<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MASTECH CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE>
MASTECH CORPORATION
1004 MCKEE ROAD
OAKDALE, PENNSYLVANIA 15071
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 1, 1998
----------------
The Annual Meeting of Shareholders of Mastech Corporation (the "Company")
will be held at the Company's Corporate Offices at 1004 McKee Road, Oakdale,
Pennsylvania on Monday, June 1, 1998, at 11:00 a.m., to consider and act upon
the following matters:
1. The election of two (2) persons to the Board of Directors;
2. To consider and approve an amendment to the Company's 1996 Incentive
Stock Plan to increase the number of shares available for issuance
thereunder; and
3. Such other matters as may properly come before the meeting.
The Board of Directors has established the close of business on March 27,
1998, as the record date for the determination of the shareholders entitled to
notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE IS NECESSARY
IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ Michael J. Zugay
Michael J. Zugay, Secretary
Pittsburgh, PA
April 30, 1998
<PAGE>
MASTECH CORPORATION
1004 MCKEE ROAD
OAKDALE, PENNSYLVANIA 15071
----------------
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON JUNE 1, 1998
----------------
This Proxy Statement is being furnished to the holders of the common stock,
par value $.01 per share (the "Common Stock"), of Mastech Corporation, a
Pennsylvania corporation, in connection with the solicitation by the Board of
Directors of the Company (the "Board of Directors" or the "Board") of proxies
to be voted at the annual meeting of shareholders (the "Annual Meeting")
scheduled to be held on Monday, June 1, 1998 at 11:00 a.m., at the Company's
corporate offices at 1004 McKee Road, Oakdale, Pennsylvania, or at any
adjournment thereof. This Proxy Statement is being mailed to shareholders on
or about April 30, 1998. As used in this Proxy Statement, the terms "Mastech"
and "the Company" refer to Mastech Corporation (or its predecessor) and its
subsidiaries, unless the context otherwise requires.
Only holders of record of the Common Stock as of the close of business on
March 27, 1998 (the "Record Date") are entitled to notice of and to vote at
the Annual Meeting and any adjournment thereof. On the Record Date, there were
23,669,476 shares of Common Stock outstanding. On March 17, 1998 the Board of
Directors declared a two-for-one stock split to be effected by means of a 100%
stock distribution. The record date for the stock split was the close of
business on March 27, 1998, with a payment date of April 10, 1998.
All shares of Common Stock represented by valid proxies received by the
Secretary of the Company at or prior to the Annual Meeting will be voted as
specified in the proxy. If no specification is made, the shares will be voted
FOR the election of each of the Board's nominees to the Board of Directors and
each of the matters submitted by the Board of Directors for vote by the
shareholders. Unless otherwise indicated by the shareholder, the proxy card
also confers discretionary authority on the Board-appointed proxies to vote
the shares represented by the proxy on any matter that is properly presented
for action at the Annual Meeting. A shareholder giving a proxy has the power
to revoke it any time prior to its exercise by delivering to the Secretary of
the Company a written revocation or a duly executed proxy bearing a later date
(though no revocation shall be effective until notice thereof has been given
to the Secretary of the Company), or by attendance at the meeting and voting
his or her shares in person.
The presence in person or by proxy of the holders of a majority of the
shares of Common Stock outstanding is required to constitute a quorum for the
transaction of business at the Annual Meeting. The holders of Common Stock
have one vote for each share held by them as of the Record Date. In the
election of directors, the duly nominated candidates receiving the highest
number of votes will be elected as directors. Under Pennsylvania law and the
Company's Bylaws, abstentions and broker non-votes (shares held of record by a
broker which are present at the meeting by proxy, but which the broker does
not have authority to vote with respect to the matter in question) will have
no effect on the vote on any matter to come before the meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the number of directors
constituting the entire Board shall be five (5).
The Company's Board of Directors is divided into three (3) classes, each as
nearly equal in number as possible, with one class being elected each year for
a term of three (3) years as follows: two (2) Class A directors whose terms
expire in 2000; two (2) Class B directors whose terms expire in 1998; and one
(1) Class C director whose term expires in 1999. Therefore, two (2) directors
are being elected to Class B at the Annual Meeting for three-year terms
expiring in the year 2001.
2
<PAGE>
The persons named as proxies on the enclosed proxy card were selected by the
Board of Directors and have advised the Board of Directors that, unless
authority is withheld, they intend to vote the shares represented by them at
the Annual Meeting for the election to Class B of Ashok Trivedi and Ed
Yourdon, nominees of the Board of Directors, each of whom presently serves as
a director of the Company.
The Board of Directors knows of no reason why any nominee for director would
be unable to serve as director. If at the time of the Annual Meeting any of
the named nominees is unable or unwilling to serve as a director of the
Company, the persons named as proxies intend to vote for such substitute as
may be nominated by the Board of Directors.
The section captioned "Board of Directors and Certain Board Committees" sets
forth certain information concerning the Company's nominees for election to
the Board of Directors at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
NAMED BELOW FOR ELECTION AS DIRECTOR.
BOARD OF DIRECTORS AND CERTAIN BOARD COMMITTEES
Directors in Class A Whose Terms Expire in 2000
Michel Berty, age 58, was appointed as a director of the Company effective
immediately after the Company's initial public offering in December 1996, and
was elected by the shareholders in 1997 to serve a three year term expiring in
2000. He currently serves as the consultant to the President of Director for
Cap Gemini Sogeti Group (CGS) and as a U.S. representative for P.A.C., a
foreign consulting company. Mr. Berty served in various executive and
management positions with CGS from 1972 through April 1997, most recently,
from 1992 through April 1997, as Chief Executive Officer and President of the
American subsidiary of CGS. Mr. Berty also serves as a member of the board of
directors of Computron Software, Inc., INTERSOLV, Sapiens International, Level
8 Systems and ZMAX.
J. Gordon Garrett, age 58, was appointed as a director of the Company
effective immediately after the Company's initial public offering in December
1996, and was elected by the shareholders in 1997 to serve a three year term
expiring in 2000. He is currently Senior Vice President of Ricoh Corp.,
Caldwell, New Jersey and Chief Executive Officer of Ricoh Canada, formerly
Gestetner North America, a position he has held since 1995. From 1991 to 1995,
Mr. Garrett was Chairman of the Board, Chief Executive Officer and President
of Information Systems Management (ISM) Corporation. He also held the position
of President of Gestetner USA from 1989 to 1991 and NULOGIX Technical
Services, Inc. (a majority owned subsidiary of IBM).
Nominees for Director in Class B for Terms to Expire in 2001
Ashok Trivedi, age 49, has served as Co-Chairman and President of the
Company since October 1996, and as a director since 1988. From 1988 through
September 1996, Mr. Trivedi served as President of the Company and held other
offices, including Secretary and Treasurer. From 1976 to 1988, he held various
marketing and management positions with Unisys Corporation.
Ed Yourdon, age 54, was appointed as a director of the Company effective
immediately after the Company's initial public offering in December 1996. Mr.
Yourdon has served as a consultant to the information technology industry for
the past five years, most currently focusing on the Internet, Year 2000,
business re-engineering, object technology and the design of Internet/intranet
software applications.
Director in Class C Whose Term Expires in 1999
Sunil Wadhwani, age 45, has served as Co-Chairman and Chief Executive
Officer of the Company since October 1996, and as a director since 1986. From
1986 through September 1996, he served as Chairman of the
3
<PAGE>
Company and held several other offices, including Vice President, Secretary
and Treasurer. From 1981 to 1986, Mr. Wadhwani served as President of Uro-
Valve, Inc., a start-up manufacturer of specialized medical devices that he
founded in 1981. Prior to 1981, Mr. Wadhwani worked as a management consultant
assisting companies in strategic planning, operations, marketing and sales.
The Board of Directors has established an Audit Committee, Compensation
Committee and an Executive Committee. During 1997, the Board of Directors met
four (4) times with all directors attending each meeting. The Company does not
have a standing nominating committee.
AUDIT COMMITTEE
The Board has an Audit Committee comprised of Messrs. Garrett, Berty and
Wadhwani, a majority of whom are independent directors. The Audit Committee's
duties include recommending to the Board of Directors the firm of independent
accountants to audit the Company's financial statements, reviewing the scope
and results of the independent auditors' activities and the fees proposed and
charged therefor, reviewing the adequacy of internal controls, reviewing the
scope and results of internal audit activities, and reporting the results of
the committee's activities to the full Board. During 1997, the Audit Committee
met twice with all committee members attending each meeting.
COMPENSATION COMMITTEE
The Board has a Compensation Committee, consisting of Messrs. Garrett, Berty
and Trivedi, a majority of whom are independent directors. The Compensation
Committee is responsible for reviewing and approving matters involving the
compensation of directors and executive officers of the Company, periodically
reviewing management development plans, administering the incentive
compensation plans and making recommendations to the full Board on these
matters. During 1997, the Compensation Committee met twice with all committee
members attending each meeting.
EXECUTIVE COMMITTEE
The Board has an Executive Committee, consisting of Messrs. Wadhwani and
Trivedi, which exercises the full power of the Board of Directors between
meetings of the Board, provided, however, that the Executive Committee does
not have power or authority to: (i) approve any fundamental change that
requires shareholder approval; (ii) create or fill vacancies on the Board of
Directors; (iii) adopt, amend or repeal the Bylaws; (iv) take any action with
respect to the compensation of executive officers; (v) take any other action
committed by resolution of the Board of Directors to another committee of the
Board of Directors; (vi) authorize the issuance of any shares of the Company's
stock; or (vii) authorize any distributions with respect to the Company's
outstanding shares. The Executive Committee did not meet during 1997.
DIRECTORS' COMPENSATION
Directors who are not executive officers of the Company are paid an annual
retainer of $20,000, and all directors are reimbursed for travel expenses
incurred in connection with attending Board and committee meetings. Directors
are not entitled to additional fees for serving on committees of the Board of
Directors. Pursuant to the terms of the Company's 1996 Stock Incentive Plan,
each of Messrs. Berty, Garrett and Yourdon, the nonemployee directors of the
Company, were granted options to purchase 15,000 shares of Common Stock in
December of 1996. The exercise price for these options is $15 per share, which
was the price per share for the Common Stock in the Company's initial public
offering. The options vest in annual installments equally over three years
commencing December 16, 1997, and expire ten years after grant, subject to
earlier termination if the optionee ceases to serve as a director prior to
vesting.
4
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 10, 1998 of: (i) each
person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) each executive officer named in the
Summary Compensation Table under the caption "Executive Officers and Executive
Compensation" below; and (iii) all directors and executive officers of the
Company as a group. As of April 10, 1998, there were 47,338,952 shares of
Common Stock outstanding. Except as noted, all persons listed below have sole
voting and investment power with respect to their shares of Common Stock,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
--------------------------
PERCENTAGE OF
NAME AND ADDRESS OF SHARES OF COMMON STOCK
BENEFICIAL OWNER COMMON STOCK OUTSTANDING
------------------- ------------ -------------
<S> <C> <C>
Sunil Wadhwani (1)(2)............................... 14,880,000 31.4%
Ramesh Thadani, as co-trustee of a Wadhwani family
trust (2)(3)....................................... 2,667,392 5.6
Ashok Trivedi (2)(4)................................ 14,880,000 31.4
Arun Nayar, as co-trustee of certain Trivedi family
trusts (2)(5)...................................... 4,487,392 9.5
Mohan Phanse, as co-trustee of certain Trivedi
family trusts (2)(5)............................... 2,667,392 5.6
Michel Berty........................................ -- *
J. Gordon Garrett (6)............................... 14,000 *
Ed Yourdon (6)...................................... 10,000 *
Steven Shangold (7)................................. 40,232 *
Lisa Kustra (8)..................................... 13,334 *
Ajmal Noorani....................................... -- *
All directors and executive officers as a group 13
persons (9)........................................ 29,897,566 63.2
</TABLE>
- --------
* Less than 1%
(1) Includes 4,487,392 shares held by three family trusts, for which Mr.
Wadhwani is a co-trustee with sole investment power and no voting power
over such shares.
(2) The address of Messrs. Wadhwani, Trivedi, Thadani, Nayar and Phanse is
c/o Mastech Corporation, 1004 McKee Road, Oakdale, Pennsylvania 15071.
(3) Mr. Thadani is a co-trustee of two of the Wadhwani family trusts referred
to in note 1, above, with no investment power and sole voting power over
such shares.
(4) Includes 4,487,392 shares held by three family trusts, for which Mr.
Trivedi is a co-trustee with sole investment power and no voting power
over such shares.
(5) Mr. Nayar is co-trustee of the three Trivedi family trusts and Mr. Phanse
is co-trustee of two of the Trivedi family trusts, in each case, referred
to in note 4 above, with no investment power and shared voting power over
such shares.
(6) Includes 10,000 shares of Common Stock underlying options which are
exercisable on or before April 10, 1998 or within 60 days after such
date.
(7) These are restricted shares which will vest on June 30, 1998. Prior to
that date, Mr. Shangold has the right to vote and receive dividends on,
but not the power to dispose of, these shares.
(8) Includes 13,334 shares of Common Stock underlying options which are
exercisable on or before April 10, 1998 or within 60 days after such
date.
(9) Includes 93,334 shares of Common Stock underlying options which are
exercisable on or before April 10, 1998 or within 60 days after such
date.
5
<PAGE>
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
In addition to Messrs. Wadhwani and Trivedi, whose positions and background
are discussed above, the following persons serve as executive officers of the
Company:
Murali Balasubamanyam, age 42, has served as a Vice President--Human
Resources of the Company since October 1995. From September 1994 to October
1995, he served as the Company's Director--Human Resources. Prior to joining
the Company, he served as Deputy General Manager (Human Resources) with HCL
Group of Companies from November 1992 to September 1994. Mr. Balasubamanyam
earned a Bachelor's degree in Business Administration from Madurai University.
Lisa Kustra, age 38, has served as Vice President--Enterprise Package
Solutions Division of the Company since September 1997. From January 1996 to
August 1997, she served as the Director of the Company's Enterprise Package
Solutions Division. From August 1992 to December 1995, Ms. Kustra held various
managerial positions with the Company including National Sales Manager--
Strategic Alliance Division. Ms. Kustra earned Bachelors' degrees in Business
Management and Psychology from the University of Pittsburgh.
Jeffrey McCandless, age 39, has served as Vice President--Finance of the
Company since November 1997. Prior to joining the Company, he was employed by
Winner International as Chief Financial Officer from November 1991 through
October 1997. Mr. McCandless is a certified public accountant with over 18
years of financial and operational experience. Mr. McCandless earned a
Bachelor's degree in Business Administration from Westminster College.
Ajmal Noorani, age 36, has served as Vice President--International
Operations of the Company since May 1996. From June 1994 to May 1996, he was
employed by Mellon Bank as an Assistant Vice President--Corporate Finance.
From 1990 to May 1994, Mr. Noorani held a number of positions with the
Company, including Director--Government Division. Mr. Noorani earned a
Master's degree in Industrial Administration from Carnegie-Mellon University
and a Bachelor's degree in Engineering from Maharaja Sayajrao University.
Paul Oliver, Ph.D., age 58, has served as Vice President--Solutions Division
of the Company since June 1997. From July 1985 to March 1997 he was employed
by Booz Allen & Hamilton as Vice President and Officer-in-Charge of its
Systems Engineering and Integration practice. Prior to 1985, he served as Vice
President--Systems Integration for American Management Systems, Inc. and
President of EDS World Corporation, the international subsidiary of EDS. He
earned a Doctoral degree in Computer Science from the University of North
Carolina, a Master of Science degree in Mathematics from Ohio State University
and a Bachelor's degree in Mathematics from the University of Maryland.
Sushma Rajagopalan, age 34, has served as Vice President--Global Resourcing
and Recruiting of the Company since October 1995. From June 1993 to October
1995, she served as the Company's Director--Federal Division, and between
November 1992 and June 1993, she held various managerial positions with the
Company. Ms. Rajagopalan earned a Master's degree in Personnel Management from
the Tata Institute of Social Sciences.
Steven Shangold, age 37, has served as Vice President--U.S. Sales and
Marketing of the Company since October 1995. From February 1992 through
September 1995, he served as the Company's Sales Director-- Commercial
Division. Mr. Shangold earned a Bachelor's degree in Management from Syracuse
University and a Bachelor's degree in Advertising from the S.I. Newhouse
School.
Michael Zugay, age 46, has served as Vice President--Corporate Development
of the Company since November 1997. From March 1995 through October 1997, he
served as the Company's Vice President--Finance. From March 1994 to March
1995, he served as an independent consultant to the steel industry. From 1990
through February 1994, he served as President and CEO of Bliss-Salem, Inc., a
provider of products to the steel industry. Mr. Zugay is a certified public
accountant with over 24 years of financial and operational experience. Mr.
Zugay earned a Bachelor's degree in Business Management from Indiana
University of Pennsylvania.
6
<PAGE>
The Company's executive officers are appointed annually by, and serve at the
discretion of, the Board of Directors. Each executive officer is a full-time
employee of the Company. There are no family relationships between any director
or executive officer of the Company.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the annual
and long-term compensation of the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers of the Company (such
executive officers are sometimes collectively referred to herein as the "Named
Executive Officers"). The information in this table is presented for the three
years ended December 31, 1997.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------------- --------------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPENSATION STOCK AWARDS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(2) ($)(3)(4) ($) (#) ($)
------------------ ---- ---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sunil Wadhwani 1997 300,000 158,473 20,334 -- -- --
Co-Chairman and Chief 1996 168,000(1) -- 21,050 -- -- --
Executive Officer 1995 108,102(1) -- -- -- -- --
Ashok Trivedi 1997 300,000 158,473 20,306 -- -- --
Co-Chairman 1996 168,000(1) -- 20,963 -- -- --
and President 1995 108,102(1) -- -- -- -- --
Steven Shangold 1997 150,000 186,365 -- -- -- --
Vice President--U.S. 1996 126,667 74,265 -- 819,000(5) 25,000 819,000(5)
Sales
and Marketing 1995 68,333 170,003 -- -- -- --
Lisa Kustra 1997 80,000 170,240 -- -- -- --
Vice President-- 1996 70,000 61,484 -- -- 52,000 --
Enterprise
Package Solutions 1995 40,000 142,713 -- -- -- --
Division
Ajmal Noorani 1997 150,000 73,672 -- -- -- --
Vice President-- 1996 64,615 10,000 -- -- 62,000 --
International 1995 -- -- -- -- -- --
Operations
</TABLE>
- --------
(1) During 1995 and 1996 (prior to the initial public offering), Messrs.
Wadhwani and Trivedi received Subchapter S distributions as shareholders
of the Company. Following the initial public offering this practice was
terminated.
(2) Bonuses were paid in 1995, 1996 and 1997 for performance in 1994, 1995 and
1996, respectively. The 1995 bonus amount shown for Mr. Shangold includes
sales commissions of $24,944. The 1995 and 1996 bonus amounts for Ms.
Kustra include sales commissions of $142,713 and $27,967, respectively.
(3) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted when such perquisites and other personal benefits
constituted less than 10% of the total annual salary and bonus for each of
the named executive officers for such year.
(4) During 1995, 1996 and 1997, the Company leased automobiles for Messrs.
Wadhwani and Trivedi. The incremental costs to the Company in 1996 and
1997 for the automobiles leased was $21,050 and $20,334, respectively for
Mr. Wadhwani and $20,963 and $20,306, respectively for Mr. Trivedi.
(5) As compensation for past services, the Company paid Mr. Shangold an amount
equal to the value of 109,200 shares of Common Stock at the initial public
offering price of $15 per share. One-half of this payment was made in
cash, at Mr. Shangold's election. The remaining half of this obligation
was satisfied through the issuance of 54,600 shares of restricted Common
Stock. In December 1997, Mr. Shangold sold 25,000 shares of the restricted
stock under the above agreement. The aggregate value of the 29,600
remaining shares of restricted stock which vests on June 30, 1998 was
$939,800 at December 31, 1997.
7
<PAGE>
OPTION GRANTS DURING 1997
The Company did not grant options to purchase Common Stock to the Named
Executive Officers during 1997.
OPTION EXERCISES DURING 1997 AND YEAR END OPTION VALUES
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1997, by each of the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF IN-THE-MONEY
UNDERLYING OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
SHARES ACQUIRED VALUE ------------------------- ----------------------------
EXECUTIVE OFFICER ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ----------------- --------------- ------------ ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sunil Wadhwani.......... -- -- --/-- --/--
Ashok Trivedi........... -- -- --/-- --/--
Steven Shangold......... 25,000 $756,250 --/25,000 --/$418,750
Lisa Kustra............. 12,000 $183,000 10,000/30,000 $167,500/$502,500
Ajmal Noorani........... 20,000 $305,000 2,000/40,000 $ 33,500/$670,000
</TABLE>
- --------
(1) The closing price for the Company's Common Stock as reported by THE
NASDAQ NATIONAL MARKET tier of THE NASDAQ STOCK MARKET on December 31,
1997 was $31.75. Value is calculated on the basis of the difference
between the option exercise price and $31.75, multiplied by the number of
shares of Common Stock underlying the option.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10 percent of a registered class of the Company's
equity securities, to file reports of ownership and change in ownership with
the Securities and Exchange Commission and Nasdaq. Directors, executive
officers and other 10 percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) reports that they file.
Based solely on its review of the copies of such reports, and written
representations from the reporting persons, the Company believes that during
1997, all filing requirements under Section 16(a) applicable to its directors
and executive officers were met.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to March of 1997, Messrs. Wadhwani and Trivedi, the Company's Co-
Chairman and Chief Executive Officer and the Company's Co-Chairman and
President, respectively, had responsibility for all decisions with respect to
executive officer compensation. In March of 1997 the Compensation Committee
was formed and consists of Messrs. Garrett, Berty and Trivedi. Mr. Trivedi is
the Company's Co-Chairman and President.
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
INTRODUCTION
The following report of the Compensation Committee of the Board of Directors
of the Company shall not be deemed incorporated by reference by any general
statement incorporating this proxy statement by reference into any filing
under the Securities Act of 1933, as amended (the "Securities Act"), or under
the Exchange Act, and shall not be deemed filed under either of the Securities
Act or the Exchange Act except to the extent that the Company specifically
incorporates this information by reference.
Effective March 1997, the Board established the current Compensation
Committee, a majority of the members of which are non-employee directors as
defined under Rule 16b-3(b)(3)(i) of the Exchange Act. The Compensation
Committee is responsible for reviewing and approving matters involving the
compensation of directors and executive officers of the Company, periodically
reviewing management development plans and making recommendations to the full
Board on these matters as well as matters involving the Company's 1996
Incentive Stock Plan. The Compensation Committee met twice during fiscal 1997
to carry out the aforementioned duties.
CO-CHAIRMAN COMPENSATION
The key components of executive officer compensation are salary, bonus and
stock option awards. Each of Messrs. Wadhwani and Trivedi is party to a two-
year employment agreement (collectively the "Executive Employment Agreements")
that were negotiated at arms-length and entered into prior to the Company's
initial public offering but did not become effective until the offering was
consummated. Each of the Executive Employment Agreements automatically extends
for one month at the end of each month unless either party gives notice of
their intention to terminate the agreement at the end of the term. Each
Executive Employment Agreement provides for a base salary of $300,000 (subject
to increase by the Board of Directors) and the right to receive discretionary
performance bonuses of not less than $200,000 upon approval by the Board of
Directors and payable no later than April 15 of each calendar year.
COMPENSATION PHILOSOPHY
The members of the Compensation Committee hold primary responsibility for
determining the remaining executive officer compensation levels. The
Compensation Committee has adopted a compensation philosophy intended to align
compensation with the Company's overall business strategy. The philosophy
guiding the executive compensation program is designed to link executive
compensation and shareholder value in order to attract, retain and motivate
high quality employees capable of maximizing shareholder value. The goals of
the program are:
. To compensate executive employees in a manner that aligns the employees'
interests with the interests of the shareholders;
. To reward executives for successful long-term strategic management;
. To recognize outstanding performance; and
. To attract and retain highly qualified and motivated executives.
The strategy established by the Compensation Committee with respect to
executive compensation includes maintaining base salaries for executives and
providing bonuses which, when combined with base salary amounts, give the
Company's executives the potential to the earn in excess of competitive
industry compensation if certain subjective and objective performance goals
for the Company are achieved. The Compensation Committee intends to continue
to grant, or recommend to the Board of Directors that it approve the granting
of stock options to the Company's executives and other key employees at
current market value, which options have no monetary value
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to the executives unless and until the market price of the Company's Common
Stock increases. The mix of base salary, bonuses and stock option awards
reflects the Compensation Committee's intention to link executive compensation
to the Company's operational performance and the price of its Common Stock.
The Compensation Committee anticipates that bonus payments and option grants
made during 1998 and thereafter will be based on a subjective analysis of
various performance criteria and will not directly be tied to any one factor.
1996 STOCK INCENTIVE PLAN
The Company's long term incentives are in the form of stock options, stock
appreciation rights ("SARs"), restricted or unrestricted stock awards and
performance share awards to directors, executives and other key employees and
consultants under the 1996 Stock Incentive Plan (the "1996 Plan") adopted by
the Board of Directors prior to the Company's initial public offering. The
objective of these awards is to advance the longer term interests of the
Company and its shareholders and complement incentives tied to annual
performance. These awards provide rewards to directors, executives and other
key employees and consultants upon the creation of incremental shareholder
value and attainment of long-term earnings goals. Stock incentive awards under
the 1996 Plan produce value to participants only if the price of the Company's
stock appreciates, thereby directly linking the interests of the participants
with those of the shareholders. Subject to the provisions of the 1996 Plan,
the Plan Administrator (which may be either the full Board of Directors or a
committee thereof including members of the Compensation Committee) in its
discretion, selects the recipients of awards and the number of shares or
options granted thereunder and determines other matters such as (i) vesting
schedules, (ii) the exercise price of options, (iii) the duration of awards
and (iv) the price of SARs.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION EXPENSES
In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended, the Company cannot deduct, for federal income tax purposes,
compensation in excess of $1,000,000, paid to any Named Executive Officer,
except to the extent such excess constitutes performance-based compensation.
The policy of the Company is to qualify future compensation arrangements to
ensure deductibility, except in those limited cases where shareholder value is
maximized by an alternative approach.
Respectively submitted,
The Compensation Committee
Ashok Trivedi
J. Gordon Garrett
Michel Berty
EMPLOYMENT AGREEMENTS
The Company has entered into substantially identical employment contracts
with Messrs. Wadhwani and Trivedi, pursuant to which each of them serves as an
executive officer of the Company at an annual base salary of not less than
$300,000, plus an annual bonus of not less than $200,000 if performance goals
to be established by the Compensation Committee of the Board of Directors are
met. The agreements have a term of 24 months and automatically extend for one
month at the end of each month unless either party gives notice of their
intention to terminate the agreement at the end of the term. The agreements
provide that upon termination of employment by the Company other than for
cause (as defined in the agreements) or death, disability or retirement, the
Company shall pay the officer a lump sum amount equal to the amount the
executive would have been paid, based upon his base salary at the time of
termination, if such executive had remained an employee for the full term of
his contract, plus shares of Common Stock having a value equal to the value of
the executive's vested stock options and stock appreciation rights. In such
event, the Company will also provide health insurance for the executive for
the remainder of his life at the level in effect for other executives prior to
his termination for the remainder of the term. In the event the executive is
terminated due to a disability, the Company will
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continue to pay for three years the executive's salary and an amount equal to
his bonus in the year prior to his termination, reduced by any amounts paid to
the executive under the Company's disability plan. Under the agreements, the
Company agrees to indemnify the executive to the full extent not prohibited by
law for liabilities he incurs in his capacity as a director, officer or
controlling person of the Company. Under the agreements, the executives agree
to a noncompetition covenant during the term of the agreement and for one year
after the termination of their employment for cause and to nonsolicitation and
nondisclosure covenants during the term of the agreement and for one year after
the termination of their employment for any reason.
The other Named Executive Officers are parties to employment agreements which
outline their responsibilities and provide generally for base salary plus
annual incentive bonuses. These Named Executive Officers are "at-will"
employees of the Company and can be terminated by the Company with or without
cause, or they may resign. Under the agreements, the Named Executive Officers
are entitled to three months' salary continuation if they are terminated by the
Company without cause generally, and to six months' salary continuation if they
are terminated by the Company without cause during the 90 days following the
sale of the Company to a third party. The employment agreements also contain
confidentiality provisions and noncompetition and nonsolicitation covenants.
STOCK PERFORMANCE CHART
The following graph compares the weekly percentage change in the cumulative
shareholder return on the Company's Common Stock during the year ended December
31, 1997 with the cumulative short-term return on (i) the Standard and Poor's
500 Composite Index ("S & P 500") and (ii) a peer group index* selected by the
Company's management which includes seven public companies within the Company's
industry. The comparison assumes $100 was invested on December 16, 1996 in the
Company's stock and in each of the foregoing indices and assumes reinvestment
of dividends.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG MASTECH, S&P 500 INDEX AND PEER GROUP INDEX
Mastech Corporation S&P 500 Peer Group
------------------- ------- ----------
12/16/96 100 100 100
4/30/97 97.5 87.27 106.94
8/31/97 176.67 116.4 127.27
12/31/97 212.5 111.49 151.74
The Common Stock is currently traded on the NASDAQ NATIONAL MARKET tier of
THE NASDAQ STOCK MARKET under the SYMBOL "MAST".
- --------
* The peer group index reflects the stock performance of the following
information technology companies: Cambridge Technology Partners, Inc.,
CIBER, Inc., Computer Horizons Corp., Computer Management Sciences, Inc.,
Keane, Inc., Technology Solutions Company and Whittman-Hart, Inc.
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CERTAIN RELATED PARTY TRANSACTIONS
As an S corporation, the net income of the Company was attributed, for
federal (and some state) income tax purposes, directly to the Company's
shareholders rather than to the Company. During 1996 and 1997, the Company had
from time to time paid the corresponding income taxes due on these amounts on
behalf of the controlling shareholders in the form of interest-free advances
which were later repaid. The highest aggregate amount of advances outstanding
to one of the controlling shareholders and his Qualified Subchapter S Trust
during 1997 was approximately $96,000. The highest aggregate amount of
advances outstanding to the other controlling shareholder and his Qualified
Subchapter S Trust during 1997 was approximately $158,000.
Mascot Systems, a wholly owned subsidiary of the Company, leases from the
controlling shareholders the office space for the offshore software
development facilities in Bangalore, India. The acquisition of the real estate
and the construction of this office building (but not the buildout of the
office space) was financed entirely by Messrs. Wadhwani and Trivedi out of
personal funds. Specifically, Mascot Systems leases approximately 4,200 square
feet of office space on one floor of an office building located in Bangalore
which floor is owned by Messrs. Wadhwani and Trivedi. The lease has a one-year
term expiring in March 1998, and the rent is approximately $7,000 per year.
Mascot Systems also leases a 30,000-square-foot office building located in
Bangalore from Messrs. Wadhwani and Trivedi. This lease has a five-year term
expiring in October 2001, and the annual rent is approximately $110,000 per
year. The offshore software development facilities located in Pune and Madras,
India are scheduled to be operational sometime during the second quarter of
1998. Mascot Systems expects to enter into two additional leases with Messrs.
Wadhwani and Trivedi for these facilities. The facility in Pune is a 35,000-
square-foot office building, and the facility in Madras is a 65,000-square-
foot office building.
Scott Systems, a wholly owned subsidiary of the Company, leases, for its
training facilities, approximately 2,100 square feet of office space on one
floor of an office building located in Mumbai (Bombay, India). The leased
space is divided into five separately owned suites owned individually by
Messrs. Wadhwani and Trivedi. The leases have a one-year term expiring in
April 1998, and the aggregate rent is $20,000 per year. Scott Systems also
leases further office space of approximately 900 square feet on another floor
in the same office building which is owned by Messrs. Wadhwani and Trivedi.
The lease has a one-year term expiring in October 1998, and the rent is $6,000
per year. Scott Systems also leases a portion of the Pune facility from
Messrs. Wadhwani and Trivedi. This lease covers 7,500 square feet and has a
three year term expiring in September 2000. The rent is $26,000 per year.
PROPOSAL 2
APPROVAL OF AMENDMENT TO 1996 INCENTIVE STOCK PLAN
AMENDMENT TO 1996 STOCK INCENTIVE PLAN
In March 1998, the Board of Directors approved an amendment of the 1996 Plan
(the "Amendment") to automatically adjust the shares covered by the 1996 Plan.
Under the Amendment, the number of shares available for issuance under the
1996 Plan will be 10% of the outstanding shares of the Company on each
December 31 beginning on December 31, 1997, less the largest number of shares
outstanding on any previous December 31; provided, however, that the foregoing
formula should never result in a decrease in the maximum number of shares
available under the 1996 Plan. The first increase will take effect immediately
upon approval of the Amendment by the shareholders and thereafter, on each
successive December 31. The Amendment is set forth in Exhibit A to this Proxy
Statement.
The Board of Directors believes that the Amendment will benefit the Company
by increasing the number of options available for grant, thereby providing the
Board of Directors and management with the ability to grant additional stock
awards to attract, retain and incentivise key personnel.
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VOTES REQUIRED
The amendment is being submitted to the shareholders of the Company in
compliance with certain rules of the Nasdaq Stock Market. The affirmative vote
of a majority of the shares of the Company's Common Stock present or
represented and entitled to vote at the Annual Meeting is required for the
approval of the amendment to the 1996 Plan. If the shareholders do not approve
the proposal, then the 1996 Plan will continue in effect in accordance with
its existing provisions.
SUMMARY OF THE MASTECH CORPORATION 1996 STOCK INCENTIVE PLAN
Summary. All share numbers referred to herein reflect the Company's two-for-
one stock split in April 1998.
The primary purposes of the 1996 Plan are to promote the long-term success
of the Company and its shareholders by strengthening the Company's ability to
attract and retain highly competent directors, employees and consultants and
to provide a means to encourage stock ownership and proprietary interest in
the Company. Grants of awards under the 1996 Plan are consistent with the
Company's goal of providing total employee compensation that is competitive in
the marketplace, recognizing meaningful differences in individual performance,
fostering teamwork and offering the opportunity to earn above-average rewards
when merited by individual and Company performance.
Directors, officers, employees and consultants of the Company and its
subsidiaries who, in the opinion of the Plan Administrator, are mainly
responsible for the continued growth and development and future financial
success of the Company shall be eligible to participate in the Plan. A total
of 4,320,000 shares of Common Stock (or 4,733,895 shares, if the proposed
Amendment is approved by the shareholders), subject to adjustment, are
authorized for issuance under the 1996 Plan. As of April 10, 1998, options to
purchase 3,103,900 shares of Common Stock have been granted under the 1996
Plan. The aggregate number of shares of Common Stock that may be covered by
stock option awards granted to any single individual under the 1996 Plan may
not exceed 400,000 shares per calendar year.
Under the 1996 Plan, participants may receive stock options, SARs, stock
awards and performance share awards, as discussed in greater detail below. The
Plan Administrator will determine the type or types of awards to be made to
each participant. Awards may be granted singly, in combination or in tandem.
"Fair Market Value" for all awards granted under the 1996 Plan is defined
generally as the closing price of a share of Common Stock as reported or the
Nasdaq National Market.
Administration of the 1996 Plan. The 1996 Plan is administered by the Plan
Administrator, which has full and exclusive power to administer and interpret
the 1996 Plan and its provisions. This power includes, but is not limited to,
selecting award recipients, establishing all award terms and conditions,
adopting procedures and regulations governing awards and making all other
determinations necessary or advisable for the administration of the 1996 Plan.
All decisions made by the Plan Administrator are final and binding on all
persons affected by such decisions.
Stock Options. A stock option represents a right to purchase a specified
number of shares of Common Stock during a specified period as determined by
the Plan Administrator. The purchase price per share for each stock option
shall be determined by the Plan Administrator; provided, however, that such
price shall not, in the case of an Incentive Stock Option ("ISO"), be less
than 100% of the Fair Market Value of a share of Common Stock on the date of
grant, subject to certain exceptions. A stock option may be in the form an ISO
which complies with Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or a non-qualified
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stock option. The shares covered by a stock option may be purchased by (1)
cash payment, (2) tendering shares of Common Stock, (3) third-party cash-less
exercise transactions or (4) any combination of these methods. The term of any
ISO shall not exceed ten years from the date of grant.
SARs. A SAR generally represents a right to receive payment, in cash and/or
shares of Common Stock, equal to the excess of the Fair Market Value of a
specified number of shares of Common Stock on the date the SAR is exercised
over the Fair Market Value of such shares on the date the SAR was granted, as
set forth in the applicable award agreement.
Stock Awards. The Plan Administrator may, in its sole discretion, grant or
sell a Stock Award to any officer, employee or consultant of the Company or
its subsidiaries, pursuant to which such individual may receive shares of
Common Stock free of any vesting restrictions. Stock Awards, may be granted or
sold in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such individual.
Performance Share Awards. Independent of or in connection with the granting
of any other award under the 1996 Plan, the Plan Administrator may, in its
sole discretion, grant Performance Share Awards to any officer, employee or
consultant of the Company or its subsidiaries. A Performance Share Award is an
award entitling the recipient to acquire shares of Common Stock upon the
attainment of specialized performance goals, which shall be determined by the
Plan Administrator.
Restricted Stock. Restricted Stock Awards entitle the participant to acquire
shares subject to such restrictions, conditions and vesting schedules as the
Plan Administrator may determine.
In the event of a stock dividend, stock split or other change affecting the
shares or share price of Common Stock, adjustments shall be made with respect
to (1) the aggregate number of shares of Common Stock that may be issued under
the 1996 Plan, (2) each outstanding award made under the 1996 Plan, and (3)
the exercise price per share for any outstanding stock options, SARs or
similar awards under the 1996 Plan.
Tax Withholding.
Whenever shares are to be issued or cash is to be paid under the 1996 Plan,
the Company shall have the right to require the participant to remit to the
Company an amount sufficient to satisfy federal, state and local tax
withholding requirements. Such withholding requirements may be paid (i) in
cash; (ii) in the discretion of the Plan Administrator, through the delivery
to the Company of previously-owned shares of Common Stock having an aggregate
Fair Market Value equal to the tax obligation provided that the previously
owned shares delivered in satisfaction of the withholding obligations must
have been held by the participant for at least six (6) months; or (iii) in the
discretion of the Plan Administrator, through a combination of the procedures
set forth in subsections (i) and (ii) above.
Federal Income Tax Consequences. In general, under the Code as presently in
effect, a participant will not be deemed to receive any income for federal
income tax purposes at the time an option or SAR is granted or a restricted
stock award or other non-vested share award is made, nor will the Company be
entitled to a tax deduction at that time. A participant will recognize
ordinary income and the Company will be entitled to a corresponding tax
deduction at the time a stock award is granted. When any part of an option or
SAR is exercised, when restrictions on restricted stock lapse (or performance
goals are attained for performance share awards) or when an unrestricted stock
award is made, the federal income tax consequences may be summarized as
follows:
1. In the case of an exercise of a non-qualified stock option or an SAR, the
participant will recognize ordinary income in an amount equal to the
difference between the option price and the Fair Market Value of the Common
Stock on the exercise date.
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2. In the case of performance share awards or restricted stock awards, the
immediate federal income tax effect for the recipient will depend on the
nature of the restrictions. Generally, the value of the Common Stock will
not be taxable to the recipient as ordinary income until the year in which
his or her interest in the stock is freely transferable or is no longer
subject to a substantial risk of forfeiture. However, the recipient may
elect to recognize income when the stock is received, rather than when his
or her interest in the stock is freely transferable or is no longer subject
to a substantial risk of forfeiture. If the recipient makes this election,
the amount taxed to the recipient as ordinary income is determined as of
the date of receipt of the restricted stock. Unrestricted stock awards will
generally be taxable as ordinary income to the recipient upon receipt.
3. In the case of an ISO, there is no tax liability at the time of exercise.
However, the excess of the Fair Market Value of the Common Stock on the
exercise date over the option price is included in the participant's income
for purposes of the alternative minimum tax. If no disposition of the ISO
stock is made before the later of one year from the date of exercise or two
years from the date the ISO is granted, the participant will realize a
long-term capital gain or loss upon a sale of the stock; if the stock is
not held for the required period, ordinary income tax treatment will
generally apply to the amount of any gain at sale or exercise, whichever is
less, and the balance of any gain or loss will be treated as capital gain
or loss (long-term or short-term, depending on whether the shares have been
held for more than one year).
4. Upon the exercise of a non-qualified stock option or SAR, or the vesting of
a performance share award or a restricted stock award, and the recognition
of income upon the vesting of a performance share award or a restricted
stock award, the Company will generally be allowed an income tax deduction
equal to the ordinary income recognized by the employee. The Company does
not receive an income tax deduction as a result of the exercise of an ISO,
provided that the ISO stock is held for the required period as described
above. If the ISO is not held for such required period and ordinary income
tax treatment is applied to the amount of any gain at sale or exercise by
the recipient, the Company will generally receive an income tax deduction
for a corresponding amount.
The foregoing is only a summary of the effect of federal income taxation
upon award recipients and the Company with respect to the grant and exercise
of awards under the 1996 plan. It does not purport to be complete, and does
not discuss the tax consequences of the employee's death or the provisions of
the income tax laws of any municipality, state or foreign country in which the
employee may reside.
Because executive officers (who may also be members of the Board) are
eligible to receive awards under the Plan, each of them has a personal
interest in the approval of these amendments.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT.
PROXIES RECEIVED BY THE COMPANY WILL BE VOTED IN FAVOR OF APPROVAL OF THE
AMENDMENT UNLESS A CONTRARY CHOICE IS INDICATED.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to
the meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
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All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names, and the Company will reimburse them for
reasonable out-of-pocket expenses in connection with the distribution of proxy
solicitation material.
A COPY OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 1997 IS BEING FURNISHED WITH THIS PROXY STATEMENT. THE COMPANY
WILL, UPON WRITTEN REQUEST OF ANY SHAREHOLDER, FURNISH WITHOUT CHARGE A COPY
OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS. PLEASE
ADDRESS ALL SUCH REQUESTS TO THE COMPANY, ATTENTION OF JEFFREY MCCANDLESS,
VICE PRESIDENT--FINANCE, 1004 MCKEE ROAD, OAKDALE, PENNSYLVANIA 15071.
EXHIBITS WILL BE PROVIDED UPON REQUEST AND PAYMENT OF AN APPROPRIATE
PROCESSING FEE.
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DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting of Shareholders must be received by the Company at its principal
office in Oakdale, Pennsylvania not later than January 1, 1999 for inclusion
in the Proxy Statement for that meeting.
April 30, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. YOUR PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE
MEETING. WE APPRECIATE YOUR COOPERATION.
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EXHIBIT A
MASTECH CORPORATION 1996 STOCK INCENTIVE PLAN
AMENDMENT TO PLAN
Section 5 of the 1996 Plan (Shares Subject to the Plan) shall be replaced by
the following paragraph:
The number of shares of Stock which may be issued pursuant to the Plan shall
be 10% of the total of (i) the number of Shares outstanding on each December
31, beginning on December 31, 1997, less (ii) the largest number of Shares
outstanding on any previous December 31; provided, however, that the foregoing
formula shall never result in a decrease in the maximum number of shares
available under this Plan. For purposes of the foregoing limitation, the
shares of Stock underlying any Awards which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the
number of shares of Stock available for issuance under the Plan.
Notwithstanding the foregoing, on and after the date that the Plan is subject
to Section 162(m) of the Code, Stock Options with respect to no more than
400,000 shares of Stock may be granted to any one individual participant
during any one calendar year period. To the extent that an SAR is granted in
conjunction with an Option, the shares covered by such SAR and Option shall be
counted only once. Common Stock to be issued under the Plan may be either
authorized and unissued shares or shares held in treasury by the Company.
<PAGE>
MASTECH CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Sunil Wadhwani and Ashok Trivedi and each
of them Proxies with power to appoint a substitute and hereby authorizes them to
represent and to vote all shares of Common Stock of Mastech Corporation (the
"Company") held of record by the undersigned on March 27, 1998 at the Annual
Meeting of Shareholders of the Company to be held on June 1, 1998 and at any
adjournments thereof, and to vote as directed on the reverse side of this form
and, in their discretion, upon such other matters not specified as may properly
come before said meeting.
(Important -- To Be Signed and Dated on Reverse Side)
1. Proposal 1 -
Election of Directors
Nominees: Ashok Trivedi and Ed Yourdon
[_] FOR all nominees listed above (except as marked to the contrary
below)
[_] WITHHELD from the following nominee(s):
-----------------------------
The Board of Directors recommends a vote FOR Proposal 1
2. Proposal 2 -
Approval of an amendment to the Company's 1996 Incentive Stock Plan (the
"1996 Plan") which will increase the number of shares of common stock the
Company is authorized to issue under the 1996 Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
The Board of Directors recommends a vote FOR Proposal 2
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED, FOR THE ELECTION OF
DIRECTORS, FOR THE AMENDMENT TO THE 1996 PLAN, AND IN THEIR DISCRETION THE
PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
The undersigned hereby acknowledges receipt of the notice of Annual Meeting and
Proxy Statement.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF
MAILED IN THE UNITED STATES.
NOTE: Please sign name(s) exactly as printed
hereon. Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such.
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Signature
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Date
