<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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
EDUTREK INTERNATIONAL, 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[EDUTREK INTERNATIONAL, INC. LETTERHEAD]
June 2, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of your Company, which will be held on Friday, June 23, 2000 at 10:00 a.m.,
Eastern Time, at the Company's offices at 6600 Peachtree-Dunwoody Road, Embassy
Row 500, Atlanta, Georgia.
The formal notice of the meeting and the proxy statement appear on the
following pages and describe the matters to be acted upon. Time will be provided
during the meeting for discussion and you will have an opportunity to ask
questions about your Company.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
notice of the meeting and proxy statement, please complete, sign, date and
return the enclosed proxy card at your earliest convenience. Returning the
signed and dated proxy card will not prevent you from voting in person at the
meeting should you later decide to do so.
Sincerely,
/s/ Steve Bostic
Steve Bostic
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
EDUTREK INTERNATIONAL, INC.
6600 Peachtree-Dunwoody Road
Embassy Row 500
Atlanta, Georgia 30328
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 23, 2000
To the Holders of Common Stock of EDUTREK INTERNATIONAL, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of
EduTrek International, Inc., a Georgia corporation (the "Company"), will be held
at the Company's offices at 6600 Peachtree-Dunwoody Road, Embassy Row 500,
Atlanta, Georgia 30328 on Friday, June 23, 2000 at 10:00 a.m. Eastern Time for
the following purposes:
(1) To elect seven (7) directors to serve until the next annual meeting of
shareholders and until their successors have been elected and qualified;
(2) To transact such other business as may be properly brought before the
meeting or any adjournments or postponements thereof.
Only shareholders of record as of the close of business on May 8, 2000
will be entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
By Order of the Board of Directors
/s/ David J. Horn
David J. Horn
Secretary
Atlanta, Georgia
June 2, 2000
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED PROXY IN
THE ACCOMPANYING POSTAGE PAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 4
EDUTREK INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
June 23, 2000
----------------------------------------------
PROXY STATEMENT
----------------------------------------------
This proxy statement and form of proxy, which are first being mailed to
shareholders on or about June 2, 2000, are furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of EduTrek
International, Inc. (the "Company"), for use at the Annual Meeting of
Shareholders of the Company to be held at the Company's offices at 6600
Peachtree-Dunwoody Road, Embassy Row 500, Atlanta, Georgia, on Friday June 23,
2000, at 10:00 a.m. Eastern Time and at any or all adjournments or postponements
thereof. The address of the principal executive offices of the Company is 6600
Peachtree-Dunwoody Road, Embassy Row 500, Atlanta, Georgia 30328 and the
Company's telephone number is (404) 965-8000.
The cost of this solicitation will be borne by the Company. In addition
to the mails, proxies may be solicited by officers and regular employees of the
Company, without remuneration, by personal interviews, telephone and facsimile.
It is anticipated that banks, brokerage houses and other custodians, nominees
and fiduciaries will forward soliciting material to beneficial owners of stock
entitled to vote at the meeting, and such persons will be reimbursed for the
out-of-pocket expenses incurred by them in this connection.
Any proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice of his election to
vote in person, without compliance with any other formalities. In addition, any
proxy given pursuant to this solicitation may be revoked prior to the meeting by
delivering to the Secretary of the Company an instrument revoking it or a duly
executed proxy for the same shares bearing a later date. Proxies which are
returned properly executed and not revoked will be voted and will be voted in
accordance with the shareholder's directions specified thereon. Where no
direction is specified, proxies will be voted FOR the election of the nominees
for director named herein, and on other matters presented for a vote, in
accordance with the judgment of the persons acting under the proxies.
Abstentions and broker non-votes are counted as present for the purpose of
determining the presence of a quorum for the transaction of business. For the
purpose of determining the number of shares voting on a particular proposal,
abstentions are counted as shares voting, whereas broker non-votes are not
counted as shares voting.
Only shareholders of record at the close of business on May 8, 2000 will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
or postponements thereof. As of May 8, 2000, the Company had outstanding
4,535,095 shares of Class A Common Stock and 7,359,667 shares of Class B Common
Stock. Each share of Class A Common Stock issued and outstanding on the Record
Date is entitled to one vote while each share of Class B Common Stock issued and
outstanding on the Record Date is entitled to ten votes.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Based solely on information made available to the Company, the following
table sets forth certain information as of May 8, 2000 with respect to the
beneficial ownership of the Company's Common Stock by (i) each person known by
the Company to own beneficially more than five percent (5%) of any class of
outstanding Common Stock of the Company, (ii) each director of the Company,
(iii) each of the executive officers of the Company named in the Summary
Compensation table on page 6 of this Proxy Statement, and (iv) all directors and
executive officers of the Company as a group. Steve Bostic, the Company's
Chairman and Chief Executive Officer, and certain of his affiliates, are the
only holders of Class B Common Stock. Such shares are entitled to ten votes per
share. If at any time any shares of Class B Common Stock are beneficially owned
by any person other than Mr. Bostic (or entities controlled by him) or upon his
death, such shares automatically convert to an equal number of shares of Class A
Common Stock.
<TABLE>
<CAPTION>
Shares Beneficially Owned(1) Percent of Class Percent of
-------------------------- ------------------- Total Voting
Beneficial Owner Class A Class B Class A Class B Power
---------------- ------- --------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Steve Bostic ............... 42,000(2) 4,493,517(3) * 61.1% 57.6%
Alice Bostic ............... -- 2,866,150 -- 38.9 36.7
Stratford Capital Partners,
L.P.(4).................... 444,318 -- 9.8% -- *
Oregon Public Employees'
Retirement Fund............ 425,000(5) -- 9.4 -- *
Firstar Corporation ........ 362,500(6) -- 8.0 -- *
State Retirement and Pension
System of Maryland......... 255,000(7) -- 5.6 -- *
Frank Russell Company ...... 230,000(8) -- 5.0 -- *
Paul D. Beckham ............ 8,000(9) -- * -- *
Fred C. Davison ............ 4,350(9) -- * -- *
Ronald P. Hogan ............ 8,300(10) -- * -- *
Gaylen D. Kemp ............. 4,200(9) -- * -- *
Gerald Tellefsen ........... 5,800(10) -- * -- *
J. Robert Fitzgerald ....... 6,800(10) -- * -- *
Barbara S. Butterfield(11) . 18,000 -- * -- *
Tina A. Garrison ........... 6,000(12) -- * -- *
Daniel D. Moore(13) ....... -- -- * -- *
Rafael A. Lago ............. 11,400(14) -- * -- *
All executive officers and
directors as a group
(11 persons) .............. 86,850(15) 4,493,517 1.8% 61.1% 57.6%
</TABLE>
----------------------------
*Less than 1%.
(1) Unless otherwise indicated, each person has sole voting and investment
power as to all such shares. Shares of Common Stock underlying
exercisable options to purchase Common Stock are deemed to be
outstanding for the purpose of computing the outstanding Common Stock
owned by the particular person and by the group, but are not deemed
outstanding for any other purpose.
(2) Shares held by The Bostic Family Foundation, Inc. over which Mr. Bostic
exercises voting and investment power.
-2-
<PAGE> 6
(3) Includes 602,700 shares of Class B Common Stock owned by the Bostic
Family Limited Partnership over which Mr. Bostic exercises voting and
investment power. Mr. Bostic's business address is 6600
Peachtree-Dunwoody Road, Embassy Row 500, Atlanta, Georgia 30328.
(4) The business address of Stratford Capital Partners, L.P. is 200
Crescent Court, 16th Floor, Dallas, Texas 75201.
(5) Based upon a Schedule 13G dated February 22, 2000 filed by Oregon
Public Employees' Retirement Fund ("OPER"). The Schedule 13G reports
that OPER shares voting and dispositive power with respect to 425,000
shares. The Company makes no representation as to the accuracy or
completeness of the information reported. The business address of OPER
is 100 Labor and Industries Building, 350 Winter Street, Salem, Oregon
97310.
(6) Based upon a Schedule 13G/A dated February 14, 2000 filed by Firstar
Corporation ("Firstar"), Firstar Investment Research & Management Co.,
LLC and Firstar MicroCap Fund. The Schedule 13G/A states that Firstar
and Firstar Investment Research & Management Co., LLC have sole voting
and dispositive power with respect to 362,500 shares and that Firstar
MicroCap Fund has sole voting and dispositive power with respect to
309,500 shares. The Firstar MicroCap Fund is an open-end investment
company, the advisor of which is Firstar Investment Research &
Management Co., LLC. Firstar filed another Schedule 13G/A on May 12,
2000 which indicates that it no longer beneficially owns any shares of
Common Stock of the Company. The Company makes no representation as to
the accuracy or completeness of the information reported. The business
address of Firstar, Firstar Investment Research & Management Co., LLC
and Firstar MicroCap Fund is 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202.
(7) Based upon a Schedule 13G dated February 10, 1999 filed by the State
Retirement and Pension System of Maryland ("SRPSM"). The Schedule 13G
states that SRPSM has sole voting and shared dispositive power with
respect to the shares. The 13G also states that Wellington Management
Company, LLP acts as investment advisor to SRPSM. The Company makes no
representation as to the accuracy or completeness of the information
reported. The business address of SRPSM is 301 West Preston Street,
Room 901-A, Baltimore, Maryland 21201.
(8) Based upon a Schedule 13G dated February 16, 2000 filed by Frank
Russell Company ("FRC"). The Schedule 13G reports that FRC has sole
voting power and shared dispositive power with respect to 230,000
shares. It also reports that all such shares are owned by the Equity II
Fund of Frank Russell Trust Company, a non depository trust company.
FRC is the parent of Frank Russell Trust Company. The Company makes no
representations as to the accuracy or completeness of the information
reported. The business address of FRC is 909 A Street, Tacoma,
Washington 98402.
(9) Includes 4,000 shares of Class A Common Stock subject to presently
exercisable stock options.
(10) Includes 3,300 shares of Class A Common Stock subject to presently
exercisable stock options.
(11) Ms. Butterfield resigned all positions with the Company effective
December 31, 1999.
(12) Represents shares of Class A Common Stock subject to presently
exercisable stock options.
(13) Mr. Moore resigned all positions with the Company effective September
30, 1999.
(14) Includes 5,600 shares of Class A Common Stock subject to presently
exercisable stock options.
(15) Includes 29,300 shares of Class A Common Stock subject to presently
exercisable stock options.
There are no arrangements known to the Company, the operation of which may, at a
subsequent date, result in a change in control of the Company.
-3-
<PAGE> 7
AGENDA ITEM ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company, pursuant to the Company's Bylaws,
has set the number of directors to serve for the next year at seven, all of whom
are to be elected at the Annual Meeting. Proxies received will be voted for all
the nominees named below, unless authority to do so is withheld. In the event
any nominee is unable or declines to serve as a director at the time of the
meeting, the persons named as proxies therein will have discretionary authority
to vote the proxies for the election of such person or persons as may be
nominated in substitution by the present Board of Directors. Management knows of
no current circumstances which would render any nominee named herein unable to
accept nomination or to serve if elected.
Members of the Board of Directors are elected annually to serve until
the next annual meeting of shareholders and until their successors are elected
and qualified. Directors will be elected by a plurality of the votes cast by the
shares entitled to vote on the election of directors.
The following persons have been nominated by management for election to
the Board of Directors:
STEVE BOSTIC, age 56, has served as Chairman of the Board and Chief
Executive Officer of the Company since its inception in July 1996. Since October
1996, Mr. Bostic has also served on the Governing Board of American
InterContinental University ("AIU"), and since June 1997, Mr. Bostic has served
as the President of AIU. Prior to founding the Company in 1996, from 1993 to
1996, Mr. Bostic was the Chairman of the Board of EduTrek Systems, Inc. and,
from 1989 to 1993, Mr. Bostic was the Chairman of the Board of Delphi
Technology, Inc., a company specializing in the scientific development and
application of cognitive-based learning systems. Mr. Bostic was the principal
owner and Chairman of American Photo Group, an operator of consumer photo
processing labs, from 1981 to 1987. In addition, Mr. Bostic serves as a member
of the Board of Trustees of Presbyterian College, the Dean's Advisory Council of
the Indiana University School of Business and the Board of the School of Public
Policy at Georgia Institute of Technology. Mr. Bostic has more than ten years of
experience in the educational arena.
PAUL D. BECKHAM, age 56, has served as a Director of the Company since
June 1997. Since 1993, Mr. Beckham has been the co-owner, Chairman and Chief
Executive Officer of Hope-Beckham, Inc., a public relations and business
consulting firm in Atlanta, Georgia. From 1970 to 1993, Mr. Beckham served in
various capacities with Turner Broadcasting System, Inc., including as the
Senior Financial Officer and President of Turner Cable Sales, a subsidiary
responsible for selling the company's programming to cable operators. Mr.
Beckham is the chairman-elect of the Board of Trustees of Young Harris College
and a member of the Sports Advisory Board of Georgia State University.
FRED C. DAVISON, age 70, has served as a Director of the Company since
June 1997 and has served on AIU's Governing Board since October 1996. Dr.
Davison has a Ph.D. in biochemistry and pathology and has served as the
President and Chief Executive Officer of the National Science Foundation,
Augusta, Georgia since 1988. From July 1967 through June 1986, Dr. Davison
served as the President of the University of Georgia. Dr. Davison is currently a
member of the Board of Trustees of Presbyterian College as well as the Augusta
Chamber of Commerce, the Southeastern Natural Science Academy and other civic
organizations
GAYLEN D. KEMP, age 47, has served as a Director of the Company since
June 1997 and has served on AIU's Governing Board since October 1996. Ms. Kemp
has been Of Counsel in the Atlanta, Georgia office of the law firm of Dow,
Lohnes & Albertson since January 1996. From 1987 to December 1995, Ms. Kemp was
a partner in the law office of Dow, Lohnes & Albertson practicing with a focus
on mergers and divestitures, financial transactions and public and private
securities offerings. Ms. Kemp was a member of
-4-
<PAGE> 8
the Executive Committee of the Corporate and Banking Law Section of the State
Bar of Georgia from 1989 to 1998 and served as Chairperson of the Section from
1993 to 1994. Ms. Kemp is currently a member of the Executive Committee of the
Board of Directors of the Atlanta Legal Aid Society.
J. ROBERT FITZGERALD, age 60, has served as a Director of the Company
since October 1997. Mr. Fitzgerald retired as Vice President - Corporate
Responsibility and Compliance with BellSouth Corporation in October 1996. Mr.
Fitzgerald served in various capacities with BellSouth and its predecessors from
1970 to 1996. Since his retirement, Mr. Fitzgerald has been involved in numerous
civic activities.
RONALD P. HOGAN, age 59, has served as a Director of the Company since
October 1997. Since August 1995, Mr. Hogan has served as President and Chief
Executive Officer of Saint Joseph's Health System, Atlanta, Georgia. From April
1994 to August 1995, Mr. Hogan was an investment advisor with the Wilkinson
Group, Atlanta, Georgia. Mr. Hogan worked for the Georgia Pacific Corporation
for 27 years, retiring in 1992 from the position as their Vice Chairman.
GERALD TELLEFSEN, age 61, has served as a Director of the Company since
October 1997. Since 1984, Mr. Tellefsen has been Chief Executive Officer of the
Tellefsen Consulting Group, Inc., a company based in New York City which serves
as a consultant to the financial industry.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT.
COMMITTEES OF THE BOARD AND MEETINGS
The Company's Board of Directors presently has the following standing
committees:
(A) The Audit Committee, currently composed of Ms. Kemp and Messrs.
Beckham and Davison. The Audit Committee, which held three meetings during 1999,
is responsible for reviewing the internal and external financial reporting of
the Company, reviewing the scope of the independent audit and considering
comments by the auditors regarding internal controls and accounting procedures
and management's response to these comments.
(B) The Compensation Committee, currently composed of Ms. Kemp and
Messrs. Fitzgerald and Tellefsen. The Compensation Committee, which held six
meetings during 1999, is responsible for reviewing and making recommendations to
the Board of Directors regarding salaries, compensation and benefits of
executive officers and key employees of the Company.
The Company does not have a Directors Nominating Committee, that
function being reserved to the entire Board of Directors.
During 1999, the Board of Directors held a total of six meetings and
acted fourteen times by unanimous written consent. Each incumbent director
attended at least 75% of the aggregate number of meetings held by the Board and
by the Committees of the Board on which he or she served during 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons who own more than 10% of the
outstanding Common Stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of the
Company held by such persons. Officers, directors and greater than 10%
shareholders are also required to
-5-
<PAGE> 9
furnish the Company with copies of all forms they file under this regulation. To
the Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and representations that no other reports were
required, during fiscal 1999, all Section 16(a) filing requirements applicable
to its officers, directors and greater than 10% shareholders were complied with
except that Ms. Garrison failed to timely file a Form 3 upon becoming an
executive officer, Mr. Beckham failed to timely file a Form 4 with respect to
two transactions and Messrs. Beckham, Davison, Hogan, Tellefsen, Fitzgerald and
Ms. Kemp, failed to timely file a Form 5 to report an option grant.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and the four next most highly compensated officers whose
cash compensation during fiscal 1999 exceeded $100,000 (the "Named Executive
Officers"), for (i) fiscal 1999, (ii) the 12-month period ended December 31,
1998 (shown because during calendar year 1998, but after the end of the fiscal
year on May 31, 1998, the Company changed its fiscal year end from May 31 to
December 31), and (iii) fiscal 1998, which ended May 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION PERIOD SALARY BONUS OPTIONS COMPENSATION(1)
--------------------------- ------ ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Steve Bostic ...................... Fiscal 1999 $250,000 -- -- --
Chairman and Chief 12/31/97-12/31/98 250,007(2) -- -- --
Executive Officer Fiscal 1998 250,000 -- -- --
Rafael A. Lago* ................... Fiscal 1999 $195,000 -- 6,000 $ 3,360
President, 12/31/97-12/31/98 195,000(3) -- -- --
London Campus Fiscal 1998 195,000 -- -- --
Barbara S. Butterfield(4) ......... Fiscal 1999 $175,000 -- 10,000 $ 3,360
Senior Vice President, 12/31/97-12/31/98 135,007(5) $ 25,000 16,000(6) --
Human Resources Fiscal 1998 124,439 -- 16,000(6) --
Daniel D. Moore(7) ................ Fiscal 1999 $152,565 -- -- --
Chief Financial Officer 12/31/97-12/31/98 55,080 -- 50,000 --
Fiscal 1998 -- -- -- --
Tina A. Garrison .................. Fiscal 1999 $107,029 -- 10,000 $ 2,248
Senior Vice President, 12/31/97-12/31/98 69,967(8) -- 6,500(9) --
Campus Operations Fiscal 1998 52,350 -- 6,500(9) --
</TABLE>
-------------------------------
* Not an executive officer
(1) Represents matching contribution paid by the Company under the Company's
profit sharing plan.
(2) Includes $104,167 of salary which is also included in the salary amount
listed for fiscal 1998.
(3) Includes $81,250 of salary which is also included in the salary amount
listed for fiscal 1998.
(4) Ms. Butterfield resigned as an officer of the Company effective December
31, 1999.
(5) Includes $56,250 of salary which is also included in the salary amount
listed for fiscal 1998.
(6) Represents the same grant of options to purchase 16,000 shares granted on
March 27, 1998.
(7) Mr. Moore resigned as an officer of the Company effective September 30,
1999.
(8) Includes $26,217 of salary which is also included in the salary amount
listed for fiscal 1998.
(9) Represents the same grant of options to purchase 6,500 shares granted on
March 27, 1998.
-6-
<PAGE> 10
EMPLOYMENT AGREEMENT
On November 3, 1999, David J. Horn became Chief Financial Officer of the
Company pursuant to the terms of an Employment and Reimbursement Agreement among
the Company, Mr. Horn and Tatum CFO Partners, LLP ("Tatum"). Tatum, of which Mr.
Horn is a partner, provides personnel for the performance of chief financial
officer services. The agreement provides that Mr. Horn, who is an employee of
the Company, is to receive a salary of $12,152.78 per month and that Tatum is to
receive a fee of $2,430.56 per month. Pursuant to the agreement, the Company
granted Mr. Horn and Tatum options to purchase 37,500 and 12,500 shares,
respectively, of the Company's Class A Common Stock at $1.00 per share. The
options vest 25% per year over a four year period commencing on November 3, 1999
(the date of the grant). The agreement further provides that if Mr. Horn serves
as the Company's Chief Financial Officer for 12 uninterrupted months, he and
Tatum will receive another option grant of 37,500 and 12,500 shares,
respectively, exercisable at the greater of $2.50 per share or the market price
of the Company's Class A Common Stock on November 3, 2000. In the event of a
change in control of the Company, all options issued pursuant to the agreement
become immediately exercisable. The agreement entitles Mr. Horn to vacation
consistent with the Company's policy for senior management but not to
participation in the Company's retirement plan or any other benefit plan. The
agreement may be terminated by the Company, Mr. Horn or Tatum on 30 days advance
written notice.
OPTIONS
The following table provides information regarding option grants in fiscal
1999 to the Named Executive Officers:
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED
SECURITIES GRANTED TO ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES IN EXERCISE PRICE APPRECIATION FOR
OPTIONS FISCAL PRICE(2) EXPIRATION OPTION TERM (3)
NAME GRANTED (#) YEAR(1) ($/SHARE) DATE 5% 10%
------------------------------ ----------- ------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Steve Bostic ................. -- -- -- -- -- --
Rafael A. Lago ............... 6,000 1.5% 5.00 10/27/09 $(21,143) $(15,897)
Barbara S. Butterfield ....... 10,000 2.5 4.00 6/10/09 19,047 54,023
Daniel D. Moore .............. -- -- -- -- -- --
Tina A. Garrison ............. 10,000 2.5 1.9375 10/1/09 12,185 30,879
</TABLE>
-------------------------------
(1) The Company granted options to purchase an aggregate of 403,700 shares to
employees in the year ended December 31, 1999.
(2) Stock options generally granted with an exercise price equal to the fair
market value of the Company's Class A Common Stock on the date of grant.
(3) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of the
Company's Class A Common Stock appreciates in value from the date of grant
at the 5% and 10% annual rates prescribed by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the price of the Company's Class A Common Stock.
-7-
<PAGE> 11
The following table presents information regarding stock options exercised
by the Named Executive Officers during 1999 and the value of options outstanding
at December 31, 1999.
AGGREGATED OPTION EXERCISES IN 1999 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES ACQUIRED AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME ON EXERCISE VALUE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------------------- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Steve Bostic ................. -- -- -- $0/$0
Rafael A. Lago ............... -- -- 2,800/14,400 $640/$1,920
Barbara S. Butterfield ....... 12,200 $ 18,714 26,000/0 $0/$0
Daniel D. Moore .............. -- -- 0/0 $0/$0
Tina A. Garrison ............. -- -- 4,000/15,300 $160/$480
</TABLE>
COMPENSATION OF DIRECTORS
Non-management directors of the Company receive an annual retainer of
$5,000 and are entitled to receive awards under the Company's 1997 Incentive
Plan. Directors are not separately compensated for serving on the Committees of
the Board of Directors and no director who is an officer or employee of the
Company receives compensation for services rendered as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Gaylen D. Kemp, J.
Robert Fitzgerald and Gerald Tellefsen. During 1999, none of such individuals
engaged in transactions with the Company requiring disclosure.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 27, 1999, the Company borrowed $1.0 million from Steve
Bostic, the Company's Chairman and Chief Executive Officer. The amount
outstanding under the promissory note was convertible, at any time at the option
of Mr. Bostic, into shares of the Company's Class B common stock at a price
equal to the lower of $2.875 per share or the closing price of the Company's
Class A common stock on the date of notice of such conversion. On December 2,
1999, Mr. Bostic gave notice of his conversion of the promissory note into the
Company's Class B common stock. Based on the closing price of the Company's
Class A common stock on December 2, 1999, the promissory note was converted into
1,066,667 shares of the Company's Class B common stock.
Jeffrey K. Bostic and Steven A. Bostic, who are sons of Steve Bostic,
the Company's Chairman and Chief Executive Officer, formerly served as Vice
President of Enrollment Management and Regional Vice President, respectively, of
the Company. Effective May 31, 1999, Jeffrey K. Bostic and Steven A. Bostic
resigned all positions with the Company. Pursuant to their employment contracts,
Jeffrey K. Bostic and Steven A. Bostic were each entitled to receive severance
payments from the Company following their resignation. During fiscal 1999, the
Company made severance payments to Jeffrey K. Bostic in the amount of $77,000
and to Steven A. Bostic in the amount of $62,534. Severance obligations have
continued into
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<PAGE> 12
and will expire in fiscal 2000. Effective May 1, 2000, Jeffrey K. Bostic
rejoined the Company as Vice President of Enrollment Management.
It is the policy of the Company not to enter into any transaction with
a related party, without the approval of a majority of disinterested directors.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this proxy statement, in whole or in part, the following
Report of the Compensation Committee of the Board of Directors on Executive
Compensation and the Shareholder Return Performance Graph shall not be
incorporated by reference into any such filings.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
In accordance with the proxy statement rules of the Securities and
Exchange Commission, the Compensation Committee of the Board of Directors of the
Company offers the following report regarding compensation policies for
executive officers and the Chief Executive Officer of the Company, and
information with respect to compensation paid to such persons during the last
fiscal year.
The Compensation Committee of the Board of Directors is composed of
three non-employee directors of the Company. It is the Committee's
responsibility to make decisions or develop recommendations for the Board of
Directors regarding the salaries, bonuses and other compensation of the chief
executive and other executive officers of the Company and to administer, along
with the Board of Directors, the Company's incentive plan through which
executives may receive long-term incentive compensation.
The Compensation Committee utilizes the following compensation
principles to link the individual compensation elements into an integrated
compensation strategy: a compensation structure that has a direct relationship
between pay levels and corporate performance and returns to shareholders with
the goal of aligning the executives with the interests and concerns of
shareholders; competitive pay levels payable to the Company's executives,
evaluated within industry and peer companies, that create proper incentives to
enhance shareholder value; and reward superior competency and performance.
The Company's executive compensation program generally consists of base
salary and annual incentive compensation and long-term equity incentives in the
form of stock options. Base salaries for executive officers are reviewed
annually. To align executive officers' interests more closely with the interests
of the shareholders of the Company, the Company's long-term compensation program
emphasizes the grant of stock options exercisable for shares of the Company's
Class A Common Stock. The amount of such awards, if any, is determined one or
more times each year by the Compensation Committee and/or the Board of
Directors. In making such awards, the Board or Committee may take into account
various factors in determining the size of stock option grants, including the
need to attract and retain individuals who will provide valuable service to the
Company.
The Compensation Committee believes that providing executives with the
opportunities to acquire significant stakes in the growth and prosperity of the
Company (through grants of stock options), while maintaining any other elements
of the Company's compensation program at conservative levels, will enable the
Company to attract and retain executives with the outstanding management
abilities and entrepreneurial spirit which are essential to the Company's
ongoing success. Furthermore, the Compensation Committee believes that this
approach to compensation motivates executives to perform to their full
potential.
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<PAGE> 13
At least annually, the Compensation Committee reviews salary
recommendations for the Company's executives and then approves such
recommendations, with any modifications it has deemed appropriate. The annual
salary recommendations are based on evaluations of the individual executive's
past and expected future performance. Similarly, the Compensation Committee
fixes the base salary of the Chief Executive Officer based on a review of
competitive compensation data, the Chief Executive Officer's overall
compensation package, and the Compensation Committee's assessment of his past
performance and its expectation as to his future performance in leading the
Company. The Compensation Committee believes that, generally, such salaries have
been commensurate with those paid to executives with comparable qualifications,
experience and responsibilities at other similarly situated companies.
No bonuses were paid to executive officers in fiscal 1999. Future
bonuses will be determined based upon an evaluation of such factors as
individual performance, increases in the Company's revenue, net income, net
income per share and market penetration, as well as improvements in operating
efficiencies. The Compensation Committee applies similar criteria in setting the
amount of annual bonus, if any, earned by the Chief Executive Officer.
Stock options represent a substantial portion of compensation for the
Company's executive officers, other than the Chief Executive Officer.
Outstanding stock options have been granted at the prevailing market price on
the date of grant. Generally, grants vest in equal amounts over a period of five
years (although certain grants may vest either immediately or over a shorter
period) and executives generally must be employed by the Company at the time of
vesting in order to exercise the options. Grants of stock options generally are
based upon the level of the executive's position with the Company and an
evaluation of the executive's past and expected future performance. The
Compensation Committee believes that dependence on stock options for a
significant portion of executives' compensation more closely aligns such
executives' interests with those of the Company's shareholders, since the
ultimate value of such compensation is linked directly to stock price.
For the last completed fiscal year, the compensation of Steve Bostic,
the Company's President and Chief Executive Officer, was set by the Compensation
Committee at $250,000, plus a bonus to be determined in the discretion of the
Board of Directors. The Board of Directors elected not to grant a bonus to Mr.
Bostic.
In approving the compensation paid to Mr. Bostic, the Compensation
Committee considered the following factors:
(i) the reasonableness of Mr. Bostic's salary in amount relative
to the chief executive officers of similarly placed public
companies; and
(ii) the fact that Mr. Bostic was already amply incentivised to
have the Company perform well by virtue of his ownership of a
substantial percentage of the Common Stock of the Company.
With respect to the other executive officers of the Company, the
Compensation Committee considered the compensation levels to be commensurate
with those of similarly positioned executives in similar companies.
The Compensation Committee evaluates the Company's compensation
policies and procedures with respect to executives. Although the Compensation
Committee believes that current compensation policies have been successful in
aligning the financial interests of executive officers with those of the
Company's shareholders and with Company performance, it continues to examine
what modifications, if any, should be implemented to further link executive
compensation with both individual and Company performance.
Gaylen D. Kemp, Chair J. Robert Fitzgerald Gerald Tellefsen
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<PAGE> 14
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company's Class A Common Stock
against the cumulative total return of the Nasdaq Market Index and an index of
peer companies selected by the Company on the basis of having similar business
formats as the Company (the "Education Peer Group") for the approximately two
year period commencing with the Company's initial public offering in September
1997 through December 31, 1999. The Education Peer Group is composed of the
following companies: Apollo Group, Inc., Computer Learning Systems, Inc., DeVry,
Inc., Education Management Corp., Quest Educational Corp., ITT Educational
Services, Inc., Strayer Education, Inc. and Sylvan Learning Systems, Inc. In
developing the Education Peer Group index, the returns of all the companies in
such index were weighted according to stock market capitalization at the
beginning of the period. The graph assumes that the value of the investment in
the Company's Class A Common Stock and each index was $100 on September 23, 1997
and that all dividends paid by the companies in each index were reinvested.
[GRAPH]
<TABLE>
<CAPTION>
September 23, December 31, December 31, December 31,
1997 1997 1998 1999
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
EduTrek International, Inc. ... $ 100.00 $ 185.71 $ 41.07 $ 9.86
Nasdaq Market Index ........... $ 100.00 $ 93.70 $ 132.15 $ 233.08
Education Peer Group .......... $ 100.00 $ 113.26 $ 140.35 $ 77.68
</TABLE>
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<PAGE> 15
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the independent auditors of the Company
for the fiscal year ended December 31, 1999 and has been appointed by the Board
of Directors to continue in that capacity in fiscal 2000. A representative of
Deloitte & Touche LLP is expected to be present at the Annual Meeting, will have
an opportunity to make a statement, if desired, and will be available to respond
to appropriate questions from shareholders.
ANNUAL REPORT TO SHAREHOLDERS AND REPORT ON FORM 10-K
Additional information concerning the Company, including financial
statements of the Company, is provided in the Company's 1999 Annual Report to
Shareholders that accompanies this proxy statement. The Company's Annual Report
on Form 10-K for the year ended December 31, 1999, as filed with the Securities
and Exchange Commission, is separately available to shareholders who make a
written request therefor to Mr. David J. Horn, at the offices of the Company,
6600 Peachtree-Dunwoody Road, Embassy Row 500, Atlanta, Georgia 30328. Copies of
exhibits filed with that report or referenced therein will be furnished to
shareholders of record upon request and payment of the Company's expenses in
furnishing such documents.
SHAREHOLDER PROPOSALS
Any proposal of shareholders intended to be presented at next year's
Annual Meeting must be received at the principal executive offices of the
Company not later than February 3, 2001, directed to the attention of the
Corporate Secretary, in order to be eligible for inclusion in the Company's
proxy statement and form of proxy relating to that meeting. Proxies solicited by
the Company for the 2001 Annual Meeting may confer discretionary authority to
vote on proposals submitted after April 19, 2001 without a description of them
in the proxy materials for that meeting. Any shareholder proposals must comply
in all respects with the rules and regulations of the Securities and Exchange
Commission and the Company's bylaws. A copy of the Company's bylaws may be
obtained by writing to the Corporate Secretary.
OTHER MATTERS
Management does not know of any matters to be brought before the
meeting other than those referred to above. If any other matter properly comes
before the meeting, the persons designated as proxies will vote on each such
matter in accordance with their best judgment.
By Order of the Board of Directors
/s/ David J. Horn
David J. Horn
Secretary
Atlanta, Georgia
June 2, 2000
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<PAGE> 16
EDUTREK INTERNATIONAL, INC.
6600 PEACHTREE-DUNWOODY ROAD
EMBASSY ROW 500
ATLANTA, GEORGIA 30328
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 2000
ANNUAL MEETING OF SHAREHOLDERS.
The undersigned hereby appoints Steve Bostic and David J. Horn, or either of
them, with power of substitution to each, the proxies of the undersigned to vote
the Common Stock of the undersigned at the Annual Meeting of Shareholders of
EDUTREK INTERNATIONAL, INC. to be held on Friday, June 23, 2000 at 10:00 a.m. at
the Company's offices, 6600 Peachtree-Dunwoody Road, Embassy Row 500, Atlanta,
Georgia, and any adjournment or postponement thereof:
1. To elect seven (7) directors to serve until the next annual meeting of
shareholders and until their successors are elected and have qualified.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary nominees listed below
below)
</TABLE>
STEVE BOSTIC, PAUL D. BECKHAM, FRED C. DAVISON, GAYLEN D. KEMP,
J. ROBERT FITZGERALD, RONALD P. HOGAN, GERALD TELLEFSEN
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THE
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
--------------------------------------------------------------------------------
2. To vote in accordance with their best judgment with respect to any other
matters that may properly come before the meeting.
(continued and to be signed on reverse)
(continued from other side)
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH OF THE ABOVE PROPOSALS AND
UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THIS
PROXY WILL BE SO VOTED.
Please date and sign this
Proxy exactly as name(s)
appears on the mailing label.
------------------------------
------------------------------
Print Name(s):
--------------------------------------------------------------------------
NOTE: When signing as an
attorney, trustee, executor,
administrator or guardian,
please give your title as
such. If a corporation or
partnership, give full name by
authorized officer. In the
case of joint tenants, each
joint owner must sign.
Dated:
------------------------------
