SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 ss. 240.14a-11(c) or ss. 240.14a-12
TMP WORLDWIDE 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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<PAGE>
TMP WORLDWIDE INC.
1633 BROADWAY
NEW YORK, NEW YORK 10019
212-977-4200
May 19, 1997
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 11:00 a.m. on Wednesday, June 25, 1997, at the
offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103.
At the meeting you will be asked to elect five directors of the Company
and to approve amendments to the Company's 1996 Stock Option Plan which would
increase the number of shares available for grant thereunder and increase the
maximum annual stock option grant to any individual. In addition, we will be
pleased to report on the affairs of the Company and a discussion period will be
provided for questions and comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
Andrew J. McKelvey
Chairman of the Board
of Directors and President
<PAGE>
TMP WORLDWIDE INC.
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------
New York, New York
May 19, 1997
Notice is hereby given that the Annual Meeting of Stockholders of
TMP Worldwide Inc. will be held on Wednesday, June 25, 1997 at 11:00 a.m. at the
offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103 for the following purposes:
(1) To elect five directors to serve for the ensuing year;
(2) To consider and vote upon proposals to amend the Company's
1996 Stock Option Plan to increase the number of shares which
may be granted thereunder and to increase the maximum annual
stock option grant to any individual; and
(3) To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
Stockholders of record at the close of business on May 8, 1997 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting
in person. Stockholders who are unable to attend the Annual Meeting in person
are requested to complete and date the enclosed form of proxy and return it
promptly in the envelope provided. No postage is required if mailed in the
United States. Stockholders who attend the Annual Meeting may revoke their proxy
and vote their shares in person.
THOMAS G. COLLISON
Secretary
<PAGE>
TMP WORLDWIDE INC.
1633 BROADWAY
NEW YORK, NEW YORK 10019
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PROXY STATEMENT
------------------------
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of Common Stock,
par value $.001 per share (the "Common Stock"), and Class B Common Stock, par
value $.001 per share ("Class B Common Stock"), of TMP Worldwide Inc. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of Stockholders to be held on
Wednesday, June 25, 1997, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the meeting.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to stockholders on or about May
19, 1997 and will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, officers, agents and employees of the Company may communicate with
stockholders, banks, brokerage houses and others by telephone, facsimile or in
person to request that proxies be furnished. All expenses incurred in connection
with this solicitation will be borne by the Company. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
otherwise might not be obtained.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting of Stockholders and a
return envelope for the proxy are enclosed. Stockholders may revoke the
authority granted by their execution of proxies at any time before their
effective exercise by filing with the Secretary of the Company a written notice
of revocation or a duly executed
<PAGE>
proxy bearing a later date, or by voting in person at the meeting. Shares of the
Company's Common Stock and Class B Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby to approve Proposal Nos. 1 and 2 as set forth in
the accompanying Notice of Annual Meeting of Stockholders and in accordance with
their best judgment on any other matters which may properly come before the
meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on May 8, 1997
are entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On May 8, 1997, there were 8,670,245 shares of Common
Stock outstanding, each of which is entitled to one vote on each of the matters
to be presented at the Annual Meeting, and 14,787,541 shares of Class B Common
Stock outstanding, each of which is entitled to ten votes on each of the matters
to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock and Class B Common Stock, present in person
or by proxy and entitled to vote, will constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum. "Broker non-votes" are shares
held by brokers or nominees which are present in person or represented by proxy,
but which are not voted on a particular matter because instructions have not
been received from the beneficial owner. Under applicable Delaware law, the
effect of broker non-votes on a particular matter depends on whether the matter
is one as to which the broker or nominee has discretionary voting authority
under the applicable rule of the New York Stock Exchange. The effect of broker
non-votes on the specific items to be brought before the Annual Meeting of
Stockholders is discussed under each item.
-2-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of April 15, 1997
(except as otherwise noted in the footnotes), regarding the beneficial ownership
determined in accordance with the rules of the Securities and Exchange
Commission (the "SEC"), which generally attributes beneficial ownership of
securities to persons who possess sole or shared voting power and/or investment
power with respect to those securities, of the Company's Common Stock of: (i)
each person known by the Company to own beneficially more than five percent of
the Company's outstanding Common Stock; (ii) each director and nominee for
director of the Company; (iii) each executive officer named in the Summary
Compensation Table (see "Executive Compensation"); and (iv) all directors and
executive officers of the Company as a group. Except as otherwise specified, the
named beneficial owner has the sole voting and investment power over the shares
listed.
Amount and Nature of
Beneficial Ownership of Percentage of
Name of Beneficial Owner Common Stock Common Stock
- ------------------------ ----------------------- -------------
Andrew J. McKelvey...................... 14,789,641(1) 63.0%
Thomas G. Collison...................... 137,484 *
David A. Hosokawa(2).................... 444,971 1.9%
James J. Treacy(3)...................... 338,367 1.4%
Jeffrey C. Taylor(2).................... 138,416 *
George R. Eisele........................ 109,056 *
John R. Gaulding(4)..................... 18,438 *
Jean-Louis Pallu(5)..................... 5,625 *
John Swann(5)........................... 5,625 *
All directors and executive officers
as a group (12 persons)(6)............ 16,145,722 68.6%
- ----------
* Less than 1%
(1) Includes 14,787,541 shares of Class B Common Stock which are convertible,
on a share for share basis, into Common Stock. Each share of Class B
Common Stock has ten votes per share. Also includes 2,000 shares of Common
Stock owned by Mr. McKelvey's wife and 100 shares of Common Stock owned by
Mr. McKelvey's daughter. Mr. McKelvey disclaims beneficial ownership of
the shares owned by his wife.
(2) Includes 2,813 shares of Common Stock, subject to options, which are
exercisable within 60 days of April 15, 1997.
-3-
<PAGE>
(3) Includes 300 shares of Common Stock owned by Mr. Treacy's daughters.
(4) Includes 8,438 shares of Common Stock, subject to options, which are
exercisable within 60 days of April 15, 1997.
(5) Includes 5,625 shares of Common Stock, subject to options, which are
exercisable within 60 days of April 15, 1997.
(6) Includes 26,723 shares subject to options which are exercisable within 60
days of April 15, 1997. Does not include 316,308 shares of Common Stock
issuable pursuant to options which are not exercisable within 60 days of
April 15, 1997.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Five directors (constituting the entire Board) are to be elected at
the Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted
in favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The nominees, their ages, the year in which each first became a
director and their principal occupations or employment during the past five
years are:
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- --------------------------
Andrew J. McKelvey 62 1967 Chairman of the Board, President and
a director since founding the
Company in 1967. Mr. McKelvey has a
B.A. from Westminster College. Mr.
McKelvey was a member of the Board
of Directors of the Yellow Pages
Publishers Association and the
Association of Directory Marketing
from 1994 through September 1996.
George R. Eisele 60 1987 Director of the Company since
September 1987 and Executive Vice
President of TMP Worldwide Direct,
the Company's direct marketing
division, since 1989.
-4-
<PAGE>
John R. Gaulding 51 1996 Director of the Company since
January 1996. Mr. Gaulding is a
private investor and business
consultant in the fields of strategy
and organization. He was Chairman
and Chief Executive Officer of
National Insurance Group, a publicly
traded financial information
services company, from April through
July 11, 1996, the date of such
company's sale and Corporate Vice
President of ADP, Inc. For six years
prior thereto, he was President and
Chief Executive Officer of ADP
Claims Solutions Group. From 1985 to
1990, Mr. Gaulding was President and
Chief Executive officer of Pacific
Bell Directory, the yellow page
publishing unit of Pacific Telesis
Group. Mr. Gaulding served as
Co-Chairman of the Yellow Pages
Publishers Association from 1987 to
1990. He holds a B.S. from the
University of California at Los
Angeles and an M.B.A. from the
University of Southern California.
Jean-Louis Pallu 56 1996 Director of the Company since
September 1996. From 1992 until June
1996, Mr. Pallu was President of
ODA, the yellow pages subsidiary of
Havas, a French advertising firm.
Prior thereto, since 1974, he was
employed by that firm in various
executive capacities. Mr. Pallu was
graduated from Diplome de l'Ecole
des Hautes Etudes Commerciales with
a concentration in business. He is a
Chevalier of the National Order of
Merit.
John Swann 60 1996 Director of the Company since
September 1996. In 1995, Mr. Swann
founded Cactus Digital Imaging
Systems, Ltd., Canada's largest
supplier of electronically produced
large format color prints.
All directors hold office until the next meeting of the stockholders
of the Company and until their successors are elected and qualified.
The Board of Directors has a Compensation Committee charged with
recommending to the Board the compensation for the Company's executives and
administering the Company's stock option and benefit plans. The Compensation
Committee is currently composed of Messrs. Gaulding and Swann. The Board of
Directors also has an Audit Committee charged with recommending to the Board the
appointment of independent auditors of the Company, as well as discussing and
reviewing, with the independent auditors, the scope of the annual audit and
results thereof. The Audit Committee is currently composed of Messrs. Gaulding
and Swann.
-5-
<PAGE>
The Board of Directors also has a Strategy Committee charged with recommending
to the Board strategic plans. The Strategy Committee is currently composed of
Messrs. Gaulding, Pallu and Swann. The aforementioned Committees were formed in
September 1996, and did not meet in 1996.
During the fiscal year ended December 31, 1996, the Board of
Directors held one meeting and acted 31 times by unanimous written consent in
lieu of a meeting. Each director attended at least 75% of the meetings of the
Board of Directors held when he was a Director.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's executive officers and directors,
and persons who beneficially own more than ten percent of the Company's Common
Stock, to file initial reports of ownership and reports of changes in ownership
with the SEC and the National Association of Securities Dealers, Inc. Executive
officers, directors and greater than ten percent beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based upon on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during fiscal 1996 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes
of the shares present in person or represented by proxy and entitled to vote for
them, a quorum being present, shall be elected as directors. Only votes cast for
a nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
-6-
<PAGE>
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1-ELECTION OF DIRECTORS"
TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A
VOTE "FOR" APPROVAL THEREOF.
-7-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and
non-cash compensation paid or to be paid by the Company as well as certain other
compensation awarded, earned by and paid, during the fiscal years indicated, to
the Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company for such period in all capacities in which
they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------- ----------------------
Awards
------
Other All
Annual Securities Other
Name and Principal Compen- Underlying Compen-
Position Year Salary Bonus sation Options/SARs sation
------------------ ---- ------ ----- ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. McKelvey,
Chairman of the Board
and President............. 1996 $696,416 $210,000 $2,730(1) - -
1995 558,731 710,000 2,730(1) - -
David A. Hosokawa,
Vice Chairman............. 1996 308,077 147,312 2,730(1) 11,250 -
1995 299,066 129,000 2,730(1) - -
James J. Treacy,
Executive Vice President-
Finance and Strategy...... 1996 199,231 154,954 2,730(1) - -
1995 180,000 197,500 2,730(1) - -
Jeffrey C. Taylor,
Executive Vice President-
Interactive............... 1996 195,025 75,000 170,000(2) 11,250 -
1995 201,089 6,250 50,000(3) - -
Thomas G. Collison,
Vice Chairman and Secretary 1996 212,573 40,000 2,730(1) - -
1995 205,418 62,000 2,730(1) - -
</TABLE>
- ----------
(1) Represents matching contributions made to the Company's 401(k) Plan.
(2) $150,000 of such compensation includes payments made to Mr. Taylor in
connection with the sale by a corporation of which Mr. Taylor was a
principal of certain assets to the Company and $20,000 of such
compensation represents the fair market value of 142,740 shares of Common
Stock of the Company issued as compensation by the Company to Mr. Taylor
in January 1996.
(3) Consists of payments made to Mr. Taylor in connection with the sale by a
corporation of which Mr. Taylor was a principal of certain assets to the
Company.
-8-
<PAGE>
STOCK OPTIONS
The following table sets forth certain summary information concerning
individual grants of stock options made during the year ended December 31, 1996
to each of the Company's executive officers named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term(2)
----------------------------- --------------
Number of % of Total Exercise
Securities Options or Base
Underlying Granted to Price
Options Employees Per Expiration
Name Granted in 1996(1) Share Date 5% 10%
---- ------- ------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Andrew J. McKelvey........ 0 - - - - -
David A. Hosokawa......... 11,250 2.7% $6.65 1/03/06 $158,850 $297,225
James J. Treacy........... 0 - - - - -
Jeffrey C. Taylor........ 11,250 2.7% $6.65 1/03/06 $158,850 $297,225
Thomas G. Collison........ 0 - - - - -
</TABLE>
- ----------
(1) Based on 421,640 options granted in 1996.
(2) These amounts represent assumed rates of appreciation in the price
of the Company's Common Stock during the term of the option in
accordance with rates specified in applicable federal securities
regulations. Actual gains, if any, or stock option exercises, will
depend on the future price of the Common Stock and overall stock
market conditions. The Company's stock price, as reported by the
Nasdaq National Market on December 31, 1996, was $12.75 per share.
On January 6, 1997, options to purchase 0, 124,459, 66,666, 26,125 and
13,334 shares of Common Stock were granted to Messrs. McKelvey, Hosokawa,
Treacy, Taylor and Collison, respectively, at a per share exercise price of
$12.875. Generally, 5/6 of the options vest on September 30, 1997 and the
remaining 1/6 of the options vest on December 31, 1997. The options are
exercisable commencing January 6, 1999. See Proposal No. 2 - Amendments to Stock
Option Plan for additional information concerning these grants.
The following table sets forth at December 31, 1996 the number of
securities underlying unexercised options and the value of unexercised options
held by each of the executive officers named in the Summary Compensation Table:
-9-
<PAGE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year End Options at Year End(1)
--------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Andrew J. McKelvey......... - - - -
David A. Hosokawa.......... 2,813 8,437 $17,159 $51,466
James J. Treacy............ - - - -
Jeffrey C. Taylor.......... 2,813 8,437 $17,159 $51,466
Thomas G. Collison......... - - - -
</TABLE>
- ----------
(1) Computed based upon the difference between the Stock Option exercise
price and the closing price of the Company's Common Stock on
December 31, 1996 ($12.75).
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Andrew J.
McKelvey, effective as of November 15, 1996, for a term ending on November 14,
2001. The agreement provides for automatic renewal for successive one year terms
unless either party notifies the other to the contrary at least 90 days prior to
the expiration of the then current term. The agreement also provides that Mr.
McKelvey will serve as Chairman of the Board and President of the Company and
will be nominated for election as a director during all periods of his
employment. Under the agreement, Mr. McKelvey is entitled to a base salary of
$1,500,000 per year and mandatory bonuses of $375,000 per quarter. Mr. McKelvey
has waived his bonus for the quarter commencing November 15, 1996. Under the
agreement, Mr. McKelvey may terminate his employment upon 90 days' prior written
notice for any reason. The agreement also provides that in the event Mr.
McKelvey's employment is terminated by the Company prior to its expiration for
reasons other than for "cause," the Company shall pay Mr. McKelvey his base
salary and mandatory bonuses for the remaining term of the agreement at the
times they would have been payable had he remained employed. The agreement
further provides that in the event of Mr. McKelvey's voluntary resignation,
termination of his employment by the Company for cause or nonrenewal of the
agreement, Mr. McKelvey shall not be entitled to any severance, and in the event
of his disability or death he or his estate shall be paid his base salary and
mandatory bonuses for a period of 180 days after any such termination at the
times they would have been payable had he remained employed. The agreement also
contains confidentiality provisions, whereby Mr. McKelvey agrees not to disclose
any confidential information regarding the Company and its affiliates.
The Company has entered into an employment agreement with James J.
Treacy, effective as of November 18, 1996, for an indefinite term on an at-will
basis. The agreement provides that either party may terminate the agreement for
any reason. Pursuant to the agreement, Mr. Treacy will serve as Executive Vice
President - Finance and Strategy of the Company for a base salary of $200,000
and an annual minimum
-10-
<PAGE>
bonus of at least $35,000. The agreement provides that in the event Mr. Treacy
is terminated for "cause" or voluntarily resigns, he shall not be entitled to
any severance, and in the event Mr. Treacy is terminated by reason of his death,
disability or for other reasons, he or his estate shall be entitled to his base
salary and minimum annual bonus for a period of one year after the effective
date of his termination payable at the times they would have been payable had he
remained employed, less income earned by him from the performance of any
personal services during such period. The agreement contains confidentiality
provisions, whereby Mr. Treacy agrees not to disclose any confidential
information regarding the Company and its affiliates, as well as nonsolicitation
provisions which prohibit Mr. Treacy from soliciting any active or prospective
accounts of the Company or its affiliates for a period of one year following
termination.
The Company's subsidiary, TMP Interactive Inc., entered into an
amended and restated employment agreement with Jeffrey C. Taylor, effective as
of September 11, 1996, for a term ending November 9, 1998. That agreement
provides for automatic renewal for successive one year terms unless either party
notifies the other to the contrary at least 60 days prior to its expiration. The
agreement provides that Mr. Taylor will serve as Chief Executive Officer of TMP
Interactive Inc. and provides Mr. Taylor with a base salary of $125,000 per year
and annual bonuses of at least $50,000 per year based on formulae mutually
agreed to by the parties. Under the agreement, Mr. Taylor may terminate his
employment upon written notice for certain material alterations in his
responsibilities, duties, and authorities or upon 60 days' prior written notice
for any reason. The agreement provides that in the event Mr. Taylor's employment
is terminated by TMP Interactive Inc. prior to its expiration for reasons other
than cause or is terminated by Mr. Taylor for certain material alterations in
his responsibilities, duties and authorities, TMP Interactive Inc. shall pay Mr.
Taylor his base salary and a minimum $50,000 annual bonus for the remaining term
of the agreement at the times they would have been payable had he remained
employed, less the consideration paid or earned by Mr. Taylor from other
employment during such period. The agreement also provides that in the event of
Mr. Taylor's voluntary resignation, termination of his employment by TMP
Interactive Inc. for "cause" or non-renewal of the agreement, Mr. Taylor shall
not be entitled to any severance, and in the event of his disability or death he
or his estate shall be paid his base salary and certain other benefits for a
period of 90 days at the times they would have been payable had he remained
employed. The agreement contains confidentiality provisions, whereby Mr. Taylor
agrees not to disclose any confidential information regarding TMP Interactive
Inc. and its affiliates, as well as non-competition provisions. The
non-competition covenants generally survive the termination or expiration of Mr.
Taylor's employment for two years, provided that in certain circumstances TMP
Interactive Inc. must pay Mr. Taylor one-half of his base salary and one-half of
his $50,000 minimum annual bonus for the duration of the non-competition
obligation. Mr. Taylor's agreement also prohibits him from soliciting or
servicing customers or prospective customers of TMP Interactive Inc. and its
affiliates for a period of two years following the termination or expiration of
his employment.
-11-
<PAGE>
STOCK OPTION AWARDS
In January 1996, the Company's Board of Directors adopted the 1996
Stock Option Plan (the "Stock Option Plan"), which provides for the issuance of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and non-statutory stock options,
to purchase an aggregate of up to 900,000 shares of the Common Stock of the
Company. The Stock Option Plan permits the grant of options to officers,
employees and consultants of the Company and its affiliates. On January 6, 1997,
options to purchase an aggregate of 1,203,737 shares were granted, subject to
stockholder approval to amend the aggregate number of options which may be
granted under the Stock Option Plan and to increase the annual maximum annual
stock option grant to any individual, at a per share exercise price of $12.875.
Of such options, 0, 124,459, 66,666, 26,125 and 13,334 were granted to Messrs.
McKelvey, Hosokawa, Treacy, Taylor and Collison, respectively. See "Proposal No.
2 - Amendments to the Stock Option Plan" for information concerning the Stock
Option Plan and proposed amendments to the Stock Option Plan.
COMPENSATION OF DIRECTORS
Prior to the Company's initial public offering in December 1996, Mr.
Gaulding, a non-employee director, received a director's fee of $20,000 per
quarter plus reimbursement of expenses in connection with his duties as a
director. Prior to the initial public offering, Messrs. Swann, Pallu and Mr.
Graeme K. Howard, Jr., a former director of the Company, were provided with
reimbursement of expenses incurred in connection with their respective duties as
a director. As of the Company's initial public offering, Messrs. Gaulding, Swann
and Pallu each receive $15,000 per year for services rendered as directors, plus
a per meeting fee of $5,000 for each meeting of the board of directors or a
committee of the board of directors attended in person after the fifth such
meeting attended in person, plus reimbursement of expenses incurred in
connection with their duties as directors.
The Company has adopted a Stock Option Plan for Non-Employee
Directors (the "Directors' Plan"), pursuant to which options to acquire a
maximum aggregate of 180,000 shares of Common Stock may be granted to
non-employee directors. Options granted under the Directors' Plan do not qualify
as incentive stock options within the meaning of Section 422 of the Code.
Pursuant to the Directors' Plan, each of Messrs. Gaulding, Pallu and Swann, its
non-employee directors, was granted an option to purchase 11,250 shares of
Common Stock at a purchase price per share equal to the fair market value of the
Common Stock on the date of such Director's election ($6.65 in the case of Mr.
Gaulding and the per share initial public offering price in the cases of Messrs.
Swann and Pallu ($14.00)). The options have a ten-year term and become
exercisable as determined by the Committee. The options may be exercised by
payment in cash, check or shares of Common Stock.
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Mr. Howard was granted options to purchase 125,000 shares of Common
Stock at a per share exercise price of $14.00. 50,000 of such options vested
December 13, 1996. In addition, pursuant to an Employment Agreement dated as of
February 1, 1997, Mr. Howard was named as a Vice Chairman of the Company and was
to receive $100,000 per annum plus expenses. Mr. Howard resigned as a director
effective as of April 8, 1997. The Employment Agreement was terminated on April
8, 1997 in connection with Mr. Howard's resignation from the Company. The
Company agreed that an additional 12,500 of Mr. Howard's stock options would
vest on June 1, 1997, and that such options, along with the 50,000 stock options
previously vested, will expire on December 9, 2006.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation Committee (the "Compensation
Committee") 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 (the "Securities Act") or under the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The Compensation Committee of the Board of Directors was formed in
September, 1996 and consists of Messrs. Gaulding and Swann, each of whom is an
independent non-employee director. The Compensation Committee is charged with
recommending to the Board of Directors the compensation for the Company's
executives and administering the Company's stock option and benefit plans.
COMPENSATION PHILOSOPHY
The Company believes that executive compensation should be closely
related to increased stockholder value. One of the Company's strengths
contributing to its successes is a strong management team, many of whom have
been with the Company for a number of years. The Committee believes that low
executive turnover has been instrumental to the Company's success, and that the
Company's compensation program has played a major role in limiting executive
turnover. The compensation program is designed to enable the Company to attract,
retain and reward capable employees who can contribute to the continued success
of the Company, principally by linking compensation with the attainment of key
business objectives. Equity participation and a strong alignment to
stockholders' interests are key elements of the Company's compensation
philosophy. Accordingly, the Company's executive compensation program is
designed to provide competitive compensation, support the Company's strategic
business goals and reflect the Company's performance.
The compensation program reflects the following principles:
o Compensation should encourage increased stockholder value.
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o Compensation programs should support the short- and long-term
strategic business goals and objectives of the Company.
o Compensation programs should reflect and promote the Company's
values and reward individuals for outstanding contributions
toward business goals.
o Compensation programs should enable the Company to attract and
retain highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is comprised of two components,
base salary and incentives, each of which is intended to serve the overall
compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with
competitive pay practices and level of responsibility, with salary increases
reflecting competitive trends, the overall financial performance and resources
of the Company, general economic conditions as well as a number of factors
relating to the particular individual, including the performance of the
individual executive, and level of experience, ability and knowledge of the job.
INCENTIVES
Incentives consist of stock options and cash awards paid to the
Company's senior and middle management executives. Incentives awarded to Mr.
McKelvey are discussed under "Chief Executive Officer 1996 Compensation."
Incentive payments in 1996 to Messrs. Hosokawa and Treacy as a percentage of
salary were 47.8% and 80.6% respectively, based on revenue growth and expense
control objectives as set forth in the Company's 1995 annual plan. Mr. Taylor's
bonus, 36% of salary, was based on internet billings growth and operations. Mr.
Collison's award, 18.8% of salary, was based on objectives for completing
acquisitions and management of the relationship with the Company's primary
lender. In 1996 other key executives earned from 0% to 25% of salary based on
revenue, divisional or regional profit, client retention or other preset
objectives related to performance as set forth in the Company's 1995 annual
plan. Stock options are granted from time to time to reward employee
contributions.
The Committee strongly believes that the pay program should provide
employees with an opportunity to increase their ownership and potentially gain
financially from Company stock price increases. By this approach, the best
interests of stockholders, executives and employees will be closely aligned.
Therefore, executives
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and other employees are eligible to receive stock options, giving them the right
to purchase shares of Common Stock of the Company at a specified price in the
future. The grant of options is based primarily on a key employee's potential
contribution to the Company's growth and profitability, based on the Committee's
discretionary evaluation. Options are granted at the prevailing market value of
the Company's Common Stock and will only have value if the Company's stock price
increases. Generally, grants of options vest over a period of time and
executives must be employed by the Company for such options to vest.
CHIEF EXECUTIVE OFFICER 1996 COMPENSATION
The base salary for Andrew J. McKelvey, the Company's President and
Chairman of the Board, was $680,000 during the Company's fiscal year ended
December 31, 1996. Such base salary of $680,000 represents a 17.2% increase over
the previous year's salary. In 1996, Mr. McKelvey also received a cash bonus of
$210,000 which was awarded to Mr. McKelvey in connection with the Company's
meeting operational targets and the overall performance of the Company. In
November 1996, the Company entered into an employment agreement with Mr.
McKelvey which provides for an annual base salary of $1,500,000 and mandatory
bonuses of $375,000 per quarter. Mr. McKelvey has waived his bonus for the
quarter commencing November 15, 1996. The employment agreement was entered into
by the Company as a recognition of Mr. McKelvey's services to the Company as
well as an acknowledgement of his stature in the industry.
The aggregate compensation paid to Mr. McKelvey was deemed
appropriate by the Compensation Committee considering the overall performance of
the Company and Mr. McKelvey.
TAX EFFECTS
Section 162(m) of the Code generally limits to $1 million the annual
income tax deduction for certain "non-performance based" compensation paid to
the chief executive officer or any of the four other highest paid offices of a
publicly held corporation. "Performance-based compensation" is not subject to
the deduction limitation if certain requirements are met. Based on the
transition rules set forth in the Code and the regulations promulgated
thereunder, compensation payable to Mr. McKelvey under his employment agreement
should be exempt from the non-deductibility provisions of Section 162(m) through
the 1999 calendar year.
The Compensation Committee believes that linking executive
compensation to corporate performance results in a better alignment of
compensation with corporate business goals and stockholder value. The Committee
believes its compensation practices are directly tied to stockholder returns and
linked to the achievement of annual and longer-term financial and operational
results of the
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Company on behalf of the Company's stockholders. In view of the Company's
performance and achievement of goals and competitive conditions, the
Compensation Committee believes that compensation levels during 1996 adequately
reflect the Company's compensation goals and policies.
COMPENSATION COMMITTEE
John R. Gaulding
John Swann
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On September 16, 1996, the Company's Board of Directors established a
Compensation Committee, which currently consists of Messrs. Gaulding and Swann
to recommend compensation for the Company's executives and to administer the
Company's stock option and other benefit plans. Prior to September 16, 1996, all
matters concerning executive officer compensation were addressed by the entire
Board of Directors. In January 1996 Mr. Gaulding and, in September 1996, Mr.
Swann received, respectively, stock options to purchase 11,250 shares of Common
Stock at an exercise price of $6.65 per share and $14.00 per share, equal to the
fair market value on the date of grant.
CERTAIN TRANSACTIONS
The Company has made advances to Messrs. McKelvey, Hosokawa and Collison.
The total gross amounts advanced to Messrs. McKelvey, Hosokawa and Collison were
$4,515,870, $123,659 and $6,954 in 1993, respectively; $9,206,681, $5,100 and
$44,839 in 1994, respectively; $612,509, $1,813 and $0 in 1995, respectively;
and $4,537,159, $10,503 and $0 in 1996, respectively. Mr. McKelvey repaid
$1,306,458 in 1993, $5,487,160 in 1994, $2,271,040 in 1995 and $1,577,157 in
1996. Mr. Hosokawa repaid $27,758 in 1994 and $0 in 1993, 1995 and 1996. Mr.
Collison repaid $23,791 in 1993, $6,614 in 1994, $4,550 in 1995 and $3,868 in
1996. At December 31, 1996, Messrs. McKelvey, Hosokawa and Collison were
indebted to the Company in the amounts of $11,413,174, $149,184 and $132,130,
respectively. The advances to Messrs. Hosokawa and Collison do not bear
interest. Mr. McKelvey has converted all of his indebtedness to the Company,
including but not limited to the indebtedness incurred in connection with Mr.
McKelvey's acquisition of a yacht from the Company at the yacht's book value, to
a promissory note in principal amount of $18,850,000. Such promissory note bears
interest at the prime rate established by The Bank of New York and shall be
adjusted December 31, 1997 and each December 31st thereafter to the Bank of New
York's prime rate in effect on such dates. The note provides for annual payments
of all accrued but unpaid interest commencing December 31, 1997. The principal
amount is payable in equal annual installments of one-sixtieth of the initial
principal amount commencing December 31, 1997, with all unpaid principal due
December 31, 2006. The
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Company has payables of $7,100,000 due to Mr. McKelvey. $2,475,000 of such
amount bears interest at 6.5% annually and the remainder bears interest,
annually, at the prime rate established by The Bank of New York.
On January 1, 1996, the Company purchased Mr. McKelvey's 100% interest in
Volando, Inc., the sole stockholder of Online Career Center Management, Inc.,
for $1,000, the same consideration paid by Mr. McKelvey in connection with the
initial issuance of those shares to him on December 20, 1994.
On January 1, 1996, Mr. McKelvey contributed to the Company his 100%
interest in EPI Aviation, Inc., which leases an aircraft. The aircraft is leased
by EPI Aviation, Inc. from an unaffiliated third party pursuant to a lease
agreement dated October 27, 1995. The lease provides for a term of 24 months and
a basic rent of $85,000 per month plus additional rent of $379.36 per flight
hour. In consideration of a payment of $350,000, EPI Aviation, Inc. also
acquired an option to purchase the aircraft for a purchase price of $6,060,000.
EPI Aviation, Inc. has no cost basis in the aircraft.
On July 16, 1996, Mr. McKelvey contributed to the Company his 100%
interest in General Directory Advertising Services, Inc., a yellow page
advertising agency. On August 15, 1996, the Company purchased Mr. McKelvey's
80.42% interest in National Media Holding Company, Inc., the sole stockholder of
a yellow page advertising agency, for $280,000. On September 1, 1996, the
Company purchased Mr. McKelvey's 48.92% interest in Telephone Directory
Advertising, Inc., a yellow page advertising agency, for $837,000. The Company
had originally sold such stock to Mr. McKelvey on December 31, 1992 for
$837,306.
On September 4, 1996, Mr. McKelvey sold his interest in S.M.E.T. Servizio
Marketing Elenchi Telefonici s.r.l. to the Company for $140,620. The Company had
originally sold such interest to Mr. McKelvey on June 5, 1990 for $140,620.
Messrs. McKelvey, Collison, Camara and Eisele had 17.8%, 5.8%, 5.4% and
0.2% interests, respectively, in the McKelvey Enterprises, Inc. Profit Sharing
Plan. Proceeds of the Company's initial public offering in 1996 were used to
redeem all of the shares of the Company's preferred stock owned by such plan.
Messrs. McKelvey, Eisele, Camara and Collison have approximately 69.4%,
10%, 5% and 5% interests, respectively, in International Drive, L.P., the lessor
of the Company's 48,000 square foot office in Mt. Olive, New Jersey. This lease
runs through December 1998 and the Company's rent for this space is $46,200 per
month. Mr. McKelvey has an 80% interest in 12800 Riverside Drive Corporation,
the lessor of the Company's 15,802 square foot office in North Hollywood,
California. This lease runs through May 2013 and the Company's rent for this
space is $16,000 per month. Mr. McKelvey has a 49% interest in TMP Development
Company Inc., the lessor of the Company's 5,000 square foot office in Holliston,
Massachusetts. This lease is month to month and the Company's rent for this
space is currently $9,756 per month. Mr. McKelvey has a 49% interest in TPH &
AJM, a partnership, the lessor of the office
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occupied by Telephone Directory Advertising, Inc., an entity in which the
Company has 48.92% interest. This lease runs through May 1999 and Telephone
Directory Advertising, Inc.'s rent for this space is currently $9,955 per month.
Messrs. Collison and Camara each have a 1% interest in Programmes
Marketing Annuaires, a yellow page advertising agency in France in which the
Company has a 32% interest.
On March 17, 1996, Mr. Eisele exchanged his 10% interest in M.S.I. -
Market Support International, Inc., a subsidiary of the Company providing order
fulfillment services, for 70,056 shares of common stock of the Company.
On January 1, 1996, 3055078 Canada Inc. redeemed John Swann's ownership
interest for $510 (in Canadian Dollars), the same amount paid by Mr. Swann for
such shares in connection with their initial issuance on September 7, 1994. On
January 1, 1996, Cala H.R.C. Ltd., the Company's Canadian recruitment
advertising subsidiary, entered into a management agreement with Cala Services
Inc., a recruitment advertising company owned by Mr. Swann, pursuant to which
Cala H.R.C. Ltd. provides management services in exchange for a percentage of
the billings of Cala Services Inc. which is agreed to from time to time. The
agreement has no stated term but is terminable by either party on 30 days'
notice. For the three months ended March 31, 1997, Cala Services Inc. has
received $52,600 for management services. No amounts were received prior to
1997.
For the three months ended March 31, 1997, Mr. Gaulding received $16,250
for consulting services.
On November 10, 1995, two of the Company's subsidiaries acquired
substantially all of the assets of Adion, Inc. and Adion Information Services,
Inc. for purchase prices of $2,744,428 and $200,000, respectively, as well as
the assumption of substantially all of the liabilities of such companies,
exclusive of liabilities under or related to employee benefit plans, taxes, and
under laws, rules and regulations regarding health benefits. Jeffrey C. Taylor
owned approximately 28% of each of those two companies. In connection with these
acquisitions, the Company and two of its subsidiaries, HGI Acquisition Corp.,
the entity which acquired the assets of Adion, Inc., and TMP Interactive Inc.,
the entity which acquired the assets of Adion Information Services, Inc., also
entered into arrangements with Mr. Taylor personally which arrangements, as
amended, provided for payments of an aggregate of $453,333.37, $230,000 of which
was paid at the time of the acquisitions and a lump sum payment of $150,000
which was paid in March 1996. The balance of these payments was paid in 11
monthly installments of $6,666.67 commencing on December 10, 1995.
On December 9, 1996, in connection with the reorganization of the Company,
Messrs. McKelvey, Hosokawa, Camara, Treacy, Eisele and Taylor received
14,787,540, 467,640, 138,564, 355,860, 151,056 and 142,740 shares of the
Company, respectively.
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Other than the advances, the Company believes that all transactions with
the aforementioned directors and executive officers were made on terms no less
favorable to the Company than would have been obtained from unaffiliated third
parties and were approved or ratified by the entire Board, including
disinterested directors.
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THE COMPANY'S PERFORMANCE
The Stock Price Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act or under the
Exchange Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
FISCAL YEAR ENDING
COMPANY 1996 1996
- ------- ---- ----
TMP WORLDWIDE INC 100.00 91.07
INDUSTRY INDEX 100.00 94.93
BROAD MARKET 100.00 99.77
The above Graph compares the performance of the Company from December 12,
1996, the date that the Company's Common Stock commenced trading on the Nasdaq
National Market, through December 31, 1996, against the performance of the
Nasdaq National Market Index and the Company's Peer Group (SIC Code Index) for
the same period. The companies included in the Company's Peer Group are Ariely
Advertising Ltd., Catalina Marketing Corp., Cordiant Plc, Digital Generation
Systems, Inc., Edisto Resources Corp., Food Court Entertainment Network, Inc.,
Greenstone Roberts Advertising, Inc., Grey Advertising, Inc., Heritage Media
Corp., Interpublic Group of Companies, Inc., Lamar Advertising Co., Leap
Partnership, Inc., Metromail Corp., Obie Media Corp., Omnicom Group, Inc., True
North Communications and WPP Group plc.
PROPOSAL NO. 2 - AMENDMENTS TO STOCK OPTION PLAN
On January 6, 1997, the Compensation Committee of the Board of
Directors unanimously adopted, subject to stockholder approval, amendments to
the Company's 1996 Stock Option Plan (the "Stock Option Plan") which would
increase the maximum annual stock option grant to any individual from 45,000 to
150,000 and which would increase the aggregate number of shares of Common Stock
which may be issued under the Stock Option Plan from 900,000 to 1,800,000
shares, all of which would be available for the grant of either "incentive stock
options," as defined in Section 422 of the Code, or options which do not qualify
as incentive stock options (non-statutory stock options). The primary features
of the Stock Option Plan are summarized below. The full text of the Stock Option
Plan and the proposed
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amendments thereto are set forth in Appendix A to this Proxy Statement and the
following discussion is qualified by reference thereto.
The Board of Directors believes that approval of the amendments will
serve the best interests of the Company and its stockholders by permitting the
Company to continue to utilize stock options as a means to attract and retain
key employees and consultants who are in a position to contribute materially to
the successful conduct of the business and affairs of the Company and, in
addition, to stimulate in such individuals an increased desire to render greater
service to the Company and its subsidiaries. In addition, the availability of
shares for grant under the Stock Option Plan is important in that it provides
the Company an alternative or additional means of compensating key employees and
consultants. As of January 5, 1997, there were 485,416 shares available for
future grants under the Stock Option Plan. On January 6, 1997, options to
purchase an aggregate 1,203,737 shares were granted subject to stockholder
approval to amend the Stock Option Plan.
The Stock Option Plan is currently administered by the Compensation
Committee of the Board of Directors (the "Committee"), which has the authority
to select optionees, designate the number of shares to be covered by each option
and, subject to certain restrictions, specify other terms of the options;
however, as currently in effect, the maximum option grant which may be made in
any calendar year cannot exceed 45,000 shares. Options may be granted from time
to time through January 3, 2006, the termination date of the Stock Option Plan,
to present and future officers and employees of the Company or an affiliate of
the Company (an "Affiliate"), within the meaning of Section 424(f) of the Code,
and to consultants of the Company or an Affiliate who are not employees. All
employees are eligible to participate in the Stock Option Plan and as of April
15, 1997, approximately 200 employees were participating in the Stock Option
Plan.
The Stock Option Plan, as currently in effect, permits the granting
of options to purchase up to an aggregate of 900,000 shares of Common Stock of
the Company. Under the Stock Option Plan, the Company may grant incentive stock
options and non-statutory options. Under the Stock Option Plan, the exercise
price for shares covered by an incentive stock option may not be less than 100%
of the fair market value (as defined in the Stock Option Plan) of the Common
Stock on the date of grant (110% in the case of a grant to an employee who owns
stock possessing more than 10% of the combined voting power of all classes of
stock of the Company or any affiliate entitled to vote (a "10% Stockholder")).
The exercise price for shares covered by a non-statutory option may not be less
than the par value of the Common Stock at the date of grant. All options must
expire no later than ten years (five years in the case of an incentive stock
option granted to a 10% Stockholder) from the date of grant. The Committee has
the discretion to determine the period required for full exercisability of stock
options. In no event, however, can the Committee shorten such period to less
than six months.
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Any option outstanding after January 3, 2006 will remain in effect
until it is exercised, terminates or expires in accordance with its terms. The
Stock Option Plan provides that the term of an option shall be ten years from
the date of grant. The Stock Option Plan also provides that, following
termination of employment, (i) if an optionee's employment is terminated for any
reason other than the optionee's death, disability, retirement after age 65 or
voluntary retirement with the consent of the Company before age 65, the optionee
has 90 days, or such longer period as the Committee may at its sole discretion
determine, to exercise his option to the extent exercisable on the date of
termination of employment, and (ii) if an optionee shall cease to be employed by
the Company as the result of his death, disability, retirement after age 65 or
voluntary retirement with the consent of the Company before age 65, the optionee
has three years to exercise his option to the extent exercisable on the date he
ceased to be employed. The Stock Option Plan also provides that options granted
under the Stock Option Plan will be adjusted to reflect changes in the Company's
capitalization and to reflect certain mergers or other combinations of the
Company.
As of April 15, 1997, options to purchase an aggregate of 1,552,140
shares were outstanding under the Stock Option Plan (including 1,203,737 stock
options granted on January 6, 1997, subject to stockholder approval to amend the
Stock Option Plan). No current director or nominee for election as a director
received stock options under the Stock Option Plan. If the Proposal is adopted,
the stock options that would be granted to the Company's Chief Executive Officer
and each of the four other most highly compensated executive officers of the
Company are set forth below in the following table:
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STOCK OPTIONS TO BE GRANTED IN 1997 TO THE CHIEF EXECUTIVE OFFICER
AND THE FOUR OTHER MOST HIGHLY COMPENSATED EXECUTIVE OFFICERS UNDER
THE TMP 1996 EMPLOYEE STOCK OPTION PLAN
Name and Position Exercise Price Per Stock Number of Options
- ----------------- ------------------------ -----------------
Option
------
Andrew J. McKelvey, -- 0
Chairman of the Board
and President
David Hosokawa, Vice (1) 124,459
Chairman
James J. Treacy, (1) 66,666
Executive Vice President
- - Finance and Strategy
Jeffrey C. Taylor, (1) 26,125
Executive Vice President
- -Interactive
Thomas G. Collison, Vice (1) 13,334
Chairman and Secretary
Executive Group (1) 281,147
Non-Executive Director -- 0
Group
Non-Executive Officer (1) 922,590
Employee Group
- ----------
(1) The exercise price per stock option is $12.875, the closing price of the
Company's Common Stock on January 6, 1997, the date of grant. Except for
33,333 options granted to Mr. Treacy, 5/6 of the options vest on September
30, 1997, and the remaining 1/6 vest on December 31, 1997. 33,333 of the
options granted to Mr. Treacy have already vested. The options are
exercisable commencing January 6, 1999.
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FEDERAL INCOME TAX CONSEQUENCES
Following is a summary of the salient Federal income tax
consequences associated with options granted under the Stock Option Plan.
An optionee will not realize taxable income upon the grant of an
option. In general, the holder of a non-statutory option will recognize ordinary
income when the option is exercised equal to the excess of the value of the
stock over the exercise price (i.e., the option spread), and the Company
receives a corresponding deduction in the same amount subject to the deduction
limitations of Section 162(m) of the Code, as discussed below. If the optionee
is subject to the six-month restrictions on sale of Common Stock under Section
16(b) of the Exchange Act, the optionee generally recognizes ordinary income on
the date the restrictions lapse, unless an early income recognition election is
made. Upon a later sale of the stock, the optionee will realize capital gain or
loss equal to the difference between the selling price and the value of the
stock at the time the option was exercised (or, if later, the time ordinary
income was recognized with respect to the exercise). If the stock acquired upon
the exercise of a non-statutory option has been held for more than one year at
the time of its disposition, such gain or loss will be long-term capital gain or
loss.
The holder of an incentive stock option does not realize taxable
income upon exercise of the option, although the option spread is an adjustment
to taxable income that may result in alternative minimum tax for the optionee
(the adjustment, if any, is also added to the basis of the stock for purposes of
determining adjusted gain or loss under the alternative minimum tax when the
stock is sold). If the stock acquired upon exercise of the incentive stock
option is sold or otherwise disposed of within two years from the incentive
stock option grant date or within one year from the exercise date, then, in
general, gain realized on the sale is treated as ordinary income to the extent
of the option spread at the exercise date, and the Company receives a
corresponding deduction in the same amount subject to the deduction limitations
of Section 162(m) of the Code. Any remaining gain is treated as short-term or
long-term capital gain, depending on the holding period. If the stock is held
for at least two years from the grant date and one year from the exercise date,
then gain or loss realized upon the sale will be long-term capital gain or loss
and the Company will not be entitled to a deduction.
In general, if an optionee delivers previously-owned shares in
payment of the exercise price of an option, no gain or loss will be recognized
on the exchange of the previously-owned shares for an equivalent number of newly
issued shares. However, if the previously-owned shares delivered in payment of
the exercise price were acquired pursuant to the exercise of an incentive stock
option and if the requisite incentive stock option holding periods are not
satisfied (see the preceding paragraph), then the optionee will realize ordinary
income on the delivery of the previously-owned shares as in the case of any
other "early" disposition of incentive stock option-acquired shares. If the
option being exercised is a non-statutory option, the optionee will realize
ordinary
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income equal to the amount by which the fair market value of the Common Stock
received exceeds the exercise price (as if the exercise price were paid in
cash).
Section 162(m) of the Code generally limits to $1 million the annual
income tax deduction for certain "non-performance based" compensation paid to
the chief executive officer or any of the four other highest paid offices of a
publicly-held corporation. "Performance-based compensation" is not subject to
the deduction limitation if certain requirements are met. Accordingly, the Stock
Option Plan has been designed to ensure that compensation resulting from the
exercise of stock options will be fully deductible to the Company.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the aggregate
voting power of the Company's shares of Common Stock and Class B Common Stock
present or represented at the meeting, a quorum being present, is required for
the adoption of this proposal. Broker non-votes with respect to this matter will
be treated as neither a vote "for" or a vote "against" the matter, although they
will be counted in determining if a quorum is present. However, abstentions will
be considered in determining the number of votes required to attain a majority
of the shares present or represented at the meeting and entitled to vote.
Accordingly, an abstention from voting by a stockholder present in person or by
proxy at the meeting has the same legal effect as a vote "against" the matter
because it represents a share present or represented at the meeting and entitled
to vote, thereby increasing the number of affirmative votes required to approve
this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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RELATIONSHIP WITH INDEPENDENT AUDITORS
BDO Seidman, LLP have been the independent auditors for the Company
since November 15, 1992 and will serve in that capacity for the 1997 fiscal
year. A representative of BDO Seidman, LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if he desires to do so, and
will respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the
1997 Annual Meeting of Stockholders of the Company must be received by the
Company no later than November 24, 1997 for inclusion in the Board of Directors'
proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon
at the Annual Meeting. However, if any other business properly comes before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
to vote on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Thomas G. Collison
Secretary
Dated: May 19, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: TMP WORLDWIDE INC.,
ATTENTION: MYRON F. OLESNYCKYJ, ESQ., 1633 BROADWAY, 33rd FLOOR, NEW YORK, NEW
YORK 10019.
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Below is the text of the Company's 1996 Stock Option Plan as proposed to
be amended pursuant to Proposal No. 2. Proposed language to the 1996 Stock
Option Plan is set forth in bold print and the language to be deleted is set
forth in brackets.
TMP WORLDWIDE INC.
1996 STOCK OPTION PLAN
I. PURPOSE. The purpose of the TMP Worldwide Inc. 1996 Stock Option Plan
(the "Plan") is to enable TMP Worldwide Inc. (the "Company") and its
stockholders to secure the benefit of the incentives inherent in common stock
ownership by present and future officers and other employees and personnel of,
and consultants to, the Company and its affiliates. The Board of Directors of
the Company (the "Board") believes that the granting of options under the Plan
will foster the Company's ability to attract, retain and motivate individuals
who will be largely responsible for the continued profitability and growth of
the Company and its affiliates.
II. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 6(a)
hereof, the Company may issue and sell a total of 1,800,000 [900,000] shares of
its common stock, $.01 par value (the "Common Stock"), pursuant to the Plan.
Such shares may be either authorized and unissued or held by the Company in its
treasury. The maximum option grant which may be made in any calendar year to any
individual shall not cover more than 150,000 [45,000] shares. New options may be
granted under the Plan with respect to shares of Common Stock which are covered
by the unexercised portion of an option which terminates or expires by its
terms, by cancellation or otherwise.
III. ADMINISTRATION. The Plan will be administered by a committee (the
"Committee") consisting of the Board, or at the option of the Board, at least
two directors appointed by and serving at the pleasure of the Board. If the
Board does not act as the Committee, the members of the Committee shall be
"non-employee directors" within the meaning and for the purposes of Rule 16b-3.
Subject to the provisions of the Plan, the Committee, acting in its sole and
absolute discretion, will have full power and authority to grant options under
the Plan, to interpret the provisions of the Plan, to fix and interpret the
provisions of option agreements made under the Plan, to supervise the
administration of the Plan, and to take such other action as may be necessary or
desirable in order to carry out the provisions of the Plan. A majority of the
members of the Committee will constitute a quorum. The Committee may act by the
vote of a majority of its members present at a meeting at which there is a
quorum or by unanimous written consent. The decision of the Committee as to any
disputed question, including questions of construction, interpretation and
administration, will be final and conclusive on all persons. The Committee will
keep a record of its proceedings and acts and will keep or cause to be kept such
books and records as may be necessary in connection with the proper
administration of the Plan. The Company shall indemnify and hold harmless each
member of the Committee and any employee or director of the Company or of an
affiliate to whom any duty or power relating to the
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administration or interpretation of the Plan is delegated from and against any
loss, cost, liability (including any sum paid in settlement of a claim with the
approval of the Board), damage and expense (including legal and other expenses
incident thereto) arising out of or incurred in connection with the Plan, unless
and except to the extent attributable to such person's fraud or wilful
misconduct.
IV. ELIGIBILITY. Options may be granted under the Plan to present and
future officers and other employees (including but not limited to directors who
are employees) or other personnel of the Company or an affiliate of the Company
within the meaning of Rule 405 under the Securities Act of 1933, as amended (an
"Affiliate"), and to consultants to the Company or an Affiliate who are not
employees. Options may not be granted to directors of the Company or an
Affiliate who are not also employees of or consultants to the Company and/or an
Affiliate. Subject to the provisions of the Plan, the Committee may from time to
time select the persons to whom options will be granted, and will fix the number
of shares covered by each such option and establish the terms and conditions
thereof (including, without limitation, the exercise price, restrictions on the
exercisability of the option and/or on the disposition of the shares of Common
Stock issued upon exercise thereof, and whether or not the option is to be
treated as an incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (an "Incentive Stock Option").
V. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan
will be evidenced by a written agreement in a form approved by the Committee.
Subject to the provisions hereof, each such option will be subject to the terms
and conditions set forth in this paragraph and such additional terms and
conditions not inconsistent with the Plan as the Committee deems appropriate.
a. Option Exercise Price. In the case of an option which is not
treated as an Incentive Stock Option, the exercise price per share may not
be less than the par value of a share of Common Stock on the date the
Option is granted; and in the case of an Incentive Stock Option, the
exercise price per share may not be less than the fair market value of a
share of Common Stock on the date the option is granted (110% in the case
of an optionee who, at the time the option is granted, owns stock
possessing more than 10% of the total combined voting power of all classes
of stock of the Company or of an affiliate (a "ten percent shareholder")).
For purposes hereof, the fair market value of a share of Common Stock on
any date shall be equal to the closing price per share as published by a
national securities exchange on which shares of the Common Stock are
traded on such date or, if there is no sale of Common Stock on such date,
the average of the bid and asked prices on such exchange at the close of
trading on such date, or if shares of the Common Stock are not listed on a
national securities exchange on such date, the closing price or, if none,
the average of the bid and asked prices in the over the counter market at
the close of trading on such date, or if the Common Stock is not traded on
a national securities exchange or the over the counter market, the fair
market value of a share of the Common Stock on such date as determined in
good faith by the Committee.
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b. Option Period. The period during which an option may be
exercised will be fixed by the Committee and will not exceed ten years
from the date the option is granted (five years in the case of an
Incentive Stock Option granted to a "ten percent shareholder").
c. Exercise of Options.
(1) General. No option will become exercisable unless the
person to whom the option is granted remains in the continuous
employ or service of the Company or an Affiliate for at least six
months (or for such other period as the Committee may designate)
from the date the option is granted. The Committee will determine
and will set forth in the option agreement any vesting or other
restrictions on the exercisability of the option, subject to earlier
termination of the option as may be required hereunder, and any
vesting or other restrictions on shares of Common Stock acquired
pursuant to the exercise of the option. All or part of the
exercisable portion of an option may be exercised at any time during
the option period. An option may be exercised by transmitting to the
Company, in a manner prescribed or approved by the Committee, (1) a
written notice specifying the number of shares to be purchased, and
(2) payment of the exercise price, together with the amount, if any,
deemed necessary by the Company to enable the Company or an
Affiliate, as the case may be, to satisfy its income tax withholding
obligations with respect to such exercise unless other arrangements
acceptable to the Company are made with respect to the satisfaction
of such withholding obligations. Subject to the provisions of
applicable law, the Company may agree to retain and withhold a
number of shares of Common Stock sufficient to reimburse the Company
for all or part of its withholding tax obligation.
(2) Stock Registration Required. Notwithstanding anything in
the Plan to the contrary, no option may be exercised unless and
until a registration statement covering the shares of Common Stock
issuable upon exercise of options granted hereunder has been filed
with, and declared effective by, the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Nothing in
this Plan shall be deemed to obligate the Company to effect any such
registration.
d. Payment of Exercise Price. The purchase price of shares of Common
Stock acquired pursuant to the exercise of an option granted under the
Plan may be paid in cash and/or such other form of payment as may be
permitted under the option agreement, including, without limitation,
previously-owned shares of Common Stock. The Committee may permit the
payment of all or a portion of the purchase price in installments
(together with interest) over a period of not more than five years.
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e. Rights as a Stockholder. No shares of Common Stock will be issued
in respect of the exercise of an option granted under the Plan until full
payment therefor has been made (and/or provided for if all or a portion of
the purchase price is being paid in installments). The holder of an option
will have no rights as a stockholder with respect to any shares covered by
an option until the date a stock certificate for such shares is issued to
him or her. Except as otherwise specifically provided herein, no
adjustments shall be made for dividends or distributions of other rights
for which the record date is prior to the date such stock certificate is
issued.
f. Nontransferability of Options. No option shall be assignable or
transferrable except upon the optionee's death to a beneficiary designated
by the optionee in accordance with procedures established by the Committee
or, if no designated beneficiary shall survive the optionee, pursuant to
the optionee's will or by the applicable laws of descent and distribution.
During an optionee's lifetime, options may be exercised only by the
optionee or the optionee's guardian or legal representative.
g. Termination of Employment or Other Service. If an optionee ceases
to be employed by or to perform services for the Company and any
Affiliate, then, unless terminated sooner under the provisions hereof or
under the provisions of the optionee's option agreement, and unless
determined otherwise by the Committee acting in its sole discretion, (i)
if such termination of employment or service occurs by reason of the
optionee's death, disability, retirement after age 65 or voluntary
retirement with the consent of the Company before age 65, then the
optionee's outstanding options will be fully vested and may be exercised
within three years from the date of the termination of employment or
service, and, at the end of such three-year period, any unexercised
outstanding options will terminate; and (ii) if the optionee's employment
or service is terminated for any reason other than the optionee's death,
disability, retirement after age 65 or voluntary retirement with the
consent of the Company before age 65, then the optionee's outstanding
options, to the extent then otherwise vested and exercisable, may be
exercised within ninety days from the date of such termination of
employment or service and, at the end of such ninety-day period, any
unexercised vested and outstanding options will terminate, and the
optionee's nonvested outstanding options will terminate upon the
optionee's termination of employment or service. Solely for purposes of
the Plan, the transfer of an employee from the employ of the Company to an
Affiliate, or vice-versa, or from one Affiliate to another shall not be
deemed a termination of employment.
h. Other Provisions. The Committee may impose such other conditions
with respect to the exercise of options, including, without limitation,
any conditions relating to the application of federal or state securities
laws, as it may deem necessary or advisable. In the case of an Incentive
Stock Option, at the time the option is granted the aggregate fair market
value (determined at the
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time of grant) of the shares of Common Stock with respect to which the
Incentive Stock Option is exercisable for the first time by the optionee
during any calendar year may not exceed $100,000.
VI. CAPITAL CHANGES, REORGANIZATION, SALE.
a. Adjustments Upon Changes in Capitalization. The aggregate number
and class of shares for which options may be granted under the Plan, the
maximum number of shares for which options may be granted to any
individual in any calendar year, the number and class of shares covered by
each outstanding option and the exercise price per share shall all be
adjusted proportionately or as otherwise appropriate to reflect any
increase or decrease in the number of issued shares of Common Stock
resulting from a split-up or consolidation of shares or any like capital
adjustment, or the payment of any stock dividend, and/or to reflect a
change in the character or class of shares covered by the Plan arising
from a readjustment or recapitalization of the Company's capital stock.
b. Cash, Stock or Other Property for Stock. Except as provided in
Section VI(c) below or as otherwise expressly provided in the optionee's
option agreement, upon merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or
stock, separation, reorganization (other than a mere reincorporation or
the creation of a holding company) or liquidation of the Company, as a
result of which the stockholders of the Company receive cash, stock or
other property in exchange for or in connection with their shares of
Common Stock, any option granted hereunder shall terminate, but the
optionee shall have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation,
reorganization or liquidation to exercise his or her option in whole or in
part to the extent permitted by the option agreement, and, if the
Committee in its sole discretion shall determine, may exercise the option
whether or not the vesting requirements set forth in the option agreement
have been satisfied.
c. Conversion of Options on Stock for Stock Exchange. If the
stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in
which the holders of Common Stock immediately prior to the merger have the
same proportionate ownership of common stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or
stock, separation or reorganization (other than a mere reincorporation or
the creation of a holding company), all options granted hereunder shall be
converted into options to purchase shares of Exchange Stock unless the
Company and the
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corporation issuing the Exchange Stock, in their sole discretion,
determine that any or all such options granted hereunder shall not be
converted into options to purchase shares of Exchange Stock but instead
shall terminate in accordance with the provisions of subparagraph (b)
above. The amount and price of converted options shall be determined by
adjusting the amount and price of the options granted hereunder in the
same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Stock receive in such merger,
consolidation, acquisition of property or stock, separation or
reorganization. The Committee shall determine in its sole discretion if
the converted options shall be fully vested whether or not the vesting
requirements set forth in the option agreement have been satisfied.
d. Fractional Shares. In the event of any adjustment in the number
of shares covered by any option pursuant to the provisions hereof, any
fractional shares resulting from such adjustment will be disregarded, and
each such option will cover only the number of full shares resulting from
the adjustment.
e. Determination of Board to be Final. All adjustments under this
Section 6 shall be made by the Board, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.
VII. AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan,
provided, however, that no such action may affect adversely any outstanding
option without the written consent of the optionee. Except as otherwise provided
in Section 6, any amendment which would increase the aggregate number of shares
of Common Stock as to which options may be granted under the Plan, increase the
number of shares with respect to which options may be granted to any individual
in any calendar year, materially increase the benefits under the Plan, or modify
the class of persons eligible to receive options under the Plan shall be subject
to the approval of the Company's stockholders. The Committee may amend the terms
of any stock option agreement made hereunder at any time and from time to time
(e.g., to accelerate vesting upon a change of control), provided, however, that
any amendment which would adversely affect the rights of the optionee may not be
made without the optionee's prior written consent.
VIII. NO RIGHTS CONFERRED. Nothing contained herein will be deemed to give
any individual any right to receive an option under the Plan or to be retained
in the employ or service of the Company or any Affiliate.
IX. GOVERNING LAW. The Plan and each option agreement shall be governed by
the laws of the State of Delaware.
X. DECISIONS AND DETERMINATIONS OF COMMITTEE TO BE FINAL. Any decision or
determination made by the Board pursuant to the provisions hereof and, except to
the
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extent rights or powers under this Plan are reserved specifically to the
discretion of the Board, all decisions and determinations of the Committee are
final and binding.
XI. TERM OF THE PLAN. The Plan shall be effective as of the date on which
it is adopted by the Board, subject to the approval of the stockholders of the
Company within one year from the date of adoption by the Board. The Plan will
terminate on the date ten years after the date of adoption, unless sooner
terminated by the Board. The rights of optionees under options outstanding at
the time of the termination of the Plan shall not be affected solely by reason
of the termination of the Plan and shall continue in accordance with the terms
of the option (as then in effect or thereafter amended) and the Plan.
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TMP WORLDWIDE INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Andrew J. McKelvey and John R. Gaulding,
and each of them, with full power of substitution, as proxies to vote on behalf
of the undersigned all shares which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders of the Company to be held at the offices of
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103 at 11:00
A.M. on Wednesday, June 25, 1997, and at any adjournments thereof, with all
powers the undersigned would possess if personally present, upon the matters set
forth in the Notice of Annual Meeting and Proxy Statement, as directed on the
reverse side hereof.
Any proxy heretofore given by the undersigned with respect to such shares
is hereby revoked. Receipt of the Notice of Annual Meeting and Proxy Statement
is hereby acknowledged.
(To be Completed, Signed and Dated on Reverse Side)
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|X| Please mark your
votes as in this
example.
Nominees: Andrew J. McKelvey
George R. Eisele
FOR WITHHOLD John R. Gaulding
1. ELECTION |_| |_| Jean-Louis Pallu
OF John Swann
DIRECTORS
(Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name below.)
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FOR AGAINST ABSTAIN
2. APPROVAL OF THE AMENDMENTS |_| |_| |_|
TO THE COMPANY'S 1996
EMPLOYEE STOCK OPTION PLAN.
3. Transaction of such other business as may properly come before the meeting
and any adjournments thereof.
NOTE: THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT
WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1 AND FOR PROPOSAL 2. THE PROXIES ARE
AUTHORIZED TO VOTE IN THEIR DISCRETION WITH RESPECT TO OTHER MATTERS WHICH MAY
COME BEFORE THE MEETING.
SIGNATURE DATE
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SIGNATURE DATE
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(SIGNATURE IF HELD JOINTLY)
NOTE: Please mark, date and sign exactly as name appears hereon, including
designation as executor, trustee, etc. if applicable. A corporation must
sign in its name by the President or other authorized officer. All
co-owners must sign. PLEASE RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
