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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
CASS INFORMATION SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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5) Total fee paid:
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SEC 1913(04-05)
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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CASS INFORMATION SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on
April 20, 2009
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Cass Information Systems, Inc. will
be held at the location specified below on Monday, April 20, 2009, at 11:00
a.m. local time, for the following purposes:
1. To elect four directors to serve for a three-year term;
2. To ratify the appointment of KPMG LLP as the independent registered
public accounting firm for 2009; and
3. To act upon such other matters as may properly come before the
meeting.
The close of business on March 5, 2009 has been fixed as the record date
for determining shareholders entitled to notice of and to vote at the Annual
Meeting.
This year's Annual Meeting will be held at The Charles F. Knight Executive
Education Center, Room 200, Olin School of Business at Washington University,
One Brookings Drive, St. Louis, Missouri 63130. For your reference, a map is
provided inside the back cover of this Proxy Statement.
Please note that you will be required to present an admission ticket to
attend the Annual Meeting. Your admission ticket is attached to your proxy
card. If your shares are held in the name of a broker, trust, bank or other
nominee, you can request an admission ticket by contacting our Investor
Relations Department at (314) 506-5500.
By Order of the Board of Directors,
/s/ P. Stephen Appelbaum
P. Stephen Appelbaum
Secretary
March 20, 2009
Bridgeton, Missouri
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
WHETHER OR NOT YOU INTEND TO BE PRESENT, IT IS IMPORTANT THAT YOUR SHARES BE
REPRESENTED AND VOTED AT THE ANNUAL MEETING. YOU CAN VOTE YOUR SHARES BY ONE OF
THE FOLLOWING METHODS: VOTE OVER THE INTERNET OR BY TELEPHONE USING THE
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, OR MARK, SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY CARD. THE PRESENCE, IN PERSON OR BY PROPERLY EXECUTED
PROXY, OF A MAJORITY OF THE COMMON STOCK OUTSTANDING ON THE RECORD DATE IS
NECESSARY TO CONSTITUTE A QUORUM AT THE ANNUAL MEETING.
CASS INFORMATION SYSTEMS, INC.
13001 Hollenberg Drive
Bridgeton, Missouri 63044
PROXY STATEMENT
Annual Meeting of Shareholders
to be held April 20, 2009
This Proxy Statement is being furnished to the common shareholders of Cass
Information Systems, Inc. (the Company) on or about March 20, 2009 in
connection with the solicitation of proxies on behalf of the Board of Directors
of the Company (the Board) for use at the annual meeting of shareholders (the
Annual Meeting) to be held on April 20, 2009 at the time and place and for the
purposes set forth in the accompanying Notice of Annual Meeting, and at any
adjournment or postponement of that meeting.
Holders of common stock, par value $.50 per share, of the Company at its
close of business on March 5, 2009 (the Record Date) are entitled to receive
notice of and vote at the Annual Meeting. On the Record Date, there were
9,213,242 shares of common stock outstanding and entitled to vote at the Annual
Meeting. Holders of record of common stock are entitled to one vote per share
of common stock they held of record on the Record Date on each matter that may
properly come before the Annual Meeting. Company management and members of the
Board, in the aggregate, directly or indirectly controlled approximately 7.5%
of the common stock outstanding on the Record Date.
Shareholders of record on the Record Date are entitled to cast their votes
in person or by properly executed proxies at the Annual Meeting. The presence,
in person or by properly executed proxy, of a majority of the shares of common
stock outstanding on the Record Date is necessary to constitute a quorum at the
Annual Meeting. If a quorum is not present at the time the Annual Meeting is
convened, the Company may adjourn or postpone the Annual Meeting.
If a quorum is present, the affirmative vote of a majority of the shares
entitled to vote which are present in person or represented by proxy at the
Annual Meeting is required to elect directors, ratify the appointment of KPMG
LLP as the Company's independent registered public accounting firm for 2009,
and to act on any other matters properly brought before the meeting.
Shareholders may not cumulate their votes in the election of directors.
Shares represented by proxies which are marked or voted (i) "withheld" for
the election of the Board's director nominees, (ii) "abstain" to ratify the
appointment of the Company's independent registered public accounting firm, or
(iii) to deny discretionary authority on other matters will be counted for the
purpose of determining the number of shares represented by proxy at the
meeting. Such proxies will thus have the same effect as if the shares
represented thereby were voted against such nominee or nominees, against the
ratification of the appointment of the Company's independent registered public
accounting firm, and against such other matters, respectively. Shares held by
brokers that do not have discretionary authority to vote on a proposal and have
not received voting instructions from their clients are considered "broker
non-votes." Broker non-votes are considered present or represented for purposes
of determining a quorum but are not counted or deemed present or represented
for determining whether shareholders have approved that proposal. The inspector
of elections appointed for the meeting will separately tabulate and certify
affirmative and negative votes, abstentions and broker non-votes.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Annual Meeting, a written
notice of revocation bearing a date later than the date of the proxy, (ii) duly
executing and dating a subsequent proxy relating to the common stock and
delivering it to the Secretary of the Company at or before the vote is taken at
the Annual Meeting or (iii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
a revocation of a proxy). Any written notice revoking a proxy, or any
subsequent proxy, should be sent to Cass Information Systems, Inc., Attn: P.
Stephen Appelbaum, Secretary, 13001 Hollenberg Drive, Bridgeton, Missouri
63044.
All common stock represented at the Annual Meeting by properly executed
proxies received prior to or at the Annual Meeting and not properly revoked
will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such proxies will
be voted FOR the election of the Board's director nominees and FOR the
ratification of the appointment of KPMG LLP as the Company's independent
registered public accountants for 2009. The Board does not know of any matters
other than the matters described in the Notice of Annual Meeting attached to
the Proxy Statement that will come before the Annual Meeting.
The Board solicits the proxies. In addition to the use of the mails,
proxies may be solicited personally or by telephone or electronic transmission
by directors, officers or regular employees of the Company. It is contemplated
that brokerage houses, custodians, nominees and fiduciaries will be requested
to forward the soliciting material to the beneficial owners of common stock
held of record by such persons, and will be reimbursed by the Company for
expenses incurred therewith. The cost of solicitation of proxies will be borne
by the Company.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDERS MEETING TO BE HELD ON APRIL 20, 2009
The Company's proxy statement, annual report on Form 10-K for the 2008
fiscal year and summary Annual Report to Shareholders are available at
www.cassinfo.com under "Investor Relations," then "Proxy Materials."
2
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board consists of twelve members and is divided into three
classes of four directors each. Each director is elected for a three-year term,
and the term of each class of directors expires in successive years.
The Board, upon presentation from a non-management director and
recommendation by the Nominating and Corporate Governance Committee, has
nominated Randall L. Schilling for election. Additionally, the Board has
nominated incumbents Robert A. Ebel, John L. Gillis, Jr., and Franklin D.
Wicks, Jr. for re-election. The following information is submitted with respect
to the nominees for election to the Board, together with the members of the
Board whose terms will continue after the Annual Meeting or until their
respective successors are duly elected and qualified:
Nominees to serve until 2012:
Robert A. Ebel ................. Mr. Ebel, 53, has been a director since 2006. He is Chief Executive Officer
(CEO) of Universal Printing Company, a privately held printing company
headquartered in St. Louis, Missouri. Mr. Ebel began his tenure with Universal
Printing Company as Chief Financial Officer and board member in 1986. In
1996, he was appointed to the position of CEO. Mr. Ebel currently serves on the
Board of the St. Louis Graphic Arts Joint Health and Welfare Fund and is active
in various civic and charitable organizations in the St. Louis metropolitan area.
John L. Gillis, Jr. ............ Mr. Gillis, 69, has been a director since 2007. Mr. Gillis is Retired -- Senior
Counsel Emeritus to the law firm of Armstrong Teasdale LLP. Mr. Gillis began
his career as an associate with Armstrong Teasdale LLP in 1968 and served as
partner with the firm from 1975 to December 2006. Mr. Gillis is a member of
the American Bar Association, Missouri Bar Association and Bar Association of
Metropolitan St. Louis. He has been active in various civic and charitable
organizations in the St. Louis metropolitan area, and currently serves on the
board of directors for Aquinas Institute of Theology.
Randall L. Schilling ........... Mr. Schilling, 46, is CEO of Quilogy, Inc., a nationally recognized, privately
held IT professional services company founded in 1992 by Mr. Schilling and
headquartered in St. Charles, Missouri. Mr. Schilling has been active in various
civic and charitable organizations in the St. Louis metropolitan area, including
the St. Louis Regional Business Council, Partners for Progress -- Education
Chairman, and Young Presidents Organization. Additionally, Mr. Schilling
serves as an Advisory Board member for United Missouri Bank, St.
Charles, Missouri.
Franklin D. Wicks, Jr. ......... Dr. Wicks, 55, has been a director since 2006. He is President, Research
Essentials and Specialties of Sigma-Aldrich Corporation, a publicly traded life
science and high technology company located in St. Louis, Missouri. Dr. Wicks
has worked for Sigma-Aldrich since 1982, beginning as a research chemist and
subsequently working in marketing, as President of Sigma Chemical and Vice
President of Worldwide Operations, Sigma-Aldrich. He served as President,
Scientific Research Division, Sigma-Aldrich from 1999 to 2002 and was
responsible for operations in 34 countries. Prior to his most recent appointment,
Dr. Wicks served as President-SAFC. After receiving his Ph. D., Dr. Wicks
served four years on the staff of the Navigators at the Air Force Academy and at
the University of Colorado at Boulder before joining Sigma-Aldrich. He is
currently a member of the CEO Forum and serves as a trustee of Covenant
Theological Seminary.
The Company's Board recommends a vote FOR the four nominees for election to the
Board of Directors.
3
Directors to serve until 2011:
K. Dane Brooksher ............... Mr. Brooksher, 70, has been a director since 2005. He is Retired Chairman and
CEO of ProLogis, a leading provider of distribution services and facilities.
Mr. Brooksher began his career with ProLogis in 1993 and during that time held
the positions of Chairman of the Board, Chief Operating Officer (COO), Co-
Chairman and CEO. Prior to joining ProLogis, he spent over 32 years with
KPMG LLP, serving as the managing partner for the Mid-West area and the
Chicago office, as well as serving on the firm's Board of Directors, Management
Committee and as International Development Partner. Mr. Brooksher is
currently a director of Qwest Communications International, Inc., a publicly
traded telecommunications firm and Pactiv Corporation, a publicly traded
consumer goods and food products packaging firm. He is director and past
chairman of the Board of Sponsors of the College of William and Mary Mason
School of Business Foundation, a member of the Advisory Board of the J. L.
Kellogg Graduate School of Management, Northwestern University, and trustee
of St. Anthony's Medical Center of St. Louis.
Eric H. Brunngraber ............. Mr. Brunngraber, 52, has been a director since 2003. Mr. Brunngraber is
President and CEO of the Company. Prior to his appointment to CEO in July
2008, he held the position of President and COO since May 2006.
Mr. Brunngraber served as Chief Financial Officer (CFO) of the Company from
1997 to 2006. He has held numerous positions with the Company since his
employment began in 1979, including Executive Vice President-Secretary of
Cass Commercial Bank, the Company's bank subsidiary. Mr. Brunngraber is
active in various civic, charitable, professional and church-related organizations
in the St. Louis metropolitan area.
Bryan S. Chapell ................ Dr. Chapell, 54, has been a director since 1998. Dr. Chapell joined the faculty of
Covenant Theological Seminary in 1985, and has served as seminary President
since 1994. Dr. Chapell has obtained degrees from Northwestern University,
Covenant Theological Seminary and Southern Illinois University and has
authored numerous books and publications.
Benjamin F. Edwards, IV ......... Mr. Edwards, 53, has been a director since 2005. He is Chairman, CEO and
President of Benjamin F. Edwards & Company, a St. Louis-based investment
firm. Previously, Mr. Edwards was branch manager of the Town & Country,
Missouri office of A.G. Edwards/Wachovia Securities LLC, a national
investment firm. Mr. Edwards' career with A.G. Edwards began in 1977, where
he held numerous positions including Employment Manager, Financial Advisor,
Associate Branch Manager, Regional Officer, Director of Sales and Marketing
and President, and member of the Board of Directors of A.G. Edwards from
1994 to October 2007. He currently serves on the Advisory Boards of Sunshine
Missions and Bethesda Hospital and Homes, and is active with various social
and charitable organizations in the St. Louis metropolitan area.
Directors to serve until 2010:
Lawrence A. Collett ......... Mr. Collett, 66, has been a director since 1983. He is Chairman of the Board of
the Company, a position he has held since 1992. Mr. Collett retired as CEO of
the Company in July 2008, having served in that capacity since 1990. He began
his career with the Company in 1963 and served as Executive Vice President
from 1974 to 1983 and President from 1983 to 1990. He holds numerous
positions with civic, charitable, and church-related institutions. Mr. Collett is a
current member of the St. Louis Regional Business Council.
4
Wayne J. Grace ............... Mr. Grace, 68, has been a director since 2003. He is Retired Managing Director
of UHY Advisors MO, Inc., a tax and business consulting firm. Mr. Grace was
the founder and Managing Director of the accounting firm Grace Advisors, Inc.,
from 1983 to 2004. From 1966 to 1983, he was the Managing Partner of the St.
Louis, Missouri office of Fox & Company, where he served as a member of the
National Consulting Services Steering Committee. Mr. Grace served on the
Board of Managers for the YMCA of the Ozarks from 1985 to 2005. Mr. Grace
became a director of Siegel-Robert, Inc., a privately held plastics product
manufacturer in 2006. Mr. Grace is a Certified Public Accountant.
James J. Lindemann ........... Mr. Lindemann, 53, has been a director since 2007. He is Executive Vice
President of Emerson Electric Co., a publicly traded manufacturing company
based in St. Louis, Missouri. Mr. Lindemann joined Emerson in 1977, where he
held a number of increasingly responsible engineering and marketing positions
with its Specialty Motor division. In 1992, he was named President of
Commercial Cam, and in 1995, he was named President of the Emerson
Appliance Motor division. In 1996, Mr. Lindemann was promoted to Chairman
and CEO of the Emerson Motor Co. He was named Senior Vice President of
Emerson in 1999 and Executive Vice President in 2000. Mr. Lindemann has
served on the Emerson Advisory Board since 2000 and has been a board
member of the CEO Forum since 2003.
Andrew J. Signorelli ......... Mr. Signorelli, 69, has been a director since 1986. Mr. Signorelli is President of
Hope Educational & Research Center, a St. Louis-based not-for-profit
organization established in 1972. He served as Administrator for St. Louis
University Association from 1963 to 1965 and Faith Hospital Association from
1965 to 1986. Mr. Signorelli is a board member of Hope Educational &
Research Centers and various other private corporations located in the St. Louis
metropolitan area.
CORPORATE GOVERNANCE
The Company's Board oversees and guides the Company's management and its
business. Committees support the role of the Board on issues that benefit from
consideration by a smaller, more focused subset of directors. All committee
members are elected by and serve at the pleasure of the Board.
Independence
Based on the independence standards as defined by the marketplace rules of
The Nasdaq Stock Market, Inc. (Nasdaq), the Board has determined in its
business judgment that all of the directors and director-nominees are
independent, as such term is defined in the Nasdaq listing standards, except
for Mr. Collett and Mr. Brunngraber. In addition, each of the members of the
Audit Committee meets the heightened independence standards set forth in the
Securities and Exchange Commission (SEC) rules and the Nasdaq listing
standards. In making these determinations, the Board has reviewed all
transactions and relationships between each director (or any member of his or
her immediate family) and the Company, including transactions and relationships
described in the responses of the directors to questions regarding employment,
business, family and other relationships with the Company and its management.
As a result of this review, the Board concluded, as to each independent
director, that no relationships exists which, in the opinion of the Board,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
Board Meetings and Committees of the Board
The Board meets on a quarterly basis in January, April, July and October.
There were four meetings of the Board in 2008. All directors attended at least
75% of the aggregate number of meetings of the Board and committees on which
they served. The Company's directors are encouraged, but not required, to
attend the Company's Annual Meeting. In 2008, ten directors attended the Annual
Meeting.
5
The following table represents the membership and number of meetings in
2008 (in parentheses) of the standing committees of the Board, each of which is
comprised entirely of independent directors, as defined by Nasdaq and SEC
rules:
Nominating and Corporate
Audit (5) Governance (4) Compensation (4)
----------------------------- ------------------------- ------------------------
Robert A. Ebel Bryan S. Chapell K. Dane Brooksher*
Wayne J. Grace* Wayne J. Grace Benjamin F. Edwards, IV
John L Gillis, Jr. Frank D. Wicks, Jr.* James J. Lindemann
Andrew J. Signorelli
------------
*Committee Chairman
In January 2009, the Board elected to retain the current committee
appointments through March 2010.
Audit Committee
The Audit Committee operates pursuant to a written charter that is
approved by the Board and available on the Company's website at
www.cassinfo.com. The Audit Committee oversees the accounting and financial
reporting processes of the Company and the audits of the Company's financial
statements. The Audit Committee is responsible for appointing, determining
funding for and overseeing the independent registered public accountants for
the Company, and meeting with the independent registered public accountants and
other corporate officers to review matters relating to corporate financial
reporting and accounting procedures and policies. Among other responsibilities,
the Audit Committee reviews financial information provided to shareholders and
others, assesses the adequacy of financial and accounting controls and
evaluates the scope of the audits of the independent registered public
accountants and reports on the results of such reviews to the Board. In
addition, the Audit Committee assists the Board in its oversight of the
performance of the Company's internal auditors. The Audit Committee meets with
the internal auditors on a quarterly basis to review the scope and results of
such services. The Board has determined that Mr. Grace qualifies as "audit
committee financial expert," as defined by the SEC and in accordance with the
Nasdaq listing rules.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee operates pursuant to a
written charter that is approved by the Board and available on the Company's
website at www.cassinfo.com. The Nominating and Corporate Governance Committee
is responsible for identifying individuals qualified to become members of the
Board, recommending director-nominees and developing and addressing corporate
governance principles and issues applicable to the Company and its
subsidiaries. In recommending director-nominees to the Board, the Nominating
and Corporate Governance Committee solicits candidate recommendations from its
own members, other directors and management. In evaluating candidates, the
Nominating and Corporate Governance Committee takes into consideration such
factors as it deems appropriate, including any legal requirements or listing
standards requirements. The Nominating and Corporate Governance Committee
considers a candidate's judgment, skills, diversity, experience with businesses
and other organizations of comparable size, the interplay of the candidate's
experience with the experience of other Board members, and the extent to which
the candidate would be a desirable addition to the Board and any committees of
the Board. In general, no person who will have reached the age of 75 prior to
election date may be nominated for election or re-election to the Board. It is
also the Board's practice to limit new directors to no more than two per year
in order to maintain Board continuity.
Although the Nominating and Corporate Governance Committee does not
specifically solicit suggestions for possible candidates from shareholders, the
Nominating and Corporate Governance Committee will consider candidates
recommended by shareholders meeting the criteria discussed above and set by the
Nominating and Corporate Governance Committee, with the concurrence of the full
Board. The criteria will be re-evaluated periodically and will include those
criteria set out in the Nominating and Corporate Governance Committee's
charter. Suggestions, together with a description of the proposed nominee's
qualifications, other relevant biographical information and an indication of
the willingness of the proposed nominee to serve, should be sent to
6
Cass Information Systems, Inc., Attn: P. Stephen Appelbaum, Secretary, 13001
Hollenberg Drive, Bridgeton, Missouri 63044.
Compensation Committee
The Compensation Committee operates pursuant to a written charter that is
approved by the Board and available on the Company's website at
www.cassinfo.com. The Compensation Committee fulfills the Board's
responsibilities relating to compensation of the Company's directors, CEO and
other executives. The Compensation Committee also has overall responsibility
for approving, evaluating and administering the compensation plans, policies
and programs of the Company.
Compensation Processes and Procedures
-------------------------------------
As specified in its charter, the Compensation Committee recommends annual
retainer fees, Board and committee meeting fees, and terms and awards of stock
compensation for non-management Directors, subject to appropriate approval by
the Board of Directors or shareholders.
The Compensation Committee establishes and administers the Company's
executive compensation programs and benefits. While the Compensation Committee
may seek input and recommendations from the CEO-President, CFO, or the Vice
President of Human Resources concerning all elements of executive and director
compensation, and confer with them on compensation philosophies, all
significant matters regarding compensation for executives are independently
considered and decided by the Compensation Committee. The Compensation
Committee annually reviews corporate goals and objectives relative to the CEO's
compensation and determines the CEO's compensation level based on this
evaluation, subject to Board approval. The Compensation Committee is
responsible for recommending salary levels and incentive stock compensation for
executive officers of the Company to the Board, and approving incentive stock
compensation for other members of management as recommended by the CEO. The
responsibility for allocating cash bonuses for executive officers other than
himself is delegated to the CEO.
Periodically, the Company uses compensation specialists to assist in
designing or modifying some components of its overall compensation program and
to provide comparison data of compensation levels at other organizations with
which the Company competes for executive management talent. In such
circumstances, the Compensation Committee does not rely solely on survey data
or the consultant's judgment or recommendation, but considers such data when
exercising its judgment in evaluating the Company's compensation program.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
No member of the Compensation Committee is, or was during the year ended
December 31, 2008, an officer, former officer or employee of the Company or any
of its subsidiaries, or a person having a relationship requiring disclosure by
the Company pursuant to Item 404 of Regulation S-K. No executive officer of the
Company served as a member of (i) the compensation committee of another entity
of which one of the executive officers of such entity served on the Company's
Compensation Committee or (ii) the board of directors of another entity of
which one of the executive officers of such entity served on the Company's
Board, during the year ended December 31, 2008.
Code of Conduct and Business Ethics
The Company has adopted a Code of Conduct and Business Ethics policy,
applicable to all Company directors, executive officers and employees. This
policy is publicly available and can be viewed on the Company's website at
www.cassinfo.com.
Certain Relationships and Related Party Transactions
Some of the directors and executive officers of the Company, and members
of their immediate families and firms and corporations with which they are
associated, have had transactions with the Company's subsidiary bank, including
borrowings and investments in depository accounts. All such loans and
investments have been made in the ordinary course of business, and on
substantially the same terms, including interest rates charged or
7
paid and collateral required, as those prevailing at the same time for
comparable transactions with unaffiliated persons, and did not involve more
than the normal risk of collectability or present other unfavorable features.
As provided by the Audit Committee's charter, the Audit Committee must
review and approve all transactions between the Company and any related person
that are required to be disclosed pursuant to Item 404 of Regulation S-K.
"Related person" and "transaction" shall have the meanings given to such terms
in Item 404 of Regulation S-K, as amended from time to time. In determining
whether to approve or ratify a particular transaction, the Audit Committee will
take into account any factors it deems relevant.
Communications with the Board of Directors
The Board has established a process by which shareholders can communicate
with the Board. Shareholders may communicate with any and all members of the
Board by transmitting correspondence to the following address or fax number:
Cass Information Systems, Inc., Name of Director(s), Attn: P. Stephen
Appelbaum, Secretary, 13001 Hollenberg Drive, Bridgeton, Missouri 63044, (314)
506-5560 (fax).
The Secretary will forward all correspondence to the Chairman of the Board
(the Chairman) or the identified director as soon as practicable.
Communications that are deemed to be inappropriate or present a safety or
security concern may be handled differently. Correspondence addressed to the
full Board will be forwarded to the Chairman, who will present the
correspondence to the full Board or a committee thereof. If a response to the
communication is warranted, the content and method of the response may be
coordinated with the Company's legal counsel.
Available Information
The website address for the Company is www.cassinfo.com. The Company makes
available free of charge through its website its annual report on Form 10-K,
quarterly report on Form 10-Q, current report on Form 8-K and amendments to
those reports filed and furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act as soon as reasonably practicable after such documents are
electronically filed with, or furnished to, the SEC.
Director Compensation
Each director of the Company who is not an officer or employee of the
Company receives compensation for his services. The following represents the
fee structure for the year ended December 31, 2008:
Per Meeting Fees
----------------
Regular Board Meeting .................................... $ 2,500
Board Committee Meeting:
Members ................................................ $ 500
Chairperson ............................................ $ 900
Annual Fees
-----------
Board Member Retainer .................................... $ 8,400
Board Committee Chairperson Retainer:
Audit .................................................. $10,000
Nominating and Corporate Governance .................... $ 7,000
Compensation ........................................... $ 7,000
Restricted Stock Awards
-----------------------
Shares issued upon election to a three year term ......... 900
In 2008, restricted stock awards were issued under the Company's 2007
Omnibus Incentive Stock Plan. The shares carry voting and dividend rights;
dividends are accumulated by the Company and paid upon vesting. The shares are
subject to a three-year vesting schedule, with 1/3 of the shares vesting each
year on the anniversary date of the awards. The grant date of awards is
typically the end of the month in which directors are elected.
8
Summary Compensation -- Directors
The table below sets forth the following compensation for each
non-executive director as of the fiscal year ended December 31, 2008: (i) the
dollar value of fees earned or paid; (ii) the compensation cost of restricted
stock outstanding; (iii) all other compensation; and (iv) the dollar value of
total compensation.
Fees Earned or Stock All Other
Paid in Cash Awards Compensation Total
Name (1) ($)(3) ($)(4) ($)(6) ($)
-------------------------------- ---------------- ----------- -------------- ---------
K. Dane Brooksher .............. 26,500 9,243 (5) 611 36,354
Bryan S. Chapell ............... 20,400 9,243 (5) 611 30,254
Robert A. Ebel ................. 32,400 10,329 287 43,016
Benjamin F. Edwards, IV ........ 20,400 9,243 (5) 611 30,254
John L. Gillis, Jr. ............ 16,900 10,209 151 27,260
Wayne J. Grace ................. 45,400 10,209 151 55,760
Harry J. Krieg (2) ............. 12,450 2,994 10,287(7) 25,731
James J. Lindemann ............. 19,400 10,209 151 29,760
Andrew J. Signorelli ........... 29,500 10,209 151 39,860
Franklin D. Wicks, Jr. ......... 26,850 10,329 287 37,466
------------
(1) Compensation for Mr. Brunngraber and Mr. Collett is set forth in the
Executive Officers -- Summary Compensation Table section of the proxy
statement, and related tables. Because Mr. Brunngraber is an executive
officer of the Company, he did not receive any additional compensation for
his services as director. Mr. Collett retired as the Company's Chief
Executive Officer in July 2008. As such, his compensation as reported in
the Summary Compensation Table reflects $10,000 received for services as a
director after his retirement.
(2) Retired from the Board of Directors on April 21, 2008.
(3) Represents fees paid during 2008 for services including Board Meeting and
Board Committee Meeting attendance, as well as retainers for Board
membership and Board Committee chair positions. Amounts include the
following fees for service on the Executive Loan Committee of Cass
Commercial Bank, the Company's bank subsidiary: Mr. Ebel, $11,500; Mr.
Grace, $10,500; Mr. Krieg, $3,500 and Mr. Signorelli (chairman), $9,600.
The Executive Loan Committee held 24 meetings during 2008. Attendance fees
are $500 per meeting for regular members and $600 per meeting for the
committee chair.
(4) The aggregate number of shares of restricted stock awards issued under the
Company's 1995 Restricted Stock Bonus Plan and 2007 Omnibus Incentive Stock
Plan and outstanding at December 31, 2008 for each director was as follows:
K. Dane Brooksher .............. 900
Bryan S. Chapell ............... 900
Robert A. Ebel ................. 330
Benjamin F. Edwards, IV ........ 900
John L. Gillis, Jr. ............ 660
Wayne J. Grace ................. 660
Harry J. Krieg ................. --
James J. Lindemann ............. 660
Andrew J. Signorelli ........... 660
Franklin D. Wicks, Jr. ......... 330
(5) Includes the compensation costs of restricted stock awarded on April 30,
2008 under the Company's 2007 Omnibus Incentive Stock Plan (900 shares)
with a full grant date fair value of $30,195 each and subject to a
three-year vesting period.
(6) Includes dividends paid on restricted stock awards at the time of vesting.
9
(7) Includes payment of $10,000 non-qualified supplemental retirement benefit
related to Mr. Krieg's prior employment with the Company.
Compensation Discussion and Analysis
Overview of Compensation Philosophy and Objectives
--------------------------------------------------
The Compensation Committee believes that the skill and dedication of
executive officers and other management personnel are critical factors
affecting the Company's long-term success in meeting its objectives and
fostering growth and profitability. In support of this, compensation programs
have been designed to attract and retain a high level of talented leadership,
to reward performance in accordance with results, provide an incentive for
future performance and align Company executives' long-term interests with those
of the shareholders.
The overall compensation program is designed to result in compensation
that is commensurate with Company and individual performance. High levels of
performance should yield compensation which is competitive externally and
equitable internally. The Committee periodically assesses the Company's
compensation programs to confirm that incentives are in place to retain key
management talent, reward attainment of longer term objectives and assure that
these programs do not provide undue encouragement for risky behavior on the
part of individuals or the executive management team.
Executive compensation is comprised of three major components: (i) base
salaries reviewed annually by the Compensation Committee, (ii) cash bonuses
distributed from the Company's profit sharing program based on individual and
Company performance, and (iii) long-term equity incentives awarded annually
based on an individual officer's level of responsibility along with Company and
individual performance. The compensation mix of cash and long-term incentives
for the CEO is similar to that of other executive officers of the Company, and
is believed to be consistent with compensation provided to similar positions at
comparable organizations. The CEO is eligible to participate in all Company
benefit programs including those available to other executive officers, and
receives no additional perquisites beyond those available to other executive
officers, as described below.
In order to assure that executive compensation is both competitive and
appropriate, the Compensation Committee reviews executive compensation in its
entirety before determining compensation level adjustments to any specific
components. As such, the Compensation Committee considers the value of cash and
incentive stock compensation. Non-cash benefits, such as perquisites, and the
calculated values of any retirement benefits provided under the Company's
defined benefit, defined contribution and supplemental retirement plans are
also considered, though these elements are given less weight. Gains from prior
incentive stock awards are not taken into account, as these were awards earned
and granted based on prior performance.
The Compensation Committee also periodically compares all compensation
components for executive officers with data on similar positions at other
organizations with which the Company competes for talent. When evaluating
external competitiveness, third party survey data, as well as information from
other resources and industry contacts, are considered. In reviewing comparative
data, the Company does not engage in benchmarking for establishing compensation
levels relative to any predetermined point. In the Committee's view, third
party survey data provides insight into external competitiveness, but is not an
appropriate single basis for establishing compensation levels. This is
primarily due to the Company's unique structure, differences in the size of
surveyed companies, and the lack of sufficient appropriate matches to provide
statistical relevance. The Company's preference is that performance, rather
than benchmarking data, drive executive compensation. As such, the processes
used by the Compensation Committee to establish and adjust executive
compensation levels take into consideration external data along with
performance, experience, retention, potential and internal equity.
During 2007, the Compensation Committee retained Towers Perrin to provide
comparative data on cash and total executive compensation prior to review and
adjustment of executive management compensation for 2008. Data was provided for
the Business and Professional Services, Financial Services and Payment
Processing business segments. Consistent with prior years and the Company's
intent not to engage in benchmarking, the Compensation Committee did not rely
solely on comparative data, but did consider such elements when
10
exercising its own judgment in determining 2008 compensation. Towers Perrin's
overall conclusion confirmed the Committee's belief that 2008 compensation
levels were appropriate for the Company.
The Compensation Committee determines all compensation adjustments for the
CEO, subject to Board approval. The CEO makes recommendations to the
Compensation Committee concerning performance and related salary and incentive
stock levels for other executive officers, subject to the Compensation
Committee's approval. The CEO has responsibility for determining profit sharing
allocations for all other executive officers, in accordance with plan
provisions. As part of the transition relating to Mr. Collett's retirement,
2008 executive profit sharing bonuses, other than those for the CEO, were
determined by Mr. Brunngraber.
Mr. Collett's Retirement
------------------------
As anticipated, Mr. Collett retired as CEO in July 2008 while retaining
the position of Chairman of the Board of Directors. At the time of his
retirement the Board approved a compensation package for Mr. Collett that
included: (i) an annual retainer of $150,000, pro-rated for the first year, for
Mr. Collett's services as Chairman of the Board, (ii) applicable director
compensation, as outlined in the section Election of Directors -- Director
Compensation in this Proxy Statement, (iii) continuation of automobile and
country club membership allowances, and (iv) retention of outstanding awards of
restricted stock, options and stock appreciation rights granted prior to his
retirement, with the continued opportunity to acquire the restricted stock and
exercise the options and stock appreciation rights on the vesting and exercise
terms set forth in his award agreements. Mr. Collett participated in the equity
incentive program and profit sharing plan for the period of January 1, 2008
through June 30, 2008, during which time Mr. Collett served as the Company's
CEO. Upon the effective date of his retirement, Mr. Collett ceased to
participate in the program and plan or receive health and life insurance
benefits. The Company and Mr. Collett each have the right to terminate this
arrangement at any time, with or without cause. Disclosure of Mr. Collett's
compensation for 2008 as both director and executive officer is included in the
compensation tables for Executive Officers. Mr. Collett does not presently
serve on any committee of the Company's Board. He does serve on the Executive
Loan Committee of Cass Commercial Bank, the Company's bank subsidiary. Mr.
Brunngraber was promoted to CEO upon Mr. Collett's retirement.
Elements of Compensation
------------------------
The key elements in the executive compensation program are base salary,
cash bonus awards distributed from the Company's profit sharing plan and
incentive stock compensation. These elements, as well as benefits plans and
perquisites, are described below.
Base Salary
Salaries are established for executive officers by balancing both internal
and external factors. Internal equity is determined through comparison with
other executives within the Company, taking into account the scope of
responsibilities, performance, skills and experience. Similarly, the Company
considers external data to validate competitiveness and reasonableness in the
market place. Considerable weight is given to performance of the individual and
his or her associated operating unit, taking into account factors such as
revenue growth, cost efficiencies, technological advancements and leadership.
Specific individualized targets and quantitative performance measurements are
not utilized. Base salaries are designed to attract and retain high levels of
expertise and talent. The Compensation Committee reviews salaries of the CEO
and other executive officers at the beginning of each fiscal year. The
Compensation Committee determines any adjustments to the CEO's salary and gives
consideration to the CEO's recommendation regarding adjustment to executive
officer salaries, based on the criteria referenced above.
Annual base salary increases for 2008 were warranted based on performance
of individuals and individual operating units, strong corporate earnings,
overall corporate growth over the past several years and competitive forces in
the external market. Mr. Brunngraber's base salary increased from $274,000 to
$350,000, reflecting an additional increase for his promotion to CEO in July
2008.
Base salary increases for other named executive officers were as follows:
Mr. Appelbaum, $211,000 to $219,000; Mr. Murray, $225,000 to $235,000; Mr.
Langfitt, $165,000 to $180,000; and, Mr. Pickering, $180,000 to $187,000.
11
Profit Sharing Bonus
The Company is unique in having a profit sharing program which has been in
existence since 1968, adjusted over the years to meet changing economic and
competitive environments. These cash bonuses are paid to all full-time
employees including executives, exempt and non-exempt staff, according to the
profit sharing plan approved by the Board. The purpose of this plan is to
facilitate the Company's continued growth and success by providing rewards that
are commensurate with achievement, thereby creating an incentive for superior
performance and improved results for shareholders. The profit sharing plan is
funded (and paid) semi-annually with 12.5% of the Company's profits before
taxes. As such, all cash bonuses paid by the Company are capped and are
available only when, and to the extent that, the Company is profitable overall.
Total profit sharing funds are divided into "pools" to be distributed
among various employee groups, including the CEO, executives, exempt and
non-exempt staff.
Profit sharing funds available to the CEO are based on return on average
equity for the period, as defined by the plan, and can range from 0% of the
total profit sharing fund if return on average equity is zero or negative to a
maximum of 5% if return on average equity is 20% or higher.
Funds allocated to the pool for named executive officers other than the
CEO are determined based on the net increase in income after taxes ("NIAT") for
the appropriate semi-annual period. This pool can range from 9% to 16% of the
total profit sharing funds available to exempt staff based on an NIAT range of
-20% to +20% or greater, respectively. Distributions from this pool to
individual executive management members are based on a subjective assessment of
performance, using the same factors considered with respect to salary
adjustments. As with the determination of base salaries, no specific,
individual performance targets are pre-established.
In the case of the CEO and executive officers, any bonus in excess of 40%
to 60% of base salary, depending on the executive's grade, requires the
approval of the Compensation Committee. Over the last few years, during which
the Company has experienced superior performance, executive bonuses have not
exceeded these levels.
Bonuses earned in 2008 were paid in August 2008 and February 2009 for the
first and second halves of 2008, respectively, and were made in accordance with
the Company's profit sharing plan. The CEO bonus calculations were based on the
return on average equity achieved by the Company during the respective six-month
periods (i.e., 16.81% and 19.62%). Bonus calculations for other named executive
officers were based on an increase in net income after taxes of 2.47% for the
first half of 2008 and 10.66% for the second half of 2008. Adjustments were
made to 2008 bonuses to reflect the shift of responsibilities from CEO Collett
to CEO Brunngraber. Bonuses paid to the CEO and other named executive officers
are shown in the Summary Compensation Table included herein.
Incentive Stock Compensation
Incentive stock compensation is awarded to managers deemed to be part of
the executive management team. The key objective for providing incentive stock
compensation is to aid the Company in securing and retaining highly qualified
personnel by offering an ownership interest in the Company and thereby inducing
such personnel to provide service and effort for the Company's growth and
success. Additionally, the Compensation Committee considers this a significant
motivational tool for executive officers and other management personnel,
helping to align their interests with those of shareholders. It has been the
Company's belief that long-term incentives serve as a retention tool since
unvested stock grants and options are forfeited if the executive leaves the
Company.
Availability of annual incentive stock compensation is tied to the
Company's overall performance. In determining the amount of annual awards, the
Company uses a framework that considers the achievement of the following
financial goals: (i) return on equity; (ii) increase in diluted earnings per
share; and (iii) increase in processing fee revenues. Results from the most
recent year are averaged with the two prior years to provide an incentive for a
longer range focus aligned with shareholders interests and also serves as a
deterrent to risky behavior. This framework does not provide for annual
targets; however, there is a Company performance threshold below which no
incentive stock compensation would be available for the year. The basis for
determining the awards made in 2008 is shown in the table below. For a more
detailed discussion on these statistics, please see the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2007.
12
Actual Results Threshold
--------------------------------------- -----------
3 Year
Factor 2005 2006 2007 Average
--------------------------------------- ----------- ----------- ----------- -----------
ROE ................................... 15.23% 18.89% 19.90% 18.01% 12.00%
EPS Growth ............................ 35.66% 37.20% 18.01% 30.29% 6.00%
Processing Fee Revenue Growth ......... 16.96% 12.37% 13.13% 14.15% 8.00%
Once the Company has reviewed the three-year averages and determined that
the thresholds have been met, individual distributions are awarded on a
subjective basis, considering the same factors which are used for base salary
and profit sharing determinations. These include individual contribution to the
Company's performance, demonstration of leadership and management, and overall
achievements relative to position. Awards to named executive officers reflect
varying levels of responsibility, with the highest level of awards going to
executives with the most far-reaching responsibilities. Specific individualized
performance targets are not used. The Committee relies heavily on
recommendations of the CEO when determining incentive stock compensation awards
for all other executive officers. An individual award would normally not exceed
the equivalent of 100% of the recipient's salary.
Long-term incentive stock compensation awards made in 2008 were
administered in accordance with the 2007 Omnibus Incentive Stock Plan. Awards
were comprised of 50% restricted stock awards and 50% stock appreciation rights
("SARs"). The grant date of the awards was the Board approval date. Restricted
stock awards were valued at that day's closing stock price as reported on
Nasdaq and the equivalent Black Scholes value for SARs. Restricted stock awards
are for common stock shares carrying voting and dividend rights, and are
subject to a three-year vesting schedule with 1/3 of the shares vesting each
year on the anniversary date of the awards. Dividends are accumulated by the
Company and paid upon vesting. SARs are for common stock shares, are subject to
a three-year vesting schedule with 1/3 of the shares vesting each year on the
anniversary date of the grant, become exercisable upon vesting and expire 10
years from the original grant date. Restricted stock awards and SARs granted
become fully exercisable in the event of disability or death of the
participant, or a change in control of the Company.
The Compensation Committee reserves the right, subject to Board approval,
to issue or refrain from issuing incentive stock compensation on a
discretionary basis. Influencing factors include economic achievement, ethical
standards, financial strength, management effectiveness and external market
forces.
Presently, long-term incentive stock awards outstanding consist of stock
options, restricted stock bonus awards and SARs issued pursuant to the
Company's 2007 Omnibus Incentive Stock Plan, or the predecessor plans: the 1995
Restricted Stock Bonus Plan and the 1995 Performance-Based Restricted Stock
Option Plan. To date, the number of outstanding long-term incentive stock
awards held by the Company's executive officers is relatively small; therefore,
the Compensation Committee has not considered the overall amount of such awards
as a significant factor in determining additional grants or awards.
The Company does not have a policy to adjust awards in the event that it
would become necessary to restate financial criteria in such a way as to impact
the basis for award of long-term incentives; however, the Compensation
Committee could elect to adjust other elements of compensation or subsequent
year awards if, in their view, it was appropriate.
The Company's policy does not allow the grant of option awards to be timed
with the release of material non-public information such that it would have an
effect on the exercise price that would benefit the executive. The grant date
for long-term incentive stock awards is the date independent Board members
approve such awards and generally occurs at the January Board meeting. The
exercise price of options cannot be less than fair market value as of the date
the option is granted. Incentive stock awards are not re-priced, in accordance
with the Company's longstanding practice.
401(k) Defined Contribution Plan
All employees of the Company and its subsidiaries, other than those
classified as off-site employees, are eligible to participate in the Cass
Information Systems, Inc. 401(k) Plan. Eligible employees may enter the plan at
the first of the month following one month of service. Employees may
voluntarily defer the maximum level
13
allowed by the Internal Revenue Service (IRS), which was $15,500 for 2008, plus
an additional $5,000 catch-up contribution for employees age 50 or older. The
Company matches 50% of the first 3% of employee contributions, subject to IRS
limitations. All employee contributions vest immediately. Company contributions
are subject to a three-year vesting period.
Defined Benefit Retirement Plan
All employees of the Company and subsidiaries, other than those classified
as off-site employees, become participants in the Retirement Plan for Employees
of Cass Information Systems, Inc. at the next semi-annual entry period
immediately following completion of one year of service. Upon retirement,
participants in this qualified plan will begin to receive monthly payments
equal to 1/12 of the sum of:
(i) .9% of Final Average Earnings multiplied by the number of years
of service, plus
(ii) .5% of Final Average Earnings in excess of Covered Compensation
multiplied by years of service.
Final Average Earnings is the average annual total compensation for the
five consecutive years of highest earnings during the last ten years of
employment. Covered Compensation is the average of the maximum social security
taxable wage bases in effect for each calendar year during the 35-year period,
ending with the year in which retirement age is attained under the Social
Security Act. Earnings covered by the plan equal W-2 earnings, including any
amounts deferred under the Company's 401(k) plan and section 125 plan, up to
the maximum IRS limit ($230,000 in 2008). Service for benefit accrual purposes
is the period beginning on the date of participation in the plan and ending on
the severance date.
Normal retirement age under the plan is 65 with five years of vesting
service. Early retirement eligibility is age 55 with five years of vesting
service. Benefits for early retirement under the defined benefit pension plan
would be calculated under the formula described above based on final average
earnings and years of service as of the date of retirement, reduced by (i) 5/9%
of 1% for each month by which the early retirement date or the first day of the
month coinciding with or next following the 60th birthday, whichever is later,
precedes the normal retirement date, and (ii) 5/18% of 1% for each month, if
any, by which the early retirement date precedes the first day of the month
coinciding with or next following the 60th birthday. Postponed retirement
benefits are an amount equal to the greater of (i) the normal retirement
benefit determined in accordance with the above formula using service and final
average earnings through the postponed retirement date, or (ii) the actuarial
equivalent of the normal retirement benefit on the postponed retirement date.
The normal form of benefit is a straight-life annuity with 120 months
guaranteed.
Supplementary Executive Retirement Program
The Company's benefits program also provides for the Cass Information
Systems, Inc. Supplemental Executive Retirement Plan (the SERP). The SERP was
designed to provide additional retirement benefits to key executives whose
benefits are limited by the IRS under the Company's qualified plan.
Upon retirement, participants in the SERP will receive monthly payments
equal to 1/12 of 70% of the Final Average Earnings, reduced proportionately for
length of service less than 25 years. Such amount is further reduced by the
participant's: (i) qualified retirement plan benefit, (ii) primary social
security benefit, and (iii) 401(k) hypothetical annuity.
Final Average Earnings, normal and early retirement age, years of service
and normal form of payment are the same as under the Retirement Plan for
Employees of Cass Information Systems, Inc., as described above.
Early retirement benefits under the SERP are calculated to be an annual
amount equal to 70% of the final average earnings multiplied by the number of
full years of service divided by 25% (not to exceed 100%), less the sum of the
defined pension plan benefit, primary social security benefit and 401(k)
hypothetical annuity, reduced by 1/180 for each of the first 60 calendar months
and 1/360 for each of the next 60 calendar months by which commencement of
benefits precedes normal retirement date. Benefits are not increased if payment
of benefits commences after the normal retirement date.
Gains or losses from stock options or restricted stock awards are not
considered in the calculation of retirement benefits, for either the defined
benefit plan or the SERP.
14
Employees are generally not eligible for benefits under the SERP if they
leave the Company prior to reaching age 55, and they receive a significant
increase in benefits if they remain with the Company until age 65; therefore,
the Compensation Committee believes that the SERP is an effective executive
retention tool.
Perquisites and Other Benefits
The Company provides executive officers with perquisites that the
Compensation Committee believes are reasonable and competitive based on the
Compensation Committee's knowledge of other companies with which the Company
competes for talent. For 2008, these perquisites included an automobile
allowance and, where deemed appropriate, a country club membership allowance.
Historically, the Company has not benchmarked or set targets for this
compensation component. The perquisites' value to the executive, as well as the
incremental cost to the Company, is considered when establishing compensation
levels; however, the value of this component of compensation is modest and has
not been given significant weight by the Compensation Committee when
establishing overall levels of executive compensation. Executive officers are
eligible to receive the same health, dental, disability and life insurance
benefits as are available to all other full-time employees of the Company and
its subsidiaries.
Post-Employment Payments
Executives of the Company do not have employment agreements, nor are there
any provisions for payments following or in connection with any termination or
change-in-control, other than for provisions that allow for SERP benefits,
stock options, SARs and restricted stock awards to vest upon a change in
control or in some circumstances, upon disability, in accordance with their
respective plans.
Federal Income Tax Deductibility Limitations
--------------------------------------------
The Compensation Committee takes into consideration the tax consequences
to employees and the Company when considering types and levels of awards and
other compensation granted to executives and directors.
The Compensation Committee also considers the potential impact of Section
162(m) of the Internal Revenue Code. Section 162(m) disallows a tax deduction
for any publicly held corporation for individual compensation exceeding $1
million in any taxable year for the CEO and the other senior executive
officers, other than compensation that is performance-based under a plan that
is approved by the shareholders of the Company and that meets certain other
technical requirements. Based on these requirements, the Compensation Committee
has determined that for 2008 Section 162(m) will not prevent the Company from
receiving a tax deduction for any of the compensation paid to executive
officers.
Post-Fiscal Year Compensation Actions
-------------------------------------
Executive Compensation Comparative Data
During 2008, the Compensation Committee retained Towers Perrin to provide
comparative data on cash and total executive compensation prior to review and
adjustment of executive management compensation for 2008. Data was provided for
the Business and Professional Services, Financial Services and Payment
Processing business segments. Consistent with prior years and the Company's
intent not to engage in benchmarking, the Compensation Committee did not rely
solely on comparative data, but did consider such elements when exercising its
own judgment in determining 2009 compensation.
Base Salary
In January 2009, salary increases were approved for the named executive
officers based on overall performance of individuals (based on the factors
discussed herein) and individual operating units, strong corporate earnings,
and overall corporate growth over the past several years. Base salary increases
from 2008 to 2009 will become effective in April 2009 and were as follows: Mr.
Brunngraber, $350,000 to $380,000; Mr. Appelbaum, $219,000 to $226,000; Mr.
Murray, $235,000 to $243,000; Mr. Langfitt, $180,000 to $189,000; and, Mr.
Pickering, $187,000 to $194,000.
15
Long-Term Incentives
Long-term incentive stock compensation awards made in 2009 were
administered in accordance with the 2007 Omnibus Incentive Stock Plan. Awards
were comprised of 50% restricted stock awards and 50% SARs. The grant date of
the awards was the Board approval date. Restricted stock awards were valued at
that day's closing stock price as reported on Nasdaq and the equivalent Black
Scholes value for SARs. Awards were determined using the methodology described
above under Elements of Compensation and were based on 2008 financial results
averaged with the prior two years' results. The awards for 2009 are shown
below. The restricted stock awards for 2009 have also been included in the
beneficial ownership numbers reported in the Principal Shareholders table
included herein.
Restricted Stock Stock Appreciation
Name Bonus Awards Rights
--------------------------------- ------------------ -------------------
Eric H. Brunngraber .......... 6,604 27,450
P. Stephen Appelbaum ......... 2,479 10,305
Harry M. Murray .............. 2,993 12,441
Gary B. Langfitt ............. 2,547 10,588
John F. Pickering ............ 2,646 10,999
Report of the Compensation Committee
In the performance of its oversight function for the year ended December
31, 2008, the Compensation Committee reviewed and discussed with management the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K.
Based upon such review and discussions, the Compensation Committee has
recommended to the Board that the Compensation Discussion and Analysis be
included in this Proxy Statement.
K. Dane Brooksher, Chairman
Benjamin F. Edwards, IV
James J. Lindemann
Andrew J. Signorelli
16
EXECUTIVE OFFICERS
The following table shows, as of December 31, 2008, the names, ages and
positions of the Company's executive officers. No executive officers have
employment agreements with the Company.
Eric H. Brunngraber .......... Information on Mr. Brunngraber can be found in the section "Election
of Directors."
P. Stephen Appelbaum ......... Mr. Appelbaum, 51, has been CFO and Secretary since 2006. Prior to joining the
Company, he was a Senior Vice President at US Bank (St. Louis, Missouri),
where he spent 16 years holding various positions in the areas of accounting,
financial reporting, risk management, and merger and acquisition integration.
Before his tenure with US Bank, he was with KPMG LLP for 10 years.
Mr. Appelbaum is a Certified Public Accountant.
Harry M. Murray .............. Mr. Murray, 55, has served as Executive Vice President since 2003. He has held
various positions with the Company since his initial employment in 1982,
including Executive Vice President -- Operations from 1995 to 2000 and COO
-- Utility Information Services from 2000 to 2003.
Gary B. Langfitt ............. Mr. Langfitt, 53, has served as COO -- Utility Information Services since 2003.
Prior to that, he was Vice President, Sales and Marketing -- Utility Information
Services since joining the Company in 1999.
John F. Pickering ............ Mr. Pickering, 58, has served as COO -- Transportation Information Services
since 2001. He has held various positions with the Company since 1977,
including President -- Transportation Information Services from 1998 to 2001.
Robert J. Mathias ............ Mr. Mathias, 56, became President of Cass Commercial Bank, subsidiary of the
Company, in February 2008. Prior to joining Cass, he served as Senior Banker
of the St. Louis loan production office of LaSalle Bank. Mr. Mathias has been
affiliated with several major financial institutions in the St. Louis metropolitan
area since 1974. Mr. Mathias serves on the board of Busch-O'Donnell Co., a
privately held St. Louis-based investment company.
17
Summary Compensation -- Executive Officers
The following table sets forth the compensation earned during the
applicable fiscal year by each individual who served as chief executive officer
during fiscal 2008, chief financial officer during fiscal 2008, and each of the
other three most highly compensated executive officers of the Company who were
executive officers as of the end of fiscal 2008 ("named executive officers").
The reported compensation is as follows: (i) the dollar value of base salary
and bonus earned; (ii) the compensation cost of restricted stock and option
awards outstanding; (iii) the change in pension value and nonqualified deferred
earnings; (iv) all other compensation; and (v) the dollar value of total
compensation for each respective fiscal year.
Change in
Stock Option Pension All Other
Name and Salary Bonus Awards Awards Value Compensation Total
Principal Position Year ($) ($) ($)(1) ($)(1) ($)(2) ($)(3) ($)
-------------------------------------------------------------------------------------------------------------------
Lawrence A. Collett (4) 2008 273,589 42,900 244,481 40,717 0(5) 113,678(6) 715,365
Chairman of the Board 2007 482,977 202,800 171,719 16,170 467,555 34,041 1,375,262
2006 459,167 171,000 54,525 14,219 416,697 28,023 1,143,631
-------------------------------------------------------------------------------------------------------------------
Eric H. Brunngraber 2008 308,410 202,000 130,675 22,837 139,466 32,819 836,207
President, CEO 2007 272,393 120,000 88,062 5,977 232,292 30,906 749,630
2006 252,750 97,000 21,057 5,243 52,291 29,275 457,616
-------------------------------------------------------------------------------------------------------------------
P. Stephen Appelbaum 2008 211,314 53,000 76,796 7,834 12,576 15,033 376,553
CFO, Secretary 2007 210,550 41,000 56,424 -- 5,560 13,600 327,134
2006 128,913 23,000 19,444 -- -- 310 171,667
-------------------------------------------------------------------------------------------------------------------
Harry M. Murray 2008 226,635 89,000 77,989 13,141 122,638 14,723 544,126
Executive Vice President 2007 224,217 86,000 51,974 2,699 196,799 13,374 575,063
2006 214,167 77,000 9,295 2,393 50,593 17,875 371,323
-------------------------------------------------------------------------------------------------------------------
Gary B. Langfitt 2008 172,981 83,099 55,154 8,691 19,381 14,415 353,721
COO, Utility 2007 163,800 140,750 36,051 1,259 17,816 13,514 373,190
Information Services 2006 149,167 90,286 5,043 1,104 18,613 12,806 277,019
-------------------------------------------------------------------------------------------------------------------
John F. Pickering (7) 2008 180,423 57,500 62,861 9,982 76,893 14,547 402,206
COO, Transportation 2007 -- -- -- -- -- -- --
Information Services 2006 -- -- -- -- -- -- --
------------
(1) The amounts reflect the financial statement expense under FAS 123R related
to awards of stock options and SARs made in prior years and do not
correspond to the actual amount that will be realized upon exercise by the
named executive officers. See Note 13 to the Company's fiscal year 2008
financial statements in the Company's Annual Report on Form 10-K for a
discussion of the assumption made in the valuation of these amounts under
FAS 123R.
(2) Represents the aggregate change in actuarial present value of accumulated
benefits under the Company's defined benefit pension plan and SERP based on
a five-year average of current pay. See Note 12 to the Company's fiscal
year 2008 financial statements in the Company's Annual Report on Form 10-K
for a complete description of the material assumptions applied in
quantifying the present value of accumulated benefits.
(3) Consists of the Company's incremental cost on perquisite benefits,
dividends paid on restricted stock awards at the time of vesting, the
Company's matching contributions paid to the Company's 401(k) Plan on
behalf of each executive, and the imputed value of group term life premiums
paid on behalf of each executive. Perquisite benefits provided in 2008
consist of an allowance for personal automobile usage ($15,000, Mr.
Collett; $14,519, Mr. Brunngraber; $9,680, all other named executive
officers) and country club membership ($14,292, Mr. Collett; $12,404, Mr.
Brunngraber).
(4) In July 2008 Mr. Collett retired as CEO and continues to serve as
non-executive Chairman of the Board. Mr. Brunngraber was appointed as CEO
upon Mr. Collett's retirement. Because Mr. Collett served as CEO during
part of fiscal year 2008, he is included in this table.
(5) The actual change in present value was $(156,840). The Company did not
disclose this negative amount in the table pursuant to Instruction 3 to
Item 402(c)(2)(viii) of Regulation S-K.
18
(6) Includes payments made to Mr. Collett following his retirement as CEO in
July 2008 and made pursuant to the Memorandum of Understanding between Mr.
Collett and the Company for directors fees, $10,000 (which includes $4,000
for serving on the Executive Loan Committee of Cass Commercial Bank, the
Company's bank subsidiary) and consulting services, $67,692.
(7) Only compensation for 2008 is reported for Mr. Pickering, as he was not a
named executive officer of the Company in 2006 or 2007.
Grants of Plan-Based Awards
The following table sets forth information regarding all equity based
incentive plan awards that were made to the named executive officers during
2008. Disclosure is provided on a separate line for each grant or award made
during the year. The information supplements the compensation costs of stock
and option awards in the Summary Compensation table above.
Estimated Future Payouts
Under Equity Exercise or Grant Date
Incentive Plan Awards Base Price Fair Value
------------------------------------ of Option of Stock
Grant Threshold Target Max Awards and Option
Name Date (#) (#) (#) ($/Sh) Awards ($)
---------------------- ---------- ----------- -------------- ----- ------------- -----------
Lawrence A. Collett 01/22/08 0 8,065(1) 0 -- $229,127
01/22/08 0 29,950(2) 0 28.41 229,118
--------------------------------------------------------------------------------------------------------
Eric H. Brunngraber 01/22/08 0 4,556(1) 0 -- $129,436
01/22/08 0 16,920(2) 0 28.41 129,438
--------------------------------------------------------------------------------------------------------
P. Stephen Appelbaum 01/22/08 0 2,105(1) 0 -- $ 59,803
01/22/08 0 7,818(2) 0 28.41 59,808
--------------------------------------------------------------------------------------------------------
Harry M. Murray 01/22/08 0 2,806(1) 0 -- $ 79,718
01/22/08 0 10,421(2) 0 28.41 79,721
--------------------------------------------------------------------------------------------------------
Gary B. Langfitt 01/22/08 0 2,058(1) 0 -- $ 58,468
01/22/08 0 7,642(2) 0 28.41 58,461
--------------------------------------------------------------------------------------------------------
John F. Pickering 01/22/08 0 2,245(1) 0 -- $ 63,770
01/22/08 0 8,336(2) 0 28.41 63,780
------------
(1) Represents restricted stock bonus awards issued pursuant to the terms of
the Company's 2007 Omnibus Stock Incentive Plan. Restricted stock awards
are subject to a three-year vesting schedule, with 1/3 of the shares
vesting each year on the anniversary of the grant date of the awards.
Dividends earned on restricted stock awards are paid upon vesting. The 2008
awards were based on criteria further described in the Compensation
Discussion and Analysis section contained herein.
(2) Represents SARs issued pursuant to the terms of the Company's 2007 Omnibus
Stock Incentive Plan. SAR awards are subject to a three-year vesting
schedule, with 1/3 of the shares vesting each year on the anniversary of
the grant date of the awards. SARs become exercisable upon vesting and
expire on the tenth anniversary of the grant date. The 2008 awards were
based on criteria further described in the Compensation Discussion and
Analysis section contained herein.
19
Outstanding Equity Awards At Fiscal Year-End
The following table sets forth information on outstanding options and
stock awards held by the named executive officers on December 31, 2008,
including the number of shares underlying both exercisable and unexercisable
portions of each stock option as well as the exercise price and the expiration
date of each outstanding option, and the market value of stock awards.
Option Awards Stock Awards
----------------------------------------------------------- ----------------------------
Number of Number of Number of Market Value
Securities Securities Shares or of Shares
Underlying Underlying Units of or Units of
Unexercised Unexercised Option Stock That Stock That
Options Options Exercise Option Have Not Have Not
(#) (#) Price Expiration Vested Vested
Name Exercisable Unexercisable ($) Date (#)(1) ($)(2)
---------------------- ------------- --------------- ---------- ------------ ------------ -------------
Lawrence A. Collett -- 7,308(3) 9.09 1/4/2010 17,926 546,026
-- 4,218(3) 12.23 1/4/2011
-- 4,035(3) 14.75 1/3/2012
-- 13,719(3) 20.67 1/2/2013
-- 29,950(4) 28.41 1/22/2018
-------------------------------------------------------------------------------------------------------------------
Eric H. Brunngraber 4,410(3) 2,404(3) 9.09 1/4/2010 9,760 297,290
2,390(3) 1,595(3) 12.23 1/4/2011
660(3) 1,540(3) 14.75 1/3/2012
-- 5,425(3) 20.67 1/2/2013
-- 16,920(4) 28.41 1/22/2018
-------------------------------------------------------------------------------------------------------------------
P. Stephen Appelbaum -- 7,818(4) 28.41 1/22/2018 4,690 142,857
-------------------------------------------------------------------------------------------------------------------
Harry M. Murray 2,700(3) 1,471(3) 10.00 1/4/2010 5,918 180,262
786(3) 525(3) 14.51 1/4/2011
375(3) 877(3) 14.44 1/3/2012
-- 1,701(3) 20.67 1/2/2013
-- 10,421(4) 28.41 1/22/2018
-------------------------------------------------------------------------------------------------------------------
Gary B. Langfitt -- 340(3) 14.51 1/4/2011 4,223 128,633
250(3) 584(3) 14.44 1/3/2012
-- 1,133(3) 20.67 1/2/2013
-- 7,642(4) 28.41 1/22/2018
-------------------------------------------------------------------------------------------------------------------
John F. Pickering 692(3) 463(3) 14.51 1/4/2011 4,760 144,990
320(3) 746(3) 14.44 1/3/2012
-- 1,425(3) 20.67 1/2/2013
-- 8,336(4) 28.41 1/22/2018
------------
(1) Represents restricted stock bonus awards issued pursuant to the Company's
1995 Restricted Stock Bonus Plan and 2007 Omnibus Stock Incentive Plan. The
shares are subject to a three-year vesting schedule, with 1/3 of the shares
vesting each year on the anniversary of the grant date of the awards. The
vesting dates for such shares are as follows:
Name Vesting Date Number of Shares
------------------------------------ -------------- -----------------
Lawrence A. Collett .......... 1/22/2009 2,688
1/31/2009 5,692
1/22/2010 2,688
1/31/2010 4,169
1/22/2011 2,689
20
Name Vesting Date Number of Shares
------------------------------------ -------------- -----------------
Eric H. Brunngraber .......... 1/22/2009 1,518
1/31/2009 2,903
1/22/2010 1,519
1/31/2010 2,301
1/22/2011 1,519
P. Stephen Appelbaum ......... 1/22/2009 701
1/31/2009 743
5/15/2009 1,100
1/22/2010 702
1/31/2010 742
1/22/2011 702
Harry M. Murray .............. 1/22/2009 935
1/31/2009 1,650
1/22/2010 935
1/31/2010 1,462
1/22/2011 936
Gary B. Langfitt ............. 1/22/2009 686
1/31/2009 1,145
1/22/2010 686
1/31/2010 1,020
1/22/2011 686
John F. Pickering ............ 1/22/2009 748
1/31/2009 1,336
1/22/2010 748
1/31/2010 1,179
1/22/2011 749
------------
(2) Value based on $30.46 per share, which was the closing market price of the
Company's common stock reported on Nasdaq on December 31, 2008.
(3) Represents stock option grants issued pursuant to the terms of the
Company's 1995 Performance-Based Stock Option Plan. The vesting date for
option awards is equivalent to the option expiration date, which is the
first business day of the seventh calendar year following the grant date of
the option award. The vesting date can be accelerated based on the
Company's attainment of certain financial operating performance criteria.
(4) Represents SARs issued pursuant to the terms of the Company's 2007 Omnibus
Stock Incentive Plan. SAR awards are subject to a three-year vesting
schedule, with 1/3 of the shares vesting each year on the anniversary of
the grant date of the awards. SARs become exercisable upon vesting and
expire on the tenth anniversary of the grant date.
21
Options Exercised and Stock Vested
The following table sets forth the exercise of stock options and vesting
of restricted stock during 2008 for the named executive officers.
Options Awards Stock Awards
-------------------------------------------- ------------------------------------------
Number of Shares Value Realized on Number of Shares Value Realized on
Acquired on Exercise Exercise Acquired on Vesting Vesting(1)
Name (#) ($) (#) ($)
------------------------------ ---------------------- ------------------- --------------------- ------------------
Lawrence A. Collett .......... 23,565 $481,008 6,332 $181,562
Eric H. Brunngraber .......... 536 11,369 3,150 90,109
P. Stephen Appelbaum ......... -- -- 1,873 56,521
Harry M. Murray .............. -- -- 1,787 50,679
Gary B. Langfitt ............. 509 8,037 1,236 35,053
John F. Pickering ............ -- -- 1,455 41,262
------------
(1) Value is determined by applying the market value of the stock on the
vesting date to the number of shares vested.
22
Pension Benefits
The following table sets forth for fiscal year ended December 31, 2008 the
actuarial present value of each named executive officer's accumulated benefit
under defined benefit plans of the Company, the number of years of credited
service under each plan, and the amount of pension benefits paid to each named
executive officer.
Present
Number of Value of
Years of Accumulated Payments
Credited Benefit During Last
Name (1) Plan Name Service (#) ($)(2) Fiscal Year ($)
------------------------- --------------------------------------- ------------- ------------- ----------------
Lawrence A. Collett (3) Retirement Plan for Employees of Cass 39.46 1,122,190 39,319
Information Systems, Inc.
Cass Information Systems SERP 39.46 2,094,460 0
----------------------------------------------------------------------------------------------------------------------
Eric H. Brunngraber Retirement Plan for Employees of Cass 28.08 340,039 0
Information Systems, Inc.
Cass Information Systems SERP 28.08 327,648 0
----------------------------------------------------------------------------------------------------------------------
P. Stephen Appelbaum Retirement Plan for Employees of Cass 1.50 17,921 0
Information Systems, Inc.
Cass Information Systems SERP 1.50 215 0
----------------------------------------------------------------------------------------------------------------------
Harry M. Murray Retirement Plan for Employees of Cass 25.08 396,942 0
Information Systems, Inc.
Cass Information Systems SERP 25.08 240,564 0
----------------------------------------------------------------------------------------------------------------------
Gary B. Langfitt Retirement Plan for Employees of Cass 8.50 103,993 0
Information Systems, Inc.
Cass Information Systems SERP 8.50 2,857 0
----------------------------------------------------------------------------------------------------------------------
John F. Pickering Retirement Plan for Employees of Cass 30.08 526,327 0
Information Systems, Inc.
Cass Information Systems SERP 30.08 0
------------
(1) Mr. Murray and Mr. Pickering were eligible for early retirement benefits
under the Company's defined benefit pension plan and SERP as of December
31, 2008.
(2) Represents the actuarial present value of accumulated benefit under the
Company's defined benefit pension plan based on a five-year average of
current pay. See Note 12 to the Company's fiscal year 2008 financial
statements in the Company's Annual Report on Form 10-K for complete
description of the material assumptions applied in quantifying the present
value of accumulated benefits.
(3) In July 2008, Mr. Collett retired as CEO and continues to serve as
non-executive Chairman of the Board.
All named executive officers were participants in the Retirement Plan for
Employees of Cass Information Systems, Inc. and the Cass Information Systems,
Inc. SERP at December 31, 2008. Details of the plans are further defined in the
Compensation Discussion and Analysis above.
23
Principal Shareholders
The following table contains information with respect to beneficial
ownership of the Company's outstanding common stock as of March 5, 2009, by:
(i) each person known to the Company to be the beneficial owner of more than 5%
of common stock, (ii) each director and nominee for director, (iii) each
executive officer, and (iv) directors and executive officers as a group. The
address of each director and executive officer is c/o Cass Information Systems,
Inc., 13001 Hollenberg Drive, Bridgeton, Missouri 63044. Unless otherwise
indicated, the named person has sole voting and investment rights with respect
to such shares. The percent of common stock owned by each person or group has
been determined based on a total of 9,213,242 shares outstanding as of March 5,
2009.
Name of Beneficial Owner Amount of Shares Percent
(and address for Beneficial Owners over 5%) Beneficially Owned (1) of Class
---------------------------------------------------------------- ------------------------ -----------
Jake Nania .................................................. 984,405(2) 10.68%
1700 S. Ocean Blvd.
Lauderdale by the Sea, FL
Howard A. Kuehner ........................................... 524,381(2) 5.69
1 Woodbridge Manor Rd.
St. Louis, MO
P. Stephen Appelbaum ........................................ 12,718(3) *
K. Dane Brooksher ........................................... 5,135(4) *
Eric H. Brunngraber ......................................... 63,637(5) *
Bryan S. Chapell ............................................ 4,990(6) *
Lawrence A. Collett ......................................... 227,719(7) 2.46
Robert A. Ebel .............................................. 3,090(8) *
Benjamin F. Edwards, IV ..................................... 5,415(9) *
John L. Gillis, Jr. ......................................... 990(10) *
Wayne J. Grace .............................................. 20,075(11) *
Gary B. Langfitt ............................................ 17,773(12) *
James J. Lindemann .......................................... 990(13) *
Robert J. Mathias ........................................... 4,113(14) *
Harry M. Murray ............................................. 47,200(15) *
John F. Pickering ........................................... 41,650(16) *
Randall L. Schilling ........................................ -- --
Andrew J. Signorelli ........................................ 239,557(17) 2.60
Franklin D. Wicks, Jr. ...................................... 1,740(18) *
----------
All directors (including nominees) and all executive officers
as a group .................................................. 696,792(19) 7.52%
------------
* Less than 1% of class.
(1) Shares shown as beneficially owned include shares of common stock that
directors and executive officers have the right to acquire within 60 days
of March 5, 2009 pursuant to the exercise of stock options and stock
appreciation rights.
(2) Determination of beneficial ownership of more than 5% based on
non-objecting beneficial shareholder records obtained from Broadridge and
BNY Mellon Shareowner Services on February 17, 2009.
(3) Includes 4,387 shares owned jointly with his spouse. Includes 5,725 shares
of restricted stock subject to forfeiture with respect to which Mr.
Appelbaum has voting but no investment rights. Includes 2,606 shares which
could be acquired within 60 days of March 5, 2009 pursuant to the exercise
of stock appreciation rights.
24
(4) Includes 4,235 shares held in trust of which Mr. Brooksher has shared
voting and investment rights. Includes 900 shares of restricted stock
subject to forfeiture with respect to which Mr. Brooksher has voting but no
investment rights.
(5) Includes 35,112 shares owned jointly with his spouse. Includes 11,943
shares of restricted stock subject to forfeiture with respect to which Mr.
Brunngraber has voting but no investment rights. Includes 16,582 shares
which could be acquired within 60 days of March 5, 2009 pursuant to the
exercise of stock options and stock appreciation rights.
(6) Includes 2,605 shares owned jointly with his spouse. Includes 900 shares of
restricted stock subject to forfeiture with respect to which Mr. Chapell
has voting but no investment rights.
(7) Includes 70,168 shares owned jointly with his spouse and 5,655 shares owned
by Mr. Collett's spouse. Includes 9,546 shares of restricted stock subject
to forfeiture with respect to which Mr. Collett has voting but no
investment rights. Includes 25,694 shares which could be acquired within 60
days of March 5, 2009 pursuant to the exercise of stock options and stock
appreciation rights.
(8) Includes 2,100 shares owned jointly with his spouse. Includes 330 shares of
restricted stock subject to forfeiture with respect to which Mr. Ebel has
voting but no investment rights.
(9) Includes 4,230 shares held in trust of which Mr. Edwards has voting and
investment rights and 285 shares Mr. Edwards holds as custodian for his
minor children. Includes 900 shares of restricted stock subject to
forfeiture with respect to which Mr. Edwards has voting but no investment
rights.
(10) Includes 660 shares of restricted stock subject to forfeiture with respect
to which Mr. Gillis has voting but no investment rights.
(11) Includes 14,877 shares held in trust of which Mr. Grace has voting and
investment rights. Includes 4,538 shares owned by Mr. Grace's spouse. Also
includes 660 shares of restricted stock subject to forfeiture with respect
to which Mr. Grace has voting but no investment rights.
(12) Includes 4,939 shares of restricted stock subject to forfeiture with
respect to which Mr. Langfitt has voting but no investment rights. Includes
2,887 shares which could be acquired within 60 days of March 5, 2009
pursuant to the exercise of stock options and stock appreciation rights.
(13) Includes 660 shares of restricted stock subject to forfeiture with respect
to which Mr. Lindemann has voting but no investment rights.
(14) Includes 3,113 shares of restricted stock subject to forfeiture with
respect to which Mr. Mathias has voting but no investment rights.
(15) Includes 29,655 shares owned jointly with his spouse. Also includes 6,326
shares of restricted stock subject to forfeiture with respect to which Mr.
Murray has voting but no investment rights. Includes 3,473 shares which
could be acquired within 60 days of March 5, 2009 pursuant to the exercise
of stock appreciation rights.
(16) Includes 30,453 shares owned jointly with his spouse. Also includes 5,322
shares of restricted stock subject to forfeiture with respect to which Mr.
Pickering has voting but no investment rights. Includes 3,791 shares which
could be acquired within 60 days of March 5, 2009 pursuant to the exercise
of stock options and stock appreciation rights.
(17) Includes 238,567 shares held in trust of which Mr. Signorelli has shared
voting and investment rights. Includes 660 shares of restricted stock
subject to forfeiture with respect to which Mr. Signorelli has voting but
no investment rights. Includes 25,530 shares pledged as security on an
outstanding loan with the Company.
(18) Includes 330 shares of restricted stock subject to forfeiture with respect
to which Mr. Wicks has voting but no investment rights.
25
(19) Includes 55,033 shares which could be acquired within 60 days of March 5,
2009 pursuant to the exercise of stock options and stock appreciation
rights.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who own more than 10% of the Company's common
stock to file reports of ownership and changes in ownership with the SEC and
Nasdaq. Executive officers, directors and greater than 10% shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based on a review solely of copies of such forms received and written
representation from certain reporting persons, the Company believes that all
Section 16(a) filing requirements applicable to 2008 for executive officers,
directors, and greater than 10% beneficial owners were complied with in a
timely manner except as follows: Messrs. Grace and Collett each did not file a
Form 4 within the required period of two business days to report one
transaction.
26
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP has served as the Company's independent registered public
accounting firm since 1983, and for the year ended December 31, 2008. The Audit
Committee of the Board has selected KPMG LLP to serve as such firm for 2009. A
representative of KPMG LLP is expected to be present at the Annual Meeting,
have an opportunity to make a statement and be available to respond to
appropriate questions of shareholders.
Fees Incurred For Services Performed by the Independent Registered Public
Accountants
For the years ended December 31, 2008 and 2007, the Company incurred the
following fees for services performed by KPMG LLP:
2008 2007
----------- --------------
Audit Fees (1) .............. $272,500 $260,000
Audit-related Fees .......... -- 5,000(3)
Tax Fees (2) ................ 79,759 73,437
All Other Fees .............. -- --
-------- ----------
Total ...................... $352,259 $338,437
======== ==========
------------
(1) Represents fees for the quarterly review of financial statements and annual
audit of the Company's consolidated financial statements and internal
controls over financial reporting. All such fees were pre-approved by the
Audit Committee.
(2) Represents fees for tax compliance and preparation services, all of which
were pre-approved by the Audit Committee.
(3) Represents fees for services rendered in connection with the Company's Form
S-8 filing on May 31, 2007 for the 2007 Omnibus Incentive Stock Plan. Such
fees were pre-approved by the Audit Committee.
The Audit Committee pre-approves all auditing services, internal
control-related services and permitted non-audit services (including the fees
and terms thereof) to be performed for the Company by its independent auditors,
subject to the de minimis exception for non-audit services that are approved by
the Audit Committee prior to the completion of the audit. The Audit Committee
may delegate to one or more members the authority to grant pre-approvals of
audit and permitted non-audit services, provided such decisions to grant
pre-approvals are presented to the full Audit Committee at its next scheduled
meeting.
The Company's Board recommends a vote FOR the ratification of KPMG LLP as the
Company's independent registered public accounting firm for 2009.
27
Report of the Audit Committee
The Audit Committee, composed entirely of independent directors, as
defined by the Nasdaq listing standards, assists the Board in its oversight of
(i) the integrity of the financial statements of the Company, (ii) the
independent registered public accountants' qualifications and independence,
(iii) the performance of the independent registered public accounting firm and
the Company's internal audit function, and (iv) the compliance by the Company
with legal and regulatory requirements. The Audit Committee operates pursuant
to a written charter that is reviewed and approved annually.
In the performance of its oversight function for the year ended December
31, 2008, the Audit Committee reviewed and discussed the audited consolidated
financial statements and the Company's internal controls over financial
reporting with management and the independent registered public accounting
firm. The Audit Committee also discussed with the independent registered public
accounting firm the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended, as adopted by the Public Company Accounting
Oversight Board (PCAOB) in Rule 3200T. In addition, the Audit Committee has
received and reviewed the written disclosures and the letter required by the
applicable requirements of the PCAOB regarding the independent registered
public accounting firm's communication with the Audit Committee concerning
independence and has discussed with the independent registered public
accounting firm its independence.
Based upon these reviews and discussions, the Audit Committee recommended
to the Board that the Company's audited consolidated financial statements be
included in its Annual Report on Form 10-K for the year ended December 31, 2008
filed with the SEC.
Wayne J. Grace, Chairman
Robert A. Ebel
John L. Gillis, Jr.
28
SHAREHOLDER PROPOSALS FOR THE 2010 ANNUAL MEETING
In order for a shareholder to bring any business before a meeting of
shareholders, the shareholder must have given timely notice thereof in writing
to the Company's Secretary and comply with the other notice requirements set
forth in the Company's bylaws. To be timely, a shareholder's notice must be
delivered to or mailed and received at the Company's principal executive
offices not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's Annual Meeting. For the 2010 Annual
Meeting, shareholders must submit proposals no earlier than January 20, 2010
and no later than February 19, 2010.
If, however, the date of the meeting is changed by more than 30 days
before or after such anniversary date, the notice must be received not later
than the tenth day following the day on which such notice of the date of the
Annual Meeting was mailed or such public disclosure was made. A shareholder's
notice to the Secretary must set forth as to each matter the shareholder
proposes to bring before the Annual Meeting:
o a brief description of the business desired to be brought before the
Annual Meeting and the reasons for conducting the business at the
Annual Meeting,
o the name and address, as they appear on the Company's books, of the
proposing shareholder,
o the class and number of shares which are beneficially owned by the
shareholder, and
o any material interest of the shareholder in such business.
The requirements contained in the Company's bylaws and summarized above
are separate from and in addition to the SEC requirements that a shareholder
must meet to have a proposal included in the Company's Proxy Statement. Any
shareholder proposal to be considered for inclusion in the Company's Proxy
Statement and form of proxy for its next Annual Meeting, which is expected to
be held on April 19, 2010, must be received by the Company no later than
November 20, 2009 at the following address: Cass Information Systems, Inc.,
Attn: P. Stephen Appelbaum, Secretary, 13001 Hollenberg Drive, Bridgeton,
Missouri 63044.
OTHER MATTERS AND HOUSEHOLDING
Management does not intend to present to the Annual Meeting any business
other than the items stated in the Notice of Annual Meeting of Shareholders and
does not know of any matters to be brought before the Annual Meeting other than
those referred to above. If, however, any other matters properly come before
the Annual Meeting, the persons designated as proxies will vote on each such
matter in accordance with their best judgment.
The Company may and some banks, brokers and other nominee record holders
may be participating in the practice of householding proxy statements and
annual reports. This means that only one copy of this proxy statement may have
been sent to multiple shareholders in your household unless you provide us with
contrary instructions. A separate copy of this proxy statement or the annual
report will be delivered to you if you write to: Cass Information Systems,
Inc., Attn: P. Stephen Appelbaum, Secretary, 13001 Hollenberg Drive, Bridgeton,
Missouri 63044, or call (314) 506-5500.
By Order of the Board of Directors
P. Stephen Appelbaum, Secretary
29
Charles F. Knight Executive Education & Conference Center
John M. Olin Business School at Washington University in St. Louis
Knight Center Reception Desk (314) 933-9400 local (866) 933-9400 toll-free
[GRAPHIC OF MAP]
From I-70 (or Lambert International Airport)
--------------------------------------------
Go south on I-170 to the Forest Park Parkway exit.
Go east on Forest Park Parkway through Clayton, past Big Bend Boulevard to
Throop Drive (1st stoplight after Big Bend). Turn right (south) onto Throop
Drive.
The Charles F. Knight Center is located across from the parking garage on the
south side of Throop Drive.
Please park in the parking garage and proceed into the main entrance of the
Charles F. Knight Center to Room 200.
From I-64 (Hwy 40), heading west (from downtown St. Louis)
----------------------------------------------------------
Veer onto the Forest Park Parkway/Market St. exit and continue to Throop Drive.
Turn left (south) onto Throop Drive.
The Charles F. Knight Center is located across from the parking garage on the
south side of Throop Drive.
Please park in the parking garage and proceed into the main entrance of the
Charles F. Knight Center to Room 200.
From I-64 (Hwy 40), heading east (from west county)
---------------------------------------------------
Go north on I-170 to the Forest Park Parkway exit.
Go east on Forest Park Parkway through Clayton, past big Bend Boulevard to
Throop Drive (1st stoplight after Big
Bend). Turn right (south) onto Throop Drive.
The Charles F. Knight Center is located across from the parking garage on the
south side of Throop Drive.
Please park in the parking garage and proceed into the main entrance of the
Charles F. Knight Center to Room 200.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE PROPOSALS.
Please mark
your votes as |X|
indicated in
this example
FOR WITHHOLD *EXCEPTIONS
ALL FOR ALL
1. Election of Directors
Nominees: | | | | | |
01 Robert A. Ebel
02 John L. Gillis, Jr.
03 Randall L. Schilling
04 Franklin D. Wicks, Jr.
FOR AGAINST ABSTAIN
2. Ratification of appointment of KPMG LLP as | | | | | |
independent registered public accounting firm.
I/We plan to attend the meeting. (Please detach | | YES
admittance card below and bring to the meeting.)
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box above and write that nominee's name in the space provided
below.)
*Exceptions
________________________________________________________________________________
Mark Here for Address | |
Change or Comments
SEE REVERSE
Signature _____________________ Signature _____________________ Date ___________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
FOLD AND DETACH HERE
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to the annual meeting day.
-------------------------------------
INTERNET
CASS INFORMATION
SYSTEMS, INC. http://www.proxyvoting.com/cass
Use the Internet to vote your proxy.
Have your proxy card in hand when you
access the web site.
-------------------------------------
OR
-------------------------------------
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote
your proxy. Have your proxy card in
hand when you call.
-------------------------------------
If you vote your proxy by Internet or
by telephone, you do NOT need to mail
back your proxy card.
To vote by mail, mark, sign and date
your proxy card and return it in the
enclosed postage-paid envelope.
Important notice regarding the Internet Your Internet or telephone vote
availability of proxy materials for the authorizes the named proxies
Annual Meeting of shareholders to vote your shares in the same
The Proxy Statement and the 2008 manner as if you marked, signed and
Annual Report to Shareholders are returned your proxy card.
available at:
http://www.cassinfo.com
-----------------------
45407
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
CASS INFORMATION SYSTEMS, INC.
The undersigned hereby appoints Eric H. Brunngraber and P. Stephen
Appelbaum, and each of them, with power to act without the other and with power
of substitution, as proxies and attorneys-in-fact and hereby authorizes them to
represent and vote, as provided on the other side, all the shares of Cass
Information Systems, Inc. Common Stock which the undersigned is entitled to
vote, and, in their discretion, to vote upon such other business as may properly
come before the Annual Meeting of Shareholders of the Company to be held April
20, 2009 or at any adjournment or postponement thereof, with all powers which
the undersigned would possess if present at the Meeting.
------------------------------------------------
Address Change/Comments
(Mark the corresponding box on the reverse side)
------------------------------------------------
------------------------------------------------
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
ADMISSION TICKET
CASS INFORMATION SYSTEMS, INC.
2009 Annual Meeting of Shareholders
Monday, April 20, 2009
11:00 A.M. Local Time
The Charles F. Knight Executive Education Center
Olin School of Business at Washington University
One Brookings Drive
St. Louis, Missouri 63130
For your reference, a map is provided inside the back cover
of the Proxy Statement.
--------------------------------------------------------------------------------
Choose MLink(SM) for fast, easy and secure 24/7 online access to your future
proxy materials, investment plan statements, tax documents and more. Simply
log on to Investor ServiceDirect(R) at www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through enrollment.
--------------------------------------------------------------------------------
45407