<PAGE> 1
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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
PRT GROUP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[PRT Logo]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 1998
To the Stockholders of
PRT Group Inc.:
The Annual Meeting of Stockholders of PRT Group Inc. ("PRT" or the
"Company") will be held at the Hotel Inter-Continental, 111 East 48th Street
(between Park & Lexington Avenues) New York, New York 10017 on Monday, May 4,
1998 at 8:30 a.m. local time, for the following purposes:
1. To elect three directors for a three-year term as described in the
accompanying proxy materials;
2. To ratify the appointment of Ernst & Young LLP as auditors to audit
the accounts of the Company for 1998; and
3. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 3, 1998 are
entitled to vote at the meeting. A complete list of those stockholders will be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours at the principal executive offices of
PRT Group Inc., 342 Madison Avenue, 11th Floor, New York, NY 10173, for a period
of 10 days prior to the meeting.
Your attention is directed to the accompanying Proxy Statement and proxy.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING
IN THE UNITED STATES.
By order of the Board of Directors
/s/ Gregory S. Mellinger
-------------------------
Gregory S. Mellinger
Chief Operating Officer
and Secretary
April 6, 1998
<PAGE> 3
[PRT Logo]
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 1998
The enclosed proxy is solicited by the Board of Directors of PRT Group Inc.
("PRT") to be voted at the annual meeting of stockholders to be held on May 4,
1997, or any adjournments thereof (the "Annual Meeting"). A stockholder
returning a proxy may revoke it at any time prior to the voting at the Annual
Meeting. A proxy returned by a stockholder which is not subsequently revoked
will be voted in accordance with the instructions indicated thereon. If no
instructions are indicated on a returned and duly executed proxy, the shares
represented by the proxy will be voted FOR the election of the three nominees
for director proposed by the Board of Directors and set forth herein, FOR the
ratification of the appointment of Ernst & Young LLP as the independent public
accountants of PRT for 1998, and in accordance with the judgment of the persons
named in the proxy as to such other matters as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on April 3, 1998 are
entitled to notice of and to vote at the Annual Meeting. As of March 31, 1998,
there were 18,124,463 shares of PRT common stock, par value $.001 per share
("Common Stock"), outstanding and entitled to vote at the Annual Meeting, each
such share entitled to cast one vote. The holders of a majority of the shares
outstanding and entitled to vote, present in person or represented by proxy,
will constitute a quorum for the transaction of business at the Annual Meeting.
With the exception of the election of directors which requires a plurality of
the votes cast, the affirmative vote of a majority of the votes cast at the
meeting is required for each item set forth in the Notice of Annual Meeting.
Abstentions and broker non-votes are counted for purposes of determining whether
a quorum is present at the meeting. For the purpose of determining whether a
proposal (except for the election of directors) has received a majority vote,
abstentions will be included in the vote totals with the result that an
abstention will have the same effect as a negative vote. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy (broker non-votes), those shares will not
be included in the vote totals and, therefore, will have no effect on the vote.
The cost of soliciting proxies will be borne by PRT. In addition to
solicitation by mail, employees of PRT, without extra remuneration, may solicit
proxies in person or by telephone. ChaseMellon Shareholder Services, L.L.C. has
been retained by PRT to assist in the solicitation of proxies for a fee of
$3,500 plus reimbursement of expenses. PRT may also reimburse brokerage firms,
nominees, custodians and fiduciaries for their out-of-pocket expenses for
forwarding proxy materials to beneficial owners and seeking instruction with
respect thereto.
This Proxy Statement and the enclosed form of proxy are being mailed on or
about April 6, 1998 to stockholders entitled to notice of, and to vote at, the
Annual Meeting. The mailing address of PRT's principal executive offices is 342
Madison Avenue, 11th Floor, New York, New York 10173.
ELECTION OF DIRECTORS
PRT's Certificate of Incorporation provides for three classes of directors
to be as nearly equal in number as possible, with each class serving a three
year term and with one class being elected each year. Currently, the Board of
Directors is comprised of nine members. The three Class I directors whose terms
expire at the 1998 Annual Meeting are Douglas K. Mellinger, Jack L. Rivkin and
Isaac Shapiro. The Board of Directors has nominated Messrs. Mellinger, Rivkin
and Shapiro for re-election as Class I directors. The terms of these directors,
if elected, will expire at the Annual Meeting of Stockholders in 2001, or at
such times as their successors are elected and qualified. Other directors will
continue in office until the expiration of the terms of their classes at the
1999 or 2000 Annual Meeting of Stockholders, as the case may be.
In the event that any of the nominees for director should become
unavailable for nomination or election, the persons designated as proxies will
have full discretion to cast votes for another person designated by the
<PAGE> 4
Board of Directors, unless the Board of Directors reduces the number of
directors. If properly executed and timely returned, the accompanying proxy will
be voted FOR the election of the three nominees set forth below.
Certain information as of March 31, 1998 with respect to the nominees for
directors and as to each current director in the classes continuing in office is
shown below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH OF THE NOMINEES FOR DIRECTOR.
NOMINEES FOR DIRECTORS FOR THREE-YEAR TERM EXPIRING IN 2001
Douglas K. Mellinger, 33.
Douglas K. Mellinger has been Chairman and Chief Executive Officer of PRT
since 1989 and was President of PRT from September 1997 to February, 1998. Mr.
Mellinger founded PRT Corp. of America, PRT's predecessor company, in August of
1989. Prior to starting PRT, Mr. Mellinger was the National and International
Director of the Association of Collegiate Entrepreneurs. Mr. Mellinger is
currently the International President of the Young Entrepreneurs' Organization
and serves on the International Board of the Young Presidents' Organization. Mr.
Mellinger graduated from Syracuse University in 1988 with a B.S. in
Entrepreneurial Science.
Jack L. Rivkin, 57.
Jack L. Rivkin has been a Director of PRT since November 1996 and has been
a Senior Vice President of the Investment Group of Travelers Group Inc.
("Travelers"), since October 1995. He is also a director and member of the
Investment Committee of Greenwich Street Capital Partners Inc., an affiliate of
Travelers which manages private investment funds engaged in merchant
banking-type activities. He was Vice Chairman and Director of Global Research at
Smith Barney from March 1993 to October 1995. Prior to joining Travelers in
1993, Mr. Rivkin was Director of the Equities Division and Director of Research
of Lehman Brothers from 1987 to 1992. From 1984 to 1987, Mr. Rivkin was
President of PaineWebber Capital, Inc., the merchant banking arm of PaineWebber
Group, and Chairman of Mitchell Hutchins Asset Management. He is a director of a
number of private venture companies in which Travelers has an investment. He is
also a director of HumaScan Inc., a medical device company. Mr. Rivkin graduated
with distinction from the Harvard University Graduate School of Business
Administration in 1968 with an M.B.A. and the Colorado School of Mines in 1962
with a degree in Metallurgical Engineering.
Isaac Shapiro, 66.
Isaac Shapiro has been a Director of PRT since July 1991 and is a member of
Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Shapiro has been with Skadden,
Arps since April 1986. Mr. Shapiro is also a director of The Bank of
Tokyo--Mitsubishi Trust Company. Mr. Shapiro graduated from Columbia University
School of Law in 1956 with an LL.B. and Columbia College in 1954 with an A.B.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE TERM EXPIRING IN 1999
Gregory S. Mellinger, 31.
Gregory S. Mellinger has been Chief Operating Officer of PRT since August
1992, responsible for shared services and M&A activities, and has been a
Director of PRT since 1995. Prior to working with PRT, Mr. Mellinger was a
Combat Arms Officer in the United States Army. Mr. Mellinger graduated from the
United States Military Academy at West Point in 1989 with a B.A. in History.
Esther Dyson, 46.
Esther Dyson has been a Director of PRT since September 1997. Ms. Dyson has
been President and owner of EDventure Holdings Inc., a company focused on
worldwide information technology, since 1983.
2
<PAGE> 5
Ms. Dyson is the publisher of Release 1.0, a technology industry publication,
and is the author of the book "Release 2.0: A Design for Living in the Digital
Age." Ms. Dyson is a director of several publicly held IT companies in the
United States and Europe, including Thinking Tools, Inc. Ms. Dyson graduated
from Harvard University in 1972 with an A.B. in Economics.
Michael Enthoven, 46.
Michael Enthoven has been a Director of PRT since July 1997. Since May
1997, he has served as the Chairman of J.P. Morgan's Plan Sponsor Group and as
J.P. Morgan's Head of Global Technology and Operations from November 1992 to May
1997 and as Chairman of J.P. Morgan's Operating Risk Committee from July 1995 to
May 1997. From June 1991 to November 1992, he served as the co-head of J.P.
Morgan's Global Markets Group. Mr. Enthoven graduated from Leyden University in
The Netherlands in 1974 with a degree in Law.
TERM EXPIRING IN 2000
Robert. P. Forlenza, 41.
Robert P. Forlenza has been a Director of PRT since November 1996. Since
1995, Mr. Forlenza has also served as Vice President of Tudor Investment
Corporation and Managing Director of the Tudor Private Equity Group. Prior to
joining Tudor, Mr. Forlenza was a Vice President at Carlisle Capital Corporation
from 1989 to 1994. Mr. Forlenza graduated from Harvard University Graduate
School of Business Administration in 1982 with an M.B.A. and from Washington and
Lee University in 1978 with a B.S. in Business Administration and Accounting.
Craig D. Goldman, 53.
Craig D. Goldman has been a Director of PRT since October 1996. He is also
President and Chief Executive Officer of Cyber Consulting Services Corporation
("Cyber"). Before starting Cyber, Mr. Goldman worked from 1985 to 1996 at Chase
Manhattan Bank, N.A. where he was named Chief Information Officer in 1991. Mr.
Goldman also held senior technology and operations positions supporting Chase's
corporate finance, institutional leasing, real estate and securities businesses.
From 1983 to 1985, Mr. Goldman was Senior Vice President of Data Systems and
Communications at the American Plan Insurance holding company. Mr. Goldman is a
member of the technology advisory boards of Lotus Development Corp., Compaq
Computer Corporation and Intel Corporation.
Irwin J. Sitkin, 67.
Irwin J. Sitkin has been a Director of PRT since July 1990 and served as
Vice President of Corporate Administration of Aetna Life and Casualty from 1954
to 1989 when he retired. Since retiring, Mr. Sitkin has acted as a consultant
to, among others, Memorex Telex Corporation, AMDAHL Corporation, Digital
Equipment Corporation, Unitech Systems, Inc. and Northern Telecom Inc. Mr.
Sitkin graduated from Cornell University in 1952 with a B.S. in Economics.
Pursuant to certain agreements by and among The Mellinger Group LLC, J.P.
Morgan Ventures Corporation ("J.P. Morgan"), The Travelers Insurance Company
("Travelers"), Tudor Investment Corporation ("Tudor"), Capital Research and
Management Company, The Prudential Insurance Company of America, Rho Management
Co., Inc., Craig D. Goldman, Jacqueline W. Shapiro, Robert Marchetti and Stephen
Michaelson (collectively, the "Shareholders"), each of the Shareholders have
agreed to vote their shares in favor of the director nominees of each of J.P.
Morgan, Travelers and Tudor until such Shareholders have sold certain
percentages of their shares of Common Stock.
Except for Douglas K. Mellinger and Gregory S. Mellinger, who are brothers,
there are no family relationships among any of the directors and executive
officers of the Company.
3
<PAGE> 6
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of Common Stock and Common Stock equivalents as of March 9, 1997 by
each director and nominee for director, the executive officers named in the
Summary Compensation table below, and by all directors and executive officers as
a group. Except as set forth below, each of the individuals listed below has
sole voting and investment power over such shares and is the owner of less than
one percent of the outstanding shares of Common Stock. The business address of
each director and executive officer is: c/o PRT Group Inc., 342 Madison Avenue,
New York, NY 10173.
Director and Executive Officer Common Stock Ownership
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(1) OF CLASS(1)
------------------- ------------ -----------
<S> <C> <C>
The Mellinger Group LLC (2)................................. 6,099,417 32.5
Douglas K. Mellinger (3)(4)................................. 17,667 *
Gregory S. Mellinger (3)(5)................................. 14,333 *
Srinivasan Viswanathan (6).................................. 117,713 *
Richard Koppel (7).......................................... 75,000 *
David Winter (8)............................................ 113,500 *
Esther Dyson (9)............................................ 10,000 *
Michael Enthoven (10)(16)................................... --
Robert P. Forlenza (16)..................................... --
Craig D. Goldman(11)........................................ 44,470 *
Jack L. Rivkin (16)......................................... --
Isaac Shapiro (12)(13)...................................... 243,500 1.3
Irwin J. Sitkin (14)(15).................................... 226,100 1.3
Directors and executive officers of PRT as a group (twelve
persons).................................................. 6,957,768 37.1
</TABLE>
- ---------------
* less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options or warrants currently exercisable, or exercisable within 60 days
of the date hereof, are deemed outstanding for computing the percentage of
the person holding such options or warrants but are not deemed outstanding
for computing the percentage of any other person.
(2) The Mellinger Group LLC is wholly owned by Douglas K. Mellinger, Chairman
and Chief Executive Officer of the Company, Gregory S. Mellinger, Chief
Operating Officer of the Company, and Paul Mellinger, brother of Douglas
and Gregory Mellinger.
(3) Does not include shares of The Mellinger Group LLC over which Messrs.
Mellinger have voting and investment power.
(4) Includes 11,417 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(5) Includes 8,083 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(6) Includes 28,333 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(7) Includes 75,000 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(8) Includes 9,250 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
4
<PAGE> 7
(9) Includes 10,000 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(10) Mr. Enthoven disclaims beneficial ownership of 16,333 shares of Common
Stock held by The Enthoven Foundation, over which Mr. Enthoven exercises no
voting or investment power.
(11) Includes 14,000 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(12) Includes 3,000 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(13) Includes 15,230 shares held by Mr. Shapiro's wife; Mr. Shapiro disclaims
beneficial ownership of such shares.
(14) Includes 4,500 shares subject to options currently exercisable or
exercisable within 60 days of the date hereof.
(15) Includes 44,500 shares beneficially owned by members of Mr. Sitkin's
immediate family; Mr. Sitkin disclaims beneficial ownership of such shares.
(16) Directors Forlenza, Enthoven and Rivkin have waived their right to receive
option grants.
MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held seven meetings in 1997. Attendance at such
meetings averaged approximately 85%. All directors attended at least 80% of the
meetings of the Board of Directors and Board committees of which they are
members. The following sets forth the committees of the Board of Directors.
Audit Committee. The Audit Committee is responsible for reviewing with
PRT's management the financial controls and accounting, audit and reporting
activities of the company. The Audit Committee reviews the qualifications of the
PRT'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 members of the Audit Committee are Robert P. Forlenza, Gregory S.
Mellinger and Isaac Shapiro. Mr. Forlenza and Mr. Shapiro are independent
directors
During 1997, the Audit Committee met one time.
Compensation Committee. The Compensation Committee is responsible for the
administration of all salary, bonus and incentive compensation plans for the
officers and key employees of the Company. The Compensation Committee also
administers the Company's Amended and Restated 1996 Stock Option Plan (the
"Stock Option Plan"), a copy of which has been filed with the SEC. As of the
date hereof, there were 4,302,000 shares of Common Stock reserved for issuance
under the Stock Option Plan. The members of the Compensation Committee are Craig
D. Goldman, Jack L. Rivkin and Irwin J. Sitkin, all of whom are independent
directors.
During 1997, the Compensation Committee met two times.
DIRECTOR COMPENSATION
Directors are not entitled to fees for serving on the Board of Directors or
committees thereof. All directors, however, are reimbursed for travel expenses
incurred in connection with attending board and committee meetings. In addition,
under the terms of the Stock Option Plan, directors who are not executive
officers of the Company are automatically granted annually options to purchase
up to 3,000 shares of Common Stock. Directors Robert Forlenza, Michael Enthoven
and Jack Rivkin have waived their right to such option grants. Director Esther
Dyson received a special one-time grant of options to purchase up to 10,000
shares of Common Stock upon joining the board in October 1997.
5
<PAGE> 8
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee"),
which is comprised entirely of nonemployee directors, is responsible for the
establishment and administration of the compensation programs for PRT's
executive officers, including the Chief Executive Officer. The Committee met two
times in 1997 to address items related to the compensation and benefits of PRT's
executive officers.
The Committee has adopted a compensation philosophy based on the premise
that executives should receive competitive compensation determined by reference
to both PRT's performance and the individual's contribution to that performance.
Compensation plans and programs are intended by the Committee to motivate and
reward executives for longterm strategic management and the enhancement of
stockholder value, support a performance-oriented environment that rewards
achievement of internal business goals, and attract and retain executives whose
abilities are critical to the long-term success and competitiveness of PRT.
Section 162(m) of the Internal Revenue Code generally limits the
deductibility of compensation to the Chief Executive Officer and the four other
most highly compensated officers in excess of $1 million per year, provided,
however, that certain "performance-based" compensation may be excluded from such
$1 million limitation. While none of the Chief Executive Officer or the four
other most highly compensated officers of the Company earned in excess of $1
million in fiscal year 1997, the Committee intends to structure future annual
cash bonus awards and stock option grants under the Stock Option Plan in a
manner designed to make such awards "performance-based" compensation to the
extent practicable.
COMPENSATION AND BENEFITS COMMITTEE
Craig D. Goldman
Jack L. Rivkin
Irwin J. Sitkin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Craig D. Goldman, Jack L. Rivkin
and Irwin J. Sitkin, none of whom are employees or current or former officers of
PRT.
6
<PAGE> 9
PERFORMANCE GRAPH
Performance Comparison: The following graph and table compare the
cumulative total shareholders return on the Company's Common Stock from November
20, 1997, the date of the initial public offering of the Common Stock, through
December 31, 1997 with (a) the Russell 2000 Index (which does not include the
Company), and (b) a peer group index* selected by the Company which includes six
publicly traded companies in the Company's industry data. The information
included in the table was supplied by the Nasdaq Stock Market. The graph and
table assume an investment of $100 in the Common Stock and each index on
November 20, 1997 and the reinvestment of all dividends.
THE FOLLOWING GRAPH IS PRESENTED IN ACCORDANCE WITH SECURITIES AND EXCHANGE
COMMISSION REQUIREMENTS. STOCKHOLDERS ARE CAUTIONED AGAINST DRAWING ANY
CONCLUSIONS FROM THE DATA CONTAINED THEREIN, AS PAST RESULTS ARE NOT NECESSARILY
INDICATIVE OF FUTURE PERFORMANCE. THIS GRAPH IN NO WAY REFLECTS PRT's FORECAST
OF FUTURE FINANCIAL PERFORMANCE.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE INITIAL PUBLIC OFFERING
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING NOVEMBER 20, 1997
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) PRT GROUP INC. RUSSELL 2000 INDEX PEER GROUP INDEX
<S> <C> <C> <C>
20-NOV-97 100 100 100
31-DEC-97 87.50 100.30 118.34
</TABLE>
- ---------------
* The peer group index reflects the stock performance of the following
companies: Complete Business Solutions, Inc., Computer Horizons Corp.,
Information Management Resources, Inc., Intelligroup, Inc., Mastech Corp., and
Whittman-Hart, Inc.
Notwithstanding anything to the contrary set forth in any of PRT's filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), that might incorporate future filings by
reference, including this Proxy Statement, in whole or in part, the foregoing
7
<PAGE> 10
Report of the Compensation Committee and Performance Graph shall not be
incorporated by reference into any such filings.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information with
respect to the compensation of the Chief Executive Officer and each of the four
other most highly compensated executive officers of PRT for services rendered
during 1996 and 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------- NUMBER OF
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#) ($)(2)
- --------------------------- ---- ---------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Douglas K. Mellinger......... 1997 192,000 -- 26,766(1) 2,000 1,520
Chief Executive Officer 1996 168,000 10,000 7,785(1) 20,000 1,520
Gregory S. Mellinger......... 1997 156,000 -- 13,923(1) 2,000 1,520
Chief Operating Officer 1996 129,000 10,000 5,795(1) 20,000 1,520
Srinivasan Viswanathan....... 1997 129,000 -- 45,300(3) 15,000 --
President, PRT 1996 129,000 10,000 34,800(3) 20,000 --
Richard Koppel(4)............ 1997 250,892 -- 15,984(5) 150,000 --
EVP Global Accounts 1996 -- -- -- -- --
David Winter................. 1997 114,855 -- 4,929(1) 6,000 413
SVP Marketing 1996 82,950 3,000 -- 15,500 --
</TABLE>
- ---------------
(1) The amount includes the personal use of an automobile provided by PRT.
(2) Represents employer matching contributions to the 401(k) Savings Retirement
Plan.
(3) The amount shown in this column includes the value of the use of a furnished
home and the personal use of an automobile, each provided by PRT.
(4) Mr. Koppel has terminated his employment with the Company effective on June
18, 1998.
(5) The amount shown in this column includes the personal use of an automobile
and contributions made to personal life insurance policies, each provided by
PRT.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of stock
options to each of the Named Executive Officers during the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE OR APPLICATION FOR OPTION
UNDERLYING EMPLOYEES BASE TERM
OPTIONS/GRANTED IN FISCAL PRICE EXPIRATION -----------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
- ---- --------------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas K. Mellinger.......... 2,000(1) 0.2 12.00 2007 15,093 38,250
Gregory S. Mellinger.......... 2,000(1) 0.2 12.00 2007 15,093 38,250
Srinivasan Viswanathan........ 15,000(2) 1.3 12.00 2007 113,201 286,874
Richard Koppel................ 150,000(3) 12.9 12.00 2007 1,132,010 2,868,736
David Winter.................. 6,000(2) 0.5 12.00 2007 45,280 114,749
</TABLE>
- ---------------
(1) The options vest in cumulative installments at the rate of 50% immediately
and 50% as of the first anniversary of the date of grant.
8
<PAGE> 11
(2) The options vest in cumulative installments at the rate of 100% immediately.
(3) The options vest in cumulative installments at the rate of 50% as of the
first anniversary of the date of grant and 50% as of the second anniversary
of the date of grant; Mr. Koppel will terminate his employment with the
Company effective on June 18, 1998 and the options which would have vested
on the second anniversary of the date of grant will not vest.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the exercise of stock
options during the last fiscal year by each of the Named Executive Officers and
year-end values of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED(1) AT FISCAL YEAR END(#) FISCAL YEAR-END($)(1)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ----------- ---------------------------------- -------------------------
<S> <C> <C> <C> <C>
Douglas K. Mellinger.... 6,250 43,750 1,417/ 14,333 2,396/92,248
Gregory S. Mellinger.... 6,250 43,750 1,417/ 14,333 2,396/92,248
Srinivasan
Viswanathan........... 0 0 21,667/ 13,333 46,649/93,291
Richard Koppel.......... 0 0 0/150,000 0/0
David Winter............ 0 0 9,250/ 12,250 22,734/82,583
</TABLE>
- ---------------
(1) Based on the difference between the exercise price of the options and the
fair-market value of the Common Stock on December 31, 1997 ($11 3/8).
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
PRT has entered into employment agreements with each of Douglas K.
Mellinger and Gregory S. Mellinger, and PRT Barbados has entered into an
employment agreement with Srinivasan Viswanathan (each employment agreement is
referred to as an "Employment Agreement," and all three employment agreements
are collectively referred to as the "Employment Agreements." Messrs. Douglas K.
Mellinger, Gregory S. Mellinger and Viswanathan are referred to individually as
an "Executive" and collectively as the "Executives"). The Employment Agreements
are each for a four-year term commencing on October 1, 1996 for Messrs. Douglas
Mellinger and Gregory Mellinger, and April 1, 1996 for Mr. Viswanathan, and are
automatically renewed for successive one-year periods unless advance notice of
termination is given by either party.
Under their respective Employment Agreements, Mr. Douglas K. Mellinger will
serve as Chief Executive Officer, earning a base salary of $192,000; Mr. Gregory
S. Mellinger will serve as Chief Operating Officer, earning a base salary of
$156,000; and Mr. Viswanathan will serve as President of PRT and PRT Barbados,
earning a base salary of $129,000 (Mr. Viswanathan's Employment Agreement
provides for a salary of $100,000 on an after-tax basis), in each case with
future raises and other compensation to be determined by the Board of Director's
Compensation Committee.
Under the terms of the Employment Agreements, the Executives will
participate in a performance-based incentive compensation program developed by
the Board of Directors Compensation Committee, with performance goals based on,
among other factors, the financial growth of PRT, and on a basis no less
favorable than the program provides for other executives. The Executives will
also be eligible to receive stock options pursuant to compensation programs, and
will be entitled to the use of an automobile and reimbursement for business
expenses. The Employment Agreements also provide for the Executives'
participation in the Company's employee benefit plans and arrangements that are
generally offered to other employees.
In addition, pursuant to Mr. Viswanathan's Employment Agreement, PRT
Barbados will make available to him a furnished home, will pay certain costs
relating to the maintenance and upkeep of his home, and will provide him with a
food allowance. If an Executive's employment is terminated, other than for Cause
(as defined in the Employment Agreements) within 42 months of the effective date
of the Employment Agreements, the Executive will be entitled to receive
continuation of base salary for the shorter of two years
9
<PAGE> 12
and the remainder of the term. If such termination occurs at any time after the
42nd month of the term, the Executive will be entitled to receive continuation
of base salary for the shorter of six months and the remainder of the term. In
either event, all benefits that are tied to vesting will vest upon termination
of employment without Cause. If the Executive's employment is terminated by
reason of disability during the term, he will continue to receive base salary
for one year.
CERTAIN TRANSACTIONS
During the year ended December 31, 1997, the Company (i) paid license fees
of approximately $48,000 in the aggregate to BJ equities, a partnership
wholly-owned by Jerome and Barbara Mellinger, parents of Douglas and Gregory
Mellinger, for the use by PRT of a database of software engineer names and
resumes, (ii) paid finders fees of approximately $297,000 to Forum Computing
Services, a corporation owned 57% by Jerome Mellinger and 43% by Allan Stern,
holder of approximately 4% of PRT's Common Stock (including shares held by the
Stern family), for new business referred to PRT, (iii) employed Barbara
Mellinger as a financial advisor to the Company; the aggregate amount paid by
the Company for such services was approximately $75,000, including benefits; and
(iv) paid an aggregate of approximately $205,000 to Erickson Travel, Inc., a
corporation wholly owned by Vereena and Robert Erickson, father- and
mother-in-law of Gregory Mellinger, for travel related services (including
airfare, hotel accommodations and auto rentals) provided to the Company.
Mr. Isaac Shapiro is a partner of the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP ("Skadden, Arps"). PRT retained Skadden, Arps to provide
various legal services to the Company during 1997; the amount paid to Skadden,
Arps for such services did not exceed 5% of Skadden, Arps gross revenues for
fiscal year 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
PRT's directors and executive officers are required under the Exchange Act
to file with the Securities and Exchange Commission (the "SEC") and the Nasdaq
National Market reports of ownership and changes in ownership in their holdings
of Common Stock. Copies of these reports must also be furnished to PRT. Based on
an examination of these reports and on written representations provided to PRT,
all such reports have been timely filed.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Ernst & Young LLP as PRT's independent public accountants for the year
ending December 31, 1998. Although not required to do so, the Board of Directors
is submitting the appointment of that firm for ratification at the Annual
Meeting. Ernst & Young LLP has been PRT's auditors since July, 1997. If the
appointment is not approved, the Board of Directors will reconsider its
appointment. A representative of Ernst & Young LLP is expected to be present at
the Annual Meeting, will be available to respond to questions and will have the
opportunity to make a statement, should he or she so desire.
The Company engaged Ernst & Young LLP as its independent auditor in July
1997 to replace KPMG Peat Marwick LLP ("KPMG") as the Company's independent
auditor to avoid a potential lack of independence resulting from a KPMG
employee's ownership interest in PRT and family relation with certain PRT
stockholders. During the period between the date KPMG was engaged and the date
on which KPMG resigned, there was no: (i) disagreement between the Company and
KPMG on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure or (ii) adverse opinions or a
disclaimer of opinion, or qualification or modification as to uncertainty, audit
scope or accounting principles in connection with its report on the Company's
financial statements.
In March 1995, the Company, with the approval of its Board of Directors,
hired KPMG to replace Shulman, Cohen, Furst, Kramer & Rosen, P.C. ("Shulman,
Cohen") as its independent auditors. During the period between January 1, 1993
and the date on which Shulman, Cohen was replaced, there was no: (i)
disagreement between the Company and Shulman, Cohen on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure or (ii) adverse opinions or a disclaimer
10
<PAGE> 13
of opinion, or qualification or modification as to uncertainty, audit scope or
accounting principles in connection with its report on the Company's financial
statements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR 1998.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Under the rules of the SEC, the date by which proposals of stockholders
intended to be presented at the 1999 Annual Meeting of Stockholders must be
received by PRT for inclusion in its Proxy Statement and form of proxy relating
to that meeting is January 6, 1999. Proposals may be mailed to PRT Group Inc.,
Secretary, 342 Madison Avenue, 11th Floor, New York, New York 10173.
PRT's By-laws provide for certain procedures which a stockholder must
follow to nominate persons for election as directors or to introduce an item of
business at an annual meeting of stockholders. Generally, these procedures
provide that stockholders desiring to make nominations for directors and/or
bring a proper subject of business before the meeting must do so by a written
notice timely received (not less than 60 days nor more than 90 days before the
prior to the anniversary date of the immediately preceding annual meeting of
stockholders) by the Secretary of PRT including the name and address of the
stockholder and of any other stockholders known by such stockholder to be in
favor of the proposal. If the notice relates to a nomination for director, it
must also set forth the name, age, principal occupation and business and
residence address of any nominee(s), the number of shares of Common Stock
beneficially owned by the nominee(s), and such other information regarding each
nominee as would have been required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC (including the written consent of each
nominee). Notice of an item of business shall include a description of the
proposed business and the reason for conducting the proposed business at the
annual meeting. Any stockholder proposal or nomination determined by the
presiding officer of the annual meeting to not have been made in accordance with
the foregoing requirements shall not be acted upon at the meeting. Copies of
PRT's Bylaws are available from the Secretary of PRT.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
matters which will be presented for consideration at the Annual Meeting other
than the proposals set forth in this Proxy Statement. However, if any other
matter calling for a vote of stockholders is properly presented at the Annual
Meeting, it is the intention of the persons named in the accompanying proxy to
vote in accordance with their best judgment on such matters.
A COPY OF PRT's ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION WILL BE SENT TO ANY STOCKHOLDER WITHOUT
CHARGE UPON WRITTEN REQUEST TO PRT GROUP INC., 342 MADISON AVENUE, 11TH FLOOR,
NEW YORK, NEW YORK 10173, ATTENTION: GREEGORY S. MELLINGER, CORPORATE SECRETARY.
THE ANNUAL REPORT ON FORM 10-K IS ALSO AVAILABLE ELECTRONICALLY ON PRT's
INTERNET WEB SITE AT HTTP://WWW.PRT.COM.
By order of the Board of Directors,
/s/ Gregory S. Mellinger
------------------------
Gregory S. Mellinger
Chief Operating Officer
and Secretary
April 6, 1998
11
<PAGE> 14
[PRT Logo]
Douglas K. Mellinger
Chairman of the Board and
Chief Executive Officer
April 6, 1998
Dear PRT Stockholder:
On behalf of your Board of directors and your management, I cordially
invite you to attend the 1998 Annual Meeting of Stockholders of PRT Group Inc.
The meeting will be held on Monday, May 4, 1998, at 8:30 a.m. local time, at the
Hotel Inter-Continental, 111 East 48th Street (between Park & Lexington
Avenues), New York, New York 10017.
Enclosed are the Notice of Meeting and Proxy Statement relating to the
annual meeting, along with the 1997 Annual Report to Stockholders on Form 10K.
Information regarding the matters to be voted upon at the meeting is set forth
in the Notice of Meeting and Proxy Statement.
Your vote is important to us. Whether or not you plan to attend the
meeting, please complete and return the enclosed proxy card in the enclosed
envelope. Please note that your completed proxy will not prevent you from
attending the meeting and voting in person should you so choose.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Douglas Mellinger
---------------------
Douglas K. Mellinger
<PAGE> 15
VOTE MUST
BE INDICATED
(X) IN BLACK /X/
OR BLUE INK.
1. ELECTION OF DIRECTORS FOR WITHHELD EXCEPTIONS*
The Board of Directors recommends a vote "FOR" / / / / / /
the nominees listed below:
Nominees: Douglas K. Mellinger, Jack L. Rivkin and Isaac Shapiro
*Exceptions:
------------------------------------------------------------
TO VOTE YOUR SHARES FOR ALL DIRECTOR NOMINEES MARK THE "FOR" BOX ON ITEM
1. TO WITHHOLD YOUR VOTES FOR ALL NOMINEES, MARK THE "WITHHELD" BOX. IF
YOU DO NOT WISH YOUR SHARES VOTED FOR A PARTICULAR NOMINEE, MARK THE
"EXCEPTIONS" BOX AND ENTER THE NAME(S) OF THE EXCEPTION(S) IN THE SPACE
PROVIDED. SUCH A MARK WILL BE DEEMED A VOTE "FOR" A NOMINEE OTHER THAN
THOSE LISTED AS EXCEPTIONS.
2. Ratification of the appointment of accountants. FOR AGAINST ABSTAIN
The Board of Directors recommends a vote "FOR" / / / / / /
the ratification of accountants.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
Check here if you: plan to attend the Annual Meeting / /
want to stop receiving more than one Annual
Report at this address / /
have a change of address on this card
(indicate address change below) / /
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Signature(s) Date
-------------------------------------------------- ----------
Please sign name exactly as it appears on this card. Joint owners should each
sign. Attorneys, trustees, executors, administrators, custodians, guardians
or corporate officers should give full title.
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