<PAGE>
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 Section 240.14a-11(c) or Section 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:
.........................................................................
2) Aggregate number of securities to which transaction applies:
.........................................................................
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
.........................................................................
4) Proposed maximum aggregate value of transaction:
.........................................................................
5) Total fee paid:
.........................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.........................................................................
2) Form, Schedule or Registration Statement No.:
.........................................................................
3) Filing Party:
.........................................................................
4) Date Filed:
.........................................................................
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<PAGE>
TMP WORLDWIDE INC.
1633 BROADWAY
NEW YORK, NEW YORK 10019
212-977-4200
May 21, 1999
Dear Stockholder:
You are cordially invited to attend the Companys Annual Meeting of
Stockholders to be held at 11:00 a.m. on Monday, June 28, 1999, at the offices
of monster.com, 5 Clock Tower Place, Maynard, Massachusetts 01754.
At the meeting you will be asked to elect six directors of the Company
and to approve the adoption of the Company's 1999 Long Term Incentive Plan. 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 CEO
<PAGE>
TMP WORLDWIDE INC.
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
New York, New York
May 21, 1999
Notice is hereby given that the Annual Meeting of Stockholders
of TMP Worldwide Inc. will be held on Monday, June 28, 1999 at 11:00 a.m. at the
offices of monster.com, 5 Clock Tower Place, Maynard, Massachusetts 01754 for
the following purposes:
(1) To elect six directors to serve for the ensuing year;
(2) To consider and vote upon a proposal to approve the
adoption of the Company's 1999 Long Term Incentive Plan;
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 10,
1999 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
--------------------
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 (the "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 Monday, June 28, 1999, 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 21, 1999 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 proxy bearing a later date, or by voting in
person at
-1-
<PAGE>
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
10, 1999 are entitled to notice of and to vote at the Annual Meeting or any and
all adjournments thereof. On May 10, 1999, there were 33,463,396 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 2,381,000 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. Andrew J. McKelvey holds all of
the Class B Common Stock giving him in excess of 60% of the combined voting
power of the Company; no other stockholder of the Company has in excess of 1% of
the combined voting power of the Company. It is expected that Mr. McKelvey will
vote for Proposal Nos. 1 and 2. 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 March 31,
1999 (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 attribute 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 by: (i)
each person known by the Company to own beneficially more than five percent (5%)
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.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership of Percentage of
Common Stock/Class B Percentage of Class B
Name of Beneficial Owner Common Stock Common Stock Common Stock
- ------------------------ ----------------------- ------------- -------------
<S> <C> <C> <C>
Andrew J. McKelvey(1)................ 13,326,080 37.2% 100%
Thomas G. Collison(2)................ 119,494 * --
James J. Treacy(3)................... 332,272 1.0% --
Jeffrey C. Taylor(4)................. 130,635 * --
Paul M. Camara(5).................... 120,720 * --
George R. Eisele(6).................. 76,430 * --
John R. Gaulding..................... 19,250 * --
Michael Kaufman(7)................... 8,438 * --
John Swann(8)........................ 10,870 * --
All directors and executive officers
as a group (13 persons)(9)........... 14,219,067 39.4% 100%
</TABLE>
- --------------------
* Less than 1%
(1) Includes 2,381,000 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, 100 shares of Common Stock owned by
Mr. McKelvey's daughter and 451 shares of Common
-3-
<PAGE>
Stock held by TMP's 401(k) Plan. Mr. McKelvey disclaims beneficial
ownership of the shares owned by his wife.
(2) Includes 451 shares of Common Stock held by TMP's 401(k) Plan and 14,584
shares of Common Stock issuable upon the exercise of options which are
exercisable within 60 days of March 31, 1999.
(3) Includes 300 shares of Common Stock owned by Mr. Treacy's daughters, 451
shares of Common Stock held by TMP's 401(k) Plan, and 67,916 shares of
Common Stock issuable upon the exercise of options which are exercisable
within 60 days of March 31, 1999.
(4) Includes 451 shares of Common Stock held by TMP's 401(k) Plan and 89,000
shares of Common Stock, issuable upon the exercise of options which are
exercisable within 60 days of March 31, 1999.
(5) Includes 451 shares of Common Stock held by TMP's 401(k) Plan and 20,125
shares of Common Stock issuable upon the exercise of options which are
exercisable within 60 days of March 31, 1999.
(6) Includes 381 shares of Common Stock held by TMP's 401(k) Plan.
(7) Consists of 8,438 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 1999.
(8) Consists of 10,870 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 1999.
(9) Includes 2,381,000 shares of Class B Common Stock which are convertible,
on a share for share basis, into Common Stock. Also includes 267,455
shares subject to options which are exercisable within 60 days of March
31, 1999. Does not include 365,589 shares of Common Stock issuable
pursuant to options which are not exercisable within 60 days of March 31,
1999.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Six 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
-4-
<PAGE>
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:
<TABLE>
<CAPTION>
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- --------------------------
<S> <C> <C> <C>
Andrew J. McKelvey 64 1967 Chairman of the Board, CEO 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 62 1987 Director of the Company since September 1987
and Executive Vice President of TMP Worldwide
Direct, the Company's direct marketing
division, since 1989.
James J. Treacy 40 1998 Director of the Company since September 1998,
Chief Operating Officer since February 1998,
Executive Vice President-Finance and Strategy
since April 1996. Mr. Treacy joined the
Company in June 1994 as Chief Executive Officer
of the Recruitment Division. Prior to joining
the Company, Mr. Treacy was Senior Vice
President - Western Hemisphere Treasurer for
the WPP Group USA, Inc.
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- --------------------------
<S> <C> <C> <C>
John R. Gaulding 53 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. Mr.
Gaulding is also a director of Ortel Corp., a
publicly traded corporation.
Michael Kaufman 53 1997 Director of the Company since October 1997.
Mr. Kaufman is President of Consumer Markets
Group for Pacific Bell since August 1997.
Prior thereto, from May 1997, Mr. Kaufman was
the President and CEO of Pacific Bell
Communications, a subsidiary of SBC
Communications Inc., and from 1993 through
April 1997, he was the regional president for
the Central and West Texas market area of
Southwestern Bell Telephone. Mr. Kaufman holds
a B.A. and an M.B.A. from the University of
Wisconsin.
John Swann 62 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.
</TABLE>
All directors hold office until the next meeting of the
stockholders of the Company and until their successors are elected and
qualified.
-6-
<PAGE>
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 Kaufman. During 1998,
the Compensation Committee did not meet but acted seventeen times by unanimous
consent in lieu of a meeting. 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. During 1998, the Audit
Committee met twice. 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 and Swann. During 1998, the Strategy
Committee [did not meet]. Each Committee member attended at least 75% of the
meetings of such Committee held when he was a member.
During the fiscal year ended December 31, 1998, the Board of
Directors held two meetings and acted twenty 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 1998 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 six 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.
-7-
<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.
-8-
<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 periods in all capacities
in which they served.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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 CEO ..................... 1998 $1,500,000 -- $ 21,395(1) -- --
1997 1,500,031 -- 23,111(1) -- --
1996 696,416 $ 210,000 2,730(2) -- --
James J. Treacy,
Chief Operating Officer and
Executive Vice President-
Finance and Strategy ........ 1998 231,100 35,000 3,200(2) 75,000 --
1997 211,531 50,000 3,200(2) 71,666 --
1996 199,231 154,954 2,730(2) -- --
Jeffrey C. Taylor,
CEO of TMP
Interactive ................. 1998 401,314 50,000 20,000(3) 100,000 --
1997 217,196 100,000 20,000(3) 41,125 --
1996 195,025 75,000 170,000(4) 11,250 --
Thomas G. Collison,
Vice Chairman and Secretary.. 1998 207,031 -- 3,200(2) 5,000 --
1997 207,031 50,320 3,200(2) 18,334 --
1996 212,573 40,000 2,730(2) -- --
Paul M. Camara
Executive Vice President -
Creative/Sales/Marketing .... 1998 225,031 -- 3,200(2) 100,000 --
1997 225,030 52,680 3,200(2) 24,250 --
1996 225,000 6,081 3,000(2) -- --
</TABLE>
(1) $3,200 represents matching contributions made to the Company's 401(k) Plan
in each of 1998 and 1997 and $18,195 and $19,911 represents lease payments
for an automobile in 1998 and 1997, respectively.
(2) Represents matching contributions made to the Company's 401(k) Plan.
(3) $3,200 represents matching contributions made to the Company's 401(k) Plan
and $16,800 represents lease payments for an automobile in each of 1998
and 1997.
(4) $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.
-9-
<PAGE>
STOCK OPTIONS
The following table sets forth certain summary information concerning
individual grants of stock options made during the year ended December 31, 1998
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
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Per Expiration
Name Granted in 1998(1) Share Date 5% 10%
---- ------- ---------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Andrew J. McKelvey................. 0 - - - - -
James J. Treacy.................... 75,000 4.4% $26.875 12/09/08 $3,115,393 $6,154,664
Jeffrey C. Taylor................. 100,000 5.8% $26.875 12/09/08 4,153,857 8,206,218
Thomas G. Collison................. 5,000 0.3% $26.875 12/09/08 207,693 410,311
Paul M. Camara..................... 100,000 5.8% $26.875 12/09/08 4,153,857 8,206,218
</TABLE>
- --------------------
(1) In December 1998, the Company's Board of Directors adopted the TMP
Worldwide Inc. 1999 Long Term Incentive Plan (the "1999 Plan") and
granted, subject to stockholder approval of the 1999 Plan, the indicated
options. See "Proposal No. 2 -- Adoption of the TMP Worldwide Inc. 1999
Long Term Incentive Plan." The indicated percentages are based on
1,726,021 options granted in 1998.
(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,
1998, was $42.00 per share.
The following table sets forth at December 31, 1998 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:
-10-
<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...................... - - - -
James J. Treacy......................... 1,250 145,416 $ 33,750 $3,177,272
Jeffrey C. Taylor....................... 60,906 131,469 1,692,028 2,464,250
Thomas G. Collison...................... 1,250 22,084 33,750 565,228
Paul M. Camara.......................... 1,375 122,875 37,125 2,169,969
</TABLE>
- --------------------
(1) Computed based upon the difference between the Stock Option exercise price
and $42.00, the closing price of the Company's Common Stock on December
31, 1998.
EMPLOYMENT AGREEMENTS
The Company has entered into an amended 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 CEO 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 until November 1998, when his agreement was amended,
was entitled to mandatory quarterly bonuses of $375,000. Mr. McKelvey waived
such bonuses. Mr. McKelvey was paid $350,000 in 1998 and in 1998 $1,150,000 was
accrued and is expected to be paid in 1999. 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 for the remaining
term of the agreement at the times it 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 for a period of 180 days after any such termination at the
times it 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 amended 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
Chief Operating Officer and Executive Vice President - Finance and Strategy of
the Company for a base salary in 1999 of $275,000 and an annual
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<PAGE>
minimum 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. In addition to his then current title, Mr. Treacy
was also named as the Company's Chief Operating Officer in February 1998 and was
elected to the Company's Board of Directors in September 1998.
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 currently provides Mr. Taylor with a base salary of
$400,000 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
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TMP Interactive Inc. and its affiliates for a period of two years following the
termination or expiration of his employment.
STOCK OPTION AWARDS
In January 1996, the Company's Board of Directors adopted the
1996 Stock Option Plan (the "Stock Option Plan"), which, as amended, 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 3,000,000 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.
In December 1998, the Company's Board of Directors adopted the
Company's 1999 Long-Term Incentive Plan (the "1999 Plan") and granted, subject
to stockholder approval of the 1999 Plan, options to purchase an aggregate of
333,000 shares of Common Stock to certain of its executive officers and
directors. See "Executive Compensation B Stock Options" and "Proposal No. 2 B
Adoption of the TMP Worldwide Inc. 1999 Long Term Incentive Plan." Such options
were granted at a per share exercise price of $26.875, the fair market value of
the Company's Common Stock on the date of grant. Upon approval of the 1999 Plan,
the Company will no longer make grants under the Stock Option Plan.
COMPENSATION OF DIRECTORS
Each of the Company's non-employee directors receives $15,000
per year for services rendered as a director, 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 his or her duties as
director.
The Company has adopted the 1996 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. Pursuant to the Directors' Plan, each of Messrs.
Gaulding, Kaufman 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 to the Board of Directors ($6.65 in the case of Mr. Gaulding, $23.63 in
the case of Mr. Kaufman and $14.00 in the case of Mr. Swann). The options have a
ten-year term and become exercisable as determined by the Compensation
Committee. The options may be exercised by payment in cash, check or shares of
Common Stock.
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Pursuant to the 1999 Plan, each new non-employee director of
the Company will be automatically granted an option to purchase 11,250 shares of
Common Stock upon his or her commencement of service as a non-employee director.
In addition, each non-employee director of the Company will automatically be
granted an option to purchase 2,500 shares of Common Stock under the 1999 Plan
on the day following each Annual Meeting of Stockholders that occurs at least
one year after the first anniversary of the date he or she first became a
non-employee director. Automatic option grants will have a ten-year term and an
exercise price equal to the fair market value of the Common Stock on the date of
grant. Options granted to non-employee directors upon their commencement of
service will be 50% vested on the date of grant and will generally become fully
vested on the first anniversary of the date of grant. Options granted to
non-employee directors on an annual basis will generally become 50% vested on
each of the first two anniversaries of the date of grant. See "Proposal No. 2 --
Adoption of the TMP Worldwide Inc. 1999 Long Term Incentive Plan."
Upon the stockholders' approval of the 1999 Plan, the Company
will no longer make grants under the Directors' Plan.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation Committee of the Board of
Directors (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 was formed in September, 1996 and
consists of Messrs. Gaulding and Kaufman, 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
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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:
- Compensation should encourage increased stockholder
value.
- Compensation programs should support the short- and
long-term strategic business goals and objectives of the
Company.
- Compensation programs should reflect and promote the
Company's values and reward individuals for outstanding
contributions toward business goals.
- 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. Mr. McKelvey does not
receive incentives. Cash incentive payments and stock option awards in 1998 to
Mr. Treacy were based on obtaining operational efficiencies and spearheading the
Company's investor relations. Mr. Taylor's cash incentive and stock options were
based on growth in internet billings and traffic and growing brand awareness.
Mr. Collison's bonus was based on objectives for completing acquisitions. Mr.
Camara's bonus was based on new business goals and spearheading award winning
advertising campaigns. In 1998, other key executives were granted stock options
based on revenue, divisional or regional
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profit, client retention or other preset objectives related to performance as
set forth in the Company's 1998 annual plan.
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 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 1998 COMPENSATION
Pursuant to his employment agreement, the base salary for
Andrew J. McKelvey, the Company's CEO and Chairman of the Board, was $1,500,000
during the Company's fiscal year ended December 31, 1998, of which $350,000 was
paid in 1998 and $1,150,000 was accrued and will be paid in 1999. Such base
salary represents no increase over the previous year's salary. The employment
agreement was entered into by the Company as a recognition of Mr. McKelvey's
services to the Company as well as an acknowledgment of his stature in the
industry.
The aggregate compensation of 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 $1,000,000 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
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to stockholder returns and linked to the achievement of annual and longer-term
financial and operational results of the 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 1998 adequately reflect the Company's compensation goals and
policies.
COMPENSATION COMMITTEE
John R. Gaulding
Michael Kaufman
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 Kaufman
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 October 1997, Mr.
Kaufman received, respectively, stock options to purchase 11,250 shares of
Common Stock at an exercise price of $6.65 per share and $23.63 per share, equal
to the fair market value on the date of grant.
CERTAIN TRANSACTIONS
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 2004 and the Company's rent for
this space is $46,200 per month. Mr. McKelvey had an 80% interest in 12800
Riverside Drive Corporation, the lessor of the Company's 15,802 square foot
office in North Hollywood, California. The Company had a month to month lease
and the Company's rent for this space was $16,000 per month. The Company vacated
these premises in 1999. Mr. McKelvey has a 49% interest in TMP Development
Company Inc., the lessor of the Company's 11,915 square foot office in
Holliston, Massachusetts. This lease is month to month and the Company's rent
for this space is currently $16,200 per month. Mr. McKelvey has a 49% interest
in TPH & AJM, a partnership, the lessor of the office occupied by Telephone
Directory Advertising, Inc., an entity in which the Company has a 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.
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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 year ended December 31, 1998, Cala Services Inc. paid
approximately $ 158,000 to the Company for management services.
For the year ended December 31, 1998, Mr. Gaulding received $ 54,000
for consulting services.
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 ONE OR MORE
COMPANINES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
<TABLE>
<CAPTION>
-------------------FISCAL YEAR ENDING-------------------
COMPANY/INDEX/MARKET 12/13/1996 12/31/1996 12/31/1997 12/31/1998
<S> <C> <C> <C> <C>
TMP Worldwide Inc 100.00 91.07 164.29 300.00
Advertising Agencies 100.00 94.93 136.82 195.17
NASDAQ Market Index 100.00 99.77 122.04 172.13
</TABLE>
Note: Base price date is 12/13/1996
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, 1998, 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 Catalina Marketing Corp., Cordiant Communications Group plc, Digital
Generation Systems, Inc., Grey Advertising, Inc., Healthworld Corp., Interpublic
Group of Companies, Inc., Lamar Advertising Co., The Leap Group, Inc., Obie
Media Corp., Omnicom Group, Inc., Princeton Video Image, Saatchi & Saatchi plc,
True North Communications, WPP Group plc and Young & Rubicam, Inc.
PROPOSAL NO. 2 - APPROVAL OF THE TMP WORLDWIDE INC.
1999 LONG TERM INCENTIVE PLAN
On December 9, 1998, the Compensation Committee of the Board
of Directors unanimously adopted, subject to stockholder approval at the 1999
Annual Meeting of Stockholders, the Company's 1999 Long Term Incentive Plan (the
"1999 Plan"). The Board of Directors believes that approval of the 1999 Plan
will serve the best interests of the Company and its stockholders by permitting
the Company to establish a flexible vehicle through which the Company can offer
equity-based compensation incentives to eligible personnel with a view toward
promoting the long-term financial success of the Company and enhancing
stockholder value. The
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primary features of the 1999 Plan are summarized below. The full text of the
1999 Plan is set forth in Appendix A to this Proxy Statement and the following
discussion is qualified in its entirety by reference thereto.
The 1999 Plan authorizes the grant of stock options, stock
appreciation rights ("SARs"), restricted stock, performance-based awards and
other equity-based awards (including, without limitation, phantom stock, stock
bonus awards and dividend equivalents) to any member of the Company's Board of
Directors (whether or not an employee of the Company or its affiliates), any
officer or other employee of the Company or its affiliates or any consultant or
other independent contractor who performs or will perform services for the
Company or its affiliates. In addition, each non-employee director of the
Company will receive an automatic grant of a stock option to purchase 11,250
shares of Common Stock under the 1999 Plan upon his or her commencement of
service as a non-employee director and each non-employee director will also
receive an automatic annual grant of a stock option to purchase 2,500 shares of
Common Stock on the day following each Annual Meeting of Stockholders that
occurs at least one year after his or her commencement of service as a
non-employee director.
Subject to adjustment to reflect stock dividends and other
capital changes, the maximum number of shares of Common Stock which may be
issued under the 1999 Plan is equal to the sum of 15,000,000 and the number of
shares that remain available for grant under the Stock Option Plan and the
Directors' Plan (including any shares subject to outstanding options that are
not issued on account of the subsequent cancellation or expiration of such
options or any shares that are withheld in satisfaction of the purchase price of
shares covered by outstanding options). Shares subject to awards under the 1999
Plan that are canceled, expired, terminated or settled in cash shall again be
available for issuance under the 1999 Plan.
Upon the stockholders' approval of the 1999 Plan, the Company
will no longer grant options under the Stock Option Plan or the Directors' Plan.
Shares of Common Stock available for issuance under the 1999
Plan may be either authorized and unissued or held by the Company in its
treasury. If approved by the Company's stockholders at the Annual Meeting of
Stockholders, the 1999 Plan will be effective as of December 9, 1998 and will,
unless terminated earlier by the Board of Directors, terminate on December 9,
2008.
Subject to adjustment to reflect stock dividends and other
capital changes, the maximum number of shares of Common Stock with respect to
which stock options, SARs or any other awards may be granted under the 1999 Plan
to any person for any calendar year shall, in each case, be 1,000,000 shares.
Not more than $1,000,000 may be paid to any individual under the 1999 Plan with
respect to any cash performance-based award (or multiple cash performance-based
awards ending with or within the same fiscal year).
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The 1999 Plan will, except with respect to awards to
non-employee directors, be administered by a committee consisting of at least
two directors appointed by and serving at the pleasure of the Board of
Directors. Subject to the provisions of the 1999 Plan, the committee will,
except with respect to awards to non-employee directors, have the authority to
grant awards under the 1999 Plan, to interpret the provisions of the 1999 Plan,
to fix and interpret the provisions of agreements governing awards made under
the 1999 Plan, to supervise the administration of the 1999 Plan, and to take
such other actions as may be necessary or desirable in order to carry out the
provisions of the 1999 Plan. The 1999 Plan will be administered by the Board of
Directors with respect to discretionary awards to non-employee directors.
References herein to the "committee" shall be deemed to be references to the
Board of Directors to the extent that the Board of Directors is required to
administer the 1999 Plan.
On December 9, 1998, the committee granted, subject to
stockholder approval of the 1999 Plan, options to each of Messrs. Treacy,
Taylor, Collison and Camara to purchase 75,000, 100,000, 5,000 and 100,000
shares of Common Stock, respectively, at a price per share of $26.875, the fair
market value of the Common Stock on the date of grant. Messrs. Gaulding, Swann
and Kaufman will, subject to stockholder approval of the 1999 Plan, be granted
options to purchase 2,500 shares of Common Stock on the day following the 1999
Annual Meeting of Stockholders at a price per share equal to the fair market
value of the Common Stock on such date. All current executive officers as a
group have received, subject to stockholder approval of the 1999 Plan, options
to purchase 333,000 shares of Common Stock. Other than with respect to certain
grants made to non-executives and automatic annual option grants made to
non-employee directors (as described below), it is not possible at this time to
determine who may be selected to receive future awards under the 1999 Plan or
the number of shares subject to such awards in the future.
STOCK OPTIONS GRANTED OR TO BE GRANTED TO THE CEO AND THE FOUR OTHER MOST
HIGHLY COMPENSATED EXECUTIVE OFFICERS AND THE NON-EXECUTIVE DIRECTORS
IF THE TMP 1999 LONG TERM INCENTIVE PLAN IS APPROVED
<TABLE>
<CAPTION>
Name and Principal Position Exercise Price Per Stock Option(1) Number of Options
- --------------------------------- ---------------------------------- -----------------
<S> <C> <C>
Andrew J. McKelvey
Chairman of the Board and CEO............... -- --
James J. Treacy
Chief Operating Officer and Executive Vice
President - Finance and Strategy............ $26.875 75,000
Jeffrey C. Taylor
CEO of TMP Interactive..................... 26.875 100,000
Thomas G. Collison
Vice Chairman and Secretary................. 26.875 5,000
</TABLE>
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<TABLE>
<CAPTION>
Name and Principal Position Exercise Price Per Stock Option(1) Number of Options
- --------------------------------- ---------------------------------- -----------------
<S> <C> <C>
Paul M. Camara
Executive Vice President -
Creative/Sales/Marketing.................... 26.875 100,000
Executive Group............................. 26.875 333,000
Non-Executive Director Group................ 26.875 7,500
Non-Executive Officer Employee Group........ 26.875 459,500
38.00 800,000
</TABLE>
- --------------------
(1) The exercise price per stock option is the closing price of the Company's
Common Stock on the date of grant. Except for 50,000 options granted to
Mr. Taylor, 25% of the options vest on the anniversary of the date of
grant commencing December 9, 1999. Of the options granted to Mr. Taylor,
50,000 vest on December 9, 1999 and the remainder vest in equal annual
installments of 12,500 commencing December 9, 2000.
DISCRETIONARY STOCK OPTION AND SAR AWARDS
Under the 1999 Plan, the committee may grant stock options
that are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Code ("ISOs") and stock options which do not qualify as
incentive stock options ("NQSOs"). ISOs may only be granted to employees of the
Company or its affiliates that qualify as "subsidiaries" within the meaning of
Section 424 of the Code.
The exercise price for shares covered by an ISO may not be
less than 100% of the fair market value of the Common Stock on the date of grant
(or, 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"), 110% of the fair market
value). The exercise price for shares covered by a NQSO may not be less than the
par value of the Common Stock on the date of grant, provided that the exercise
price of a NQSO that is intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code (as described below) or a NQSO
that is granted to replace any existing option awarded under the 1999 Plan (as
described below) may not be less that the fair market value of the Common Stock
on the date of the grant.
All options will, unless sooner terminated, expire ten years
(or, in the case of an incentive stock option granted to a 10% Stockholder, five
years) from the date of grant. The committee has the discretion to determine the
vesting and other restrictions on the exercise of an option and/or upon the
disposition of stock acquired upon the exercise of an option. Unless the
committee determines otherwise, no option may be exercised within six months
after the date the option is granted and, during an optionee's employment or
service with the Company or an affiliate, each option will be subject to a
four-year vesting schedule pursuant to which the option will generally become
25% vested on each of the first four anniversaries of the grant date. Special
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rules apply upon a change in control of the Company. Any option outstanding
after December 9, 2008 will remain in effect until it is exercised, terminates
or expires in accordance with its terms.
Payment for shares acquired upon the exercise of an option may
be made (as determined by the committee) in cash and/or such other form of
payment as may be permitted under the option agreement, including, without
limitation, previously-owned shares of the Company's Common Stock and
installment payments under the optionee's promissory note.
The committee may grant replacement options to certain
individuals who used previously-owed shares to pay the exercise price of their
options. Replacement options shall cover a number of shares that is not greater
than the number of shares used to exercise the original option plus the number
of shares withheld by the Company for the payment of applicable taxes. In
general, replacement options will become fully vested on the first anniversary
of the grant date.
The committee may award SARs, which entitle the holder, upon
exercise, to receive an amount, in cash or shares of Common Stock or a
combination thereof (as determined by the committee) determined with reference
to the appreciation, if any, in the fair market value of Common Stock during the
period beginning on the date the SAR is granted and ending on the date the SAR
is exercised. SARs may be awarded in conjunction with or independent of any
stock option award. SARs granted in conjunction with a stock option award are
exercisable only at the same time and to the same extent as the related option
is exercisable and may only be exercised when the fair market value of the
Common Stock to which it relates exceeds the option exercise price. Unless the
committee determines otherwise, no SAR may be exercised until the expiration of
six months from the date the SAR is awarded.
The 1999 Plan generally provides that, unless otherwise
determined by the committee, following a participant's termination of employment
or service: (i) for any reason other than the death or disability, the
participant will have 6 months to exercise all then exercisable options or SARs,
(ii) as the result of death, the participant's beneficiary will have one year to
exercise all then outstanding options or SARs, and (iii) due to disability, the
participant will have 6 months to exercise all then exercisable options or SARs,
provided that, in all instances, no option or SAR may be exercised beyond the
expiration of its stated term.
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RESTRICTED STOCK AWARDS
The committee may award shares of restricted stock to all
eligible personnel upon such terms and subject to forfeiture as it deems
appropriate. Any award of restricted stock must be evidenced by a written
restricted stock agreement or similar instrument. The committee will determine
the purchase price payable for shares of restricted stock awarded under the 1999
Plan in accordance with applicable law and will establish conditions on the
grant or vesting of such shares as it deems appropriate including, without
limitation, conditions based on continued service or the attainment of
performance goals established by the committee or, if such restricted stock is
intended to qualify as performance-based compensation under Section 162(m) of
the Code, performance goals based on the performance criteria described below.
The holder of restricted stock is entitled to dividends on
such shares, may vote such shares and, subject to the satisfaction of applicable
vesting conditions, may tender such shares. Notwithstanding the foregoing, the
committee may, in its sole discretion, defer the payment of dividends until, and
condition such payment upon, the satisfaction of the applicable vesting
conditions.
Upon a participant's termination of employment or service for
any reason (including death or disability) or no reason, the participant will,
unless otherwise determined by the committee, automatically forfeit all
restricted stock which has not yet become fully vested.
PERFORMANCE-BASED AWARDS
The 1999 Plan allows the committee to condition the exercise,
vesting or settlement of an award on the achievement of specified performance
goals, including those intended to generate "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code. Any performance
goal established in connection with an award under the 1999 Plan must be
objective, prescribed in writing by the committee before the beginning of the
applicable performance period and expressed in a manner that conforms to one or
more of the following business criteria: (i) the attainment of certain target
levels of, or a specified percentage increase in, revenues, income before income
taxes and extraordinary items, net income, earnings before income tax, earnings
before interest, taxes, depreciation and amortization or a combination of any or
all of the foregoing; (ii) the attainment of certain target levels of, or a
percentage increase in, after-tax or pre-tax profits; (iii) the attainment of
certain target levels of, or a specified increase in, operational cash flow;
(iv) the achievement of a certain level of, reduction of, or other specified
objectives with regard to limiting the level of increase in, all or a portion
of, the Company's bank debt or other long-term or short-term public or private
debt or other similar financial obligations of the Company, which may be
calculated net of such cash balances and/or other offsets and adjustments as may
be established by the committee; (v) the attainment of a specified percentage
increase in earnings per share or earnings per share from continuing operations;
(vi) the attainment of certain target levels of, or a specified increase in
return on
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capital employed or return on invested capital; (vii) the attainment of certain
target levels of, or a percentage increase in, after-tax return on stockholders'
equity; (viii) the attainment of certain target levels of, or a specified
increase in, economic value added targets based on a cash flow return on
investment formula; (ix) the attainment of certain target levels in the fair
market value of the shares of Common Stock; and (x) growth in the value of an
investment in the Common Stock assuming the reinvestment of dividends.
Unless otherwise determined by the committee, all outstanding
performance-based awards expire upon the termination of the participant's
employment or service for any reason (including death and disability) or no
reason.
NON-EMPLOYEE DIRECTOR AUTOMATIC STOCK OPTION AWARDS
Under the 1999 Plan, each non-employee director of the Company
will be automatically granted a NQSO to purchase 11,250 shares of Common Stock
upon his or her commencement of service as a non-employee director. In addition,
each non-employee director of the Company will automatically be granted a NQSO
to purchase 2,500 shares of Common Stock under the 1999 Plan on the day
following each Annual Meeting of Stockholders that occurs at least one year
after his or her commencement of service as a non-employee director. The options
will have a ten-year term and an exercise price equal to the fair market value
of the Common Stock on the date of grant. The options granted upon a
non-employee director's commencement of service will be 50% vested on the date
of grant and, while the director remains in service, will become fully vested on
the first anniversary of the date of grant. The options granted to non-employee
directors on an annual basis will generally become 50% vested on each of the
first two anniversaries of the grant date. The provisions described above with
regard to discretionary option grants shall also apply upon a director's
termination of service.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO OPTIONS
An optionee will not realize taxable income upon the grant of
an option. The holder of a NQSO will generally recognize ordinary income upon
the exercise of the option in an amount equal to the excess of the fair market
value of the Common Stock over the exercise price (I.E., the option spread), and
the Company will receive a corresponding deduction, subject to the deduction
limitation under Section 162(m) of the Code. If the optionee is subject to the
six-month restrictions under Section 16(b) of the Securities Exchange Act of
1934, as amended, on the sale of the Common Stock acquired upon the exercise of
a NQSO, the optionee generally will recognize ordinary income on the date the
restrictions lapse, unless an early income recognition election is made. Upon a
later sale of the Common Stock, the optionee will recognize capital gain or loss
equal to the difference between the selling price and the sum of the exercise
price plus the amount of ordinary income realized on the exercise.
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The holder of an ISO will not realize taxable income upon the
grant or exercise of the option (although, upon exercise, the option spread is
includable as income for purposes of the alternative minimum tax). If the Common
Stock acquired upon exercise of an ISO is sold or otherwise disposed of within
two years from the 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 ordinary income that would have been realized upon exercise if the
option had been a NQSO, and the Company will receive a corresponding deduction
subject to the deduction limitation of Section 162(m) of the Code. Any remaining
gain is treated as capital gain. If the Common Stock is held for at least two
years from the grant date and one year from the exercise date and the optionee
is employed by the Company (or its subsidiaries) at all times beginning on the
grant date and ending on the date three months (or, in the case of disability,
one year) prior to the exercise date, then all gain or loss realized upon the
sale will be capital gain or loss and the Company will not be entitled to a
deduction. A special basis adjustment applies to reduce the gain for alternative
minimum tax purposes.
In general, Section 162(m) of the Code denies a publicly held
corporation a deduction for federal income tax purposes for compensation paid in
excess of $1,000,000 per year per person to its chief executive officer and the
four other officers whose compensation is disclosed in its proxy statement,
subject to certain exceptions. Although the 1999 Plan has been designed so that
certain options, SARs, restricted stock and performance-based awards will
qualify for an exception from the above deduction limitation, it is possible
that compensation realized under the 1999 Plan will not be deductible by the
Company by reason of the executive compensation deduction limitation of Section
162(m) of the Code. Accordingly, although the Company expects that the committee
will take into consideration the non-deductibility of compensation attributable
to a particular award under the Plan, no assurance can be given that all or part
of any such compensation will be deductible by the Company.
The 1999 Plan is not qualified under Section 401(a) of the
Code.
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.
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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.
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 1999
fiscal year. A representative of BDO Seidman, LLP will be present (either in
person or by telephone) 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
Stockholder proxies obtained by the Board of Directors in
connection with the annual meeting of stockholders in the year 2000 will confer
on the proxyholders discretionary authority to vote on any matters presented at
the meeting which were not included in the proxy statement, unless notice of the
matter to be presented at the meeting is provided to the Company's Corporate
Secretary not later than March 10, 2000.
All stockholder proposals which are intended to be presented
at the 2000 Annual Meeting of Stockholders of the Company must be received by
the Company no later than January 21, 2000 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 21, 1999
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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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APPENDIX A
TMP WORLDWIDE INC.
1999 LONG TERM INCENTIVE PLAN
1. GENERAL.
(a) PURPOSE. The purpose of the TMP Worldwide Inc. 1999 Long
Term Incentive Plan (the "Plan") is to establish a flexible vehicle through
which TMP Worldwide Inc. (the "Company") can offer equity-based compensation
incentives to eligible recipients with a view toward promoting the long-term
financial success of the Company and enhancing stockholder value.
(b) TYPES OF AWARDS. Awards under the Plan may be in the form
of any one or more of the following: (1) stock options, including "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code") and options which do not qualify as ISOs
("NQSOs"), described in Section 5; (2) stock appreciation rights ("SARs"),
described in Section 6; (3) awards of restricted stock ("Restricted Stock"),
described in Section 7; (4) performance-based awards ("Performance-Based
Awards") described in Section 8; (5) automatic grants of NQSOs to Non-Employee
Directors (within the meaning of Section 9(a)) described in Section 9; and (6)
such other types of equity-based awards as the Committee (defined herein) deems
advisable, including, without limitation, phantom stock awards, stock bonus
awards, and dividend equivalent awards.
(c) STOCK COVERED BY AWARDS. Awards made under the Plan will
be made in the form of or with reference to shares of the Company's common
stock, $.001 par value ("Common Stock"). Shares of Common Stock available for
issuance under the Plan may be either authorized and unissued or held by the
Company in its treasury. No fractional shares of Common Stock will be delivered
under the Plan.
(d) DOCUMENTATION OF AWARDS. Each award made under the Plan
will be evidenced by a written agreement or other written instrument the terms
of which will be established by the Committee. To the extent not inconsistent
with the provisions of the Plan, the written agreement or other instrument
evidencing an award will govern the rights and obligations of the parties with
respect to the award.
2. ADMINISTRATION.
(a) COMMITTEE. The Plan will be administered by a committee
(the "Committee") of two or more members of the Company's Board of Directors
(the "Board"). The members of the Committee will be appointed by and serve at
the pleasure of the Board. Unless the Board determines otherwise, each member of
the Committee must be a "non-employee director" within the meaning of Rule 16b-3
issued under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
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The Plan will be administered by the Board with respect to discretionary grants
made to Non-Employee Directors.
(b) AUTHORITY OF COMMITTEE. Subject to the limitations of the
Plan, the Committee, acting in its sole and absolute discretion, will have full
power and authority to (1) select the persons to whom awards will be made under
the Plan, (2) make awards to such persons and prescribe the terms and conditions
of such awards (including, without limitation, nonsolicitation, confidentiality
and mandatory dispute resolution conditions), (3) interpret and apply the
provisions of the Plan and of any agreement or other document evidencing an
award made under the Plan, (4) carry out any responsibility or duty specifically
reserved to the Committee under the Plan, and (5) make any and all
determinations and interpretations and take such other actions as may be
necessary or desirable in order to carry out the provisions, intent and purposes
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.
(c) DELEGATION OF AUTHORITY. The Committee may delegate any of
its powers and duties under the Plan to such officers of the Company or other
persons as the Committee deems appropriate in accordance with such guidelines as
the Committee may establish, provided, however, that no such delegation may be
made (1) with respect to any award intended to qualify for the performance-based
compensation exception of Section 162(m)(4)(C) of the Code, or (2) to the extent
it would enable the delegate to grant, fix the terms of or amend or cancel an
award under the Plan to an individual who is required to file reports with
respect to securities of the Company pursuant to Section 16(a) of the Exchange
Act.
(d) INDEMNIFICATION. The Company will indemnify and hold
harmless each member of the Committee and any employee or director of the
Company or an affiliate to whom any duty or power relating to the 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.
3. PARTICIPATION. (a) Awards may be granted under the Plan to
any member of the Board (whether or not an employee of the Company or an
affiliate), to any officer or other employee of the Company or an affiliate and
to any consultant or other independent contractor who performs or will perform
services for the Company or an affiliate. In selecting participants and
determining the nature and terms of awards made under the Plan, the Committee
may give consideration to the functions and responsibilities of a potential
recipient, his or her previous and/or expected contributions to the business of
the Company or its affiliates and such other factors as the Committee deems
relevant under the circumstances.
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(b) Non-Employee Directors will receive automatic grants of
NQSOs pursuant to Section 9.
4. LIMITATIONS ON AWARDS UNDER THE PLAN.
(a) AGGREGATE NUMBER OF SHARES. The maximum number of shares
of Common Stock that may be issued under the Plan is the sum of (1) 15,000,000,
and (2) the number of shares remaining available for new awards under the TMP
Worldwide Inc. 1996 Stock Option Plan, as amended, and the TMP Worldwide Inc.
1996 Stock Option Plan for Non-Employee Directors (collectively, the "Prior
Plans") including, without limitation, shares covered by any option outstanding
under the Prior Plans which, by reason of the subsequent expiration or
cancellation of the option, are not issued under the Prior Plans. In determining
the number of shares that remain issuable under the Plan at any time after the
date the Plan is adopted, the following shares will be deemed not to have been
issued (and will be deemed to remain available for issuance) under the Plan: (i)
shares remaining under an award made under this Plan or under an option granted
under the Prior Plans that terminates or is canceled without having been
exercised or earned in full; (ii) shares subject to an award under this Plan
where cash is delivered to the holder of the award in lieu of such shares; (iii)
shares of restricted stock awarded under this Plan that are forfeited in
accordance with the terms of the applicable award; and (iv) shares that are
withheld in order to pay the purchase price of shares acquired upon the exercise
of outstanding options granted under the Prior Plans or of awards granted under
the Plan or to satisfy the tax withholding obligations associated with such
exercise. The number of shares of Common Stock issued in connection with the
exercise of an option under the Prior Plans or an award under the Plan will be
determined net of any previously-owned shares tendered by the holder of the
option or award in payment of the exercise price or of applicable withholding
taxes.
(b) INDIVIDUAL AWARD LIMITS. The maximum number of shares of
Common Stock for which stock options may be granted under the Plan to any person
in any calendar year shall be 1,000,000. The maximum number of shares of Common
Stock subject to SARs granted under the Plan to any person in any calendar year
shall be 1,000,000. The aggregate maximum number of shares of Common Stock
subject to awards, other than options or SARs, that may be granted under the
Plan to any person in any calendar year shall be 1,000,000. For purposes of this
subsection, the repricing of a stock option or SAR shall be treated as a new
grant to the extent required under Section 162(m) of the Code. Subject to these
limitations, each person eligible to participate in the Plan will be eligible in
any year to receive awards covering up to the full number of shares of Common
Stock then available for awards under the Plan. No more than $1,000,000 may be
paid to any individual with respect to any cash Performance-Based Award covered
by Section 8. In applying this limitation, multiple Performance-Based Awards to
the same individual will be subject to a single $1,000,000 limit if they are
either (1) determined by reference to performance periods of one year or less
ending with or within the same fiscal year of the Company, or (2) determined by
reference to one or more multi-year performance periods ending in the same
fiscal year of the Company.
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5. STOCK OPTIONS AWARDS.
(a) ISOS AND NQSOS. Subject to the provisions hereof,
including, without limitation, this Section and Sections 10 and 11, the
Committee may grant ISOs and NQSOs to eligible personnel to purchase shares of
Common Stock upon such terms and conditions as the Committee deems appropriate,
provided that the Committee may only grant ISOs to employees of the Company and
its "subsidiaries" within the meaning of Section 424 of the Code.
(b) REPLACEMENT OPTIONS. The Committee, acting in its
discretion, may provide with respect to an option granted pursuant to this
Section 5 (including, without limitation, any option described in this
subsection) that, if the grantee, while still an employee or otherwise in the
service of the Company or an affiliate, exercises the option in whole or in part
using shares of Common Stock that were owned by the holder for at least six
months prior to such exercise to pay the exercise price, then the grantee will
automatically receive an additional option ("replacement option") to purchase
shares of Common Stock. The number of shares covered by a replacement option may
not be greater than the number of shares used to pay the exercise price under
the original option plus the number of shares withheld by the Company for the
payment of income taxes associated with the exercise of the original option
(whether or not such income taxes are required to be withheld). Unless the
Committee determines otherwise, a replacement option will not become
exercisable, if at all, for at least six months after the date it is granted
and, unless sooner terminated, will expire ten years after the date the option
is granted. The Committee may prescribe such rules and procedures in connection
with the exercise of options and the issuance of replacement options as it deems
appropriate, including, without limitation, procedures for telephonic exercise.
(c) EXERCISE PRICE. The purchase price per share of Common
Stock covered by an option granted pursuant to this Section 5 will be determined
by the Committee when the option is granted. The purchase price per share of
Common Stock covered by an NQSO must be at least equal to the par value per
share of Common Stock on the date the option is granted, provided, however, that
the purchase price per share of Common Stock covered by an NQSO which is a
replacement option (described in the preceding subsection) or which is an option
intended to qualify for the performance-based compensation exception of Section
162(m)(4)(C) of the Code, may not be less than the fair market value per share
of Common Stock (determined under the next subsection) on the date the option is
granted. The purchase price per share of Common Stock covered by an ISO may not
be less than 100% of the fair market value of a share of Common Stock on the
date the ISO is granted (or, 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 a "subsidiary" of the
Company within the meaning of Section 424 of the Code, 110%).
(d) FAIR MARKET VALUE OF COMMON STOCK. For all purposes of the
Plan, the fair market value of a share of Common Stock on any date will be equal
to the closing price per share as published by the principal national securities
exchange (including, but not limited to, NASDAQ) 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
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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, of if the
Common Stock is not traded on a national securities exchange or the over the
counter market value of a share of the Common Stock on such date as determined
in good faith by the Board.
(e) OPTION PERIOD. Subject to the provisions hereof, unless
the Committee determines otherwise, no option granted pursuant to this Section 5
may be exercised within six months after the date the option is granted. Unless
sooner terminated, all such options will expire ten years after the date the
option is granted (or, in the case of an ISO granted to a ten percent
stockholder described in Section 424 of the Code, five years).
(f) VESTING CONDITIONS. The Committee may establish such
vesting and other restrictions on the exercise of an option and/or upon the
disposition of the stock acquired upon the exercise of an option as it deems
appropriate. Unless the Committee prescribes otherwise, during an optionee's
employment or service with the Company or an affiliate, each option granted
pursuant to this Section 5 (other than a replacement option) will be subject to
a four-year vesting schedule pursuant to which, unless sooner terminated or
accelerated, the option will become vested as to 25% of the shares originally
covered thereby at the end of each of the first four years following the date of
grant, and each replacement option will become fully vested as to all of the
shares covered thereby on the first anniversary of the date the option is
granted.
(g) EXERCISE OF OPTIONS. An option may be exercised by
transmitting to the Company (1) a 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 Committee to enable the Company to satisfy its
federal, foreign or other 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). The Committee may
establish such rules and procedures as it deems appropriate for the exercise of
options under the Plan, including, without limitation, procedures for telephonic
exercise. 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 by the Committee under the option
agreement, including, without limitation, shares of Common Stock which have been
owned by the holder for at least six (6) months and installment payments under
the optionee's promissory note.
(h) 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 where all or a portion of
the purchase price is being paid in installments), and the applicable income tax
withholding obligation has been satisfied or provided for. 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 provided herein, no adjustments shall be made for
dividend distributions or other rights for which the record date is prior to the
date such stock certificate is issued.
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(i) 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 or exchange requirements, as it may deem necessary or advisable.
6. STOCK APPRECIATION RIGHTS.
(a) GENERAL. Subject to the provisions hereof, the Committee
may award SARs to eligible personnel upon such terms and conditions as it deems
appropriate. A SAR is an award entitling the holder, upon exercise, to receive
an amount, in cash or shares of Common Stock or a combination thereof, as
determined by the Committee in its sole discretion, determined with reference to
the appreciation, if any, in the fair market value of Common Stock during the
period beginning on the date the SAR is granted and ending on the date the SAR
is exercised.
(b) TYPES OF SARS. SARs may be awarded under the Plan in
conjunction with a stock option award ("tandem SARs") or independent of any
stock option award ("stand-alone SARs"). Tandem SARs awarded in conjunction with
a NQSO may be awarded either at or after the time the NQSO is granted. Tandem
SARs awarded in conjunction with an ISO may only be awarded at the time the ISO
is granted.
(c) EXERCISABILITY OF SARS. Unless the Committee determines
otherwise, no SAR may be exercised until the expiration of six months from the
date the SAR is awarded. Except as otherwise provided herein, a tandem SAR will
be exercisable only at the same time and to the same extent and subject to the
same conditions as the related option is exercisable. The exercise of a tandem
SAR will cancel the related option to the extent of the shares of Common Stock
with respect to which the SAR is exercised, and vice versa. Tandem SARs may be
exercised only when the fair market value of the Common Stock to which it
relates exceeds the option exercise price. The Committee may impose such
additional service or performance-based vesting conditions upon the exercise of
a SAR (tandem or stand-alone) as it deems appropriate.
(d) EXERCISE OF SARS. A SAR may be exercised by giving written
notice to the Company identifying the SAR that is being exercised, specifying
the number of shares covered by the exercise and containing such other
information or statements as the Committee may require. The Committee may
establish such rules and procedures as it deems appropriate for the exercise of
SARs under the Plan, including, without limitation, procedures for telephonic
exercise. Upon the exercise of a SAR, the holder will be entitled to receive an
amount (in cash and/or shares of Common Stock as determined by the Committee)
equal to the product of (1) the number of shares with respect to which the SAR
is being exercised and (2) the difference between the fair market value of a
share of Common Stock on the date the SAR is exercised (or such other exercise
price as may be specified in the award) and the exercise price per share of the
SAR. As a condition of exercise, the holder must pay to the Company or make
arrangements satisfactory to the Company for the payment of applicable
withholding taxes.
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(e) DEFERRAL OF PAYMENT. The Committee may at any time and
from time to time provide for the deferral of delivery of any shares and/or cash
for which an SAR may be exercisable until such date or dates and upon such other
terms and conditions as the Committee may determine.
7. RESTRICTED STOCK AWARDS.
(a) GENERAL. Subject to the provisions of the Plan, the
Committee may award shares of Common Stock to eligible personnel upon such terms
and subject to such forfeiture and other conditions as the Committee deems
appropriate. The terms and conditions of any such stock award will be evidenced
by a written restricted stock agreement or other instrument approved for this
purpose by the Committee.
(b) STOCK CERTIFICATES FOR RESTRICTED STOCK. Unless the
Committee elects to use a different method (such as, for example, the issuance
and delivery of stock certificates) shares of restricted stock will be evidenced
by book entries on the Company's stock transfer records pending the expiration
of restrictions thereon. If a stock certificate for restricted stock is issued
in the name of the grantee, it will bear an appropriate legend to reflect the
nature of the restrictions applicable to the shares represented by the
certificate, and the Committee may require that such stock certificates be held
in custody by the Company until the restrictions on such shares have lapsed. The
Committee may establish such other conditions as it deems appropriate in
connection with the issuance of stock certificates for shares of restricted
stock, including, without limitation, a requirement that the grantee deliver a
duly signed stock power, endorsed in blank, for the shares covered by the award.
(c) PURCHASE PRICE. The purchase price payable for shares of
restricted stock awarded under the Plan will be determined by the Committee. To
the extent permitted by applicable law, the purchase price may be as low as zero
and, to the extent required by the applicable law, the purchase price will be no
less than the par value of the shares covered by the award.
(d) RESTRICTIONS AND VESTING. The Committee will establish
such conditions as it deems appropriate on the grant or vesting of restricted
stock awarded under the Plan. Such conditions may be based upon continued
service, the attainment of performance goals (which, in the case of grants of
restricted stock intended to qualify for the performance-based compensation
exception under Section 162(m)(4)(C) of the Code, satisfy the requirements of
Section 8) and/or such other relevant factors or criteria designated by the
Committee. The holder of restricted stock will not be permitted to transfer
shares of restricted stock awarded under the Plan before the time the applicable
vesting conditions are satisfied.
(e) RIGHTS AS A STOCKHOLDER. Except as provided herein and as
otherwise determined by the Committee, the recipient of a restricted stock award
shall have with respect to his or her restricted stock all of the rights of a
holder of shares of Common Stock, including, without limitation, the right to
receive any dividends, the right to vote such shares and, subject to
satisfaction of the applicable vesting conditions, the right to tender such
shares. The Committee may, in its sole
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discretion, determine at the time of grant that the payment of dividends will be
deferred until, and conditioned upon, the satisfaction of the applicable vesting
conditions.
(f) LAPSE OF RESTRICTIONS. If and when the vesting conditions
are satisfied with respect to a restricted stock award, a certificate for the
shares covered by the award, to the extent vested, will be delivered to the
grantee. All legends shall be removed from said certificates at the time of
delivery except as otherwise required by applicable law.
8. PERFORMANCE-BASED AWARDS.
(a) GENERAL. The Committee may condition the exercise, vesting
or settlement of an award made under the Plan on the achievement of specified
performance goals. The provisions of this Section will apply in the case of a
performance-based award that is intended to generate "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code.
(b) OBJECTIVE PERFORMANCE GOALS. A performance goal
established in connection with an award covered by this Section must be (1)
objective, in the sense that a third party having knowledge of the relevant
facts could determine whether the goal is met, (2) prescribed in writing by the
Committee before the beginning of the applicable performance period or at such
later date (when fulfillment is substantially uncertain) as may be permitted
under Section 162(m) of the Code, and (3) expressed in the following manner with
respect to any one or more of the following business criteria:
(A) attainment of certain target levels of, or a specified percentage
increase in, revenues, income before income taxes and extraordinary
items (determined in accordance with standards established by Opinion
No. 30 of the Accounting Principles Board), net income, earnings before
income tax, earnings before interest, taxes, depreciation and
amortization or a combination of any or all of the foregoing;
(B) attainment of certain target levels of, or a percentage increase
in, after-tax or pre-tax profits;
(C) attainment of certain target levels of, or a specified increase in,
operational cash flow;
(D) achievement of a certain level of, reduction of, or other specified
objectives with regard to limiting the level of increase in, all or a
portion of, the Company's bank debt or other long-term or short-term
public or private debt or other similar financial obligations of the
Company, which may be calculated net of such cash balances and/or other
offsets and adjustments as may be established by the Committee;
(E) attainment of a specified percentage increase in earnings per share
or earnings per share from continuing operations;
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(F) attainment of certain target levels of, or a specified increase in
return on capital employed or return on invested capital;
(G) attainment of certain target levels of, or a percentage increase
in, after-tax return on stockholders' equity;
(H) attainment of certain target levels of, or a specified increase in,
economic value added targets based on a cash flow return on investment
formula;
(I) attainment of certain target levels in the fair market value of the
shares of the Company's Common Stock; and
(J) growth in the value of an investment in the Company's Common Stock
assuming the reinvestment of dividends.
If and to the extent permitted under Section 162(m) of the Code, such
performance goals may be determined without regard to (or adjusted for) changes
in accounting methods, corporate transactions (including, without limitation,
dispositions and acquisitions) and other similar types of events or
circumstances occurring during the applicable performance period. The Committee
may not delegate any responsibility with respect to the establishment or
determination of performance goals to which awards covered by this Section are
subject.
(c) CALCULATION OF PERFORMANCE-BASED AWARD. At the expiration
of the applicable performance period, the Committee will determine the extent to
which the performance goals established pursuant to this Section are achieved
and the percentage of each performance-based award that has been earned. The
Committee may reduce the amount that would otherwise be payable pursuant to an
award covered by this Section, but may not exercise its discretion to increase
such amount.
9. NON-EMPLOYEE DIRECTOR STOCK OPTION AWARDS.
(a) DEFINITION. For all purposes hereof, the term
"Non-Employee Director" means any member of the Board who is not also an
employee of the Company of any affiliate.
(b) AUTOMATIC GRANTS. Without further action by the Board or
the stockholders of the Company, (1) each Non-Employee Director shall, subject
to the terms of the Plan, be granted an option to purchase 11,250 shares of
Common Stock on the date he or she first commences service as a Non-Employee
Director provided such date occurs after the date the Plan is adopted (the
"Initial Grant"), and (2) each Non-Employee Director will be granted an option
to purchase 2,500 shares of Common Stock on the trading day following each
annual meeting of the Company's stockholders that occurs after the date the
Plan is adopted and at least one year after the date he or she first became a
Non-Employee Director (the "Annual Grant").
-9-
<PAGE>
(c) OPTION AGREEMENT. Stock options granted pursuant to this
Section 9 will be NQSOs. Such options shall be evidenced by written option
agreements on a form approved by the Board. Such agreements shall contain such
terms and conditions as are not inconsistent with the terms and conditions
hereof.
(d) TERMS OF OPTIONS.
(i) EXERCISE PRICE. The purchase price per share
deliverable upon the exercise of an option shall
be 100% of the closing price of such Common
Stock, as published by the principal national
securities exchange (including, but not limited
to NASDAQ) on which shares of the Common Stock
are traded on such date, at the date of the
grant of the Option.
(ii) VESTING CONDITIONS. An Initial Grant will be 50%
vested at the time of the grant, and will become
100% vested on the first anniversary of the date
of grant, provided the optionee is still a
Non-Employee Director on the vesting date. An
Annual Grant will become vested as to 50% of the
shares originally covered thereby on each of the
first two anniversaries of the grant date,
provided the optionee is still a Non-Employee
Director on the vesting date.
(iii) EFFECT OF TERMINATION OF SERVICE. The provisions
of Section 11(a) shall apply to options granted
pursuant to this Section 9.
(iv) CAPITAL TRANSACTIONS; CHANGE IN CONTROL. The
provisions of Section 12 shall apply to options
granted pursuant to this Section 9.
(e) EXPIRATION. Except as otherwise provided herein, if not
previously exercised, each option will expire on the tenth anniversary of the
date of grant.
10. NON-TRANSFERABILITY OF AWARDS. No stock option, SAR,
Performance Award or other stock-based award under the Plan shall be
transferable by the recipient other than upon the recipient's death to a
beneficiary designated by the recipient in a manner acceptable to the Committee,
or, if no designated beneficiary shall survive the recipient, pursuant to the
recipient's will or by the laws of descent and distribution. All stock options
and SARs shall be exercisable during the recipient's lifetime only by the
recipient. Tandem stock appreciation rights shall be transferable, to the extent
permitted above, only with the underlying stock option. Shares of restricted
stock may not be transferred prior to the date on which shares are issued, or,
if later, the date on which such shares have vested and are free of any
applicable restriction imposed hereunder. Except as otherwise specifically
provided by law or the provisions hereof, no award received under the Plan may
be transferred in any manner, and any attempt to transfer any such award shall
be void, and no such award shall in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such award, nor shall it be subject to attachment or legal process
for or against such person. Notwithstanding the foregoing, the Committee may
determine
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<PAGE>
at the time of grant or thereafter that an NQSO is transferable in whole or part
to such persons, under such circumstances, and subject to such conditions as the
Committee may prescribe.
11. EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE. Unless
otherwise determined by the Committee at grant or, if no rights of the
participant are thereby reduced, thereafter, and subject to earlier termination
in accordance with the provisions hereof, the following rules apply with regard
to vesting and exercise of awards held by a participant at the time of his or
her termination of employment or other service with the Company and its
affiliates.
(a) RULES APPLICABLE TO STOCK OPTIONS AND SARS.
(1) TERMINATION BY REASON OF DEATH. If a participant's
employment or service terminates by reason of his or her
death, then any stock option or SAR held by the deceased
participant will thereupon become fully vested and may be
exercised by the deceased participant's beneficiary at any
time within one year from the date of death but in no event
after expiration of the stated term.
(2) TERMINATION BY REASON OF DISABILITY. If a
participant's employment or service terminates by reason of
his or her disability (defined below), then any stock option
or SAR held by the participant, to the extent exercisable on
the date his or her employment or service terminates, may be
exercised by the participant at any time within one year from
the date his or her employment or service terminates but in no
event after expiration of the stated term. If the participant
dies during such one-year period and before the option or SAR
is exercised, then the deceased participant's beneficiary may
exercise the option or SAR, to the extent exercisable by the
deceased participant immediately prior to his or her death,
for a period of one year following the date of death but in no
event after expiration of the stated term. For the purposes
hereof, the term "disability" means the inability of a
participant to perform the customary duties of his or her
employment or other service for the Company or an affiliate by
reason of a physical or mental incapacity which is expected to
result in death or be of indefinite duration.
(3) OTHER TERMINATION. If a participant's employment or
service terminates for any reason (other than death or
disability) or no reason, then all stock options and SARs held
by the participant, to the extent otherwise exercisable on the
date his or her employment or service is terminated, may be
exercised by the participant at any time within a period of
six months from the termination date, but in no event beyond
the expiration of the stated term of such stock options and
SARs.
(b) RULES APPLICABLE TO RESTRICTED STOCK. Upon the termination
of a participant's employment or service for any reason (including death and
disability) or no reason, restricted stock which has not yet become fully vested
will, unless otherwise determined by the Committee,
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<PAGE>
automatically be forfeited by the participant (or the participant's successors)
and any certificate therefor or book entry with respect thereto or other
evidence thereof will be canceled.
(c) RULES APPLICABLE TO PERFORMANCE-BASED AWARDS. Upon
termination of a participant's employment or service for any reason (including
death and disability) or no reason, then the participant's outstanding
performance-based awards will, unless otherwise determined by the Committee,
thereupon expire and the participant (or his or her beneficiary, as the case may
be) will not be entitled to receive any amount in respect of the performance
period or cycle within which the participant's employment or service is
terminated.
(d) RULES APPLICABLE TO OTHER STOCK-BASED AWARDS. Rules
similar to those set forth in subsection (b) (relating to restricted stock
awards) will apply in connection with the termination of employment or service
of a participant who holds any other form of stock-based award granted under the
plan that has not yet vested and/or is contingent upon future performance of
services.
12. CAPITAL CHANGES; CHANGE IN CONTROL.
(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate
number and class of shares for which awards may be granted under the Plan, the
maximum number of shares covered by awards that may be granted to any individual
in any calendar year, the number and class of shares covered by each outstanding
award and, if applicable, 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) CHANGE IN CONTROL. If, in connection with a Change in
Control (defined below), the stockholders of the Company receive capital stock
of another corporation ("Exchange Stock") in exchange for their shares of Common
Stock (whether or not such Exchange Stock is the sole consideration), and if the
Board so directs, then all outstanding options will be converted into options to
purchase shares of Exchange Stock. The number of shares and exercise price under
the converted options will be determined by adjusting the number of shares and
exercise price for the options granted hereunder on the same basis as the
determination of the number of shares of Exchange Stock the holders of Common
Stock will receive in connection with the Change in Control and, unless the
Board determines otherwise, the vesting conditions with respect to the converted
options will be substantially the same as the vesting conditions set forth in
the original option agreement. If the Board does not direct the conversion of
outstanding options in connection with a Change in Control, then all optionees
will be permitted to exercise their outstanding options in whole or in part
(whether or not otherwise vested or exercisable) prior to the Change in Control,
and any outstanding options which are not exercised before the Change in Control
will thereupon terminate.
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<PAGE>
(c) DEFINITION OF CHANGE IN CONTROL. For purposes hereof, the
term "Change in Control" shall be deemed to occur if (1) there shall be
consummated (A) any consolidation, merger or reorganization involving the
Company, unless such consolidation, merger or reorganization is a "Non-Control
Transaction" (as defined below) or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (2) the stockholders of the
Company shall approve any plan or proposal for liquidation or dissolution of the
Company, or (3) any person (as such term is used in Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of more than 50% of the combined voting power of the Company's then
outstanding voting securities other than (a) a person who owns or owned shares
of Class B Common Stock of the Company, (b) pursuant to a plan or arrangement
entered into by such person and the Company or (c) pursuant to receipt of such
shares from a stockholder of the Company pursuant to such stockholder's will or
the laws of descent and distribution, or (4) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period. A "Non-Control Transaction" shall mean a consolidation, merger or
reorganization of the Company where (1) the stockholders of the Company
immediately before such consolidation, merger or reorganization own, directly or
indirectly, at least a majority of the combined voting power of the outstanding
voting securities of the corporation resulting from such consolidation, merger
or reorganization (the "Surviving Corporation"), (2) the individuals who were
members of the Board of the Company immediately prior to the execution of the
agreement providing for such consolidation, merger or reorganization constitute
at least 50% of the members of the Board of Directors of the Surviving
Corporation, or a corporation directly or indirectly beneficially owning a
majority of the voting securities of the Surviving Corporation and (3) no person
(other than (a) the Company, (b) any subsidiary of the Company, (c) any employee
benefit plan (or any trust forming a part thereof) maintained by the Company,
the Surviving Corporation or any subsidiary, or (d) any person who, immediately
prior to such consolidation, merger or reorganization, beneficially owned more
than 50% of the combined voting power of the Company's then outstanding voting
securities beneficially owns more than 50% of the combined voting power of the
Surviving Corporation's then outstanding voting securities.
(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 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.
13. AMENDMENT AND TERMINATION. The Board may amend or
terminate the Plan,
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<PAGE>
provided, however, that no such action may affect adversely the accrued rights
of the holder of any outstanding award without the consent of the holder. Except
as otherwise provided in Section 12, any amendment which would increase the
aggregate number of shares of Common Stock for which awards may be granted under
the Plan or modify the class of recipients eligible to receive stock-based
awards under the Plan shall be subject to the approval of the Company's
stockholders. The Committee may amend the terms of any agreement or certificate
made or issued hereunder at any time and from time to time provided, however,
that any amendment which would adversely affect the accrued rights of the holder
may not be made without his or her consent.
14. 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 of the
Company.
15. GOVERNING LAW. The Plan and each option agreement shall be
governed by the laws of the State of Delaware, except as otherwise provided in
the option agreement.
16. 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 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.
17. TERM OF THE PLAN. The Plan shall be effective as of
December 9, 1998, 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 December 9, 2008, unless sooner terminated by the Board. The rights of any
person with respect to an award made under the Plan that is 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 award (as then in effect or thereafter amended) and the Plan.
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<PAGE>
TMP WORLDWIDE INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Andrew J. McKelvey and Thomas Collison,
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 monster.com, 5
Clock Tower Place, Maynard, Massachusetts 01754 at 11:00 A.M. on Monday, June
28, 1999, 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)
<PAGE>
<TABLE>
<S><C><C>
/X/ Please mark your
votes as in this
example.
Nominees: 3. Transaction of such other business as may
properly come before the meeting and any
FOR WITHHOLD Andrew J. McKelvey adjournments thereof.
/ / / / 1. ELECTION George R. Eisele
OF John R. Gaulding NOTE: THIS PROXY WILL BE VOTED AS
DIRECTORS Michael Kaufman SPECIFIED. IF NO SPECIFICATION IS MADE, IT
John Swann WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1
James J. Treacy AND FOR PROPOSAL 2. THE PROXIES ARE
AUTHORIZED TO VOTE IN THEIR DISCRETION WITH
RESPECT TO OTHER MATTERS WHICH MAY COME
BEFORE THE MEETING.
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name below.)
- ------------------------------------------------------------------
FOR AGAINST ABSTAIN
/ / / / / / 2. APPROVAL OF THE COMPANY'S
1999 LONG TERM INCENTIVE
PLAN
SIGNATURE___________________________________ DATE__________ SIGNATURE___________________________________ DATE__________
(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.
</TABLE>
