is
a corporation, please sign
full corporate name by duly authorized
officer. If a partnership, please sign
in partnership name by authorized
person.
If you expect to attend the 1995 Annual
Meeting of Shareholders please check
this box: ----
| |
----
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting
and Proxy Statement, dated April 14,
1995.
_______________________________________________
SIGNATURE Date
_______________________________________________
SIGNATURE Date
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED.
CERNER CORPORATION PROXY
2800 Rockcreek Parkway
Kansas City, Missouri 64117
__________________________________________________________________________
This Proxy is for the 1995 Annual Meeting of Shareholders of
Cerner Corporation, a Delaware corporation, to be held May 16,
1995, at 10:00 a.m., local time, at the American Heartland
Theater located at 2450 Grand Avenue, Kansas City, Missouri
64108.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF CERNER
CORPORATION.
The undersigned hereby appoints Clifford W. Illig and Neal L.
Patterson, and each of them, jointly and severally, with full
power of substitution, as attorneys-in-fact, to vote all the
shares of Common Stock which the undersigned is entitled to
vote at the 1995 Annual Meeting of Shareholders of Cerner
Corporation to be held on May 16, 1995, and at any adjournment
thereof, on the transaction of any and all business which may
come before said meeting, as fully and with the same effect as
the undersigned might or could do if personally present for the
purposes set forth.
The nominees for director are: Clifford W. Illig, Gerald E.
Bisbee, Jr. and Michael E. Herman
You are encouraged to specify your choice by marking the
appropriate boxes on the reverse side.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN
THE ENCLOSED ENVELOPE.
CERNER CORPORATION
NONQUALIFIED STOCK OPTION PLAN
AS AMENDED BY THE BOARD OF DIRECTORS
ON FEBRUARY 15, 1994
AND RATIFIED BY THE SHAREHOLDERS ON MAY 17, 1994
1. Purpose of Plan. The purpose of the Plan is to encourage
the employees and directors of Cerner Corporation (the
"Company") and its subsidiaries and consultants and advisors to
the Company and its subsidiaries to participate in the
ownership of the Company, and to provide additional incentive
for such persons to promote the success of its business through
sharing in the future growth of such business.
2. Effectiveness of Plan. The provisions of this Plan shall
become effective on the date the Plan is adopted by the Board
of Directors of the Company (the "Board of Directors"), and
shall govern all options granted hereunder. Nothing in this
Plan shall be construed as a modification of any provision of
the Cerner Corporation Incentive Stock Option Plan A, the
Cerner Corporation Incentive Stock Option Plan B or the Cerner
Corporation Incentive Stock Option Plan C.
3. Administration. This Plan shall be administered by a
committee of the Board of Directors consisting of not less than
two nor more than five members of the Board of Directors (the
"Committee") appointed by the members of the Board of
Directors. The Committee shall have full power and authority
to construe, interpret and administer the Plan, and may from
time to time adopt such rules and regulations for carrying out
this Plan as it may deem proper and in the best interests of
the Company. Subject to the terms, provisions and conditions
of the Plan, the Committee shall have exclusive authority (i)
to select the persons to whom options shall be granted, (ii) to
determine the number of shares subject to each option, (iii) to
determine the time or times when options will be granted, (iv)
to determine the option price of the shares subject to each
option, (v) to determine the time when each option may be
exercised, (vi) to fix such other provisions of each option
agreement as the Committee may deem necessary or desirable,
consistent with the terms of this Plan, and (vii) to determine
all other questions relating to the administration of this
Plan.
4. Eligibility. Options to purchase shares of common stock
of the Company ("Cerner Common Stock") shall be granted under
this Plan only to directors and employees of the Company or of
any of its subsidiaries and to advisors and consultants to the
Company and any of its subsidiaries. Neither Neal L. Patterson
nor Clifford W. Illig are eligible under this Plan.
5. Shares Subject to the Plan. Options granted under this
Plan shall be granted solely with respect to shares of Cerner
Common Stock. Subject to any adjustments made pursuant to the
provisions of paragraph 10, the aggregate number of shares of
Cerner Common Stock which may be issued upon exercise of all
the options which may be granted under this Plan shall not
exceed 450,000. If any option granted under this Plan shall
expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject to such
option shall be added to the number of shares otherwise
available for options which may be granted in accordance with
the terms of this Plan. The shares to be delivered upon
exercise of the options granted under this Plan shall be made
available, at the discretion of the Committee, from either the
authorized but unissued shares of Cerner Common Stock or any
treasury shares of Cerner Common Stock held by the Company.
6. Option Agreement. Each option granted under this Plan
shall be evidenced by a nonqualified stock option agreement,
which shall be signed by an officer of the Company and by the
employee to whom the option is granted (the "optionee"). The
terms of said nonqualified stock option agreement shall be in
accordance with the provisions of this Plan, but it may include
such other provisions as may be approved by the Committee. The
granting of an option under this Plan shall be deemed to occur
on the date on which the nonqualified stock option agreement
evidencing such option is executed by the Company and the
optionee. Each nonqualified stock option agreement shall
constitute a binding contract between the Company and the
optionee, and every optionee, upon the execution of a
nonqualified stock option agreement, shall be bound by the
terms and restrictions of this Plan and such nonqualified stock
option agreement.
7. Option Price. The price at which shares of Cerner Common
Stock may be purchased under an option granted pursuant to this
Plan shall be determined by the Committee.
8. Period and Exercise of Option.
(a) Period--The period during which each option granted
under this Plan may be exercised shall be fixed by the
Committee at the time such option is granted.
(b) Exercise--Any option granted under this Plan may be
exercised by the optionee (or such other person as the
Committee may determine) only by (i) delivering to the Company
written notice of the number of shares with respect to which he
is exercising his option right and (ii) paying in full the
option price of the purchased shares. Subject to the
limitations of this Plan and the terms and conditions of the
respective nonqualified stock option agreement, each option
granted under this Plan shall be exercisable in whole or in
part at such time or times as the Committee may specify in such
nonqualified stock option agreement. All options will
terminate concurrently with termination of employment or such
other relationship with the Company as qualified such
individual for participation in this Plan.
(c) Payment for shares--Payment for shares of Cerner
Common Stock purchased pursuant to an option granted under this
Plan shall be made in cash.
(d) Delivery of certificates--As soon as practicable
after receipt by the Company of the notice described in
subsection (b), and of payment in full of the option price for
all of the shares being purchased pursuant to an option granted
under this Plan, a certificate or certificates representing
such shares of stock shall be registered in the name of the
optionee and shall be delivered to the optionee. However, no
certificate for fractional shares of stock shall be issued by
the Company notwithstanding any request therefor. Neither any
optionee, nor the legal representative, legatee or distributee
of any optionee, shall be deemed to be a holder of any shares
of stock subject to an option granted under this Plan unless
and until the certificate or certificates for such shares have
been issued.
(e) Limitations on exercise--The Committee may impose
such limitations on the exercise of any specific nonqualified
stock option agreement as it deems appropriate.
9. Nontransferability of Options. No option granted under
this Plan shall be transferable or assignable by the optionee,
other than by will or by the laws of descent and distribution.
10. Adjustments Upon Changes in Capitalization. In the event
of any change in the capital structure of the Company,
including but not limited to a change resulting from a stock
dividend, stock split, reorganization, merger, consolidation,
liquidation or any combination or exchange of shares, the
number of shares of Cerner Common Stock subject to this Plan
and the number of such shares subject to each option granted
hereunder shall be correspondingly adjusted by the Committee.
The option price for which shares of Cerner Common Stock may be
purchased pursuant to an option granted under this Plan shall
also be adjusted so that there will be no change in the
aggregate purchase price payable upon the exercise of any
option.
11. Amendment and Termination of Plan. No option shall be
granted pursuant to this Plan after January 1, 2000, on which
date this Plan will expire except as to options then
outstanding, which options shall remain in effect until they
have been exercised or have expired. The Committee may at any
time before such date amend, modify or terminate the Plan;
provided, however, that the Committee may not, without approval
of the Shareholders of the Company (i) increase the maximum
number of shares of Cerner Common Stock as to which options may
be granted pursuant to the Plan, (ii) alter the eligibility
requirements for optionees under the Plan or (iii) extend the
duration of the Nonqualified Plan. No amendment, modification
or termination of this Plan may adversely affect the rights of
any optionee under any then outstanding option granted
hereunder without the consent of such optionee.
12. Governing Law. This Plan and the rights of all persons
claiming hereunder shall be construed and determined in
accordance with the laws of the State of Missouri.
CERNER CORPORATION
FOUNDATIONS RETIREMENT PLAN
TO: All Participants
The Annual Meeting of the Shareholders of Cerner
Corporation (the "Company") will be held at the American
Heartland Theater located at 2450 Grand Avenue, Kansas City,
Missouri 64108, on May 16, 1995, commencing at 10:00 a.m. As a
participant in the Cerner Corporation Foundations Retirement
Plan (the "Plan"), you are entitled to instruct Twentieth
Century Services, Inc., as trustee of the Plan (the "Trustee"),
to vote the shares of Common Stock, par value $.01 per share,
of the Company (the "Common Stock"), which have been credited
to you under the Plan as of March 28, 1995.
As of this date, your Plan account has been credited
with the number of shares of Common Stock indicated on the
label affixed to the bottom of the second page of the enclosed
Participant Instruction Form. The number of shares of Common
Stock shown includes shares of Common Stock purchased with your
elective deferrals, Company matching contributions, and
allocations to your account of shares of Common Stock forfeited
by terminated associates, as allocated by the provisions of the
Plan. Therefore, you may not be fully vested in the total
number of shares of Common Stock indicated.
The Plan gives you the right to direct the Trustee to
vote your shares in accordance with your instructions. Your
votes are to be indicated on the enclosed Participant
Instruction Form and returned to Jackie Gorman of Cerner
Corporation, Mail Drop 1511, no later than May 5, 1995. The
Trustee may vote only those shares in the Plan for which valid
instructions have been received from the participant. Please
sign and date your form and mail it as promptly as possible to
Jackie Gorman, Mail Drop 1511.
Your voting instructions are confidential.
TWENTIETH CENTURY SERVICES, INC.,
as trustee of Cerner Corporation
Foundations Retirement Plan
PARTICIPANT INSTRUCTION FORM
UNDER
CERNER CORPORATION
FOUNDATIONS RETIREMENT PLAN
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1995
I am a participant in the Cerner Corporation
Foundations Retirement Plan (the "Plan") of Cerner Corporation
(the "Company") entitled to vote the number of shares of Common
Stock, par value $.01 per share, of the Company (the "Common
Stock") indicated on this form.
I understand that TWENTIETH CENTURY SERVICES, INC.,
as trustee of the Plan (the "Trustee"), will vote the shares of
Common Stock upon instructions from participants. I further
understand that I may direct the Trustee to vote certain shares
of Common Stock in favor and certain shares of Common Stock
against any of the proposals, but that to do so requires
separate forms.
I acknowledge receipt of the Company's Notice of
Annual Meeting and Proxy Statement for its Annual Meeting of
Shareholders to be held May 16, 1995, at 10:00 a.m., local
time, at the American Heartland Theater located at 2450 Grand
Avenue, Kansas City, Missouri 64108.
I instruct the Trustee to vote all of my shares of
Common Stock as follows:
1. The election of Cliff W. Illig, Gerald E. Bisbee, Jr. and
Michael E. Herman as directors.
FOR Withheld as to all nominees
---- ----
| | | |
---- ----
To withhold authority to vote for any nominee(s), mark the
"FOR" box and write the name of each such nominee with
respect to which you intend to withhold authority to vote
on the line provided below.
__________________________________________________________
Unless authority to vote for each nominee is withheld,
this Proxy will be deemed to confer authority to vote
"FOR" each nominee whose name is not written on the line
provided.
2. Approval of Amendments to the Nonqualified Stock Option Plan.
FOR AGAINST ABSTAIN
---- ---- ----
| | | | | |
---- ---- ----
3. Ratification and approval of the selection of KPMG Peat
Marwick LLP as the independent auditors of Cerner
Corporation for the fiscal year ending December 30, 1995.
FOR AGAINST ABSTAIN
---- ---- ----
| | | | | |
---- ---- ----
4. Considering and acting upon any other matters which may
properly come before the meeting or any adjournment
thereof.
I direct that Clifford W. Illig and Neal L.
Patterson, and each or any one of them, be appointed my true
and lawful attorneys, agents and proxies with full power of
substitution in my name to vote at the Annual Meeting, and at
any and all adjournments thereof, with respect to the shares of
Common Stock which have been credited to me under the Plan for
the purpose of any matters which may properly come before the
meeting or any adjournment thereof.
----
| | a. I hereby grant the power of attorney
---- referred to above.
----
| | b. I hereby withhold the grant of the power of
---- attorney referred to above
Date:________________________, 1995
______________________________________
(Signature of Participant)
(Please sign exactly as your name
appears on the label to this
form. If you are signing as
executor, administrator or
guardian, please give your full
title as such.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PARTICIPANT INSTRUCTION
FORM IN THE ENVELOPE PROVIDED TO JACKIE GORMAN AT MAIL DROP
1511.
