<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NAVIGANT 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
NAVIGANT INTERNATIONAL, INC.
84 Inverness Circle East
Englewood, CO 80112-5314
May 18, 1999
TO THE STOCKHOLDERS OF NAVIGANT INTERNATIONAL, INC.:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
(the "Meeting") of Navigant International, Inc. to be held on Monday, June 14,
1999, at 9:00 a.m., Mountain Time, at the Inverness Hotel and Golf Club, 200
Inverness Drive West, Englewood, Colorado 80112.
Please read the enclosed Annual Report on Form 10-K and Proxy Statement for
the Meeting. Whether or not you plan to attend the Meeting, please sign, date
and return the proxy card in the enclosed envelope to American Stock Transfer
& Trust Company as soon as possible so that your vote will be recorded. If you
attend the Meeting, you may withdraw your proxy and vote your shares in
person.
Very truly yours,
NAVIGANT INTERNATIONAL, INC.
By: /s/ Edward S. Adams
Name: Edward S. Adams
Title:Chairman of the Board, Chief
Executive Officer and President
<PAGE>
NAVIGANT INTERNATIONAL, INC.
84 Inverness Circle East
Englewood, CO 80112-5314
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 1999
----------------
TO OUR STOCKHOLDERS:
The 1999 Annual Meeting of Stockholders (the "Meeting") of Navigant
International, Inc., a Delaware corporation (the "Company"), will be held on
Monday, June 14, 1999, at 9:00 a.m., Mountain Time, at the Inverness Hotel and
Golf Club, 200 Inverness Drive West, Englewood, Colorado 80112, for the
following purposes:
(1) to elect one Class I director to serve for a term of three years or
until his or her successor is duly elected and qualified;
(2) to consider and vote upon a proposal to approve and ratify the
appointment of PricewaterhouseCoopers LLP as the Company's independent
auditors for 1999; and
(3) to consider such other matters as may properly come before the
Meeting, and at any and all adjournments thereof.
Only stockholders of record at the close of business on May 14, 1999 are
entitled to notice of and to vote at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Eugene A. Over, Jr.
Name: Eugene A. Over, Jr.
Title:Vice President, General
Counsel and Secretary
Denver, Colorado
May 18, 1999
A PROXY CARD IS ENCLOSED. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES
YOU OWN. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE
COMPLETE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED, POSTAGE PREPAID, ADDRESSED ENVELOPE TO AMERICAN STOCK TRANSFER &
TRUST COMPANY. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IF YOU ATTEND THE MEETING.
<PAGE>
NAVIGANT INTERNATIONAL, INC.
84 INVERNESS CIRCLE EAST
ENGLEWOOD, CO 80112-5314
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 1999
----------------
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Navigant International, Inc., a Delaware corporation ("Navigant" or the
"Company"), for use at the Company's 1999 Annual Meeting of Stockholders (the
"Meeting") to be held at 9:00 a.m., Mountain Time, on Monday, June 14, 1999,
at the Inverness Hotel and Golf Club, 200 Inverness Drive West, Englewood,
Colorado 80112, and at any and all adjournments thereof. This Proxy Statement
and the accompanying form of proxy are first being mailed or given to the
stockholders of the Company on or about May 18, 1999.
The Company's Annual Report on Form 10-K (the "Annual Report"), which
includes audited financial statements for the fiscal year ended December 27,
1998, is being mailed to stockholders of the Company simultaneously with this
Proxy Statement.
INFORMATION CONCERNING SOLICITATION AND VOTING
All voting rights are vested exclusively in the holders of the Company's
common stock, $.001 par value per share (the "Common Stock"). Each share of
the Common Stock is entitled to one vote. Cumulative voting in the election of
directors is not permitted. Holders of a majority of shares entitled to vote
at the Meeting, when present in person or by proxy, constitute a quorum. On
May 14, 1999, the record date for stockholders entitled to vote at the
Meeting, 12,911,000 shares of Common Stock were issued and outstanding.
Proxies in the enclosed form will be effective if properly executed and
returned prior to the Meeting in the enclosed envelope to American Stock
Transfer & Trust Company, 6201 15th Avenue, Brooklyn, New York 11219. The
Common Stock represented by each effective proxy will be voted at the Meeting
in accordance with the instructions on the proxy. If no instructions are
indicated on a proxy, all Common Stock represented by such proxy will be voted
FOR election of the nominee named in the proxy as the Class I director, FOR
the approval and ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent auditors for the 1999 fiscal year, and, as to any
other matters of business which properly come before the Meeting, by the named
proxies at their discretion.
Any stockholder signing and mailing the enclosed proxy may revoke it at any
time before it is voted by giving written notice of the revocation to the
Company, by voting in person at the Meeting or by filing at the Meeting a
later executed proxy.
When a quorum is present in the election of a director, the nominee having
the highest number of votes cast in favor of his or her election will be
elected to the Company's Board of Directors. With respect to any other matter
which may properly come before the Meeting, unless a greater number of votes
is required by law or by the Company's Certificate of Incorporation, a matter
will be approved by the shareholders if the votes cast in favor of the matter
exceed the votes cast in opposition.
Abstentions and broker non-votes (i.e., shares held by brokers or nominees
as to which the broker or nominee indicates on a proxy that it does not have
discretionary authority to vote) will be treated as shares that are present
and entitled to vote for purposes of determining the presence of a quorum.
Because abstentions will
<PAGE>
be counted for purposes of determining the shares present or represented at
the Meeting and entitled to vote, abstentions will have the same effect as a
vote "against" the approval and ratification of PricewaterhouseCoopers LLP as
the Company's independent auditors. Abstentions on the election of the Class I
director will not have any effect on the election of the Class I director.
Broker non-votes on a particular matter are not deemed to be shares present
and entitled to vote on such matter, and, assuming the presence of a quorum,
will not affect whether any proposal is approved at the Meeting.
The Company will pay the cost of soliciting proxies in the accompanying
form. The Company has retained the services of Morrow & Co., Inc. to assist in
distributing proxy materials to brokerage houses, banks, custodians and other
nominee holders and to solicit proxies. American Stock Transfer & Trust
Company has been retained to distribute proxies to the registered shareholders
of the Company and to collect proxies. The estimated cost of such services is
approximately $3,500 plus out-of-pocket expenses. Although there are no formal
agreements to do so, proxies may also be solicited by officers and other
regular employees of the Company by telephone, telegraph or by personal
interview for which employees will not receive additional compensation.
Arrangements also may be made with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to beneficial
owners of the shares held of record by such persons, and the Company may
reimburse such persons for reasonable out-of-pocket expenses incurred by them
in so doing.
PROPOSAL ONE: ELECTION OF CLASS I DIRECTOR
General
The Company's Certificate of Incorporation provides for the classification
of the Company's Board of Directors. The Board of Directors, which currently
is composed of five members, is divided into three classes. One class stands
for re-election at each annual meeting of shareholders. The Board of Directors
currently is classified into one Class I director (Jonathan J. Ledecky), two
Class II directors (Ned A. Minor and D. Craig Young) and two Class III
directors (Edward S. Adams and Vassilios Sirpolaidis), whose terms will expire
upon the election and qualification of directors at the annual meetings of
stockholders held in 1999, 2000 and 2001, respectively. At each annual meeting
of stockholders, directors will be elected by the stockholders of the Company
for a full term of three years to succeed those directors whose terms are
expiring. The powers and responsibilities of each class of directors are
identical. All directors shall serve until their successors are duly elected
and qualified, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
Proxies cannot be voted for a greater number of persons than the number of
nominees named therein. Unless authority to vote is withheld, the persons
named in the enclosed form of proxy will vote the shares represented by such
proxy for the election of the nominee for director named below. If, at the
time of the Meeting, the nominee shall have become unavailable for any reason
for election as a director, the persons entitled to vote the proxy will vote
for such substitute nominee, if any, as they determine in their discretion. If
elected, the nominee will hold office until the year 2002 annual meeting of
stockholders or until his or her successor is elected and qualified.
Class I Director Nominee
Jonathan J. Ledecky has chosen not to run for re-election as the Class I
director. The Board of Directors has nominated Paul J. Blackney as his
replacement and unanimously recommends that the shareholders vote FOR his
election as the Class I director of the Company.
<TABLE>
<CAPTION>
Name Age Position Director Since
---- --- --------- --------------
<S> <C> <C> <C>
Paul J. Blackney............................ 52 Director N/A
</TABLE>
2
<PAGE>
CONTINUING DIRECTORS
The persons named below will continue to serve as directors of the Company
until the annual meeting of stockholders in the year indicated below and until
their successors are elected and take office. Stockholders are not voting on
the election of the Class II and Class III directors. The following table
shows the names, ages and positions of each continuing director.
CLASS II--TERM EXPIRES IN 2000
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
---- --- ------------------------ --------------
<S> <C> <C> <C>
Ned A. Minor................... 53 Director 1998
D. Craig Young................. 45 Director 1998
CLASS III--TERM EXPIRES IN 2001
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
---- --- ------------------------ --------------
<S> <C> <C> <C>
Edward S. Adams................ 48 Chairman of the Board, 1998
Chief Executive Officer,
President and Director
Vassilios Sirpolaidis.......... 51 Director 1998
</TABLE>
PROPOSAL TWO: RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected the firm of
PricewaterhouseCoopers LLP as independent auditors of the Company for the 1999
fiscal year, subject to the approval and ratification of stockholders. The
Board of Directors unanimously recommends that stockholders vote to approve
and ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for 1999. PricewaterhouseCoopers LLP has served as the
independent auditors of the Company since the Company's formation in February
1998. Representatives of PricewaterhouseCoopers LLP are expected to be present
at the Meeting, will have an opportunity to make a statement if they desire,
and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares present or
represented at the Meeting and entitled to vote is needed to ratify the
appointment of PricewaterhouseCoopers LLP as independent auditors of the
Company for 1999. If the appointment is not approved, the matter will be
referred to the Audit Committee for further review.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of outstanding
shares of the Company's Common Stock beneficially owned as of December 27,
1998, by (1) all persons known by the Company to own beneficially more than 5%
of the Company's Common Stock, (2) each director and each executive officer of
the Company, and (3) all directors and executive officers of the Company as a
group. All persons listed below have sole voting and investment power with
respect to their shares of Common Stock unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)(2)
------------------------------------ ------------------ -----------
<S> <C> <C>
Edward S. Adams(3)......................... 122,986 *
Robert C. Griffith(4)...................... 1,000 *
Douglas R. Knight(5)....................... 53,322 *
Robert P. Dunlop(6)........................ 27,573 *
Michael B. Arrington....................... -- --
John S. Coffman(7)......................... 1,000 *
Eugene A. Over, Jr.(7)..................... -- --
Neville Teagarden.......................... -- --
Jonathan J. Ledecky(8)..................... 186,391 1.4%
Vassilios Sirpolaidis(9)................... 140,170 1.1%
Ned A. Minor(10)........................... 2,000 *
D. Craig Young(10)......................... 4,100 *
All current executive officers and direc-
tors as a group (12 persons)(11).......... 538,542 4.1%
5% STOCKHOLDERS
The Baupost Group, LLC(12)................. 2,194,241 16.8%
44 Brattle Street, 5th Floor
P.O. Box 389125
Cambridge, MA 02238-9125
Capital Research and Management Compa-
ny(13).................................... 940,000 7.2%
333 South Hope Street
Los Angeles, CA 90071
SMALLCAP World Fund, Inc.(14).............. 840,000 6.4%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- --------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Shares of Common Stock subject to options, warrants and
convertible debentures currently exercisable or convertible, or
exercisable or convertible within 60 days of December 27, 1998 are deemed
outstanding for computing the percentage of the person or entity holding
such securities but are not outstanding for computing the percentage of
any other person or entity.
(2) Percentage of ownership is based on 12,929,000 shares of Common Stock
outstanding at December 27, 1998 and 137,375 shares of Common Stock
subject to options, warrants and convertible debentures currently
exercisable or convertible, or exercisable or convertible within 60 days
of December 27, 1998 are deemed outstanding for computing the percentage
of the person or entity holding such securities but are not outstanding
for computing the percentage of any other person or entity.
(3) Includes 12,353 shares held by Marcono, LLC; Mr. Adams disclaims
beneficial ownership of these shares except for his pecuniary interest
therein. Excludes 976,533 shares of Common Stock which may be acquired
upon exercise of options which are not exercisable within 60 days
following December 27, 1998.
4
<PAGE>
(4) Excludes 272,204 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 27, 1998.
(5) Includes 1,408 shares of Common Stock held by DeFranco & Knight, LLC; Mr.
Knight disclaims beneficial ownership of these shares except for his
pecuniary interest therein. Excludes 52,500 shares of Common Stock which
may be acquired upon exercise of options which are not exercisable within
60 days following December 27, 1998. On April 9, 1999, Mr. Knight
announced his decision to relinquish his duties as Chief Operating
Officer, although he continues to be employed by the Company.
(6) Excludes 25,000 shares of Common Stock which may be acquired upon the
exercise of options which are not exercisable within 60 days following
December 27, 1998.
(7) Excludes 50,000 shares of Common Stock which may be acquired upon the
exercise of options which are not exercisable within 60 days following
December 27, 1998
(8) Excludes 822,671 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 27, 1998.
(9) Excludes 10,000 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 27, 1998.
(10) Excludes 10,000 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 27, 1998.
(11) Excludes 2,278,908 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 27, 1998.
(12) The Baupost Group, LLC is a registered investment adviser. SAK
Corporation is the Manager of the Baupost Group, L.L.C. Seth A. Klarman,
as the sole director of SAK Corporation and a controlling person of
Baupost Group, LLC, may also be deemed to have beneficial ownership of
these securities. These securities include securities purchased on behalf
of a registered investment company and various limited partnerships.
(13) Capital Research and Management Company is a registered investment
adviser.
(14) SMALLCAP World Fund, Inc. is a registered investment company which is
advised by Capital Research and Management Company.
There has been no change in control of the Company since the beginning of
its last fiscal year, and there are no arrangements known to the Company,
including any pledge of securities of the Company, the operation of which may
at a subsequent date result in a change in control of the Company.
LEGAL PROCEEDINGS
The Company has been named as a defendant in a lawsuit filed by the previous
stockholders of two of the Company's subsidiaries. The lawsuit also names
Jonathan J. Ledecky, a member of the Company's Board of Directors, and certain
other executive officers of U.S. Office Products Company ("U.S. Office
Products") as defendants. The plaintiffs allege that Mr. Ledecky and the named
U.S. Office Products executive officers made fraudulent misrepresentations and
omissions about U.S. Office Products' accounting methods, the value of U.S.
Office Products' stock and U.S. Office Products' intent to spin-off its travel
business when it distributed 10,984,000 shares of Common Stock to the
shareholders of U.S. Office Products in June 1998 (the "Travel Distribution").
The plaintiffs contend that such alleged misrepresentations and omissions
induced the plaintiffs to sell their businesses to U.S. Office Products. The
Company has been named in the lawsuit as a successor to U.S. Office Products'
travel businesses. The plaintiffs contend that they may seek rescission of the
purchases of these two subsidiaries or damages for the value of the assets of
the two subsidiaries from the Company and have requested that the Company be
required to hold such assets in a constructive trust for the plaintiffs. The
Company's management intends to vigorously defend against this lawsuit.
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning each of the current
directors and executive officers of the Company, as well as the nominee for
election as Class I director. All directors serve until their successors are
duly elected and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office. Officers are appointed by
and serve at the discretion of the Company's Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Edward S. Adams......... 48 Chairman of the Board, Chief Executive Officer,
President and Director(3)
Robert C. Griffith...... 49 Chief Financial Officer and Treasurer
Douglas R. Knight....... 41 Chief Operating Officer(5)
Robert P. Dunlop........ 52 Executive Vice President, Marketing and Technology
Michael B. Arrington.... 56 Executive Vice President, Global Operations
John S. Coffman......... 37 Vice President and Corporate Controller
Eugene A. Over, Jr...... 41 Vice President, General Counsel and Secretary
Neville Teagarden....... 35 Vice President, Information Systems
Jonathan J. Ledecky..... 41 Director(1)
Vassilios Sirpolaidis... 51 Director(3)
Ned A. Minor............ 53 Director(2)
D. Craig Young.......... 44 Director(2)
Paul J. Blackney........ 52 Director(4)
</TABLE>
- --------
(1) Term expires in 1999.
(2) Term expires in 2000.
(3) Term expires in 2001.
(4) Term would expire in 2002.
(5) On April 9, 1999, Mr. Knight announced his decision to relinquish his
duties as Chief Operating Officer, although he continues to be employed by
the Company.
BUSINESS BIOGRAPHIES
Edward S. Adams has served as Chairman of the Board, Chief Executive Officer,
President and Director of the Company since February 1998. He has served as
Chairman and Chief Executive Officer of Professional Travel Corporation
("PTC"), a subsidiary of the Company, since 1983, served as President of PTC
from 1983 through April 1998, and as President of the U.S. Office Products
Corporate Travel Services Division from January 1997 through June 9, 1998.
Robert C. Griffith has served as Chief Financial Officer and Treasurer of the
Company since February 1998. He has served as Chief Financial Officer of PTC
since January 1997 and served as Chief Financial Officer of the U.S. Office
Products Corporate Travel Services Division from January 1997 through June 9,
1998. Mr. Griffith served as Vice President of Finance and Administration of
PTC from June 1993 through January 1997. Prior to joining PTC, Mr. Griffith
served as Senior Manager and Area Director of IDS Tax and Business Services, a
subsidiary of American Express, from September 1991 to June 1993. Before
joining IDS, Mr. Griffith was employed by Deloitte & Touche. Mr. Griffith is
licensed as a certified public accountant in the state of Colorado.
Douglas R. Knight has served as Chief Operating Officer of the Company since
March 1998. Mr. Knight has served as President of McGregor Travel Management,
Inc., a subsidiary of the Company ("McGregor"), since April 1993 and as
Chairman of McGregor since October 1997. Mr. Knight joined McGregor in 1987 as
Controller and became Vice President of Finance in 1989. From 1984 to 1987, Mr.
Knight worked for American Airlines and was responsible for implementing and
maintaining American Airline's travel agency accounting system, ADS, in travel
agencies across the United States.
6
<PAGE>
Robert P. Dunlop has served as Executive Vice President, Marketing and
Technology, of the Company since November 1998, and as President of the
Company's Pacific Northwest Region since August 1998. In addition, Mr. Dunlop
has served as CEO of Mutual Travel, Inc. ("Mutual Travel"), now a subsidiary
of the Company, since 1985. He entered the travel industry in 1977 as Vice
President, Finance for Doug Fox Travel in Seattle, serving as that company's
President from 1980 to 1984. Originally from England, Mr. Dunlop was educated
as an engineer and lived and worked in South Africa before coming to the
United States in 1972 as a management consultant for Touche Ross.
Michael B. Arrington has served as Executive Vice President of Global
Operations of the Company since November 1998 and as President of the
Company's Central Region since August 1998. Mr. Arrington served as President
and Chief Executive Officer of Arrington Travel Center, Inc. ("Arrington
Travel") (a subsidiary of the Company since July 1998) from August 1969
through December 1997, and as Chairman and Chief Executive Officer of
Arrington Travel from December 1997 to present. Mr. Arrington served in the
U.S. Marine Corps, First Force Reconnaissance Company, 1st Marine Division,
from 1962 through 1964. He received his bachelor of arts degree in political
science from the University of Illinois at Chicago.
John S. Coffman, has served as Vice President and Corporate Controller of
the Company since June 1998. Prior to that, Mr. Coffman was a senior manager
in the business advisory group of Price Waterhouse LLP. Mr. Coffman began with
Price Waterhouse in September 1984. Mr. Coffman is licensed as a certified
public accountant in the state of Colorado.
Eugene A. Over, Jr. has served as General Counsel and Secretary of the
Company since February 1998. He served as Legal Affairs and Administrative
Officer of U.S. Office Products' corporate travel services division from
December 1997 through June 9, 1998. Mr. Over was an attorney at Clanahan
Tanner Downing & Knowlton, P.C. from December 1994 through November 1997. From
January 1994 through November 1994, he served as General Counsel of GSA
Corporation, a private investment company. Prior to January 1994, Mr. Over was
an attorney at Montgomery, Little & McGrew, P.C.
Neville Teagarden has served as Vice President of Information Systems at the
Company since January 1999. Mr. Teagarden served as Manager and subsequently
Director of Technology Architecture at Janus Capital Corporation, from May
1996 through January 1999. From 1989 through 1996, Mr. Teagarden worked for
Advantage kbs, Inc., an information systems consulting firm. In 1993, Mr.
Teagarden was promoted to Manager and given responsibility for the consulting
practice in the western half of the United States. Mr. Teagarden has also
performed research at the Massachusetts Institute of Technology ("MIT")
Artificial Intelligence Laboratory. He received his degree in Computer Science
and Engineering from MIT.
Jonathan J. Ledecky has served as a director of the Company since June 15,
1998. Mr. Ledecky founded the predecessor to Building One Services Corporation
in February 1997 and serves as its Chairman and Chief Executive Officer. Mr.
Ledecky founded U.S. Office Products in October 1994 and served as its
Chairman of the Board until June 9, 1998, and as its Chief Executive Officer
until November 5, 1997. Mr. Ledecky serves as a director of U.S.A. Floral
Products, Inc., UniCapital Corporation, Aztec Technology Partners, School
Specialty, Inc., Workflow Management, Micro Strategy Corporation, and Building
One Services Corporation. Mr. Ledecky served from 1989 to 1991 as the
President of The Legacy Fund, Inc., and from 1991 to September 1994 as
President and Chief Executive Officer of Legacy Dealer Capital Fund, Inc., a
wholly-owned subsidiary of Steelcase Inc. Prior to his tenure at The Legacy
Fund, Inc., Mr. Ledecky was a partner at Adler and Company and a Senior Vice
President at Allied Capital Corporation, an investment management company.
Vassilios Sirpolaidis has served as a director of the Company since June 9,
1998. Mr. Sirpolaidis has been President of Mile High Office Supply Company,
Inc. ("Mile High") since 1978. U.S. Office Products acquired Mile High in July
1996. Mr. Sirpolaidis has also served as a District President of U.S. Office
Products since August 1996 and as President of Arizona Office Products, a
subsidiary of U.S. Office Products, since May 1997.
7
<PAGE>
Ned A. Minor has served as a director of the Company since June 9, 1998. Mr.
Minor has served as Director, President and Vice-President of Minor & Brown,
P.C., a private law firm, since 1977. Mr. Minor is a practicing attorney in
the state of Colorado, specializing in the areas of general corporate law and
mergers and acquisitions.
D. Craig Young has served as a director of the Company since June 9, 1998.
Mr. Young currently serves as Director, President and Chief Executive Officer
of Metronet Communications, a telecommunications company. From 1995 through
1998, Mr. Young served as the President and Chief Operating Officer of Brooks
Fiber Properties, Inc. Mr. Young served from 1993 to 1995 as Vice President of
Custom Business for Ameritech Corp., a telecommunications company based in
Chicago, Illinois. Mr. Young also serves as a director of Metronet
Communications.
Paul J. Blackney has served as Senior Vice President, Publishing and
Business Services of the American Medical Association since February 1, 1999.
From January 1998 to January 1999, Mr. Blackney provided consulting services
to XTRA On-Line and priceline.com, Inc. From 1993 to 1997, he served as
President and Chief Executive Officer of Apollo Travel Services ("Apollo"),
one of the major computerized reservation systems used by travel agencies in
the United States. Prior to his association with Apollo, Mr. Blackney held
various management positions with Covia (Apollo's predecessor) and United Air
Lines. Mr. Blackney also serves as Chairman of the Board of XTRA On-Line, a
developer and marketer of interactive reservations technology to travel
agencies and corporations. He also serves as a director of priceline.com, Inc.
Certain Transactions
On January 24, 1997, U.S. Office Products acquired PTC, which is now a
wholly-owned subsidiary of the Company, from Edward S. Adams, the Company's
Chairman of the Board, Chief Executive Officer and President, for 725,923
shares of U.S. Office Products common stock (which now represent 72,592 shares
of Common Stock) valued at $22.725 per share (the "PTC Acquisition"). In
connection with the PTC Acquisition, PTC also entered into an employment
agreement, as amended, with Mr. Adams at an annual base salary of $300,000 per
year and an employment agreement, as amended, with Robert C. Griffith, the
Company's Chief Financial Officer and Treasurer, at an annual base salary of
$200,000 per year. The Company believes that the terms of these transactions
are as favorable as could be negotiated with third parties.
On January 24, 1997, in a transaction related to the PTC Acquisition, PTC
acquired a commercial office building at 84 Inverness Circle East, Englewood,
Colorado from Marcono LLC ("Marcono"), a Colorado limited liability company,
for an aggregate purchase price of approximately $3.4 million, consisting of
68,154 shares of U.S. Office Products common stock (which now represent 6,815
shares of Common Stock) valued at $22.725 per share and PTC's assumption of
certain notes from Marcono in the aggregate amount of $1,846,721. Marcono is
owned as follows: 2% by Edward S. Adams, 2% by Mr. Adams' wife and 48% by each
of two trusts established for the benefit of Mr. Adams' two children.
Vassilios Sirpolaidis, a director of the Company, is the trustee of the two
trusts. Prior to the purchase of the office building by PTC, PTC leased the
office building from Marcono for approximately $22,000 per month. The office
building purchased by PTC is used as its headquarters and as the headquarters
of the Company. The Company believes that the terms of this transaction are as
favorable as could be negotiated with third parties.
On October 24, 1997, U.S. Office Products acquired McGregor, which is now a
wholly-owned subsidiary of the Company, from its stockholders for 1,255,008
shares of U.S. Office Products common stock (which now represent 125,501
shares of Common Stock) valued at $24.54 per share (the "McGregor
Acquisition"). One of McGregor's beneficial owners was Douglas R. Knight, who
was the Company's Chief Operating Officer. In connection with the McGregor
Acquisition, Mr. Knight received 676,265 shares of U.S. Office Products common
stock (which now represent 67,626 shares of Common Stock) valued at $24.54 per
share. Also in connection with the McGregor Acquisition, McGregor entered into
an employment agreement with Mr. Knight at an annual base salary of $250,000
per year. The Company believes that the terms of this transaction are as
favorable as could be negotiated with third parties.
8
<PAGE>
On October 28, 1997, in a transaction related to the McGregor Acquisition,
McGregor acquired portions of an office building at 112 Prospect Street,
Stamford, Connecticut from DeFranco & Knight, LLC for an aggregate purchase
price of approximately $1,035,000, consisting of 18,336 shares of U.S. Office
Products common stock (which now represent 1,834 shares of Common Stock)
valued at $24.54 per share and McGregor's assumption of a note from DeFranco &
Knight LLC in the approximate amount of $585,000. Mr. Knight is a 50% owner of
DeFranco & Knight, LLC. The Company believes that the terms of this
transaction are as favorable as could be negotiated with third parties.
Mr. Knight is a partner in an emergency travel service provider that
contracts with McGregor to provide emergency travel service to clients of
McGregor at a rate of $12.00 per emergency call. During the fiscal year ended
December 27, 1998, McGregor paid approximately $533,092 to such emergency
travel service provider.
On April 25, 1997, U.S. Office Products acquired Mutual Travel, which is now
a wholly-owned subsidiary of the Company, from its stockholders for 1,031,754
shares of U.S. Office Products common stock (which now represent approximately
103,175 shares of Common Stock) valued at $15.242 per share (the "Mutual
Acquisition"). One of Mutual Travel's beneficial owners was Robert P. Dunlop,
who is now the Company's Executive Vice President, Marketing and Technology.
In connection with the Mutual Acquisition, Mr. Dunlop received approximately
345,637 shares of U.S. Office Products common stock (which now represent
approximately 34,564 shares of Common Stock). Mutual Travel also entered into
an employment agreement with Mr. Dunlop at an annual base salary of $250,000
per year. The Company believes that the terms of these transactions are as
favorable as could be negotiated with third parties.
On July 28, 1998, PTC, a wholly-owned subsidiary of the Company, acquired
Arrington Travel from Michael B. Arrington, the Company's Executive Vice
President, Global Operations, for $17,097,911 (the "ATC Acquisition"). In
connection with the ATC Acquisition, Arrington Travel also entered into an
employment agreement with Mr. Arrington at an annual base salary of $250,000
per year. The Company believes that the terms of these transactions are as
favorable as could be negotiated with third parties.
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires directors, executive officers and beneficial owners
of more than 10% of the outstanding shares of the Company to file with the
Securities and Exchange Commission reports regarding changes in their
beneficial ownership of shares in the Company.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished
to the Company, the following are persons who, at any time during the fiscal
year, were a director, officer, beneficial owner of more than 10% of any class
of equity securities of the Company registered pursuant to Section 12 of the
Exchange Act, or any other person subject to Section 16 of the Exchange Act,
that failed to file on a timely basis, as disclosed in the above Forms,
reports required by Section 16(a) of the Exchange Act during the most recent
and prior fiscal years:
<TABLE>
<CAPTION>
NUMBER OF
PERSON LATE REPORTS TRANSACTIONS
------ ------------ ------------
<S> <C> <C>
Edward S. Adams............................... 1 2
Michael B. Arrington.......................... 1 0
John S. Coffman............................... 2 2
Robert P. Dunlop.............................. 1 0
</TABLE>
There are no known failures to file a required Form during the most recent
fiscal year.
As of April 15, 1999, based solely upon a review of Forms 3 and Forms 4 and
amendments thereto furnished to the Company, all directors and officers have
filed all forms required to be filed in the current fiscal year.
9
<PAGE>
Directors' Meetings and Committees
The entire Board of Directors met eight times during the year ended December
27, 1998. Each incumbent director except Jonathan J. Ledecky and D. Craig
Young attended at least 75% of the board meetings. The Company's Board of
Directors has appointed an Audit Committee and a Compensation Committee.
Audit Committee
The Audit Committee has as its primary responsibilities the recommendation
of an independent public accountant to audit the annual financial statements
of the Company, the review of internal and external audit functions, the
review of internal accounting controls, the review of annual financial
statements, and a review at its discretion of compliance with corporate
policies and codes of conduct. The Audit Committee is comprised of outside
directors. The current members of the Audit Committee are Messrs. Sirpolaidis,
Minor and Young. The Audit Committee met two times in 1998.
Compensation Committee
The Compensation Committee determines officers' salaries and bonuses and
administers the grant of stock options and other awards pursuant to the 1998
Stock Incentive Plan (the "Plan"). The Compensation Committee is comprised of
outside directors. The current members of the Compensation Committee are
Messrs. Sirpolaidis, Minor and Young. The Compensation Committee met three
times in person and acted once by written consent in 1998.
10
<PAGE>
DIRECTOR AND EXECUTIVE COMPENSATION
Director Compensation
Non-management directors are compensated with $10,000 of airline tickets and
other travel accommodations for their services as directors. In addition, such
directors will be paid $2,500 in cash for each committee of the Board of
Directors on which they serve and may be granted stock options under the Plan.
Non-management directors will also be reimbursed for all out-of-pocket
expenses related to their service as directors.
On June 10, 1998, Jonathan J. Ledecky received a stock option pursuant to
the Plan to purchase 822,671 shares of Common Stock at the exercise price of
$9.00 per share. The option expires on June 9, 2008, and was granted to Mr.
Ledecky in order to compensate Mr. Ledecky for services to the Company as an
employee.
On June 10, 1998, each of Ned A. Minor, Vassilios Sirpolaidis and D. Craig
Young received a stock option pursuant to the Plan to purchase 10,000 shares
of Common Stock at the exercise price of $9.00 per share. The options expire
on June 9, 2008.
Executive Compensation
Summary Compensation
The following table sets forth information with respect to the compensation
paid by all persons for services rendered to the Company and its subsidiaries
during the fiscal years ended December 27, 1998 and December 28, 1997 to the
Chief Executive Officer and to the other four most highly compensated officers
of the Company (the "Named Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual
Compensation
---------------- All Other
Name and Principal Position Year Salary Bonus Compensation(1)
--------------------------- ---- -------- ------- ---------------
<S> <C> <C> <C> <C>
Edward S. Adams.......................... 1998 $295,260 -- $8,873
Chairman of the Board, Chief Executive 1997 255,995 -- 7,640
Officer, President and Director
Robert C. Griffith....................... 1998 188,333 -- 5,458
Chief Financial Officer and Treasurer 1997 146,689 -- 4,700
Douglas R. Knight(2)..................... 1998 251,923 -- 2,891
Chief Operating Officer
Robert P. Dunlop(3)...................... 1998 235,437 $57,971 21,667
Executive Vice President, Marketing and
Technology
Michael B. Arrington(4).................. 1998 118,273 -- --
Executive Vice President, Global
Operations
</TABLE>
- --------
(1) Represents automobile expenses paid by the Company.
(2) Mr. Knight became an employee of the Company effective October 1997 and
became an officer of the Company effective March 1998. On April 9, 1999,
Mr. Knight announced his decision to relinquish his duties as Chief
Operating Officer, although he continues to be employed by the Company.
(3) Mr. Dunlop became an officer of the Company effective November 1998.
(4) Mr. Arrington became an employee of the Company effective July 1998 and
became an officer of the Company effective November 1998.
11
<PAGE>
Option Grants
The following table sets forth certain information regarding options to
acquire Common Stock granted to the Named Officers during the fiscal year
ended December 27, 1998.
Options Granted in Fiscal Year 1998
<TABLE>
<CAPTION>
Options Granted in Potential Realizable
Fiscal Year 1998 Value at Assumed
--------------------------- Annual Rate of Stock
Percent of Total Price Appreciation for
Options Granted Option Term(4)(5)
Options in Fiscal Exercise Expiration ----------------------
Name Granted Year(2) Price Date 5% 10%
---- ------- ---------------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Edward S. Adams......... 746,667(1) 27.3 $11.89(3) 3/20/08 $4,486,781 $11,370,384
376,500 13.8 9.00 6/10/08 2,131,009 5,400,396
Robert C. Griffith...... 186,667(1) 6.8 11.89(3) 3/20/08 1,205,412 3,054,751
111,000 4.0 9.00 6/10/08 628,266 1,592,149
Douglas R. Knight....... 52,500 1.9 9.00 6/10/08 297,153 753,043
Robert P. Dunlop........ 25,000 0.9 9.00 6/10/08 141,501 358,592
Michael B. Arrington.... -- -- -- -- -- --
</TABLE>
- --------
(1) Options were granted by U.S. Office Products to acquire U.S. Office
Products common stock, and were replaced with options to acquire Common
Stock in connection with the Travel Distribution. Of these options granted
by U.S. Office Products in 1998, 146,634 of Mr. Adams' options and 25,463
of Mr. Griffith's options were repurchased with U.S. Office Products'
tender of 23.2% of outstanding shares and options in connection with its
strategic restructuring and these options were not replaced with options
to acquire Common Stock.
(2) Based on options granted in 1998 to purchase an aggregate of 2,730,540
shares of Common Stock.
(3) The original exercise prices of the options to acquire U.S. Office
Products common stock were $18.50 per share, which exercise prices were
adjusted when they were replaced with options to acquire Common Stock in
connection with the Travel Distribution to be $11.89.
(4) The potential realizable value is calculated based on the term of the
option at its time of grant (10 years) and is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciated price. The 5% and 10% assumed rates of appreciation are
derived from the rules of the SEC and do not represent the Company's
estimate or projection of the future Common Stock price.
(5) Excludes the options that were repurchased by U.S. Office Products
immediately prior to the Travel Distribution (see note (1) above).
12
<PAGE>
Option Exercises and Holdings
The following table sets forth certain information regarding option
exercises and unexercised options held by the Named Officers at December 27,
1998.
Aggregated Option Exercises in Fiscal Year Ended December 27, 1998
and Fiscal Year-End 1998 Option Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options Held at In-the-Money Options at
Shares December 27, 1998 December 27, 1998
Acquired Value ------------------------- -------------------------
Name on Exercise(1) Realized($)(2) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward S. Adams......... 181,634 $1,067,428 -- 976,533 -- --
Robert C. Griffith...... 48,796 316,586 -- 272,204 -- --
Douglas R. Knight....... -- -- -- 52,500 -- --
Robert P. Dunlop........ -- -- -- 25,000 -- --
Michael B. Arrington.... -- -- -- -- -- --
</TABLE>
- --------
(1) Options were repurchased with U.S. Office Products' tender of 23.2% of
outstanding shares and options for $17.36 per share post-Travel
Distribution ($27.00 prior to the Travel Distribution) in connection with
its strategic restructuring.
(2) Values stated are the bargain element recognized in 1998, which is the
difference between the option price and the market price (or price
tendered by U.S. Office Products) at the time of exercise.
1998 Stock Incentive Plan
The Company has adopted the Plan. The purpose of the Plan is to promote the
long-term growth and profitability of the Company by providing employees with
incentives to improve stockholder value and contribute to the growth and
financial success of the Company. The Plan also allows the Company to attract,
retain and reward highly motivated and qualified employees. The maximum
percentage of shares of Common Stock that may be issued with respect to awards
granted under the Plan is 30% of the outstanding Common Stock. The maximum
number of shares that may be issued with respect to awards granted under the
Plan to an individual in a calendar year may not exceed 1,100,000 shares. The
Compensation Committee of the Board of Directors administers the Plan. All
employees of the Company and its subsidiaries, as well as non-employee
directors of the Company, are eligible to receive awards under the Plan. The
Plan authorizes the Compensation Committee to make awards of stock options,
restricted stock and other stock-based awards. The Compensation Committee will
determine the prices, vesting schedules, expiration dates and other material
conditions under which such awards may be exercised.
Ledecky Services Agreement
Jonathan J. Ledecky entered into a services agreement (the "Ledecky Services
Agreement") with U.S. Office Products on January 13, 1998, which agreement was
amended as of June 8, 1998. The principal terms of the Ledecky Services
Agreement, as amended, are summarized below.
The Ledecky Services Agreement, which continues through June 30, 2001,
provides that Mr. Ledecky will provide high-level acquisition negotiation
services and strategic business advice to the Board of Directors of U.S.
Office Products.
The Company entered into an employment agreement with Mr. Ledecky, effective
as of June 10, 1998, that implemented its assigned portion of the Ledecky
Services Agreement. Under the employment agreement, Mr. Ledecky will report to
the Board of Directors and senior management of the Company. In such capacity,
Mr. Ledecky will provide high-level acquisition negotiations services and
strategic business advice. The Company can require Mr. Ledecky's performance
of such services, consistent with his other contractual
13
<PAGE>
obligations to Consolidation Capital Corporation, U.S. Office Products and the
other companies that were spun off by U.S. Office Products (the "Spin-Off
Companies"). As an employee, Mr. Ledecky will also be subject to the generally
applicable personnel policies of the Company and will be eligible for such
benefit plans in accordance with their terms. The Company will pay Mr. Ledecky
an annual salary of $48,000 for up to two years. The Company may terminate Mr.
Ledecky's employment with "cause," where cause includes (1) his conviction of
or guilty or nolo contendere plea to a felony demonstrably and materially
injurious to the Company or (2) his violation of the non-competition provision
as it relates to the Company.
The Ledecky Services Agreement provides for non-competition and non-
solicitation restrictions that continue, in the case of the Company, until the
later of June 10, 2000 or the date one year after Mr. Ledecky leaves the
Company's employ. These provisions generally restrict Mr. Ledecky from, among
other things, investing in or working for, or on behalf of, any business
selling any products or services in direct competition with U.S. Office
Products or the Spin-Off Companies (collectively, the "U.S. Office Products
Companies"), within 100 miles of any location where the relevant U.S. Office
Products Company regularly maintains an office with employees. (For this
purpose, "products or services" are those that U.S. Office Products offered on
January 13, 1998). Notwithstanding this prohibition, Mr. Ledecky may serve in
a policy-making role (but not engage in direct personal competition) with
respect to certain businesses including: (1) businesses providing Internet
access services and (2) U.S. Marketing Services' incentive marketing
businesses (as currently publicly described to include travel incentives), but
Mr. Ledecky must cease serving as a director and be solely an investor after
that company is public. The Ledecky Services Agreement prohibits Mr. Ledecky
from trying to hire away managerial employees of the U.S. Office Products
Companies or calling upon customers of the U.S. Office Products Companies to
solicit or sell products or services in direct competition with the U.S.
Office Products Companies. The Company can enforce the non-competition
provision described above as it applies to the Company.
Employment Contracts and Related Matters
On June 9, 1998, Mr. Adams' employment agreement with PTC was assigned to
the Company and amended. As amended, the agreement provides for a term of five
years, and provides that Mr. Adams is entitled to receive minimum annual
compensation of $300,000. In addition, Mr. Adams is entitled to receive
incentive bonuses as determined by the Company's Board of Directors, all
perquisites and benefits customarily provided by the Company to its employees
and reimbursement for the actual cost of leasing an automobile for business
use (not to exceed $712 per month). If Mr. Adams' employment is terminated for
any reason other than cause, Mr. Adams is entitled to receive his base salary
and benefits for the longer of (1) six months from the date of termination or
(2) the remaining time under the initial term of the employment agreement
(subject to a right of offset if Mr. Adams secures other employment during the
period that payment is continuing under the agreement). The employment
agreement also prohibits Mr. Adams from engaging in certain activities deemed
competitive with the Company or its affiliates during the duration of his
employment with the Company and for the longer of (1) a period of two years
thereafter or (2) as long as Mr. Adams continues to receive severance payments
from the Company.
On June 9, 1998, Mr. Griffith's employment agreement with PTC was assigned
to the Company and amended. As amended, the agreement provides for a term of
five years, and provides that Mr. Griffith is entitled to receive minimum
annual compensation of $200,000. In addition, Mr. Griffith is entitled to
receive incentive bonuses as determined by the Company's Board of Directors,
all perquisites and benefits customarily provided by the Company to its
employees and reimbursement for the actual cost of leasing an automobile for
business use (not to exceed $438 per month). In the event that Mr. Griffith's
employment is terminated for any reason other than cause, Mr. Griffith's
employment agreement provides that Mr. Griffith is entitled to receive his
base salary and benefits for the longer of (1) four months from the date of
termination or (2) the remaining time under the initial term of the employment
agreement, subject to a right of offset if Mr. Griffith secures other
employment during the period that payment is continuing under the agreement.
The employment agreement also prohibits Mr. Griffith from engaging in certain
activities deemed competitive with the Company or its affiliates during the
14
<PAGE>
duration of his employment with the Company and for the longer of (1) a period
of two years thereafter or (2) as long as Mr. Griffith continues to receive
severance payments from the Company.
On June 9, 1998, Mr. Knight's employment agreement with McGregor was
assigned to the Company and amended. As amended, the agreement provides for a
term of two years, and provides that Mr. Knight is entitled to receive minimum
annual compensation of $250,000. In addition, Mr. Knight is entitled to
receive all perquisites and benefits customarily provided by the Company to
its employees and reimbursement for the actual cost of leasing an automobile
for business use (not to exceed $550 per month). In the event that Mr.
Knight's employment is terminated without cause, Mr. Knight's employment
agreement provides that Mr. Knight is entitled to receive severance
compensation at the rate of $250,000 per year for whatever time period is
remaining under the term of the agreement, subject to a right of offset if Mr.
Knight secures other employment during the period that payment is continuing
under the agreement. The employment agreement also prohibits Mr. Knight from
engaging in certain activities deemed competitive with the Company or its
affiliates during the duration of his employment with the Company and for the
longer of (1) a period of one year thereafter or (2) as long as Mr. Knight
continues to receive severance payments from the Company.
On April 25, 1997, Mr. Dunlop entered into an employment agreement with
Mutual Travel. The agreement provides for a two-year term, with an additional
year at the option of Mutual Travel, and a base salary of $250,000 per year.
In addition, Mr. Dunlop is entitled to receive incentive bonuses as determined
by the Company's Board of Directors, and all perquisites and benefits
customarily provided by Mutual Travel to its employees. If Mr. Dunlop's
employment is terminated without cause, Mr. Dunlop is entitled to receive his
base salary for the longer of (1) three months from the date of termination
and (2) the time period remaining under the initial term of the employment
agreement, subject to a right of offset if Mr. Dunlop secures other employment
during the period that payment is continuing under the agreement. The
employment agreement also prohibits Mr. Dunlop from engaging in certain
activities deemed competitive with Mutual Travel or its affiliates during the
duration of his employment with Mutual Travel or its affiliates and for the
longer of (1) a period of one year thereafter or (2) as long as Mr. Dunlop
continues to receive severance payments from Mutual Travel.
On July 28, 1998, Mr. Arrington entered into an employment agreement with
Arrington Travel. The agreement provides for an initial four-year term, with
successive one-year extensions at the option of Arrington Travel, and a base
salary of $250,000 per year. In addition, Mr. Arrington is entitled to
participate in any incentive bonus plan adopted by the Company for all of its
senior regional executives, and all perquisites and benefits customarily
provided by Arrington Travel to its employees. If Mr. Arrington's employment
is terminated without cause, Mr. Arrington is entitled to receive his base
salary for the longer of (1) three months from the date of termination and (2)
the time period remaining under the initial term of the employment agreement,
subject to a right of offset if Mr. Arrington secures other employment during
the period that payment is continuing under the agreement. The employment
agreement also prohibits Mr. Arrington from engaging in certain activities
deemed competitive with Arrington Travel or its affiliates during the duration
of his employment with Arrington Travel or its affiliates and for the longer
of (1) a period of two years thereafter or (2) as long as Mr. Arrington
continues to receive severance payments from Arrington Travel.
Compensation Committee Interlocks and Insider Participation
The Board of Directors has created a Compensation Committee consisting of
Vassilios Sirpolaidis, Ned A. Minor and D. Craig Young. The Compensation
Committee is charged with determining the compensation of all executive
officers. No member of the Compensation Committee has ever been an officer of
the Company or any of its subsidiaries.
Compensation Committee Report on Executive Compensation
The following report is submitted by the Compensation Committee, pursuant to
rules established by the Securities and Exchange Commission, and provides
certain information regarding compensation of the Company's executive
officers.
15
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee establishes and reviews the compensation of the
Company's executive officers: Mr. Adams, Mr. Knight, Mr. Griffith, Mr. Dunlop,
Mr. Arrington, Mr. Teagarden, Mr. Coffman and Mr. Over. The Compensation
Committee's goal is to design executive compensation packages that reward the
achievement of both short-term and long-term objectives of the Company, and
which are comparable to the packages available to similarly placed executives
within the corporate travel management industry and within companies of
similar size as the Company.
Compensation Policy. The Compensation Committee expects to adopt a
comprehensive policy in the 1999 fiscal year. In the meantime, the basic
components of executive compensation are base salary, expense allowances,
bonuses, and options. Base salary and expense allowances are set in light of
prevailing salaries and allowances for similarly placed executives within the
corporate travel management industry. Bonuses and the award of options reward
the achievement of the Company's short-term and long-term objectives.
Long Term Incentives. The Compensation Committee believes that the grant of
stock options is an appropriate method of compensating executives for the
long-term performance of the Company. The grant of stock options is intended
to reward these executives for their efforts in contributing to the dramatic
growth of the Company's business and to motivate the executives to continue to
contribute to such growth. Moreover, the Compensation Committee believes it
was appropriate to grant options at the levels granted during the 1998 fiscal
year in order to attract and retain executive officers of the caliber of these
individuals.
Additional Bonus. The Compensation Committee believes that the award of
bonuses is an appropriate way to compensate executives for a significant
contribution to the Company's objectives, or for the attainment of results
beyond expectations. At this time, the Compensation Committee has not
recommended any bonuses for any of the executive officers. Nevertheless,
bonuses may be considered by the Compensation Committee in the future as
appropriate.
Chief Executive Officer Compensation for Fiscal Year 1998. Mr. Adams'
compensation in the previous fiscal year consisted of base salary, expense
allowances and options to purchase the Company's Common Stock:
. Base Salary was set in June of 1998, and was based primarily on
prevailing salaries in the corporate travel management industry. The
Compensation Committee also considered the increased duties and
responsibilities Mr. Adams would have to undertake following the Travel
Distribution.
. Expense Allowance was also set in June of 1998, and was based on
prevailing allowances in the corporate travel management industry.
. Options. Prior to the Travel Distribution, and as part of his employment
agreement with U.S. Office Products, Mr. Adams was awarded options to
purchase U.S. Office Products common stock. In connection with the
Travel Distribution, on June 10, 1998 Mr. Adams was awarded 376,500
options to purchase the Company's Common Stock. These options were
awarded to compensate Mr. Adams for his efforts in the rapid growth of
the Company and to motivate Mr. Adams to continue to contribute to that
growth.
Since setting Mr. Adams' initial compensation, the Compensation Committee
has not authorized any further compensation increases.
COMPENSATION COMMITTEE
Vassilios Sirpolaidis
Ned A. Minor
D. Craig Young
16
<PAGE>
Performance Graph
The following graph compares the stock price performance of the Company's
common stock for the period beginning June 9, 1998, the date of the Company's
initial public offering, and ending December 27, 1998, with the cumulative
total return for the same period of (i) the Russell 2000 and (ii) a selected
peer group. These comparisons assume an investment of $100 at the beginning of
the period and the reinvestment of dividends paid during the period, if
applicable.
Note: Management cautions that the stock price performance information shown
in the graph below may not be indicative of current stock price levels or
future stock price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG NAVIGANT, PEER GROUP AND RUSSELL 2000
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period PEER
(Fiscal Year Covered) NAVIGANT GROUP RUSSELL 2000
- ------------------- ---------- --------- ------------
<S> <C> <C> <C>
Measurement Pt- 6/9/1998 $100 $100 $100
FYE 12/27/1998 $ 62.5 $ 65.0 $ 89.9
</TABLE>
The peer group selected by the Company consists of companies active in
certain sectors of the travel service industry, and which are publicly held.
The Company believes that each company within the peer group is the largest
publicly traded company in its respective sector. The Company believes that,
within its industry class, the assembly of a peer group is difficult because
the Company primarily competes with companies engaged in the corporate travel
management sector of the travel service industry, but which are not publicly
traded. The following companies comprise the peer group: Travel Services
International, Inc., Global Vacation Group, Inc. and Preview Travel, Inc.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Company's proxy materials
relating to the next annual meeting of shareholders must be received by the
Company on or before January 19, 2000.
17
<PAGE>
1998 ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 27,
1998 ACCOMPANIES THIS PROXY STATEMENT, AND WAS FILED ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION. STOCKHOLDERS WHO WISH TO OBTAIN, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS)
SHOULD ADDRESS A WRITTEN REQUEST TO NAVIGANT INTERNATIONAL, INC., ATTENTION:
JUDY WILLIAMS, 84 INVERNESS CIRCLE EAST, ENGLEWOOD, CO 80112-5314. THE COMPANY
WILL PROVIDE COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A
REASONABLE FEE.
OTHER BUSINESS
As of the date of this Proxy Statement, management was not aware of any
business not described above would be presented for consideration at the
Meeting. If any other business properly comes before the Meeting, it is
intended that the shares represented by proxies will be voted in respect
thereto in accordance with the judgment of the persons voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
/s/ Eugene A. Over, Jr.
EUGENE A. OVER, JR.
Vice President, General Counsel and
Secretary
Denver, Colorado
May 18, 1999
18
<PAGE>
PROXY PROXY
Proxy Solicited by the Board of Directors for the Annual Meeting of Stockholders
To be held June 14, 1999
The undersigned hereby appoints Edward S. Adams and Eugene A. Over, Jr., and
each of them, proxies of the undersigned, with full power of substitution, to
vote all shares of common stock of Navigant International, Inc., which the
undersigned is entitled to vote, at the Annual Meeting of Stockholders (the
"Meeting") to be held on Monday, June 14, 1999, at 9:00 a.m., Mountain Time, at
the Inverness Hotel and Golf Club, 200 Inverness Drive West, Englewood, Colorado
80112, and at any and all adjournments thereof for the following purposes:
(1) Election of Class I Director:
_______ FOR the nominee listed below (except as marked to the contrary below)
_______ WITHHOLD AUTHORITY to vote for the nominee listed below
Paul J. Blackney
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME ON THE LINE IMMEDIATELY BELOW.)
__________________________________________________________________
(2) Approval and Ratification of PricewaterhouseCoopers LLP as the Company's
independent auditors for the 1999 fiscal year:
FOR __________ AGAINST __________ ABSTAIN __________
(3) In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Meeting.
<PAGE>
(back of card)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEE FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS AND "FOR" APPROVAL
AND RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT AUDITORS.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith. The undersigned
hereby revokes any proxies given prior to the date reflected below.
Dated
________________________, 1999
______________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Please complete, date and sign exactly as your
name appears hereon. If shares are held jointly,
each holder should sign. When signing as
attorney, executor, administrator, trustee,
guardian or corporate official, please add your
title.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE TO AMERICAN STOCK
TRANSFER AND TRUST COMPANY, AS AGENT FOR THE COMPANY. THE GIVING OF A PROXY
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
