SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ANSWERTHINK CONSULTING GROUP, INC.
(Name of Registrant as Specified in Its Charter)
ANSWERTHINK CONSULTING GROUP, INC.
(Name of Persons(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions apply:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
1001 BRICKELL BAY DRIVE, SUITE 3000
MIAMI, FLORIDA 33131
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
The 1999 Annual Meeting of Shareholders of AnswerThink Consulting Group,
Inc. will be held at The Hotel Inter-Continental Miami, 100 Chopin Plaza,
Miami, Florida on Wednesday, May 5, 1999 at 11:00 AM. for the following
purposes:
1. To elect three Class III directors.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants for the Company.
3. To consider and act upon such other business as may properly come
before the meeting.
Whether or not you expect to attend the meeting, please sign, date and
return the enclosed proxy as promptly as possible in the enclosed stamped
envelope.
By Order of the Board of Directors
John F. Brennan
Secretary
Miami, Florida
April 15, 1999
<PAGE>
ANSWERTHINK CONSULTING GROUP, INC.
1001 BRICKELL BAY DRIVE, SUITE 3000
MIAMI, FLORIDA 33131
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1999
This Proxy Statement is furnished on or about April 15, 1999 to
shareholders of AnswerThink Consulting Group, Inc. (the "Company"), 1001
Brickell Bay Drive, Suite 3000, Miami, Florida 33131, in connection with the
solicitation by the Board of Directors of the Company of proxies to be voted at
the Annual Meeting of Shareholders. The shareholder giving the proxy has the
power to revoke the proxy at any time before it is exercised at the Annual
Meeting. Such right of revocation is not limited by or subject to compliance
with any formal procedures.
The Company will bear the cost of soliciting proxies. Copies of
solicitation material may be furnished to brokers, custodians, nominees and
other fiduciaries for forwarding to beneficial owners of shares of the
Company's Common Stock, and normal handling charges may be paid for such
forwarding service. Officers and other management employees of the Company, who
will receive no additional compensation for their services, may solicit proxies
by mail, personal interview and telephone.
At the close of business on March 22, 1999, there were 34,699,041 shares
of the Common Stock of the Company outstanding and entitled to vote at the
meeting. There were 422 record holders as of March 22, 1999, and only
shareholders of record on that date will be entitled to vote at the meeting.
Each share will have one vote.
PROPOSAL 1 - ELECTION OF DIRECTORS
GENERAL
The Board of Directors currently consists of ten members. The directors
are divided into three classes, each class serving for a staggered three-year
term. Classes II and III contain three Directors, while Class I contains four
Directors. Class I, whose term expires in 2001, consists of Messrs. Fernandez,
Montero, Rauner and Wix; Class II, whose term expires in 2000, consists of
Messrs. Bahash, Frank and Kessinger; and Class III, whose term expires at the
Annual Meeting, consists of Messrs. Miller, Knotts and Keisling. At the Annual
Meeting, three directors will be elected to fill positions in Class III. Each
of the nominees for Class III, if elected, will serve for terms expiring at the
2002 annual meeting of shareholders.
Unless otherwise instructed on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the persons named below as
nominees. The Board of Directors believes that all such nominees will stand for
election and will serve if elected. However, if any of the persons nominated by
the Board of Directors fails to stand for election or is unable to accept
election, proxies will be voted by the proxy holders for the election of such
other person or persons as the Board of Directors may recommend.
<PAGE>
The following table presents information concerning: (i) persons nominated
for election as directors of the Company; (ii) for those directors whose term
of office will continue after the meeting; and (iii) Named Executive Officers
not serving on the Board of Directors:
NOMINEES FOR ELECTION AS A DIRECTOR FOR TERMS EXPIRING IN 2002
Edmund R. Miller ........... Mr. Miller, 43, is a founder of the Company and
has been a Director of the Company since
inception. Mr. Miller is President of Miller
Capital Management, Inc. ("Miller Capital"), which
he founded in June 1996. Mr. Miller is also a
Principal of Interprise Technology Partners, L.P.
which he founded in 1999. From 1984 through May
1996, Mr. Miller was employed by Goldman, Sachs &
Co., serving since 1988 as a Vice President in
Private Client Services in the Miami office. Prior
to joining Goldman, Sachs & Co., Mr. Miller spent
four years as an International Tax Accountant at
Price Waterhouse LLP in New York. Mr. Miller
serves on the Audit and Compensation Committees of
the Board of Directors.
Ulysses S. Knotts, III ..... Mr. Knotts, 43, is a founder of the Company. He
has served as Executive Vice President of Sales
and Marketing of the Company and Director since
inception. Prior to founding the Company, Mr.
Knotts served as the Partner-in-Charge of Sales
and Marketing and Enterprise Integration Services
of KPMG Peat Marwick LLP's ("KPMG's") Strategic
Services Consulting, the firm's transformation and
IT consulting group, from 1995 to January 1997,
and as the Partner-in-Charge of Enterprise Package
Solutions from 1994 to 1995. Prior to joining
KPMG, Mr. Knotts was employed by IBM from 1980 to
1993 where he held various executive positions in
the consulting and sales and marketing areas.
Jeffrey E. Keisling ........ Mr. Keisling, 42, was appointed to the Board of
Directors during 1999. Mr. Keisling serves as
Senior Vice President and Chief Information
Officer of Advanta Corporation ("Advanta"), a
position that he has held since December of 1998.
Mr. Keisling served as the Vice President and
Chief Information Officer of Rhone-Poulenc Rorer
Pharmaceuticals from January of 1994 to October of
1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ITS NOMINEES FOR
DIRECTORS FOR TERMS TO EXPIRE AT THE 2002 ANNUAL MEETING OF THE STOCKHOLDERS,
WHICH IS DESIGNATED AS PROPOSAL 1 ON THE ENCLOSED PROXY.
2
<PAGE>
DIRECTORS CONTINUING IN OFFICE
Ted A. Fernandez ........... Mr. Fernandez, 43, is a founder of the Company.
He has served as Chief Executive Officer,
President and Chairman of its Board of Directors
since inception. Mr. Fernandez served as the
National Managing Partner of KPMG's Strategic
Services Consulting from May 1994 to January 1997.
Mr. Fernandez also served as a member of KPMG's
Management Committee from May 1995 to January
1997. From 1979 to 1993, Mr. Fernandez held
several industry, executive and client service
positions with KPMG. Mr. Fernandez serves on the
Compensation Committee of the Board of Directors.
Mr. Fernandez's term as a Director expires in
2001.
Fernando Montero ........... Mr. Montero, 52, has been a Director of the
Company since April 1998. Mr. Montero is President
of Mentor Capital Corporation, which he founded in
January 1998. Mr. Montero has also served as a
partner of the Latin America Enterprise Fund since
June 1995. From June 1987 through December 1997,
Mr. Montero was President of Hanseatic
Corporation, a private investment firm. Mr.
Montero served as Minister in the Ministry of
Energy and Mines of the Republic of Peru, from
August 1982 through December 1983, and as Deputy
Minister from August 1980 through April 1982. From
1969 to 1978, Mr. Montero held a variety of
positions with Kuhn Loeb & Co., the International
Finance Corporation, Inversiones Abancay and
Deltec International Group. Mr. Montero serves on
the Audit Committee of the Board of Directors. Mr.
Montero's term as a Director expires in 2001.
Bruce V. Rauner ............ Mr. Rauner, 43, has been a Director of the Company
since its inception. Mr. Rauner serves as managing
principal of GTCR Golder Rauner, LLC ("GTCR LLC"),
which together with its predecessors manages
approximately $2 billion in six private equity
funds. Mr. Rauner is also a director of a number
of other companies, including Province Healthcare
Company, Metamore Worldwide, Inc., Polymer Group,
Inc., the Coinmach Corporation and Lason, Inc. Mr.
Rauner's term as a Director expires in 2001.
Robert J. Bahash ........... Mr. Bahash, 54, was appointed to the Board of
Directors during 1999. Mr. Bahash is the Executive
Vice President and Chief Financial Officer of The
McGraw-Hill Companies ("McGraw- Hill"), and has
held the position since 1988. Mr. Bahash joined
McGraw-Hill in 1974 and prior to being elevated to
his current position served in several finance
related positions including Senior Vice President,
Corporate Financial Operations from 1985 to 1988.
Mr. Bahash's term as a Director expires in 2000.
3
<PAGE>
Allan R. Frank ............. Mr. Frank, 44, is a founder of the Company. He has
served as Executive Vice President and Chief
Technology Officer and Director of the Company
since inception. Prior to founding the Company,
from May 1994 to January 1997 Mr. Frank served as
the Chief Technology Officer for KPMG and as the
Partner in Charge of Enabling Technologies with
KPMG's Strategic Services Consulting. Mr. Frank
also served on KPMG's Board of Directors from
September 1994 to January 1997. Prior to 1994, Mr.
Frank held several executive and client service
responsibilities with KPMG. Mr. Frank's term as a
Director expires in 2000.
William C. Kessinger ....... Mr. Kessinger, 32 has been a Director of the
Company since inception. Mr. Kessinger joined GTCR
LLC's predecessor entity in May 1995 and became a
Principal in September 1997. Mr. Kessinger was a
Principal with The Parthenon Group from July 1994
to May 1995. From August 1992 to June 1994, Mr.
Kessinger attended Harvard Business School and
received his MBA. Prior to that time, Mr.
Kessinger served as an Associate with Prudential
Asset Management Asia from August 1988 to June
1992. Mr. Kessinger is also a director of
Excaliber, Inc., Global Imaging Systems, Inc.,
National Equipment Services, Inc., Users, Inc. and
National Computer Print, Inc. Mr. Kessinger serves
on the Audit and Compensation Committees of the
Board of Directors. Mr. Kessinger's term as a
Director expires in 2000.
Alan T.G. Wix .............. Mr. Wix, 57, was appointed to the Board in 1999.
Mr. Wix was retired in August 1998 as Managing
Director Core IT Development of Lloyds TSB
("Lloyds"), a position he held from January 1993.
From April 1990 to January 1993, Mr. Wix held the
position of Head of Development at Lloyds. Prior
to being elevated to that position, Mr. Wix held a
variety of positions within the information
systems division of Lloyds. Mr. Wix' term as
Director expires in 2001.
NAMED EXECUTIVE OFFICERS NOT ON THE BOARD OF DIRECTORS
John F. Brennan ............ Mr. Brennan, 41, served as Executive Vice
President, Acquisitions and Strategic Planning and
Secretary from August 1997 to January 1999 when he
was named Executive Vice President and Chief
Administrative Officer and Secretary. Mr. Brennan
was employed by Ryder System, Inc. ("Ryder"), as
Vice President and Treasurer from June 1996
through August 1997. From January 1994 to June
1996, Mr. Brennan served as Assistant Controller
of Operations Accounting for Ryder. Mr. Brennan
held a variety of accounting and finance positions
with Ryder from 1986 through 1994. Prior to
joining Ryder, Mr. Brennan was a Manager with
Arthur Andersen & Co.
4
<PAGE>
Luis E. San Miguel ......... Mr. San Miguel, 39, has served as Executive Vice
President, Finance and Chief Financial Officer of
the Company since inception. From 1994 through
April 1997, Mr. San Miguel served as the Chief
Financial Officer of KPMG's Strategic Services
Consulting. Prior to joining KPMG, Mr. San Miguel
spent three years with Burger King Corporation in
several positions, the last of which was Director
of Operations, Finance and Cash Management.
BOARD AND BOARD COMMITTEE INFORMATION
BOARD COMMITTEES
The Compensation Committee of the Board of Directors consists of Messrs.
Fernandez, Kessinger and Miller. The Compensation Committee is responsible for
determining compensation for the Company's executive officers and administering
the Company's Stock Plans. Mr. Fernandez does not participate in the
determination of his compensation. The Audit Committee of the Board of
Directors is comprised of Messrs. Kessinger, Miller and Montero. The Audit
Committee is responsible for making recommendations concerning the engagement
of independent public accountants, reviewing the plans and results of such
engagement with the independent public accountants, reviewing the independence
of the independent public accountants, considering the range of audit and
non-audit fees and reviewing the adequacy of the Company's internal accounting
controls. Prior to April 1998, the Company had no separate compensation
committee or audit committee, or other board committee performing equivalent
functions with respect to determining compensation for the Company's executives
or audit-related matters, and those functions were performed by the Company's
Board of Directors.
ATTENDANCE AT MEETINGS
During fiscal 1998, the Board of Directors held three meetings, and the
Compensation Committee held three meetings. During each director's service on
the Board of Directors, each director of the Company attended 75% or more of
Board of Director meetings, and 75% or more of meetings of each committee on
which he served.
DIRECTORS' FEES
Directors who are officers or employees of the Company or any subsidiary
of the Company receive no additional compensation for serving on the Board of
Directors or any of its committees. Directors who are not officers or employees
of the Company receive upon initial election to the Board an option to purchase
15,000 shares of Common Stock for a purchase price equal to the market value of
the underlying stock on the date of grant. Each option is expected to have a
term of ten years and to vest in five equal installments beginning on the first
anniversary of the date of grant. All directors will be reimbursed for travel
expenses incurred in connection with attending board and committee meetings.
Directors are not entitled to additional fees for serving on committees of the
Board of Directors.
5
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 22, 1999: (i) by each person
(or group of affiliated persons) known by the Company to be the beneficial
owner of more than 5% of the outstanding Common Stock; (ii) by each of the
Named Executive Officers; (iii) by each director of the Company; (iv) by all of
the Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(1)
- ------------------------------------------ ------------------------- --------------------
<S> <C> <C>
Ted A. Fernandez(2)(3) ................... 1,466,670 4.2%
Allan R. Frank(2) ........................ 1,466,666 4.2
Ulysses S. Knotts, III(2)(4) ............. 1,466,666 4.2
Luis E. San Miguel(2) .................... 182,664 *
Bruce Rauner(5)(6) ....................... 5,891,225 17.0
William C. Kessinger(5)(7) ............... 5,895,204 17.0
Fernando Montero(2)(8) ................... 890,096 2.6
John F. Brennan(2) ....................... 140,000 *
Alan T.G. Wix(12) ........................ 0 *
Jeffrey E. Keisling(13) .................. 200 *
Robert J. Bahash(9) ...................... 7,400 *
Golder, Thomas, Cressey, Rauner Fund V, LP
and certain affiliates(5)(10) .......... 5,891,225 17.0
Edmund R. Miller(2)(11) .................. 2,540,668 7.3
All directors and executive officers
as a group (12 persons) ................ 14,056,234 40.5
</TABLE>
- ----------------
<TABLE>
<S> <C>
* Represents less than 1%.
(1) The persons named in this table have sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws where applicable and except as indicated in the
other footnotes to this table. Beneficial ownership is determined in accordance with the rules of the United States
Securities and Exchange Commission ("SEC"). In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of Common Stock subject to options or warrants held by that person that
are currently exercisable or exercisable within 60 days after March 22, 1999 are deemed outstanding. Such shares,
however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
(2) The address for each of Messrs. Fernandez, Frank, Knotts, Brennan, San Miguel, Montero and Miller is 1001 Brickell Bay
Drive, Suite 3000, Miami, Florida 33131.
(3) Includes 1,366,670 shares held through the Aurelio E. Fernandez Trustee of the Ted A. Fernandez Flint Trust, 50,000
shares held through each of the Ted A. Fernandez, Jr. Irrevocable Trust (1998) and the Christina Marie Fernandez
Irrevocable Trust (1998).
(4) Includes 50,000 shares held through the Ulysses Knotts Irrevocable Trust.
(5) The address of each of Messrs. Rauner and Kessinger, Golder Thoma Cressey, Rauner Fund V, LP and its affiliates is
6100 Sears Tower, Chicago, Illinois 60606.
(6) Includes 5,891,225 shares owned by Golder, Thoma, Cressey, Rauner Fund V, L.P. and certain of its affiliates, as
described in footnote (10), for which Mr. Rauner disclaims beneficial ownership except to the extent of his proportionate
ownership interest therein.
(7) Includes 3,979 shares beneficially owned by Mr. Kessinger. Also includes 5,891,225 shares owned by Golder, Thoma,
Cressey, Rauner Fund V, L.P. and certain of its affiliates, as described in footnote (10), for which Mr. Kessinger
disclaims
beneficial ownership except to the extent of his proportionate ownership interest therein.
(8) Includes (i) 204,000 shares held by Mr. Montero and his wife as joint tenants; and (ii) 686,096 shares held by four
entities whose investments are managed by affiliates of Mr. Montero. Mr. Montero disclaims beneficial ownership of
the shares owned by these four entities.
(9) The address of Mr. Bahash is 1221 Avenue of the Americas, 49th Floor, New York, New York 10020.
(10) Golder, Thoma, Cressey, Rauner Fund V, L.P. ("GTCR V") owns 5,880,956 shares. GTCR Associates V, a partnership
affiliated with GTCR V, owns 10,269 shares. Messrs. Rauner and Kessinger are principals in Golder, Thoma, Cressey,
Rauner, Inc., which is the general partner of each of GTCR V and GTCR Associates V. Messrs. Rauner and Kessinger
disclaim the beneficial ownership of the shares held by such entities except to the extent of his proportionate
ownership interests therein.
(11) Includes 1,280,000 shares held through the George E. Miller Trustee of the Edmund R. Miller Flint Trust. Mr. Miller
disclaims beneficial ownership of these shares. Also includes (i) 200,000 shares held directly by Miller Capital, which
is wholly owned by Mr. Miller, (ii) 380,668 shares held directly by Southeast Investments International, Ltd., which
is an investment fund managed by Miller Capital and (iii) 680,000 shares held directly by Southeast Investments, L.P.,
which is an investment fund managed by Miller Capital and in which Mr. Miller owns, indirectly, approximately a 42%
interest. Mr. Miller disclaims the beneficial ownership of the shares owned by these entities, except to the extent
of his pecuniary interest therein.
(12) The address of Mr. Wix is 99 Merewood Road, Barnehurst, Kent, England DA7 6PH.
(13) The address of Mr. Keisling is Welsh and McKean Road, Springhouse, PA 19477.
</TABLE>
6
<PAGE>
COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to or earned by the
Company's Chief Executive Officer and the four other executive officers of the
Company (the "Named Executive Officers") whose salary and bonus for services
rendered in all capacities to the Company exceeded $100,000 during the fiscal
year 1998 (year ended January 1, 1999) . The information presented for fiscal
year 1997 is for the Inception Period (the period from April 23, 1997
(inception) to January 2, 1998):
<TABLE>
<CAPTION>
ANNUAL ANNUAL ALL OTHER
NAMES AND PRINCIPAL POSITION(S) FISCAL YEAR SALARY BONUS COMPENSATION
- ------------------------------------- ------------- ----------- -------- -----------------
<S> <C> <C> <C> <C>
Ted A. Fernandez 1998 $500,000 $ 3,846
President, Chief Executive Officer 1997 375,000 295,403(1)
and Chairman
Allan R. Frank 1998 500,000 3,846
Executive Vice President 1997 375,000 307,185(1)
and Chief Technology Officer
Ulysses S. Knotts, III 1998 500,000 3,846
Executive Vice President, 1997 375,000 216,185(1)
Sales and Marketing
John F. Brennan 1998 200,000 30,000 1,539
Executive Vice President, 1997 70,000 521
Chief Administrative Officer
Luis E. San Miguel 1998 175,000 17,500 1,346
Executive Vice President, 1997 132,708 --
Finance and Chief Financial Officer
</TABLE>
- ----------------
(1) Represents cash payments made by the Company to each of Messrs. Fernandez,
Frank and Knotts relating to obligations assumed by the Company for
compensation earned during the period from December 1, 1996 to the date
of the Company's inception.
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes the options to acquire common stock granted
to each of the Named Executive Officers during the fiscal year ended January 1,
1999:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------
NUMBER OF SECURITIES PERCENT OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN FISCAL YEAR OR BASE PRICE DATE
- -------------------------------- ---------------------- ------------------------- --------------- -----------
<S> <C> <C> <C> <C>
Ted A. Fernandez ............... -- -- -- --
Allan R. Frank ................. -- -- -- --
Ulysses S. Knotts, III ......... -- -- -- --
Luis E. San Miguel ............. -- -- -- --
John F. Brennan ................ 5,000(1) .21 $ 21.50 June 30,
2008
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
FOR OPTION TERM
----------------------
NAME 5% 10%
- -------------------------------- ---------- -----------
<S> <C> <C>
Ted A. Fernandez ............... -- --
Allan R. Frank ................. -- --
Ulysses S. Knotts, III ......... -- --
Luis E. San Miguel ............. -- --
John F. Brennan ................ $67,600 $171,350
</TABLE>
- ----------------
(1) The options granted to Mr. Brennan vest and become exercisable 50%, 25% and
25% on the second, third and fourth anniversaries of the grant date,
respectively.
7
<PAGE>
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information as of January 1, 1999
with respect to stock options owned by the Named Executive Officers as of such
date:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END
---------------------------- ---------------------------
NAME EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
- -------------------------------- ---------------------------- ---------------------------
<S> <C> <C>
Ted A. Fernandez ............... -- --
Allan R. Frank ................. -- --
Ulysses S. Knotts, III ......... -- --
Luis E. San Miguel ............. -- --
John F. Brennan ................ 0/5,000 $0/$26,875
</TABLE>
EMPLOYMENT AGREEMENTS
Each of Messrs. Fernandez, Frank and Knotts (collectively, the "Senior
Executives") entered into an employment agreement with the Company effective as
of June 2, 1998 (each, a "Senior Executive Agreement"). Each of the Senior
Executive Agreements is for a three-year term (with an automatic renewal for
one additional year on the first and each subsequent anniversary thereafter
unless either party gives contrary notice) and provides for an annual salary of
$500,000 for the applicable Senior Executive, plus a bonus to be determined and
paid pursuant to a bonus plan to be adopted by the Board of Directors for each
fiscal year. In the event a Senior Executive is terminated by the Company
without "cause" (as defined), or the Senior Executive terminates his employment
with "good reason" (as defined), other than in the case of a "change in
control" (as discussed below), that Senior Executive will be entitled to
severance payments equaling that Senior Executive's annual salary and benefits
for a one-year period from the date of termination. The Company will have the
option to extend such severance payments for an additional one-year period. In
the event the terminated Senior Executive finds new employment, the Company
will be able to cease making or reduce the severance payments and benefits. If
a Senior Executive's employment is terminated by the Company without cause or
by the Senior Executive with good reason, in either case in anticipation of, in
connection with or within one year after a "change in control" (as defined) his
salary will be continued for two years (without offset for earnings from other
employment), his benefits will be continued for two years (subject to cessation
if the Senior Executive is entitled to similar benefits from a new employer)
and stock options and shares of restricted stock then held by him will become
fully vested. Under the terms of the Senior Executive Agreements, each of the
Senior Executives agrees to preserve the confidentiality and the proprietary
nature of all information relating to the Company and its business. Each Senior
Executive Agreement contains certain non-competition and non-solicitation
provisions.
The Senior Executive Agreements replaced the employment provisions
contained in, and amended in certain other respects, the Senior Management
Agreements entered into by each of the Senior Executives on April 23, 1997 (the
"Senior Management Agreements"). The Senior Management Agreements contain
provisions affecting 800,000 shares of Common Stock held by each of the Senior
Executives (the "Time Vesting Stock"), of which 50% will vest on April 23,
1999, 25% will vest on April 23, 2000 and 25% will vest on April 23, 2001,
provided that if a Senior Executive's employment with the Company is terminated
by the Company without cause prior to April 23, 2001, then all shares of Time
Vesting Stock which have vested up to that date plus one-half of all unvested
Time Vesting Stock held by such Senior Executive on such date shall be vested
as of the date of such termination.
Luis E. San Miguel entered into an employment agreement with the Company
effective as of June 2, 1998. Mr. San Miguel's employment agreement has a
three-year term (with an automatic renewal for one additional year thereafter
and each subsequent anniversary unless either party gives
8
<PAGE>
contrary notice) and provides for an annual salary of $175,000, plus a bonus
pursuant to a bonus plan to be adopted by the Board of Directors for each
fiscal year. In the event Mr. San Miguel is terminated by the Company without
"cause" (as defined), or Mr. San Miguel terminates his employment with "good
reason" (as defined), Mr. San Miguel will be entitled to a severance payment at
the rate of his annual salary and benefits for a six-month period from the date
of termination, which may be extended at the option of the Company for an
additional six-month period. In the event Mr. San Miguel finds new employment
after termination, the Company may eliminate or reduce such severance payments
and benefits. In addition, the Company's employment agreement with Mr. San
Miguel contains provisions regarding confidentiality, proprietary information
and work product, non-competition and non-solicitation. If Mr. San Miguel's
employment is terminated by the Company without cause or by Mr. San Miguel with
good reason, in either case in anticipation of, in connection with or within
one year after a "change of control" (as defined), his salary will be continued
for one year (without offset for earnings from other employment), his benefits
will be continued for one year (subject to cessation if Mr. San Miguel is
entitled to similar benefits from a new employer) and stock options and shares
of restricted stock then held by him will become fully vested.
John F. Brennan entered into an employment agreement with the Company
effective as of March 23, 1999. Mr. Brennan's employment agreement has a
three-year term (with an automatic renewal for one additional year thereafter
and each subsequent anniversary unless either party gives contrary notice) and
provides for an annual salary of $250,000, plus a bonus pursuant to a bonus
plan to be adopted by the Board of Directors for each fiscal year. In the event
Mr. Brennan is terminated by the Company without "cause" (as defined), or Mr.
Brennan terminates his employment with "good reason" (as defined), Mr. Brennan
will be entitled to a severance payment at the rate of his annual salary and
benefits for a six-month period from the date of termination, which may be
extended at the option of the Company for an additional six-month period. In
the event Mr. Brennan finds new employment after termination, the Company may
eliminate or reduce such severance payments and benefits. In addition, the
Company's employment agreement with Mr. Brennan contains provisions regarding
confidentiality, proprietary information and work product, non-competition and
non-solicitation. If Mr. Brennan's employment is terminated by the Company
without cause or by Mr. Brennan with good reason, in either case in
anticipation of, in connection with or within one year after a "change of
control" (as defined), his salary will be continued for one year (without
offset for earnings from other employment), his benefits will be continued for
one year (subject to cessation if Mr. Brennan is entitled to similar benefits
from a new employer) and stock options and shares of restricted stock then held
by him will become fully vested.
STOCK OPTION PLANS
The Company's Stock Option Plan permits the Board of Directors, or a
committee of the Board of Directors, to grant (i) options that are intended to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), to employees of the Company, as well as
non-qualifying options to employees and to any other individual whose
participation in the Stock Option Plan is determined to be in the best
interests of the Company, (ii) shares of Common Stock, subject to certain
restrictions (the "Restricted Common Stock"), to the Company's employees,
directors and other representatives and (iii) conditional rights to receive
Restricted Common Stock in the future ("Restricted Common Stock Units"). The
Stock Option Plan authorizes the issuance of up to 10,000,000 shares of Common
Stock pursuant to options or as Restricted Common Stock or Restricted Common
Stock Units, plus shares of Common Stock awarded under any prior stock option
plan of the Company that are forfeited or otherwise terminate without the
delivery of stock (subject to anti-dilution adjustments in the event of a stock
split, recapitalization or similar transaction), provided that no more than
5,000,000 shares of Common Stock can be awarded as Restricted Common Stock.
During any calendar year, the maximum number of options that may be granted to
any one person is 3,000,000 and the maximum number of shares of Restricted
Common Stock and Restricted Common Stock Units that may be issued to any one
person is 3,000,000.
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<PAGE>
The Compensation Committee administers grants of options, which includes
establishing the exercise price per share under each option and a vesting
schedule for any options to purchase shares of Common Stock. Except as provided
by the Board of Directors, the option exercise price per share for stock
options granted under the Stock Option Plan may not be less than 100% of the
fair market value per share of Common Stock on the date of grant of the option
(or 110% of the fair market value per share of Common Stock in the case of an
incentive stock option granted to an optionee beneficially owning more than 10%
of the outstanding Common Stock). The maximum option term is ten years (or five
years in the case of an incentive stock option granted to an optionee
beneficially owning more than 10% of the outstanding Common Stock). Options may
be exercised at any time after grant, except as otherwise provided in the
particular option agreement. There is also a $100,000 limit on the value of
shares of Common Stock (determined at the time of grant) covered by incentive
stock options that become exercisable by an optionee in any year.
The Compensation Committee also determines the number of shares, the
purchase price per share and a vesting schedule for any shares of Restricted
Common Stock or Restricted Common Stock Units that are to be issued under the
Stock Option Plan. In the event a holder of Restricted Common Stock or
Restricted Common Stock Units ceases to be employed by the Company for any
reason, the Stock Option Plan provides that any unvested Restricted Common
Stock or Restricted Common Stock Units held by such person will be forfeited
immediately to the Company.
The Board of Directors may amend or terminate the Stock Option Plan with
respect to shares of Common Stock as to which options have not been granted or
with respect to shares of Restricted Common Stock or Restricted Common Stock
Units which have not been granted.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of Messrs.
Fernandez, Kessinger and Miller. The Compensation Committee is responsible for
determining compensation for the Company's executive officers and administering
the Company's Stock Plans. Mr. Fernandez does not participate in the
determination of his compensation. Prior to April 1998, the Company had no
separate compensation committee or other board committee performing equivalent
functions with respect to determining compensation for the Company's
executives, and those functions were performed by the Company's Board of
Directors. The Committee endeavors to meet no less than three times per year to
review issues associated with compensation, option awards, human resource
policies, personnel recruitment and retention and to consider, amend, or
approve the Company's bonus plan and related performance metrics recommended by
the Company's Chief Executive Officer.
The Committee has adopted a performance-based compensation policy that
considers both short-term and long-term business objectives. These two
components focus management on increasing the strength of the business and its
ability to serve customers with comprehensive, high value services, while
building an organization in a deliberate, thoughtful way. The current
compensation program applies to all employees of the Company, including its
executive officers. The Committee believes that all employees of the Company
should have the same opportunity to participate in performance-based
compensation.
The current compensation program includes three components: base salary,
performance-based cash bonus, and performance-based stock option awards. All
employees receive a stock option grant upon hire by the Company which varies
based on employee level. Additional stock options are granted on an annual
basis to those employees who made a substantial contribution to shareholder
value during the past year. Options generally vest at the rate of 50% on the
second anniversary of grant, and 25% on the third and fourth anniversaries.
This program encourages all employees to focus on activities that improve
shareholder value and enhances employee retention. Cash bonuses are accrued and
paid annually pursuant to the Company's bonus plan. The size of the bonus pool
at the conclusion of the year is based on the financial results of the Company
and partly on other objectives determined by the Company including the
generation of new business. Employees participate in the bonus pool based on
individual performance.
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<PAGE>
The bonus pool for the Company for fiscal 1998 averaged approximately 10%
of salaries and was paid in February of 1999. For fiscal 1999, the total bonus
pool opportunity will range from 5% to 25% of salaries based on the Company's
performance.
On an annual basis, the Compensation Committee approves the compensation
package for executive officers which includes base salary, performance-based
cash bonuses, and performance-based stock options. Base salaries are targeted
at competitive market levels based on each executive's experience and role in
the organization. At the February 12, 1999 Compensation Committee meeting,
compensation packages were approved for the executive officers.
Mr. Fernandez' compensation, like that of the other executive officers of
the Company, is determined in accordance with the policies set forth above. As
the Company's Chief Executive Officer, his leadership has been a significant
factor in the achievement of the Company's goals. In addition, Mr. Fernandez
has been an exceptionally effective spokesman concerning the Company's
strengths and prospects for the future. Mr. Fernandez' salary for 1998 of
$500,000 was unchanged from his 1997 salary, on an annualized basis.
Section 162(m) of the Internal Revenue Code limits tax deductions for
executive compensation to $1 million. There are several exemptions to Section
162(m), including one for qualified performance-based compensation. To be
qualified, performance-based compensation must meet various requirements,
including shareholder approval. The Committee intends to consider annually
whether it should adopt a policy regarding 162(m) and to date has concluded
that it is not appropriate to do so. One reason for this conclusion is that,
assuming the current compensation policies and philosophy remain in place,
Section 162(m) will not be applicable in the near term to any executive's
compensation.
Submitted by the members of the Compensation Committee:
Ted A. Fernandez
William C. Kessinger
Edmund R. Miller
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors, which serves the
traditional functions of a compensation committee, consists of Ted A.
Fernandez, William C. Kessinger and Edmund R. Miller. Messrs. Kessinger and
Miller were not at any time during the fiscal year ended January 1, 1999, or at
any other time, an officer or employee of the Company. No member of the
Compensation Committee of the Company serves as a member of the Board of
Directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Board of Directors or
Compensation Committee.
11
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph shows a comparison of cumulative total returns for an
investment in the Common Stock of the Company, the NASDAQ Stock Market Index
and the Hambrecht & Quist Technology Information Services Index. Although the
SEC requires the Company to present such a graph for a five-year period, the
Common Stock has been publicly traded only since May 28, 1998 and, as a result,
the following graph commences as of such date. This graph is not deemed to be
"soliciting material" or to be "filed" with the SEC or subject to the SEC's
proxy rules or to the liabilities of Section 18 of the Exchange Act of 1934,
and the graph shall not be deemed to be incorporated by reference into any
prior or subsequent filing by the Company under the Securities Act of 1933 or
the 1934 Act.
[GRAPHIC OMITTED}
<TABLE>
<CAPTION>
CUMULATIVE TOTAL
RETURN
-------------------
5/28/98 1/1/99
--------- -------
<S> <C> <C>
ANSWERTHINK CONSULTING GROUP, INC. 100 207
NASDAQ STOCK MARKET (U.S.) 100 124
HAMBRECHT & QUIST BUSINESS SERVICES SECTOR -
BUSINESS SERVICES, IT SERVICES INDEX 100 120
</TABLE>
12
<PAGE>
PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounting firm of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") has acted as the Company's independent auditors for
the year ended January 1, 1999 and has been selected by the Board of Directors
to act as such for the examination of the Company's financial statements for
the year ended December 31, 1999, subject to ratification by the shareholders.
Representatives of PricewaterhouseCoopers are expected to be present at the
shareholders' meeting and will have an opportunity to make a statement if they
desire and to respond to appropriate questions.
In the event the appointment of PricewaterhouseCoopers as independent
public auditors for the year ended December 31, 1999 is not approved by the
shareholders, the adverse vote will be considered as a direction to the Board
of Directors to consider the selection of other auditors for the following
year. However, because of the difficulty in making any substitution of auditors
so long after the beginning of the current year, it is contemplated that the
appointment for the year ended December 31, 1999 will be permitted to stand
unless the Board finds other good reason for making a change.
THE BOARD OF DIRECTORS BELIEVES THAT RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
YEAR ENDED DECEMBER 31, 1999 IS IN THE BEST INTERESTS OF ALL SHAREHOLDERS AND,
ACCORDINGLY, RECOMMENDS A VOTE FOR PROPOSAL 2. YOUR PROPOSAL WILL BE SO VOTED
UNLESS YOU SPECIFY OTHERWISE.
VOTING PROCEDURES
Shares can be voted only if the shareholder is present in person or by
proxy. Whether or not you plan to attend in person, you are encouraged to sign
and return the enclosed proxy card. The representation in person or by proxy of
at least a majority of the outstanding shares entitled to vote is necessary to
provide a quorum at the meeting. Directors are elected by a plurality of the
affirmative votes cast by the shareholders present at the Meeting (in person or
by proxy). Proposal 2 must be approved by a majority of the shares of Common
Stock voting for or against the Proposal at the Meeting. Unless otherwise
indicated, executed proxies will be voted for Proposals 1 and 2.
Abstentions and "non-votes" are counted as present in determining whether
the quorum requirement is satisfied. Abstentions and "non-votes" are treated as
votes against proposals presented to shareholders other than elections of
directors. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
SHAREHOLDER PROPOSALS
All shareholder proposals intended to be presented at the 2000 Annual
Meeting of the Company must be received by the Company no later than December
17, 1999 and must otherwise comply with the rules of the SEC for inclusion in
the Company's proxy statement and form of proxy relating to that meeting.
All proposals intended to be presented at the 2000 Annual Meeting of the
Company, which are not sought to be included in the proxy statement, must have
been received by the Company no later than March 1, 2000.
TRANSACTIONS WITH RELATED PARTIES
In September 1998, Miller Capital and certain affiliates formed Netera,
Inc. ("Netera"), a company engaged in the systems/network integration business
in the U.S. market. In connection with
13
<PAGE>
the formation of Netera, one of the Company's employees joined Netera as a
shareholder and as chief executive officer. The Company owns a 5% fully-diluted
equity interest in Netera.
The Company is a party to an Alliance Agreement, dated as of December 10,
1997 (the "Alliance Agreement"), by and among the Company and NetSol
International, Inc., a Florida corporation ("NetSol"). Pursuant to the Alliance
Agreement, the Company will receive referrals and leads on consulting and other
projects from NetSol in both the U.S. and Latin American markets, and provides
for certain commission sharing and procurement arrangements. NetSol has
provided the Company with such products as computer hardware and telephone
systems and related procurement services. For the fiscal year ended January 1,
1999, payments to NetSol for such products and services totaled approximately
$ 1.7 million. The Company believes that the terms on which such goods and
services were acquired are comparable to those that would be obtained from a
third-party vendor in arms-length transactions. GTCR V owned 33.33%, and
Messrs. Fernandez, Frank, Knotts and Miller owned 12.59%, 5.03%, 5.03% and
2.52% of NetSol's common stock, respectively.
In March, 1999, Netera acquired NetSol for $1.9 million. Pursuant to the
terms of the acquisition, and as consideration for their NetSol shares, Messrs.
Fernandez, Frank and Knotts and GTCR V received shares in Netera and committed
to make future capital contributions to Netera, and Mr. Miller received cash.
Messrs. Fernandez, Frank and Knotts assigned their Netera stock and financing
commitment to Interprise Technology Partners, L.P. ("Interprise"), an entity
controlled by Mr. Miller, in exchange for an ownership interest in Interprise.
After these transactions, Interprise and affiliates of Mr. Miller have an
approximately 75% ownership interest in Netera, and GTCR V and its affiliates
have an approximately 3.5% ownership interest in Netera.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, all reports required to be filed under Section
16 of the Securities Exchange Act were filed timely.
OTHER MATTERS
Management knows of no matters to be presented for action at the meeting
other than those mentioned above. However, if any other matters properly come
before the meeting, it is intended that the persons named in the Company's form
of proxy will vote on such other matters in accordance with their judgment of
the best interests of the Company.
By Order of the Board of Directors
John F. Brennan Secretary
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<PAGE>
PROXY
ANSWERTHINK CONSULTING GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ted A. Fernandez and John F. Brennan,
jointly and individually, as proxies, each with full power of substitution, and
hereby authorizes them to represent and to vote, as directed below, all shares
of Common Stock, par value $.001 per share, of AnswerThink Consulting Group,
Inc., a Florida corporation (the "Company"), that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders of
the Company to be held on Wednesday, May 5, 1999, or any adjournments thereof,
as follows on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS SAMPLE.
1. Election of Directors
NOMINEES: Edmund R. Miller, Ulysses S. Knotts, III
and Jeffrey E. Keisling
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[] ______________________________________ MARK HERE [ ]
For all nominees except as noted above FOR ADDRESS
CHANGE AND
NOTE BELOW
2. Proposal to ratify FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP as the [ ] [ ] [ ]
Company's independent public
accountants for the 1999 fiscal year.
3. In accordance with their discretion upon such other matters as may properly
come before the meeting and any adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSALS SET FORTH HEREIN.
(Please sign excactly as name appears on share certificate. When shares are
registered jointly, all owners must sign. Corporate owners should sign full
corporate name by an authorized person. Executors, administrators, trustees or
guardians should indicate their status when signing.)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature ____________________________ Date: ___________________________
Signature ____________________________ Date: ___________________________
