UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
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)
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|_| 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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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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CASS INFORMATION SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on
April 18, 2005
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Cass Information Systems, Inc. will
be held at the offices of Cass Information Systems, Inc. located at 13001
Hollenberg Drive, Bridgeton, Missouri on Monday, April 18, 2005, at 11:00 a.m.,
for the following purposes:
1. To elect four Directors, each to serve for a three-year term;
2. To act upon such other matters as may properly come before the
meeting.
The close of business on March 7, 2005 has been fixed as the record date
for determining shareholders entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
Eric H. Brunngraber
Secretary
March 15, 2005
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 18, 2005
This Proxy Statement is being furnished to the common shareholders of Cass
Information Systems, Inc. (the "Company") on or about March 15, 2005 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 18, 2005 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 shares of Common Stock, par value $.50 per share ("Shares" or
the "Common Stock"), of the Company at its close of business on March 7, 2005
(the "Record Date") are entitled to receive notice of and vote at the Annual
Meeting. On the Record Date, 3,675,757 shares of Common Stock were outstanding.
Holders of record of Common Stock (the "Shareholders") 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
("Management"), and members of the Board (the "Board"), in the aggregate,
directly or indirectly controlled approximately 26.08% 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 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.
A plurality of the votes of Shareholders cast at the Annual Meeting is
required for the election of each director. Abstentions are counted in the
number of shares present for purposes of determining whether a quorum is
present, and are counted as having voted on each matter presented for vote. As a
result, an abstention has the same effect as a vote against a proposal, but will
have no effect on the vote to elect directors. Broker non-votes are counted in
the number of shares present for purposes of determining whether a quorum is
present, but as not being present as to matters for which voting instructions
are not given. As a result, broker non-votes will not affect voting on any
matter voted on at the meeting.
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 should be sent to
Eric H. Brunngraber, Secretary, Cass Information Systems, Inc., 13001 Hollenberg
Drive, Bridgeton, Missouri 63044 (telephone number (314) 506-5500).
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. The Board of the Company 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 of the Company solicits the proxies. In addition to the use of
the mails, proxies may be solicited personally or by telephone or facsimile
transmission, by directors, officers or regular employees of the Company or
persons employed by the Company for the purpose of soliciting proxies. 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.
1
ELECTION OF DIRECTORS
Pursuant to the by-laws of the Company, the Company's Board consists of
twelve members and is divided into three classes of approximately equal numbers
of directors. Each director is elected for a three-year term, and the term of
each class of directors expires in successive years.
The following information is submitted respecting the members of the
Company's Board whose terms will continue after the meeting, together with the
nominees for election to the Board:
Nominees for election at this meeting to a term expiring in 2008:
K. Dane Brooksher Mr. Brooksher, 66, is Chairman of the Board of
ProLogis, a leading provider of distribution
facilities. He has been with ProLogis since 1993
and has held positions including Chief Operating
Officer ("COO"), Co-Chairman and Chief Executive
Officer ("CEO"). Prior to joining ProLogis, he
spent over 32 years with KPMG, serving as the
Mid-West area-managing partner and Chicago
office-managing partner, 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., Butler Manufacturing Company,
Pactiv Corporation, National Association of
Manufacturers, and Colorado Forum, and is a current
member of the Advisory Board of the J. L. Kellogg
Graduate School of Management, Northwestern
University.
Eric H. Brunngraber Mr. Brunngraber, 48, has been a director since
2003. He has served as Chief Financial Officer
("CFO") of the Company since 1997. He has held
numerous positions with the Company since his
employment began in 1979, including Executive Vice
President-Secretary of the Company's bank
subsidiary. Mr. Brunngraber has been active in
various civic, charitable, professional and
church-related groups. He is a current board member
of the St. Louis Equity Fund, Inc.
Bryan S. Chapell Dr. Chapell, 50, 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, 49, has been with A. G. Edwards &
Sons, Inc., one of the nation's largest investment
firms, since 1977. He is currently the branch
manager of the firm's Town & Country, Missouri
office. He has also been a member of the Board of
Directors of A. G. Edwards since 1994. During his
career with A. G. Edwards he has held positions
including Employment Manager, Financial Advisor,
Associate Branch Manager, Regional Officer,
Director of Sales and Marketing, and President. He
serves on the Advisory Boards of Sunshine Missions,
Bethesda Hospital and Homes, Trinity University,
and Covenant Theological Seminary. Mr. Edwards is
also a board member of The Missouri Historical
Society and serves on the Investment Advisory
Committee of The American Legacy Foundation.
The Company's Board recommends a vote FOR the four nominees for election to the
Board of Directors.
2
Directors whose terms expire in 2007:
Lawrence A. Collett Mr. Collett, 62, has been a director since 1983. He
has been the CEO and Chairman of the Board of the
Company since 1990 and 1992, respectively. He began
his career at Cass in 1963 and served as Executive
Vice President from 1974 to 1983 and President of
the Company from 1983 to 1990. He has held numerous
positions with civic, charitable, and
church-related institutions. Mr. Collett is a
current member of the St. Louis Regional Business
Council.
Wayne J. Grace Mr. Grace, 64, has been a director since 2003. He
has been the Managing Director of UHY Advisors, Tax
and Business Consultants, since 2004. He was the
founder and Managing Director of Grace Advisors,
Inc. from 1983 to 2004. From 1966 to 1983, he was
the Managing Partner of the St. Louis office of Fox
& Company, where he served as a member of the
National Consulting Services Steering Committee.
Mr. Grace serves on the Board of Managers for the
YMCA of the Ozarks.
Irving A. Shepard Mr. Shepard, 87, has been a director since 1970. He
is the President of Venture Consulting, a
nationwide consulting firm. He has held numerous
engineering positions throughout his career,
including Aerodynamicst, Chief of Flight Test with
McDonnell Aircraft, President of Shepard
Engineering Company, and President and CEO of
Chromalloy American Corporation. Mr. Shepard
currently serves on the Board of Essex Industries,
a St. Louis-based firm.
Andrew J. Signorelli Mr. Signorelli, 65, has been a director since 1986.
He currently serves as CEO of Andrews Educational &
Research Center and Hope Educational & Research
Center, which he founded in the early 1980's. He
has also served as Administrator for St. Louis
University Association from 1963 to 1965, and Faith
Hospital Association from 1965 to 1986. Mr.
Signorelli is a member of the Board of Directors
for Andrews and Hope Educational & Research
Centers, as well as various other private
corporations located in the St. Louis area.
Directors whose terms expire in 2006:
Robert J. Bodine Mr. Bodine, 80, has been a director since 1966. He
is Chairman Emeritus and former CEO of Bodine
Aluminum, Inc. where he served from 1947 to 1990.
He is an active member of numerous civic and
charitable organizations, including Chairman of the
Aluminum Association-Foundry Division, Past Board
Chairman of the St. Louis Salvation Army, Board
Trustee of the St. Louis Zoo, and board member of
St. Joseph Hospital, located in Kirkwood, Missouri.
Thomas J. Fucoloro Mr. Fucoloro, 79, has been a director since 1986.
He is the former CEO of Todd Uniform, a
manufacturer and marketer of customized uniforms
for North American businesses. He presently serves
on the Board of Directors of Catholic Youth
Council, a charitable organization that provides
services to over 90,000 youth and young adults in
its Catholic scouting and sports programs.
Harry J. Krieg Mr. Krieg, 80, has been a director since 1962. He
is Chairman Emeritus of the Board of Directors of
the Company. He began his career with the Company
in 1955. He served as the President of Cass Bank &
Trust Company (presently known as Cass Commercial
Bank, the banking subsidiary of the Company) from
1964 to 1969. He became CEO and Chairman in 1969
and 1974, respectively. Mr. Krieg also served as
CEO and Chairman of Cass Commercial Corporation
(the predecessor name of the Company) until 1992.
Howard A. Kuehner Mr. Kuehner, 89, has been a director since 1966. He
is retired from the insurance industry, where he
spent a number of years with Daniel & Henry
Insurance Agency and Rebholz Insurance Agency. He
was the founder of Kuehner Insurance Agency and
served as the past president of the Insurance
Association of St. Louis.
3
Board and Committee Membership
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.
Each director that is not an officer of the Company received compensation
for his services. During 2004, the regular attendance fee for Board meetings and
Committee meetings was $600 and $400, respectively. Additionally, effective
March 1, 2004, the monthly retainer fee increased from $300 to $500, and the
Committee Chairman attendance fee increased from $400 to $500. Upon re-election
to the Board, each director who was not an officer of the Company received 300
shares of restricted stock, carrying voting and dividend rights. 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.
Based on the independence standards defined by the Nasdaq rules, the Board
has determined in its business judgment that each of the non-management
directors on the Board is independent. Mr. Collett and Mr. Brunngraber are
members of Management and as a result are not considered independent directors.
During 2004, there were 12 meetings of the Board. Each director attended
at least 75% of the aggregate number of meetings of the Board and committees on
which he served. The Company's directors are encouraged, but not required, to
attend the Company's Annual Meeting of shareholders. Eight directors attended
the 2004 Annual Meeting.
The following table presents, as of March 7, 2005, the key Committees of
the Board, the number of times each such Committee met in 2004 (in parentheses)
and the membership of such Committees:
Nominating and Corporate
Audit (6) Governance (9) Compensation (4)
--------- --------------- ----------------
Wayne J. Grace* Bryan S. Chapell Robert J. Bodine
Harry J. Krieg Wayne J. Grace Irving A. Shepard
Irving A. Shepard Harry J. Krieg* Andrew J. Signorelli*
*Committee Chairman
The Audit Committee is composed entirely of independent directors, as
defined by the Nasdaq listing standards, and operates pursuant to a written
charter, included as Exhibit I and available on the Company's website at
www.cassinfo.com. The Committee is responsible for appointing and terminating
the independent auditors for the Company, and meeting with the independent
auditors and other corporate officers to review matters relating to corporate
financial reporting and accounting procedures and policies. Among other
responsibilities, the Audit Committee also reviews financial information
provided to Shareholders and others, assesses the adequacy of financial,
accounting, operating and disclosure controls, evaluates the scope of the audits
of the independent auditors and reports on the results of such reviews to the
Board. In addition, the Committee assists the Board in its oversight of the
performance of the Company's internal auditors. The 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 and Mr. Krieg serve as "audit
committee financial experts", as defined by the Securities and Exchange
Commission (SEC) and the Nasdaq listing rules.
The Nominating and Corporate Governance Committee is composed entirely of
independent directors, as defined by the Nasdaq listing standards, and operates
pursuant to a written charter, which is 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 Committee solicits candidate
recommendations from its own members, other directors and management. No person
who has reached the age of 80 prior to the election date may be nominated for
election or re-election to the Board. Although the Nominating and Corporate
Governance Committee does not specifically solicit suggestions for possible
candidates from Shareholders, the Committee will consider candidates meeting the
criteria set by the Committee, with the concurrence of the full Board and
re-evaluated periodically, including those criteria set out in the 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 the Nominating
and Corporate Governance Committee, c/o Eric H. Brunngraber, Secretary, Cass
Information Systems, Inc., 13001 Hollenberg Drive, Bridgeton, Missouri 63044.
The Compensation Committee is composed entirely of independent directors,
as defined by the Nasdaq listing standards, and operates pursuant to a written
charter, which is available on the Company's website at www.cassinfo.com.
4
The Committee reviews and recommends to the Board the salaries and all other
forms of compensation of the officers of the Company and its subsidiaries.
Report of the Audit Committee
The Audit Committee, composed entirely of independent directors, assists
the Board in its oversight of (1) the integrity of the financial statements of
the Company, (2) the independent auditors' qualifications and independence (3)
the performance of the independent auditors and the Company's internal audit
function, and (4) the compliance by the Company with legal and regulatory
requirements. The Audit Committee operates pursuant to a written charter that
was last revised and adopted in January 2005, and is attached as Exhibit I to
this Proxy Statement.
In the performance of its oversight function and in connection with the
December 31, 2004 consolidated financial statements, the Audit Committee
reviewed and discussed the audited consolidated financial statements with
Management and the independent auditors. The Committee also discussed with the
independent auditors the matters required by Statement on Auditing Standards No.
61, Communications with Audit Committees, as currently in effect. The Committee
has also received and discussed with the independent auditors the matters
required by Independence Standards Board Statement No. 1, Independence
Discussions with Audit Committees, as currently in effect. The Committee has
considered whether the provision of all non-audit services to the Company by the
independent auditors is compatible with maintaining the auditors' independence
and has discussed with them their independence.
Based upon these reviews and discussions, and the roles and
responsibilities of the Committee outlined in its charter, the Audit Committee
recommended to the Board that the audited consolidated financial statements be
included in the Annual Report on Form 10-K filed with the SEC.
Wayne J. Grace, Chairman
Harry J. Krieg
Irving A. Shepard
Report of the Compensation Committee
The Compensation Committee is appointed by the Board and is composed of
three independent directors, as defined by the Nasdaq listing standards, one of
whom serves as chairman of the Committee. The Committee operates under a written
charter approved by the Board; the charter is available on the Company's website
at www.cassinfo.com. The Committee establishes and administers the Company's
executive compensation programs and benefits. During the year, the Committee
analyzed, reviewed and approved each of these programs. While the Committee may
seek input occasionally from the CEO, the CFO or the Director of Human
Resources, all matters are independently resolved and decided without the
presence or voting of any officer of the Company or its subsidiaries. The
Compensation Committee of the Board is also responsible for recommending salary
levels for executive officers to the Board of the Company and recommending the
overall levels of salary compensation for all Company employees.
The Committee's goal with regard to executive compensation has been to
develop and provide a combination of programs that enable the Company to attract
and retain competent executive officers and other management personnel with the
capabilities and experience necessary to continue leading the Company in meeting
its objectives and in furthering its growth and profitability. Additionally, the
Committee's goal is to reward executives and managers in accordance with the
results that are accomplished. The Committee believes that total compensation
should be related to profits and to the performance of the Company. For this
reason, overall compensation is tied to incentive bonus plans that are directly
related to the Company's earnings.
5
In order to determine the levels of peer compensation within its industry,
the Committee utilizes the services of Peter R. Johnson & Company of West
Chester, Pennsylvania. Additionally, when evaluating the cash compensation and
stock incentives for senior executive management, the Committee utilizes the
services of Towers Perrin and other sources for comparison to compensation
levels at companies performing in industries similar to those of the Company.
For peer group comparison, compensation data is gathered from both the Financial
Services and Professional/Business Services industries. In setting executive
compensation, the Company strives to maintain a target range of 95% of the 50th
percentile of the total compensation data from such comparable industries. The
Committee considers stock options and restricted stock grants to be a
significant motivational tool for rewarding its executive officers and senior
management. Stock options and grants provided under the Company's stock
incentive programs are awarded primarily on the basis of performance of the
Company, performance of the individual operating subsidiaries, relationship of
the Company's performance to other companies in its peer group, and the
recommendation of the CEO regarding the individual's performance. The Company
has also developed supplemental guidelines for stock compensation based on the
return on investment received. Because of the relatively small number of
restricted stock options and shares held by the Company's executive officers,
the Committee has not considered such restricted stock options and shares as a
factor in granting additional restricted shares and options.
The Committee also considers the potential impact of Section 162(m) of the
Internal Revenue Code of 1986, as amended ("Section 162(m)") and has determined
that Section 162(m) will not prevent the Corporation from receiving a tax
deduction for any of the compensation paid to executive officers.
The Committee seeks to maintain salaries at levels competitive with peer
groups. Bonuses are available to all personnel in the Company based upon the
level of profits before taxes achieved by the Company. These bonuses are
distributed on the basis of merit. Performance is measured on the basis of
several factors deemed relevant and bonuses are calculated on the basis of these
evaluations. The pool available for executive bonuses is formula-driven and is
based on the size of the overall bonus pool, which is determined by the level of
earnings achieved before taxes. The portion available for executive bonuses
takes into consideration such factors as the return on investment and the growth
in the Company's net profits after taxes. The determination of salaries for the
Company's executive officers is a subjective process, which consists of
individual performance, growth in the Company's profits, resources, and the
quality of the Company's operations, as well as adherence to regulatory
requirements. The amount of bonuses available for executive officers is a
percentage of the profit-sharing allocation for all staff members and is based
on the growth in net earnings of the Company. Because the Company's net earnings
in 2004 were greater than in 2003, the amount available for executive officers
in 2004 was comparable to the 2003 levels, and most of the executives received
bonuses in 2004 comparable or slightly higher than those received in 2003 due to
the level of profits achieved in 2004.
The Committee reviews salaries of the CEO, CFO and other executive
officers annually in January for the current fiscal year. Bonuses are calculated
in July and January, and relate directly to the profit performance for the year.
The CEO's bonus is a percentage of total profit sharing allocations and
fluctuates with the Company's return on equity. The CEO's salary was increased
in 2004 due to improved profitability in 2003. The CEO's bonus for 2004 was
directly related to profit performance in 2004 and was slightly higher than that
received in 2003. In 2004, the CEO also received long-term incentive awards
based on results of 2003 in the form of incentive stock options and restricted
stock grants in conjunction with the plans adopted by the Committee and approved
by the Board.
Andrew J. Signorelli, Chairman
Robert J. Bodine
Irving A. Shepard
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or was during the year ended
December 31, 2004 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 SEC Regulation S-K. No executive officer of
the Company served as a member of (i) the compensation committee of another
entity in which one of the executive officers of such entity served on the
Company's Compensation Committee or (ii) the Board of another entity in which
one of the executive officers of such entity served on the Company's Board,
during the year ended December 31, 2004.
6
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. Pursuant
to Nasdaq listing requirements, the policy is publicly available and can be
viewed on the Company's website at www.cassinfo.com.
Communications with the Board of Directors
Shareholders may communicate with any and all members of the Board by
transmitting correspondence to the following address or fax number:
Name of Director(s)
c/o Eric H. Brunngraber, Secretary
Cass Information Systems, Inc.
13001 Hollenberg Drive
Bridgeton, Missouri 63044
(314) 506-5560 (fax)
The Secretary will forward all correspondence to the Chairman of the Board
or the identified director as soon as practicable. Communications that are
abusive, in bad taste or that present a safety or security concern may be
handled differently. Correspondence addressed to the full Board will be
forwarded to the Chairman of the Board. As deemed necessary, the Chairman 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.
Performance Quoted on The Nasdaq Stock Market for the last Five Fiscal Years
The following graph compares the cumulative total returns over the last
five fiscal years of a hypothetical investment of $100 in shares of Common Stock
of the Company with a hypothetical investment of $100 in the Nasdaq Stock Market
(US) and in the index of Nasdaq Computer and Data Processing Stocks. The graph
assumes $100 was invested on December 31, 1999, with dividends reinvested.
Returns are based on period end prices.
[PERFORMANCE CHART]
[The following table was depicted as a
Performance Chart in the printed materials.]
Nasdaq
Cass Nasdaq Computer and
Information Stock Data Processing
Systems, Inc. Market (US) Stocks
12/31/1999 12/31/1999 100.000 100.000 100.000
1/31/2000 99.383 96.325 88.277
2/29/2000 101.235 114.691 104.383
3/31/2000 98.494 112.351 98.474
4/28/2000 104.728 94.493 75.424
5/31/2000 105.351 83.095 66.225
6/30/2000 104.473 97.685 80.351
7/31/2000 102.585 92.578 72.151
8/31/2000 97.927 103.521 81.310
9/29/2000 89.025 90.070 74.320
10/31/2000 87.753 82.667 68.017
11/30/2000 93.635 63.691 49.336
12/29/2000 12/29/2000 90.007 60.308 45.880
1/31/2001 115.081 67.612 53.049
2/28/2001 105.437 52.338 40.574
3/30/2001 95.421 44.977 33.469
4/30/2001 101.549 51.685 41.120
5/31/2001 103.341 51.628 41.188
6/29/2001 103.822 53.038 43.579
7/31/2001 104.923 49.669 38.241
8/31/2001 104.608 44.261 31.556
9/28/2001 111.335 36.803 26.655
10/31/2001 111.229 41.527 30.987
11/30/2001 125.000 47.439 35.154
12/31/2001 12/31/2001 130.867 47.837 36.945
1/31/2002 130.867 47.475 36.752
2/28/2002 133.939 42.537 33.118
3/30/2002 135.125 45.327 34.091
4/30/2002 133.536 41.562 28.862
5/31/2002 134.990 39.729 27.018
6/29/2002 135.147 36.130 27.095
7/31/2002 132.412 32.832 23.796
8/31/2002 124.835 32.484 23.915
9/28/2002 136.742 28.991 20.959
10/31/2002 127.727 32.951 25.335
11/30/2002 133.476 36.625 28.670
12/31/2002 12/31/2002 142.570 33.073 25.477
1/31/2003 147.206 32.716 24.908
2/28/2003 153.697 33.175 24.761
3/30/2003 153.316 33.271 24.820
4/30/2003 189.060 36.295 26.746
5/31/2003 154.192 39.482 28.154
6/29/2003 175.824 40.115 28.796
7/31/2003 171.675 42.879 29.798
8/31/2003 183.917 44.748 31.157
9/28/2003 195.274 44.166 31.434
10/31/2003 183.365 47.721 32.443
11/30/2003 177.530 48.428 32.244
12/31/2003 12/31/2003 197.504 49.449 33.563
1/29/2004 189.638 50.914 34.453
2/26/2004 205.312 49.956 33.059
3/31/2004 225.565 49.104 31.358
4/30/2004 235.936 47.477 30.804
5/28/2004 256.286 49.055 32.113
6/30/2004 264.272 50.562 34.105
7/30/2004 267.260 46.705 31.515
8/31/2004 249.000 45.561 30.224
9/30/2004 246.975 46.920 31.891
10/29/2004 246.975 48.822 33.595
11/30/2004 234.960 51.830 35.854
12/31/2004 12/31/2004 234.624 53.813 36.967
7
EXECUTIVE OFFICERS
The following tables list all executive officers of the Company, their
ages, their position(s) with the Company, and compensation information. All
officers serve at the pleasure of the Company's Board.
Lawrence A. Collett Information on Mr. Collett can be found in the
Section "Election of Directors."
Eric H. Brunngraber Information on Mr. Brunngraber can be found in the
Section "Election of Directors."
Harry M. Murray Mr. Murray, 51, has been Executive Vice President
since 2003. He has held various positions with the
Company since his initial employment in 1982,
including COO - Utility Division from 2000 to 2003,
and Executive Vice President - Operations from 1995
to 2000.
John F. Pickering Mr. Pickering, 53, has been 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.
Gary B. Langfitt Mr. Langfitt, 49, has been COO - Utility
Information Services since 2003. Prior to that he
was Vice President, Sales and Marketing - Utility
Division since joining the Company in 1999.
Summary Compensation Table
--------------------------
Long Term Compensation
----------------------
Annual Compensation Restricted Securities
Name and ------------------- Stock, ($) Underlying All Other
Principal Position Year Salary ($) Bonus ($) Awards (1) Options (#) Compensation ($) (2)
------------------ ---- ---------- --------- ---------- ----------- --------------------
Lawrence A. Collett 2004 $410,000 $ 59,100 $ 42,988 4,260 $ 5,055
Chairman and 2003 365,000 60,900 67,716 9,029 4,980
CEO 2002 341,000 58,000 -- -- 4,290
of the Company and subsidiaries
Eric H. Brunngraber 2004 $202,000 $ 36,000 $ 16,226 1,610 $ 3,525
CFO and 2003 181,600 33,000 22,275 2,970 3,450
Vice President - Secretary 2002 156,600 29,000 -- -- 3,056
of the Company and subsidiaries
Harry M. Murray 2004 $180,000 $ 32,000 $ 6,354 530 $ 3,765
Executive Vice President 2003 170,000 30,500 15,042 1,818 3,690
2002 150,000 21,000 -- -- 2,914
John F. Pickering 2004 $153,400 $ 26,000 $ 5,600 467 $ 3,381
Chief Operating Officer - 2003 150,000 24,000 -- -- 3,378
Transportation Information 2002 150,000 19,080 -- -- 3,168
Services
Gary B. Langfitt 2004 $120,000 $ 55,436 $ 4,093 343 $ 3,542
Chief Operating Officer - 2003 110,000 112,041 -- -- 3,400
Utility Information 2002 104,000 55,090 -- -- 3,378
Services
8
(1) This item shows the grant date value of restricted stock awards,
pursuant to the terms of the Company's 1995 Restricted Stock Bonus Plan. The
value of restricted stock was calculated by multiplying the number of shares
awarded by the average of the high and low market price of the Company's stock
on the day prior to the date of the award. During 2004, Messrs. Collett and
Brunngraber received awards of 1,420 and 536 shares, respectively; these 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, beginning January 26, 2005.
Also during 2004, Messrs. Murray, Pickering and Langfitt received awards of 177,
156, and 114 shares, respectively; these 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, beginning April 30, 2005. At December 31, 2004, the
aggregate number and value of all restricted shares held by each named executive
officer was as follows:
Number of Shares Values at December 31, 2004*
---------------- ----------------------------
Mr. Collett 3,426 $119,738
Mr. Brunngraber 1,196 41,800
Mr. Murray 580 20,271
Mr. Pickering 156 5,452
Mr. Langfitt 114 3,984
*These values are based on the closing market price of the Company's Common
Stock on the Nasdaq Stock Market on December 31, 2004. The executive officers
are entitled to vote and receive dividends on the restricted shares awarded to
them.
(2) This item represents the Company's matching contributions paid on behalf of
the executive under the Company's 401(k) Plan (in 2004 contributions were $3,075
for Mr. Collett, $3,075 for Mr. Brunngraber, $3,075 for Mr. Murray, $2,691 for
Mr. Pickering, and $3,075 for Mr. Langfitt) and the imputed value of group term
life premiums paid on their behalves (in 2004 premiums were $1,980 for Mr.
Collett, $450 for Mr. Brunngraber, $690 for Mr. Murray, $690 for Mr. Pickering,
and $467 for Mr. Langfitt).
Option/SAR Grants in 2004
Pursuant to the terms of the Company's 1995 Performance-Based Stock Option
Plan, the Board may grant options on up to 462,000 shares of the Company's
Common Stock to aid in securing and retaining qualified personnel. These options
vest over a period not to exceed seven years, but the vesting period can be
accelerated based on the Company's attainment of certain financial operating
performance criteria.
The following table summarizes options granted during 2004 to the
executive officers named above, together with estimates of the value of such
options at the end of their seven-year terms assuming the market value of the
Common Stock appreciates at an annual rate of 5% or 10%.
Percent of Potential Realizable
Number of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Appreciation For
Options Employees Exercise Options Term
Granted in Fiscal Base Price Expiration ----------------------
(#) Year ($/SH) Date 5% ($) 10% ($)
--- ---- ------ ---- ------ -------
Mr. Collett 4,260 42% $30.270 2011 $80,542 $161,187
Mr. Brunngraber 1,610 16 30.270 2011 30,445 60,929
Mr. Murray 530 5 35.910 2011 7,032 17,065
Mr. Pickering 467 5 35.910 2011 6,196 15,036
Mr. Langfitt 343 3 35.910 2011 4,551 11,044
9
Options Exercised in 2004 and Year-end Option Values
The following table summarizes options exercised during 2004 and the
values of options outstanding on December 31, 2004, for the executive officers
named above.
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year-End Fiscal Year-End
Acquired on Value Exercisable/ Exercisable/
Exercise (#) Realized ($) Unexercisable (#) Unexercisable ($)(1)
------------ ------------ ----------------- --------------------
Mr. Collett -- -- 5,428 / 42,165 $71,048 / $439,215
Mr. Brunngraber -- -- 2,698 / 11,122 34,996 / 122,114
Mr. Murray -- -- 875 / 7,247 11,458 / 82,680
Mr. Pickering -- -- 875 / 5,366 11,458 / 64,125
Mr. Langfitt -- -- 349 / 2,303 4,768 / 26,705
(1) These values are based on the closing market price of the Company's Common
Stock on the Nasdaq Stock Market on December 31, 2004.
Defined Contribution Savings Plan
All full-time employees of the Company and subsidiaries are eligible to
participate in the Cass Information Systems, Inc. 401(k) Plan. Employees may
voluntarily defer up to 15% of pre-tax earnings subject to the Internal Revenue
Service (the "IRS") maximum limitation, which was $13,000 for 2004. Voluntary
deferrals contributed to the 401(k) Plan by the Executive officers are included
in Annual Salary Compensation in the Summary Compensation Table. The Company
matches 50% of the first 3% of employee contributions, subject to IRS
limitations. Amounts contributed to the Plan in 2004 for the benefit of the
executive officers are included in the section titled All Other Compensation in
the Summary Compensation Table. Each executive officer is fully vested in
Company contributions.
Defined Benefit Retirement Plans
Retirement Plan for Employees of Cass Information Systems, Inc.
All executive officers of the Company and subsidiaries are participants in
the Retirement Plan for Employees of Cass Information Systems, Inc., which
covers all full-time employees. Upon retirement, participants in the plan will
begin to receive monthly payments equal to 1/12 of the sum of:
(a) .9% of Final Average Earnings multiplied by the number of
years of participation, plus
(b) .5% of Final Average Earnings in excess of Covered
Compensation multiplied by years of participation.
Final Average Earnings is defined as 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 total compensation as reported
in the Summary Compensation Table, including any amounts deferred under the Cass
Information Systems, Inc. 401(k) Plan.
Normal retirement under the Plan commences at age 65. At normal
retirement, the years of participation under the Plan for the executive officers
listed in the Compensation Table would be as follows: Mr. Collett-41; Mr.
Brunngraber-41; Mr. Murray-34; Mr. Pickering-37; and Mr. Langfitt-21.
10
The following table shows the estimated annual benefits payable at
retirement, assuming a straight-life annuity with 120 months guaranteed.
Estimated Annual Retirement Benefit (1)(2)
------------------------------------------
Final Years of Service Credited at Retirement
Average ---------------------------------------
Earnings 10 15 20 25 30 35 40
--------------------------------------------------------------------------------------------------------
$ 125,000 $ 15,000 $ 22,400 $ 29,900 $ 37,400 $ 44,900 $ 52,400 $ 59,800
150,000 18,500 27,700 36,900 46,100 55,400 64,600 73,800
175,000 22,000 32,900 43,900 54,900 65,900 76,900 87,800
200,000 25,500 38,200 50,900 63,600 76,400 89,100 101,800
(1) Estimated benefit calculation assumes retirement at age 65 in the year
2006 with no increase in the maximum social security taxable wage base
after 2004.
(2) Estimated benefits would be subject to IRS maximum retirement limitations
in effect at the retirement date. The maximum annual compensation that may
be recognized for determining benefits in 2004 was $205,000.
Supplemental Executive Retirement Plan
In addition to the Retirement Plan for Employees of Cass Information
Systems, Inc. described above, the Company established the Cass Information
Systems, Inc. Supplemental Retirement Plan in 1998, which covers key executive
officers of the Company. This supplemental plan 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 plan 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 and reduced by the participant's: (a)
Qualified retirement plan benefit, (b) Primary social security benefit, and (c)
401(k) hypothetical annuity.
Final Average Earnings, normal retirement age and years of participation
at normal retirement are the same as under the Retirement Plan for Employees of
Cass Information Systems, Inc.
The following table shows the estimated annual benefits payable at
retirement, assuming a straight-life annuity with 120 months guaranteed.
Estimated Annual Retirement Benefit (1)
---------------------------------------
Final Years of Service Credited at Retirement
Average ---------------------------------------
Earnings 10 15 20 25 30 35 40
-------------------------------------------------------------------------------------------------------
$125,000 $ -- $ -- $ 2,100 $ 12,000 $ 4,500 $ -- $ --
150,000 -- -- 5,800 17,600 8,300 -- --
175,000 -- -- 9,600 23,100 12,100 1,100 --
200,000 -- 3,100 15,900 31,200 18,400 5,700 --
300,000 26,000 45,100 71,900 101,200 88,400 75,700 63,000
400,000 54,000 87,100 127,900 171,200 158,400 145,700 133,000
(1) Estimated benefit calculation assumes retirement at age 65 in the year
2006.
11
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 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 collectibility or present other unfavorable features. As of December 31,
2004, the aggregate indebtedness to officers and directors of the Company and to
firms and corporations in which they have at least a 10% beneficial interest was
approximately $4,150,813 which represents approximately 6% of the Company's
consolidated Shareholders' equity at that date.
Principal Shareholders
The following table contains information with respect to beneficial
ownership of the Company's outstanding Common Stock, as of March 7, 2005, by:
(1) each person known to the Company to be the beneficial owner of more than 5%
of Common Stock, and (2) each director and executive officer of the Company. 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.
Name of Number of Shares Percent
Beneficial Owner Beneficially Owned of Class
---------------- ------------------ --------
Directors and Executive Officers:
---------------------------------
Robert J. Bodine 109,986 (1) 2.99%
K. Dane Brooksher -- *
Eric H. Brunngraber 9,511 (2) *
Bryan S. Chapell 1,049 (3) *
Lawrence A. Collett 71,660 (4) 1.95
Benjamin F. Edwards, IV -- *
Thomas J. Fucoloro 676 (5) *
Wayne J. Grace 410 (6) *
Harry J. Krieg 55,855 (7) 1.52
Howard A. Kuehner 137,289 (8) 3.74
Gary B. Langfitt 724 (9) *
Harry M. Murray 11,963 (10) *
Jake Nania 397,741 (11) 10.82%
John F. Pickering 11,520 (12) *
Irving A. Shepard 20,749 (13) *
Andrew J. Signorelli 129,417 (14) 3.52
All directors and executive officers -------
as a group 958,550 26.08%
----------
* Less than 1% of class.
(1) Includes shares held in a trust as to which Mr. Bodine has shared voting
and investment rights. Includes 220 shares granted under the Company's
1995 Restricted Stock Bonus Plan, which are subject to forfeiture;
however, Mr. Bodine has voting but no investment rights.
(2) Includes 4,430 shares owned jointly with his wife. Includes 983 shares
granted under the Company's 1995 Restricted Stock Bonus Plan, which are
subject to forfeiture; however, Mr. Brunngraber has voting but no
investment rights. Includes 3,589 shares Mr. Brunngraber has the right to
acquire under the 1995 Performance-Based Stock Option Plan.
(3) These shares are owned jointly with his wife. Includes 115 shares granted
under the Company's 1995 Restricted Stock Bonus Plan, which are subject to
forfeiture; however, Mr. Chapell has voting but no investment rights.
12
(4) Includes 31,471 shares owned jointly with his wife. Includes 2,725 shares
granted under the Company's 1995 Restricted Stock Bonus Plan, which are
subject to forfeiture; however, Mr. Collett has voting but no investment
rights. Includes 8,195 shares Mr. Collett has the right to acquire under
the 1995 Performance-Based Stock Option Plan.
(5) Includes 220 shares granted under the Company's 1995 Restricted Stock
Bonus Plan, which are subject to forfeiture; however, Mr. Fucoloro has
voting but no investment rights. Excludes 231 shares held in a trust as to
which Mr. Fucoloro's wife has sole voting and investment rights.
(6) Includes 373 shares granted under the Company's 1995 Restricted Stock
Bonus Plan, which are subject to forfeiture; however, Mr. Grace has voting
but no investment rights. Excludes 1,550 shares owned by his wife.
(7) Includes 55,635 shares held in a trust with Mr. Krieg having shared voting
and investment rights. Includes 220 shares granted under the Company's
1995 Restricted Stock Bonus Plan, which are subject to forfeiture;
however, Mr. Krieg has voting but no investment rights. Excludes 58,648
shares owned by his wife.
(8) Includes 65,437 shares held in a trust with Mr. Kuehner having shared
voting and investment rights. Includes 220 shares granted under the
Company's 1995 Restricted Stock Bonus Plan, which are subject to
forfeiture; however, Mr. Kuehner has voting but no investment rights.
Excludes 61,784 shares owned by his wife.
(9) Includes 227 shares granted under the Company's 1995 Restricted Stock
Bonus Plan, which are subject to forfeiture; however, Mr. Langfitt has
voting but no investment rights. Includes 497 shares Mr. Langfitt has the
right to acquire under the 1995 Performance-Based Stock Option Plan.
(10) Includes 9,786 shares owned jointly with his wife. Includes 748 shares
granted under the Company's 1995 Restricted Stock Bonus Plan, which are
subject to forfeiture; however, Mr. Murray has voting but no investment
rights. Includes 1,429 shares Mr. Murray has the right to acquire under
the 1995 Performance-Based Stock Option Plan.
(11) Includes 397,626 shares held in a trust with Mr. Nania having sole voting
and investment rights. Includes 115 shares granted under the Company's
1995 Restricted Stock Bonus Plan, which are subject to forfeiture;
however, Mr. Nania has voting but no investment rights.
(12) Includes 9,975 shares owned jointly with his wife. Includes 300 shares
granted under the Company's 1995 Restricted Stock Bonus Plan, which are
subject to forfeiture; however, Mr. Pickering has voting but no investment
rights. Includes 1,245 shares Mr. Pickering has the right to acquire under
the 1995 Performance-Based Stock Option Plan.
(13) Includes 20,449 shares held in family partnerships in which Mr. Shepard
has shared voting and investment rights. Includes 300 shares granted under
the Company's 1995 Restricted Stock Bonus Plan, which are subject to
forfeiture; however, Mr. Shepard has voting but no investment rights.
(14) Includes 129,117 shares held in various trusts with Mr. Signorelli having
shared voting and investment rights. Includes 300 shares granted under the
Company's 1995 Restricted Stock Bonus Plan, which are subject to
forfeiture; however, Mr. Signorelli has voting but no investment rights.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(SEC) and The Nasdaq Stock Market. Directors and executive officers 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 its review of the copies of such forms received by it and written
representation from certain reporting persons that no Form 5 was required for
those persons, the Company believes that during 2004, all filing requirements
applicable to its directors, executive officers, and greater than 10% beneficial
owners were complied with in a timely manner.
13
INDEPENDENT AUDITORS
KPMG LLP were the auditors of the Company during the year ended December
31, 2004 and also have been selected by the Audit Committee of the Board to
serve as auditors for the present year, 2005. KPMG LLP has served as the
Company's independent auditors since 1983.
A representative of KPMG LLP is expected to be present at the Meeting,
will have an opportunity to make a statement, and is expected to be available to
respond to appropriate questions of Shareholders.
Fees Incurred For 2004 Services Performed by the Independent Auditors
For the years ended December 31, 2004 and 2003, the Company incurred the
following fees for services performed by KPMG LLP:
2004 2003
---- ----
Audit Fees (1) $225,000 $101,300
Audit-related Fees -- --
Taxes (2) 61,520 69,745
All Other Fees -- --
(1) 100% of these services were pre-approved by the Audit Committee.
(2) Represents tax compliance and preparation services.
It is the policy of the Audit Committee to pre-approve all audit,
audit-related and non-audit services provided by our independent auditors.
OTHER MATTERS
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 Meeting other than
those referred to above. If, however, any other matters properly come before the
Meeting, the persons designated as proxies will vote on each such matter in
accordance with their best judgment.
HOUSEHOLDING
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 or annual report may have been
sent to multiple Shareholders in your household. We will promptly deliver a
separate copy of either document to you if you write or call us at:
Cass Information Systems, Inc.
13001 Hollenberg Drive
Bridgeton, Missouri 63044
Attn: Eric H. Brunngraber, Secretary
(314) 506-5500
If you wish to receive separate copies of our proxy statements and annual
reports to Shareholders in the future, or if you are receiving multiple copies
and would like to receive only one copy for your household, you should contact
your bank, broker or other nominee record holder, or you may contact us at the
above address and phone number.
SHAREHOLDER PROPOSALS
Any Shareholder proposal to be considered for inclusion in the Company's
Proxy Statement for its next Annual Meeting, which is expected to be held in
April, 2006, must be received by the Company in writing at its principal office
at the address listed in the section above no later than November 15, 2005. The
deadline for written notice of a proposal for which the Shareholder will conduct
his or her own solicitation is January 30, 2006.
By Order of the Board of Directors
Eric H. Brunngraber, Secretary
14
Cass Information Systems, Inc. Exhibit I
Audit Committee Charter
I. PURPOSE
The Audit Committee is appointed by the Board to oversee the accounting
and financial reporting processes of the Company and the audits of the Company's
financial statements. In that regard, the Audit Committee assists the Board in
monitoring (1) the integrity of the financial statements of the Company, (2) the
independent auditors' qualifications and independence, (3) the performance of
the Company's internal audit function and independent auditors, and (4) the
compliance by the Company with legal and regulatory requirements.
The Audit Committee shall prepare the report required by the rules of the
Securities and Exchange Commission (the "Commission") to be included in the
Company's annual proxy statement.
II. COMMITTEE MEMBERSHIP
The Audit Committee shall consist of no fewer than three members. Each
member of the Audit Committee shall meet the independence and experience
requirements of The NASDAQ Stock Market, Inc. Marketplace Rules and the
Securities Exchange Act of 1934 (the "Exchange Act"). All members of the Audit
Committee shall be able to read and understand fundamental financial statements.
No member of the Audit Committee shall have participated in the preparation of
the financial statements of the Company in the past three years. At least one
member of the Audit Committee shall be an "audit committee financial expert" as
defined by the Commission. However, one director who does not meet the NASDAQ
definition of independence, but who meets the criteria set forth in Section
10A(m)(3) under the Exchange Act and the rules there under, and who is not a
current officer or employee or a family member of such person, may serve for no
more than two years on the audit committee if the Board, under exceptional and
limited circumstances, determines that such individual's membership is required
by the best interests of the Company and its shareholders. Such person must
satisfy the independence requirements set forth in Section 10A(m)(3) of the
Exchange Act, and may not chair the Audit Committee. The use of this
"exceptional and limited circumstances" exception, as well as the nature of the
individual's relationship to the Company and the basis for the board's
determination, shall be disclosed in the annual proxy statement.
In addition, if an audit committee member ceases to be independent for
reasons outside the member's reasonable control, his or her membership on the
audit committee may continue until the earlier of the Company's next annual
shareholders' meeting or one year from the occurrence of the event that caused
the failure to qualify as independent. If the Company is not already relying on
this provision, and falls out of compliance with the requirements regarding
audit committee composition due to a single vacancy on the audit committee, then
the Company will have until the earlier of the next annual shareholders' meeting
or one year from the occurrence of the event that caused the failure to comply
with this requirement. The Company shall provide notice to Nasdaq immediately
upon learning of the event or circumstance that caused the non-compliance, if it
expects to rely on either of these provisions for a cure period.
The members of the Audit Committee shall be appointed and may be replaced by the
Board.
1 of 6
Cass Information Systems, Inc. Exhibit I
Audit Committee Charter
III. MEETINGS
The Audit Committee shall meet as often as it determines necessary but not
less frequently than quarterly. The Audit Committee shall meet periodically in
separate executive sessions with management, the internal auditors and the
independent auditors, and have such other direct and independent interaction
with such persons from time to time, as the members of the Audit Committee deem
appropriate. The Audit Committee may request any officer or employee of the
Company or the Company's outside counsel or independent auditors to attend a
meeting of the Committee or to meet with any members of, or consultants to, the
Committee.
IV. COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Audit Committee shall have the sole authority to appoint, determine
funding for, and oversee the outside auditors (subject, if applicable, to
shareholder ratification). The Audit Committee shall be directly responsible for
the compensation and oversight of the work of the independent auditors
(including resolution of disagreements between management and the independent
auditors regarding financial reporting) for the purpose of preparing or issuing
an audit report or related work. The independent auditors shall report directly
to the Audit Committee.
The Audit Committee shall pre-approve 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 that such decisions to grant
pre-approvals shall be presented to the full Audit Committee at its next
scheduled meeting.
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to engage and determine funding for independent legal,
accounting or other advisors. The Company shall provide for appropriate funding,
as determined by the Audit Committee, for payment of compensation to the
independent auditors for the purpose of rendering or issuing an audit report or
performing other audit, review or attest services for the Company and to any
advisors employed by the Audit Committee, as well as funding for the payment of
ordinary administrative expenses of the Audit Committee that are necessary or
appropriate in carrying out its duties.
The Audit Committee shall make regular reports to the Board. The Audit
Committee shall review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
2 of 6
Cass Information Systems, Inc. Exhibit I
Audit Committee Charter
V. FINANCIAL STATEMENT AND DISCLOSURE MATTERS
The Audit Committee, to the extent it deems necessary or appropriate,
shall:
(1) Review and discuss with management and the independent auditors the
annual audited financial statements, including disclosures made in
management's discussion and analysis, and recommend to the Board
whether the audited financial statements should be included in the
Company's Form 10-K.
(2) Review and discuss with management and the independent auditors the
Company's quarterly financial statements prior to the filing of its
Form 10-Q, including the results of the independent auditors' review
of the quarterly financial statements.
(3) Discuss with management and the independent auditors significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements, including any
significant changes in the Company's selection or application of
accounting principles, any major issues as to the adequacy of the
Company's internal controls and any special steps adopted in light
of material control deficiencies.
(4) Review and discuss with management and the independent auditors any
major issues as to the adequacy of the Company's internal controls,
any special steps adopted in light of material control deficiencies
and the adequacy of disclosures about changes in internal control
over financial reporting.
(5) Review and discuss with management (including the senior internal
audit executive) and the independent auditors the Company's internal
controls report and the independent auditors' attestation of the
report prior to the filing of the Company's Form 10-K.
(6) Review and discuss quarterly reports from the independent auditors
on:
(a) all critical accounting policies and practices to be used;
(b) all alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditors, and
(c) other material written communications between the independent
auditors and management, such as any management letter or
schedule of unadjusted differences.
3 of 6
Cass Information Systems, Inc. Exhibit I
Audit Committee Charter
(7) Discuss with management the Company's earnings press releases,
including the use of "pro forma" or "adjusted" non-GAAP information,
as well as financial information and earnings guidance provided to
analysts and rating agencies. Such discussion may be done generally
(consisting of discussing the types of information to be disclosed
and the types of presentations to be made).
(8) Discuss with management and the independent auditors the effect of
regulatory and accounting initiatives as well as off-balance sheet
structures on the Company's financial statements.
(9) Discuss with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures, including the Company's risk assessment and risk
management policies.
(10) Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit, including any difficulties encountered in the
course of the audit work, any restrictions on the scope of
activities or access to requested information, and any significant
disagreements with management.
(11) Review disclosures made to the Audit Committee by the company's CEO
and CFO during their certification process for the Form 10-K and
Form 10-Q about any significant deficiencies in the design or
operation of internal controls of material weaknesses therein and
any fraud involving management or other employees who have a
significant role in the Company's internal controls.
(12) Ensure that a public announcement of the Company's receipt of an
audit opinion that contains a going concern qualification is made
promptly.
VI. OVERSIGHT OF THE COMPANY'S RELATIONSHIP WITH THE INDEPENDENT AUDITORS
(1) Review and evaluate the lead partner of the independent auditors
team.
(2) Obtain and review a report from the independent auditors at least
annually regarding (a) the independent auditors' internal
quality-control procedures, (b) any material issues raised by the
most recent internal quality-control review, or peer review, of the
firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting
one or more independent audits carried out by the firm and (c) any
steps taken to deal with any such issues. Evaluate the
qualifications, performance and independence of the independent
auditors, including considering whether the auditors' quality
controls are adequate and the provision of permitted non-audit
services is compatible with maintaining the auditors' independence,
and taking into account the opinions of management and internal
4 of 6
Cass Information Systems, Inc. Exhibit I
Audit Committee Charter
auditors. The Audit Committee shall present its conclusions with
respect to the independent auditors of the Board.
(3) Obtain from the independent auditors a formal written statement
delineating all relationships between the independent auditors and
the Company. It is the responsibility of the Audit Committee to
actively engage in a dialogue with the independent auditors with
respect to any disclosed relationships or services that may impact
the objectivity and independence of the auditors and for purposes of
taking, or recommending that the full board take, appropriate action
to oversee the independence of the outside auditors.
(4) Ensure the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner
responsible for reviewing the audit as required by law. Consider
whether, in order to assure continuing auditor independence, it is
appropriate to adopt a policy of rotating the independent auditing
firm on a regular basis.
(5) Recommend to the Board policies for the Company's hiring of
employees or former employees of the independent auditors.
(6) Discuss with the independent auditors material issues on which the
national office of the independent auditors was consulted by the
Company's audit team.
(7) Meet with the independent auditors prior to the audit to discuss the
planning and staffing of the audit.
VII. OVERSIGHT OF THE COMPANY'S INTERNAL AUDIT FUNCTION
(1) Review the appointment and replacement of the senior internal
auditing executive.
(2) Review the significant reports to management prepared by the
internal auditing department and management's responses.
(3) Discuss with the independent auditors and management the internal
audit department responsibilities, budget and staffing and any
recommended changes in the planned scope of the internal audit.
VIII. COMPLIANCE OVERSIGHT RESPONSIBILITIES
(1) Obtain from the independent auditors assurance that Section 10A(b)
of the Exchange Act has not been implicated.
(2) Obtain reports from management, the Company's senior internal
auditing executive and the independent auditors that the Company and
its subsidiary/foreign-affiliated entities are in conformity with
applicable legal requirements and the Company's
5 of 6
Cass Information Systems, Inc. Exhibit I
Audit Committee Charter
Code of Business Conduct and Ethics. Advise the Board with respect
to the Company's policies and procedures regarding compliance with
applicable laws and regulations and with the Company's Code of
Business Conduct and Ethics.
(3) Approve all related party transactions.
(4) Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
(5) Discuss with management and the independent auditors any
correspondence with regulators or governmental agencies and any
published reports that raise material issues regarding the Company's
financial statements or accounting policies.
(6) Discuss with the Company's General Counsel legal matters that may
have a material impact on the financial statements or the Company's
compliance polices.
IX. LIMITATION OF AUDIT COMMITTEE'S ROLE
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements and disclosures
are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditors.
6 of 6
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS Please
INDICATED, WILL BE VOTED "FOR" THE PROPOSAL. Mark Here
for Address |_|
Change or
Comments
SEE REVERSE SIDE
1. Election of Directors
FOR WITHHELD
FOR ALL
|_| |_|
Nominees:
01 K. Dane Brooksher
02 Eric H. Brunngraber
03 Bryan S. Chapell
04 Benjamin F. Edwards, IV
Withheld for the nominees you list below: (Write that nominee's name in the
space provided below.)
________________________________________________________________________________
I PLAN TO ATTEND |_|
THE MEETING
Choose MLink(sm)for fast, easy and secure 24/7 online access to your future
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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.
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^ FOLD AND DETACH HERE ^
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
------------------------------------ -------------------------------- ---------------------
Internet Telephone Mail
http://www.proxyvoting.com/cass 1-866-540-5760
Mark, sign and date
Use the internet to vote your proxy. OR Use any touch-tone telephone to OR your proxy card and
Have your proxy card in hand vote your proxy. Have your proxy return it in the
when you access the web site. card in hand when you call. enclosed postage-paid
envelope.
------------------------------------ -------------------------------- ---------------------
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
CASS INFORMATION SYSTEMS, INC.
The undersigned hereby appoints Lawrence A. Collett and Eric H.
Brunngraber, 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 Stockholders of the company to be held April
18, 2005 or at any adjournment or postponement thereof, with all powers which
the undersigned would possess if present at the Meeting.
(Continued and to be marked, dated and signed, on the other side)
________________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
________________________________________________________________________________
________________________________________________________________________________
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