UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[ONLINE RESOURCES LOGO]
ONLINE RESOURCES CORPORATION
7600 COLSHIRE DRIVE
MCLEAN, VIRGINIA 22102
APRIL 22, 2002
Dear Stockholder,
We cordially invite you to attend our 2002 annual meeting of stockholders
to be held at 2:00 p.m. on Tuesday, May 21, 2002 at the Harvard Club of New
York, 27 East 44th Street, New York, NY 10036. The attached notice of annual
meeting and proxy statement describe the business we will conduct at the meeting
and provide information about Online Resources Corporation that you should
consider when you vote your shares.
This year, we have prepared the proxy statement in a format that we hope is
easier to understand. The Securities and Exchange Commission is encouraging
companies to write documents for investors in plain English, and we support this
effort. We hope that you like the new format and welcome your comments.
When you have finished reading the proxy statement, please promptly vote
your shares by marking, signing, dating and returning the proxy card in the
enclosed envelope. We encourage you to vote by proxy so that your shares will be
represented and voted at the meeting, whether or not you can attend.
Sincerely,
/s/ MATTHEW P. LAWLOR
Matthew P. Lawlor,
Chairman of the Board and
Chief Executive Officer
[ONLINE RESOURCES LOGO]
APRIL 22, 2002
NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
TIME: 2:00 p.m. (EST)
DATE: May 21, 2002
PLACE: Harvard Club of New York, 27 East 44th Street, New York, NY 10036
PURPOSES:
1. To elect three directors to serve three-year terms expiring in 2005.
2. To ratify the appointment of Ernst & Young LLP as the company's
independent public accountants for the fiscal year ending December 31,
2002.
3. To consider any other business that is properly presented at the
meeting.
WHO MAY VOTE:
You may vote if you were the record owner of Online Resources Corporation
common stock at the close of business on March 25, 2002. A list of stockholders
of record will be available at the meeting and, during the 10 days prior to the
meeting, at the office of the Secretary at the above address.
By Order of the Board of Directors
[C. Graham Signature]
Catherine A. Graham
Chief Financial Officer and
Secretary
TABLE OF CONTENTS
PAGE
----
General information about the annual meeting................ 1
Security ownership of certain beneficial owners and
management................................................ 4
Management.................................................. 6
The Board of Directors...................................... 6
Committees of the Board of Directors and meetings........... 7
Compensation of Directors................................... 8
Executive Officers who are not Directors.................... 8
Executive compensation...................................... 9
Summary compensation table.................................. 9
Options grants in our last fiscal year...................... 9
Aggregated option exercises in last fiscal year and fiscal
year-end option values.................................... 10
Change-in-control arrangements.............................. 10
Performance graph........................................... 11
Report of Compensation Committee on Executive
Compensation.............................................. 12
Report of Audit Committee................................... 14
Section 16(a) beneficial ownership reporting compliance..... 15
Item 1 -- Election of Directors............................. 16
Item 2 -- Independent public accountants.................... 17
Stockholder proposals....................................... 18
ONLINE RESOURCES CORPORATION
7600 COLSHIRE DRIVE
MCLEAN, VA 22102
703-394-5100
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PROXY STATEMENT FOR ONLINE RESOURCES CORPORATION
2002 ANNUAL MEETING OF STOCKHOLDERS
-------------------------------
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We sent you this proxy statement and the enclosed proxy card because Online
Resources Corporation's Board of Directors is soliciting your proxy to vote at
the 2002 annual meeting of stockholders and any adjournments of the meeting.
This proxy statement summarizes the information you need to know to vote at the
annual meeting. You do not need to attend the annual meeting to vote your
shares. Instead, you may vote your shares by marking, signing, dating and
returning the enclosed proxy card.
On April 22, 2002, we began sending this proxy statement, the attached
notice of annual meeting and the enclosed proxy card to all stockholders
entitled to vote at the meeting. Only stockholders who owned Online Resources
Corporation common stock at the close of business on March 25, 2002 are entitled
to vote at the annual meeting. On this record date, there were 13,281,298 shares
of Online Resources Corporation common stock outstanding. Online Resources
Corporation common stock is our only class of voting stock. We are also sending
along with this proxy statement, our 2002 annual report, which includes our
financial statements for the fiscal year ended December 31, 2001.
HOW MANY VOTES DO I HAVE?
Each share of Online Resources Corporation common stock that you own
entitles you to one vote.
HOW DO I VOTE BY PROXY?
Whether you plan to attend the annual meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the annual meeting and vote.
If you properly fill in your proxy card and send it to us in time, your
"proxy" (one of the individuals named on your proxy card) will vote your shares
as you have directed. If you sign the proxy card but do not make specific
choices, your proxy will vote your shares as recommended by the board of
directors.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?
The board of directors recommends that you vote as follows:
- "FOR" the election of the nominees for director;
- "FOR" ratification of the selection of our independent public accountants
for our fiscal year ending December 31, 2002.
If any other matter is presented, your proxyholder will vote your shares in
accordance with his or her best judgment. At the time this proxy statement was
printed, we knew of no matters that needed to be acted on at the annual meeting,
other than those discussed in this proxy statement.
MAY I REVOKE MY PROXY?
If you give us your proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of the following ways:
- You may send in another proxy with a later date;
- You may notify Online Resources Corporation's Secretary in writing before
the annual meeting that you have revoked your proxy; or
- You may vote in person at the annual meeting.
HOW DO I VOTE IN PERSON?
If you plan to attend the annual meeting and vote in person, we will give
you a ballot when you arrive. Please note, however, if your shares are held in
the name of your broker, bank or other nominee, you must bring an account
statement or letter from the nominee indicating that you are the beneficial
owner of the shares on March 25, 2002, the record date for voting.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSAL 1: ELECT DIRECTORS The nominees for director who receive the most votes
at the annual meeting (also known as a "plurality" of
the votes) will be elected.
PROPOSAL 2: RATIFY SELECTION OF The affirmative vote of a majority of the votes
AUDITORS present or represented by proxy and entitled to vote
at the annual meeting is required to ratify the
selection of independent auditors.
WHAT IS THE EFFECT OF BROKER NON-VOTES, WITHHOLDINGS AND ABSTENTIONS?
- Broker Non-Votes: If your broker holds your shares in its name, the
broker will be entitled to vote your shares on both Proposal 1 and
Proposal 2 even if it does not receive instructions from you. If your
broker cannot vote your shares on a particular matter because it does not
have instructions from you or discretionary voting authority on that
matter, this is referred to as a "broker non-vote". Broker non-votes are
not considered to be present and represented and entitled to vote at the
meeting as to proposals for which instructions have not been obtained or
discretionary authority does not exist. Discretionary authority should
generally exist as to the two proposals being presented to our
stockholders. This means that there should be no broker non-votes at the
annual meeting.
- Withholdings: Withholding authority to vote for a nominee for director
will have no effect on the outcome of the vote.
- Abstentions: Abstentions are treated as shares present or represented
and entitled to vote at the annual meeting, and therefore, count towards
the determination of a quorum. For matters such as Proposal 2, which
require an affirmative vote of a majority of the shares present and
entitled to vote at a meeting, an abstention generally has the same
effect as a no vote.
IS VOTING CONFIDENTIAL?
We will keep all the proxies, ballots and voting tabulations private. We
only let our Inspectors of Election and American Stock Transfer and Trust
Company examine these documents. We will not disclose your vote to management
unless it is necessary to meet legal requirements. We will, however, forward to
management any written comments you make, on the proxy card or elsewhere.
WHAT ARE THE COSTS OF SOLICITING THESE PROXIES?
We will pay all of the costs of soliciting these proxies. Our directors,
officers and employees may solicit proxies in person or by telephone, fax or
email. We will pay these employees and directors no additional
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compensation for these services. We have retained Georgeson Shareholder
Communications, Inc. to assist in the distribution of proxy materials and
solicitation of votes for a fee of $5,000, plus reimbursement of out-of-pocket
expenses. In addition, Georgeson Shareholder Communications, Inc. will reimburse
brokerage firms and other persons representing beneficial owners of our common
stock for their expenses in forwarding proxy materials to such beneficial owners
and we will reimburse Georgeson Shareholder Communications, Inc. for the
expenses. Our directors, officers and employees may supplement Georgeson's
solicitation of proxies by mail, Internet, telephone, telegram, telex and
personal solicitation. No additional compensation will be paid for such
solicitation. We will ask banks, brokers and other institutions, nominees and
fiduciaries to forward these proxy materials to their principals and to obtain
authority to execute proxies. We will then reimburse them for their expenses.
WHAT CONSTITUTES A QUORUM FOR THE MEETING?
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of our common stock is necessary to constitute a quorum at
the meeting. Votes of stockholders of record who are present at the meeting in
person or by proxy, abstentions, and broker non-votes are counted for purposes
of determining whether a quorum exists.
ATTENDING THE ANNUAL MEETING
The annual meeting will be held at 2:00 p.m. on May 21, 2002, at the
Harvard Club of New York, 27 East 44th Street, New York, NY 10036. When you
arrive at the Harvard Club of New York, signs will direct you to the appropriate
meeting rooms. You need not attend the annual meeting in order to vote.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of February 28, 2002 for (a) the
executive officers named in the Summary Compensation Table on page 10 of this
proxy statement, (b) each of our directors and director nominees, (c) all of our
current directors and executive officers as a group and (d) each stockholder
known by us to own beneficially more than 5% of our common stock. Beneficial
ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to the securities.
SHARES BENEFICIALLY
OWNED(1)
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NAME AND ADDRESS** NUMBER PERCENT
------------------ --------- -------
Wellington Management Co., L.P.............................. 1,758,400(2) 13.3%
75 State Street
Boston, MA 02109
Capital Group International, Inc. .......................... 953,600(3) 7.2%
11100 Santa Monica Blvd., Suite 1500
Los Angeles, CA 90025
Bruce Bent Associates, Inc. ................................ 858,200(4) 6.5%
950 Third Avenue
New York, NY 10022-2705
Matthew P. Lawlor........................................... 1,623,437(5) 12.1%
7600 Colshire Drive
McLean, VA 22102
George M. Middlemas......................................... 584,385(6) 4.4%
Ervin R. Shames............................................. 21,419(7) *
Barry D. Wessler............................................ 18,604(8) *
David A. O'Connor........................................... 63,386(9) *
Joseph J. Spalluto.......................................... 60,611(10) *
Michael H. Heath............................................ 56,227(11) *
Thomas S. Johnson........................................... 118,987(12) *
Raymond T. Crosier.......................................... 235,266(13) 1.7%
All directors and current executive officers as a group (9
persons).................................................. 2,782,322 19.9%
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* Represents beneficial ownership of less than 1% of the outstanding shares
of our common stock.
** Addresses are given for beneficial owners of more than 5% of the
outstanding common stock only.
(1) The number of shares of common stock issued and outstanding on February 28,
2002 was 13,269,012. The calculation of percentage ownership for each
listed beneficial owner is based upon the number of shares of common stock
issued and outstanding at February 28, 2002, plus shares of common stock
subject to options held by such person at February 28, 2002 and exercisable
within 60 days thereafter. The persons and entities named in the table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below.
(2) This information is based solely on a Schedule 13G/A filed by Wellington
Management Co., L.P. with the Securities and Exchange Commission on
February 12, 2002. Clients of Wellington Management Co., L.P., own the
shares of record. Those clients have the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from the sale of,
such securities. No such client is known to have such right or power with
respect to more than five percent of the common stock outstanding.
(3) This information is based solely on a Schedule 13G/A filed by Capital Group
International, Inc. with the Securities and Exchange Commission on February
11, 2002. Capital Group International, Inc. is the parent holding company
of the Capital Guardian Trust Company, a bank as defined in Section 3(a)(6)
of the Securities Exchange Act of 1934. Capital Guardian Trust Company may
be deemed to be the beneficial owner of 953,600 shares of common stock.
Capital Group International, Inc. and Capital
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Guardian Trust Company disclaim beneficial ownership of 953,600 shares of common
stock pursuant to Rule 13d-4 of the Securities Exchange Act.
(4) This information is based solely on a Schedule 13G filed by Bruce Bent
Associates, Inc. with the Securities and Exchange Commission on February
13, 2002. Bruce Bent Associates, Inc., in its capacity as investment
advisor, may be deemed the beneficial owner of these shares, which shares
are owned by investment advisory client(s).
(5) Includes 13,109 shares of common stock issuable pursuant to warrants
exercisable within 60 days of February 28, 2002 and 174,013 shares of
common stock issuable pursuant to options exercisable within 60 days of
February 28, 2002. Of the total shares, 82,685 shares are held of record by
the Rosemary K. Lawlor Living Trust for which Mr. Lawlor serves as the
Trustee, and 8,910 shares are held of record by the Rosemary K. Lawlor, Mr.
Lawlor's wife.
(6) Includes 131,957 shares issuable pursuant to warrants exercisable within 60
days of February 28, 2002 and 29,246 shares issuable pursuant to options
exercisable within 60 days of February 28, 2002. Of the total shares
208,844 are held of record by Apex Investment Fund II, L.P. of which 49,490
are issuable upon the exercise of warrants; 320,037 shares are held of
record by Apex Investment Fund III, L.P. of which 72,756 are issuable upon
the exercise of warrants and 26,258 shares are held of record by Apex
Strategic Partners, LLC of which 9,711 are issuable upon the exercise of
warrants. 29,246 shares issuable upon the exercise of options are held by
Mr. Middlemas. Mr. Middlemas has shared voting and investment power of all
the shares which he does not hold of record.
(7) Includes 21,419 shares issuable upon the exercise of options to purchase
common stock that are exercisable within 60 days of February 28, 2002.
(8) Includes 14,595 shares issuable upon the exercise of options to purchase
common stock that are exercisable within 60 days of February 28, 2002.
(9) Includes 61,386 shares issuable upon the exercise of options to purchase
common stock that are exercisable within 60 days of February 28, 2002.
(10) Includes 4,019 shares issuable upon the exercise of warrants to purchase
common stock and 33,887 shares issuable upon the exercise of options to
purchase common stock that are exercisable within 60 days of February 28,
2002. Of the total shares, 1,188 are held of record by Ellen Spalluto, Mr.
Spalluto's wife.
(11) Includes 36,680 shares issuable upon the exercise of options to purchase
common stock that are exercisable within 60 days of February 28, 2002.
(12) Includes 4,918 shares issuable upon the exercise of warrants to purchase
common stock and 32,816 shares issuable upon the exercise of options to
purchase common stock that are exercisable within 60 days of February 28,
2002.
(13) Includes 3,145 shares issuable upon the exercise of warrants to purchase
common stock and 176,759 shares issuable upon the exercise of options to
purchase common stock that are exercisable within 60 days of February 28,
2002. Of the total shares, 7,853 are held of record by Raymond T. Crosier
Grantor Retained Annuity Trust, and 3,500, 1,000 and 1,000 shares are held
of record by Deborah Crosier (Mr. Crosier's wife), William Crosier, II (Mr.
Crosier's son) and Jennifer Crosier (Mr. Crosier's daughter), respectively.
5
MANAGEMENT
THE BOARD OF DIRECTORS
Our Bylaws provide that our business is to be managed by or under the
direction of our Board of Directors. Our Board of Directors is divided into
three classes for purposes of election. One class is elected at each annual
meeting of stockholders to serve for a three-year term. Our Board of Directors
currently consists of eight members, classified into three classes as follows:
(1) Matthew P. Lawlor, Ervin R. Shames, and Barry D. Wessler constitute a class
with a term ending at the 2004 annual meeting; (2) Michael H. Heath and Thomas
S. Johnson constitute a class with a term ending at the 2003 annual meeting; and
(3) George M. Middlemas, David A. O'Connor and Joseph J. Spalluto constitute a
class with a term ending at the upcoming 2002 annual meeting.
On February 14, 2001, our Board of Directors voted to nominate George M.
Middlemas, David A. O'Connor and Joseph J. Spalluto for election at the annual
meeting for a term of three years to serve until the 2005 annual meeting of
stockholders, and until their respective successors have been elected and
qualified.
Set forth below are the names of the persons nominated as directors and
directors whose terms do not expire this year, their ages, their offices in the
company, if any, their principal occupations or employment for the past five
years, the length of their tenure as directors and the names of other public
companies in which such persons hold directorships.
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Matthew P. Lawlor....................... 54 Chairman of the Board and Chief Executive Officer
Ervin R. Shames (1)..................... 61 Director
Barry D. Wessler (2).................... 58 Director
George M. Middlemas (1)................. 55 Director
David A. O'Connor (1)................... 67 Director
Joseph J. Spalluto (2).................. 43 Director
Michael H. Heath (2).................... 60 Director
Thomas S. Johnson (2)................... 61 Director
---------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Matthew P. Lawlor has served as Chairman and Chief Executive Officer since
March 1989. Mr. Lawlor started his career as a project engineer with RCA. After
completing his graduate business education in 1973, he joined Chemical Bank,
where he later headed a regional consumer branch division and its international
equity investment company. In 1980, he served as a Presidential Exchange
Executive with the White House. He formed US Multitrade in 1981, a venture
development firm noted for the seed financing of RSA Security, Inc., (formerly
Security Dynamics Technology, Inc.) and other emerging growth companies. He
later co-founded Online Resources Corporation, and currently serves on the Board
of Directors of the Electronic Funds Transfer Association ("EFTA") where he
chairs its eFinancial Enablers Council, a group of senior executives whose firms
supply Internet products and services to financial institutions. Mr. Lawlor has
a BS in mechanical engineering from the University of Pennsylvania and an MBA
from Harvard University.
Michael H. Heath, a director since March 1989, served as President of
Online Resources Corporation from January 1995 to October 1997. Mr. Heath has
held positions both in and outside of the financial services industry. He is the
former President of MediaNews, which owned the Denver Post and the Houston Post;
and President of The Record, a New Jersey-based regional newspaper and broadcast
company. Mr. Heath also worked in a variety of senior management positions with
Chemical Bank, including a consumer branch division. Mr. Heath received his BA
from Williams College and an MBA from Harvard University.
Thomas S. Johnson, a director since May 1994, has served as Chairman and
Chief Executive Officer of GreenPoint Bank and GreenPoint Financial Corp. since
August 1993. GreenPoint Bank and GreenPoint Financial Corp. is a large thrift
and specialty mortgage originator based in New York. Mr. Johnson formerly
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served as President of Chemical Banking Corporation from 1983 to 1989, and as
President of Manufacturers Hanover Trust Company from 1989 to 1991. Mr. Johnson
is a director of R.R. Donnelley & Sons Company, Alleghany Corporation, The
Phoenix Companies and GreenPoint Financial Corp. He holds a BA from Trinity
College and an MBA from Harvard University.
George M. Middlemas, a director since June 1997, is a Managing General
Partner of Apex Venture Partners ("Apex"), a venture partner company that
invests in technology companies. He has been a venture capital investor since
1979. Prior to joining Apex, Mr. Middlemas was a senior vice president and
principal with Inco Venture Capital Management and a vice president and member
of the investment committee of Citicorp Venture Capital. He played a material
role in the founding of America Online and RSA Security, Inc., (formerly
Security Dynamics Technologies, Inc.) Mr. Middlemas is a director of Tut Systems
and Pure Cycle Corporation. Mr. Middlemas holds a BA in both history and
political science from Pennsylvania State University, an MA in political science
from the University of Pittsburgh, and an MBA from Harvard University.
David A. O'Connor, a director since April 1996, is an EFT industry
consultant. He was a Vice Chairman of Honor Technologies, one of the largest ATM
networks in the nation from 1997 to 1998. Mr. O'Connor was previously President
of CashFlow, Inc., an electronic banking subsidiary of Sovran Financial Services
(now Bank of America) and one of the first shared ATM networks. Later, Mr.
O'Connor served as President and CEO of Internet, Inc., owner of MOST, which was
the nation's fifth largest ATM network before merging with Honor Technologies.
Mr. O'Connor served on the Board of Directors of the Electronic Funds Transfer
Association and served as its chairman. He also served as President of the
Mid-Atlantic Exchange and Senior Vice President of Virginia National Bank. Mr.
O'Connor holds a BS from American University.
Ervin R. Shames, a director since January 2000, is a visiting lecturer for
consumer marketing at the University of Virginia's Darden School of Business.
Mr. Shames formerly served as President and Chief Executive Officer of Borden,
Inc., a large consumer marketing company, from 1993 through 1995. Prior to
Borden, Mr. Shames served as President of General Foods USA and Kraft USA. He
also served as Chairman, President and Chief Executive Officer of Stride Rite
Corporation. Mr. Shames is currently serving on the Board of Directors of Select
Comfort Corporation, where he is a member of the Audit Committee. Mr. Shames
holds a BSBA from Florida University and an MBA from Harvard University.
Joseph J. Spalluto, a director since May 1995, is a Managing Director of
Corporate Finance for Keefe Bruyette & Woods, Inc. since 1981, a national
investment banking firm specializing in the financial services industry. Keefe,
Bruyette & Woods, Inc. is an investor in Online Resources Corporation and has
participated in joint marketing. Mr. Spalluto received a BA from Amherst College
and a JD from the University of Connecticut School of Law.
Barry D. Wessler, a director since May 2000, is widely known as one of the
founders of the Internet as a result of his work in the late 1960s at the
Advanced Research Projects Agency, where he directed the research for the design
and implementation of the ARPANet (the forerunner of today's Internet). Since
1995, Dr. Wessler has used his expertise as an independent consultant to
computer and communications corporations, including America Online, KDD America
and Teleglobe Communications. From 1973 to 1982, Dr. Wessler co-founded GTE
Telenet, a pioneering packet switch service company (now Sprint Data). Mr.
Wessler founded and served from 1982 to 1994 as President and Chief Operating
Officer of NetExpress, Inc., a market leader in international facsimile network
products and services. Mr. Wessler, served as Chief Executive Officer from 1994
to 1995 for Plexsys International, a cellular telephone infrastructure
manufacturer. Mr. Wessler is currently serving on the Board of Directors of
Geo-Centers. Dr. Wessler received his BSEE in 1965 and MSEE in 1967 from MIT and
his Ph.D. in Computer Science from the University of Utah in 1973.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
Meeting Attendance. During the fiscal year ended December 31, 2001 there
were seven meetings of our Board of Directors, and the various committees of the
Board met a total of nine times. No director attended fewer than 75% of the
total number of meetings of the Board and of committees of the Board on which he
or she served during fiscal 2001.
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Audit Committee. Our Audit Committee met four times during fiscal 2001.
This committee currently has four members, Michael H. Heath (Chairman), Thomas
S. Johnson, Joseph J. Spalluto and Barry D. Wessler. Our Audit Committee reviews
the engagement of our independent public accountants, reviews annual financial
statements, considers matters relating to accounting policy, internal controls
and risk assessment and reviews the scope of annual audits. Please also see the
report of the Audit Committee set forth elsewhere in this proxy statement.
Compensation Committee. Our Compensation Committee met three times during
fiscal 2001. This committee currently has three members, Ervin R. Shames
(Chairman), George M. Middlemas and David A. O'Connor. Our Compensation
Committee reviews, approves and makes recommendations regarding our compensation
policies, practices and procedures to ensure that legal and fiduciary
responsibilities of the Board of Directors are carried out and that such
policies, practices and procedures contribute to our success. Please also see
the report of the Compensation Committee set forth elsewhere in this proxy
statement. The Compensation Committee administers Online Resources Corporation's
1999 Stock Option Plan.
COMPENSATION OF DIRECTORS
Each non-employee Director receives (i) a fee of $7,500, (ii) an additional
fee of $1,500 for the Chairperson of each Board Committee, (iii) an option to
purchase 8,750 shares of common stock (with an exercise price at the fair market
value of the common stock at the time of grant), and (iv) an additional option
to purchase 1,750 shares of common stock for the Chairperson of each Board
Committee for each year of service. In additional, we reimburse Directors for
related travel expenses incurred to attend meetings of the Board of Directors.
The employee Director does not receive any compensation for their participation
in Board or Board Committee meetings.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The names of, and certain information regarding, our executive officers who
are not also directors are set forth below. None of the executive officers has
an employment agreement with us and the executive officers serve at the pleasure
of the Board of Directors.
NAME AGE POSITION
---- --- --------
Raymond T. Crosier..................... 47 President, Chief Operating Officer
Catherine A. Graham.................... 41 Executive Vice President, Chief Financial Officer
Raymond T. Crosier joined Online Resources Corporation in January 1996 and
in January 2001 he was elected as President and Chief Operating Officer. He is
responsible for managing our day-to-day operations. He has 23 years of
experience with the financial services industry. Before joining us, he served as
Vice President of Sales and Customer Service for TeleCheck International, a
check verification and guarantee firm, from 1990 to 1996. TeleCheck was a
subsidiary of First Financial International Corp., which later merged with First
Data Corp. He served in a variety of other management positions at TeleCheck,
including its national account division from 1989 to 1990 and its regional
marketing divisions from 1977 to 1989. Mr. Crosier received a BA in Psychology
from the University of Virginia.
Catherine A. Graham joined Online Resources Corporation in March 2002 and
currently serves as Executive Vice President and Chief Financial Officer. She is
responsible for general financial management with particular attention paid to
broadening the investor base and exploring strategic business opportunities. She
has 20 years of professional experience in financial disciplines, including
technology, restaurant and banking companies. Ms. Graham most recently served as
Chief Financial Officer of VIA NET.WORKS, Inc., a publicly-held Internet service
provider serving the international ISP markets with subsidiaries in 14 countries
outside of the United States. In 1996, she served as Vice President of Finance
and Investor Relations Officer for Yuire Systems. Prior to her position with
Yurie Systems, she served as Chief Financial Officer for Davco Restaurants,
Inc., which was then the largest franchiser of Wendy's restaurants with over
14,000 employees. Ms. Graham received a BA in Economics and an MBA from Loyola
College.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the total compensation paid or accrued during the
three fiscal years ended December 31, 2001 to (1) our Chief Executive Officer
and (2) each of our most highly compensated executive officers who earned more
than $100,000 during the fiscal year ended December 31, 2001.
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- -------- ------- ------------ ------------
Matthew P. Lawlor....................... 2001 $206,042 $67,725 125,203 $ 70(2)
Chief Executive Officer and 2000 206,250 63,000 6,500 303(2)
Chairman of the Board 1999 150,000 50,000 129,819 303(2)
Raymond T. Crosier...................... 2001 $193,750 $47,803 84,401 $ 70(2)
President and Chief Operating Officer 2000 179,167 59,353 6,500 303(2)
1999 148,521 35,677 64,475 303(2)
Carl D. Blandino(1)..................... 2001 $160,759 $24,391 62,360 $ 70(2)
Executive Vice President and 2000 132,801 33,449 81,000 7,064(3)
Chief Financial Officer 1999 -- -- -- --
---------------
(1) Mr. Blandino joined Online Resources Corporation in February 2000 and
terminated his employment with us on January 11, 2002. Mr. Blandino's fiscal
2001 base salary was $161,000.
(2) Consists of premium amount paid by us for group life insurance on behalf of
the named executive officer.
(3) Consists of relocation expenses paid by us on behalf of the named executive
officer.
OPTION GRANTS IN OUR LAST FISCAL YEAR
The following table sets forth information regarding each stock option
granted during fiscal year 2001 to each of the executive officers named in the
Summary Compensation Table above.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ------------- ------------ --------- ---------- --------- ----------
Matthew P. Lawlor....... 5,355 0.3% $2.125 1/2/2002 $ 569 $ 1,138
3,213 0.2% 2.313 1/5/2002 372 743
1,071 0.1% 1.750 3/31/2002 94 187
14,695 0.8% 2.222 6/4/2008 13,293 30,978
4,055 0.2% 2.020 6/4/2008 3,335 7,771
23,897 1.3% 3.063 1/11/2011 46,033 116,656
23,926 1.3% 3.063 1/11/2011 46,089 116,798
48,991 2.7% 1.500 10/16/2008 29,916 69,718
Raymond T. Crosier...... 39,847 2.2% $3.063 1/11/2011 $76,757 $194,518
960 0% 3.063 1/11/2011 1,849 4,686
16,250 0.9% 2.020 6/4/2008 13,363 31,142
27,344 1.5% 1.500 10/16/2008 16,698 38,913
Carl D. Blandino........ 30,277 1.7% $3.063 1/11/2011 $58,322 $147,801
831 0% 3.063 1/11/2011 1,601 4,057
11,071 0.6% 3.500 2/24/2008 15,775 36,761
179 0% 3.500 2/24/2008 255 594
20,002 1.1% 1.500 10/16/2008 12,214 28,464
9
---------------
(1) The options were granted pursuant to our 1999 Stock Option Plan.
(2) The amounts shown in this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10% compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise price,
but do not include deductions for taxes or other expenses associated with
the exercise. Actual gains, if any, on stock option exercises will depend on
the future performance of the common stock, the optionee's continued
employment through the option period and the date on which the options are
exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table shows information regarding exercises of options to
purchase our common stock by each executive officer named in the Summary
Compensation Table during the fiscal year ended December 31, 2001. The table
also shows the aggregate value of options held by each executive officer named
in the Summary Compensation Table as of December 31, 2001. The value of the
unexercised in-the-money options at fiscal year end is based on a value of $2.30
per share, the closing price of our stock on the NASDAQ National Market System
on December 31, 2001 (the last trading day prior to the fiscal year end), less
the per share exercise price.
NUMBER OF SECURITIES VALUE OF THE UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
Matthew P. Lawlor......... -- -- 160,116 171,340 $7,125 $35,876
Raymond T. Crosier........ -- -- 160,006 128,391 $3,125 $23,300
Carl D. Blandino.......... -- -- 45,633 102,727 $2,286 $13,715
---------------
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to be
held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise.
CHANGE-IN-CONTROL ARRANGEMENTS
The 1999 Stock Option Plan provides that, upon a change in control,
unvested options issued under the plan vest and become immediately exercisable
for a period of one year after such occurrence.
10
PERFORMANCE GRAPH
The following graph compares the annual percentage change in our cumulative
total stockholder return on its common stock during a period commencing on June
4, 1999 when we went public and ending on December 31, 2001 (as measured by
dividing (i) the sum of (A) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (B) the difference
between our share price at the end and the beginning of the measurement period;
by (ii) the share price at the beginning of the measurement period) with the
cumulative total return of the Russell 2000 Index and S&P Computer Software &
Services Index during such period. We have not paid any dividends on our common
stock, and no dividends are included in the representation of our performance.
The stock price performance on the graph below is not necessarily indicative of
future price performance. Prior to June 4, 1999, our common stock was not
publicly traded. Comparative data is provided only for the period since that
date. This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by reference in
any of our filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing. Information used on the graph
was obtained from the NASDAQ Online, Frank Russell Company and Standard & Poor,
a division of The McGraw-Hill Companies, sources we believe to be reliable, but
we are not responsible for any errors or omissions in such information.
[PERFORMANCE GRAPH]
ONLINE RESOURCES S&P COMPUTER SOFTWARE &
CORPORATION RUSSELL 2000 SERVICES INDEX
---------------- ------------ -----------------------
6/99 100.00 100.00 100.00
9/99 98.67 94.64 112.39
12/99 118.22 96.09 158.74
3/00 122.23 98.36 151.55
6/00 45.78 101.71 108.09
9/00 26.67 109.18 109.34
12/00 14.22 118.03 75.00
3/01 12.44 104.27 66.48
6/01 17.07 119.17 89.38
9/01 8.32 94.40 57.34
12/01 16.36 114.30 75.47
11
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee, which is
responsible for establishing and administering our executive compensation
policies and stock option plans. This committee is composed of Ervin R. Shames,
George M. Middlemas, and David A. O'Connor, none of whom is an employee of ours.
This report addresses the compensation policies for fiscal year 2001 as they
affected Matthew P. Lawlor, in his capacity as Chief Executive Officer, and our
other executive officers.
The Compensation Committee makes recommendations to the Board of Directors
concerning the compensation and benefits of our directors, executive officers
and key employees, and acts on such other matters relating to their compensation
as it deems appropriate. The Compensation Committee administers our 1999 Stock
Option Plan, pursuant to which incentive stock options and non-statutory stock
options may be granted to eligible employees, directors and consultants. The
Compensation Committee also administers our executive and key employee incentive
plan, pursuant to which eligible employees may be granted incentive compensation
for achievement of company and individual performance targets.
Compensation Objectives. The Compensation Committee considers the
following objectives in setting base salary and benefits and some of the
following objectives in determining bonuses and long-term incentives for
executives:
- establishing base salaries at a competitive average within our industry;
- rewarding the achievement of our annual and long-term strategic goals;
- retaining executive officers by offering competitive compensation and
benefits at a competitive level with other executives in our industry;
and
- providing additional motivation for the executive officers to enhance
stockholder value by linking a portion of the compensation package to the
performance of our common stock.
- rewarding achievement of individual performance targets.
Executive Compensation Program Components.
The three principal components of executive compensation are base salary,
annual incentive bonuses, and long-term incentive compensation under our 1999
Stock Option Plan. Each of these components is discussed as follows:
BASE SALARY. The Compensation Committee's recommendations regarding the
base salary of our executive officers, including the compensation of the
Chairman of the Board and Chief Executive Officer, are based on a number of
factors, including each executive officers' experience and qualifications, the
potential impact of the individual on our performance, the level of skill and
responsibilities and the other factors described above. Base salaries are
reviewed annually, and the Compensation Committee seeks to set executive officer
base salaries at competitive levels in relation to the companies with which we
compete for executives. Base salaries for certain executive officers were
increased in fiscal 2001 in order to retain key members of the management team
to pursue our plans. Effective November 2001 for a period of 14 months, our
executive officers received a portion of their salary ranged between 13 to 25%
in non-qualified stock options in lieu of cash.
ANNUAL INCENTIVE BONUSES. The Company's annual incentive bonus program is
designed to provide a direct financial incentive to our executive officers,
including the Chief Executive Officer, as well as other key employees, for
achievement of specific Company and individual performance goals. Consistent
with our executive and key employee incentive program, at the beginning of each
fiscal year, the Compensation Committee determines:
- The employees by grade level that are eligible to participate in the plan
for the year;
- The annual corporate performance goals for the year; and
12
- For each eligible employee, the target bonus level as a percentage of
base compensation, the portion of the target bonus level that is based on
achievement of Company performance goals, and the portion of the target
bonus level that is based on achievement of individual performance goals.
In fiscal 2001, the Compensation Committee established incentive bonus
compensation for executive officers and other key employees based on our
targeted revenue, gross profit margin, service quality index and operating
efficiencies as measured by cost/transaction and targeted SG&A levels.
LONG-TERM INCENTIVE COMPENSATION. The Compensation Committee believes that
stock ownership is a significant incentive in aligning the interests of the
executives and the stockholders. Consistent with industry standards, upon
hiring, executives may be granted a number of options in an amount larger than
the average grant given executives in any year and with different terms and
vesting schedules. During fiscal 2001, we granted stock options to all of its
executive officers under our 1999 Stock Option Plan, and such grants are set
forth in the Stock Option Grants Table under the Executive Compensation section
of this proxy statement. A portion of the total stock options granted to
executive officers vest 25% each year for 4 years and expire after 7 years,
performance based options vest 100% after eight years (with accelerated vesting
schedule, should the Company meet established performance goals) and expire
after 10 years and other stock options granted to executive officers vest 10%
each year (with accelerated vesting schedule, should our stock outperform an
index of comparable companies) for 10 years and expire after 10 years. Stock
option grants under the 1999 Stock Option Plan were allocated by the
Compensation Committee based upon past and present performance and future
potential value of such executive officer's service to the company. The
Compensation Committee made additional awards to certain executive officers
during the year based on compensation evaluations made during the year.
CHIEF EXECUTIVE OFFICER. The Chief Executive Officer's compensation
evaluation included consideration of his leadership qualities, experience in the
electronic commerce services industry and the results of our performance. At the
recommendation of the Compensation Committee the Board of Directors awarded the
Chief Executive Officer a cash bonus of $67,725 in the fiscal year ended
December 31, 2001. The Chief Executive Officer was granted options for 125,203
shares of common stock.
The goal of our compensation structure is to be certain that all executives
are compensated consistent with the above guidelines and to assure that all
reasonable and possible efforts are being exerted to maximize stockholder value.
Compensation levels will be reviewed as frequently as necessary to ensure this
result.
Members of the Online Resources
Corporation Compensation Committee
Ervin R. Shames, Chairman
George M. Middlemas
David A. O'Connor
13
REPORT OF AUDIT COMMITTEE
The Audit Committee of the Board of Directors, which consists entirely of
directors who meet the independence and experience requirements of the NASDAQ
National Market System, has furnished the following report:
The Audit Committee assists the Board in overseeing and monitoring the
integrity of our financial reporting process, compliance with legal and
regulatory requirements and the quality of internal and external audit
processes. This Committee's role and responsibilities are set forth in our
charter adopted by the Board which is attached as Appendix A to this proxy
statement. This committee reviews and reassesses our charter annually and
recommends any changes to the Board for approval. The Audit Committee is
responsible for overseeing our overall financial reporting process. In
fulfilling its responsibilities for the financial statements for fiscal year
2001, the Audit Committee took the following actions:
- Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2001 with management and Ernst & Young LLP, our
independent auditors;
- Discussed with Ernst & Young LLP the matters required to be discussed by
Statement on Auditing Standards No. 61 relating to the conduct of the
audit; and
- Received written disclosures and a letter from Ernst & Young LLP
regarding its independence as required by Independence Standards Board
Standard No. 1. The Audit Committee further discussed with Ernst & Young
LLP their independence.
- The Audit Committee also considered oversight relating to the financial
reporting and audit process that the committee determined appropriate.
Based on the Audit Committee's review of the audited financial statements
and discussions with management and Ernst & Young LLP, the Audit Committee
recommended to the Board that the audited financial statements be included in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2001 for
filing with the SEC.
Members of the Online Resources
Corporation
Audit Committee
Michael H. Heath, Chairman
Thomas S. Johnson
Joseph J. Spalluto
Barry D. Wessler
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our records reflect that all reports that were required to be filed
pursuant to Section 16(a) of the Exchange Act were filed on a timely basis,
except that one of Mr. Lawlor's fiscal 2001 Form 4 reports included three
transactions that were reported late and two of Mr. Crosier's fiscal 2001 Form 4
reports included two transactions that were reported late. In addition, Mr.
Heath reported one fiscal 2000 transaction, Mr. Lawlor and Crosier each reported
two fiscal 2000 transactions on their respective fiscal 2001 Forms 5. Mr.
Blandino's fiscal 2001 Form 5 report included two transactions that were
reported late.
15
ELECTION OF DIRECTORS
(NOTICE ITEM 1)
The Board of Directors currently consists of eight members, classified into
three classes as follows: Matthew P. Lawlor, Ervin R. Shames, and Barry D.
Wessler constitute a class with a term ending in 2004 (the "Class III
directors"); Michael H. Heath and Thomas S. Johnson constitute a class with a
term ending in 2003 (the "Class II directors"); and George M. Middlemas, David
A. O'Connor and Joseph J. Spalluto constitute a class with a term which expires
at the upcoming Annual Meeting (the "Class I directors"). At each Annual Meeting
of Stockholders, directors are elected for a full term of three years to succeed
those directors whose terms are expiring.
The Board of Directors has voted to nominate George M. Middlemas, David A.
O'Connor and Joseph J. Spalluto for election at the Annual Meeting for a term of
three years to serve until the 2005 Annual Meeting of Stockholders, and until
their respective successors are elected and qualified. The Class III directors
(Matthew P. Lawlor, Ervin R. Shames, and Barry D. Wessler) and the Class II
directors (Michael H. Heath and Thomas S. Johnson) will serve until the Annual
Meetings of Stockholders to be held in 2004 and 2003, respectively, and until
their respective successors have been elected and qualified.
Unless authority to vote for any of these nominees is withheld, the shares
represented by the enclosed proxy will be voted FOR the election as directors of
George M. Middlemas, David A. O'Connor, and Joseph J. Spalluto. In the event
that either nominee becomes unable or unwilling to serve, the shares represented
by the enclosed proxy will be voted for the election of such other person as the
Board of Directors may recommend in his/her place. We have no reason to believe
that any nominee will be unable or unwilling to serve as a director.
A plurality of the votes of the shares present in person or represented by
proxy at the Meeting is required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF GEORGE M. MIDDLEMAS,
DAVID A. O'CONNOR AND JOSEPH J. SPALLUTO AS DIRECTORS, AND PROXIES SOLICITED BY
THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
16
INDEPENDENT PUBLIC ACCOUNTANTS
(NOTICE ITEM 2)
The Board of Directors has appointed Ernst & Young LLP, independent public
accountants, to audit our financial statements for the fiscal year ending
December 31, 2002. The Board proposes that the stockholders ratify this
appointment. Ernst & Young LLP audited our financial statements for the fiscal
year ended December 31, 2001. We expect that representatives of Ernst & Young
LLP will be present at the meeting, will be able to make a statement if they so
desire, and will be available to respond to appropriate questions.
Audit Fees
Online Resources Corporation incurred fees from Ernst & Young LLP totaling
$146,000 for their audit of our annual financial statements for the fiscal year
ended December 31, 2001 and for their quarterly reviews and the reviews of our
Quarterly Reports on Form 10-Q filed during the last fiscal year.
All Other Fees
During our fiscal year ended December 31, 2001, we incurred fees totaling
$139,000 for the following services provided by Ernst & Young LLP.
Audit related:
- Consultations with the Company on various accounting matters and internal
control reports totaling $117,000.
Non-audit related:
- Information technology testing for $22,000.
The Audit Committee of the Board of Directors has considered whether the
provision of the services described above under the caption All Other Fees is
compatible with maintaining Ernst & Young LLP's independence.
Stockholder ratification of Ernst & Young LLP as our independent
accountants is not required by our by-laws or otherwise. However, we are
submitting the appointment of Ernst & Young LLP to our stockholders for
ratification as a matter of what we consider to constitute good corporate
practice. If the stockholders fail to ratify the appointment, we will consider
whether or not to retain that firm. Even if the appointment is ratified, our
Board of Directors, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if they determine that a
change is in the best interest of the Company and its stockholders.
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Meeting is required to ratify the appointment of the
independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST
& YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES
OTHERWISE ON THE PROXY.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
to the Annual Meeting. If any other business is properly brought before the
Annual Meeting, proxies in the enclosed form will be voted in accordance with
the judgment of the persons voting the proxies.
17
STOCKHOLDER PROPOSALS
To be considered for inclusion in our proxy statement and form of proxy
relating to the Annual Meeting of Stockholders to be held in 2003, a stockholder
proposal must be received by the Corporate Secretary at our principal executive
offices not later than December 23, 2002. Any such proposal will be subject to
Rules and Regulations under the Securities Exchange Act of 1934, as amended.
Our bylaws provide an advance notice procedure for a stockholder to
properly bring a proposal before an annual meeting. The stockholder must give
timely written notice to the Corporate Secretary. To be timely, a stockholder
notice of the proposal must be delivered or mailed to and received at our
principal executives office not less than ninety (90) days prior to the date of
such annual meeting; provided, however, that in the event that less than one
hundred (100) days notice or prior public disclosure of the date of the meeting
is given or made to stockholders, to be timely, notice of the proposal by the
stockholder must be received not later than the close of business on the tenth
day following the date on which notice to stockholders of such annual meeting
date was mailed or such public disclosure was made. Proposals received after
such date will not be voted on at such annual meeting. If a proposal is received
before that date, the proxies that management solicits for such annual meeting
may still exercise discretionary voting authority on the stockholder proposal
under circumstances consistent with the proxy rules of the Securities and
Exchange Commission. The notice of a proposal by a stockholder must include the
stockholder's name and address, as the same appears in our record of
stockholders, a brief description of the proposal, the reason for the proposal,
the number of shares of common stock that are beneficially owned by the
proposing stockholder and any material interest of such stockholder in the
proposed business. All stockholder proposals should be marked for the attention
of: Corporate Secretary, Online Resources Corporation, 7600 Colshire Drive,
McLean, Virginia 22102.
McLean Virginia
April 22, 2002
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 2001 (OTHER THAN EXHIBITS THERETO) FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WHICH PROVIDES ADDITIONAL INFORMATION ABOUT ONLINE RESOURCES
CORPORATION, IS AVAILABLE TO BENEFICIAL OWNERS OF OUR COMMON STOCK WITHOUT
CHARGE UPON WRITTEN REQUEST TO: ONLINE RESOURCES CORPORATION, 7600 COLSHIRE
DRIVE, MCLEAN, VIRGINIA 22102, ATTN: INVESTOR RELATIONS.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Matthew P. Lawlor
MATTHEW P. LAWLOR,
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
18
ONLINE RESOURCES CORPORATION
7600 COLSHIRE DRIVE
MCLEAN, VIRGINIA 22102
PROXY FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 2002
2:00 P.M. EASTERN STANDARD TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated April 22,
2002 in connection with the Annual Meeting of Stockholders to be held on
Tuesday, May 21, 2002, at 2:00 p.m. Eastern Standard Time, at the Harvard Club
of New York, 27 East 44th Street, New York, NY 10036, and hereby appoints
Matthew P. Lawlor and Catherine A. Graham, and each of them (with full power to
act alone), the attorneys and proxies of the undersigned, with power of
substitution to each, to vote all shares of the common stock of Online Resources
Corporation that are registered in the name provided in this Proxy and that the
undersigned is entitled to vote at the 2002 Annual Meeting of Stockholders, and
at any adjournments of the meeting, with all the powers that undersigned would
have if personally present at the meeting. Without limiting the general
authorization given by this Proxy, the proxies are, and each of them is,
instructed to vote or act as follows on the proposals set forth in this Proxy.
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR PROPOSAL 1 (THE
ELECTION OF DIRECTORS) AND FOR PROPOSAL 2.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OF
THE MEETING, INCLUDING WHETHER OR NOT TO ADJOURN THE MEETING. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE ANNUAL MEETING.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
--------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
--------------------------------------------------------------------------------
If you wish to vote in accordance with the Board of Directors' recommendations,
just sign on the reverse side. You need not mark any boxes. If you do mark
boxes, please mark the boxes as in this example: [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED NOMINEES AND "FOR" EACH OF THE PROPOSALS.
1. ELECTION OF DIRECTORS (or if any nominee is not available for
election, such substitute as the Board of Directors may designate):
Proposal to elect GEORGE M. MIDDLEMAS, DAVID A. O'CONNOR AND JOSEPH J.
SPALLUTO as Directors of the Company.
GEORGE M. MIDDLEMAS [ ] FOR [ ] WITHHOLD VOTE
DAVID A. O'CONNOR [ ] FOR [ ] WITHHOLD VOTE
JOSEPH J. SPALLUTO [ ] FOR [ ] WITHHOLD VOTE
2. Proposal to ratify the appointment of Ernst & Young LLP for the
Company's fiscal year ending December 31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] By checking this box, I/we consent to future access and
delivery of Annual Reports and Proxy Statement electronically via the
Internet. I/We understand that the Company may no longer distribute
printed materials to me/us for any future stockholder meetings until
this consent that I/we have given is revoked. I/we understand that I/we
may revoke this consent to electronic access and delivery at any time.
Please sign exactly as name(s) appears
hereon. Joint owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such.
Signature: Date
--------------------- -------
Signature: Date
--------------------- -------
PLEASE CAST YOUR VOTE AS SOON AS POSSIBLE!
YOUR VOTE IS IMPORTANT!