<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 26, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number _____________
----------------
NAVIGANT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-2080967
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
84 INVERNESS CIRCLE EAST
ENGLEWOOD, COLORADO 80112
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number: (303) 706-0800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None. None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share
---------------------------------------
(Title of Class)
----------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ( 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [_]
The aggregate market value of the Registrant's voting stock held as of
February 29, 2000 by non-affiliates of the Registrant was $117,037,800. This
calculation assumes that certain parties may be affiliates of the Registrant
and that, therefore, 11,703,780 shares of voting stock are held by non-
affiliates. As of February 29, 2000, the Registrant had 13,100,000 shares of
its common stock and 685,000 shares of treasury stock outstanding.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth information as of December 26, 1999 (4)
concerning each of the directors, executive officers and key employees of
Navigant. 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 ..................... 49 Chairman of the Board, Chief Executive
Officer, and Director (2)
C. Thomas Nulty....................... 54 President and Chief Operating Officer
Robert C. Griffith .................. 50 Chief Financial Officer and Treasurer
Neville D. E. Teagarden ............. 36 Chief Information Officer
John S. Coffman ..................... 38 Vice President and Corporate Controller
Regina Q. Keating ................... 57 Vice President, Operations, and President, Rocky
Mountain Region
Eugene A. Over, Jr. ................. 41 Vice President, General Counsel and Secretary
Paul Shamon ......................... 36 Vice President, Marketing and Corporate Communication
Michael B. Arrington.................. 57 President, North Central Region (5)
David Buskirk ....................... 50 President, Southwest Region
Fred L. Coward, III ................. 61 President, Southeast Region
Jonathan P. Danforth ................ 44 President, Cornerstone, a Navigant International
Company
Salvatore A. DeFranco ............... 43 President, Northeast Region
Gary Pearce ......................... 43 President, South Central Region
David Quibell ....................... 53 President, Canadian Region
M. Keith Taylor ..................... 38 President, Northwest Region
Paul J. Blackney .................... 53 Director (3)
Ned A. Minor ........................ 54 Director (1)
Vassilios Sirpolaidis ............... 52 Director (2)
D. Craig Young ...................... 46 Director (1)
</TABLE>
(1) Term expires in 2000.
(2) Term expires in 2001.
(3) Term expires in 2002.
(4) On February 12, 2000, Todd R. Tarbert was named President of
NavigantVacations.com, LLC. On March 1, 2000, Kelly L. Kuhn became
President, North Central Region.
(5) On February 29, 2000, Mr. Arrington resigned as President, North Central
Region, although he continues to be employed at Arrington Travel Center,
Inc., a subsidiary of the Company.
Business Biographies
Edward S. Adams has served as Chairman of the Board, Chief Executive
Officer, and Director of the Company since February 1998. He served as President
of the Company from February 1998 to May 1999. 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 U.S. Office Products' Corporate
Travel Services Division from January 1997 through June 9, 1998.
C. Thomas Nulty has served as President and Chief Operating Officer of the
Company since May 1999. He served as President of Associated Travel Services
("Associated") (a subsidiary of the Company since June 1997) from 1984 to 1999.
He has over 30 years experience in the travel industry and is considered a
recognized expert in the field. Mr. Nulty has a degree from the University of
Utah, has served as a trustee of the Orange County Museum or Art, and has been
on the Dean's Advisory Board for the Graduate School of Business at the
University of California, Irvine.
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 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.
Neville D. E. Teagarden has served as Chief Information Officer of the
Company since November 1999. Prior to that, Mr. Teagarden served as Vice
President of Information Systems for the Company from 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. 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.
John S. Coffman, has served as Vice President, 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.
Regina Q. Keating has served as Vice President of Operations of the Company
since October 1999, and Rocky Mountain Regional President since June 1999. Ms.
Keating has also served as President of PTC since March 1998, and served as
Chief Operating Officer of PTC from 1996 to 1999. She has worked for PTC since
1983. Ms. Keating was named one of the 200 Most Powerful Travel Women in Travel
by Travel Agent Magazine in 1997, and has over 22 years experience in the travel
industry. Ms. Keating has a Bachelor of Arts degree in English from the College
of Charleston in Charleston, S.C.
Eugene A. Over, Jr. has served as Vice President, General Counsel and
Secretary of the Company since February 1998. He served as Legal Affairs and
Administrative Officer of U.S. Office Product's 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.
Paul Shamon has served as Vice President of Marketing and Corporate
Communications for the Company since November 1999. Mr. Shamon served as
President and Founder of the Denali Group, Inc. from July 1990 to October 1999.
From February 1997 to August 1998, Mr. Shamon also served as President and
Founder of the Colorado Children's Automobile Safety Association, Inc., and Vice
President of Marketing for the John Costanza Institute of Technology, Inc.
From November 1998 to August 1999, Mr. Shamon served as Vice President of
Corporate Communications for Multum Information Services, Inc.
Michael B. Arrington served as Executive Vice President of Global Operations
of the Company from November 1998 to October 1999, and as President of the
Company's North Central Region since June 1999. 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 October 1999. 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.
David F. Buskirk has served as Southwest Regional President for the Company
since June 1999, and as President of Associated from May 1999. Mr. Buskirk
joined Associated in 1987 as Regional Vice President of Associated's San Diego
Region, and was promoted to Vice President of Sales and Marketing in 1989. He
served in that capacity until his promotion to Executive Vice President and
Chief Operating Officer in May 1998. Mr. Buskirk has over 26 years experience in
the travel industry and has served in several sales and marketing positions
throughout his travel industry tenure.
Fred L. Coward III has served as Southeast Regional President for the Company
since October 1999 and as President of First Travelcorp, Inc., ("First
Travelcorp") (a subsidiary of the Company since September 1999) from September
1999. Before that, Mr. Coward was Executive Vice President of First Travelcorp
from 1991.
Jonathan P. Danforth has served as President of Cornerstone Enterprises, Inc.
("Cornerstone") (a subsidiary of the Company since September 1999) since
September 1991. Mr. Danforth was educated at Yale, studied in Switzerland and
acquired his sales and marketing training from a Fortune 500 company.
Salvatore A. DeFranco has served as Northeast Regional President for the
Company since June 1999, and as President of McGregor Travel Management, Inc.
("McGregor") (a subsidiary of the Company since October 1997) since 1998. Mr.
DeFranco joined McGregor in 1989 as Vice President of Sales, and became a co-
owner and President of McGregor in 1992. In 1997, Mr. DeFranco was awarded Ernst
& Young's "Entrepreneur of the Year" Award in the category of products and
Services.
Gary Pearce has served as South Central Regional President for the Company
from June 1999, and as President of Atlas Travel Services (a subsidiary of the
Company since July 1998) from 1993. Mr. Pearce has more than 23 years experience
in the travel industry with a focus in sales and operations.
David Quibell has served as the Company's Canadian Regional President since
October 1999. Mr. Quibell owned Travel Resources, Inc., (a subsidiary of the
Company since October 1999) and served as that company's President from 1995. He
has over 26 years experience in the travel industry. Mr. Quibell has a M.A. from
the University of Toronto and B.Ed diploma from the University of Strasbourg,
France.
M. Keith Taylor has served as Northwest Regional President for the Company
since December 1999, and served as President of Mutual Travel , Inc. ("Mutual
Travel") (a subsidiary of the Company since April 1997) from June 1999. Prior
to that, Mr. Taylor was Chief Operating Officer and Executive Vice President of
Mutual Travel from January 1999. Mr. Taylor served as Executive Vice President
of Atlas Travel Service Ltd. ("Atlas") (a subsidiary of the Company since
September 1997) from 1985 to 1989, before being promoted to President of Atlas
in 1989. Mr. Taylor has a business administration degree from British Columbia
Institute of Technology.
Paul J. Blackney has served as a director of the Company since June 14, 1999.
Mr. Blackney is Director, President and Chief Executive Officer of Worldspan,
holding these positions since October 1999. From February 1, 1999 to September
1999, Mr. Blackney was Senior Vice President, Publishing and Business Services
of the American Medical Association. 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.
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.
Vassilios Sirpolaidis has served as a director of the Company since June 9,
1998. Mr. Sirpolaidis has served as Rocky Mountain Regional President of U.S.
Office Products since April 1999. He has also served as President of Mile High
Office Supply, 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.
D. Craig Young has served as a director of the Company since June 9, 1998. Mr.
Young currently serves as Vice Chairman, President and Director of AT&T Canada
and has held these positions since June 1999. Prior to assuming these roles,
which occurred with the merger of MetroNet Communications and AT&T Canada, Mr.
Young was President and Chief Executive Officer of MetroNet Communications,
Canada's largest facilities-based competitive local exchange carrier (CLEC),
holding these positions from March 1998 to June 1999. 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.
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>
Fred L. Coward, III ...................... 1 0
Jonathan P. Danforth ..................... 1 0
David Quibell ............................ 1 0
Paul Shamon .............................. 1 0
M. Keith Taylor .......................... 1 0
David Buskirk ............................ 1 0
Salvatore A. DeFranco .................... 1 0
Regina Q. Keating ........................ 1 0
Gary Pearce .............................. 1 0
</TABLE>
There are no known failures to file a required Forms 3 or 4 during the most
recent fiscal year.
As of April 15, 2000, 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.
ITEM 11. 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 26, 1999, December 27, 1998 and December
28, 1997 to the Chief Executive Officer, to the other four most highly
compensated officers of the Company, serving at the end of the last completed
fiscal year, and to one former officer of the Company who if he were still
employed at the end of the last completed fiscal year, would have been included
(the ``Named Officers'').
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------------
All Other
- ---------------------------------------------------------- ------ Salary Bonus Compensation(1)
Year ---------- ----------- -------------------
Name and Principal Position ------
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Edward S. Adams .......................................... 1999 $300,000 -- $8,544
Chairman of the Board, Chief Executive Officer, 1998 295,260 -- 8,873
and Director 1997 255,995 -- 7,640
Michael B. Arrington(2) .................................. 1999 269,241 $26,000 --
Executive Vice President, Global Operations 1998 118,273 -- --
Salvatore A. DeFranco(3) ................................. 1999 255,752 -- --
President, Northwest Region
Robert C. Griffith ....................................... 1999 215,385 -- 5,256
Chief Financial Officer and Treasurer 1998 188,333 -- 5,458
1997 146,689 -- 4,700
C. Thomas Nulty(4) ....................................... 1999 225,632 84,516 2,077
President and Chief Operating Officer
</TABLE>
(1) Represents automobile expenses paid by the Company.
(2) Mr. Arrington became an employee of the Company effective July 1998 with the
acquisition of Arrington Travel Center, Inc., and became an officer of the
Company effective November 1998. On October 15, 1999, Mr. Arrington resigned
as an officer of Arrington Travel Center, Inc., and as Executive Vice
President Global Operations. On February 29, 2000, he announced his
intention to relinquish his duties as the Company's Regional President for
the North Central Region. Mr. Arrington, however, remains an employee of
Arrington Travel Center, Inc.
(3) Mr. DeFranco became an employee of the Company in October of 1997, with the
acquisition of McGregor Travel Management, Inc. Mr. DeFranco became an
officer of the Company on June 9, 1999.
(4) Mr. Nulty became the President and Chief Operating Officer of the Company on
May 17, 1999. Prior to that, Mr. Nulty was President of Associated Travel
Services, a subsidiary of the Company. Associated became a subsidiary of
the Company in June of 1997. Consequently, Mr. Nulty's 1999 salary includes
5 months of salary from Associated.
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 26, 1999.
Options Granted in Fiscal Year 1999
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rate of Stock Price
Options Granted in Appreciation for Option
Fiscal Year 1999 Term(2)
-------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Percent of
- -------------------------- ------------ Total
Options Granted
in Fiscal Year(1) Exercise Expiration
Options Price Date 5% 10%
Name Granted ----------- ------------ -------- --------
- -------------------------- ------------
Edward S. Adams .......... -- -- -- -- -- --
C. Thomas Nulty .......... 75,000 23.1 $ 6.81 5/11/09 $321,349 $814,363
50,000 15.4 9.00 6/09/09 242,280 652,341
40,749 12.5 12.00 6/09/09 75,207 409,398
Robert C. Griffith ....... -- -- -- -- -- --
Salvatore A. DeFranco .... -- -- -- -- -- --
Michael B. Arrington ..... -- -- -- -- -- --
</TABLE>
(1) Based on options granted in 1999 to purchase an aggregate of 886,772 shares
of Common Stock.
(2) The potential realizable value is calculated based on the term of the option
at its time of grant (10 years) and is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate
compounded annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated price.
The 5% and 10% assumed rates of appreciation are derived from the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
Option Exercises and Holdings
The following table sets forth certain information regarding option
exercises and unexercised options held by the Named Officers at December 26,
1999.
Aggregated Option Exercises in Fiscal Year Ended December 26, 1999
and Fiscal Year-End 1999 Option Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options Held at In-the-Money Options at
December 26, 1999 December 26, 1999 (1)
-------------------------- --------------------------------
Shares
- ------------------------- Acquired Value
on Exercise Realized($) Exercisable Unexercisable Exercisable
- ------------------------- -------------- --------------- ----------- ------------------------------ ---------------
Name
- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward S. Adams .......... -- -- 488,500 488,032 $1,035,375 --
C. Thomas Nulty .......... -- -- 61,376 138,624 170,305 406,220
Robert C. Griffith ....... -- -- 139,000 133,204 305,250 --
Salvatore A. DeFranco .... -- -- 25,000 25,000 68,750 --
Michael B. Arrington ..... -- -- -- -- -- --
</TABLE>
(1) The in-the-money value of unexercised options is equal to the excess of the
per share market price of the Company's common stock at December 26, 1999
over the per share exercise price multiplied by the number of unexercised
options.
1998 Stock Incentive Plan
The Company has adopted the 1998 Stock Incentive Plan (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.
Committees of the Board
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 Blackney.
Compensation Committee
The Compensation Committee determines officers' salaries and bonuses and
administers the grant of stock options and other awards pursuant to the Plan.
The Compensation Committee is comprised of outside directors. The current
members of the Compensation Committee are Messrs. Sirpolaidis, Minor, and
Blackney.
Compensation of Directors
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.
Employment Contracts and Related Matters
On June 9, 1998, Mr. Adams' pre-existing 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 May 17, 1999, Mr. Nulty entered into an employment agreement with
Navigant for a term of two years. The agreement provides that Mr. Nulty is
entitled to receive minimum annual compensation of $260,000. In addition, Mr.
Nulty is entitled to receive incentive bonuses as determined by the Company's
Board of Directors, accommodations in the Denver metropolitan area, reasonable
costs of an automobile for Mr. Nulty's use in the Denver metropolitan area,
commuting expenses for travel between Mr. Nulty's home in Orange County,
California, and the Denver metropolitan area, the stock options described above,
and all other perquisites and benefits customarily provided by the Company to
its employees. In the event that Mr. Nulty's employment is terminated for any
reason other than cause, Mr. Nulty's employment agreement provides that Mr.
Nulty is entitled to receive his base salary and medical benefits for twenty-
four months form the date of termination. The agreement further provides that
Mr. Nulty is entitled to receive his base salary and medical benefits for
twenty-four months following a change-of-control in the Company, if Mr. Nulty is
terminates his employment as a result of such change-of-control. The employment
agreement also prohibits Mr. Nulty 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 period of two years thereafter.
On June 9, 1998, Mr. Griffith's pre-existing 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 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 July 28, 1998, Mr. Arrington entered into an employment agreement with
Arrington Travel Center, Inc. ("Arrington Travel"). On October 15, 1999, Mr.
Arrington's employment agreement was amended by the parties to reflect Mr.
Arrington's resignation as an officer of Arrington and to modify certain other
terms. As amended, the agreement provides for a four-year term, with 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. 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 Paul J. Blackney. 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 Compensation Committee establishes and reviews the compensation of the
Company's executive officers: Mr. Adams, Mr. Nulty, Mr. Griffith, Ms. Keating,
Mr. Shamon, 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 2000 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 1999 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 1999. 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
Paul J. Blackney
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 26, 1999, 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.
[PERFORMANCE GRAPH]
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. until
the announcement of their acquisition by Travelocity, Inc.
ITEM 12. 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 26, 1999,
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>
------------------
Name and Address of Beneficial Owner Number of Shares Percent of Class (1)(2)
- ----------------------------------------------------------- Beneficially Owned ------------------------
------------------
<S> <C> <C>
Edward S. Adams (3) .................................... 642,992 4.9%
C. Thomas Nulty (4)...................................... 61,376 *
Robert C. Griffith (5) ................................. 144,604 1.1%
Neville D. E. Teagarden (6) ............................ -- --
John S. Coffman (7) .................................... 51,834 *
Regina Q. Keating (8) .................................. 31,352 *
Eugene A. Over, Jr. (7) ................................ 50,129 *
Paul Shamon (9).......................................... -- --
Michael B. Arrington..................................... -- --
David Buskirk (10)....................................... 1,874 *
Fred L. Coward III....................................... -- --
Jonathan P. Danforth (6)................................. -- --
Salvatore A. DeFranco (11)............................... 105,000 *
Gary Pearce.............................................. -- --
David Quibell............................................ -- --
M. Keith Taylor (6)...................................... 1,400 *
Paul J. Blackney (12) .................................. 10,000 *
Ned A. Minor (12) ...................................... 12,000 *
Vassilios Sirpolaidis (12) ............................. 160,070 1.3%
D. Craig Young (12) .................................... 14,100 *
All current executive officers and directors as a
group (20 persons)(13) ................................ 1,286,731 8.8%
5% Stockholders
Douglas A. Hirsch ...................................... 1,260,000 10.0%
c/o Seneca Capital, L.P.
527 Madison Avenue, 11th Floor
New York, NY 10022
Steven Major............................................. 885,167 7.0%
c/o Cohen Tauber Spierack & Wagner, LLP
1350 Avenue of the Americas
New York, NY 10019
</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 26, 1999 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 12,615,000 shares of Common Stock, net
of treasury stock, outstanding at December 26, 1999 and 1,962,380 shares of
Common Stock subject to options, warrants and convertible debentures
currently exercisable or convertible, or exercisable or convertible within
60 days of December 26, 1999. The shares subject to such options, warrants
and convertible debentures held by a person or entity 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 and
488,032 shares of Common Stock which may be acquired upon exercise of
options which are exercisable within 60 days following December 26, 1999.
Excludes 488,032 shares of Common Stock which may be acquired upon exercise
of options which are not exercisable within 60 days following December 26,
1999.
(4) Includes 61,376 shares of Common Stock which may be acquired upon exercise
of options which are exercisable within 60 days following December 26,
1999. Excludes 138,624 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 26, 1999.
(5) Includes 139,000 shares of Common Stock which may be acquired upon exercise
of options which are exercisable within 60 days following December 26,
1999. Excludes 133,204 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 26, 1999.
(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 26, 1999.
(7) Includes 50,000 shares of Common Stock which may be acquired upon the
exercise of options which are exercisable within 60 days following December
26, 1999.
(8) Includes 31,152 shares of Common Stock which may be acquired upon exercise
of options which are exercisable within 60 days following December 26,
1999. Excludes 18,184 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 26, 1999.
(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 26,
1999.
(10) Includes 1,874 shares of Common Stock which may be acquired upon exercise
of options which are exercisable within 60 days following December 26,
1999. Excludes 28,500 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 26, 1999.
(11) Includes 25,000 shares of Common Stock which may be acquired upon exercise
of options which are exercisable within 60 days following December 26,
1999.
(12) Includes 10,000 shares of Common Stock which may be acquired upon exercise
of options which are exercisable within 60 days following December 26,
1999.
(13) Includes 886,902 shares of Common Stock which may be acquired upon exercise
of options which are exercisable within 60 days following December 26,
1999. Excludes 891,544 shares of Common Stock which may be acquired upon
exercise of options which are not exercisable within 60 days following
December 26, 1999.
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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On May 24, 1999, McGregor Travel Management, Inc. ("McGregor Travel"), a
subsidiary of the Company, sold its interest in certain real property located at
112, Prospect Street, Stamford, Connecticut, to DeFranco & Knight, LLC. Mr.
DeFranco is a 50% owner of DeFranco & Knight, LLC. The sale price was $975,000,
and was determined by an appraisal of the property by Michaud Company, Inc.
using a sales comparison approach. McGregor Travel acquired the property on
October 28, 1997 from DeFranco & Knight, LLC for an aggregate purchase price of
approximately $1,035,000. The 1997 transaction was related to the acquisition of
McGregor Travel by U.S. Office Products. The consideration in the 1997
transaction consisted of 18,336 shares of U.S. Office Products common stock
(which now represents 1,839 shares of the Company's common stock) valued at
$24.54 per share and McGregor Travel assumption of a note in the approximate
amount of $585,000.
On May 24, 1999, McGregor Travel leased certain real estate from DeFranco &
Knight, LLC. Mr. DeFranco is a 50% owner of DeFranco & Knight, LLC. The lease is
for a term of five years, and provides for annual rental payments starting at
$180,000, and increasing by $5,000 per year during the term of the lease. The
lease is a net lease. The Company believes that the terms of this transaction
are as favorable as could be negotiated with third parties.
Mr. DeFranco is a partner in an emergency travel service provider that
contracts with McGregor Travel Management, Inc., a subsidiary of the Company, to
provide emergency travel service to clients of McGregor at a rate of $13.00 per
emergency call. During the fiscal year ended December 26, 1999, McGregor paid
approximately $533,000 to such emergency travel service provider.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: April 21, 2000
Navigant International, Inc.
a Delaware corporation
/s/ Edward S. Adams
By: _________________________________
Edward S. Adams
Chairman of the Board, Chief
Executive Officer, and Director
(Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Edward S. Adams his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him or
in his name, place and stead, in any and all capacities to sign to this report,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated as of April 21, 2000.
/s/ Robert C. Griffith
By: _________________________________
Robert C. Griffith
Chief Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
/s/ C. Thomas Nulty
By: _________________________________
C. Thomas Nulty
President and Chief Operating
Officer
/s/ Eugene A. Over, Jr.
By: _________________________________
Eugene A. Over, Jr.
Vice President, General Counsel
and Secretary
/s/ Paul Blackney
By: _________________________________
Paul Blackney
Director
<PAGE>
/s/ Vassilios Sirpolaidis
By: _________________________________
Vassilios Sirpolaidis
Director
/s/ Ned A. Minor
By: _________________________________
Ned A. Minor
Director
/s/ D. Craig Young
By: _________________________________
D. Craig Young
Director
