INTERGRAPH CORPORATION
Huntsville, Alabama 35894-0001
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
May 15, 2003
TO THE SHAREHOLDERS OF INTERGRAPH CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Meeting") of Intergraph Corporation (the "Company" or
"Intergraph") will be held at the Intergraph Auditorium, Building
15, Intergraph Way, Huntsville, Alabama, on May 15, 2003, at 5:00
p.m. local time for the following purposes:
1. To elect eight directors to the Board of Directors to serve
for the ensuing year and until their successors are duly
elected and qualified (designated as Proposal 1 in the
accompanying Proxy Statement).
2. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the current year
(designated as Proposal 2 in the accompanying Proxy
Statement).
3. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The close of business on March 19, 2003, has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
A copy of the Annual Report to Shareholders for the year ended
December 31, 2002, is enclosed.
By Order of the Board of
Directors,
DAVID VANCE LUCAS
Secretary
Huntsville, Alabama
April 3, 2003
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE
MEETING. NO POSTAGE IS NEEDED IF MAILED IN THE UNITED STATES.
INTERGRAPH CORPORATION
HUNTSVILLE, ALABAMA 35894-0001
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board")
of Intergraph Corporation, to be voted at the Annual Meeting of
Shareholders to be held May 15, 2003, and at any and all
adjournments or postponements thereof. Proposals 1 and 2 will be
presented at the Meeting by management. The form of proxy
permits approval of all nominees or withholding of votes as to
all nominees or specific nominees for director, and permits
approval, disapproval, or abstention as to ratification of the
Company's independent auditors for the year. If the enclosed
form of proxy is properly executed, returned, and not revoked, it
will be voted in accordance with the specifications, if any, made
by the shareholder and, if specifications are not made, will be
voted FOR the nominees to the Company's Board of Directors and
FOR the ratification of the appointment of Ernst & Young LLP as
the Company's independent auditors for the current year. It is
not expected that any matter not referred to herein will be
presented for action at the Meeting. If any other matters are
properly brought before the Meeting, including, without
limitation, a motion to adjourn such Meeting to another time
and/or place for the purposes of, among other things, permitting
dissemination of information regarding material developments
relating to the Proposals, or soliciting additional proxies in
favor of the Proposals, the persons named on the accompanying
proxy card will vote the shares represented by such proxy upon
such matters in their discretion; provided, however, that if the
Company proposes to adjourn the Meeting for the purpose of
soliciting additional votes in favor of the Proposals, and seeks
a vote of shareholders on such adjournment, no proxy that is
voted against Proposal 3 (or on which a shareholder elects to
abstain on such matter) will be voted in favor of any adjournment
for the purposes of soliciting additional proxies in favor of
either Proposal. Any other proxy will be deemed to have voted
FOR such adjournment proposal. Should the Meeting be reconvened,
all proxies will be voted in the same manner as such proxies
would have been voted when the Meeting was originally convened,
except for the proxies effectively revoked or withdrawn prior to
the time proxies are voted at such reconvened meeting.
The cost of solicitation of proxies will be borne by the
Company. Proxies may be solicited by directors, officers, or
regular employees of the Company in person or by telephone or
mail. The Company requests that brokerage houses and other
custodians, nominees and fiduciaries forward solicitation
materials to the beneficial owners of shares of the Company's
Common Stock held of record by such persons, and the Company will
reimburse such brokers and other fiduciaries for their reasonable
out-of-pocket expenses incurred when the solicitation materials
are forwarded. On or about April 3, 2003, the Company will
commence mailing this Proxy Statement, the enclosed form of
proxy, and the attached Notice to holders of its Common Stock.
Shareholders who sign proxies have the right to revoke them at
any time before they are voted by filing with the Secretary of
the Company either an instrument revoking the proxy or a duly
executed proxy bearing a later date, or by attending the Meeting
and voting in person.
The close of business on March 19, 2003, has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the Meeting.
GENERAL
The holders of a majority of outstanding shares of Common Stock
as of the record date must be present in person or be represented
by proxy to constitute a quorum and act upon the proposed
business. Failure of a quorum to be represented at the Meeting
will necessitate an adjournment or postponement and will subject
the Company to additional expense.
Proposal 1 discussed in this Proxy Statement requires the
affirmative vote of a plurality of the votes cast at the Meeting.
Proposal 2 discussed in this Proxy Statement and, if applicable,
Proposal 3, require the affirmative vote of the holders of a
majority of the outstanding shares represented at the Meeting and
entitled to vote thereon. The Board of Directors recommends that
you vote FOR each nominee for director and FOR Proposal 2
presented in this Proxy Statement.
Votes are counted by the Company's transfer agent. The
Company's Certificate of Incorporation and Bylaws contain no
provisions concerning the treatment of abstentions and broker non-
votes. In accordance with Delaware law, abstentions and broker
non-votes will have no effect on the outcome of Proposal 1.
Abstentions will have the same effect as a vote cast against
Proposals 2 and 3, and broker non-votes will have no effect on
the outcome of Proposals 2 and 3. Both abstentions and broker
non-votes will be included in the determination of the presence
of a quorum.
COMMON STOCK OUTSTANDING AND PRINCIPAL SHAREHOLDERS
As of January 31, 2003, there were outstanding 46,227,249
shares of the Company's Common Stock, $.10 par value (the "Common
Stock"). Holders of Common Stock are entitled to one vote per
share.
The following table sets forth information as of January 31,
2003, as to:
(a) the only persons who were known by the Company to own
beneficially more than 5% of the outstanding Common Stock
of the Company,
(b) the shares of Common Stock beneficially owned by
the directors and nominees of the Company,
(c) the shares of Common Stock beneficially owned by
James F. Taylor, Jr., Chairman of the Board and Chief
Executive Officer of the Company, who is also a director
and nominee; and the four most highly compensated
executive officers of the Company who were serving as
such at December 31, 2002, (collectively, Mr. Taylor and
the four most highly compensated executive officers are
the "Named Executive Officers"), and
(d) the shares of Common Stock beneficially owned by
all directors, nominees, Named Executive Officers, and all
other executive officers of the Company as a single group.
Number of Shares and Nature
of Beneficial Ownership
---------------------------
Options
Common Exercisable Percent
Shares Within of
Name Owned (2) 60 Days Class (3)
----------------------- ---------- ----------- ---------
Thomas J. Coleman and
Michael Lowenstein
c/o Kensico Capital
Management Corp. (1) 3,676,175 (4) --- 8.0%
Director Nominees
-----------------
James F. Taylor, Jr. 74,964 (5) 15,000 *
Larry J. Laster 22,947 (6) 23,000 *
Sidney L. McDonald 90,000 6,000 *
Thomas J. Lee 3,000 6,000 *
Lawrence R. Greenwood 1,400 2,500 *
Joseph C. Moquin 2,000 1,500 *
Linda L. Green 6,151 (7) 1,000 *
Richard W. Cardin --- --- *
Highest Compensated Executive Officers
--------------------------------------
Gerhard Sallinger 10,000 2,500 *
David Vance Lucas 12,508 --- *
Preetha R. Pulusani 9,342 (8) 20,000 *
Graeme J. Farrell 1,337 (9) 23,750 *
All directors, nominees, and executive
--------------------------------------
officers as a group (19 persons),
--------------------------------------
including the foregoing directors,
--------------------------------------
nominees, and Named Executive
---------------------------------
Officers 541,069 145,000 1.5%
--------
---------------------------------
* Indicates beneficial ownership of less than 1%
(1) The address of Kensico Capital Management Corp. is 200 Park
Avenue, Suite 3300, New York, NY 10166.
(2) Unless otherwise noted, the indicated owner has sole voting
power and sole investment power.
(3) Shares issuable upon exercise of stock options that are
exercisable within 60 days of January 31, 2003, are considered
outstanding for the purposes of calculating the percentage of
total outstanding Common Stock owned by directors and executive
officers, and by directors, nominees, and executive officers
together as a group. Such shares are not considered outstanding
for the purposes of calculating the percentage of total
outstanding Common Stock owned by any person or group.
(4) As set forth on Schedule 13G filed with the Securities and
Exchange Commission on February 14, 2003. Thomas J. Coleman and
Michael Lowenstein of Kensico Capital Management Corp. share
voting power and dispositive power as to 3,586,175 shares, and
Mr. Coleman has sole voting power and dispositive power as to
90,000 shares.
(5) This figure excludes 100,000 shares owned by his wife as to
which Mr. Taylor expressly disclaims beneficial ownership.
(6) This figure consists of 19,900 shares owned jointly by Mr.
Laster and his wife as to which voting and investment powers are
shared.
(7) This figure excludes 2,051 shares owned by Mrs. Green's
husband as to which Mrs. Green expressly disclaims beneficial
ownership.
(8) This figure excludes 5,000 shares owned by Ms. Pulusani's
husband as to which Ms. Pulusani expressly disclaims beneficial
ownership.
(9) This figure includes 581 shares owned jointly by Mr. Farrell
and his wife as to which voting and investment powers are shared.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of members of the
Board at eight by resolution pursuant to the authority granted by
the Bylaws of the Company. There are eight directors at present.
The directors of the Company are currently elected at each Annual
Meeting of Shareholders and serve for a term of one year.
Election of directors is determined by a plurality of the votes
cast at the Meeting.
The Board of Directors proposes that the eight nominees listed
below be elected as directors to serve for a term of one year and
until their respective successors are duly elected and qualified,
subject to their prior death, resignation, retirement,
disqualification, or removal from office. Proxies may not be
voted for more than eight persons.
It is the intention of the persons named in the proxy to vote
the proxies for the election of the nominees listed below, all of
whom are presently directors of the Company. If any nominee
should become unavailable to serve as a director for any reason
(which is not anticipated), the persons named as proxies reserve
full discretion to vote for such other person or persons as may
be nominated.
The nominees for director, together with certain information
regarding them, are as follows:
Positions/Offices Director of the
Name and Age with the Company Company Since
------------------------- ------------------ ----------------
James F. Taylor, Jr. (58) Chairman of the Board, 1973
Chief Executive Officer,
and Director
Larry J. Laster (51) Executive Vice President, 1987
Chief Financial Officer,
and Director
Sidney L. McDonald (64) Director 1997
Thomas J. Lee (67) Director 1997
Lawrence R. Greenwood (63) Director 2000
Joseph C. Moquin (78) Director 2000
Linda L. Green (51) Director 2001
Richard W. Cardin (67) Director 2002
Mr. Taylor joined the Company in July 1969, shortly after its
formation, and is considered a founder. Mr. Taylor was elected
Chief Executive Officer ("CEO") in March 2000, and Chairman of
the Board of Directors in May 2001. Prior to being elected CEO
of Intergraph Corporation, he served as CEO of Intergraph Public
Safety, Inc., a wholly owned subsidiary of the Company. In
October 2002, Mr. Taylor announced his intention to retire as the
Company's CEO, but will continue to serve in this capacity until
a successor is named.
Mr. Laster joined the Company in 1981 and served as Executive
Vice President and Chief Financial Officer from February 1987
through February 1998, at which time he resigned from the Company
to serve as Chief Operating Officer of a privately owned company
specializing in the development, sale, and support of business
systems for the petroleum distribution and convenience store
industries. He rejoined the Company in June 1998 as Chief
Financial Officer of Intergraph Public Safety, Inc., a wholly
owned subsidiary of the Company. In September 2001, Mr. Laster
was elected Executive Vice President and Chief Financial Officer
of Intergraph Corporation.
Mr. McDonald served as President of Brindlee Mountain Telephone
Company, a provider of local telephone services in north Alabama,
from 1961 until his retirement in July 2000. Mr. McDonald is a
founder of Deltacom Long Distance Services, Inc. and served as
its Chief Executive Officer from 1984 through 1996. He also
served as Chief Executive Officer of Marshall Cellular, a
cellular telephone service company, from 1988 through 1996, and
of Southern Interexchange Services, a fiber optic
telecommunications network, from 1990 through 1996. Mr. McDonald
has served in the Alabama Legislature and as Finance Director for
the State of Alabama.
Mr. Lee is a founder of Lee and Associates, an engineering
services firm specializing in guided missile systems, and has
served as its President since January 1997. He was employed for
thirty-six years by NASA, and was the Director of the George C.
Marshall Space Flight Center from June 1989 through January 1994.
Mr. Lee served as Special Assistant to the NASA Administrator for
Access to Space from January 1994 through March 1995. Mr. Lee is
a registered professional engineer and is a member of numerous
advisory boards and committees within his field.
Dr. Greenwood serves as Vice President of Research at the
University of Alabama in Huntsville and has served in that
capacity since August 1998. He spent fifteen years with NASA,
serving as Director of the Earth Observations Division in NASA
Headquarters and, more recently, as Manager of the Global
Hydrology and Climate Center in Huntsville from September 1994
through August 1998. He served as President of Nichols Research
Corporation, an information technology company specializing in
information solutions and services, from 1991 to 1994. He also
served as Vice President and General Manager of the General
Electric Astro Space Division from 1988 to 1991. Dr. Greenwood
is a member of the Alabama Aerospace Commission and is a
registered professional engineer and a certified financial
planner.
Mr. Moquin retired from Teledyne Brown Engineering, an
aerospace corporation specializing in ballistic missile defense
and space systems, in 1989 after thirty years of service. At the
time of his retirement, he was serving as Chairman and Chief
Executive Officer. He served as Interim President of the
University of Alabama in Huntsville from September 1990 through
July 1991. He served on the Board of Directors of SCI Systems,
Inc. ("SCI"), now Sanmina-SCI, Inc., an international electronics
manufacturing services provider, from 1992 through 1997, and
served as a Director Emeritus, non-voting director, for SCI from
1997 to 2000. Mr. Moquin is a registered professional engineer
and has served on numerous advisory boards and committees within
his field.
Mrs. Green serves as Chief Executive Officer of the Northern
Region of Colonial Bank, the fiftieth largest bank in the United
States, and has served in that capacity since June 2000. From
July 1993 to June 2000, Mrs. Green served as President and Chief
Executive Officer of the Huntsville/Tennessee Region of Colonial
Bank. In January 2002, she was confirmed by the Alabama Senate
to serve on the State of Alabama's Ethics Commission. She also
serves on the University of Alabama in Huntsville Foundation.
Her past service includes Vice Chair and Chair of the Alabama
Space Science Commission, the Von Braun Center Board of Control,
the Alabama State Banking Board, 1998 Chair for the Huntsville
Madison County Chamber of Commerce, the Board of United Way and
numerous other civic and charitable organizations.
Mr. Cardin was elected to the Board of Directors on October 30,
2002, in accordance with the Articles of Incorporation and Bylaws
of the Company. Mr. Cardin retired from Arthur Andersen LLP in
1995 after thirty-seven years of service. He was Managing
Partner of its Nashville office from 1980 to 1994 and Managing
Partner of its Chattanooga office from 1969 to 1980. He serves
on the Board of Directors of Atmos Energy Corporation, a
distributor of pure natural gas, and is a member of its Audit and
Nominating Committees. He also serves on the Board of Directors
of United States Lime & Minerals, Inc., a manufacturer of lime
and limestone products, and is Chairman of its Audit Committee.
He serves as Chairman of the Advisory Committee to the Dean of
the School of Business of the University of Tennessee at
Knoxville and on the Board of Trust of the Junior League of
Nashville. Mr. Cardin is a certified public accountant and has
extensive past leadership positions with various civic and
educational organizations.
BOARD COMMITTEES AND ATTENDANCE
The Board of Directors and its Audit, Compensation, and
Nominating Committees meet periodically as meetings are deemed
necessary. During the year ended December 31, 2002, the Board of
Directors held twelve meetings, the Audit Committee held six
meetings, the Compensation Committee held three meetings, and the
Nominating Committee held four meetings. All current directors
were present for more than 75% of the aggregate Board and
committee meetings for the periods during 2002 in which they
served.
The Audit Committee consists of Mr. Cardin, Mrs. Green, Dr.
Greenwood, and Mr. Lee. Mr. Cardin was elected to serve as Chair
of the Audit Committee. Each member of the Audit Committee is
independent within the meaning of the listing standards of the
National Association of Securities Dealers. The Compensation and
Nominating Committees consist solely of the Company's independent
directors, Mr. Cardin, Mrs. Green, Dr. Greenwood, Mr. Lee, Mr.
McDonald, and Mr. Moquin. During 2002, Mr. McDonald was elected
to serve as Chair of the Compensation Committee, and Mr. Lee was
elected to serve as Chair of the Nominating Committee. In its
September 17, 2002, meeting, the Board of Directors formulated a
Chief Executive Officer Search Committee, which consists of Mrs.
Green, Mr. Lee, and Mr. McDonald. Mr. McDonald was elected to
serve as Chair of the Chief Executive Officer Search Committee.
Mr. McDonald was appointed by the Board of Directors in 2002 to
be the lead independent director and serve as coordinator of the
activities of the Board's independent directors. Specific
responsibilities of the lead independent director include
advising the Chairman of the Board as to the scheduling and
agenda for Board meetings, ensuring that the quality, quantity,
and timeliness of the flow of information from Company management
is sufficient to allow independent directors to effectively and
responsibly perform their duties, and coordinating and moderating
executive sessions of the Board's independent directors.
The purpose of the Compensation Committee is to recommend and
oversee management compensation, including CEO compensation.
Additional information regarding the functions performed by the
Compensation Committee and the determination of management
compensation is included in the "Report of the Compensation
Committee" following.
The purpose of the Nominating Committee is to consider and
recommend nominees for director, including those recommended by
shareholders of the Company. Any recommendations of a nominee
should be submitted to David Vance Lucas, Secretary, Intergraph
Corporation, Huntsville, Alabama 35894-0001. Such nominees will
be reviewed by the Nominating Committee in accordance with its
established procedures.
Information regarding the functions performed by the Audit
Committee is set forth in the "Report of the Audit Committee"
following. The Audit Committee is governed by a written charter
that was amended by the Board of Directors on September 17, 2002.
For a copy of the charter, refer to Appendix A in this Proxy
Statement.
Report of the Audit Committee
The Audit Committee, which is composed of four independent
directors as defined under the applicable rules of The Nasdaq
Stock Market, oversees the Company's financial reporting process
on behalf of the Board of Directors. Management has primary
responsibility for the Company's financial statements and
reporting process, including the systems of internal controls.
In light of certain provisions of the Sarbanes-Oxley Act of 2002
(the "Act"), the Audit Committee reviewed its charter and
determined that it was appropriate to amend the charter. A copy
of the amended charter is attached as an appendix to the
Company's proxy statement. The Audit Committee continues to work
with management to implement all changes and procedures required
by the Act.
In the performance of its oversight function, the Audit
Committee has reviewed and discussed the audited financial
statements with management and the independent auditors. The
Audit Committee has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as
amended by Statement on Auditing Standards No. 90 (Audit
Committee Communications). In addition, the Audit Committee has
received from the independent auditors the written disclosures
required by the pronouncements of the Independence Standards
Board and discussed with them their independence from the Company
and its management. The Audit Committee has considered whether
the independent auditors' provision of non-audit services to the
Company is compatible with the auditors' independence.
The Audit Committee discussed with the Company's internal and
independent auditors the overall scope and plans for their
respective audits. The Audit Committee meets with the internal
and independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of
the Company's internal controls, and the overall quality of the
Company's financial reporting.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended and the Board of Directors has
approved the Company's audited financial statements in the Annual
Report on Form 10-K for the year ended December 31, 2002, for
filing with the Securities and Exchange Commission (the "SEC").
Members of the Audit Committee:
Richard W. Cardin, Chair
Linda L. Green
Lawrence R. Greenwood
Thomas J. Lee
The foregoing report of the Audit Committee does not
constitute soliciting material and shall not be deemed
incorporated by reference by any general statement incorporating
by reference the proxy statement into any filing by the Company
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers, directors, and persons who own more than
ten percent of a registered class of the Company's equity
securities, if any, to file reports of ownership and changes in
ownership with the SEC and, in the case of the Company, with The
Nasdaq Stock Market. Officers, directors, and greater than ten
percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms and any
amendments thereto furnished to the Company, or on written
representations that no forms were required, the Company believes
that during the year ended December 31, 2002, all Section 16(a)
filing requirements applicable to its officers, directors, and
greater than ten percent beneficial owners were met, except that
one late report each was filed by Michael Scott Moore and Mark
Woelke, officers of two business units of the Company, with
respect to the sale of less than two shares each arising out of
the termination of the Company's Stock Bonus Plan.
EXECUTIVE COMPENSATION
Information relating to compensation of certain executive
officers of the Company, the policies and practices of the
Company relative to executive compensation, and the performance
of the Company's Common Stock are presented in this section.
This information consists of a summary compensation table,
information on stock option grants, exercises and year-end
values, director compensation, information on employment
contracts, the Report of the Compensation Committee, and a graph
depicting the five-year performance of the Company's Common Stock
against the performance of peer companies and the Standard &
Poor's 500 Stock Index.
Summary Compensation Table
The following table summarizes the compensation of James F.
Taylor, Jr., Chairman of the Board and Chief Executive Officer of
the Company, and the four most highly compensated executive
officers of the Company who were serving as such at December 31,
2002.
Long-Term
Compensation
Annual Compensation Awards
------------------------------------ ------------
Other Securities
Annual Underlying All Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($) ($) ($)(1) (#) ($)
---------------------------- ---- ------ ----- ------------ ----------- ------------
James F. Taylor, Jr. (2) 2002 301,194 300,000 --- --- 7,857
Chairman of the Board and 2001 300,000 --- --- --- 7,422
Chief Executive Officer 2000 284,302 --- --- --- 8,189
Gerhard Sallinger (3) 2002 268,257 253,071 --- --- 19,998
President, Intergraph Process, 2001 194,166 72,078 --- 25,000 15,686
Power & Offshore
David Vance Lucas (4) 2002 226,020 250,000 --- --- 5,999
Vice President, 2001 197,194 10,000 --- 30,000 4,496
General Counsel and 2000 162,890 --- --- 20,000 3,398
Secretary
Preetha R. Pulusani (5) 2002 260,417 75,000 --- --- 3,117
President, Intergraph 2001 190,700 44,000 --- 30,000 3,021
Mapping and Geospatial
Solutions
Graeme J. Farrell (6) 2002 234,167 73,293 --- --- 41,118
Executive Vice President, 2001 225,000 35,631 --- --- 38,432
Asia Pacific 2000 204,789 --- 29,622 20,000 29,686
(1) "Other Annual Compensation" for each of the named executives
does not include the value of certain personal benefits, if any,
furnished by the Company or for which it reimburses the named
executives, unless the value of such benefits in total exceeds
the lesser of $50,000 or 10% of the total annual salary and bonus
reported in the above table for the named executive.
(2) The amounts reported in "All Other Compensation" for Mr.
Taylor include $5,535, $5,100, and $6,464 contributed on his
behalf to the Company's retirement plan, and $2,322, $2,322, and
$1,725 in premium payments for term life insurance* in 2002,
2001, and 2000, respectively.
(3) Mr. Sallinger first became an executive officer of the
Company in 2001. The amounts reported in "All Other
Compensation" for Mr. Sallinger include $11,399 and $7,767
contributed on his behalf to the Company's retirement plan, and
$8,599 and $7,919 in premium payments for term life insurance* in
2002 and 2001, respectively. Mr. Sallinger's compensation is
paid in Euros that fluctuate in value against the U.S. dollar.
(4) Mr. Lucas first became an executive officer of the Company
in 2000 and was elected Secretary in 2002. The amounts reported
in "All Other Compensation" for Mr. Lucas include $5,578, $4,131,
and $3,145 contributed on his behalf to the Company's retirement
plan and $421, $365, and $253 in premium payments for term life
insurance* in 2002, 2001, and 2000, respectively.
(5) Ms. Pulusani first became an executive officer of the
Company in 2001. The amounts reported in "All Other
Compensation" for Ms. Pulusani include $2,890 and $2,718
contributed on her behalf to the Company's retirement plan, and
$227 and $303 in premium payments for term life insurance* in
2002 and 2001, respectively.
(6) Mr. Farrell first became an executive officer of the Company
in 1999. The amount reported in "Other Annual Compensation" for
Mr. Farrell in 2000 includes $14,159 in car allowance, $8,015 in
education assistance for his dependents, and $7,448 in
supplemental health insurance. "Other Annual Compensation"
amounts for 2002 and 2001 did not exceed the lesser of $50,000 or
10% of total annual salary and bonus and are not reported. The
amounts reported in "All Other Compensation" for Mr. Farrell
include $25,009, $22,818, and $19,670 contributed on his behalf
to the Company's retirement plan, $3,443, $3,147, and $2,552 in
income protection insurance, and $12,666, $12,467, and $7,464 in
premium payments for term life insurance* in 2002, 2001, and
2000, respectively.
*Premium payments for term life insurance were not made to split-
dollar insurance arrangements.
STOCK OPTION GRANTS, EXERCISES, AND YEAR-END VALUES
Option Grants Table
The Company from time to time awards stock options to key
employees, including executive officers and directors, pursuant
to stock option plans approved by the shareholders of the
Company. There were no options granted under these plans to the
Named Executive Officers during the year ended December 31, 2002.
Aggregated Option Exercises and Year-End Values Table
The following table sets forth information regarding options
exercised for shares of the Company's Common Stock during 2002
and the value of securities underlying unexercised stock options
held by the Named Executive Officers at December 31, 2002.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Value Options at Year End (#) Options at Year End ($)
Acquired Realized ------------------------- ------------------------
Name On Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
------------------ ----------- -------- ----------- ------------- ----------- -------------
James F. Taylor, Jr.
Chairman of the Board and
Chief Executive Officer --- --- 15,000 5,000 185,775 61,925
Gerhard Sallinger
President, Intergraph Process,
Power & Offshore 15,000 169,673 --- 45,000 --- 416,948
David Vance Lucas
Vice President,
General Counsel and
Secretary 12,500 124,913 --- 47,500 --- 390,325
Preetha R. Pulusani
President, Intergraph Mapping
and Geospatial Solutions --- --- 20,000 32,500 183,793 207,362
Graeme J. Farrell
Executive Vice President,
Asia Pacific --- --- 23,750 16,250 229,891 198,444
The value of unexercised in-the-money options is determined as
the excess of the closing sale price of the Company's Common
Stock as reported on The Nasdaq Stock Market on December 31,
2002, over the exercise prices of the options held by the Named
Executive Officers.
Compensation of Directors
Directors who are also employees of the Company do not receive
additional compensation for their service as directors. Non-
employee directors receive an annual retainer of $20,000, paid in
quarterly installments, plus $1,000 for each Board and committee
meeting attended. In its October 30, 2002, meeting, the Board of
Directors resolved to provide the Chair of the Company's Audit
Committee an additional annual retainer of $5,000 to be paid in
addition to the standard annual Board member retainer. The Board
also resolved to increase the compensation for Board or committee
meeting attendance from $500 to $1,000 per meeting, effective
October 30, 2002. Other compensation includes mileage paid at
$.30 per mile for each member whose home is more than 25 miles
from Intergraph headquarters and $50 for each hour traveled,
computed round trip. In addition, any commercial travel expenses
are fully reimbursed. All directors received the full annual
retainer in 2002, except for Mr. Cardin who received a pro-rata
portion of his annual retainer.
The Intergraph Corporation Nonemployee Director Stock Option
Plan was approved at the 1998 Annual Shareholders' Meeting.
Under this plan, any new non-employee director is granted an
option to purchase 3,000 shares of the Company's Common Stock
upon his or her first election to the Board. At each Annual
Meeting of Shareholders, each non-employee director re-elected to
the Board is granted an option to purchase an additional 1,500
shares of the Company's Common Stock. The exercise price of each
option granted is the fair market value of the Company's Common
Stock on the date of grant. Options are granted for a term of
ten years from the date of grant. Options first become
exercisable one year from the date of grant and vest at a rate of
33% per year from that point, with full vesting on the third
anniversary of the date of grant.
Employment Contracts
Mr. Sallinger holds an employment agreement with one of the
Company's European business entities. The employment agreement
provides him a fixed base salary, a permanent advance for travel
expenses, and a vehicle. The contract is open-ended, but may be
terminated by either party giving a notice of six weeks prior to
the end of a quarter. A contract penalty equal to the last
monthly salary may apply if the employment relationship is
terminated prematurely.
Mr. Farrell holds an employment agreement with the Company and
one of its Australian business entities that provides him a fixed
base salary, supplemental health insurance, supplemental defined
contribution pension and life insurance benefits, and expense
allowances for a vehicle and other personal expense items. The
contract is open-ended, but may be terminated by either party
with three months' written notification. The termination
provisions of his contract provide for severance benefits
calculated as a function of his length of service under the
agreement up to a maximum of two years' base salary.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors is
composed of all non-employee directors. The following committee
report reflects the committee's activities in 2002 with regard to
executive compensation. The Compensation Committee held three
meetings wherein it made compensation decisions based upon
recommendations by the Company's CEO, as well as consideration of
corporate and individual performance, independent industry survey
results, and its own subjective evaluations. This report also
describes the basis for compensation recommendations for 2002,
and the objectives that the Compensation Committee followed in
reviewing and determining executive compensation for 2002.
Compensation Committee Charter and Objectives
In accordance with its Charter, the responsibilities of the
Compensation Committee include the oversight of the Company's
executive officer compensation policies and practices. In
fulfilling these responsibilities, the committee conducts an
annual review of the Company's executive compensation programs
and policies in order to attain the following objectives:
o offer fair and competitive base salaries consistent with the
Company's position in the markets in which it competes,
o reward executive officers for corporate and individual
performance through incentive bonus programs,
o encourage future performance through the use of long-term
incentives such as stock options, and
o encourage executive officers to acquire and retain ownership
of the Company's Common Stock.
The Company's executive compensation programs and policies are
intended to enable the Company to attract, retain, and motivate
the highest quality of management talent. To achieve this
objective, the Compensation Committee utilizes annual base
salaries together with annual and long-term incentives tied to
business unit and corporate performance. As a result, the
Compensation Committee works closely with the Administrative
Committee of the Company's Employee Stock Option Plan ("the
Administrative Committee") in the provision of incentive stock
options and non-qualified stock options to executive officers and
other key employees of the Company. The Administrative Committee
reviews and determines the award of individual employee stock
option grants under the Company's Employee Stock Option Plan.
See "Compensation Committee Interlocks and Insider Participation"
following for a summary of the options granted to the Company's
executive officers and directors during 2002.
Executive Officer Compensation for 2002
For 2002, the CEO was responsible for formulating a
recommendation for the compensation of all other executive
officers of the Company based on the authority and discretion
granted the CEO by the Board of Directors. The CEO and the
Compensation Committee also reviewed and considered independent
industry survey results concerning the compensation practices of
similarly situated companies, including, where available,
specific regional, industry, and competitor compensation data
(including that of the peer companies in the performance graph
following this report). Based upon a review of the information
received, their own business experience, and the recommendations
of the CEO, the Compensation Committee approved the CEO's
compensation recommendations.
Each of the Business Unit Presidents participates in a formal
bonus plan that is tied to the financial performance of the
segment. There is no bonus until the executive officer reaches
the income from operations targets established in the segment's
Annual Operating Plan. As the executive officer exceeds the
planned performance, bonuses are earned. The bonus is capped at
twice the executive officer's annual salary. When there are
increases in responsibilities due to restructuring or other
reasons, the Compensation Committee may occasionally award a
bonus to an executive officer if deemed appropriate, even if
planned performance targets are not met. There is no formal cash
bonus plan for executive officers that are not responsible for a
segment or a geographic region, but exceptional individual
performance is occasionally rewarded by a cash bonus. Overall
corporate performance neither guarantees nor precludes the award
of bonuses, but may influence the amount of such bonuses.
The granting of stock options to purchase shares of the
Company's Common Stock over a ten-year period at a specified
price is the primary means of providing long-term incentive to
executive officers to perform in a manner that benefits
themselves, the Company, and the Company's shareholders. There
were no standard performance factors, applicable to either the
individual and his or her job performance or the financial
performance of the Company, considered by the Administrative
Committee. Decisions to award stock options were based upon
subjective evaluations of job performance and expected
contribution to the Company. Stock options have also been used
to attract new employees. Previous option awards are considered
when awarding new options. With respect to incentive stock
options, such options may not exceed the amounts permitted under
applicable Internal Revenue Code provisions. The Compensation
Committee reviewed and approved the recommendations of the CEO
with regard to the award of stock options for both existing
executive officers and new executive officers retained during
2002.
In the past, the Company has on occasion entered into
employment agreements with key executives. Such agreements
specified the terms of employment, including duration, separation
benefits, and compensation. Under most circumstances, separation
amounts do not exceed the balance of compensation due for the
remaining unfulfilled term of the agreement. Executives without
employment agreements who are terminated through a workforce
reduction or job elimination receive severance pay based on
standard Company policy applicable to all employees. The CEO
did not recommend, nor did the committee approve, any new
employment agreements during 2002.
CEO Compensation
There was no change in the base compensation of the CEO for
2002. The Compensation Committee approved a $300,000 bonus for
the CEO for 2002 performance. In determining the amount of bonus
to be awarded, the committee considered the improvement in the
Company's financial condition and results of operations and such
other factors as it deemed appropriate. The Compensation
Committee establishes the base compensation for the CEO based on
the subjective evaluation of the performance of the CEO and the
level of compensation paid to similar executives.
Members of the Compensation Committee:
Sidney L. McDonald, Chair
Richard W. Cardin
Linda L. Green
Lawrence R. Greenwood
Thomas J. Lee
Joseph C. Moquin
Compensation Committee Interlocks and Insider Participation
The Administrative Committee of the Company's stock option
plan, which is appointed by and comprised of all current members
of the Board of Directors, may award both incentive stock options
and non-qualified stock options to executive officers and other
key employees. Members of the Administrative Committee who are
also employees of the Company, including James F. Taylor, Jr.,
Chairman of the Board and CEO, and Larry J. Laster, Chief
Financial Officer, are eligible to receive options under the
Plan.
During the year ended December 31, 2002, the Administrative
Committee awarded options for a total of 120,500 shares of the
Company's Common Stock. Of this total, options for 10,500 shares
were awarded to directors of the Company under the Nonemployee
Director Stock Option Plan. No options were granted to the Named
Executive Officers during the year ended December 31, 2002.
During the year ended December 31, 2002, no executive officer
of the Company served as a director or as a member of the
compensation committee, or committee performing equivalent
functions, of another business entity.
Performance Graph
The following graph sets forth, for the five-year period ended
December 31, 2002, a comparison of the cumulative total
shareholder return to the Company's shareholders with that of the
Software and Services Index, and that of the Standard & Poor's
500 Stock Index. The Company uses the Media General Computer
Software and Services Index as the best representation of the
companies with which its business segments compete. The
cumulative total return for this index was provided to the
Company by Media General Financial Services. Total shareholder
return for each was determined by adding a) the cumulative amount
of dividends for a given year, assuming dividend reinvestment,
and b) the difference between the share price at the beginning
and at the end of the year, the sum of which was then divided by
the share price at the beginning of such year. The graph assumes
$100 was invested on December 31, 1997.
Comparative Five-Year Total Returns
Software and Services Index,
Standard & Poor's 500 Stock Index, and Intergraph Corporation
1997 1998 1999 2000 2001 2002
Software and
Services Index $100 $149 $256 $154 $136 $ 93
S&P 500 $100 $129 $156 $141 $125 $ 97
Intergraph $100 $ 58 $ 47 $ 60 $137 $178
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board has appointed Ernst & Young LLP ("Ernst & Young") as
the Company's independent auditors to audit the financial
statements of the Company and to perform other accounting
services, if appropriate, for the year ending December 31, 2003.
Such appointment will be presented to the shareholders for
ratification at the Meeting. If the shareholders do not ratify
the appointment, the selection of another firm will be considered
by the Board. A representative of Ernst & Young is expected to
be present at the Meeting to respond to questions from
shareholders and will be given the opportunity to make a
statement if so desired.
Fees paid to Ernst & Young for services provided during the
years ended December 31, 2002, and 2001, are presented below.
The Company did not engage Ernst & Young to perform financial
information systems design or implementation services during the
year. "Audit Fees" include fees associated with the annual
audit, the review of the Company's quarterly reports on Form 10-
Q, and local statutory audits performed in various international
locations. "Audit-Related Fees" primarily include fees
associated with the audits of the Company's employee benefit
plans. "Tax Fees" include fees associated with tax compliance,
tax advice, and tax planning, including expatriate tax services.
"All Other Fees" include fees associated with miscellaneous
professional services. The Company's Audit Committee considered
whether the provision of services covered under the caption "All
Other Fees" is compatible with maintaining the auditor's
independence and concluded that auditor's independence was not
impaired.
Audit Fees Audit-Related Fees Tax Fees All Other Fees
---------- ------------------ -------- --------------
2002 $1,013,000 $29,000 $239,000 $3,000
2001 $ 813,000 $18,000 $257,000 ---
The Board of Directors recommends a vote FOR Proposal 2.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Shareholder proposals intended for presentation at the 2004
Annual Meeting and for inclusion in the Company's 2004 proxy
material must be received by the Company, in writing, no later
than December 5, 2003, and must comply with the rules of the SEC
relating to shareholder proposals. The named proxies solicited
by the Board of Directors for the 2004 Annual Meeting will confer
discretionary authority to vote on any shareholder proposal not
received in writing by the Company by February 18, 2004, and will
exercise authority in accordance with the recommendation of the
Board of Directors.
OTHER
Management does not know of any other matters to be presented
at the Meeting for action by shareholders; however, if any other
matters are properly brought before the Meeting or any
adjournment or postponement thereof, votes will be cast pursuant
to the proxies in accordance with the best judgment of the proxy
holders with respect to such matters.
UPON WRITTEN REQUEST OF ANY SHAREHOLDER TO DAVID VANCE LUCAS,
SECRETARY, INTERGRAPH CORPORATION, HUNTSVILLE, ALABAMA 35894-
0001, THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2002, AS FILED WITH THE SEC.
By Order of the Board of
Directors,
DAVID VANCE LUCAS
Secretary
DATED: April 3, 2003
APPENDIX A
INTERGRAPH CORPORATION
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
I. Organization
This charter governs the operations of the Audit Committee.
The committee shall review and reassess the charter at least
annually and obtain the approval of the Board of Directors (the
"Board") for any changes. The Audit Committee shall be appointed
by the Board and shall be comprised of at least three members of
the Board. Each director serving on the committee shall meet the
independence and experience and other requirements of The Nasdaq
Stock Market and other applicable regulatory requirements.
Accordingly, all committee members shall be independent as
defined by Nasdaq rules and other applicable regulatory
requirements, shall be financially literate, or shall become
financially literate within a reasonable period of time after
appointment to the committee. At least one member shall have
accounting or related financial management expertise. The duties
of the Chair of the Audit Committee shall be to call meetings of
the Audit Committee and to preside at such meetings.
II. Statement of Policy
The Audit Committee shall provide assistance to the Board in
fulfilling their oversight responsibility to the shareholders and
others relating to the Company's financial statements and the
financial reporting process, the systems of internal accounting
and financial controls, the internal audit function, and the
annual independent audit of the Company's financial statements.
In so doing, it is the responsibility of the committee to
maintain free and open communication between the committee, the
independent auditors, the internal auditors, and management of
the Company. In discharging its oversight role, the committee is
empowered to investigate (or direct management or internal audit
to investigate) any matter brought to its attention with full
access to all books, data, records, facilities, and personnel of
the Company and to retain outside counsel or other experts at the
Company's expense for this purpose.
III. Responsibilities
The committee's duties are those of monitoring and
oversight, and it recognizes that the Company's management is
responsible for preparing the Company's financial statements and
that the independent auditors are responsible for auditing those
financial statements. Additionally, the committee recognizes
that the Company's financial management, including the internal
audit department, as well as its independent auditors, have more
knowledge and more detailed information regarding the Company and
its financial reports than do committee members; consequently, in
carrying out its duties and oversight responsibilities, the
committee is not providing any expert or special assurance as to
the Company's financial statements or any professional
certification as to the independent auditors' work, and is not
conducting an audit or investigation of the financial statements
nor determining that the financial statements are true and
complete or have been prepared in accordance with accounting
principles generally accepted in the United States.
The directors serving on the Audit Committee of the Company
shall have no greater standard of liability in the performance of
their duties than the standard of liability applicable to all
directors. Audit Committee members who are previously employed
by the Company or who have special training or experience in
financial or audit matters shall have no greater duty or
responsibility as a result of such prior training services or
experience. Members of the Audit Committee shall have the full
protection against personal liability for breach of fiduciary
duties as set forth in Article IX to the Certificate of
Incorporation, adopted by the shareholders in the meeting of
April 23, 1987. In addition, members of the Audit Committee
shall be entitled to be indemnified against liability by the
Company as provided in Articles VIII and IX of the Certificate of
Incorporation and Article Nine of the By-laws.
IV. Processes
The following shall be the principal recurring processes of
the Audit Committee in carrying out its oversight
responsibilities. The processes are set forth as a guide with
the understanding that the committee may supplement them as
appropriate without modifying this charter.
A. The committee shall have a clear understanding
with management and the independent auditors that the
independent auditors are ultimately accountable to the
Board and the Audit Committee, as representatives of the
Company's shareholders. The committee shall have the
ultimate authority and responsibility to evaluate and,
where appropriate, replace the independent auditors.
The committee shall discuss with the auditors their
independence from management and the Company and matters
included in the written disclosures required by the
Independence Standards Board. The committee shall
consider whether the provision of non-audit services by
the independent auditors is compatible with maintaining
the outside auditors' independence. Annually, the
committee shall review and recommend to the Board the
selection of the Company's independent auditors.
B. The committee shall discuss with the internal
auditors and the independent auditors the overall scope
and plans for their respective audits, including the
adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal
auditors, and the independent auditors the adequacy and
effectiveness of the accounting and financial controls.
Further, the committee shall meet separately with the
internal auditors and the independent auditors, with and
without management present to discuss the results of
their examinations.
C. The committee shall review the interim
financial statements with management and the independent
auditors prior to the public release of such interim
financial statements and prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the
committee shall discuss the results of the quarterly
review and any other matters required to be communicated
to the committee by the independent auditors under
generally accepted auditing standards. The Chair of the
committee may represent the entire committee for the
purpose of this review.
D. The committee shall review and discuss with
management and the independent auditors the financial
statements to be included in the Company's Annual Report
on Form 10-K (or the annual report to the shareholders
if distributed prior to the filing of Form 10-K), and
the selection, application and disclosure of critical
accounting policies used in such financial statements.
The review and discussion shall include their judgment
about the quality, not just the acceptability, of
accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in such
financial statements. Also, the committee shall review
and discuss any off-balance-sheet-financing
transactions, any related party transactions, and any
issues that may affect in any material way the fairness
of the financial statement presentation, the financial
risks of the Company, and the internal control systems
of the Company.
E. The committee shall, at least annually, meet with the
senior officer with oversight of the Company's ethics and
compliance policies for a report on such programs.
F. The committee shall pre-approve all auditing
services to be provided by the independent auditors.
G. The committee shall pre-approve all non-auditing
services, including tax services, to be provided by the
independent auditors, subject to such exceptions as may
be determined by the committee to be appropriate and
consistent with applicable federal and regulatory
provisions.
H. The committee shall receive reports from the
principal executive and financial officers of the
Company regarding (1) all significant deficiencies in
the design or operation of internal controls which could
adversely affect the Company's ability to record,
process, summarize, and report financial data and
whether they have identified for the independent
auditors any material weaknesses in internal controls;
(2) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the Company's internal controls; and (3) whether
there were significant changes in internal controls or
in other factors that could significantly affect
internal controls subsequent to the date of their
evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Intergraph
----------
[ ] Mark this box with an X if you
have made changes to your name
or address details above.
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Annual Meeting Proxy Card
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[A] Election of Directors
1. The Board of Directors recommends a vote FOR the listed nominees.
For Withhold
01 - James F. Taylor, Jr. [ ] [ ]
02 - Larry J. Laster [ ] [ ]
03 - Sidney L. McDonald [ ] [ ]
04 - Thomas J. Lee [ ] [ ]
05 - Lawrence R. Greenwood [ ] [ ]
06 - Joseph C. Moquin [ ] [ ]
07 - Linda L. Green [ ] [ ]
08 - Richard W. Cardin [ ] [ ]
[B] Issues
The Board of Directors recommends a vote FOR the following proposal.
For Against Abstain
2. Proposal to ratify the appointment of Ernst [ ] [ ] [ ]
& Young LLP as the Company's independent
auditors for the current fiscal year.
*COM = Common Stock Shares; ESP = Employee Stock Purchase Plan Shares
[C] Authorized Signatures - Sign Here - This section must be completed for
your instructions to be executed.
Please sign exactly as your name appears above. If registered in the names of
two or more persons, each should sign. Executors, administrators, trustees,
guardians, attorneys and corporate officers should show their titles.
Signature 1 - Please Signature 2 - Please Date (mm/dd/yyyy)
keep signature within keep signature within
the box the box
[ ] [ ] [ ]/[ ]/[
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Proxy - Intergraph Corporation
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THIS PROXY IS SOLICITED ON BEHALF OF THE INTERGRAPH CORPORATION
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS,
MAY 15, 2003.
The undersigned hereby appoints James F. Taylor, Jr., and
David Vance Lucas, or either of them, as Proxies and
Attorneys-in-fact, each with the power to appoint his
substitute, and hereby authorizes them to represent and to
vote, as designated below, all the shares of Common Stock
of Intergraph Corporation which the undersigned would be
entitled to vote if personally present at the Annual
Meeting of Shareholders to be held May 15, 2003, or any
adjournment(s) or postponement(s) thereof. In their
discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or
any adjournment(s) or postponement(s) thereof.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder. IF
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
ELECTION OF ALL NOMINEES LISTED ON THE REVERSE SIDE AND
FOR PROPOSAL 2.
The Board of Directors recommends a vote FOR election of
all nominees listed on the reverse side and FOR Proposal
2.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)