<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
/ / 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 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 19, 1998
-------------------------------
TO THE SHAREHOLDERS OF
ICT GROUP, INC.:
Notice is hereby given that the 1998 annual meeting of shareholders
(the "Annual Meeting") of ICT GROUP, INC. (the "Company" or "ICT") will be held
at the Hyatt Regency Princeton, 102 Carnegie Center, Princeton, New Jersey on
May 19, 1998, at 10:00 a.m., local time, for the following purposes:
1. To elect one director;
2. To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending
December 31, 1998; 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 13,
1998 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 13, 1998 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 24, 1998
================================================================================
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
1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 19, 1998
-------------------------------
General Information on the Meeting
This proxy statement and the accompanying form of proxy are being mailed on
or about April 24, 1998 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 1998
Annual Meeting of Shareholders (the "Annual Meeting") to be held at the Hyatt
Regency Princeton, 102 Carnegie Center, Princeton, New Jersey on May 19, 1998,
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 13, 1998 are
entitled to notice of, and to vote at, the Annual Meeting. As of April 13, 1998,
there were 11,542,300 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 the nominee listed herein under "Election of
Director," and FOR ratification of the
<PAGE>
selection of Arthur Andersen LLP as the Company's independent public accountants
for the fiscal year ended December 31, 1998. 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 DIRECTOR
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, one director is to be elected for the current class. The
term of office for the director elected at the Annual Meeting will expire at the
2001 annual meeting of shareholders.
Bernard Somers, a current member of the board of directors, has been
nominated by the board of directors for election as a director at the Annual
Meeting.
The nominee has 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 nominee. The board
of directors believes the nominee will be able to serve as a director; 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 the nominee.
-----------------------------------------------------------
Nominee for Election
-----------------------------------------------------------
<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.
-----------------------------------------------------------
Director Continuing in Office with Term Expiring in 1999
-----------------------------------------------------------
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- ---------------------------------------------------------
Donald P. Brennan 57 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.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------
Directors Continuing in Office with Term Expiring in 2000
-----------------------------------------------------------
<S> <C> <C>
Year First Became Director, Principal Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- ---------------------------------------------------------
John J. Brennan 54 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 44 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>
General Information Concerning the Board of Directors and its Committees
The board of directors of the Company met on five occasions during 1997.
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
met twice during 1997. 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 met twice
during 1997. The Compensation Committee is currently composed of two
non-employee directors, Donald P. Brennan and Bernard Somers.
4
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Position
- ---- --- --------
John J. Brennan 54 Chairman, President, Chief Executive Officer
Carl E. Smith 50 Senior Vice President, Finance and Administration,
Chief Financial Officer, and Secretary
Timothy F. Kowalski 37 Senior Vice President, Systems and Technology,
Chief Information Officer
John D. Campbell 42 President, ICT Group Sales
John L. Magee 44 President, ICT TeleServices Division
Dean J. Kilpatrick 53 President, ICT Marketing Services Division
Maurice J. Kerins 44 President, ICT Management Services Division
- --------------
John J. Brennan's employment background is described above under "Directors
Continuing In Office."
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.
Timothy F. Kowalski has served as the Company's Senior Vice President,
Systems and Technology and Chief Information Officer since August 1997. From May
1993 until July 1997, Mr. Kowalski was employed by Independence Blue Cross, a
healthcare company, where he served as Senior Director of Information and
Technology Development. From December 1984 until May 1993, Mr. Kowalski was
employed by Computer Sciences Corporation, a systems integration company, where
he served as Technical Director.
John D. Campbell has served as President of ICT Group Sales since January
1998. He served as President of ICT Domestic Sales between January 1997 and
January 1998 and as Senior Vice President, Sales and Marketing between January
1990 and January 1998. Mr. Campbell served as the President of ICT Direct
between January 1994 and January 1997.
John L. Magee has served as the President of ICT TeleServices Division
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
Division 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.
5
<PAGE>
Maurice J. Kerins has served as President of ICT Management Services
Division since January 1998. He served as the Company's Senior Vice President,
Systems and Technology from April 1994 to December 1997 and as the Company's
Vice President, Systems and Technology from November 1988 to April 1994.
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 or (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.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1998
(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) ........................................... 7,446,600 59.2%
Donald P. Brennan (3) ............................................ 6,346,500 55.0%
Eileen Brennan Oakley (5)......................................... 2,062,500 17.9%
Bernard Somers (7)................................................ 8,000 *
John A. Stoops (7)................................................ 2,000 *
John L. Magee (6)................................................. 310,300 2.6%
John D. Campbell (6).............................................. 153,350 1.3%
Maurice J. Kerins (6)............................................. 161,750 1.4%
Dean J. Kilpatrick (6)............................................ 25,350 *
All executive officers and directors as a group (10 persons)...... 7,456,600 59.2%
- ------------------------
* Less than one percent
</TABLE>
(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 31, 1998.
(2) The percentage for each individual or group is based on the aggregate
number of shares outstanding as of March 31, 1998 (11,542,300) 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 31, 1998.
(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 42,300 issued and outstanding shares of Common Stock and 1,037,800
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 31, 1998, 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.
(7) Includes 2,000 shares of Common Stock issuable pursuant to exercisable
stock options. The address of these shareholders is 800 Town Center Drive,
Langhorne, PA 19047.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth for the years
ended December 31, 1997, 1996 and 1995 certain compensation paid by the Company
to its Chief Executive Officer and the four other most highly compensated
executive officers of the Company whose cash compensation exceeded $100,000 for
the year ended December 31, 1997.
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............................ 1997 $330,730 $ 15,942 -- $46,008
Chairman, President and Chief Executive Offic 1996 $350,449 $ 87,929 -- $79,068
1995 $307,000 $216,214 -- $20,402
John L. Magee.............................. 1997 $163,077 $ 56,161 -- $ 6,123
President, ICT TeleServices Division 1996 $149,616 $ 46,103 -- $ 5,606
1995 $129,904 $ 62,191 -- $ 5,365
John D. Campbell........................... 1997 $149,462 $ 94,898 -- $ 6,267
President, ICT Group Sales 1996 $129,788 $109,202 -- $ 5,666
1995 $118,888 $122,026 22,500 $ 5,388
Maurice J. Kerins.......................... 1997 $134,462 $ 80,332 -- $ 5,158
President, ICT Management Services Division 1996 $114,904 $ 40,571 -- $ 4,060
1995 $109,807 $ 61,300 22,500 $ 4,370
Dean J. Kilpatrick......................... 1997 $139,462 $ 36,768 -- $ 5,337
President, ICT Marketing Services Division 1996 $124,867 $ 51,301 4,500 $ 5,844
1995 $106,636 $ 73,940 22,500 $ 3,141
</TABLE>
- -------------------
(1) Includes: (A) for 1997 (i) Company contributions of $4,750, $4,750, $4,750,
$4,750 and $4,185 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. Kilpatrick, respectively, (ii) premiums paid by the Company
in the amount of $1,152, $408, $408, $408, and $1,152 for group term life
insurance on behalf of Mr. Brennan, Mr. Magee, Mr. Campbell, Mr. Kerins and
Mr. Kilpatrick, respectively; and (iii) premiums paid by the Company in the
amount of $40,106, $965 and $1,109 for life insurance on behalf of Mr.
Brennan, Mr. Magee and Mr. Campbell, respectively; (B) for 1996 (i) Company
contributions of $4,750, $4,750, $4,750, $3,693 and $4,750 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. Kilpatrick,
respectively, (ii) premiums paid by the Company in the amount of $1,152,
$408, $408, $367, and $1,094 for group term life insurance on behalf of Mr.
Brennan, Mr. Magee, Mr. Campbell, Mr. Kerins and Mr. Kilpatrick,
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 (C) for 1995 (i) Company
contributions of $4,620, $4,562,$4,620, $4,064 and $2,219 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. Kilpatrick,
respectively; (ii) premiums paid by the Company in the amount of $1,152,
$388, $343, $306, and $922 for group term life insurance on behalf of Mr.
Brennan, Mr. Magee, Mr. Campbell, Mr. Kerins and Mr. Kilpatrick,
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.
8
<PAGE>
Option Grants in Last Fiscal Year. No options were granted in 1997 to any
officers named in the Summary Compensation Table.
Year End Values. The following table summarizes option exercises during
1997 and the value of vested and unvested options for the persons named in the
Summary Compensation Table at December 31, 1997. Year-end values are based upon
a price of $4.50 per share, which was the closing market price of a share of the
Company's Common Stock on December 31, 1997.
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, 1997 December 31, 1997 (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......... -- -- 306,000 -- $1,363,414 --
John D. Campbell...... -- -- 148,500 -- $ 639,590 --
Maurice J. Kerins..... -- -- 157,500 -- $ 701,757 --
Dean J. Kilpatrick.... -- -- 21,825 1,800 $ 74,475 $ 5,266
</TABLE>
- ------------
(1) Values calculated using the closing market price of a share of the
Company's Common Stock on December 31, 1997 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 Common Stock by John J. Brennan
and Donald P. Brennan and their children and grandchildren.
9
<PAGE>
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 $190,000 and $150,000,
respectively. Each employment agreement had 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 the renewal term. Each of
the agreements were renewed on January 1, 1998 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 had 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 was renewed
on January 1, 1998 for an additional one-year term. Mr. Campbell, whose current
base salary is $170,000, is eligible for bonuses from the Company.
In 1994, the Company entered into an employment agreement with Dean J.
Kilpatrick that provided for a base salary of $110,000 per year. Mr.
Kilpatrick's employment agreement had an initial term of one year and renews
automatically for consecutive one-year periods unless terminated within 90 days
prior to the expiration of the then-current term. In addition to his base
salary, which is currently $150,000, Mr. Kilpatrick 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.
10
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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
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 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
and is based upon a review of compensation packages of executives in comparable
positions with other publicly held teleservices firms. The Committee believes
that the compensation levels of the executive officers in fiscal 1997 were
within the median compensation levels for comparable positions.
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 based 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. Payment of awards are made in cash and in
stock options as determined by the Compensation Committee.
Long-Term Compensation
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 Compensation Committee considered primarily the
executive's position, skills and achievements, and the level and timing of
previously granted stock options.
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Compensation of Chief Executive Officer
The CEO's annual base salary was increased to $382,200 effective May 1,
1997 from $364,000 pursuant to his employment agreement which was executed in
May 1996. Based upon the 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.
During 1997, the CEO elected to waive his right to receive a portion of his base
salary.
The CEO was eligible to receive a bonus for 1997 based upon the financial
performance of the Company during the fiscal year. The Compensation Committee
believes the best measure of success for accomplishment is sustained shareholder
value. Therefore, for 1997, the CEO received a cash bonus in the amount of
$15,942 and the Compensation Committee approved an additional bonus for 1997 in
stock options that were granted in 1998.
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, 1997,
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.
THE COMPENSATION COMMITTEE
Donald P. Brennan
Bernard Somers
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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
$150 |-------------------------------------------------------------------------|
| @ |
| o |
125 |-------------------------------------------------------------------------|
| |
| o |
100 *o@-----------------------------------------------------------------------|
| |
| |
75 |-------------------------------------------------------------------------|
| ___________________ |
| | | @ |
50 | | -*- ICT |--------------------------------------------------|
| | | |
| | -o- Nasdaq | * * |
25 | | |--------------------------------------------------|
| | -@- Peer Group | |
| |___________________| |
0 |-------------------------------------------------------------------------|
6/14/96 12/31/96 12/31/97
Measurement Date ICT Group, Inc. Nasdaq Stock Market Peer Group
---------------- --------------- ------------------- ----------
6/14/96 $100 $100 $100
12/31/96 $ 30 $105 $140
12/31/97 $ 28 $129 $ 62
13
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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, 1998. 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, 1998.
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 1999 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 1999 annual meeting, such proposals must be received by the Company no later
than December 26, 1998. 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, 1997, 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 24, 1998
14
