<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
Whittman-Hart, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
WHITTMAN-HART, INC.
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1997
------------------------
To the Stockholders of
Whittman-Hart, Inc.:
The Annual Meeting of Stockholders of Whittman-Hart, Inc. (the "Company")
will be held at 10:00 a.m., Chicago time, on Wednesday, May 14, 1997, at The
University of Chicago Downtown Center, 450 North Cityfront Plaza Drive, Chicago,
Illinois 60611, for the following purposes:
(1) To elect two directors of the first class to the Company's Board of
Directors; and
(2) To transact such other business as may properly come before the meeting
or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 20, 1997 as
the record date for determining stockholders entitled to notice of, and to vote
at, the meeting.
By Order of the Board of Directors,
[EDWARD V. SZOFER SIGNATURE]
Edward V. Szofer
VICE PRESIDENT, CHIEF OPERATING
OFFICER AND SECRETARY
Chicago, Illinois
April 11, 1997
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY. WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID
ENVELOPE FURNISHED FOR THAT PURPOSE. YOUR PROXY CAN BE WITHDRAWN AT ANY TIME
BEFORE IT IS VOTED.
<PAGE>
WHITTMAN-HART, INC.
311 SOUTH WACKER DRIVE
SUITE 3500
CHICAGO, ILLINOIS 60606-6618
(312) 922-9200
------------------------
PROXY STATEMENT
---------------------
The accompanying proxy is solicited by the Board of Directors (the "Board of
Directors" or "Board") of Whittman-Hart, Inc., a Delaware corporation (the
"Company"), for use at the Company's Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 10:00 a.m., Chicago time, Wednesday, May 14, 1997, at
The University of Chicago Downtown Center, 450 North Cityfront Plaza Drive,
Chicago, Illinois 60611, and any adjournments thereof. This Proxy Statement and
accompanying form of proxy were first released to stockholders on or about April
11, 1997.
RECORD DATE AND OUTSTANDING SHARES--The Board of Directors has fixed the
close of business on March 20, 1997 as the record date (the "Record Date") for
the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting or any adjournments thereof. As of the Record Date, the Company
had outstanding 20,215,329 shares of Common Stock, par value $.001 per share
("Common Stock"). Each of the outstanding shares of Common Stock is entitled to
one vote on all matters coming before the Annual Meeting.
VOTING OF PROXIES--Robert F. Bernard and David P. Shelow, the persons named
as proxies on the proxy card accompanying this Proxy Statement, were selected by
the Board of Directors of the Company to serve in such capacity. Mr. Bernard
serves as an officer and director of the Company, and Mr. Shelow serves as an
officer of the Company. The shares represented by each executed and returned
proxy will be voted and such vote will be in accordance with the directions
indicated thereon or, if no direction is indicated, in accordance with the
recommendations of the Board of Directors contained in this Proxy Statement. The
Board of Directors does not presently intend to bring any business before the
Annual Meeting other than the specific proposal referred to in this Proxy
Statement and specified in the Notice of Annual Meeting, and so far as is known
to the Board of Directors, no other matters are to be brought before the Annual
Meeting. As to any other business that may properly come before the Annual
Meeting, however, it is intended that proxies, in the form enclosed, will be
voted in respect thereof in accordance with the judgment of the persons voting
such proxies. Each stockholder giving a proxy has the power to revoke it at any
time before the shares it represents are voted. Revocation of a proxy is
effective upon receipt by the Secretary of the Company of either (i) an
instrument revoking the proxy or (ii) a duly executed proxy bearing a later
date. Additionally, a stockholder may revoke a previously executed proxy by
voting in person at the Annual Meeting (although attendance at the Annual
Meeting will not, by itself, revoke a proxy).
REQUIRED VOTE--A plurality of the votes of the shares present in person or
represented by proxy at the Annual Meeting is required to elect the nominees for
directors. Stockholders will not be allowed to cumulate their votes in the
election of directors.
QUORUM--The required quorum for the transaction of business at the Annual
Meeting will be a majority of the shares of Common Stock entitled to vote on the
Record Date.
1
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS--The Company's Annual Report to Stockholders
for the year ended December 31, 1996, containing financial and other information
pertaining to the Company, is being furnished to stockholders simultaneously
with this Proxy Statement.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors consists of five directors. Article III of
the Company's Second Amended and Restated Bylaws provides that the Board of
Directors shall be classified with respect to the terms for which its members
shall hold office by dividing the members into three classes. At the Annual
Meeting, two directors of the first class of the Company's Board of Directors
will be elected, each to be elected for a term of three years expiring at the
Annual Meeting of Stockholders in the year 2000. All of the nominees are
presently serving as directors of the Company.
The three directors whose terms of office do not expire in 1997 will
continue to serve after the Annual Meeting until such time as their respective
terms of office expire or their successors are duly elected and qualified. See
"Other Directors" below.
If at the time of the Annual Meeting any of the nominees should be unable or
decline to serve, the persons named in the proxy will vote for such substitute
nominee or nominees as the Board of Directors recommends, or vote to allow the
vacancy created thereby to remain open until filled by the Board, as the Board
recommends. The Board of Directors has no reason to believe that any nominee
will be unable or will decline to serve as a director if elected.
NOMINEES
The names of the nominees for the office of director, together with certain
information concerning such nominees, are set forth below:
<TABLE>
<CAPTION>
SERVED AS
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
- ------------------------------------------------- --- --------------------- ---------------
<S> <C> <C> <C>
Lawrence P. Roches(1)(2)......................... 45 Director 1995
Robert F. Steel(1)(2)............................ 42 Director 1995
</TABLE>
- ------------------------
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Compensation Committee of the Board of Directors.
LAWRENCE P. ROCHES has served as a director of the Company since August
1995. He has been the Chief Executive Officer and a director of Melson
Technologies, Inc., a provider of investment management systems for securities,
mortgage loans and real estate portfolios since September 1994. From November
1991 to August 1994, he was employed as the Vice President of Marketing of
ShipNet Systems, Inc., an information services company. From October 1985 to May
1991, Mr. Roches was employed as Vice President of Technology and Chief Services
Officer of System Software Associates, Inc., a software company.
ROBERT F. STEEL has served as a director of the Company since August 1995.
He served as Secretary from January 1996 to May 1996. Since 1977, Mr. Steel has
served in various positions with K.A. Steel Chemicals Inc., a chemical
processing firm, most recently as President, Chief Executive Officer and
Director. Mr. Steel also serves as a director of Monterey Pasta Company and as
an officer and director of several other privately held companies.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL OF THE
NOMINEES FOR ELECTION FOR DIRECTORS OF THE FIRST CLASS.
2
<PAGE>
OTHER DIRECTORS
The following persons will continue to serve as directors of the Company
after the Annual Meeting until their terms of office expire (as indicated below)
or until their successors are elected and qualified.
<TABLE>
<CAPTION>
SERVED AS TERM
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE EXPIRES
- -------------------------------- --- ------------------------------------------------ --------------- -----------
<S> <C> <C> <C> <C>
Robert F. Bernard............... 35 Chairman of the Board, President and Chief 1984 1999
Executive Officer
Edward V. Szofer................ 37 Director, Vice President, Chief Operating 1995 1998
Officer and Secretary
Paul D. Carbery(1)(2)........... 35 Director 1995 1998
</TABLE>
- ------------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
ROBERT F. BERNARD, the founder of the Company, has served as Chairman of the
Board, President and Chief Executive Officer of the Company since its inception
in 1984. He was selected as the KPMG Illinois High Tech Entrepreneur of the Year
in 1992.
EDWARD V. SZOFER has served as a director of the Company since August 1995.
He has been Vice President and Chief Operating Officer of the Company since
January 1994 and Secretary of the Company since May 1996. From 1984 to December
1993, Mr. Szofer held various management positions with the Company in
operations. Mr. Szofer was employed as a consultant in the Management
Information Consulting division of Arthur Andersen & Co. prior to joining the
Company.
PAUL D. CARBERY has served as a director of the Company since August 1995.
Mr. Carbery has been a general partner of Frontenac Company, a private equity
investment management partnership, since June 1993 and was an associate of that
firm from September 1989 to June 1993. He also serves as a director of Eagle
River Interactive, Inc. as well as several privately held companies.
MEETINGS
During the year ended December 31, 1996, the Board of Directors held seven
meetings. Each director attended at least 75% of the aggregate of the number of
board meetings held and the total number of meetings of committees on which he
served that were held during 1996.
BOARD COMMITTEES
The Board of Directors has established an Audit Committee and a Compensation
Committee. Both the Audit Committee and the Compensation Committee are currently
composed entirely of directors who are not officers or employees of the Company.
The Company does not have a standing nominating committee.
The Audit Committee, consisting of Messrs. Carbery, Roches and Steel, is
responsible for selection, reviewing the results and scope of audits and other
services provided by the Company's independent auditors and reviewing the
Company's audit and control functions and reporting to the Board of Directors
regarding all of the foregoing. The Audit Committee did not hold any meetings in
1996.
The Compensation Committee, consisting of Messrs. Carbery, Roches and Steel,
makes recommendations concerning the salaries and incentive compensation of
employees of the Company, including the number of options to be granted to the
Company's executive officers pursuant to its incentive compensation plans, and
reporting to the Board of Directors regarding the foregoing. The Compensation
Committee held two meetings in 1996.
3
<PAGE>
DIRECTOR COMPENSATION
Except for Mr. Roches, directors do not receive any compensation for their
services, although directors are reimbursed for their reasonable out-of-pocket
expenses incurred in attending meetings. In 1996, Mr. Roches was granted a
nonqualified option to acquire 16,000 shares of Common Stock at an exercise
price of $2.315 per share (as adjusted to reflect the two-for-one split of the
shares of Common Stock, effected in the form of a stock dividend on December 10,
1996 (the "Stock Split")).
EXECUTIVE OFFICERS
Set forth below is a table identifying executive officers of the Company who
are not identified in the tables entitled "Election of Directors--Nominees" or
"--Other Directors."
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- ----------------------------------------------------------
<S> <C> <C>
Kevin M. Gaskey............ 38 Chief Financial Officer and Treasurer
Susan B. Reardon........... 41 Director of Human Resources
Stanley F. Martin.......... 42 Vice President of Marketing and Sales
</TABLE>
KEVIN M. GASKEY has served as the Chief Financial Officer and Treasurer of
the Company since April 1990. Mr. Gaskey, a certified public accountant, joined
the Company with over nine years of financial experience from his prior
positions with KPMG Peat Marwick LLP, Beatrice Companies, Inc. and Baxter
International, Inc.
SUSAN B. REARDON has served as the Company's Director of Human Resources
since February 1990. From June 1987 to January 1990, she established the human
resource function at the Company. Prior to joining the Company, Ms. Reardon
served as Human Resources Manager at TTX Co., a Chicago-based transportation
equipment leasing company.
STANLEY F. MARTIN has served as the Company's Vice President of Marketing
and Sales since January 1997. From 1994 until joining the Company, Mr. Martin
was the Area Director of Sales and Marketing for Ernst & Young LLP in New York.
From 1988 to 1994, Mr. Martin served as a Divisional Vice President with Siemens
Nixdorf Information Systems, managing a business unit that developed, marketed
and sold client server applications for the U.S. market. Mr. Martin previously
served in a variety of management positions with IBM Corporation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the Company's officers (as defined under Section 16) and
directors, and persons who own greater than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission"). Based
solely on a review of the forms it has received and on written representations
from certain reporting persons that no such forms were required for them, the
Company believes that, during 1996, all Section 16 filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with by such persons.
EXECUTIVE COMPENSATION
The following tables provide information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended December 31, 1996 and 1995 of those persons who were at December 31, 1996
(i) the chief executive officer and (ii) the four other most highly compensated
(based upon combined salary and bonus) executive officers of the Company
(collectively, with the chief executive officer, the "Named Officers"). All
share numbers and option exercise prices included in these tables have been
adjusted to reflect the Stock Split.
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(1)
---------------------------- -------------
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) ($)(2)
- --------------------------------- --------- ---------- ---------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernard ............... 1996 $ 360,000 $ 9,989 -- -- --
Chairman of the Board, 1995 360,000 -- $ 103,446(3) -- --
President and Chief Executive
Officer
Edward V. Szofer ................ 1996 $ 200,000 -- -- 854 $ 500
Vice President, Chief Operating 1995 199,000 $ 25,000 -- 115,704 500
Officer and Secretary
Kevin M. Gaskey ................. 1996 $ 165,000 $ 15,000 -- 490 $ 500
Chief Financial Officer and 1995 160,500 141,250(4) -- 124,000 500
Treasurer
Susan B. Reardon ................ 1996 $ 135,000 -- -- 576 $ 500
Director of Human Resources 1995 132,500 $ 27,000 -- 108,000 500
Glen A. Metelmann ............... 1996 $ 136,000 -- -- 582 $ 500
Director of Marketing and 1995 135,000 $ 20,400 -- 110,096 500
Sales(5)
</TABLE>
- ------------------------
(1) The Company did not issue any restricted stock or grant any stock
appreciation rights in 1996. None of the Named Executive Officers held any
restricted stock as of December 31, 1996.
(2) Represents Company matching payments under the Company's 401(k) Plan.
(3) Represents amounts paid as reimbursement for income tax liabilities incurred
as a result of the Company's predecessors' earnings.
(4) Represents a cash bonus of $41,250 and the issuance of 61,800 shares of
Common Stock on February 15, 1995.
(5) Mr. Metelmann served as the Company's Director of Marketing and Sales until
April 1997, when he became the Company's Director of Marketing and Sales for
Information Technology ("IT") Products.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR--The following table sets forth certain
information with respect to the grant of stock options by the Company to the
Named Officers during 1996. No stock appreciation rights were granted to the
Named Officers in 1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION --------------------
NAME GRANTED IN YEAR ($/SH) DATE 5% 10%
- ---------------------------------------------- ------------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernard............................. -- -- -- -- -- --
Edward V. Szofer.............................. 854 1.2% $ 18.00 6/28/06 $ 9,667 $ 24,499
Kevin M. Gaskey............................... 490 0.7 18.00 6/28/06 5,547 14,057
Susan B. Reardon.............................. 576 0.8 18.00 6/28/06 6,520 16,524
Glen A. Metelmann............................. 582 0.8 18.00 6/28/06 6,588 16,696
</TABLE>
- ------------------------
(1) These options, all of which are nonqualified stock options, were granted
pursuant to the 1995 Incentive Stock Plan. These options vested 10% upon
grant and vest an additional 22.5% on each of the first four anniversaries
of the date of the grant. The exercise price is payable in cash or, subject
to certain limitations, by delivery of shares of Common Stock.
(2) Potential realizable value is presented net of the option exercise price but
before any federal or state income taxes associated with exercise. These
amounts represent certain assumed rates of appreciation only. Actual gains
are dependent on the future performance of the Common Stock and the option
holder's continued employment throughout the vesting period. The potential
realizable value does not represent the Company's prediction of its stock
price performance. The amounts reflected in the table may not be achieved.
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END 1996 OPTION VALUES--The
following table sets forth certain information with respect to options exercises
in 1996 by the Named Officers and on the Named Officers' unexercised options at
December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE YEAR-END 1996 (#) YEAR-END 1996 ($)(1)
ACQUIRED ON REALIZED -------------------------- --------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernard.............. -- -- -- -- -- --
Edward V. Szofer............... 5,000 $ 101,275 32,572 78,806 $ 731,735 $ 1,752,332
Kevin M. Gaskey................ 20,000 403,225 31,149 73,341 696,392 1,634,865
Susan B. Reardon............... -- -- 35,157 73,419 785,973 1,635,459
Glen A. Metelmann.............. 10,800 218,417 25,056 74,822 559,897 1,666,785
</TABLE>
- ------------------------
(1) The value per option is calculated by subtracting the exercise price from
the closing price of the Common Stock on the Nasdaq National Market on
December 31, 1996, which was $25.625.
6
<PAGE>
EMPLOYMENT AGREEMENTS
The Company is a party to substantially identical employment contracts with
Messrs. Bernard, Szofer, Gaskey and Metelmann and Ms. Reardon, pursuant to which
each of those individuals serves as an executive of the Company at compensation
levels and terms to be agreed upon between those individuals and the Company.
These agreements provide that upon termination of employment by the Company,
other than for "Cause" (as defined in the agreements) or retirement, the Company
shall pay the officer an amount equal to twice the executive's annual base
compensation in effect at the time of termination in the case of Messrs. Bernard
and Szofer and the executive's annual base compensation in the case of Messrs.
Gaskey and Metelmann and Ms. Reardon. The agreements also provide that in the
event of a "Change in Control" (as defined in the agreements) and the occurrence
of certain events, and to the extent deductible under then applicable tax laws,
the Company shall pay such executives a payment equal to two times the sum of:
(i) the executives' most recent base annual compensation in effect at the date
of the "Change in Control" and (ii) the cash value of purchasing on an
individual basis insurance protection (including dependent coverage) that is
equal to the coverage then in effect with respect to the Company's health
insurance plan, based upon the cost of such insurance coverage for a six-month
period following the "Change in Control" date. Mr. Bernard's employment
agreement does not provide for payments in the event of a "Change in Control".
Each of these executives is subject to noncompetition, nonsolicitation and
nondisclosure covenants.
7
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
which is composed entirely of outside, non-employee directors, establishes the
Company's compensation strategy and policies and determines the nature and
amount of all compensation for the Company's executive officers.
The Committee recognizes that the Company's many achievements to date have
been largely a result of the outstanding efforts of the Company's senior
management team and that the Company's future success will depend substantially
on its continued ability to attract, motivate and retain talented and dedicated
senior executives. With this understanding, the Committee attempts (a) to reward
executives for superior individual and Company performance, (b) to foster
commitment to the annual and long-term business performance and growth of the
Company, (c) to create a commonality of interests between the management team
and the Company's stockholders, and (d) to provide executive compensation
packages that are fair and competitive with those provided by the Company's
competitors in the IT services industry. To accomplish these goals, the
Committee offers executive compensation packages consisting of three primary
components: (i) base salaries, (ii) annual cash incentive awards based upon
achievement of pre-determined financial targets for the Company, as well as key
individual contributions to the Company's strategic development, and (iii) stock
option awards, which enable the executives to profit only as stockholder value
increases.
In making its compensation decisions, the Committee considers overall
Company financial performance, as well as individual executive contributions, as
measured against certain objective and subjective factors which the Committee
considers important. The Committee also reviews compensation surveys prepared by
IT industry sources and, in greater detail, compensation information with
respect to a few publicly-traded companies in the IT services industry. These
companies, which the Company considers its principal competitors for executive
talent, are included in the Nasdaq Computer & Data Processing Services Index
appearing in the Performance Graph on page 10. Although the Committee does not
target each item of compensation at a particular level relative to these
comparative companies, the Committee does offer its executives the opportunity
to earn highly competitive total compensation packages, provided the Company
achieves certain financial targets and individual executive performance meets
expectations.
BASE SALARIES
Base salaries are established, in consideration of the competitive
marketplace (as discussed above), at levels which the Committee considers to be
appropriate relative to the responsibilities, experience and individual
performance of each executive officer, without assigning any specific weight to
any factor. Although the financial performance of the Company is also taken into
account in setting base salaries, cash incentive awards and stock options are
the primary components of the executive compensation packages designed to link
compensation to Company performance. Base salaries are generally subject to
annual review for adjustment by the Committee. For 1996, the Committee decided
to provide each executive officer with either a very minor increase in base
salary or no increase at all. Accordingly, Mr. Bernard, the Company's Chairman,
President and Chief Executive Officer, did not receive any increase in base
salary. The Committee's decisions with respect to base salaries reflected the
Committee's view that base salaries were already at appropriate levels for 1996
and that there should be an increased emphasis on variable, "at risk"
compensation tied to Company and individual performance.
CASH INCENTIVE AWARDS
For 1996, the Company's executive officers did not receive cash incentive
awards, except that Mr. Bernard and Mr. Gaskey were awarded small cash bonuses
to reward their contributions to the Company's achievement of important
strategic milestones, including the Company's successful completion of its
initial public offering and a subsequent public offering. Because 1996 was the
year in which the
8
<PAGE>
Company transitioned from a private to a public Company, the Committee focused
on stock option awards to foster "at risk" equity investment in the Company. The
Committee intends to enhance the performance-based components of the Company's
executive compensation program, including both cash incentive awards and stock
options, with an emphasis on long-term incentives.
STOCK OPTIONS
In addition to cash incentive awards, the Committee generally makes annual
stock option awards to the executive officers, dependent upon the Company's
financial performance for the previous year. Stock options are intended to
create long-term incentives which are directly tied to the results of the
Company's stock. The stock options have exercise prices of no less than the fair
market value of the Common Stock on the date of grant. Vesting schedules are
used to encourage continued employment with the Company and to emphasize
long-term performance.
During 1996, the Committee did not make regular stock option grants to the
Company's executive officers, primarily because of the substantial option grants
to the executive officers near the end of 1995. The Committee did, however,
allow certain executives to exchange their right to receive certain benefits
from the Company for options to purchase small numbers of shares. Furthermore,
in January 1997, as a result of the Company's achievement of 1996 profit
targets, the Committee awarded stock options to the Company's executive
officers. These option grants will be reflected in the compensation tables in
the Company's proxy statement for its 1998 annual meeting of stockholders.
COMPLIANCE WITH SECTION 162(M)
The Compensation Committee currently intends for all compensation paid to
its executive officers to be tax deductible to the Company pursuant to Section
162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)").
Section 162(m) provides that compensation paid to the executive officers in
excess of $1,000,000 cannot be deducted by the Company for Federal income tax
purposes unless, in general, such compensation is performance-based, is
established by a committee of independent directors and is objective, and the
plan or agreement providing for such performance-based compensation has been
approved in advance by stockholders. The Compensation Committee believes that
the requirements of Section 162(m) may arbitrarily impact the Company.
Accordingly, in the future, the Compensation Committee may determine to adopt a
compensation program that does not satisfy the conditions of Section 162(m) if
in its judgment, after considering the additional costs of not satisfying
Section 162(m), such program is appropriate.
COMPENSATION COMMITTEE
Robert F. Steel
Paul D. Carbery
Lawrence P. Roches
9
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the Nasdaq Stock Market-U.S. Index and the Nasdaq Computer & Data
Processing Services Index during the period commencing on May 3, 1996, the date
of the Company's initial public offering, and ending on December 31, 1996. The
comparison assumes $100 was invested on May 3, 1996 in the Common Stock, the
Nasdaq Stock Market-U.S. Index and the Nasdaq Computer & Data Processing
Services Index and assumes the reinvestment of all dividends, if any.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
5/3/1996 12/3/1996
<S> <C> <C>
Whittman-Hart, Inc. $100.00 $ 209.18
Nasdaq Stock Market - U.S. Index 100.00 109.04
Nasdaq Computer & Data Processing Services Index 100.00 107.22
</TABLE>
<TABLE>
<CAPTION>
5/3/96 12/31/96
--------- ---------
<S> <C> <C>
Whittman-Hart, Inc...................................................... $ 100.00 $ 209.18
Nasdaq Stock Market-U.S. Index.......................................... 100.00 109.04
Nasdaq Computer & Data Processing Services Index........................ 100.00 107.22
</TABLE>
10
<PAGE>
CERTAIN TRANSACTIONS
In August 1995, F-WH Corporation ("Frontenac") purchased 173,832 preferred
equity units in Whittman-Hart, L.P., a Delaware limited partnership which owned
the Company's business until December 31, 1995 ("LP"), for $4.0 million, and
PVP-WH Corporation ("Platinum") purchased 65,187 preferred equity units in LP
for $1.5 million. The preferred equity units were converted into a like number
of shares of Redeemable Preferred Stock in connection with the restructuring of
the Company effective December 31, 1995, and such shares were converted into
1,912,148 (as adjusted to reflect the Stock Split) shares of Common Stock
immediately prior to the consummation of the Company's initial public offering.
Frontenac and Platinum were granted certain registration rights with respect
to the preferred equity units and any securities issuable upon conversion of the
preferred equity units. They were also granted certain other rights, including:
(i) the right to each designate one member to the Company's five person Board of
Directors; (ii) certain class voting rights; (iii) certain preferences upon
liquidation, dissolution or winding up of the Company; (iv) a preferred dividend
accrual of 10% per annum payable upon redemption of the preferred equity units;
and (v) certain rights of first refusal and co-sale rights involving existing
management securities. In addition, Frontenac; Platinum; Whittman-Hart, Ltd., a
Delaware corporation which was the general partner of LP ("Limited"); and each
of Messrs. Bernard and Szofer entered into a Voting Agreement whereby the
parties, other than Limited, agreed to vote in favor of the others' respective
designees to the Board of Directors. The preferential rights, including those
enumerated above, and the Voting Agreement terminated immediately prior to the
consummation of the Company's initial public offering.
During the time when the Company's business was conducted as a partnership,
various loans were made among Mr. Bernard, Limited and LP, all of which have
been repaid. In January 1996, loans by the Company to Mr. Bernard aggregated
$326,356 and bore interest at the per annum rate of prime less 2%. These loans
were made to enable Mr. Bernard to make certain payments owned by him to an
affiliate of the Company. Also in January 1996, loans from Mr. Bernard to the
Company aggregated $317,413 and bore interest at the per annum rate of 10%.
These loans were made for working capital and other general corporate purposes.
On January 25, 1996, the loans were offset against each other and the remaining
balance owed by Mr. Bernard to the Company was paid in full.
In 1995, the Company acquired a 50% ownership interest in Sleep Relief
L.L.C., an Illinois limited liability company ("Sleep Relief"). Sleep Relief
develops and markets sleep laboratory software products and provides consulting,
education and risk assessment services to providers involved in the practice of
sleep medicine, as well as organizations seeking to identify sleep disorders in
targeted populations. In consideration of its ownership interest, the Company
made a nominal capital investment in Sleep Relief and committed to provide up to
$150,000 in technical and administrative support and to match capital
contributions made by other interested parties, provided an appraisal determines
that the value of Sleep Relief will increase by the value of the Company's
contribution. Mr. Bernard serves on Sleep Relief's Management Committee.
11
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 20, 1997 (except as otherwise
indicated), certain information with respect to the beneficial ownership of the
Common Stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, (ii) each of the Named
Officers, (iii) each director of the Company and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated, each person
named below has (a) an address in care of the Company's principal executive
offices, and (b) to the Company's knowledge, sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by such
person.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OWNED OWNERSHIP
- ---------------------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
Robert F. Bernard(1).............................................................. 7,687,617 38.0%
Smith Barney Mutual Funds Management Inc.(2)...................................... 1,045,000 5.2
Smith Barney Holdings Inc.(2)..................................................... 1,101,105 5.4
Travelers Group Inc.(2)........................................................... 1,101,105 5.4
Putnam Investments, Inc.(3)....................................................... 1,057,793 5.2
Edward V. Szofer(1)............................................................... 456,766 2.3
Kevin M. Gaskey(1)................................................................ 123,872 *
Susan B. Reardon(1)............................................................... 82,546 *
Glen A. Metelmann(1).............................................................. 11,871 *
Robert F. Steel(4)................................................................ -- --
Paul D. Carbery(5)................................................................ 123,574 *
Lawrence P. Roches(1)............................................................. 4,000 *
Directors and executive officers as a group (8 persons)(1)........................ 8,490,246 41.8%
</TABLE>
- ------------------------
* Less than one percent
(1) Includes shares of Common Stock which can be acquired through the exercise
of options within 60 days of March 20, 1997, as follows: Robert F. Bernard
6,633 shares; Edward V. Szofer 36,526 shares; Kevin M. Gaskey 33,872 shares;
Susan B. Reardon 36,960 shares; Glen A. Metelmann 1,871 shares; Lawrence P.
Roches 4,000 shares; and all executive officers and directors as a group
119,862 shares.
(2) As reported on a Schedule 13G filed with the Commission on February 14, 1997
(the "Travelers 13G") by Smith Barney Mutual Funds Management Inc.
("SBMFM"), Smith Barney Holdings Inc. ("SBH") and Travelers Group Inc.
("Travelers"). According to the Travelers 13G, SBMFM has shared voting and
dispositive power with respect to 1,045,000 shares, and each of SBH and
Travelers has shared voting and dispositive power with respect to 1,101,105
shares. The address of each of SBMFM, SBH and Travelers is 338 Greenwich
Street, New York, New York 10013.
(3) As reported on a Schedule 13G filed with the Commission on January 31, 1997
(the "Putnam 13G") by Putnam Investments, Inc. ("PI"), Marsh & McLennan
Companies, Inc., Putnam Investment Management, Inc. and The Putnam Advisory
Company, Inc. According to the Putnam 13G, PI has shared voting power with
respect to 66,818 shares and shared dispositive power with respect to all
1,057,793 shares. The address of PI is One Post Office Square, Boston,
Massachusetts 02109.
(4) Mr. Steel, a director of the Company, is a limited partner of Platinum
Venture Partners I, L.P. and Platinum Venture Partners II, L.P. As such, Mr.
Steel may be deemed to beneficially own the 37,564 shares of the Common
Stock beneficially owned by Platinum Venture Partners I, L.P. and the 42,930
shares of the Common Stock beneficially owned by Platinum Venture Partners
II, L.P. Mr. Steel disclaims beneficial ownership of these shares within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934 ("Exchange
Act").
(5) Mr. Carbery, a director of the Company, is a general partner of Frontenac
Company, which is the general partner of Frontenac VI Limited Partnership.
As such, Mr. Carbery may be deemed to
12
<PAGE>
beneficially own the 123,574 shares of Common Stock beneficially owned by
Frontenac VI Limited Partnership. Mr. Carbery disclaims beneficial ownership
of these shares within the meaning of Rule 13d-3 under the Exchange Act.
INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
selected KPMG Peat Marwick LLP to audit the financial statements of the Company
for the year ended December 31, 1997. A representative of KPMG Peat Marwick LLP
is expected to be present at the Annual Meeting with the opportunity to make a
statement, if such representative desires, and to respond to appropriate
questions.
MISCELLANEOUS MATTERS
STOCKHOLDER LIST--A list of stockholders entitled to vote at the Annual
Meeting, arranged in alphabetical order, showing the address of and number of
shares registered in the name of each stockholder, will be open to the
examination of any stockholder for any purpose germane to the Annual Meeting,
during ordinary business hours, commencing May 2, 1997 and continuing through
the date of the Annual Meeting, at the principal executive offices of the
Company, 311 South Wacker Drive, Suite 3500, Chicago, Illinois 60606-6618.
SOLICITATION--The cost of this proxy solicitation will be borne by the
Company. The Company may request banks, brokers, fiduciaries, custodians,
nominees and certain other record holders to send proxies, proxy statements and
other materials to their principals at the Company's expense. Such banks,
brokers, fiduciaries, custodians, nominees and other record holders will be
reimbursed by the Company for their reasonable out-of-pocket expenses of
solicitation. The Company does not anticipate that costs and expenses incurred
in connection with this proxy solicitation will exceed an amount normally
expended for a proxy solicitation for an election of directors in the absence of
a contest.
PROPOSALS OF STOCKHOLDERS--Proposals of stockholders intended to be
considered at the 1998 Annual Meeting of Stockholders must be received by the
Secretary of the Company no later than December 12, 1997.
ADDITIONAL INFORMATION--The Company will furnish, without charge, a copy of
its Annual Report on Form 10-K for the year ended December 31, 1996, as filed
with the Commission, upon the written request of any person who is a stockholder
as of the Record Date. Requests for such materials should be directed to
Whittman-Hart, Inc., 311 South Wacker Drive, Suite 3500, Chicago, Illinois
60606-6618, Attention: David P. Shelow.
By order of the Board of Directors
[EDWARD V. SZOFER SIGNATURE]
Edward V. Szofer
VICE PRESIDENT, CHIEF OPERATING
OFFICER AND SECRETARY
Chicago, Illinois
April 11, 1997
13
<PAGE>
PROXY PROXY
WHITTMAN-HART, INC.
311 SOUTH WACKER DRIVE, SUITE 3500, CHICAGO, ILLINOIS 60606-6618
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Whittman-Hart, Inc. (the "Company")
hereby appoints Robert F. Bernard and David P. Shelow, and each of them, with
full power of substitution, as attorneys and proxies for and in the name and
place of the undersigned and hereby authorizes each of them to represent and
to vote all of the shares of Common Stock of the Company held of record by
the undersigned as of March 20, 1997 which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Company (the "Annual
Meeting") to be held on May 14, 1997 at 10:00 a.m., Chicago time, at The
University of Chicago Downtown Center, 450 North Cityfront Plaza Drive,
Chicago, Illinois 60611, and at any adjournments thereof. The undersigned
stockholder hereby revokes any proxy or proxies heretofore given.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL CARDS IN
THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
WHITTMAN-HART, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
Withhold For All
Authority Except
1. ELECTION OF DIRECTORS For For as Written
(TERMS TO EXPIRE IN 2000) All All Below
NOMINEES: Lawrence P. Roches / / / / / /
Robert F. Steel
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space below.)
______________________________________________
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting, or any
adjournments thereof.
This proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. UNLESS CONTRARY DIRECTION IS GIVEN,
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED FOR ALL NOMINEES LISTED IN
PROPOSAL 1 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS
PROXIES HEREIN AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
ANNUAL MEETING. The undersigned stockholder hereby acknowledges receipt of
the Notice of Annual Meeting of Stockholders and Proxy Statement.
Dated: ____________________________, 1997
Signature(s)_______________________________________________
___________________________________________________________
Please date and sign exactly as the name appears hereon. When signing as
executor, administrator, trustee, guardian, attorney-in-fact or other
fiduciary, please give title as such. When signing as a corporation, please
sign in full corporate name by President or other authorized officer. When
signing as a partnership or limited liability company, please sign in
partnership or limited liability company name by an authorized person.
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
