<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LEAPNET, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[leapnet inc. logo]
June 9, 2000
Dear Leapnet Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Leapnet, Inc., which will be held at the Quantum Leap Communications Building,
420 West Huron Avenue, Chicago, Illinois, 60610 on July 11, 2000, at 9:00 a.m.
The Quantum Leap Communications Building is accessible to handicapped persons.
We look forward to greeting as many of you as possible.
Details of the matters to be considered at the Annual Meeting are provided
in the attached Notice of Annual Meeting and Proxy Statement. Also enclosed
you will find your proxy card, which allows you to vote on these matters, and
Leapnet's Annual Report for fiscal 2000.
Your vote is important. Please complete and mail in your proxy card
promptly, even if you plan to attend the Annual Meeting. You can attend the
Annual Meeting and vote in person, even if you have sent in a proxy card.
On behalf of the Board of Directors, We would like to express our
appreciation for your continued interest in Leapnet.
Sincerely,
Frederick A. Smith
Chairman of the Board
Robert M. Figliulo
Vice-Chairman and Chief Executive
Officer
<PAGE>
[leapnet inc. logo]
June 9, 2000
Notice of Annual Meeting of Stockholders
Dear Leapnet Stockholders:
The Annual Meeting of the Stockholders of Leapnet, Inc. will be held at the
Quantum Leap Communications Building, 420 West Huron Avenue, Chicago,
Illinois, 60610 on July 11, 2000, at 9:00 a.m. for the purpose of voting on
the following proposals:
1. To elect three directors to the Board;
2. To ratify the appointment of Arthur Andersen LLP as independent
auditors for the fiscal year ending December 31, 2000; and
3. To transact such other business as may properly come before the
Annual Meeting.
The Board of Directors recommends that Stockholders vote for the Nominees
for the Board of Directors and for Proposal 2.
Only Stockholders of record at the close of business on May 12, 2000 are
entitled to notice of, and to vote at, the Annual Meeting.
All Stockholders are cordially invited to attend the Annual Meeting in
person. An admission ticket, which will be required for entry into the Annual
Meeting, is attached to the proxy card accompanying this Proxy Statement.
Beneficial owners of Leapnet stock who hold stock through a third party, such
as a broker, may gain admission by bringing account statements or similar
documentation evidencing ownership. Whether or not you plan to attend the
Annual Meeting in person, please vote, sign, date and return the enclosed
proxy card in the postage-paid envelope provided to ensure your
representation.
You may revoke your proxy at any time before it has been voted, and if you
attend the Annual Meeting you may vote in person even if you have previously
returned your proxy card. Your prompt cooperation will be greatly appreciated.
Leapnet's Annual Report to Stockholders for fiscal 2000 is enclosed with
this Proxy Statement.
By Order of the Board of Directors.
Robert C. Bramlette
Chief Legal Officer and Corporate
Secretary
<PAGE>
[leapnet inc. logo]
June 9, 2000
Proxy Statement
These proxy materials are furnished in connection with the solicitation by
the Board of Directors of Leapnet, Inc. ("Leapnet"), a Delaware corporation,
of proxies to be used at the 2000 Annual Meeting of Stockholders of Leapnet
and at any adjournment thereof.
The enclosed proxy is solicited by the Board of Directors of Leapnet. The
items enumerated herein constitute the only business which the Board of
Directors intends to present or is informed that others will present at the
Meeting. The proxy does, however, confer discretionary authority upon Robert
C. Bramlette, or his substitutes, to vote the shares of the Stockholders at
the Annual Meeting with respect to any other business which may properly come
before the Meeting. Mr. Bramlette is an executive officer of Leapnet.
Annual Meeting Admission
An admission ticket, which will be required for entry into the Annual
Meeting, is attached to the proxy card accompanying this Proxy Statement. If
you plan to attend the Annual Meeting in person, please retain the admission
ticket.
Beneficial owners of Leapnet stock who hold stock through a third party,
such as a broker, may gain admission by bringing account statements or similar
documentation evidencing ownership.
Voting of Proxies
Your vote is important. Because many Stockholders cannot personally attend
the Meeting, it is necessary that they be represented by proxy. Stockholders
may vote, sign, date and mail their proxies in the postage-paid envelope
provided. Please promptly return your proxy card.
Proxies may be revoked at any time before they are exercised by written
notice to the Corporate Secretary, by timely notice of a properly executed
later-dated proxy or by voting in person at the Meeting.
Voting your proxy by mail will in no way limit your right to vote at the
Annual Meeting if you later decide to attend in person. If your shares are
held in the name of a broker, bank or other holder of record, you must obtain
a proxy, executed in your favor, from the holder of record to be able to vote
at the Meeting.
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting and not revoked will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that proxy will be voted as recommended by the Board of
Directors.
If any other matters are properly presented at the Annual Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place, the persons named in the
enclosed form of proxy and acting thereunder will have discretion to vote on
those matters in accordance with their best judgment to the same extent as the
person signing the proxy would be entitled to vote. The Board of Directors
does not currently anticipate that any other matters will be raised at the
Annual Meeting.
Stockholders Entitled to Vote
Holders of record of Leapnet's Common Stock at the close of business on
June 2, 2000, the record date, are entitled to notice of and to vote at the
Annual Meeting. On June 2, 2000, there were 28,902,587 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote on each matter
properly brought before the Meeting.
<PAGE>
In accordance with Delaware law, a list of Stockholders entitled to vote at
the Annual Meeting will be available during regular business hours at the
offices of Leapnet which are located at 420 West Huron Street, Chicago,
Illinois, 60610, beginning June 26, 2000, and ending on the date of the Annual
Meeting.
Required Vote
The presence, in person or by proxy, of the holders of a majority of the
Common Stock issued and outstanding on the record date, May 12, 2000, is
necessary to constitute a quorum. Abstentions and broker "non-votes" are
counted as present and entitled to vote for purposes of determining a quorum.
A broker "non-vote" occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner.
A plurality of the votes cast in person or by proxy is required for the
election of directors (i.e., the nominees receiving the greatest number of
votes will be elected). Stockholders will not be entitled to cumulate their
votes in the election of directors. Abstentions and broker "non-votes" are not
counted for the purpose of electing the directors. The affirmative vote of the
majority of votes cast in person or by proxy, affirmatively or negatively, is
required to ratify the appointment of Arthur Andersen LLP. Abstentions and
broker "non-votes" will have no effect on the voting of such proposal.
Cost of Proxy Solicitation
The cost of soliciting proxies will be borne by Leapnet. Proxies may be
solicited on behalf of Leapnet by officers, directors, or employees of Leapnet
in person or by telephone, facsimile transmission, telegram or electronic
transmission. In accordance with the regulations of the Securities and
Exchange Commission, The NASDAQ Stock Market, Inc. and securities exchanges,
Leapnet will also reimburse brokerage houses and other custodians, nominees
and fiduciaries for their expenses incurred in sending proxies and proxy
material to the beneficial owners of Common Stock.
Stockholder Communications
Stockholders' comments pertaining to any aspect of Company business are
welcome. Stockholders may write to Leapnet in care of the Corporate Secretary,
or visit our website at http://www.leapnet.com. Stockholder comments assist
Company management in understanding the needs of Leapnet's Stockholders.
Stockholder Account Maintenance
Leapnet has selected First Chicago Trust Company, a division of EquiServe
as its Transfer Agent. All communications concerning your Stockholder account,
including address changes, name changes, requirements to transfer shares,
etc., can be handled by calling 1-800-446-2617 or 201-222-4955 (tdd/tty for
hearing impaired) or by writing First Chicago Trust Company, a division of
EquiServe, P.O. Box 2500, Jersey City, N.J. 07303-2500.
Governance of Leapnet
Pursuant to the Delaware General Corporation Law, as implemented by
Leapnet's Certificate of Incorporation and By-Laws, Leapnet's business,
property and affairs are managed under the direction of the Board of
Directors. Members of the Board are kept informed of Leapnet's business
through discussions with the Chairman and other officers, by reviewing
materials provided to them and by participating in Board and Committee
meetings.
The Board held eight meetings in the fiscal year ended January 31, 2000.
Each of the then current directors attended at least eighty-seven percent
(87%) of the meetings held during the period in which he served as a director.
The Stock Committee held one meeting, the Audit Committee held two meetings,
and the Compensation Committee held three meetings during fiscal 2000. All of
the committee members attended all of the Audit and Compensation Committee
meetings, while only two members of the Stock Committee attended the meeting.
2
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. The Board is composed
of three Class I Directors (Messrs. Stephen J. Tober, John G. Keane and
Frederick A. Smith) whose terms will expire at the Annual Meeting, two Class
II Directors (Messrs. Robert M. Figliulo and Thomas R. Sharbaugh) whose terms
expire in 2001 and three Class III Directors (Messrs. Peter Poli, Scott Barnum
and Charles J. Ruder) whose terms will expire in 2002. At each Annual Meeting,
successors to the class of Directors whose term expires at that Annual Meeting
will be elected for a three-year term. Mr. Charles J. Moran is nominated as a
Class I Director, and Mr. Keane is not seeking re-election.
Three Class I Directors are to be elected at the Annual Meeting to hold
office until the Annual Meeting of Stockholders to be held in the year 2003.
All of the directors that are elected will hold office until their terms
expire and their successors are elected and qualified. It is intended that the
accompanying proxy will be voted in favor of the following persons to serve as
directors unless the Stockholder indicates to the contrary on the proxy.
Nominees for Director
Frederick A. Smith--46--Chairman of the Board
Mr. Smith, a co-founder of Leapnet, was elected Chairman of the Board of
Directors in February 1998. He served as Chief Executive Officer of Leapnet
from February 1998 until May 1, 2000; as Acting Chief Executive Officer from
August 1997 until February 1998; and as Vice Chairman from March 1996 until
February 1998. In addition, Mr. Smith serves as President of Quantum Leapnet
Communications, Inc., a subsidiary of Leapnet. From January 1991 until the
formation of Leapnet in September 1993, Mr. Smith was employed by DDB Needham
Chicago where he was a Vice President, Executive Producer. While there, his
principal accounts were Bud Light, Michelob, Discover Card Services, General
Mills, and Audi. Mr. Smith's previous experience included one year at Young
and Rubicam Chicago, and five years at Leo Burnett in Chicago where his client
list included McDonald's, Kellogg and United Airlines. Mr. Smith attended the
University of Illinois, the University of California--Los Angeles, and the
University of Southern California.
Stephen J. Tober--35--Director, President and Chief Operating Officer
Mr. Tober was appointed Director, President, and Chief Operating Officer of
Leapnet on May 1, 2000. Mr. Tober had served as SPR Inc.'s Chief Operating
Officer since June 1998 and as Executive Vice-President--Finance and Business
Development since June 1997. Mr. Tober worked in the investment banking
division of Salomon Smith Barney from 1995 through 1997. From 1991 through
1995 Mr. Tober worked in the corporate finance group of the law firm Latham &
Watkins. Mr. Tober received a J.D. degree from the University of Virginia
School of Law in 1991 and a B.A. degree from Amherst College in 1987.
Charles F. Moran--70
Mr. Moran served as Senior Vice President--Administration of Sears, Roebuck
and Co. from 1989 to 1993, where he was also a member of Sears Management
Committee. In this capacity, Mr. Moran's responsibilities included Corporate
Operations, Real Estate, Technology, Human Resources and Public Affairs
functions. Mr. Moran also served as Senior Vice President and Chief
Information Officer for Sears, Roebuck and Co. from 1988-1989. During this
period, he developed and implemented the Sears Technology Services Co.,
combining all voice and data communications, as well as Data Processing for
the Sears family of companies. From 1986 to 1988, Mr. Moran was the Senior
Executive Vice President and Chief Administrative Officer of Dean Witter
Financial Services Group and Discover Card. During his career, he held a
number of senior positions at Sears including President, Sears World Trade,
Inc.; Vice President, Corporate Planning; and Vice President, Operations. Mr.
Moran's career with Sears, Roebuck and Co. began in 1954 and extended through
the end of 1993, when he retired. He presently serves as a director for Morgan
Stanley Dean Witter Trust Company, Greenwood Trust Company (Delaware), New
Castle Trust Company (Delaware), International Insurance Company, Advantica
3
<PAGE>
Restaurant Group, Inc., West Side Affordable Housing, Inc., and Homan
Arthington Foundation. Mr. Moran received a Masters in Business Administration
from Fairleigh Dickinson University and a BA degree from Drew University.
The Board of Directors recommends a vote for each of the nominees listed
above.
The other members of the Board of Directors are as follows:
Robert M. Figliulo--45--Vice-Chairman of the Board and Chief Executive Officer
Mr. Figliulo was appointed Vice-Chairman of the Board of Directors and
Chief Executive Officer of Leapnet on May 1, 2000. He had served as Chairman
and Chief Executive Officer of SPR Inc. since June 1997 and previously served
as President and Chairman of SPR Chicago. Since joining SPR in May 1976, Mr.
Figliulo held numerous positions, including Programmer, Analyst, Account
Manager, General Manager of both the Tulsa and Chicago offices and Vice
President of Marketing. Mr. Figliulo received a Masters in Business
Administration from the University of Chicago in 1987.
Scott Barnum--43--Director
Mr. Barnum was appointed a director of Leapnet in May 2000. Until February
2000, Mr. Barnum served as Vice President/General Manager--International for
eBay, Inc., an on-line trading community. Mr. Barnum started the company's
international division and established fully localized operating units and
websites in five major countries (Australia, Canada, Germany, Japan and UK)
supported by a comprehensive headquarters infrastructure within 12 months.
Prior to eBay, Mr. Barnum was President and Chief Operating Officer of Pete's
Brewing Company; a nationally distributed microbrewer, from 1997 until the
company was acquired in 1998. He also held senior general management and
marketing management positions at Miller Brewing Company from 1993 until 1998.
Before Miller, Mr. Barnum spent nine years at PepsiCo, Inc, in marketing
management across several divisions, both domestically and internationally.
Mr. Barnum also serves as a director or advisory board member to several other
companies in the Internet and consumer products industries. He received a
Masters in Business Administration from Columbia University in 1982 and a
Bachelor's of Business Administration from Pacific Lutheran University in
1977.
Peter Poli--39--Director
Mr. Poli was appointed a director of Leapnet in May 2000. He served as the
Vice President and Chief Financial Officer of FTD.COM. from April 1999 until
April 2000. Prior to joining FTD.COM, Mr. Poli was Chief Financial Officer of
Discover Brokerage Direct, Inc., an Internet brokerage firm that is a wholly
owned subsidiary of Morgan Stanley Dean Witter & Co., from March 1997 to April
1999. He was also a director of Discover Brokerage Direct from July 1998 to
April 1999. From 1987 until he joined Discover Brokerage Direct, Mr. Poli
served in various capacities at Dean Witter Reynolds Inc., an investment
banking firm. Mr. Poli received a Masters in Business Administration from
Harvard Business School in 1987 and an A.B. from Brown University in 1983.
Charles J. Ruder--62--Director
Mr. Ruder joined Leapnet's Board of Directors in September 1997. Mr. Ruder
served as the President and Chief Executive Officer of the Chicago United Way
/ Crusade of Mercy for the greater Chicagoland area from 1994 to 1996, when he
retired. Mr. Ruder worked at Sears, Roebuck and Co. from 1959 to 1993 in many
management capacities, including Vice President of Public Affairs from 1985 to
1993. Prior to that time, he served as region manager for stores located in
the Washington, D.C. area and prior to that for the Minnesota area. Mr. Ruder
received a Bachelor of Science from Northern Illinois University in 1959.
Thomas R. Sharbaugh--56--Director
Mr. Sharbaugh joined Leapnet in April 1996, became a director at that time
and served as President from May 1996 until May 2000. In addition, Mr.
Sharbaugh serves as the President of YAR Communications, Inc.
4
<PAGE>
and The Leap Partnership, Inc., subsidiaries of Leapnet. Prior to joining
Leapnet, Mr. Sharbaugh was employed by Sears, Roebuck and Co. from March 1994
until February 1996 as Vice President, Strategic Marketing and Advertising.
Prior to joining Sears, Mr. Sharbaugh held various senior-level executive
marketing positions during his 16-year tenure at Anheuser-Busch. As Vice
President of Brand Management and, prior to that, as Vice President of
Budweiser Brands, he was responsible for managing brand marketing activities
and new product marketing. Mr. Sharbaugh's responsibilities at Anheuser-Busch
included the development and market launch of Bud Light; management of the
"This Bud's For You" campaign for Budweiser; the "Gimme a Light", "Spuds
McKenzie" and "Make it a Bud Light" campaigns for Bud Light; and the "Bud
Bowl" promotional campaign. Mr. Sharbaugh received a Masters in Business
Administration from the Wharton School, University of Pennsylvania in 1970 and
a B.A. degree from Pennsylvania State University in 1966.
Committees of the Board of Directors
The Board of Directors has established the following three Committees:
Audit Committee. The Audit Committee is presently composed of John G.
Keane, Peter Poli, and Charles J. Ruder. In January 2000, Mr. Ruder was
appointed to the Committee. In May 2000, Mr. Garville resigned from the
Committee, and Mr. Poli was appointed to the Committee. The Audit Committee
makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of the audit engagement, approves professional services provided by
the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and non-audit
fees and reviews the adequacy of Leapnet's internal accounting controls.
The Audit Committee met twice during the fiscal year ended January 31,
2000, and all then current members of the Committee attended the meeting.
Compensation Committee. The Compensation Committee is presently composed
of Scott Barnum, Robert M. Figliulo, Charles J. Ruder and Frederick A.
Smith. In May 2000, Mr. Figliulo was appointed to the Committee. In May
2000, Mr. Keane resigned from the Committee. The Compensation Committee
determines the compensation of Leapnet's Executive Officers and makes
recommendations concerning the grant of options to purchase shares of
Leapnet's stock under Leapnet's Employee Incentive Compensation Plan. The
Compensation Committee met three times during the fiscal year ended January
31, 2000, and all then current members of the Committee attended all
meetings.
Stock Committee. The Stock Committee is presently comprised of Stephen
J. Tober, Charles J. Ruder and Frederick A. Smith. In May 2000, Mr. Tober
was appointed to the Committee and Mr. Garville resigned from the
Committee. The Stock Committee is responsible for the administration of
Leapnet's 1996 Stock Option Plan, Employee Incentive Compensation Plan and
Employee Stock Purchase Plan. The Stock Committee met once during the
fiscal year ended January 31, 2000, and Messrs. Garville and Ruder
participated in the meeting.
Other Committees The Board of Directors may establish such other
committees as are deemed necessary and appropriate from time to time.
Compensation of Directors
Leapnet pays a fee of $2,000 per Board meeting attended, $1,000 per
telephonic Board meeting attended and $500 per Committee meeting attended to
its directors who are not employees of Leapnet. Mr. Gier received $6,000 for
meetings attended in fiscal 2000. The Directors may elect to receive options
in lieu of the cash payment. Leapnet reimburses such Directors for travel and
lodging expenses incurred in connection with their activities on behalf of
Leapnet. During fiscal 2000, Messrs. Garville, Keane, and Ruder were granted
options to purchase 21,500 shares, 18,000 shares, and 22,500 shares of common
stock, respectively, pursuant to the Non-Employee Directors' Stock Option
Plan.
5
<PAGE>
Other Executive Officers
Set forth below are the Executive Officers of Leapnet who are not directors
of Leapnet. The Board of Directors elects officers annually and all officers
serve at the discretion of the Board.
David A. Figliulo--39--Mr. Figliulo was appointed Vice President--Sales of
Leapnet in May 2000. Prior to that time, he served as a director of SPR Inc.
and an Executive Vice President since June 1997. Since joining SPR Inc. in
July 1989, Mr. Figliulo served as an Account Manager, the Vice President of
Sales for the Chicago office, and Vice President of the Chicago office. Prior
to joining SPR, Mr. Figliulo worked as an Account Manager for Baxter
Healthcare, an international pharmaceutical company, in the Oxygen Systems
Division, and was recognized as the division's top salesman in the United
States in 1987, 1988 and 1989. Mr. Figliulo received a B.A. degree from
St.Mary's University in 1983.
Stephen T. Gambill--49--Mr. Gambill was appointed Chief Financial Officer
of Leapnet in May 2000. Prior to that time, he served as SPR Inc.'s Vice
President and Chief Financial Officer since July 1996. From 1982 through July
1996, Mr. Gambill, a certified public accountant, held various financial
management positions within Natural Gas Pipeline Company of America, a large
natural gas pipeline, and most recently served as its Director of Accounting.
Prior to 1982, he held various auditing positions with public accounting firms
of Coopers and Lybrand and Deloitte, Haskins & Sells. Mr. Gambill received a
Masters in Business Administration degree from the University of Chicago in
1987.
Robert C. Bramlette--50--Mr. Bramlette has served as Chief Legal Officer
and as Secretary of Leapnet since May 1996. In addition, Mr. Bramlette serves
as Vice President of YAR Communications, Inc. Prior to joining Leapnet, Mr.
Bramlette was Of Counsel to the law firm Krupa & Braun, which he joined in
February 1996. Prior to joining Krupa & Braun, Mr. Bramlette was employed by
Sears, Roebuck and Co. for sixteen years, most recently as its Assistant
General Counsel, Real Estate, and prior to that time in a number of positions
including Director of Corporate Communications. Currently, Mr. Bramlette is Of
Counsel to the firm of Braun & Edwards, Chtd. Mr. Bramlette received a J.D.
degree from Northwestern University in 1974 and a B.B.A. from the University
of Notre Dame in 1971.
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
Summary Compensation Table
The following table sets forth information with respect to the cash
compensation paid for services rendered during each of the last three fiscal
years to the officers who acted as its Chief Executive Officer, its other
current executive officers, and three former executive officers who received
the highest compensation in fiscal 2000 (each, a "Named Executive Officer").
<TABLE>
<CAPTION>
Securities
Year Ended Underlying All Other
Name January 31, Salary Bonus ($) Options (#) Compensation
---- ----------- -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Frederick A. Smith...... 2000 $200,000 -- -- --
Chairman of the Board
and 1999 52,000(1) -- -- --
Chief Executive Officer 1998 236,177(2) -- -- --
Thomas R. Sharbaugh..... 2000 $200,000 -- -- --
President 1999 52,000(1) -- -- --
1998 280,923 -- -- --
George Gier............. 2000 $184,615 -- -- --
Executive Vice President
and 1999 53,846(1) -- -- --
Chief Marketing Officer 1998 200,000 -- -- --
Joseph A. Sciarrotta.... 2000 $200,000 -- -- --
Executive Vice President
and 1999 200,000 -- -- --
Chief Creative Officer 1998 200,000 -- -- --
Robert C. Bramlette..... 2000 $140,562 -- -- --
Chief Legal and 1999 127,846 -- -- --
Strategic Officer 1998 125,999 -- -- --
</TABLE>
6
<PAGE>
--------
(1) Messrs. Smith, Sharbaugh, and Gier voluntarily reduced their salaries
during fiscal 1999.
(2) The former Chairman of the Board and Chief Executive Officer, authorized
additional payments to Mr. Smith totaling $36,177 for additional
responsibilities assumed during fiscal 1998 including those of acting
Chief Executive Officer. Mr. Smith's annual salary was $200,000 under the
terms of his employment agreement.
Stock Option Grants in Last Fiscal Year
The following table sets forth certain information on options granted in
fiscal 2000 to the Named Executive Officers.
No stock appreciation rights were granted to the Named Executive Officers
during fiscal 1999.
Individual grants
<TABLE>
<CAPTION>
Number of
securities Percent of total
underlying options granted Exercise Grant Date
options to employees price Grant Expiration present
granted (#) in fiscal year ($/share) Date Date value $(1)
----------- ---------------- --------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Bramlette..... 30,000 1.1% $5.53 1/7/00 1/7/05 $ 82,767
50,000 1.9% $6.38 1/26/00 1/26/05 $159,148
Thomas R. Sharbaugh..... 100,000 3.8% $2.50 6/14/99 6/14/04 $123,066
</TABLE>
--------
(1) The Grant Date present value in the far right column of the above table
was calculated using the Black-Scholes option pricing model applied as of
the Grant Date, as specified in the table. The values generated by this
model depend upon certain assumptions, as follows: an estimated option
life of 3 years; an assumed annual volatility of underlying stock of 68
percent; and a risk-free rate of return on the grant dates ranging from
5.7 to 6.5 percent. Leapnet made no assumptions regarding restrictions on
vesting or the likelihood of vesting.
Option Exercises in the Last Fiscal Year and Year-End Option Values
The Leapnet Named Executive Officers did not exercise any options in fiscal
2000. The following table provides information on unexercised options of
Leapnet Named Executive Officers at January 31, 2000
<TABLE>
<CAPTION>
Number of securities
underlying unexercised Value of unexercised
options at fiscal year- in-the-money options at
end (#) fiscal year-end ($)
------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas R. Sharbaugh......... 1,734,000 166,000 105,196 204,204
Robert C. Bramlette......... 135,417 33,333 155,253 0
</TABLE>
Employment Agreements
Leapnet entered into an employment agreement with Mr. Smith, which provides
for an annual base salary of $200,000, expires on March 11, 2001, and is
terminable by Leapnet on ninety (90) days prior written notice or in the event
of death or disability or for "Cause" (as defined within the agreements). Mr.
Smith may terminate the agreement on two hundred seventy (270) days prior
written notice, and said notice may not be given prior to July 1, 1999. The
employment agreement contains provisions that restricts the misappropriation
of confidential information during the term of employment and thereafter and
from soliciting Leapnet's clients, prospects or employees for one year
following termination of employment.
Leapnet has not entered into employment agreements with any other Named
Executive Officer; however, the SPR (now known as Leapnet I, Inc.) has entered
into employment agreements with Robert M. Figliulo,
7
<PAGE>
Stephen J. Tober, David A. Figliulo, and Stephen T. Gambill, which are
substantially identical. The agreements provide that upon termination of
employment by SPR, other than for Cause (as defined in the agreements), death
or retirement, SPR shall pay the executive an amount equal to no more than the
executive's annual base compensation in effect at the time of termination. The
agreements also generally provide that in the event of a change in control (as
defined in the agreements) and the occurrence of certain events, and to the
extent deductible under the then applicable tax laws, SPR shall pay the
executive a payment equal to the sum of: (i) the executive's most recent base
annual compensation and annual bonus for the fiscal year prior to the date of
the change in control; plus (ii) the cash value of the insurance protection
(including dependent coverage) then in effect with respect to SPR's health
insurance plan, based upon the cost of such insurance to SPR for a 12-month
period following the change in control date. The agreements also contain
noncompetition, nonsolicitation, and nondisclosure covenants. The employment
agreements for Messrs. Robert M. Figliulo, David A. Figliulo, and Stephen J.
Tober were amended on January 27, 2000 to preserve their target bonus program
after the merger by substituting Leapnet stock for SPR stock.
Compensation Committee Report on Executive Compensation
The Compensation Committee met twice during fiscal 2000. At the both
meetings, the Committee reviewed the employment contracts of Named Executive
Officers and other senior executives of Leapnet. The salary paid to Mr. Smith
was determined by his employment agreement. The compensation for the other
Named Executive Officers was recommended by Mr. Smith and approved by the
Committee.
The Committee's goal is to provide a compensation package that will enable
Leapnet to attract and retain talented executives, reward outstanding
performance and link the interests of Leapnet's executives to the interests of
Leapnet's Stockholders. The Board of Directors currently intends for all
compensation paid to the Named Executive Officers to be tax deductible to
Leapnet pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"). Section 162(m) provides that compensation paid to
the Named Executive Officers in excess of $1,000,000 cannot be deducted by
Leapnet for federal income tax purposes unless, in general, such compensation
is performance based, is established by an independent committee of directors,
is objective and the plan or agreement providing for such performance-based
compensation has been approved in advance by Stockholders. In the future,
however, if, in the judgment of the Board, the benefits to Leapnet of a
compensation program that does not satisfy the arbitrary and inflexible
conditions of Section 162(m) outweigh the costs to Leapnet of the failure to
satisfy these conditions, the Board may adopt such a program.
Report submitted by the Compensation Committee of the Board of Directors:
Scott Barnum Charles J. Ruder Frederick A. Smith
Compensation Committee Interlocks and Insider Participation
Messrs. Barnum, Ruder, and Smith are members of the Compensation Committee.
Committee members have no "interlocking" relationships as defined by the
Securities and Exchange Commission.
Certain Transactions
On February 2, 1998, Leapnet received proceeds of a loan from Alliance
Banking Company ("Alliance") of New Buffalo, Michigan, in the amount of
$665,000 that is secured by a mortgage on the property located at 22 West
Hubbard, Chicago, IL. 60610. The loan was due on January 27, 2001. The full
amount of such indebtedness was personally guaranteed by Mr. Smith. The loan
was approved by all of the directors; however, R. Steven Lutterbach, then a
director of Leapnet, did not vote because he is a significant stockholder in
Alliance. On March 3, 2000, the property was sold, and the loan was paid in
full.
On May 1, 2000, Leapnet stockholders approved the merger of Brassie
Corporation, a wholly owned subsidiary of Leapnet, Inc., with and into SPR
Inc. SPR Inc. paid approximately $324,000, $340,000, and $480,000 during 1999,
1998, and 1997, respectively, in fees to a law firm in which a partner was
both a
8
<PAGE>
stockholder of SPR Inc. and a brother of certain executive officers of
Leapnet. In addition, in 1999, fees of approximately $128,000 were paid to
another law firm in which a partner was both a stockholder of SPR and a
brother of certain executive officers of Leapnet.
Leapnet has adopted a policy that all transactions with affiliated entities
or persons will be on terms no less favorable than could be obtained from
unrelated parties and all future transactions between Leapnet and its
officers, directors, principal Stockholders and affiliates will be approved by
a majority of Leapnet's independent directors.
Total Return Performance Graph
The total return graph is presented for the approximate 40-month period
since Leapnet's initial public offering on September 27, 1996. The total
stockholder return assumes that $100 is invested at the beginning of the
period in the Common Stock of Leapnet, the NASDAQ U.S. Stock Market Index, and
Leapnet's Peer Group. Leapnet's Peer Group is comprised of Agency.com, Ltd.,
marchFIRST, Inc., iXL Enterprises, Inc., Organic, Inc., and Razorfish, Inc.
(the "New Peer Group" in the graph below). The Company has selected this Peer
Group because it includes companies that offer a blend of services that are
similar to the range of services that Leapnet provides. Total shareholder
return is weighted according to market capitalization so that companies with a
larger market capitalization have a greater impact on the Peer Group Index
results. Historical stock price performance during the period shown may not be
indicative of future stock performance.
The Interpublic Group of Companies, Inc. ("Interpublic"); Omnicom Group,
Inc. ("Omnicom"); Think New Ideas, Inc.; and USWeb Corporation were included
in Leapnet's Peer Group for the Proxy Statement following fiscal 1999.
Interpublic and Omnicom are the "Old Peer Group" companies in the graph below,
and they have been removed from the Peer Group because they focus on
traditional advertising more than Leapnet. Since Think New Ideas, Inc. and
USWeb Corporation merged with other companies, they are not included in the
Old Peer Group.
Comparison of 40-Month Cumulative Total Return* Among The Leapnet, Inc., The
NASDAQ Stock Market (U.S.) Index, a New Peer Group and an Old Peer Group
<TABLE>
<CAPTION>
LEAPNET, INC. NEW PEER OLD PEER NASDAQ STOCK
GROUP GROUP MARKET (U.S.)
<S> <C> <C> <C> <C>
9/27/96 100.00 100.00 100.00 100.00
9/30/96 101.25 101.07 99.70 99.70
10/31/96 67.50 101.60 103.82 98.59
11/30/96 61.25 97.33 106.65 104.70
12/31/96 68.75 109.63 99.35 104.62
1/31/97 70.00 86.63 104.41 112.04
2/28/97 77.50 67.38 106.45 105.84
3/31/97 42.50 90.91 109.73 98.94
4/30/97 47.50 81.28 117.21 102.02
5/31/97 31.25 111.23 126.24 113.58
6/30/97 27.50 120.32 131.89 117.07
7/31/97 27.50 110.16 146.77 129.40
8/31/97 20.00 123.53 151.36 129.21
9/30/97 25.63 130.48 161.12 136.87
10/31/97 19.38 124.06 152.64 129.74
11/30/97 17.50 139.04 157.29 130.42
12/31/97 14.38 146.52 171.93 128.18
1/31/98 12.50 124.06 166.86 132.24
2/28/98 15.31 141.18 187.03 144.67
3/31/98 13.75 193.58 202.68 150.02
4/30/98 33.75 187.70 206.23 152.55
5/31/98 27.50 174.87 197.75 144.07
6/30/98 27.50 206.95 206.76 154.13
7/31/98 43.75 197.06 211.53 152.34
8/31/98 25.00 160.43 196.06 122.14
9/30/98 26.25 157.22 185.62 139.09
10/31/98 27.19 170.05 203.04 145.20
11/30/98 43.75 188.77 228.60 159.96
12/31/98 26.88 236.36 257.23 180.74
1/31/99 29.06 286.63 268.64 206.96
2/28/99 25.63 267.91 266.18 188.43
3/31/99 23.75 183.96 300.28 202.66
4/30/99 25.00 241.71 283.94 209.08
5/31/99 24.38 229.73 275.88 203.43
6/30/99 23.13 244.59 315.76 221.76
7/31/99 25.31 229.78 291.90 217.78
8/31/99 21.88 206.81 293.83 226.95
9/30/99 23.44 304.79 307.33 227.08
10/31/99 48.13 368.32 324.38 245.11
11/30/99 54.69 416.14 346.48 274.78
12/31/99 59.38 497.63 408.22 335.03
1/31/00 55.94 387.29 355.28 322.64
</TABLE>
--------
*100 invested on 9/27/96 in stock or index--including reinvestment of
dividends. Fiscal year ending January 31.
9
<PAGE>
New Peer Group
Agency.com, Ltd.
marchFIRST, Inc.
iXL Enterprises, Inc.
Organic, Inc.
Razorfish, Inc.
Old Peer Group
The Interpublic Group of Companies, Inc.
Omnicom Group, Inc.
Think New Ideas, Inc.
USWeb Corporation
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning the beneficial
ownership of Leapnet's Common Stock as of June 2, 2000, for: (a) each
incumbent Director and each of the nominees for Director; (b) each of the
current Named Executive Officers not listed as a Director; (c) each person
known by Leapnet to own beneficially more than 5% of the outstanding Common
Stock; and (d) Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
Amount of
Shares Percent of
Beneficially Total Stock
Name of Individual(1) Owned (2) Outstanding
--------------------- ------------ -----------
<S> <C> <C>
Robert M. Figliulo (3).......................... 2,557,751 8.8%
Frederick A. Smith (4).......................... 2,149,000 7.4%
Thomas R. Sharbaugh (5)......................... 1,867,000 6.5%
George Gier (6)................................. 1,820,000 6.3%
David A. Figliulo (7)........................... 1,738,568 6.0%
T. Rowe Price & Associates, Inc. (8)............ 1,450,500 5.0%
State of Wisconsin (9).......................... 1,010,400 3.5%
Stephen J. Tober (10)........................... 366,917 1.3%
Robert C. Bramlette (11)........................ 135,917 *%
John G. Keane (12).............................. 94,000 *%
Stephen T. Gambill (13)......................... 66,738 *%
Charles J. Ruder (14)........................... 44,500 *%
Scott Barnum (15)............................... 7,000 *%
Peter Poli (15)................................. 7,000 *%
Charles F. Moran (16)........................... 0 *%
All Directors, Nominees and Executive Officers
as a group (13 individuals) (17)............... 10,854,391 36.7%
</TABLE>
--------
*Less than one percent.
(1) Unless otherwise noted below, the address of each person listed is: c/o
Leapnet, Inc., 420 W. Huron Street, Chicago, IL 60610.
(2) Unless otherwise noted below, the persons in the above table have sole
voting and investment power with respect to all shares shown as
beneficially owned by them.
(3) Includes 595,889 shares owned by the Robert M. Figliulo Grantor Retained
Annuity Trust, for which Robert M. Figliulo serves as sole trustee and has
sole investment and voting discretion, includes 269,978 shares owned by
Figliulo Family Associates II L.P., a Delaware limited partnership, for
which partnership
10
<PAGE>
Robert M. Figliulo is a general partner and serves as trustee and has sole
investment and voting discretion, and includes 65,100 shares owned by the
Robert M. and Kim M. Figliulo Family Foundation, for which Robert M.
Figliulo serves as trustee and has sole investment and voting discretion.
Includes 6,510 shares issuable pursuant to currently exercisable options.
(4) Includes 174,000 shares held by trusts for Mr. Smith's children, for which
Mr. Smith, as co-trustee, shares voting and investment power.
(5) The shares shown are issuable to Mr. Sharbaugh pursuant to currently
exercisable options, of which 33,000 shares are exercisable within 60 days
of the date of this proxy.
(6) Includes 100,000 shares held by trusts for Mr. Gier's children, for which
Mr. Gier, as co-trustee, shares voting and investment power. Mr. Gier
resigned as a director effective May 15, 2000.
(7) Includes 596,090 shares owned by the David A. Figliulo Grantor Retained
Annuity Trust, for which David A. Figliulo serves as sole trustee and has
sole investment and voting discretion. Does not include an aggregate of
60,694 shares held by the Figliulo Family Associates, L.P., a Delaware
limited partnership, of which partnership Mr. Figliulo is a General
Partner. Mr. Figliulo disclaims beneficial ownership of such shares.
Includes 4,340 shares issuable pursuant to currently exercisable options.
(8) Based on Schedule 13G dated February 2, 2000, jointly filed by T. Rowe
Price Associates, Inc. and T. Rowe Price New Horizons Fund, Inc. The
address of these companies is 100 E. Pratt Street, Baltimore, Maryland
21202. T. Rowe Price has sole voting power over 1,450,500 shares.
(9) Based on Schedule 13G dated February 2, 2000, filed by the State of
Wisconsin Investment Board. The address of this company is P.O. Box 7842,
Madison, Wisconsin 53707. State of Wisconsin Investment Board has sole
voting power over 1,010,400 shares.
(10) Includes 366,089 shares issuable pursuant to currently exercisable
options.
(11) Includes 135,417 shares issuable pursuant to currently exercisable
options.
(12) Includes 53,500 shares issuable pursuant to currently exercisable
options.
(13) Includes 53,156 shares issuable pursuant to currently exercisable
options.
(14) Includes 43,000 shares issuable pursuant to currently exercisable
options.
(15) Includes 7,000 shares issuable pursuant to currently exercisable options.
(16) Nominee for Director
(17) The shares shown include 2,510,012 shares issuable pursuant to currently
exercisable options and 33,000 shares issuable pursuant to options
exercisable within 60 days of the date of this Proxy.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires Leapnet's Executive Officers and Directors, and persons who
beneficially own more than ten percent (10%) of Leapnet's Common Stock, to
file initial reports of ownership and changes in ownership with the Securities
and Exchange Commission. Based on a review of the copies of such forms
furnished to Leapnet and written representations from Leapnet's Executive
Officers and Directors, except as noted below Leapnet believes that all forms
were filed in a timely manner during the 2000 fiscal year. Mr. Smith filed one
late report reflecting a sale of stock and Mr. Sciarrotta filed two late
reports reflecting a sale of stock.
PROPOSAL 2--APPOINTMENT OF INDEPENDENT AUDITORS
Arthur Andersen LLP has been appointed by Leapnet's Board of Directors to
serve as the independent auditors for Leapnet and its subsidiaries for the
year ending December 31, 2000. The appointment is being submitted to the
Stockholders for ratification. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting to respond to Stockholders'
questions and to have the opportunity to make any statements they consider
appropriate.
11
<PAGE>
In March and September, 1999, the Audit Committee met, reviewed and
approved the scope of Arthur Andersen LLP's professional services rendered to
Leapnet. Arthur Andersen LLP has acted as auditors for Leapnet since April
1996.
The Board of Directors recommends a vote for the appointment of Arthur
Andersen LLP as the independent auditors for the year ending December 31,
2000. In view of the difficulty and expense involved in changing independent
accountants on short notice, if the appointment is not approved, it is
contemplated that the appointment for the year ending December 31, 2000 will
be permitted to stand unless the Board finds other compelling reasons for
making a change. Disapproval of the resolution will be considered as advice to
the Board to select other independent accountants for the following year.
OTHER MATTERS
The Board of Directors does not intend to bring any other business before
the Meeting, and so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the Notice of the Meeting. However,
as to any other business which may properly come before the Meeting, it is
intended that proxies, in the form enclosed, will be voted in respect thereof
in accordance with the judgment of the person voting such proxies.
Stockholder Proposals for the 2001 Annual Meeting
Stockholders may submit proposals for Stockholder action at Leapnet's
Annual Meeting consistent with the regulations of the Securities and Exchange
Commission. It is expected that the 2001 Annual Meeting of Leapnet will be
held in June 2001. Stockholders who intend to present proposals at the 2000
Annual Meeting, and who wish to have such proposals included in Leapnet's
Proxy Statement for the 2001 Annual Meeting, must ensure that such proposals
are received by the Corporate Secretary of Leapnet at 420 West Huron Street,
Chicago, Illinois 60610, not less than 60 nor more than 90 days prior to June
9, 2000. Such proposals must meet the requirements set forth in the rules and
regulations of the Securities and Exchange Commission in order to be eligible
for inclusion in Leapnet's 2001 Proxy Statement.
Leapnet will furnish without charge to each person whose proxy is
solicited, and to each person representing that as of the record date for the
Annual Meeting he or she was a beneficial of owner of shares entitled to be
voted at the Annual Meeting, on written request, a copy of Leapnet's 2000
Annual Report to Stockholders and Annual Report on Form 10-K, including the
financial statements and schedules included therein. Such written request
should be directed to Leapnet, Inc., Attention: Investor Relations, 420 West
Huron Street, Chicago, Illinois 60610.
12
<PAGE>
Please mark your
[X] votes as in this
example.
This proxy when properly executed will be voted as directed. If no direction is
specified this Proxy will be voted as recommended by the Board of Directors.
The Board of Directors recommends a vote FOR the Nominees listed below and FOR
Proposals 2.
FOR WITHHELD
1. Election of Directors [_] [_]
Class I Nominees:
Frederick A. Smith
Stephen J. Tober
Charles F. Moran
For, except vote withheld from the following nominee(s): _______________________
FOR AGAINST ABSTAIN
2. Ratification of the Appointment of [_] [_] [_]
Arthur Andersen LLP as independent
auditors
In their discretion, the persons named in the enclosed form of Proxy and acting
thereunder are authorized to vote on such other matters as may properly come
before the Meeting, including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place. The persons named in the
enclosed form of Proxy and acting thereunder will have discretion to vote for
those matters in accordance with their best judgment to the same extent as the
person signing the Proxy would be entitled to vote. The Company does not
currently anticipate that any other matters will be raised at the Annual
Meeting.
YES NO
I WILL BE ATTENDING THE [_] [_]
ANNUAL MEETING TO BE HELD
ON JULY 11, 2000
SIGNATURE(S)___________________ DATE ________ The signatory hereby acknowledges
Please sign exactly as your name appears. receipt of the accompanying
Joint owners should each sign. Where Notice of Annual Meeting of
applicable, indicate your official Stockholders and Proxy Statement.
position or representation capacity.
---------------------------------------------
IMPORTANT: THIS IS YOUR PROXY CARD: CAREFULLY FOLD AND TEAR ALONG PERFORATION.
PLEASE SIGN AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE
<PAGE>
LEAPNET INC.
Proxy solicited on behalf of the Board of Directors
The signatory hereby appoints Robert C. Bramlette, or his substitutes with full
power of substitution, as attorney and proxy to vote all shares of common stock
which the signatory is entitled to vote, with all powers which the signatory
would possess if personally present, at the Annual Meeting of Stockholders of
Leapnet, Inc. (and any adjournment thereof) to be held at the Quantum Leap
Communications Building, 420 W. Huron St., Chicago, Illinois, 60610, on July 11,
2000 at 9:00 a.m., upon the matters referred to on the reverse side and, in his
discretion, upon such other matters as may properly come before the Meeting.
This Proxy when properly executed will be voted as directed. If no direction is
specified this Proxy will be voted FOR election of the Nominees to the Board of
Directors and FOR ratification of Arthur Andersen LLP as independent auditors.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
-----------------------------------
.FOLD AND DETACH HERE.
Annual
Meeting of
Stockholders
Admission Ticket
Tuesday, July 11, 2000
9:00 a.m. Chicago Time
LEAPNET INC. The Quantum Leap
[LOGO] Communications Building
420 W. Huron St.
Chicago, Illinois
PLEASE PRESENT THIS ORIGINAL FOR ADMISSION.
PHOTOCOPIES WILL NOT BE ACCEPTED.
YOU MAY BE ASKED FOR IDENTIFICATION
AT THE TIME OF ADMISSION.
