<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ICT Group, 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>
ICT GROUP, INC.
800 Town Center Drive
Langhorne, Pennsylvania 19047
-------------------------------
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 20, 1997
-------------------------------
TO THE SHAREHOLDERS OF
ICT GROUP, INC.:
Notice is hereby given that the 1997 annual meeting of shareholders
(the "Annual Meeting") of ICT GROUP, INC. (the "Company" or "ICT") will be held
at the Sheraton Hotel, Langhorne, Pennsylvania on May 20, 1997, at 10:00 a.m.,
local time, for the following purposes:
1. To elect two directors;
2. To ratify the selection of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year
ending December 31, 1997; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders of record as of the close of business on April 14,
1997 will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and any adjournments thereof. A list of shareholders of the Company as
of the close of business on April 14, 1997 will be available for inspection
during normal business hours for ten days prior to the Annual Meeting at the
Company's executive offices at 800 Town Center Drive, Philadelphia, Pennsylvania
19047.
By order of the board of directors,
/s/ Carl E. Smith
-----------------------------
Carl E. Smith
Secretary
Langhorne, Pennsylvania
April 25, 1997
===============================================================================
EACH SHAREHOLDER IS URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF A SHAREHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE
MAY, IF SO DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
===============================================================================
<PAGE>
ICT GROUP, INC.
800 Town Center Drive
Langhorne, Pennsylvania 19047
-------------------------------
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 20, 1997
-------------------------------
General Information on the Meeting
This proxy statement and the accompanying form of proxy are being
mailed on or about April 25, 1997 to the shareholders of ICT Group, Inc. (the
"Company" or "ICT"). These materials are being furnished in connection with the
solicitation by the board of directors of the Company of proxies to be voted at
the 1997 Annual Meeting of Shareholders (the "Annual Meeting") to be held at the
Sheraton Hotel, Langhorne, Pennsylvania on May 20, 1997, at 10:00 a.m., local
time, and at any adjournments thereof.
The entire cost of soliciting proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by telephone by
officers and directors and a small number of regular employees of the Company
who will not be specially compensated for such services. The Company also will
request banks and brokers to solicit proxies from their customers, where
appropriate, and will reimburse such persons for reasonable expenses incurred in
that regard.
Voting at the Meeting
Only shareholders of record at the close of business on April 14, 1997
are entitled to notice of, and to vote at, the Annual Meeting. As of April 14,
1997, there were 11,553,527 shares of Common Stock outstanding. Each shareholder
entitled to vote shall have the right to one vote for each share of Common Stock
outstanding in such shareholder's name.
The Company presently has no other class of stock outstanding and
entitled to be voted at the Annual Meeting. The presence in person or by proxy
of shareholders entitled to cast a majority of all votes entitled to be cast at
the Annual Meeting will constitute a quorum.
Shares cannot be voted at the Annual Meeting unless the holder of
record is present in person or by proxy. The enclosed form of proxy is a means
by which a shareholder may authorize the voting of his or her shares at the
Annual Meeting. Directors are to be elected at the Annual Meeting by a plurality
of the votes cast by holders of Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote. In the case of shares that are
present at the Annual Meeting for quorum purposes, not voting those shares for a
particular nominee for director (including by withholding authority on the
proxy) will not operate to prevent the election of that nominee if he otherwise
receives affirmative votes; an abstention on any other item will operate to
prevent approval of the item to the same extent as a vote against approval of
such item and a broker "non-vote" on any item (which results when a broker
holding shares for a beneficial owner has not received timely voting
instructions on certain matters from such beneficial owner and those matters are
matters with respect to which the broker has no discretion to vote) will have no
effect on the outcome of the vote on such item. The shares of Common Stock
represented by each properly executed proxy will be voted at the Annual Meeting
in accordance with each shareholder's directions. Shareholders are urged to
specify their choices by marking the appropriate boxes on the enclosed proxy
card. If no choice has been specified and the enclosed proxy card is properly
executed and returned, the shares will be voted for all nominees listed herein
under "Election of Directors" and for ratification of the selection of Arthur
Andersen LLP as the Company's independent public accountants for the fiscal year
ended December 31,
<PAGE>
1997. If any other matters are properly presented to the Annual Meeting for
action, the proxy holders will vote the proxies (which confer discretionary
authority to vote on such matters) in accordance with their best judgment.
Execution of the accompanying proxy will not affect a stockholder's
right to attend the Annual Meeting and vote in person. Any stockholder giving a
proxy has the right to revoke it by giving written or oral notice of revocation
to the Secretary of the Company, or by delivering a subsequently executed proxy,
at any time before the proxy is voted.
Your proxy vote is important. Accordingly, you are asked to complete,
sign and return the accompanying proxy card whether or not you plan to attend
the Annual Meeting. If you plan to attend the Annual Meeting to vote in person
and your shares are registered with the Company's transfer agent in the name of
a broker or bank, you must secure a proxy from your broker or bank assigning
voting rights to you for your shares of Common Stock.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The board of directors of the Company currently consists of four
members and is divided into three classes, two classes each consisting of one
director and one class consisting of two directors. One class is elected each
year to hold office for a three year term and until the election and
qualification of the director's successor or until the director's death, removal
or resignation. At the Annual Meeting, two directors are to be elected for the
current class. The term of office for each director elected at the Annual
Meeting will expire at the 2000 annual meeting of shareholders.
John J. Brennan and John A. Stoops, both of whom are current members of
the board of directors, have been nominated by the board of directors for
election as directors at the Annual Meeting.
All nominees have consented to be named and to serve if elected. Unless
otherwise instructed by the shareholders, the persons named in the proxies will
vote the shares represented thereby for the election of such nominees. The board
of directors believes all nominees will be able to serve as directors; if this
should not be the case, however, the proxies may be voted for one or more
substitute nominees to be designated by the board of directors or the board may
decide to reduce the number of directors. The board of directors recommends a
vote FOR each of the nominees.
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NOMINEES FOR ELECTION
-----------------------------------------------------------
<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- ---------------------------------------------------------
<S> <C> <C>
John J. Brennan 53 Mr. Brennan has served as Chairman, President and Chief Executive Officer of the
Company and as a director since 1987, when he managed the buyout of ICT's
predecessor company, International Computerized Telemarketing, Inc., from
Decision Industries Corporation ("DIC"). Mr Brennan was employed by DIC
from May 1983 to March 1987 and over that period served as Vice President of
Product Marketing, Vice President of Corporate Planning and Business
Development and President of its subsidiary, International Computerized
Telemarketing.
John A. Stoops 43 Mr. Stoops has been Vice President and General Manager of Books and
Information Services for American Express Publishing Corporation, a joint
venture between American Express and Time Publishing, since January 1995.
From November 1990 to September 1994, Mr. Stoops was President of Atlas
Editions, U.S.A. He has been a director of the Company since 1996.
</TABLE>
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Director Continuing in Office with Term Expiring in 1998
-----------------------------------------------------------
<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- ---------------------------------------------------------
<S> <C> <C>
Bernard Somers 48 Mr. Somers has been a partner of Somers & Associates, Chartered Accountants,
located in Dublin, Ireland, since 1988. Mr. Somers has been a director of the
Company since 1996. He currently serves as a director of Eurotel Marketing
Limited, a subsidiary of the Company, and Commerzbank Europe (Ireland) Ltd.
3
<PAGE>
-----------------------------------------------------------
Director Continuing in Office with Term Expiring in 1999
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- ---------------------------------------------------------
<S> <C> <C>
Donald P. Brennan 56 Donald P. Brennan has served as a Vice Chairman and director of the
Company since April 1987. He has been an Advisory Director of Morgan
Stanley & Co. Incorporated since February 1996. Prior to that time, Mr.
Brennan was a Managing Director and Head of the Merchant Banking
Division of Morgan Stanley & Co. Incorporated since 1986, and also has
served as Chairman of Morgan Stanley Capital Partners III, Inc., Chairman
of Morgan Stanley Leveraged Equity Fund II, Inc., Chairman of Morgan
Stanley Venture Partners and a director of Morgan Stanley & Co.
Incorporated. Mr. Brennan currently serves as a director of Fort Howard
Corporation, Jefferson Smurfit Corporation and SITA Telecommunications,
N.V.
</TABLE>
General Information Concerning the Board of Directors and its Committees
The board of directors of the Company met on two occasions during 1996.
The Pennsylvania Business Corporation Law provides that the board of directors,
by resolution adopted by a majority of the entire board, may designate one or
more committees, each of which shall consist of one or more directors. The board
of directors annually elects from its members an Audit Committee and
Compensation Committee. Each director attended at least 75% of the aggregate of
the meetings of the board of directors held during the period for which he was a
director, and the meetings of the committee or committees on which he served
during such period.
Audit Committee. The Audit Committee is responsible for providing
general oversight with respect to the accounting principles employed in ICT's
financial reporting. The Audit Committee meets at least annually with the
Company's principal financial and accounting officers and independent public
accountants to review the scope of auditing procedures, the Company's policies
relating to internal auditing and accounting procedures and controls, and to
discuss results of the annual audit of the Company's financial statements. The
Audit Committee, which was created in July 1996 following the initial public
offering, met once during 1996. The Audit Committee is currently composed of
three non-employee directors, Donald P. Brennan, Bernard Somers and John A.
Stoops.
Compensation Committee. The Compensation Committee has general
supervisory power over, and the power to grant options under, the Company's
stock option plans. In addition, the Compensation Committee recommends to the
board the compensation of the Company's Chairman, President and Chief Executive
Officer, reviews and takes action on the recommendations of the Chairman,
President and Chief Executive Officer as to the compensation of the Company's
other officers and key personnel, approves the grants of any bonuses to
officers, and reviews other compensation matters generally. The Compensation
Committee, which was created in July 1996 following the initial public offering,
met once during 1996. The Compensation Committee is currently composed of two
non-employee directors, Donald P. Brennan and Bernard Somers.
4
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
John J. Brennan 53 Chairman, President, Chief Executive Officer
Carl E. Smith 49 Senior Vice President, Finance and Admin-
istration, Chief Financial Officer, and Secretary
John L. Magee 43 President, ICT TeleServices
Dean J. Kilpatrick* 52 President, ICT Marketing Services
John D. Campbell 41 President, ICT Domestic Sales and Senior Vice
President, Sales and Marketing
James J. Shannon* 43 President, ICT International Sales and Senior
Vice President, Sales and Marketing
Maurice J. Kerins 43 Senior Vice President, Systems and Technology
Robert F. Small 45 Senior Vice President, Corporate Planning and
Development
</TABLE>
- --------------
*Chosen to become an executive officer
John J. Brennan's employment background is described above under
"Nominees for Election."
Carl E. Smith joined the Company as Senior Vice President, Finance and
Administration and Chief Financial Officer in October 1994 and was elected
Secretary of the Company in 1995. From April 1992 to October 1994, he was
employed by DNA Plant Technology Corporation, an agricultural biotechnology
company, where he served as Vice President of Finance. From April 1990 to April
1992, Mr. Smith was employed by Envirosafe Services, Inc., a hazardous waste
management company, where he served as Vice President of Finance and Chief
Financial Officer.
John L. Magee has served as the President of ICT TeleServices since
January 1996 and was the Executive Vice President, Operations between January
1994 and January 1997. From November 1987 to January 1994, he served as Senior
Vice President, Operations of the Company.
Dean J. Kilpatrick has served as President of ICT Marketing Services
since September 1996 and was the President of ICT Research Services from May
1994 to September 1996. From January 1992 to April 1994, Mr. Kilpatrick was the
sole proprietor of Kilpatrick and Associates, a direct marketing consulting
firm. Between February 1988 and January 1992, Mr. Kilpatrick was Vice President,
Marketing for StarTV, Inc., a start-up television network business. From 1986 to
1988, Mr. Kilpatrick was Executive Vice President of MRI, Inc., a market
research company.
John D. Campbell has served as President of ICT Domestic Sales since
January 1997 and as Senior Vice President, Sales and Marketing since January
1990 . Mr. Campbell served as the President of ICT Direct between January 1994
and January 1997.
James J. Shannon has served as President of ICT International Sales and
Senior Vice President, Sales and Marketing since August 1996. From August 1992
until August 1996, Mr. Shannon was employed by Lexmark International, Inc., a
company engaged in the development, manufacturing and distribution of printing
solutions, where he served as the Director of Sales and Marketing.
5
<PAGE>
Maurice J. Kerins has served as the Company's Senior Vice President,
Systems and Technology since April 1991 and as the Company's Vice President,
Systems and Technology from November 1988 to April 1994.
Robert F. Small has served as the Company's Senior Vice President,
Corporate Planning and Development since April 1995. From January 1993 to April
1995, he served as the Company's Vice President, Client Services, and from
January 1987 to January 1993, he served as the Company's Vice President,
Finance.
John J. Brennan and Donald P. Brennan are brothers.
Certain Relationships and Related Transactions Involving Executive Officers and
Directors
Voting Trust Agreement. John J. Brennan, Donald P. Brennan and the
Company have entered into a Voting Trust Agreement that terminates December 3,
2080 (the "Voting Trust Agreement"), with John J. Brennan and Donald P Brennan
as voting trustees. All acts of the voting trustees under the Voting Trust
Agreement must be by unanimous consent, although the agreement provides that the
voting trustees all be present for purposes of constituting a quorum at any
meeting of the shareholders, regardless of whether the shares subject to the
Voting Trust Agreement are to be voted at the meeting. Upon the death,
incompetence or resignation of John J. Brennan as a voting trustee, Donald P
Brennan shall have the right to (i) be the sole voting trustee if he becomes
actively involved in the Company, which shall include, up to December 31, 1999,
becoming Chairman and appointing a President and Chief Executive Officer, and
thereafter holding the position of President and Chief Executive Officer, or
(ii) appoint a successor trustee if he does not become, or ceases to be,
actively involved in the Company. Upon the death, incompetence or resignation of
Donald P. Brennan as a voting trustee, John J. Brennan shall have the right to
be the sole voting trustee.
Shareholders' Agreement. John J. Brennan, Donald P. Brennan and the
Company have entered into a Shareholders' Agreement that covers the shares
included under the Voting Trust Agreement and any other shares that they may own
(the "Shareholders' Agreement"). The Shareholders' Agreement prohibits the
transfer of shares owned by John J. Brennan and Donald P. Brennan, without the
consent of the other, except (i) pursuant to a public offering, (ii) to certain
family members and trusts therefor who agree to be bound by the Shareholders'
Agreement, (iii) to the other party, or the Company, pursuant to rights of first
refusal and (iv) to a third party if the first refusal rights have not been
exercised.
Voting Agreement. Each of the Company's employee optionholders has
entered into a ten-year voting agreement (the "Voting Agreements") with the
Company and John J. Brennan, the Chairman, President and Chief Executive
Officer, pursuant to which each has agreed to vote all shares of Common Stock
received by such individuals upon the exercise of options in the manner directed
by Mr. Brennan. The Voting Agreements are binding on each of the optionholders'
successors in interest. Mr. Brennan is required to release shares covered by the
Voting Agreements if a shareholder intends to sell shares in the public market
and completes the sale within 90 days of the release. Shares sold in the public
market will thereafter not be subject to the Voting Agreements.
Guaranties by John J. Brennan and Donald P. Brennan. In April 1996, the
Company entered into an amended and restated loan agreement (the "Amended and
Restated Loan Agreement") whereby the lender (the "Bank") (i) made available a
$15,000,000 line of credit and a $3,500,000 equipment line of credit, (ii)
advanced a $1.5 million short-term loan and (iii); revised the terms of two term
loans previously advanced in the principal amounts of $1,350,000 and $1,000,000.
John J. Brennan and Donald P. Brennan (collectively, the "Brennans") issued
personal, unconditional guaranties to the Bank under which each jointly and
severally guaranteed the repayment of the loans issued under the Amended and
Restated Loan Agreement. In July 1996, the Bank released the personal guarantees
of John J. Brennan and Donald P. Brennan.
Loan to the Company by Donald P. Brennan. In March 1987, Donald P.
Brennan loaned $100,000 to the Company at an interest rate of 12% per annum and
was issued a promissory note (the "Brennan Note"). Principal repayments on the
Brennan Note were restricted by various loan agreements entered into by the
Company. Under the terms of an Amended and Restated Subordination Agreement
entered into in April 1996 in connection with the Amended and
6
<PAGE>
Restated Loan Agreement, the Company was permitted to make principal payments of
up to $10,000 per month, in aggregate, on the Brennan Note and the Passage East
Partnership Note described below. The Company repaid the Brennan Note in full in
1996. The Company believes that the terms of this loan were no less favorable to
the Company than those which it could have received from unaffiliated parties.
Loan to the Company by Passage East Partnership. In April 1987, Passage
East Partnership, a New York general partnership in which John J. Brennan and
Donald P. Brennan are the sole general partners, loaned $300,000 to the Company,
at an interest rate of 12% per annum. The loan to the Company was evidenced by a
promissory note executed in favor of Passage East Partnership (the "Passage East
Partnership Note"). Like the Brennan Note, principal repayments on the Passage
East Partnership Note were prohibited under the terms of various loan documents.
However, from time to time, the Company's lenders allowed principal repayments
to Passage East Partnership. The Company made principal repayments of $30,000 in
1991, $20,000 in 1993, $50,000 in 1994 and the remaining balance of $200,000 in
1996. The Company believes that the terms of this loan were no less favorable to
the Company than those which it could have received from unaffiliated parties.
Loan to Shareholders. In April 1996, pursuant to the Amended and
Restated Loan Agreement, the Bank advanced a line of credit to the Company in
the principal amount of $1,500,000, with interest to accrue at the Bank's base
rate of interest which was 8.25% at April 30, 1996. The Company, in turn, loaned
$1,500,000 to the Brennans to satisfy their estimated income tax liability for
the quarterly periods ending December 31, 1995, March 31, 1996 and June 30,
1996. The loan to the Brennans was evidenced by a promissory note executed by
the Brennans (the "Shareholders' Note"), which did not bear interest, and was
payable in full on or before November 30, 1996. The Shareholders' Note was
repaid in full in 1996.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 3, 1997
(except as otherwise noted) regarding the ownership of Common Stock (i) by each
person known by the Company to be the beneficial owner of more than five percent
of the outstanding Common Stock, (ii) by each director of the Company, (iii) by
each executive officer of the Company named in the Summary Compensation Table
included elsewhere in this proxy statement and (iv) by all current executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage
Names Beneficially Owned (1) of Class (2)
- ----- ---------------------- ------------
<S> <C> <C>
John J. Brennan (3)(4) ........................................... 7,367,352 58.9%
Donald P. Brennan (3) ............................................ 6,346,500 55.0%
Eileen Brennan Oakley (5)......................................... 2,062,500 17.9%
Bernard Somers (6)................................................ 1,000 *
John A. Stoops (6)................................................ 1,000 *
John L. Magee (6)................................................. 306,000 2.6%
John D. Campbell (6).............................................. 148,500 1.3%
Maurice J. Kerins (6)............................................. 157,500 1.4%
Carl E. Smith (6)................................................. 31,500 *
All executive officers and directors as a group (9 persons)....... 7,369,352 58.9%
</TABLE>
- ------------------------
* Less than one percent
(1) Nature of ownership consists of sole voting and investment power unless
otherwise indicated. The number of shares indicated includes shares
issuable upon the exercise of outstanding stock options held by each
individual or group to the extent such options are exercisable within
60 days of March 3, 1997.
(2) The percentage for each individual or group is based on the aggregate
number of shares outstanding as of March 3, 1997 (11,549,527) and all
shares issuable upon the exercise of outstanding stock options held by
such individual or group to the extent such options are exercisable
within 60 days of March 3, 1997.
(3) Includes 6,346,500 shares of Common Stock over which John J. Brennan
and Donald P. Brennan share voting and dispositive power pursuant to a
Voting Trust Agreement dated February 2, 1996, with John J. Brennan and
Donald P. Brennan as voting trustees, and a Shareholders' Agreement
dated February 2, 1996. The address of these shareholders is 800 Town
Center Drive, Langhorne, PA 19047.
(4) Includes 38,300 issued and outstanding shares of Common Stock and
962,552 shares of Common Stock issuable pursuant to exercisable stock
options over which John J. Brennan exercises voting control pursuant to
certain Voting Agreements entered into by and among current and former
employees of the Company, John J. Brennan and the Company.
(5) These shares are held subject to 7 trusts for which Ms. Oakley serves
as trustee. The address of this shareholder is 800 Town Center Drive,
Langhorne, PA 19047.
(6) Consists of shares of Common Stock issuable pursuant to stock options
exercisable as of March 3, 1997, or within 60 days thereafter. Voting
control over these shares is held by John J. Brennan pursuant to the
terms of the Voting Agreements. The address of these shareholders is
800 Town Center Drive, Langhorne, PA 19047.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth for the
years ended December 31, 1996 and 1995 certain compensation paid by the Company
to its Chief Executive Officer and the four other most highly paid executive
officers of the Company whose cash compensation exceeded $100,000 for the year
ended December 31, 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
--------------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options/ SARs Compensation (1)
--------------------------- ---- ------ ----- ------------- ----------------
<S> <C> <C> <C> <C> <C>
John J. Brennan..................................... 1996 $350,449 $ 87,929 -- $79,068
Chairman, President and Chief Executive Officer 1995 $307,000 $216,214 -- $20,402
John L. Magee....................................... 1996 $149,616 $ 46,103 -- $ 5,606
President of ICT TeleServices 1995 $129,904 $ 62,191 -- $ 5,365
John D. Campbell.................................... 1996 $129,788 $109,202 -- $ 5,666
President of ICT Domestic Sales and 1995 $118,888 $122,026 22,500 $ 5,388
Senior Vice President, Sales and Marketing
Maurice J. Kerins................................... 1996 $114,904 $ 40,571 -- $ 4,060
Senior Vice President, Systems and Technology 1995 $109,807 $ 61,300 22,500 $ 4,370
Carl E. Smith....................................... 1996 $104,904 $ 22,535 22,500 $ 4,274
Senior Vice President, Finance and Administration, 1995 $100,000 $ 25,276 22,500 $ 452
Chief Financial Officer, and Secretary
</TABLE>
- -------------------
(1) Includes: (A) for 1996 (i) Company contributions of $4,750, $4,750,
$4,750, $3,693 and $3,352 to the Company's 401(k) tax-qualified employee
savings and retirement plan on behalf of Mr. Brennan, Mr. Magee, Mr.
Campbell, Mr. Kerins and Mr. Smith, respectively, (ii) premiums paid by
the Company in the amount of $1,152, $408, $408, $367, and $922 for group
term life insurance on behalf of Mr. Brennan, Mr. Magee, Mr. Campbell, Mr.
Kerins and Mr. Smith, respectively; and (iii) premiums paid by the Company
in the amount of $73,166, $448 and $508 for life insurance on behalf of
Mr. Brennan, Mr. Magee and Mr. Campbell, respectively and (B) for 1995 (i)
Company contributions of $4,620, $4,562,$4,620, $4,064 to the Company's
401(k) tax-qualified employee savings and retirement plan on behalf of Mr.
Brennan, Mr. Magee, Mr. Campbell and Mr. Kerins, respectively; (ii)
premiums paid by the Company in the amount of $1,152, $388, $343, $306,
and $452 for group term life insurance on behalf of Mr. Brennan, Mr.
Magee, Mr. Campbell, Mr. Kerins and Mr. Smith, respectively; and (iii)
premiums paid by the Company in the amount of $14,630, $415 and $425 for
life insurance on behalf of Mr. Brennan, Mr. Magee and Mr. Campbell,
respectively.
9
<PAGE>
Option Grants. The following table sets forth certain information
regarding stock options granted during the year ended December 31, 1996 to the
persons named in the Summary Compensation Table.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-----------------
Potential Realizable
Value At Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation For
Granted to Option Term(2)
Options Employees in Exercise Expiration ----------------------
Name Granted(1) 1996 Price Date 5% 10%
---- ---------- ---- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
John J. Brennan ............... -- -- -- -- -- --
John L. Magee.................. -- -- -- -- -- --
John D. Campbell............... -- -- -- -- -- --
Maurice J. Kerins.............. -- -- -- -- -- --
Carl E. Smith.................. 22,500 29.2% $1.57 12/31/06 $22,216 $56,299
</TABLE>
- ----------
(1) These options were granted under the Company's 1987 Stock Option Plan
and have a term of ten years, subject to earlier termination in certain
events related to the termination of employment. The options vest in
five equal annual installments commencing on the date of grant.
(2) The potential realizable values are based on an assumption that the
stock price of the Common Stock starts equal to the exercise price
shown for the particular option grant and appreciates at the annual
rate shown (compounded annually) from the date of grant until the end
of the term of the option. These amounts are reported net of the option
exercise price, but before any taxes associated with exercise or
subsequent sale of the underlying stock. The actual value, if any, an
optionholder may realize will be a function of the extent to which the
stock price exceeds the exercise price on the date the option is
exercised and also will depend on the option holder's continued
employment through the vesting period. The actual value to be realized
by the option holder may be greater or less than the values estimated
in this table. Please note that the calculated assumed price is less
than the initial public offering price.
10
<PAGE>
Year End Values. The following table summarizes option exercises during
1996 and the value of vested and unvested options for the persons named in the
Summary Compensation Table at December 31, 1996. Year-end values are based upon
a price of $4.75 per share, which was the closing market price of a share of the
Company's Common Stock on December 31, 1996.
Aggregated Option Exercises in Last Year and
Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at December 31, 1996 December 31, 1996 (1)
---------------------------- ----------------------------
Shares Acquired
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Brennan....... -- -- -- -- -- --
John L. Magee......... 54,000 $801,122 306,000 -- $1,439,914 --
John D. Campbell...... 9,000 $133,520 148,500 -- $ 676,716 --
Maurice J. Kerins..... -- -- 157,500 -- $ 719,206 --
Carl E. Smith......... -- -- 31,500 13,500 $ 112,530 $42,871
</TABLE>
- ----------
(1) Values calculated using the closing market price of a share of the
Company's Common Stock on December 31, 1996 and the per share exercise
price of the individual's options.
The Company does not currently grant any long-term incentives, other
than stock options, to its executives or other employees. Similarly, the Company
does not sponsor any defined benefit or actuarial plans at this time.
Employment Agreements
In May 1996, the Company entered into an employment agreement with John
J. Brennan as President and Chief Executive Officer. The agreement is for a
three-year term ending April 30, 1999 and renews automatically for successive
three-year periods unless either party gives written notice of termination at
least 180 days prior to the expiration date, unless earlier terminated as
provided therein. The agreement provides for a base salary of $364,000, which
shall be increased by a minimum of 5% each year but may not be decreased below
the then current level. The Board, in its sole discretion, may award incentive
bonuses in the form of cash and/or stock to Mr. Brennan, who will be eligible
each year for a minimum bonus in an amount equal to his then current salary. If
Mr. Brennan is terminated by the Company for other than willful misconduct, or
terminates his employment for "good reason," then the Company shall maintain its
obligations under the agreement through the later of (i) the expiration of the
then current term of the agreement (or the expiration of the next renewal term
if there are less than 180 days remaining in the current term and no notice of
termination was given prior thereto), or (ii) 24 months from the date of
termination. Mr. Brennan may terminate his agreement for "good reason" upon 30
days' written notice if there has been a reduction in his salary or benefits, a
substantial change in his duties or a change of control, defined as the decrease
below 50% of the combined voting power of the Company's common stock by John J.
Brennan and Donald P. Brennan and their children and grandchildren.
In April 1987, the Company entered into employment agreements with John
L. Magee and Maurice J. Kerins that provided for base salaries of $70,000 and
$55,000 per year, respectively. Each employment agreement provides that the
employee's salary is to be reviewed annually by the Board of Directors. Messrs.
Magee's and Kerins' current base salaries are $160,000 and $135,000,
respectively. Each employment agreement has an initial term of three years, but
renews automatically each year for an additional one-year term unless either
party to the agreement terminates prior to the end of
11
<PAGE>
the renewal term. Each of the agreements renewed automatically on April 1, 1997
for additional one-year terms. In addition to base salary, each agreement allows
for bonuses to be paid by the Company. The Company may terminate the employment
agreements described immediately above at any time, with or without cause. Each
of the employment agreements contains severance provisions which, if triggered,
entitle the employees to monthly severance payments in an amount equal to the
affected employee's then-current monthly salary for a period of 12 months. The
severance payments are triggered by the occurrence of any of the following
events: termination of employment by the Company without cause, cessation of
business operations in a business in which the employee is employed, a merger,
consolidation or acquisition of the Company, the filing by the Company of a
voluntary petition in bankruptcy or the filing of an involuntary petition in
bankruptcy against the Company which is not dismissed within 60 days. In
addition, if the employee terminates his employment upon 90 days prior written
notice, in certain circumstances, the Company would be required to continue to
provide the employee with his regular payments of base salary for a period of 90
days.
In October 1987, John D. Campbell entered into an employment agreement
with the Company that provided for a base salary of $43,200 per year. Mr.
Campbell's employment agreement has an initial term of one year, but renews
automatically each year for an additional one-year term unless either party
terminates prior to the end of the renewal term. Mr. Campbell's employment
agreement renewed automatically on October 1, 1996 for an additional one-year
term. Mr. Campbell, whose current base salary is $150,000, is eligible for
bonuses from the Company.
In October 1994, the Company entered into an employment agreement with
Carl E. Smith that provided for a base salary of $100,000 per year. Mr. Smith's
employment agreement had a term of one year. Pursuant to an amendment entered
into by the Company and Mr. Smith as of October 1995, his employment agreement
was extended for an additional one-year period and will renew automatically for
consecutive one-year periods unless terminated within 90 days prior to the
expiration of the then-current term. Mr. Smith's employment agreement renewed
automatically in October 1996. In addition to his base salary, which is
currently $115,000, Mr. Smith is eligible for bonuses from the Company.
The employment agreements discussed above contain non-tampering,
non-disclosure, non-solicitation and confidentiality provisions. Although the
employment contracts restrict the employee from interfering with the Company's
current, former or potential customers, there is no provision restricting a
terminated employee's ability to work for a competitor of the Company.
Compensation of Directors
The independent directors are paid directors' fees of $2,000 for each
quarterly Board meeting attended and $500 for each special Board meeting
attended and each committee meeting attended. In addition, directors are
reimbursed for expenses incurred in connection with attendance at Board and
committee meetings.
Under the Company's 1996 Non-Employee Directors Plan, each independent
director owning less than 10% of the outstanding capital stock of the Company
receives, upon initial election to the Board, an option to purchase 1,000 shares
of Common Stock. The options are fully vested and immediately exercisable, have
an exercise price equal to the fair market value of the Common Stock on the date
of grant and expire ten years after the date of grant. In addition, each
independent director owning less than 10% of the outstanding capital stock of
the Company is granted an option to purchase 1,000 shares of Common Stock on the
date of each annual meeting; these options will vest in full one year after
grant, will have an exercise price equal to the fair market value of the Common
Stock on the date of grant and expire ten years after issuance.
12
<PAGE>
The following Compensation Committee Report and the
Comparative Stock Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this
Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under
such Acts.
COMPENSATION COMMITTEE REPORT
On July 30, 1996, following the Company's initial public offering (the
"IPO"), the board of directors created the Compensation Committee to have the
responsibility for implementing and administering the Company's compensation
policies and programs for its executive officers. Prior to July 1996, the
responsibilities of the Committee were performed by the Board as a whole.
The Compensation Committee is responsible for setting the base salaries
and the total compensation levels of the Chief Executive Officer (the "CEO") and
the other executive officers of the Company. In addition, the Compensation
Committee is responsible for (i) setting the performance criteria for annual
bonus awards and determining the achievement levels and payout for the executive
officers and (ii) determining which executives, including the CEO, will be
granted stock options and the size of such grants.
Compensation Philosophy
The Company's compensation policies for executive officers, as
established by the board prior to the IPO and continued by the Compensation
Committee, are designed to (a) provide competitive compensation packages that
will attract and retain superior executive talent, (b) link a significant
portion of compensation to financial results, so as to reward successful
performance, and (c) provide long-term equity compensation, to further align the
interests of executive officers with those of stockholders and further reward
successful performance. The principal components of the Company's executive
officer compensation program are base salary, annual bonus awards, and grants of
stock options.
Annual Compensation
Annual cash compensation is comprised of a base salary and a bonus
award. Salary determinations have not been based upon any specific criteria.
Nevertheless, the members of the Compensation Committee, who have experience in
setting compensation for public companies believe that salaries of the executive
officers in fiscal 1996 were modest, considering the scope of the Company's
operations and the respective responsibilities of the executive officers,
particularly in light of the increased responsibilities of several of the
executive officers in connection with the Company's initial public offering.
During fiscal 1996, salary increases for the executive officers other than CEO
were between approximately five and 15 percent.
Bonus awards are made pursuant to a criteria established toward the
beginning of each fiscal year. The amount of bonus paid to an executive officer
is largely non-discretionary and based generally upon the Company's achievement
of specified levels of operating income determined by the Compensation
Committee; provided, however, that in the case of sales personnel their bonuses
are based upon specified sales targets and the margins achieved with such sales.
Long-Term Compensation
Prior to the IPO, the Company granted stock options at irregular
intervals at the discretion of the board of directors. Since the IPO, the
Compensation Committee has had the discretion to grant stock options to the
executive officers. The number of options in each grant is not based on any
specific criteria. However, the board of directors and the Compensation
Committee considered primarily the executive's position, skills and
achievements, and the level and timing of previously granted stock options. In
January 1996, the board of directors granted to Carl E. Smith options to
purchase 22,500 shares
13
<PAGE>
of Common Stock in order to bring his equity interest in the Company in line
with other executive officers of the Company. In August 1996, the Compensation
Committee granted to James J. Shannon options to purchase 20,000 shares of
Common Stock in connection with the commencement of his employment with the
Company.
Compensation of Chief Executive Officer
The CEO's annual base salary was raised to $364,000 in 1996 pursuant to
his employment agreement which was executed in May 1996 prior to the IPO. The
increased salary and employment agreement were approved by the outside director
and reflects the CEO's increased responsibilities. Based upon the analysis by
the outside director at the time of the increase and subsequent analysis by the
Compensation Committee, the Compensation Committee is of the opinion that the
CEO's base salary is comparable to the median of competitive base salaries for
executives from companies of similar annual revenues, operating earnings and
growth potential.
There was no pre-set formula by which the amount of the CEO's 1996
bonus was determined. However, the Compensation Committee considered the
financial performance of the Company during the fiscal year and the median of
competitive cash compensation for executives with companies of similar annual
revenues. The Compensation Committee also considered the CEO's pivotal role in
the Company's IPO. The Compensation Committee believes the best measure of
success for the accomplishment is sustained shareholder value. In recognition of
these factors, the Compensation Committee awarded a bonus to the CEO of $87,929.
Neither the board of directors prior to the IPO nor the Compensation
Committee following the IPO made an award of stock options to the CEO in 1996.
Deductibility of Certain Compensation
Section 162(m) of the Internal Revenue Code generally denies a federal
income tax deduction for certain compensation exceeding $1,000,000 paid to the
CEO or any of the four other highest paid executive officers, excluding (among
other things) certain performance-based compensation. Through December 31, 1996,
this provision has not affected the Company's tax deductions, but the
Compensation Committee will continue to monitor the potential impact of section
162(m) on the Company's ability to deduct executive compensation.
Donald P. Brennan and Bernard Somers have served as members of the
Compensation Committee since July 1996. Donald P. Brennan served as a member of
the board of directors prior to the IPO and has been involved in the
determination of the compensation of the Company's executive officers since
1987, when he became a member of the Company's board of directors. Mr. Somers
did not participate in the deliberations relating to the compensation of the
Company's executive officers prior to July 1996.
THE COMPENSATION COMMITTEE
Donald P. Brennan
Bernard Somers
14
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return of (i) the Nasdaq Stock
Market (U.S.) Index (the "Nasdaq Index"), and (ii) a "peer group" index,
assuming an investment of $100 on June 14, 1996 in each of the Common Stock of
the Company, the stocks comprising the Nasdaq Index and the stocks comprising
the "peer group," and further assuming reinvestment of dividends. The "peer
group" consists of ATC Communications Group, Inc., APAC Teleservices, Inc., RMH
Teleservices, Inc., Telespectrum Worldwide, Inc., West Teleservices Corp.,
Precision Response Corp., Sitel Corp. and Teletech Holdings, Inc. The graph
commences as of June 14, 1996, the date the Common Stock became publicly-traded.
COMPARISON OF CUMULATIVE RETURN
ICT, Nasdaq Index and Peer Group Index
(From June 14, 1996 to December 31, 1996)
150 |-------------------------------------------------------------------------|
| & |
| # |
100 |-------*#&---------------------------------------------------------------|
| |
| |
50 |-------------------------------------------------------------------------|
| * |
| |
0 |-------------------------------------------------------------------------|
6/14/96 12/31/96
* = ICT Group, Inc. # = Nasdaq Stock Market & = Peer Group
Measurement Date ICT Group, Inc. Nasdaq Stock Market Peer Group
- ---------------- --------------- ------------------- ----------
06/14/96 $100 $100 $100
12/31/96 $ 30 $105 $140
15
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP as
independent public accountants for the year ending December 31, 1997. Arthur
Andersen LLP has audited the Company's financial statements since the Company's
inception. The appointment of independent public accountants is approved
annually by the Board of Directors, which is based in part on the
recommendations of the Audit Committee. In making its recommendations, the Audit
Committee reviews both the audit scope and estimated audit fees for the coming
year. This appointment will be submitted to the shareholders for ratification at
the Annual Meeting.
Although not required by law or by the By-laws of the Company, the
Board of Directors has determined that it would be desirable to request
ratification of this appointment by the shareholders. If ratification is not
received, the Board will reconsider the appointment. A representative of Arthur
Andersen LLP is expected to be available at the Annual Meeting to respond to
appropriate questions and to make a statement if he so desires.
The affirmative vote of a majority of the votes cast at the Annual
Meeting by the holders of the outstanding shares of Common Stock is required for
the ratification of this selection.
The Board of Directors recommends that the shareholders vote FOR
ratification of the selection of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1997.
OTHER MATTERS
The board of directors is not aware of any matters not set forth herein
that may come before the meeting. If, however, further business properly comes
before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their judgment.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for
stockholder action at annual meetings in accordance with regulations adopted by
the SEC. To be considered for inclusion in the proxy statement and form of proxy
relating to the 1998 annual meeting, such proposals must be received by the
Company no later than December 26, 1997. Proposals should be directed to the
attention of the Secretary of the Company.
ANNUAL REPORT ON FORM 10-K
The Company will furnish without charge to each person whose proxy is
being solicited, upon the written request of such person, a copy of the
Company's annual report on Form 10-K for the year ended December 31, 1996,
including the financial statements, but excluding exhibits. Requests for copies
of such report should be directed to the Company, Attention: Carl E. Smith.
By order of the board of directors,
Carl E. Smith
Secretary
April 25, 1997
16
<PAGE>
PROXY ICT GROUP, INC. PROXY
ANNUAL MEETING OF SHAREHOLDERS--MAY 20, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOHN J. BRENNAN and CARL E. SMITH, or either of
them acting alone in the absence of the other, the proxies of the undersigned,
with full powers of substitution (the "Proxies") to attend and act as proxy or
proxies of the undersigned at the Annual Meeting of Shareholders of ICT Group,
Inc. (the "Company") to be held at the Sheraton Hotel, Langhorne, Pennsylvania
on May 20, 1997 at 10:00 a.m. or any adjournment thereof, and to vote as
specified herein the number of shares which the undersigned, if personally
present, would be entitled to vote.
(Continued and to be signed on the reverse side)
<PAGE>
Please Detach and Mail in the Envelope Provided
A |X| Please mark your votes as in the example.
FOR all nominees
listed at right (except WITHHOLD
as marked to the AUTHORITY to
contrary) vote for all nominees
1. Election of / / / / Nominee: John J. Brennan
Directors (Class 1) John A. Stoops
INSTRUCTION: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list at right.
FOR AGAINST ABSTAIN
2. Proposal to Ratify the Appointment / / / / / /
of Arthur Andersen LLP as the Independent Public Accountants of the
Company for the Fiscal Year Ending December 31, 1997.
3. Other Business. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the Annual Meeting and
any and all adjournments thereof.
This Proxy, when properly executed, will be voted as directed by the
shareholder. If no such directions are indicated, the Proxies will have
authority to vote "FOR" each director nominee and "FOR" the ratification of
Arthur Andersen LLP as the independent public accountants of the Company.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
DATE , 1997
- ---------------------- ------------------------- -------------
Signature Signature
Note: Please sign exactly as name or names appear on this Proxy. If stock is
held jointly, each holder must sign. If signing as attorney, trustee,
executor, administrator, custodian or corporate officer, please give
full title.
