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>
WHITTMAN-HART, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
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., central time, on Thursday, May 20, 1999,
at The Whittman-Hart Institute for Strategic Education, 320 North Elizabeth
Street, Chicago, Illinois 60607, for the following purposes:
(1) To elect one director of the third 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 Board of Directors has fixed the close of business on March 22, 1999
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
President and Secretary
Chicago, Illinois
April 29, 1999
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., central time, Thursday, May 20,
1999, at The Whittman-Hart Institute for Strategic Education, 320 North
Elizabeth Street, Chicago, Illinois 60607, and any adjournments thereof. This
Proxy Statement and accompanying form of proxy were first released to
stockholders on or about April 29, 1999.
RECORD DATE AND OUTSTANDING SHARES - The Board of Directors has fixed
the close of business on March 22, 1999 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 52,818,758 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 executive 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 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).
<PAGE>
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
nominee for director. Stockholders will not be allowed to cumulate their votes
in the election of the director. Shares represented by proxies which are marked
"abstain" or to deny discretionary authority on any matter will be treated as
shares present and entitled to vote which will have the same effect as a vote
against any such matters. Broker "non-votes" will have no effect in the election
of the director.
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. Broker "non-votes" are included for purposes of determining
whether a quorum is present at the Annual Meeting. A broker "non-vote" occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.
ANNUAL REPORT TO STOCKHOLDERS - The Company's Annual Report to
Stockholders for the year ended December 31, 1998, containing financial and
other information pertaining to the Company, is being furnished to stockholders
simultaneously with this Proxy Statement.
PROPOSAL
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, one director of the third class of the Company's Board of Directors
will be elected for a term of three years expiring at the Annual Meeting of
Stockholders in the year 2002. The nominee is presently serving as a director of
the Company.
The four directors whose terms of office do not expire in 1999 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 the nominee should be unable or
decline to serve, the persons named in the proxy will vote for such substitute
nominee 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 the nominee
will be unable or will decline to serve as a director if elected.
<PAGE>
NOMINEE
The name of the nominee for the office of director, together with
certain information concerning such nominee, is set forth below:
SERVED AS
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE
---- --- --------------------- --------------
Robert F. Bernard ...... 37 Director, Chairman of the 1984
Board and Chief Executive
Officer
Robert F. Bernard, the founder of the Company, has served as Chairman of the
Board and Chief Executive Officer of the Company since its inception in 1984.
From 1984 to August 1997, Mr. Bernard also served as the Company's President. He
was selected as the KPMG Illinois High Tech Entrepreneur of the Year in 1992 and
the Ernst and Young Illinois and Northwest Indiana Service Entrepeneur of the
Year in 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEE FOR
ELECTION FOR DIRECTOR OF THE THIRD CLASS.
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>
SERVED AS TERM
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE EXPIRES
- ---- --- --------------------- -------------- -------
<S> <C> <C> <C> <C>
Paul D. Carbery (1)(2)... 37 Director 1995 2001
Lawrence P. Roches (1)(2) 47 Director 1995 2000
Robert F. Steel (1)(2)... 44 Director 1995 2000
Edward V. Szofer......... 39 Director, President and 1995 2001
Secretary
_______________________
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
</TABLE>
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
Mastering, Inc. as well as several privately held companies.
<PAGE>
Lawrence P. Roches has served as a director of the Company since August
1995. Mr. Roches has served as (i) a director of Stream Technology, Inc. since
March 1999, (ii) a director and the Chief Executive Officer of Copernicus
Interactive, Inc. since September 1998 and (iii) Chairman of the Board of
Directors of DBS Communications, Inc. since August 1998. He was the Chief
Executive Officer and a director of Quantra Corporation, a provider of
investment management systems for securities, mortgage loans and real estate
portfolios from September 1994 to March 1998. Prior to 1994, Mr. Roches held
executive management positions at ShipNet Systems, Inc. and Systems Software
Associates, Inc.
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 an officer and director of several other
privately held companies.
Edward V. Szofer has served as a director of the Company since August
1995, has been President since August 1997 and Secretary since May 1996. From
December 1993 through July 1997, Mr. Szofer served as Vice President of the
Company. From 1984 to December 1993, Mr. Szofer held various management
positions with the Company in operations. Mr. Szofer was employed as a
consultant of Arthur Andersen LLP prior to joining the Company.
MEETINGS
During the year ended December 31, 1998 the Board of Directors held six
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 1998.
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 held two meetings in 1998.
The Compensation Committee, consisting of Messrs. Carbery, Roches and
Steel, makes recommendations concerning the salaries and incentive compensation
for the employees of the Company, including the number of options to be granted
to the Company's executive officers pursuant to its incentive compensation
<PAGE>
plans, and reporting to the Board of Directors regarding the foregoing. The
Compensation Committee held two meetings in 1998.
DIRECTOR COMPENSATION
Members of the Board of Directors receive no cash compensation for
their services as directors, except for Mr. Roches who receives $3,000 annually.
Directors are reimbursed for their reasonable out-of-pocket expenses incurred in
attending meetings.
Effective for 1999, non-employee directors will participate in the
Company's 1995 Incentive Stock Plan. Awarding stock options to non-employee
directors is intended to further align director and stockholder interests,
reflect industry practices and assist in attracting and retaining capable
directors. For 1999, on the date of the Annual Stockholders' meeting, Paul D.
Carbery will receive option grants for 10,000 shares (vesting in 50% increments
over the two years remaining of his current term) and Lawrence P. Roches and
Robert F. Steel will each receive option grants for 5,000 shares (each vesting
at the end of the remaining one year of their current terms). The exercise price
will be fair market value of the Company's common stock on the date of grant.
Options will expire on the tenth anniversary of the date of the option grant.
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."
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
Kevin M. Gaskey 40 Chief Financial Officer and Treasurer
Michael J. Berent 47 Executive Vice President, North
American Operations
Stanley F. Martin 44 Executive Vice President, Strategic Services
Kevin M. Gaskey, a certified public accountant, has served as the Chief
Financial Officer and Treasurer of the Company since early 1990. From 1985 to
1990, Mr. Gaskey held various corporate and division financial management
positions with Baxter International, Inc., with a significant focus on Baxter's
Caribbean operations, as well as overseeing the financial arm of their start-up
software entity. Prior to 1985, Mr. Gaskey was employed by Beatrice Companies,
Inc. and KPMG Peat Marwick LLP.
Michael J. Berent has served as the Executive Vice President, North
American Operations since December 1998. Mr. Berent joined the Company in
October 1997 as the Company's Chicago Branch Manager. Prior to October 1997, Mr.
Berent held various management positions with Ernst & Young LLP, CA/Cullinet and
GTE Corporation. Mr. Berent joined the company from Ernst & Young LLP where he
was a partner responsible for several multi-national clients.
<PAGE>
Stanley F. Martin has served as the Executive Vice President, Strategic
Services since December 1998. Mr. Martin served as the Company's Chief Operating
Officer from August 1997 to November 1998. Mr. Martin joined the Company in
January 1997 as the Vice President of Sales and Marketing before becoming the
Company's Chief Operating Officer. From 1994 until joining the Company, Mr.
Martin was the Area Director of Sales and Marketing for Ernst & Young LLP in New
York. Prior to 1994, Mr. Martin held management positions at Siemen Nixdorf
Information Systems and 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 executive officers (as defined under Section
16 of the 1934 Act) 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 1998, all Section 16 filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with by such persons.
<PAGE>
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, 1998, 1997, and 1996 of those persons who were
at December 31, 1998, (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").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS ($) COMPENSATION($) AWARDS(1) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- --------- --------- --------------- --------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert F. Bernard 1998 $130,152 -- -- -- 102,000 --
Chairman of the Board 1997 360,000 10,368 -- -- 76,166 --
and Chief Executive 1996 360,000 9,989 -- -- -- --
Officer
Edward V. Szofer 1998 $242,789 -- -- -- 82,000 $1,200
President and Secretary 1997 218,750 6,480 -- -- 1,200
45,316
1996 200,000 -- -- -- 500
1,708
Kevin M. Gaskey 1998 $235,577 -- -- -- 82,000 $1,200
Chief Financial Officer 1997 191,250 5,760 -- -- 1,200
30,290
and Treasurer 1996 165,000 15,000 -- -- 500
980
Michael J. Berent 1998 305,769 4,500 -- -- 36,000 --
Executive Vice President, 1997 17,307 -- -- $610,500(3) 110,000 --
North American 1996(4) -- -- -- -- -- --
Operations
Stanley F. Martin 1998 $242,308 -- -- -- 113,300 $1,200
Executive Vice President, 1997 189,327 33,069(5) -- -- 85,510 --
Strategic Services 1996(4) -- -- -- -- -- --
- ---------------
(1) The Company did not issue any restricted stock or grant any stock
appreciation rights to the Named Officers in 1998. None of the Named
Officers, other than Michael Berent, holds restricted stock as of
December 31, 1998.
(2) Represents Company matching payments under the Company's 401(k) Plan.
(3) The Company awarded Michael Berent a restricted stock award for 44,000
shares at on October 28, 1997. The value of the award is based on the
closing stock price on October 28, 1997 of $13.875. On October 28,
1997, 11,000 shares vested immediately. The remainder of the award
vests in equal amounts of 8,250 on each subsequent anniversary for a
four year period. On December 31, 1998 the value of the award is
$1,215,750 based on a closing stock price on that date of $27.63 per
share. Mr. Berent will be entitled to all dividends declared on the
Common Stock with respect to his restricted stock awards.
(4) Messrs. Berent and Martin were not employed by the Company in 1996.
(5) Represents a relocation payment of $27,789 and a cash bonus of $5,280
paid in accordance with the Company's incentive policies.
</TABLE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR --The following table sets forth certain
information with respect to the grant of stock options by the Company to the
Named Officers during 1998. No stock appreciation rights were granted to the
Named Officers in 1998.
<TABLE>
OPTION GRANTS IN 1998
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS(1) TERM(2)
------------------------------------- ------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN
NAME OPTIONS 1998 EXERCISE PRICE($) EXPIRATION DATE 5% ($) 10% ($)
- ---- ------------- -------------- ----------------- --------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernard 22,000 0.21% $14.88 1/21/08 205,875 521,728
40,000 0.39% 24.50 7/01/08 616,317 1,561,868
40,000 0.39% 17.56 10/01/08 441,736 1,119,445
------
102,000
Edward V. Szofer 22,000 0.21% 14.88 1/21/08 205,875 521,728
60,000 0.58% 20.00 5/21/08 754,674 1,912,491
------
82,000
Kevin M. Gaskey 22,000 0.21% 14.88 1/21/08 205,875 521,728
60,000 0.58% 20.00 5/21/08 754,674 1,912,491
------
82,000
Michael J. Berent 4,000 0.04% 14.88 1/21/08 37,432 94,860
32,000 0.31% 20.00 5/21/08 402,492 1,019,995
------
36,000
Stanley F. Martin 22,000 0.21% 14.88 1/21/08 205,875 521,728
60,000 0.58% 20.00 5/21/08 754,674 1,912,491
31,300 0.30% 16.31 10/08/08 321,101 813,735
------
113,300
(1) These options, all of which are nonqualified stock options, were granted
pursuant to the 1995 Incentive Stock Plan. These options have varying
vesting amounts and periods. The exercise price is payable in cash or,
subject to certain limitations, by delivery of shares of Common Stock.
(2) Potential realizable value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains are dependent on the future performance of the Common Stock and the
option holder's continued employment throughout the vesting period. The
potential realizable value does not represent the Company's prediction of
its stock price performance. The amounts reflected in the table may not be
achieved.
</TABLE>
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END 1998 OPTION VALUES--The
following table sets forth certain information with respect to options exercises
in 1998, by the Named Officers and on the Named Officers' unexercised options at
December 31, 1998.
<TABLE>
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END 1998 OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT YEAR- MONEY OPTIONS AT YEAR-END
END 1998(#) 1998($)(1)
---------------------- ----------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernard -- -- 58,986 119,180 $ 829,064 $ 1,288,071
Edward V. Szofer 40,000 $610,278 160,651 149,781 3,916,145 2,349,397
Kevin M. Gaskey 40,000 620,074 80,651 140,619 1,890,937 2,188,435
Michael Berent 42,000 231,787 2,800 101,200 39,714 1,258,806
Stanley F. Martin 16,000 186,750 28,863 153,947 381,933 1,773,530
(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, 1998, which was $27.63.
(2) The value is calculated by subtracting the exercise price per share from
the fair market value at the time of exercise and multiplying by the
number of shares exercised pursuant to the option.
</TABLE>
EMPLOYMENT AGREEMENTS
The Company is a party to substantially identical employment contracts
with Messrs. Bernard, Szofer and Gaskey, 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 in equal semi-monthly installments over two years an amount
equal to twice the executive's annual base compensation in effect at the time of
termination. 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 payable in equal semi-monthly installments over two years. 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.
<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 to:
o reward executives for superior individual and Company performance,
o foster commitment to the annual and long-term business performance
and growth of the Company,
o align the interests of the management team and the Company's
stockholders, and
o provide executive compensation packages that are fair and
competitive with those provided by the Company's competitors in the
Information Technology ("IT") services industry.
To accomplish these goals, the Committee offers executive compensation packages
consisting of three primary components:
o base salaries,
o 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
o 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 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 in this Proxy Statement. 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
<PAGE>
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 1998, the Committee decided
to increase executive officers' base salaries based on a review of competitive
practices and the growth of the Company. However, Mr. Bernard, the Company's
Chairman and Chief Executive Officer, has entered into a special pay arrangement
which is discussed further below (see "CEO Compensation").
INCENTIVE AWARDS
Annual cash incentive awards are based upon achievement of
pre-determined financial targets for the Company, as well as key individual
contributions to the Company's strategic development. For 1998, the Company's
executive officers earned cash incentive awards based on results versus targets
(see "CEO Compensation" below for information on the Chief Executive Officer).
In keeping with the Company's philosophy of aligning executive and shareholder
interests, executives were given the opportunity to elect to receive stock
options in lieu of the cash compensation earned under the annual incentive plan,
which all executives did. By foregoing cash incentives for stock options, the
variable "at risk" component of the executive's compensation package increased,
further motivating executives to increase shareholder value over the long term
and demonstrating their confidence in the future success of the Company. Under
the program, the amount of the stock option grant is determined by the Committee
based on consideration of a number of factors, including a present value
estimate of stock option value, the degree of risk incurred by the executive and
the positive economic impact to the Company of participation in the program.
STOCK OPTIONS
Stock option awards comprise the largest portion of the value of an
executive's total compensation package and serve as the cornerstone of the
Corporation's executive compensation program. The Compensation Committee
believes that stock options align executive interests with those of
stockholders, encourage retention of experienced personnel and create
appropriate incentives to maximize stockholder value. The Committee generally
makes annual stock option awards to the executive officers, depending upon the
Company's financial performance for the previous year. Other factors in
developing award levels include individual performance and industry practices.
Stock options generally 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
<PAGE>
encourage continued employment with the Company and to emphasize long-term
performance.
FOCUS 2002
In 1998 the Committee adopted a one-time, special stock option award
called Focus 2002. This program is designed to drive the creation of substantial
increases in shareholder value and enhance the retention of key executives. All
awards were at fair market value at the time of grant. Focus 2002 stock options
have a performance vesting feature based on stock price appreciation. Stock
options may be vested by performance during a three-year window starting
December 31, 1999 and ending December 31, 2002. For any stock options to vest by
performance, the stock price needs to double from the price at grant and, for
full vesting, the stock price must triple. To make sure that there is a
sufficient retention incentive in these awards, no more than 50% can vest in a
given year. In order to maintain favorable accounting treatment, stock options
that are not performance vested by the end of 2002 will vest by continued
service over a seven-year period.
CHIEF EXECUTIVE OFFICER COMPENSATION
During the course of 1998, the Compensation Committee, with the aid of
an independent executive compensation consulting firm, recommended to the Board
of Directors a reconfiguration of the compensation structure for the Chief
Executive Officer. The reconfiguration further emphasizes the Board's belief
that the role that the Chief Executive Post is to create stockholder value.
Under the new program, all salary and cash bonuses were eliminated
leaving stock options and their associated gains as the sole source of
compensation. Without any base salary or bonus paid in cash, the Chief Executive
Officer's compensation is entirely dependent on the creation of incremental
market value through setting strategic direction and achieving expected
financial performance. Mr. Robert Bernard, the present Chief Executive Officer
consented to be employed under the structure and the Board approved its
implementation.
Of the 102,000 shares granted as options to the Chief Executive Officer
in 1998, 80,000 were granted under this new structure and 22,000 shares had been
granted from the earlier compensation structure. The Compensation Committee and
Board of Directors believe that this structure will help insure a focus by the
Chief Executive Officer on the strategic and financial results that build
stockholder value.
COMPLIANCE WITH SECTION 162(M)
For 1998, the Company was for the first time subject to Section 162(m)
of the Internal Revenue Code of 1986, as amended ("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). 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
<PAGE>
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
Paul D. Carbery
Lawrence P. Roches
Robert F. Steel
<PAGE>
CERTAIN TRANSACTIONS
In September 1997, the Company sold a fixed asset management software
product to Fortress Technologies, Inc. ("Fortress") for a price of $1.1 million.
Robert Bernard, the Company's Chief Executive Officer is a 16.8% owner of
Fortress. During 1998, the Company leased certain employees to Fortress and
provided certain incidental office equipment rental, the charges for which
(totaling $1,602,500) were calculated as the total cost to the Company of gross
wages and benefits for those personnel plus $2,000 per month. The Company also
assigned its leasehold interest in certain office space to Fortress, but remains
contingently liable on the lease because it was the original tenant. Fortress
paid the entire $61,000 rent directly to the landlord. The Company believes that
the terms of these transactions are at least as favorable as those which could
have been provided to unrelated parties.
<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, 1998. 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.
Note: The Common Stock performance shown below is not necessarily indicative of
future price performance.
[GRAPHIC OMITTED]
<TABLE>
5/3/96 12/31/96 12/31/97 12/31/98
------ -------- -------- --------
<S> <C> <C> <C> <C>
Whittman-Hart, Inc. $100.00 $209.18 $279.59 $451.10
Nasdaq Stock Market Index - U.S. Index 100.00 109.04 133.87 188.18
Nasdaq Computer & Data Processing Services Index 100.00 107.22 131.68 236.10
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 31, 1999 (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.
PERCENT OF
NAME TOTAL OWNERSHIP
- ---- ----- ----------
Robert Bernard (1)................................ 12,918,608 24.4%
American Express Company (2)...................... 3,907,500 7.4%
Putnam Investments, Inc. (3)...................... 3,479,000 6.6%
GeoCapital, LLC (4)............................... 3,150,750 6.0%
Pilgrim Baxter & Associates, Ltd. (5)............. 3,082,100 5.8%
Edward V. Szofer(1)............................... 817,039 1.5%
Paul D. Carbery................................... 123,574 *
Kevin M. Gaskey(1)................................ 42,549 *
Stanley F. Martin(1).............................. 39,371 *
Michael J. Berent(1).............................. 30,954 *
Lawrence P. Roches(1)............................. 24,000 *
Robert F. Steel................................... - *
Directors and executive officers
as a group (persons)(1) ....................... 13,996,095 26.5%
- ---------------------
*less than 1%
(1) Includes shares of Common Stock which can be acquired through the
exercise of options within 60 days of March 31, 1998, as follows: Robert
F. Bernard 88,386; Edward V. Szofer 176,559; Kevin M. Gaskey 42,549;
Stanley F. Martin 39,371; Michael J. Berent 20,954; Lawrence P. Roches
24,000; and all executive officers and directors as a group 391,819.
(2) As reported on Schedule 13G filed with the Commission on January 22,
1999, by American Express Company, American Express Financial Corporation
has shared voting power with respect to 3,150,500 shares and shared
dispositive power with respect to 3,907,500 shares. The address of
American Express Company is IDS Tower 10, T33/52, Minneapolis, MN 55440.
(3) As reported on Schedule 13G filed with the Commission on February 18,
1999 by Putnam Investments, Inc. ("PI"), Marsh and McLennan Companies,
Inc., Putnam Investment Management, Inc. and the Putnam Advisory Company,
Inc., PI has shared voting power with respect to 63,600 shares and
<PAGE>
dispositive power with respect to all 3,479,000 shares. The address of PI
is One Post Office Box Square, Boston, MA 02109.
(4) The address of Geocapital, LLC is 767 Fifth Avenue, 45th floor, New York,
NY 10153-4590.
(5) As reported on Schedule 13G filed with the Commission on February 9, 1999
by Pilgrim Baxter and Associates, Ltd., Pilgram Baxter and Associates,
Ltd. has the sole voting power with respect to 2,645,200 shares, shared
voting power with respect to 3,082,100 and sole dispositive power with
respect to 3,082,100. The address of Pilgrim Baxter and Associates, Ltd.
is 825 Duportail Road, Wayne, PA 19087
INDEPENDENT AUDITORS
The Company's certified public accountants for 1999 were KPMG LLP and
the Board of Directors, upon recommendation of the Audit Committee, has selected
KPMG LLP to audit the financial statements of the Company for the year ended
December 31, 1999. A representative of KPMG 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 10, 1999 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 for inclusion in
proxy materials for the 2000 Annual Meeting of Stockholders must be received by
the Secretary of the Company no later than December 31, 1999. In addition,
notice of any other business to be brought before the 2000 Annual Meeting of
Stockholders by a stockholder that is not included in the proxy materials for
such meeting, must be delivered, to the Company's Secretary together with
certain prescribed information, no less than 60 and no more than 90 days prior
to May 20, 2000; provided that if the date of the 2000 Annual Meeting is either
thirty days prior to or more than 60 days after May 20, 2000, the such
<PAGE>
stockholder's notice must be delivered not later than the later of 60 days prior
to the annual meeting date or ten days following the day on which public
announcement of the meeting date is first made.
ADDITIONAL INFORMATION--The Company will furnish, without charge, a
copy of its Annual Report on Form 10-K for the year ended December 31, 1998, 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
Chicago, Illinois
April 29, 1999
<PAGE>
PROXY
WHITTMAN-HART, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 1999.
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 22, 1999, which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held on May 20, 1999 at 10:00 a.m., central time, at The Whittman-Hart Institute
for Strategic Education, 320 North Elizabeth Street, Chicago, Illinois 60607,
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.
WHITTMAN-HART, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. |X| [____]
1. Election of Director (Term to expire in 2002)
Nominee:
Robert F. Bernard
(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 annual 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 THE NOMINEE LISTED
IN PROPOSAL 1, AND 2 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: ____________________, 1999
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 -
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
