<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number 0-22903
SYNTEL, INC.
(Exact name of Registrant as specified in its charter)
Michigan 38-2312018
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2800 Livernois Road, Suite 400, Troy, Michigan 48083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 619-2800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
--------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the Registrant
has been required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates
of the Registrant as of March 18, 1999, based on the last sale price of $8.688
per share for the Common Stock on the NASDAQ National Market on such date, was
approximately $44,133,675. As of March 18, 1999, the Registrant had 38,135,973
shares of Common Stock outstanding.
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SYNTEL, INC.
FORM 10-K/A
INDEX
Page
PART III
Item 10 Directors and Executive Officers of Registrant . . . . . . . . . . 3
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 5
Item 12 Security Ownership of Certain Beneficial Owners and Management . . 7
Signatures 9
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Amendment No. 1
to the Form 10-K filed by
Syntel, Inc. on March 31, 1999
The following items were omitted from the Form 10-K filed by Syntel,
Inc. on March 31, 1999. That Form 10-K is hereby amended to include the
information set forth below. Capitalized terms used but not defined in this
Amendment No. 1 are as defined in the Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Board of Directors is composed of three classes of members, each
class being as nearly equal in number as possible. One class of directors is
elected each year to hold office for a three-year term and until successors of
such class are duly elected and qualified. There are currently five members of
the Board.
Two directors are to be elected at the Annual Meeting to serve for a
term ending at the 2002 Annual Meeting of Shareholders. The nominees named below
have been selected by the Board of Directors. Except where the authority to do
so has been withheld, it is the intention of the persons named in the Company's
proxy to vote to elect the nominees as directors.
The persons receiving a plurality of the votes cast at the Annual
Meeting in person or by proxy will be elected as directors. "Plurality" means
that the nominee who receives the largest number of votes cast is elected as a
director. Shares not voted (whether by abstention, broker non-votes or
otherwise) have no effect on the election. In case a nominee is unable or
declines to serve, proxies will be voted for such other person as shall be
designated by the Board of Directors to replace such nominee. However, the Board
of Directors does not anticipate this will occur.
Information concerning the nominees for election and the directors
continuing in office, with respect to age and positions with the Company or
other principal occupations for the past five years follows. Mr. Desai and Ms.
Sethi have been directors of the Company since its formation in 1980. Messrs.
Mrkonic, Van Houweling, and Choksi were appointed by the Board to fill vacancies
created upon increasing the size of the Board after completion of the Company's
initial public offering in August 1997.
NOMINEES FOR ELECTION AS DIRECTORS UNTIL THE 2002 ANNUAL MEETING
NEERJA SETHI, age 44, is a co-founder of the Company and has served as
its Vice President, Corporate Affairs and as a director since the Company's
formation in 1980, and as Secretary and Treasurer from 1980 to March 1996. Ms.
Sethi is the spouse of Mr. Desai.
DOUGLAS E. VAN HOUWELING, age 54, has been Chief Executive Officer and
President of the University Corporation for Advanced Internet Development
(UCAID) since November 1997. UCAID is the not for profit organization created by
the higher education community to support continued development of the Internet
through the Internet2 project. Dr. Van Houweling is on leave from the University
of Michigan where he is Professor of Information. From December
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1984 until November 1997, he was Vice Provost for Information and Technology and
from 1995 until November 1997 he was the Dean for Academic Outreach, both at the
University of Michigan.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2000 ANNUAL MEETING
BHARAT DESAI, age 46, is a co-founder of the Company and has served as
its President and Chief Executive Officer and as a director since its formation
in 1980, and as Chairman of the Board since February 1999. Mr.
Desai is the spouse of Ms. Sethi.
PARITOSH K. CHOKSI, age 46, is Chief Financial Officer/financial
consultant for Wink Communications, a developer of interactive television, and
has served in those capacities since December 1997. From 1977 through December
1997, Mr. Choksi was associated with the Phoenix American group of companies,
and at the end of that period served as Phoenix American's Senior Vice
President, Chief Financial Officer, and Treasurer and as a director.
DIRECTOR WHOSE TERM CONTINUES UNTIL THE 2001 ANNUAL MEETING
GEORGE R. MRKONIC, age 46, is Vice Chairman of Borders Group, Inc., a
retailer of books and music located in Ann Arbor, Michigan. From November 1994
to January 1997, Mr. Mrkonic was also the President of Border's Group, Inc. From
November 1990 to November 1994, Mr. Mrkonic was Executive Vice President,
Specialty Retail Group at Kmart Corporation, Troy, Michigan. Mr. Mrkonic is also
a director of Borders Group, Inc., Champion Enterprises, Inc. and Chief Tickets,
Inc.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid $2,000 per
Board meeting and $500 per Committee meeting, and all directors are reimbursed
for travel expenses incurred in connection with attending Board and Committee
meetings. Each non-employee director is granted an option to purchase 6,000
shares of the Company's Common Stock, which vests over a period of four years,
under the Company's 1997 Stock Option and Incentive Plan at the first Board
meeting they attend and at each subsequent four year anniversary.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC") and the NASDAQ Stock Market. Officers, directors and
greater than ten percent shareholders are required by regulations of the SEC to
furnish the Company copies of all Section 16(a) forms they file.
Based solely on the Company's review of copies of such forms received
by it, or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that, except for the
following, its officers, directors and greater than ten percent beneficial
owners met all applicable filing requirements during the last fiscal year.
Timothy D. Webb, a former executive officer of the Company, made a late filing
of his initial Form 3.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning the
compensation of the Company's Chief Executive Officer and the other four most
highly compensated executive officers of the Company for the last three fiscal
years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
- ------------------------------------------------------------------------- ------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS (#) ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bharat Desai, Chairman, President, and 1998 $300,000 $600,000 -0- -0-
Chief Executive Officer................... 1997 $395,682 (1) $200,000 -0- -0-
1996 $420,000 $350,000 -0- -0-
Neerja Sethi, Vice President, 1998 $ 94,000 (1) $300,000 -0- -0-
Corporate Affairs......................... 1997 $270,000 (1) $100,000 -0- -0-
1996 $360,000 $250,000 -0- -0-
Jay Clark, Vice President, Global 1998 $150,000 $ 70,000 -0- $1,020(3)
Applications Management................... 1997 $153,333 $ 50,000 37,500 -0-
1996 $145,000 $ 17,500 -0- -0-
Daniel M. Moore, Chief Administrative 1998 $144,708 $ 75,000 -0- $1,800(3)
Officer and Secretary..................... 1997 $139,375 $ 65,000 45,000 -0-
1996 $ 87,619 (2) $ 25,000 -0- -0-
John Andary, Chief Financial Officer 1998 $149,167 $ 60,000 -0- $2,660(3)
and Treasurer............................. 1997 $135,417 $ 50,000 45,000 -0-
1996 $127,500 $ 10,000 -0- -0-
</TABLE>
(1) Effective in August, 1997, Mr. Desai and Ms. Sethi began receiving an
annual salary of $300,000 and $96,000, respectively. Due to 1997 year end
timing issues, Ms. Sethi's 1998 salary was adjusted downward by $2,000 to
reverse an excess payment of $2,000 in 1997.
(2) Mr. Moore joined the Company in March 1996.
(3) These amounts reflect payments by the Company for life insurance upon the
named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL PERIOD
The Company did not grant any stock options or stock appreciation
rights to the persons named in the Summary Compensation Table during the last
fiscal year.
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AGGREGATED FISCAL YEAR-END OPTION VALUES
The following table provides information regarding the exercise of
stock options and the value of unexercised in-the-money options held at the end
of the last fiscal year by the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Shares Value Number of Securities Value of Unexercised In-The-
Acquired On Realized Underlying Money
Exercise (#) ($) Unexercised Options at Fiscal Options at Fiscal Year-End ($)
------------------------------ ---------------------------------
Year-End (#) (1)
------------ ---
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bharat Desai ....
Neerja Sethi .... -0- -0- -0- -0- -0- -0-
Jay Clark ....... -0- -0- -0- -0- -0- -0-
Daniel M. Moore -0- -0- 3,750 33,750 $ 26,918 $242,258
John Andary ..... 1,500 $40,438 3,000 40,500 $ 15,930 $278,100
-0- -0- 4,500 40,500 $ 30,900 $278,100
</TABLE>
(1) Assumes a market price of $11.31 per share, which was the last sale price
on December 31, 1999. At April 19, 1999 the last sale price was $7.81 per
share.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock from August 12, 1997, the date of the initial public
offering of the Common Stock, through December 31, 1998, the end of the
Company's fiscal year, to the cumulative total shareholder returns for the S&P
500 Stock Index and for an index of peer companies selected by the Company for
the same period of time. The peer group index is composed of Cambridge
Technology Partners, Inc., CIBER, Inc., Computer Horizons Corp., Computer
Sciences Corporation, Electronic Data Systems Corporation, Keane, Inc., and
Sapient Corporation. These companies were selected based on similarities in
their service offerings and their competitive position in the industry.
COMPARISON OF CUMULATIVE TOTAL RETURN FROM AUGUST 12, 1997
THROUGH DECEMBER 31, 1998 AMONG SYNTEL, INC., S&P 500 STOCK INDEX
AND AN INDEX OF PEER COMPANIES *
[INSERT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
8/12/97 12/31/97 12/31/98
------- -------- --------
<S> <C> <C> <C>
Syntel, Inc. $100 $106 $126
S&P 500 Stock Index $100 $105 $133
Peer Group Index $100 $123 $137
</TABLE>
- -----------------------
* Assumes that the value of an investment in the Company's Common Stock and each
index was $100 on August 12, 1997 and that all dividends were reinvested.
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EMPLOYMENT AGREEMENTS
MR. DESAI AND MS. SETHI. The Company is a party to employment
agreements with Mr. Desai and Ms. Sethi through December 31, 1999, pursuant to
which they will continue to serve the Company in their current positions, at
initial salaries of $300,000 and $96,000, respectively. Salaries during calendar
year 1999 will be determined by the Compensation Committee of the Board of
Directors, as will annual bonuses throughout the employment term. The agreements
provide that upon termination of employment by the Company for reasons other
than for cause (as defined in the agreements), or death, disability or
incapacity, the Company shall pay the executive for his or her then salary for
the remaining term of the agreement, without reduction for any compensation
received from other sources. Under the agreements, Mr. Desai and Ms. Sethi are
subject to noncompetition, nonsolicitation, and nondisclosure covenants during
the employment term and for two years following termination of employment.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
PRINCIPAL SHAREHOLDERS
The following table provides information about any person known by
management of the Company to have been the beneficial owner of more than five
percent of the Company's outstanding Common Stock as of April 19, 1999.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OWNERSHIP OF CLASS
-------------------- ------------ --------
<S> <C> <C>
Neerja Sethi......................................... 19,786,350(1) 51.9%
Bharat Desai......................................... 13,176,150(2) 34.6%
</TABLE>
- ------------------------------
(1) Includes 9,932,138 shares of Common Stock held in several trusts for
the benefit of Ms. Sethi and her descendants, of which trusts Ms. Sethi
is a trustee, and 10,500 shares held in several educational trusts for
the benefit of unrelated individuals, of which Ms. Sethi is also the
trustee. Ms. Sethi disclaims beneficial ownership of shares held by her
spouse, Mr. Desai. The business address of Ms. Sethi is Suite 400, 2800
Livernois, Troy, Michigan 48083.
(2) Includes 150,000 shares of Common Stock held in several trusts for the
benefit of Mr. Desai's descendants, of which trusts Mr. Desai is a
trustee, and 5,400 shares held in several educational trusts for the
benefit of individuals related to Mr. Desai, of which Mr. Desai is also
the trustee. Mr. Desai disclaims beneficial ownership of shares held by
his spouse, Ms. Sethi. The business address of Mr. Desai is Suite 400,
2800 Livernois, Troy, Michigan 48083.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table provides information, as of April 19, 1999, about
the beneficial ownership of the Company's Common Stock by the nominees, present
directors and named executive officers of the Company, and by all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Percent of
Name Owned(l) Class
- ------------------------------- ------------ ----------
<S> <C> <C>
John Andary ............................................................. 9,000 *
Paritosh K. Choksi ...................................................... 44,250 *
Jay Clark ............................................................... 11,350 *
Bharat Desai............................................................. 13,176,150(2) 34.5%(4)
Daniel M. Moore ......................................................... 9,530 *
George R. Mrkonic ....................................................... 33,000 *
Neerja Sethi............................................................. 19,786,350(3) 51.8%(4)
Douglas E. Van Houweling ................................................ 3,000 *
All directors and executive officers as a group (12 persons)............. 33,110,380 86.7%
</TABLE>
- ---------------------------
* Less than 1%
(1) The number of shares shown in the table includes the following number
of shares which the person specified may acquire by exercising options
which were unexercised on April 19, 1999: John Andary, 7,500; Paritosh
K. Choksi, 3,000; Jay Clark, 6,750; Daniel M. Moore, 6,000; George R.
Mrkonic, 3,000; Douglas E. Van Houweling, 3,000; and all directors and
executive officers as a group, 52,500.
(2) Includes 150,000 shares of Common Stock held in several trusts for the
benefit of Mr. Desai's descendants, of which trusts Mr. Desai is a
trustee, and 5,400 shares held in several educational trusts for the
benefit of individuals related to Mr. Desai, of which Mr. Desai is also
the trustee. Mr. Desai disclaims beneficial ownership of shares held by
his spouse, Ms. Sethi.
(3) Includes 9,932,138 shares of Common Stock held in several trusts for
the benefit of Ms. Sethi and her descendants, of which trusts Ms. Sethi
is a trustee, and 10,500 shares held in several educational trusts for
the benefit of unrelated individuals, of which Ms. Sethi is also the
trustee. Ms. Sethi disclaims beneficial ownership of shares held by her
spouse, Mr. Desai.
(4) Percentages vary between this table and the preceding table because,
when calculating percentages, this table includes exercisable but
unexercised options in the total number of shares outstanding.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SYNTEL, INC.
By: /s/ Bharat Desai
--------------------
Bharat Desai
Dated: May 10, 1999 Chairman, President, and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Bharat Desai Chairman, President, and May 10, 1999
- ------------------- Chief Executive Officer
Bharat Desai (principal executive officer)
/s/ John Andary Chief Financial Officer May 10, 1999
- ------------------- (principal financial and
John Andary chief accounting officer)
/s/ Neerja Sethi Director and Vice President, May 10, 1999
- ------------------- Corporate Affairs
Neerja Sethi
/s/ Paritosh K. Choksi Director May 10, 1999
- ----------------------
Paritosh K. Choksi
/s/ Douglas VanHouweling Director May 10, 1999
- ------------------------
Douglas Van Houweling
/s/ George R. Mrkonic Director May 10, 1999
- ------------------------
George R. Mrkonic
