<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Complete Business Solutions, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
COMPLETE BUSINESS SOLUTIONS, INC.
- --------------------------------------------------------------------------------
NOTICE OF THE 1999 ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of Complete Business Solutions, Inc.
will be held on Tuesday, May 4, 1999 at 9:00 a.m. at The Ritz-Carlton Hotel,
Fairlane Plaza, 300 Town Center Drive, Dearborn, Michigan for the following
purposes:
1. to elect four (4) directors;
2. to ratify the appointment of Arthur Andersen LLP as our independent
auditors for the 1999 fiscal year; and
3. to transact any such other business that may properly come before
the meeting.
Shareholders who owned their shares as of the close of business on March
24, 1999 are entitled to notice of and to vote at our Annual Meeting.
Whether or not you plan to attend the meeting, please sign, date and return
the enclosed voting card in the envelope provided.
By Order of the Board of Directors
Thomas E. Sizemore
Secretary and General Counsel
April 5, 1999
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YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED SELF-ADDRESSED, STAMPED ENVELOPE.
<PAGE> 3
COMPLETE BUSINESS SOLUTIONS, INC.
April 5, 1999
Dear Complete Business Solutions Shareholder:
You are cordially invited to attend our annual meeting of Shareholders. The
date of our meeting this year is May 4, 1999. Our meeting will once again be
held at The Ritz-Carlton Hotel, Fairlane Plaza, 300 Town Center Drive, Dearborn,
Michigan. We plan to get started at 9:00 a.m. For your convenience, we have
included a map and directions to The Ritz-Carlton Hotel on the back page of this
proxy statement.
The formal notice of the meeting follows on the next page. In addition to
the two items of business, we will also discuss our 1998 performance and answer
any questions you may have about our company. Enclosed with this proxy statement
are your voting card, a postage-paid envelope to return your voting card, your
admission ticket to the meeting and our 1998 Annual Report.
Your vote is important. Whether you are able to attend the meeting or not,
please sign, date and return the enclosed voting card in the envelope provided.
If you decide to attend the meeting and would like to vote in person, you may do
so.
I look forward to seeing you at the meeting.
Sincerely,
/s/ RAJENDRA B. VATTIKUTI
Rajendra B. Vattikuti
President and Chief Executive Officer
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Information About Complete Business Solutions, Inc. ........ 1
Information About the Annual Meeting........................ 1
Information About Attending the Annual Meeting............ 1
Information About this Proxy Statement.................... 1
Information About Voting.................................. 1
Quorum Requirement........................................ 1
Information About Votes Necessary for Action to be
Taken.................................................. 2
Election of Directors....................................... 2
Appointment of Independent Public Accountants............... 3
Meetings and Committees of the Board........................ 4
Director Compensation....................................... 4
Director and Executive Officer Ownership of CBSI Common
Stock..................................................... 5
Persons Owning More Than Five Percent of Outstanding CBSI
Common Stock.............................................. 6
Executive Compensation...................................... 6
Transactions with Management................................ 9
Compliance with Section 16(a)............................... 9
</TABLE>
<PAGE> 5
INFORMATION ABOUT COMPLETE BUSINESS SOLUTIONS, INC.
Complete Business Solutions, Inc. is a leading provider of information
technology services. We offer our clients flexible global delivery capabilities
through our eleven worldwide development centers and 25 branch locations. We
employ more than 4,500 people. Our headquarters is located in Farmington Hills,
Michigan and our address is 32605 West Twelve Mile Road, Farmington Hills,
Michigan 48334. Our telephone number is (248) 488-2088.
INFORMATION ABOUT THE ANNUAL MEETING
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
Our Annual Meeting will be held Tuesday, May 4, 1999 at 9:00 a.m. at The
Ritz-Carlton Hotel, Fairlane Plaza, 300 Town Center Drive, Dearborn, Michigan.
If you would like to attend the Annual Meeting please bring your admission
ticket with you. Your admission ticket is included with this proxy statement and
is attached to the proxy card. Simply detach the proxy card from your ticket,
sign, date and mail your proxy card in the enclosed envelope and bring your
admission ticket to the meeting. If you want to attend the meeting, but your
shares are held in the name of a broker or other nominee, please send a written
request for an admission ticket to our Director of Investor Relations, Gail
Lutey, and include in your request an account statement or letter from the
nominee indicating that you were the beneficial owner of the shares at the close
of business on March 24, 1999.
INFORMATION ABOUT THIS PROXY STATEMENT
You are receiving this proxy statement and the enclosed proxy card because
our Board of Directors is soliciting your proxy to vote your shares at the
Annual Meeting. This proxy statement contains the information we are required to
provide to you under the rules of the Securities and Exchange Commission. It is
designed to assist you in voting your shares. On April 6, 1999, we began mailing
these proxy materials to all shareholders of record at the close of business on
March 24, 1999.
INFORMATION ABOUT VOTING
You can vote on the matters to be presented at the Annual Meeting in two
ways:
- By Proxy -- You can vote by signing, dating and returning the
enclosed proxy card. If you do this, the individuals named on the
card (your "proxies") will vote your shares in the manner you
indicate. You may specify on your proxy card whether your shares
should be voted for all, some or none of the nominees for director
and whether your shares should be voted for or against the
ratification of Arthur Andersen LLP as the Company's auditors. If
you do not indicate instructions on the proxy card, your shares will
be voted for the election of all the nominees for director and for
the ratification of Arthur Andersen as independent accountants for
the 1999 fiscal year.
- In Person -- You may cast your vote in person when you attend the
Annual Meeting.
You may revoke your proxy at any time before it is exercised at the Annual
Meeting by sending a written notice of revocation to CBSI's Secretary, Thomas E.
Sizemore, by providing a later dated proxy or by voting in person at the
meeting.
Each share of CBSI common stock is entitled to one vote. As of March 24,
1999, there were 37,307,266 shares of common stock outstanding.
QUORUM REQUIREMENT
To hold a valid meeting, a quorum of shareholders is necessary. If
shareholders entitled to cast at least a majority of all the votes entitled to
be cast at the meeting are present in person or by proxy, a quorum will exist.
Abstentions and broker non-votes are counted as present for establishing a
quorum. A broker non-vote
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<PAGE> 6
occurs when a broker votes on some matter on the proxy card but not on others
because the broker does not have the authority to vote on the other matter.
INFORMATION ABOUT VOTES NECESSARY FOR ACTION TO BE TAKEN
Four directors will be elected at the meeting. In the event a quorum
exists, to be elected, a director must receive the affirmative vote of a
majority of the votes cast at the meeting. Other action, such as ratification of
the appointment of Arthur Andersen as the Company's auditors, requires an
affirmative vote of the majority of the votes cast on the matter. Abstentions
and non-votes will have no effect on the result of the vote on the two items to
be presented at the meeting.
OTHER MATTERS
The Board of Directors does not know of any other matter which will be
presented at the Annual Meeting other than the proposals discussed in this proxy
statement. Under our Bylaws, generally no business other than the two items
discussed in this proxy statement may be transacted at the meeting. However, if
any other matter properly comes before the Annual Meeting, your proxies will act
on such proposal in their discretion.
ELECTION OF DIRECTORS
Our Board of Directors is divided into classes and as a result, the terms
of our directors are staggered. Each class of director serves a three year term.
This year, the terms of our Class III directors end and therefore our class III
directors are nominated to be re-elected. All re-elected directors will serve
until the end of the term and until their qualified successors have been
elected. Currently, Messrs. Machtley and Stanley are Class III directors and if
re-elected will serve new three year terms. In addition, and William Brooks and
Jerry L. Stone were elected to the Board by the other directors on August 20,
1998 to fill the vacant seats on the Board. If re-elected, Mr. Brooks will serve
the 3 year term of a Class III director and Mr. Stone will serve the remaining 2
years of a Class II director. If a nominee is unavailable for election, the
proxy holders may vote for another nominee proposed by the Board or the Board
may reduce the number of directors to be elected at the Annual Meeting.
The following information is furnished with respect to all of our
directors. The ages of the directors are as of December 31, 1998.
Rajendra B. Vattikuti, founder of CBSI, has served as President and Chief
Executive Officer and as a Director since its formation in February 1985. From
1983 to 1985, Mr. Vattikuti was Director of M.I.S. for Yurika Foods Corporation.
From 1977 to 1983, he was an M.I.S. Project Leader for Chrysler Corporation. Mr.
Vattikuti holds a Bachelor of Science degree in Electrical Engineering from the
College of Engineering, Guindy (India) and a Master of Science degree in
Electrical and Computer Engineering from Wayne State University. Age 48. Term
expires 2000.
Timothy S. Manney, has served as Executive Vice President of Finance and
Administration and Treasurer and as a Director of CBSI since November 1993. From
February 1990 to November 1993, Mr. Manney held various executive positions,
most recently as Chief Financial Officer. From 1980 until 1990, Mr. Manney was
an Audit Manager at Arthur Andersen LLP. He is a member of the Michigan
Association of Certified Public Accountants. Mr. Manney holds a Bachelor of
Business Administration degree from the University of Michigan. Age 40. Term
expires 2000.
William Brooks, has served as a director since August 1998. Mr. Brooks is
Chairman of the Board of The Brooks Group International, a human resource and
workforce development firm. He retired as Vice President of Corporate Affairs of
General Motors in 1997 where he had served for 25 years in various positions. He
is a member of the Board of Directors of United American Healthcare Corporation,
Louisiana-Pacific Corporation and DTE Energy Corporation. Mr. Brooks was
nominated by President Clinton and served from February 1996 to January 1998 on
the Social Security Advisory Board. Mr. Brooks was nominated by President Bush
and served from July 1989 to November 1990 as the Assistant Secretary of Labor
for the Employment Standards Administration. Mr. Brooks holds a Bachelor of Arts
degree from Long Island
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<PAGE> 7
University and a Master's Degree in Business Administration from the University
of Oklahoma. Age 65. Nominee for re-election.
Charles Costello, has served as a director since May 1998. Mr. Costello was
the Founder, President and Chief Executive Officer of c.w. Costello &
Associates, inc. from December 1986 to December 1996. Mr. Costello holds a
Bachelor of Arts degree in Business Management from Northeastern University. Age
60. Term expires 2000.
Douglas S. Land, has served as a director since November 1993 and as an
advisor since 1988. Mr. Land is the founder and President of Economic Analysis
Group, Ltd., a Washington DC-based consulting firm that has been providing
financial and economic consulting services since 1983. Mr. Land is also the
President and founder of The Chesapeake Group, a financial advisory firm that
has been providing consulting to start-up and middle-market firms since 1985.
Mr. Land holds a Bachelor of Science degree in Economics and a Master of
Business Administration degree in Finance from the Wharton School and a Master
of Arts degree in International Relations from the University of Pennsylvania.
Age 41. Term expires 2001.
Ronald K. Machtley, has served as a director since May 1998. Mr. Machtley
has been the President of Bryant College since 1996. From 1994 to 1995, Mr.
Machtley was a partner in the Washington D.C. law firm of Wilkinson, Barker,
Knauer & Quinn. From 1988 to 1995, Mr. Machtley was a United States Congressmen
from the State of Rhode Island. Mr. Machtley holds a Juris Doctorate from
Suffolk University and is a graduate of the U.S. Naval Academy. Age 50. Nominee
for re-election.
Frank D. Stella, has served as a director since November 1993. Mr. Stella
has served as President of F.D. Stella Products Company, a food service and
dining equipment company, since 1946. Mr. Stella was appointed to the Commission
for White House Fellows by President Ronald W. Reagan in 1983 and has served as
Chairman of the Income Tax Board of Review, City of Detroit, since 1965. Mr.
Stella is also a board member of VFS, Inc., an insurance holding company, and a
former board member of the Federal Home Loan Bank of Indianapolis. He is also on
the boards of several medical and charitable organizations. Mr. Stella holds a
degree from the College of Commerce and Finance at the University of Detroit.
Age 79. Term expires 2001.
John A. Stanley, has served as a director since June 1997. Mr. Stanley has
served as President of European Operations of Lexmark International since March
1991. Previously, he was employed by IBM for 22 years. Mr. Stanley is a graduate
of FitzWilliam College, University of Cambridge, England with a Master of Arts
degree, and holds a degree in Personnel Management from The London School of
Economics. Age 61. Term expires 1999. Nominee for re-election.
Jerry L. Stone, has served as a director since August 1998. Mr. Stone is
the former Chairman of the Board of Directors of Claremont Technology Group,
Inc. Mr. Stone was previously the Chairman and Chief Executive Officer of
Marketing One, Inc. Age 56. Nominee for re-election.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP to serve as the independent public accountants of
CBSI for its fiscal year ending December 31, 1999. The Board seeks to have the
shareholders ratify the appointment of Arthur Andersen which has served as the
independent public accountants of CBSI since 1991. Representatives of Arthur
Andersen will be present at the Annual Meeting to respond to questions and to
make a statement if they desire to do so. If the appointment of Arthur Andersen
is not ratified by the shareholders, the Board of Directors may appoint other
independent public accountants based upon the recommendation of the Audit
Committee.
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<PAGE> 8
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
FISCAL YEAR 1999.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met six times during the fiscal year. In addition to
meetings of the full Board, directors also attended meetings of Board
Committees. Attendance by directors at meetings of the Board and Board
committees during the year was in excess of 90%. The Board of Directors has
standing audit, compensation, executive and nominating committees.
AUDIT COMMITTEE. The Audit Committee is responsible for reviewing with
management our financial controls, accounting, audit and reporting activities.
The Audit Committee reviews the qualifications of CBSI's independent auditors,
makes recommendations to the Board of Directors regarding the selection of
independent auditors, reviews the scope, fees and results of any audit and
reviews non-audit services provided by the independent auditors. The Audit
Committee is also responsible for reviewing any transactions between CBSI and
its directors, officers, or significant shareholders. The Audit Committee met
three times during the year. The members of the Audit Committee are Messrs.
Costello, Land and Stella.
COMPENSATION COMMITTEE. The Compensation Committee is responsible for the
administration of all salary and incentive compensation plans for the officers
and key employees of the Company, including bonuses. The Compensation Committee
also administers the Company's 1996 Stock Option Plan and the Employee Stock
Purchase Plan. The Compensation Committee met four during the year. The members
of the Compensation Committee are Messrs. Machtley, Stanley and Stella.
EXECUTIVE COMMITTEE. The Executive Committee exercises the authority of the
Board on such matters as are delegated to by the Board of Directors and
exercises the authority of the Board between meetings of the Board of Directors.
The Executive Committee met four times during the year. The members of the
Executive Committee are Messrs. Vattikuti, Manney and Land.
NOMINATING COMMITTEE. The Nominating Committee is responsible for
identifying, and recruiting highly qualified candidates to serve as directors of
the Company. The Nominating Committee also recommends to the Board of Directors
and shareholders worthy candidates to serve as directors of the Company. The
Nominating Committee met two times during the year. The members of the
Nominating Committee are Messrs. Stanley, Stella and Vattikuti.
DIRECTOR COMPENSATION
Directors who are not employees or consultants of CBSI are paid $2,000 per
month for serving on the Board of Directors. Committee Chairman receive an
additional $1,000 per month. Each member also receives $1,000 per each meeting
they attend. CBSI pays all expenses related to attendance at regular or special
meetings.
Directors are also eligible to participate in the 1996 Stock Option Plan.
New Board members receive an initial grant of non-qualified stock options to
purchase 5,000 shares of CBSI common stock. Each member receives an annual award
of non-qualified stock options to purchase 3,000 shares of CBSI stock with an
exercise price equal to the fair market value on the date of grant.
On November 6, 1998, grants of non-qualified stock options were made to
members of the Board of Directors at an exercise price of $22.75 per share. The
options vest in four equal annual installments
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<PAGE> 9
commencing one year from the date of grant. The following are the number of
options granted to each director during the year:
<TABLE>
<CAPTION>
DIRECTOR NUMBER OF OPTIONS GRANTED
-------- -------------------------
<S> <C>
Rajendra B. Vattikuti................................... 20,000
Timothy S. Manney....................................... 15,000
Douglas S. Land......................................... 12,000
Frank D. Stella......................................... 8,000
John A. Stanley......................................... 8,000
Charles W. Costello..................................... 5,000
Ronald K. Machtley...................................... 5,000
William Brooks.......................................... 5,000
Jerry L. Stone.......................................... 5,000
</TABLE>
DIRECTOR AND EXECUTIVE OFFICER OWNERSHIP
OF CBSI COMMON STOCK
This table indicates how much common stock the executive officers and
directors beneficially owned as of March 24, 1999. In general, "beneficial
ownership" includes those shares a director or executive officer has the power
to vote, or the power to transfer, and stock options that are exercisable
currently or become exercisable within 60 days. Except as otherwise noted, the
persons named in the table below have sole investment power with respect to all
shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY OPTIONS EXERCISABLE PERCENT OF
NAME OWNED WITHIN 60 DAYS OUTSTANDING SHARES
---- ------------ ------------------- ------------------
<S> <C> <C> <C>
Joseph Benaroya.................................. -- -- *
William Brooks................................... -- -- *
Charles W. Costello.............................. 474,376 -- 1.3%
Karen Fast....................................... 58,467 10,834 *
Douglas S. Land.................................. 235,382 -- *
Ronald K. Machtley............................... -- -- *
Timothy S. Manney................................ 299,004 -- *
John A. Stanley.................................. -- 6,667 *
Frank D. Stella.................................. 25,750 41,598 *
Jerry L. Stone................................... 502,528 -- *
Nanjappa S. Venugopal............................ 39,613 -- *
Rajendra B. Vattikuti............................ 9,085,819 -- 24.4%
Directors and Executive Officers as a group (12
persons)....................................... 10,720,939 59,099 28.9%
</TABLE>
- -------------------------
* Less than 1% of CBSI's outstanding shares of common stock.
5
<PAGE> 10
PERSONS OWNING MORE THAN FIVE PERCENT
OF OUTSTANDING CBSI COMMON STOCK
This table lists those persons known to us to hold more than five percent
of our outstanding common stock as of March 24, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING SHARES
---------------- ------------------ ------------------
<S> <C> <C>
Pilgrim Baxter & Associates, Ltd. .......................... 1,748,600 5%*
825 Duportail Road, Wayne, PA 19037
Putnam Investment Management, Inc........................... 3,691,015 10%**
One Post Office Square, Boston, MA 02109
</TABLE>
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* As reported on Form 13G dated February 8, 1999.
** As reported on Form 13G dated January 26, 1999.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The CBSI compensation committee is comprised of three directors who are not
employees of the company. The Compensation Committee is responsible for the
approval and administration of compensation programs for CBSI's executive
officers. In conducting its review of executive compensation matters, the
committee utilizes the outside compensation data and advisory services of
certain independent compensation consultants. CBSI's compensation policy for
executive officers is intended to:
- provide competitive compensation packages in order to attract and
retain superior executive talent;
- link a significant portion of an executive's overall compensation to
financial results as reflected in the value returned to
shareholders; and
- provide long-term equity compensation to align the interests of
executive officers with those of shareholders and reward successful
performance.
CASH COMPENSATION
Cash compensation for CBSI executive officers is based primarily on an
analysis of competitive executive compensation. The Compensation Committee
relies upon general business compensation surveys to determine appropriate
compensation ranges. The Committee also relies upon the analyses of independent
compensation consultants to determine the appropriate level of cash compensation
for executive officers.
CBSI's policy is to pay its executive officers at the competitive averages
for comparable positions. Compensation levels for individual executive officers,
may be greater or less than competitive averages, depending upon a subjective
assessment of individual factors such as the executive's position, skills,
achievements, tenure with the Company and other historical factors.
EQUITY COMPENSATION
CBSI provides equity compensation to its executive officers principally
through its 1996 Stock Option Plan. Option awards under the 1996 Stock Option
Plan are determined based upon the achievement of various predetermined goals of
CBSI relating to budgeted financial performance or the achievement of operating
targets and goals. Generally, awards under the 1996 Stock Option Plan vest over
a four year period to ensure that the decisions made by officers consider the
long-term best interests and continued financial and operational growth and
achievement of CBSI.
Awards of stock options to executive officers during the year under the
1996 Stock Option Plan are made at the then current fair market value of CBSI
common stock as quoted on the Nasdaq National Market.
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<PAGE> 11
Making awards at the then current fair market value ensures that the options
only become valuable upon the continued appreciation of the CBSI stock price. In
administering the 1996 Stock Option Plan in this manner, the Compensation
Committee strives to align the interests of executive officers with the
interests of shareholders.
CHIEF EXECUTIVE OFFICER'S COMPENSATION.
Mr. Vattikuti's salary for 1998 was $425,000, which is based in part on the
employment agreement signed in 1996. Mr. Vattikuti also received a cash bonus of
$425,000 for 1998. The cash bonus was based on the achievement of certain
earnings per share targets. Mr. Vattikuti also was granted options to by 20,000
shares of common stock at an exercise price of $22.75 per share. The options
vest in four equal annual installments.
Compensation Committee
John Stanley
Ronald Machtley
Frank Stella
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Company had no compensation committee interlocks.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
SINCE MARCH 5, 1997, INITIAL PUBLIC OFFERING
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
5-Mar-97 Dec-97 Dec-98
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Complete Business Solutions $100.00 $355.10 $553.07
S&P 500 $100.00 $122.75 $157.83
Russell 2000 Technology $100.00 $110.28 123.52
------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 12
EXECUTIVE COMPENSATION TABLE
The table below shows the compensation paid to Rajendra B. Vattikuti, Chief
Executive Officer and President and the next four most highly compensated
executive officers of CBSI.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER OPTIONS (#) COMPENSATION(4)
--------------------------- ------ ------ ----- ----- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Rajendra B. Vattikuti........... 1998 $425,000 $425,000 $12,136(1) 20,000 $4,075
President and 1997 $350,000 $350,000 $16,788(2) -- $3,800
Chief Executive Officer 1996 $411,000 $288,000 $14,729(3) -- $3,800
Timothy S. Manney............... 1998 $225,000 $225,000 -- 15,000 $3,845
Executive Vice President 1997 $180,000 $108,000 -- $3,800
of Finance and Administration, 1996 $150,000 $ 50,000 $ 2,746(5) $3,800
Treasurer
Karen Fast...................... 1998 $250,000 $125,000 -- 50,000 $ 580
Executive Vice President, 1997 $250,000 -- -- -- $ 625
U.S. Consulting West 1996 $208,000 -- -- 15,510 $1,250
Nanjappa S. Venugopal........... 1998 $160,000 $ 50,000 -- -- $1,302
Director of Human Resources 1997 $125,000 $ 40,000 -- -- $ 692
1996 $100,000 $ 35,000 -- 59,422 $3,240
Joseph Benaroya(6).............. 1998 2,848 -- -- -- --
Executive Vice President, 1997 -- -- -- -- --
U.S. Consulting East. 1996 -- -- -- -- --
</TABLE>
- -------------------------
(1) Represents the personal use of corporate cars.
(2) Includes $4,688 representing the imputed value of certain health and life
insurance benefits provided by the Company to Mr. Vattikuti and $12,100
representing the personal use of corporate cars.
(3) Includes $3,576 representing the imputed value of certain health and life
insurance benefits provided by the Company to Mr. Vattikuti and $11,153
representing the personal use of corporate cars. It does not include
benefits from certain non-interest bearing loan outstanding during 1996.
(4) Represents the amount of contribution by the Company on behalf of such
individual to the Company's 401(k) Plan.
(5) Represents the imputed value of certain health and life insurance benefits
provided by the Company.
(6) Joined CBSI on December 14, 1998.
8
<PAGE> 13
OPTIONS GRANTED DURING 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
% OF TOTAL OPTIONS APPRECIATION FOR
NUMBER OF SECURITIES GRANTED TO OPTION TERM
UNDERLYING OPTION EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR PRICE(2)(3) DATE 5% 10%
---- -------------------- ------------------ ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Rajendra B.
Vattikuti............ 20,000 * $22.75 11/6/08 $286,147 $ 725,153
Timothy S. Manney...... 15,000 * 22.75 11/6/08 $214,610 $ 543,865
Karen Fast............. 50,000 2.4% 22.75 11/6/08 $715,368 $1,812,822
Nanjappa S.
Venugopal............ -- -- 0 11/6/08 -- --
Joseph Benaroya........ -- -- 0 11/6/08 -- --
</TABLE>
- -------------------------
* Less than 1%.
(1) The dollar amounts indicated in these columns are the result of calculations
required by the rules of the Securities and Exchange Commission which assume
specified stock value appreciation. These growth rates are not intended by
CBSI to forecast future stock price appreciation of CBSI common stock.
(2) The exercise price equals the fair market value of CBSI common stock as of
the date the options are granted as determined by the Compensation
Committee.
(3) Options are exercisable in four equal annual installments commencing on the
date the option was granted..
OPTION EXERCISES AND 1998 YEAR-END VALUES
The following table shows the number and value of stock options (exercised
and unexercised) for the listed executive officers who exercised options during
1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END(#) AT YEAR END($)(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Karen Fast............ 94,633 $1,332,508 10,834 57,755 $214,225 $668,969
Nanjappa S.
Venugopal........... 19,807 $ 401,884 -- 19,809 -- $587,634
</TABLE>
- -------------------------
(1) Calculated based upon the share price of CBSI common stock on December 31,
1998 of $33.875 less the option exercise price. An option is in-the-money
when the market value of CBSI common stock exceeds the exercise price of the
option.
TRANSACTIONS WITH MANAGEMENT
During 1998, CBSI paid approximately $654,000 for consulting services
provided by the Chesapeake Group, an entity affiliated with Douglas S. Land.
OTHER INFORMATION
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the executive
officers, directors and persons who own more than 10% of the Company's stock to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. The regulations of the Securities and Exchange Commission
require CBSI to identify anyone who filed a required report late during 1998.
Based solely on review of reports furnished to CBSI and written representations
that no other reports were required during 1998, all Section 16(a) filing
requirements were met except that Mr. Vattikuti filed a Form 5 late, and Messrs.
Brooks and Stone filed their initial Form 3 late.
9
<PAGE> 14
SHAREHOLDER PROPOSALS
Shareholders of CBSI that want to present a proposal to be considered at
the 2000 annual meeting should send the proposal to Thomas E. Sizemore,
Secretary of CBSI at 32605 West Twelve Mile Road, Suite 250, Farmington Hills,
MI 48334 by registered, certified or express mail. Proposals must be received
prior to December 31, 1999.
10
<PAGE> 15
MAP TO THE RITZ-CARLTON, DEARBORN, MI
DIRECTIONS TO THE RITZ-CARLTON, DEARBORN, MICH.
*The hotel is a tall dusty rose colored building on the corner of
Southfield Expressway service drive and Hubbard Drive.
From Detroit-Metro Airport
Take I-94 East toward Detroit to Southfield Expressway (M-39) North. Go
approximately 2-3 miles to the Michigan Ave. exit. Exit the freeway on to the
service drive of the Southfield Expressway continuing north to the first light
which will be Hubbard Drive. We will be on the left hand side. You may enter the
hotel from Hubbard or the southbound Southfield service drive.
From Downtown Detroit
Take I-94 West (Toward Chicago) to Ford Road West. Take Ford Road West to the
Southfield Expressway South. Exit on to the service drive and continue south to
the first light, which will be Hubbard Drive. We will be on the right side. You
may enter the hotel from Hubbard Drive or cross through the light and turn right
into the first driveway and then turn right again into the first drive you come
to and you will be in front of the hotel.
From the South
Take I-75 North to Southfield Road North. Southfield Rd. will turn into
Southfield Expressway (M-39). Continue north on the expressway for 2-3 miles to
the Michigan Ave. exit. Exit at Michigan but stay on the service drive of
Southfield continuing north to the first light. That light will be Hubbard
Drive. We will be on the left side.*
From the North
Take I-96 East to Southfield Expressway (M-39) South. Continue south to the Ford
Road Exit. Do not turn on Ford Road. Stay on the Southfield Expressway service
drive to the first light. This light is Hubbard Drive. We will be on your
right.*
11
<PAGE> 16
COMPLETE BUSINESS SOLUTIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Complete Business Solutions, Inc. appoints
Timothy S. Manney, Thomas E. Sizemore and Rajendra B. Vattikuti or any of them,
proxies for the undersigned, with full power of substitution, to vote the
common stock of the Company which the undersigned would be entitled to vote as
of the close of business on March 24, 1999 at the Annual Meeting of
Stockholders to be held on Tuesday, May 4, 1999.
CONTINUED AND TO BE SIGNED ON THE OTHER SIDE
-----------
|SEE REVERSE|
| SIDE |
-----------
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
<PAGE> 17
<TABLE>
<S><C>
|X| PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
IF NO CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF MANAGEMENT'S FOUR NOMINEES AS DIRECTORS.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of | | | | Nominees: 2. Ratify appointment of Arthur Andersen LLP | | | | | |
Directors William Brooks as independent auditors for fiscal year 1999
Ronald K. Machtley
For, except vote withheld John A. Stanley
from the following nominee(s): Jerry Stone I will attend | |
meeting
- --------------------------------
The Undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and the Proxy
Statement furnished therewith.
PLEASE FILL IN DATE, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
------------------------------------------------------
------------------------------------------------------
NOTE: PLEASE SIGN NAME EXACTLY AS YOUR NAME APPEARS ON THE STOCK SIGNATURE(S) DATE
CERTIFICATE. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE THAN ONE
TRUSTEE, ALL SHOULD SIGN. ALL JOINT OWNERS MUST SIGN.
- -----------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
ADMISSION TICKET
Complete Business Solutions, Inc.
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, May 4, 1999 at 9:00 AM
The Ritz Carlton, Dearborn
300 Town Center Drive
Dearborn, MI 48126
This ticket admits the named Shareholder(s) and one guest. Photocopies will
not be accepted. You may be asked for identification at the time of admission.
</TABLE>
