<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
DA Consulting Group, 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)(4) 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>
DA CONSULTING GROUP, INC.
San Felipe Plaza
5847 San Felipe, Suite 3700
Houston, TX 77057
__________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 6, 2000
_________________
To the Shareholders of DA Consulting Group, Inc.:
The Annual Meeting of Shareholders of DA Consulting Group, Inc, a Texas
corporation (the "Company") will be held at 1:00 P.M. CDT, on June 6, 2000, at
5847 San Felipe, Suite 1245, Houston, Texas 77057 for the following purposes:
1. To elect two Class II directors of the Company for a three-year term,
ending at the Company's 2003 Annual Meeting of Shareholders, and one
director of the Company for a one-year term, ending at the Company's
2001 Annual Meeting of Shareholders;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the Company for the fiscal year ending December 31,
2000; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of shares of the Company's Common Stock at the close of
business on April 26, 2000 are entitled to notice of, and to vote at, the Annual
Meeting and any adjournments or postponements thereof. Such shareholders may
vote in person or by proxy. The stock transfer books of the Company will not be
closed. The accompanying form of proxy is solicited by the Board of Directors of
the Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO
ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE SELF-ADDRESSED ENVELOPE, ENCLOSED FOR YOUR CONVENIENCE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DECIDE TO ATTEND THE
MEETING AND WISH TO VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY BY WRITTEN NOTICE
AT THAT TIME.
By Order of the Board of Directors
Virginia L. Pierpont
Chair of the Board
April 28, 2000
<PAGE>
DA CONSULTING GROUP, INC.
San Felipe Plaza
5847 San Felipe, Suite 3700
Houston, TX 77057
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
June 6, 2000
This Proxy Statement, which is first being mailed to shareholders on or
about April 28, 2000, is furnished in connection with the solicitation by the
Board of Directors of DA Consulting Group, Inc. (the "Company") of proxies to be
used at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting"), to be held at 1:00 p.m. CDT on June 6, 2000, at 5847 San Felipe,
Suite 1245, Houston, Texas 77057, and at any adjournments or postponements
thereof. If proxies in the accompanying form are properly executed and returned
prior to voting at the meeting, the shares represented thereby will be voted as
instructed on the proxy. If no instructions are given on a properly executed and
returned proxy, the shares represented thereby will be voted (i) in favor of the
election of the nominees for director named below, (ii) in favor of the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 2000, and (iii)
in support of management on such other business as may properly come before the
Annual Meeting or any adjournments thereof. Shareholders whose shares are held
of record by a broker or other nominee are nevertheless encouraged to fill in
the boxes of their choice on the proxy, as brokers and other nominees may not be
permitted to vote shares with respect to certain matters for which they have not
received specific instructions from the beneficial owners of the shares. Any
proxy may be revoked by a shareholder prior to its exercise upon written notice
to the Secretary of the Company, by delivering a duly executed proxy bearing a
later date, or by the vote of a shareholder cast in person at the Annual
Meeting.
VOTING
Holders of record of the Company's Common Stock on April 26, 2000, will be
entitled to vote at the Annual Meeting or any adjournments or postponements
thereof. As of that date, there were 6,418,604 shares of Common Stock
outstanding and entitled to vote. The presence, in person or by proxy, of
holders of Common Stock entitled to cast at least a majority of the votes which
all holders of Common Stock are entitled to cast will constitute a quorum for
purposes of the transaction of business.
Each share of Common Stock entitles the holder thereof to one vote on the
election of each nominee for director and on any other matter that may properly
come before the Annual Meeting. Shareholders are not entitled to cumulative
voting in the election of directors.
Under Texas law and the By-laws of the Company, the presence of a quorum is
required for each matter to be acted upon at the Annual Meeting. The presence at
the Annual Meeting in person or by proxy, of shareholders entitled to cast at
least a majority of the votes that all shareholders are entitled to cast on a
particular matter shall constitute a quorum for the purposes of consideration
and action on the matter. Directors are elected by a plurality vote. All other
actions to be taken by the shareholders at the Annual Meeting shall be taken by
the affirmative vote of a majority of the votes cast by all shareholders
entitled to vote thereon. Votes that are withheld and abstentions will be
counted in determining the presence of a quorum, but will not be counted in
determining the number of votes cast in connection with any particular matter.
Broker non-votes, which occur when a broker or other nominee holding shares for
a beneficial owner does not vote on a proposal because the broker or other
nominee has not received specific instructions from the beneficial owners, are
not voted and will therefore have no effect on the outcome of any of the matters
to be voted upon at the Annual Meeting.
The cost of solicitation of proxies by the Board of Directors will be borne
by the Company. Proxies may be solicited by mail, personal interview, telephone
or telegraph and, in addition, directors, officers and regular employees of the
Company may solicit proxies by such methods without additional remuneration.
Banks, brokerage
<PAGE>
houses and other institutions, nominees or fiduciaries will be requested to
forward the proxy materials to beneficial owners in order to solicit
authorizations for the execution of proxies. The Company will, upon request,
reimburse such banks, brokerage houses and other institutions, nominees and
fiduciaries for their expenses in forwarding such proxy materials to the
beneficial owners of the Company's stock.
ELECTION OF DIRECTORS (Proposal 1)
The Company's Board of Directors consists of six members, divided into
three classes, with the directors in each class serving for staggered three-year
terms and until their successors are elected and qualify. At the Annual Meeting,
two Class II directors will be elected to serve for a term of three years and
one Class III director will be elected to fill a vacant position serving the
unexpired term of one year, each until their successors are elected and qualify.
Unless otherwise specified in the accompanying proxy, the shares of Common Stock
voted pursuant thereto will be cast for Virginia L. Pierpont and Richard W.
Thatcher, Jr., each for terms expiring at the Annual Meeting of Shareholders to
be held in 2003 and for John E. Mitchell, whose term will expire at the Annual
Meeting of Shareholders to be held in 2001. If, for any reason, at the time of
election, any of the nominees named should decline or be unable to accept his
nomination or election, it is intended that such proxy will be voted for the
election, in the nominee's place, of a substituted nominee, who would be
recommended by the Board of Directors. The Board of Directors, however, has no
reason to believe that any of the nominees will be unable or unwilling to serve
as a director. Two directors will continue to serve as directors following the
Annual Meeting as set forth below, with two Class I directors having a term
expiring at the 2002 Annual Meeting of Shareholders. The remaining vacant Class
III seat on the Board of Directors will not be filled at the Annual Meeting and
will remain vacant until filled by the Board of Directors or by the shareholders
at a meeting of shareholders.
The following biographical information is furnished as to each nominee for
election as a director and each of the current directors:
Nominees for Election to the Board of Directors
Class II Directors for a Three Year Term Expiring at the 2003 Annual
--------------------------------------------------------------------
Meeting
- -------
Virginia L. Pierpont, age 58, founded the Company as a sole proprietorship
in 1984, incorporated the business in 1987, and opened its United Kingdom
operation in 1988. Ms. Pierpont was the Chief Executive Officer of the Company
from 1984 to 1993 and has served as Chair of the Board from December 1996
through August 1998 and again from April 2000 to the present. She is a member of
the Company's Compensation Committee.
Richard W. Thatcher, Jr., age 60, has served as a director since December
1996. Since 1992, he has been Senior Vice President in the investment banking
department of Pennsylvania Merchant Group Ltd. Mr. Thatcher is a member of the
Company's Audit Committee.
Class III Director for a One Year Term Expiring at the 2001Annual Meeting
-------------------------------------------------------------------------
John E. Mitchell, age 42, joined the Company in November 1999 as president
of its Europe, Middle East, Africa division with primary responsibilities for
operational functions within this division. In February 2000, Mr. Mitchell was
promoted to Chief Operating Officer of the Company. In April 2000, Mr. Mitchell
was promoted to President and Chief Executive Officer. Prior to joining the
Company, Mr. Mitchell was with Equifax Inc. from January 1997 to October 1999 as
Chief Marketing Officer and before that was with International Business Machines
Corporation (IBM) for 18 years serving in various sales and marketing positions.
Members of the Board of Directors Continuing in Office
Class I Members - Terms Expiring at 2002 Annual Meeting
-------------------------------------------------------
Nigel W.E. Curlet, age 54, has served as a director since December 1996.
Since 1976, he has been employed in various capacities by Shell Chemical Company
and is currently its Manager - Demand Chain Center of Excellence. Mr. Curlet's
prior management roles at Shell were in its information technology, research and
development, and operations and strategic planning departments. He is a member
of the Company's Audit, Compensation and Stock Option Committees.
2
<PAGE>
Gunther E.A. Fritze, age 63, has served as a director since December 1996.
Mr. Fritze is retired. From 1962 to 1999, Mr. Fritze was employed in various
capacities by Bank of Boston. Mr. Fritze's most recent position was Manager,
Finance Companies. Mr. Fritze is a member of the Company's Audit, Compensation
and Stock Option Committees.
The Board of Directors Recommends a Vote FOR Proposal 1 to Elect All
Nominees.
Committees and Meetings of the Board of Directors
During the Company's 1999 fiscal year, which ended on December 31, 1999,
the Board of Directors held nine meetings. Each director attended at least 75%
of the aggregate of the total number of meetings of the Board of Directors and
committees of the Board of Directors on which he or she served.
During 1999, the Audit Committee, which consisted of Messrs. Thatcher,
Curlet and Fritze, met five times. The function of the Audit Committee is to (i)
review and monitor the financial and cost accounting practices and procedures of
the Company (ii) review the qualifications of the Company's independent public
accountants who audit the Company's books and records, (iii) make
recommendations to the Board of Directors regarding the annual selection of
these independent accountants, (iv) review the scope, fees and results of any
audit, and (v) review nonaudit services and related fees provided by these
independent accountants.
During 1999, the Compensation Committee, which consisted of Ms. Pierpont
and Messrs. Curlet and Fritze, met three times. The Compensation Committee is
responsible for determining compensation for the executive officers of the
Company, including bonus and benefits and for administering the Company's
compensation programs, other than the Company's 1997 Stock Option Plan.
During 1999, the Stock Option Committee, which consisted of Messrs. Curlet
and Fritze, met three times. The Stock Option Committee is responsible for the
administration of the Company's 1997 Stock Option Plan.
The Company does not have a standing Nominating Committee.
Compensation of Directors
During 1999, the Company paid each director who was not also an employee of
the Company an annual retainer of $12,500, and awarded each such director an
option to purchase 1,025 shares of Common Stock pursuant to the Company's 1997
Stock Option Plan, being that number of options determined by dividing $10,000
by the fair market value of a share of Common Stock on May 3, 1999, the date of
the Company's 1999 Annual Meeting. During 2000, the Company will pay each
director, who is not also an employee of the Company, a $12,500 annual retainer
and will award (as of and on the date of the Company's Annual Meeting) pursuant
to the 1997 Stock Option Plan, each such director that number of options to
purchase Common Stock determined by dividing $10,000 by the fair market value of
a share of Common Stock on the date of the Annual Meeting. The Company also
reimburses directors for travel expenses incurred on behalf of the Company.
3
<PAGE>
EXECUTIVE OFFICERS AND COMPENSATION
Background of Executive Officers
<TABLE>
<CAPTION>
Name Offices Held Date of First Election Age
---- ------------ ---------------------- ---
<S> <C> <C> <C>
John E. Mitchell President and Chief April 2000 42
Executive Officer
Lisa L. Costello Executive Vice President, August 1997 30
Research and
Development
Eric J. Fernette Executive Vice President, July 1997 43
Human Resources
Dennis C. Fairchild Executive Vice President April 1999 50
and Chief Financial
Officer
</TABLE>
For further information regarding Mr. Mitchell's background, see "Nominees for
Election to the Board of Directors."
Lisa L. Costello joined the Company as a consultant in February 1993. She
assumed the position of Operations Manager of the Americas Division Mobile Group
in January 1996. In July 1996, she was promoted to Director of Research and
Development for the Company's Americas Division. In January 1997, she was
promoted to Vice President and in August 1997, to Executive Vice President,
Research and Development, with responsibility for research and development
globally. Prior to joining the Company, from June 1991 to January 1993, Ms.
Costello was a technical writer for Software Interfaces, Inc. Ms. Costello
received her B.A. from the University of St. Thomas in Houston.
Eric J. Fernette joined the Company as Executive Vice President, Human
Resources in July 1997. Prior to joining DACG, from 1987 to 1997, Mr. Fernette
was employed by Compaq North America in various capacities, most recently as
Director of Human Resources, North American Division. From 1979 to1987, Mr.
Fernette was a Human Resources Manager with ITT. Mr. Fernette received his B.S.
from Arizona State University.
Dennis C. Fairchild joined the Company in April 1999 as Executive Vice
President and Chief Financial Officer and is primarily responsible for the
finance and administrative functions of the Company. Prior to joining the
Company, Mr. Fairchild provided consulting services from April 1998 to February
1999. From April 1997 to April 1998 Mr. Fairchild was Chief Financial Officer at
National Water & Power. He also served as Chief Financial Officer at AmeriQuest
Technologies from January 1994 to April 1997 and at Southeast Frozen Foods from
March 1990 to January 1994. Mr. Fairchild received his B.A. from Mankato State
University.
4
<PAGE>
Cash and Non-Cash Compensation Paid to Certain Executive Officers
The following table sets forth, with respect to services rendered during
1999, 1998 and 1997, the total compensation earned by the Company's Chief
Executive Officer and the four most highly compensated executive officer whose
total annual salary and bonus exceeded $100,000 during 1999 (the "named
executive officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
------------
Year Annual Compensation (1) Awards
---- ----------------------- ------
Securities
Underlying All Other
Name and Principal Position Salary($) (2) Bonus($) Options (#) Compensation ($) (3)
- --------------------------- ------------- -------- ----------- --------------------
<S> <C> <C> <C> <C> <C>
Nicholas H. Marriner (4) 1999 $ 335,000 $ --- --- $ ---
Chairman of the Board and 1998 $ 432,000 $ 168,480 --- $ ---
Chief Executive Officer 1997 $ 270,000 $ 205,878 --- $ ---
Patrick J. Newton (5) 1999 $ 333,505 $ --- 98,500 $ ---
President and Chief Operating Officer 1998 $ 306,000 $ 295,068 42,000 $ 2,192,400
1997 $ 210,000 $ 95,317 8,400 $ ---
Lisa L. Costello 1999 $ 160,260 $ 40,000 33,500 $ ---
Executive Vice President - 1998 $ 156,313 $ 138,856 21,000 $ ---
Research and Development 1997 $ 113,927 $ 56,000 21,000 $ ---
Eric J. Fernette (6) 1999 $ 155,700 $ 40,000 27,250 $ ---
Executive Vice President - 1998 $ 141,583 $ 132,818 4,200 $ ---
Human Resources 1997 $ 48,159 $ 20,000 25,200 $ ---
Dennis C. Fairchild (7) 1999 $ 142,708 $ 55,000 30,750 $ 46,046
Executive Vice President - Chief 1998 $ --- $ --- --- $ ---
Financial Officer 1997 $ --- $ --- --- $ ---
</TABLE>
________________________________
(1) All figures converted to U.S. dollars based upon the exchange rate at the
end of the applicable fiscal year.
(2) Salary includes amounts deferred, if any, pursuant to the Company's 401(k)
plan.
(3) Amounts include compensation expense attributed to employee stock awards,
employer 401(k) contributions and Company perquisites. Mr. Newton's "all
other compensation" represents in 1998 shares of Common Stock awarded to
him without cash consideration. Mr. Fairchild's all other compensation
represents $33,454 in relocation costs and $12,592 in other company
perquisites.
(4) Mr. Marriner served as Chief Executive Officer of the Company through
November 30, 1999. He was elected Chief Executive Officer and President
effective February 11, 2000 and resigned his position as Chairman of the
Board of Directors, President and Chief Executive Officer effective April
3, 2000.
(5) Mr. Newton served as Chief Executive Officer of the Company effective
December 1, 1999 and resigned his position as President and Chief Executive
Officer of the Company effective February 11, 2000.
(6) Mr. Fernette was elected as an executive officer of the Company on July 28,
1997 at a base annual salary of $115,000.
5
<PAGE>
(7) Mr. Fairchild was elected as an executive officer of the Company on April
14, 1999 at a base annual salary of $175,000. Options with respect to
20,000 shares of Common Stock were granted to Mr. Fairchild on May 3,
1999.
The Company entered into employment agreements with Messrs. Marriner and
Fernette and Ms. Costello effective January 1, 1998, the initial terms of which
expired on December 31, 1998. All of the employment agreements were renewed
under the same terms on January 1, 1999. The Company entered into a change in
control separation agreement with Mr. Fairchild effective November 2, 1999. The
initial base annual salaries under the employment agreements of the named
executive officers are $432,000 for Mr. Marriner, $144,000 for Ms. Costello, and
$144,000 for Mr. Fernette. The base annual salary of each of the named executive
officers is subject to increases periodically at the discretion of the Board of
Directors, and each named executive officer may receive an annual bonus as
determined by the Board of Directors. Each of the employment agreements provides
for customary benefits, including life, health and disability insurance and
401(k) plan participation and further provides that if the employee is
terminated without cause, such employee is entitled to severance pay of up to 18
months base salary, bonus, and benefits. In the event such employee is
terminated in connection with a change in control (as defined therein), Mr.
Fernette and Ms. Costello would be entitled to receive one year's base salary
and benefits and 100% of any bonus paid with respect to the calendar year
immediately preceding termination, and Messrs. Mariner and Fairchild would be
entitled to receive two years' base salary and benefits and 200% of any bonus
paid with respect to the calendar year immediately preceding termination.
Prior to his resignation, the Company had entered into an employment
agreement with Mr. Newton effective January 1, 1998, the initial term of which
expired on December 31, 1998. The employment agreement was renewed under the
same terms on January 1, 1999. The initial base annual salary under the
employment agreement was $306,000. The base annual salary of Mr. Newton was
subject to increase periodically at the discretion of the Board of Directors,
and there was the possibility of an annual bonus as determined by the Board of
Directors. The employment agreement provided for customary benefits, including
life, health and disability insurance and 401(k) plan participation and further
provided that if Mr. Newton was terminated without cause, he was entitled to
severance pay of up to 18 months base salary, bonus, and benefits.
During 1999, the Company maintained, and was the beneficiary of "key man"
life insurance policies on the lives of Messrs. Marriner and Newton, each in the
face amount of $1.0 million. Due to resignations of both Mr. Newton and Mr.
Marriner, these policies have been cancelled.
Mr. Newton resigned his employment with the Company effective February 11,
2000. Mr. Newton received no severance upon his resignation. In connection with
Mr. Newton's resignation, the Board of Directors of the Company elected Mr.
Marriner President and Chief Executive Officer and John Mitchell as Chief
Operating Officer.
6
<PAGE>
Stock Options Granted to Certain Executive Officers During Last Fiscal Year
Under the 1997 Stock Option Plan, options to purchase Common Stock are
available for grant to directors, officers and other key employees of the
Company. The following table sets forth certain information regarding options
for the purchase of Common Stock that were awarded to the named executive
officers during 1999.
<TABLE>
<CAPTION>
OPTION GRANTS IN CALENDAR YEAR 1999
Number of Potential Realizable Gain
Securities Percent of Total at Assumed Annual Rates
Underlying Options Granted Exercise or of Stock Appreciation for
Options to Employees in Base Price Expiration Option Terms
Name Granted (#) Last Fiscal Year ($/Sh) (1) Date (2) Compounded Annually
- ---- ----------- ---------------- ----------- ---------- --------------------------
5% 10%
--- ---
<S> <C> <C> <C> <C> <C> <C>
Nicholas H. Marriner ---- ---- ---- ---- ---- ----
Patrick J. Newton 77,000 14% $ 15.00 2/4/09 $ 726,373 $ 1,840,773
21,500 4% $ 3.69 11/2/09 $ 49,893 $ 126,440
Lisa L. Costello 18,000 3% $ 15.00 2/4/09 $ 169,802 $ 430,310
15,500 3% $ 3.69 11/2/09 $ 35,970 $ 91,154
Eric J. Fernette 16,500 3% $ 15.00 2/4/09 $ 155,651 $ 394,451
10,750 2% $ 3.69 11/2/09 $ 24,947 $ 63,220
Dennis C. Fairchild 20,000 4% $ 9.75 5/2/09 $ 188,668 $ 478,123
10,750 2% $ 3.69 11/2/09 $ 24,947 $ 63,220
</TABLE>
(1) The exercise price equaled the fair market value of a share of Common
Stock on the date of grant as determined by the Board of Directors. The
exercise price is payable in cash or by delivery of shares of Common Stock
having a fair market value equal to the exercise price of the options
exercised.
(2) The options granted on February 5, 1999 and May 3, 1999 vest in one-third
installments on the second, third, and fourth anniversaries of the date of
grant. The options granted on November 3, 1999 vest in one-half
installments on the first and second anniversaries of the date of grant.
Stock Options Exercised by Named Executive Officers During 1999 and Held by
Named Executive Officers at December 31, 1999
No options granted by the Company were exercised by the named executive
officers during 1999. The following table sets forth certain information
regarding options for the purchase of Common Stock that were held by the named
executive officers.
7
<PAGE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Securities
Acquired on Value Underlying Unexercised Value of Unexercised In-the-
Name Exercise (#) Realized($) Options at December 31, 1999 Money Options at FY-End
---- ------------ ----------- ---------------------------- -----------------------
($)(1)
------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas H. Marriner --- --- --- --- --- ---
Patrick J. Newton --- --- 2,800 146,100 --- ---
Lisa L. Costello --- --- 7,000 68,500 --- ---
Eric J. Fernette --- --- 8,400 48,250 --- ---
Dennis Fairchild --- --- --- 30,750 --- ---
</TABLE>
(1) Based on $3.563 per share, the closing price of the Common Stock, as
reported by the Nasdaq National Market, on December 31, 1999.
Compensation Committee Report on Executive Compensation
The function of the Compensation Committee is to advise the Board regarding
overall compensation policies and recommend specific compensation for the
Company's senior executives. The Compensation Committee is responsible for
providing guidance to the Board of Directors regarding broad compensation
issues. The Committee is composed of Virginia L. Pierpont, Gunther E.A. Fritze
and Nigel W.E. Curlet.
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premises
that the success of the Company results from the efforts of each employee and
that a cooperative, team-oriented environment is an essential part of the
Company's culture. The Company believes in the importance of rewarding employees
for the Company's successes. Particular emphasis is placed on broad employee
equity participation through the use of stock options and annual cash bonuses
linked to overall Company profitability.
The Committee has retained a leading compensation consulting firm to advise
the Committee on the Company's executive compensation programs. The consultants'
review provides benchmarks for comparison of executive compensation to that of
other companies whose business is similar in nature to the Company's or who may
compete with the Company for executive talent. The compensation consultants
advise the Committee using resources that include publicly available information
and the consultants' prior experience.
The principal elements of the Company's executive compensation program
consist of both annual compensation (primarily base salary and annual incentive
cash bonuses) and long-term incentive compensation in the form of stock options.
Base salary, annual cash bonuses, and option grants are determined on the basis
of the overall financial performance of the Company and the performance of the
individual officer. As a result of the downturn in ERP implementations,
which the Company believes to be the result of the Year 2000 Problem, the
Company did not reach its revenue and earnings goals for 1999. Cash bonuses for
1999 were granted to key management in an effort to retain these key managers
through the downturn.
The Compensation Committee recommends base salary levels and annual cash
bonuses of the Company's senior management for approval by the Board. The Board
approved base salaries of $420,000 effective January 1999, $250,000 effective
August 1999 and $150,000 effective November 1999 for Mr. Marriner, and $336,600
effective January 1999 and $360,000 effective December 1999 for Mr. Newton.
Based on the Company's failure to meet revenue and earnings targets for 1999,
neither Mr. Marriner nor Mr. Newton was awarded a bonus for 1999.
At the direction of the Compensation Committee, the Stock Option Committee
was established to administer the 1997 Stock Option Plan. The Stock Option
Committee from time to time will grant options of the
8
<PAGE>
Company's Common Stock to executive officers in an effort to further align their
long-term interests with those of the Company and the Company's other
shareholders. In addition, in November 1999, the Stock Option Committee granted
stock options with shorter vesting periods to key management, as an incentive to
retain key personnel during the financial downturn of the Company. During 1999,
the Company granted stock options for 541,140 shares to officers and employees
of the Company (of which 190,000 were granted to executive officers of the
Company). The Compensation Committee believes that the directors', officers' and
employees' existing equity ownership and stock options sufficiently link their
interests to the financial success of the Company.
Nigel W.E. Curlet, Chair
Gunther E.A. Fritze
Virginia L. Pierpont
Stock Performance
The following Stock Performance Chart compares the Company's cumulative
total shareholder return on its Common Stock quarterly, for the period from
April 24, 1998 (the date the Common Stock commenced trading on the Nasdaq
National Market) to December 31, 1999 (the date the Company's 1999 fiscal year
ended), with the cumulative total return of the Nasdaq Composite and Nasdaq
Computer and Data Processing Indices. The comparison assumes $100 was invested
on April 24, 1998 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends.
[Performance graph appears here]
<TABLE>
<CAPTION>
Base Quarter Ending
Period
Company / Index 24 Apr 98 Jun 98 Sep 98 Dec 98 Mar 99 Jun 99 Sep 99 Dec 99
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D A CONSULTING GROUP INC 100 99.14 105.17 150.86 68.10 41.38 33.19 24.57
NASDAQ US COMPOSITE 100 101.08 91.28 118.46 132.51 144.98 148.28 214.01
NASDAQ COMPUTER & DATA PROCESSING 100 109.01 102.41 132.97 159.94 166.43 171.91 281.04
</TABLE>
9
<PAGE>
OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of March 31, 2000, with
respect to the beneficial ownership of shares of Common Stock of the Company by
each person who is known to the Company to be the beneficial owner of more than
five percent of either class of stock, by each director or nominee for director,
by each of the named executive officers, and by all directors and executive
officers as a group. Unless otherwise indicated, each person listed has sole
voting power and sole investment power over the shares indicated.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Amount and Nature of Percent of Voting
------------------------------------
Beneficial Ownership (1) Power
------------------------ -----
<S> <C> <C>
Executive Officers and Directors(2)
Nicholas H. Marriner 370,000 5.8%
Patrick J. Newton (3)............................ 117,880 1.8%
Lisa L. Costello (4)............................. 21,000 *
Eric J. Fernette (5)............................. 40,040 *
Dennis C. Fairchild.............................. --- *
Nigel W.E. Curlet (6)(7)......................... 26,375 *
Gunther E.A. Fritze (6)(8)....................... 40,925 *
Richard W. Thatcher, Jr (6)...................... 77,245 1.2%
Virginia L. Pierpont............................. 391,842 6.1%
Other Shareholders
Amicable Discretionary Trust (9)(10)(12)......... 693,200 10.8%
Worcester Discretionary Trust (9)(11)(12)........ 631,092 9.8%
Woodbourne Discretionary Trust (9)(11)(12)....... 629,034 9.8%
Dimensional Fund Advisors, Inc. (13)............. 452,000 7.0%
All directors and executive officers as a group.. 1,085,307 16.7%
(9 persons)
</TABLE>
________________
* Less than 1%
(1) Each beneficial owner's percentage ownership is determined by assuming that
options that are held by such person (but not those held by any other
person) and that are exercisable within 60 days of March 31, 2000 have been
exercised. Options that are not exercisable within 60 days of March 31,
2000 have been excluded. Unless otherwise noted, the Company believes that
all persons named in the above table have sole voting and investment power
with respect to all shares of Common Stock beneficially owned by them.
(2) The address of each of these people is: c/o DA Consulting Group, Inc., San
Felipe Plaza, 5847 San Felipe, Suite 3700, Houston, TX 77057.
(3) The total number of shares of Common Stock includes 19,600 shares of Common
Stock that may be acquired upon the exercise of stock options.
(4) The total number of shares of Common Stock includes 16,800 shares of Common
Stock that may be acquired upon the exercise of stock options.
(5) The total number of shares of Common Stock includes 9,800 shares of Common
Stock that may be acquired upon the exercise of stock options.
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<PAGE>
(6) The total number of shares includes 13,625 shares of Common Stock that may
be acquired upon the exercise of stock options.
(7) Includes 11,300 shares owned by Mr. Curlet's spouse and 1,450 shares owned
by his son.
(8) Includes 12,600 shares owned by Mr. Fritze's children.
(9) John Andrew Cowan and Roger Geoffrey Barrs are the co-trustees of each of
these trusts. Messrs. Cowan and Barrs are also trustees of the David
Michael Payne Settlement (which beneficially owns 21,000 shares of Common
Stock), the sole beneficiary of which is Piero Granelli, a former employee
of the Company.
(10) The beneficiaries under this trust include Ms. Pierpont, her children and
grandchildren, the spouses and children of any of the beneficiaries, and
any other persons or class of persons named by the trustees. As of the date
above, no other persons or classes of persons have been so named.
(11) The beneficiaries under these trusts include Ms. Pierpont, her children,
the spouses and children of any of the beneficiaries, and any other persons
or class of persons named by the trustees. As of the date above, no other
persons or classes of persons have been so named.
(12) The trustees of each of these trusts have the authority to appoint all or
any part of the capital and income of the trust for one or more of the
beneficiaries and in such names and proportions and at such time as such
trustees shall determine.
(13) Certain information with respect to the ownership of such stockholders was
obtained from Schedule 13G dated February 3, 2000, as received from the
Company. The address of this shareholder is 1299 Ocean Avenue, Eleventh
Floor, Santa Monica, CA 90401.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1999, all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than ten-percent beneficial owners were complied with.
RATIFICATION OF
APPOINTMENT OF ACCOUNTANTS
(Proposal 2)
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
public accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending December 31, 2000, and recommends that the
shareholders ratify such selection. This appointment is being submitted to the
shareholders for ratification at the Annual Meeting.
The submission of the appointment of PricewaterhouseCoopers LLP is not
required by law or by the By-laws of the Company. The Board of Directors is
nevertheless submitting it to the shareholders to ascertain their views. If the
shareholders do not ratify the appointment, the selection of other independent
public accountants will be considered by the Board of Directors. If
PricewaterhouseCoopers LLP shall decline to accept or become incapable of
accepting it appointment, or if its appointment is otherwise discontinued, the
Board of Directors will appoint other independent public accountants.
11
<PAGE>
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting, will have the opportunity to make a statement, and will be
available to respond to appropriate questions.
The Board of Directors Recommends a Vote FOR Proposal 2 to Ratify the
Appointment of PricewaterhouseCoopers LLP as Independent Accountants for the
Year Ending December 31, 2000.
APPRAISAL RIGHTS
Under Texas law, no appraisal rights are available to dissenting
shareholders in regard to either Proposal 1 or Proposal 2.
OTHER BUSINESS
Management knows of no other matters that will be presented at the Annual
Meeting. However, if any other matter properly comes before the meeting, or any
adjournment or postponement thereof, it is intended that proxies in the
accompanying form will be voted in accordance with the judgment of the persons
named therein.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1999 accompanies this Proxy Statement.
12
<PAGE>
SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for inclusion in the
Company's proxy statement and form of proxy relating to the 2001 Annual Meeting
of Stockholders, in addition to meeting the requirements of the Securities and
Exchange Commission's rules governing such proposals, the proposal must be
received by the Company at its principal executive offices not later than
January 1, 2001. In the event that the Company receives notice not later than
March 17, 2001 of a shareholder proposal intended to be presented at the 2001
Annual Meeting of Shareholders and which is not included in the Company's proxy
materials, then so long as the Company includes in its proxy statement for such
Annual Meeting advice on the nature and matter and how the named proxyholders
intend to vote the shares for which they have received discretionary authority,
such proxyholders may exercise discretionary authority with respect to such
proposal, except to the extent limited by the SEC's rules governing shareholder
proposals.
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT
FOR EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER
31, 1999. REQUESTS SHOULD BE DIRECTED TO CHIEF FINANCIAL OFFICER, DA CONSULTING
GROUP, INC., SAN FELIPE PLAZA, 5847 SAN FELIPE, SUITE 3700, HOUSTON, TX 77057.
By Order of the Board of Directors
Virginia L. Pierpont
Chair of the Board
Date: April 28, 2000
Houston, Texas
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<PAGE>
X] Please mark your votes
as in this example using dark ink only.
FOR THE WITHHOLD AUTHORITY TO
NOMINEES LISTED VOTE FOR THE NOMINEES
BELOW LISTED BELOW
1. Election of Directors: [_] [_]
FOR AGAINST ABSTAIN
2. Ratification of appointment of [_] [_] [_]
PricewaterhouseCoopers LLP as independent
accountants for the Company for the fiscal
year ending December 31, 2000:
Nominees: For a three-year term expiring at the Annual Meeting to be held
in 2003: Virginia L. Pierpont and Richard W. Thatcher. For a one-year term
expiring at the Annual Meeting to be held in 2001: John E. Mitchell.
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) on the line below.)
- --------------------------------------------------------------------------------
_____________________________________________ Date: ______________ , 2000
Signature of Shareholder(s)
NOTE: Please sign this proxy exactly as name(s) appear on your stock
certificate. When signing as attorney-in-fact, executor, administrator, trustee
or guardian, please add your title as such, and if signer is a corporation,
please sign with full corporate name by a duly authorized officer or officers
and affix the corporate seal. Where stock is issued in the name of two (2) or
more persons, all such persons should sign.
<PAGE>
DA CONSULTING GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FROM HOLDERS OF COMMON STOCK
The undersigned, revoking all previous proxies, hereby appoints Virginia L.
Pierpont and Dennis C. Fairchild, and each of them acting individually, as the
attorney and proxy of the undersigned, with full power of substitution, to vote,
as indicated below and in their discretion upon such other matters as may
properly come before the meeting, all shares of Common Stock which the
undersigned would be entitled to vote at the Annual Meeting of the Shareholders
of DA Consulting Group, Inc. to be held on June 6, 2000, and at any adjournment
or postponement thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE
SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES FOR
DIRECTOR LISTED ON THE REVERSE SIDE HEREOF AND "FOR" RATIFICATION OF APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000. THIS PROXY ALSO DELEGATES DISCRETIONARY
AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
(PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.)
SEE REVERSE SIDE
