<PAGE>
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 (AMENDMENT NO. 1 )
Filed by the Registrant {X}
Filed by a Party other than the Registrant { }
Check the appropriate box:
{ } PRELIMINARY PROXY STATEMENT { } CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
{X} DEFINITIVE PROXY STATEMENT
{ } DEFINITIVE ADDITIONAL MATERIALS
{ } SOLICITING MATERIAL PURSUANT TO RULE 14a-11(c) OR RULE 14a-12
GLOBAL VACATION GROUP, INCORPORATED
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
{X} No fee required.
{ } Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
{ } Fee paid previously with preliminary materials:
{ } Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
LOGO
<PAGE>
GLOBAL VACATION GROUP, INC.
1420 NEW YORK AVENUE, N.W.
SUITE 550
WASHINGTON, D.C. 20005
(202) 347-1800
April 16, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of shareholders
of Global Vacation Group, Inc. to be held on Wednesday, May 12, 1999, at 9:00
a.m., at the Willard Inter-Continental Hotel, 1401 Pennsylvania Ave., N.W.,
Washington, D.C. 20004.
The 1999 Annual Meeting has been called for the following purposes:
- to elect one director for a term of three years;
- to ratify the appointment of our independent auditors; and
- to transact any other business as may properly come before the 1999
Annual Meeting or any adjournments thereof.
It is important that your shares be represented at the 1999 Annual Meeting.
Whether or not you plan to attend the 1999 Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed envelope
for which postage has been paid.
Very truly yours,
Roger H. Ballou
Chairman of the Board
and Chief Executive Officer
<PAGE>
GLOBAL VACATION GROUP, INC.
1420 NEW YORK AVENUE, N.W.
SUITE 550
WASHINGTON, D.C. 20005
(202) 347-1800
------------------------
NOTICE TO ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1999
------------------------
THIS IS NOTICE that the 1999 Annual Meeting of shareholders of Global
Vacation Group, Inc. will be held at the Willard Inter-Continental Hotel, 1401
Pennsylvania Ave., N.W., Washington, D.C. 20004 on Wednesday, May 12, 1999, at
9:00 a.m., for the following purposes:
(1) To elect one director for a three-year term and until his successor
shall have been elected and qualified;
(2) To ratify the appointment of our independent auditors; and
(3) To transact any other business as may properly come before the 1999
Annual Meeting or any adjournments thereof.
The board of directors has fixed April 15, 1999 as the record date for the
1999 Annual Meeting. Only shareholders of record at the close of business on
that date will receive notice of and be entitled to vote at the 1999 Annual
Meeting. All shareholders are cordially invited to attend the 1999 Annual
Meeting.
In the event that there are not sufficient votes to approve any one or more
of the foregoing proposals at the scheduled time of the 1999 Annual Meeting, the
1999 Annual Meeting may be adjourned in order to permit us to solicit further
proxies.
By Order of the Board of Directors
Roger H. Ballou
Chairman of the Board
and Chief Executive Officer
Washington, D.C.
April 16, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE 1999 ANNUAL MEETING, YOU ARE URGED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING PRE-ADDRESSED
ENVELOPE WHICH REQUIRES NO POSTAGE STAMP. YOUR PROXY MAY BE REVOKED PRIOR TO THE
VOTING BY FILING WITH THE SECRETARY OF GLOBAL VACATION GROUP A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE OR BY ATTENDING THE
1999 ANNUAL MEETING AND VOTING IN PERSON.
<PAGE>
GLOBAL VACATION GROUP, INC.
1420 NEW YORK AVENUE, N.W.
SUITE 550 WASHINGTON, D.C. 20005
(202) 347-1800
------------------------
PROXY STATEMENT
1999 ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 1999
------------------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
We are furnishing this proxy statement to shareholders of Global Vacation
Group, Inc. as part of our solicitation of proxies to be used at the 1999 Annual
Meeting of shareholders. We will hold the 1999 Annual Meeting at the Willard
Inter-Continental Hotel, 1401 Pennsylvania Ave., N.W., Washington, D.C. 20004 on
Wednesday, May 12, 1999, at 9:00 a.m.
If the enclosed form of proxy is properly signed and returned to us in time
to be voted at the 1999 Annual Meeting, we will vote the shares as instructed.
WE WILL VOTE SIGNED BUT UNMARKED PROXIES:
1. FOR THE ELECTION OF KENNETH M. DUBERSTEIN AS DIRECTOR; AND
2. FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS OUR
INDEPENDENT AUDITORS.
Under applicable rules of the Securities and Exchange Commission, the board
of directors may retain discretionary authority to vote proxies we receive on
any other matter brought before the 1999 Annual Meeting if we did not receive
notice of that matter a reasonable time before we mailed these proxy
solicitation materials to our shareholders. We did not receive notice of any
matters to be brought before the 1999 Annual Meeting. Accordingly, if any other
matters are properly brought before the 1999 Annual Meeting, the persons named
in the accompanying proxy will vote the shares as determined by a majority of
the board of directors in its discretion.
The presence of a shareholder at the 1999 Annual Meeting will not
automatically revoke that shareholder's proxy. Shareholders may, however, revoke
a proxy at any time prior to its exercise by filing with the secretary of Global
Vacation Group a written revocation or a properly signed proxy bearing a later
date or by attending the 1999 Annual Meeting and voting in person.
Global Vacation Group will pay the cost of our solicitation of proxies. In
addition to the solicitation of proxies by mail, directors, officers and regular
employees may also solicit proxies personally or by telephone or telegraph. We
will also request persons, firms and corporations holding shares in their names,
or in the names of their nominees, to send proxy material to and obtain proxies
from beneficial owners and will reimburse these persons, firms and corporations
for their reasonable expenses in so doing.
We expect to mail this proxy statement to our shareholders on or about April
16, 1999.
The securities which can be voted at the 1999 Annual Meeting consist of
shares of Global Vacation Group common stock. Each share entitles its owner to
one vote on all matters. The Global Vacation Group certificate of incorporation
does not provide for cumulative voting in the election of directors. We have
fixed the close of business on April 15, 1999 as the record date for
determination of shareholders entitled to vote at the 1999 Annual Meeting. The
number of shares of common stock outstanding on the record date was 14,747,576.
1
<PAGE>
The presence, in person or by proxy, of at least a majority of the
outstanding shares of common stock is necessary to constitute a quorum at the
1999 Annual Meeting. We have appointed inspectors to tabulate shareholders'
votes. Abstentions and broker non-votes will be counted for purposes of
determining the presence of a quorum at the 1999 Annual Meeting. Abstentions and
broker non-votes will not be counted, however, as votes cast on any matter.
A copy of our Annual Report to Shareholders for the year ended December 31,
1998 accompanies this Proxy Statement. GLOBAL VACATION GROUP IS REQUIRED TO FILE
AN ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 WITH THE SEC.
SHAREHOLDERS MAY OBTAIN, FREE OF CHARGE, A COPY OF OUR 1998 FORM 10-K, NOT
INCLUDING THE EXHIBITS, BY WRITING TO GLOBAL VACATION GROUP, INC., 1420 NEW YORK
AVENUE, N.W., SUITE 550, WASHINGTON, D.C. 20005, ATTENTION: CORPORATE SECRETARY.
WE WILL PROVIDE COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A
REASONABLE FEE.
2
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 15, 1999 with respect
to the ownership of shares of Global Vacation Group common stock.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF COMMON
NAME AND ADDRESS SHARES STOCK OUTSTANDING
- -------------------------------------------------- ---------- -----------------
<S> <C> <C>
Roger H. Ballou, Chairman and Chief Executive
Officer
1420 New York Avenue, N.W., Suite 550,
Washington, D.C. 20005.......................... 423,362(1) 2.9
J. Raymond Lewis, Jr., President and Chief
Operating Officer
1420 New York Avenue, N.W., Suite 550,
Washington, D.C. 20005.......................... 124,822 *
Walter S. Berman, Executive Vice President and
Chief
Financial Officer
1420 New York Avenue, N.W., Suite 550,
Washington, D.C. 20005.......................... 191,180 1.3
Kenneth M. Duberstein, Director
2100 Pennsylvania Avenue, N.W., Suite 500,
Washington, D.C. 20037.......................... 2,000 *
Frederic V. Malek, Director
1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, DC 20004............................ 12,050 *
Carl J. Rickertsen, Director
1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, DC 20004............................ -- --
James M. Sullivan, Director
10400 Fernwood Road, Suite 632,
Bethesda, Maryland 20817........................ 3,000 *
Stanley Fisher (2)
165 West 46th Street, 10th Floor,
New York, New York 10036........................ 185,188 1.3
Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, DC 20004............................ 9,457,249 64.1
Executive officers and directors as a group (7
persons)........................................ 756,414(1) 5.1
</TABLE>
- ------------------------
* Less than one percent.
(1) Includes 4,050 shares owned by Mr. Ballou's children. Mr. Ballou disclaims
beneficial ownership of these shares.
(2) Mr. Fisher served as our chief executive officer until March 1998 when
Global Vacation Group was recapitalized in connection with an investment by
Thayer Equity Investors III, L.P. Mr. Fisher is no longer an employee of
Global Vacation Group, and we have entered into a consulting agreement with
him.
3
<PAGE>
ELECTION OF DIRECTOR
(PROPOSAL 1)
The Global Vacation Group certificate of incorporation provides for a
minimum of three directors and a maximum of 15 directors. The board of directors
currently consists of five members. Our directors are divided into three
classes, with each including approximately one-third of the total number of
directors. The term of office of one class expires each year and the successor
or successors to that class are elected for terms of three years and until their
successors are elected and qualified.
At the 1999 Annual Meeting, shareholders will elect one director for a
three-year term. Our nominee is Kenneth M. Duberstein. Mr. Duberstein has
confirmed that he will stand for election and will serve if elected as a
director. However, if Mr. Duberstein fails to stand for election or is unable to
accept election, the proxies will be voted for the election of a person selected
by a majority of the board of directors. Under our bylaws, directors are elected
by plurality vote.
WE RECOMMEND THAT YOU VOTE FOR MR. DUBERSTEIN'S ELECTION AS A DIRECTOR. YOUR
PROXY WILL BE VOTED FOR MR. DUBERSTEIN UNLESS YOU SPECIFY OTHERWISE ON THE
ENCLOSED CARD.
NOMINEE AND CONTINUING DIRECTORS
<TABLE>
<CAPTION>
AGE AT
MARCH 31, DIRECTOR TERM POSITION(S) HELD WITH
1999 SINCE EXPIRES GLOBAL VACATION GROUP
--------------- ----------- ----------- ----------------------------------------
<S> <C> <C> <C> <C>
NOMINEE:
Kenneth M. Duberstein................... 54 1998 1999 Director
CONTINUING DIRECTORS:
Roger H. Ballou......................... 47 1998 2001 Chairman and Chief Executive Officer
Frederic V. Malek....................... 62 1998 2001 Director
Carl J. Rickertsen...................... 38 1998 2000 Director
James M. Sullivan....................... 55 1998 2000 Director
</TABLE>
KENNETH M. DUBERSTEIN has served as Chairman and Chief Executive Officer of
The Duberstein Group, a strategic advisory and consulting firm, since 1989. Mr.
Duberstein served as White House Chief of Staff to President Ronald Reagan from
1988 to 1989. During President Reagan's two terms, he also served as Deputy
Chief of Staff as well as both Assistant and Deputy Assistant to the President
for Legislative Affairs. His earlier government appointments included Deputy
Under Secretary of Labor and Director of Congressional and Intergovernmental
Affairs at the U.S. General Services Administration. Mr. Duberstein currently
serves on the boards of directors of The Boeing Company, The St. Paul Companies,
Cinergy Corporation and Fannie Mae. He also serves on the Board of Governors of
the American Stock Exchange L.L.C. and the National Association of Securities
Dealers, Inc.
ROGER H. BALLOU has served as our Chairman and Chief Executive Officer since
March 1998. Immediately prior to joining Global Vacation Group, Mr. Ballou
served as a Senior Advisor to Thayer Equity Investors III, L.P. Between May 1995
and September 1997, Mr. Ballou served as Vice Chairman and Chief Marketing
Officer and then as President and Chief Operating Officer of Alamo Rent-a-Car,
Inc.. For more than 16 years prior to joining Alamo, Mr. Ballou held several
executive positions with American Express Travel Related Services Company, Inc.,
serving most recently as President--Travel Services Group. Mr. Ballou currently
serves as Chairman of the National Tourism Organization, a travel industry
organization chartered by the U.S. Congress, as a member, and past Chairman, of
the board of directors of the Travel Industry Association and as a member of the
board of directors of the National Academy Foundation. From 1995 through 1997,
he served as Chairman of
4
<PAGE>
the Government Affairs Council, the leading travel industry federal government
lobbying arm. Mr. Ballou also is a member of the board of directors of American
Medical Security, Inc.
FREDERIC V. MALEK has served as chairman of Thayer Capital Partners, an
affiliate of Thayer Equity Investors III, L.P., since 1993. Prior to 1993, Mr.
Malek was president of Marriott Hotels and Resorts from 1980 to 1988, and
president and vice chairman of Northwest Airlines from 1989 to 1991. During
1992, Mr. Malek was the Campaign Manager of the Bush-Quayle campaign. Mr. Malek
currently serves on the boards of directors of Aegis Communications Corporation,
Automatic Data Processing Corporation, American Management Systems, Inc., FPL
Group, Inc., HCR Manor Care, Inc., CB Commercial Real Estate Group, Inc.,
Northwest Airlines, Colorado Prime, Inc. and PaineWebber Mutual Funds.
CARL J. RICKERTSEN has served as a partner in Thayer Capital Partners since
September 1994. Mr. Rickertsen acted as a private financial consultant from 1993
through August 1994 and was a partner at Hancock Park Associates, a private
equity investment firm based in Los Angeles, from 1989 to 1993. Before joining
Hancock Park Associates, Mr. Rickertsen was an associate at Brentwood Associates
from 1987 to 1989, and worked in the high technology group at Morgan Stanley &
Co., Inc. from 1983 to 1985. Mr. Rickertsen currently serves as a director of
MLC Holdings, Inc. and Colorado Prime, Inc. and as Chairman of the Board of
Software AG Systems, Inc.
JAMES M. SULLIVAN is Executive Vice President of Development for the Lodging
Group of Marriott International, Inc.. Since 1986, he has held several positions
with Marriott, including Vice President of Mergers and Acquisitions. From 1983
to 1986, Mr. Sullivan was Chairman, President and Chief Executive Officer of
Tenley Enterprises, Inc., a privately held company operating 105 restaurants.
Prior to 1983, he held senior management positions with Marriott, Harrah's
Entertainment, Inc., Holiday Inns, Inc., Kentucky Fried Chicken Corp. and
Heublein, Inc. He also was employed as a senior auditor with Arthur Andersen &
Co. Mr. Sullivan currently serves on the board of directors of Integra
LifeSciences Corporation.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1998, the board of directors held one regular meeting and one special
meeting. Other than Mr. Sullivan, no director attended fewer than 75% of the
meetings held by the board of directors and by all committees on which each
director served.
AUDIT COMMITTEE. The members of the Audit Committee are Messrs. Duberstein
and Sullivan, both of whom are non-employee directors. The Audit Committee,
among other things, makes recommendations concerning the engagement of our
independent auditors, reviews the results and scope of the annual audit and
other services provided by our independent auditors and reviews the adequacy of
our internal accounting controls. The Audit Committee held no meetings during
1998.
COMPENSATION COMMITTEE. The members of the Compensation Committee are Mr.
Ballou, our Chairman and Chief Executive Officer, and Messrs. Malek and
Sullivan, both of whom are non-employee directors. The Compensation Committee
makes recommendations to the full board of directors concerning salary and bonus
compensation and benefits for executive officers of Global Vacation Group. The
Compensation Committee held no meetings during 1998.
STOCK OPTION COMMITTEE. The members of the Stock Option Committee are
Messrs. Duberstein and Sullivan, both of whom are non-employee directors. The
Stock Option Committee has the power and authority to take all actions and make
all determinations under our stock option plans, including the grant of options
thereunder. The Stock Option Committee held two meetings during 1998.
5
<PAGE>
NOMINATION PROCEDURES
No person may be elected as a director unless nominated in accordance with
the procedures set forth in the Global Vacation Group bylaws. The entire board
of directors acts as a nominating committee for selecting management's nominees
for election as directors and has made its nomination for the 1999 Annual
Meeting. Our bylaws require that shareholder nominations for directors be made
in writing to the corporate secretary within the time frame stated in the
bylaws. A shareholder's notice of nomination must set forth the information
specified in the bylaws concerning each person the shareholder proposes to
nominate for election and the nominating shareholder. To be timely for this 1999
Annual Meeting, notice of a shareholder nomination must have been delivered to,
or mailed to and received at, our principal executive offices a reasonable time
before we mailed these proxy solicitation materials to our shareholders. No
shareholder nominations were received. The dates for submission of shareholder
nominations or other proposals for our 2000 annual meeting of shareholders are
set forth below under "Date for Submission of Shareholder Nominations and
Proposals."
COMPENSATION OF DIRECTORS
We do not pay cash compensation to directors. We reimburse directors for
out-of-pocket expenses incurred in connection with attendance at meetings of the
board of directors or committees thereof. In addition, we may issue options to
directors under the Global Vacation Group stock option plan. On July 31, 1998,
we issued options to acquire 5,700 shares to each of Messrs. Duberstein and
Sullivan at an exercise price of $14.00 per share, which was the initial public
offering price. On October 28, 1998, we issued options to acquire an additional
5,000 shares to each of Messrs. Duberstein and Sullivan at an exercise price of
$6.625 per share, which was the market price of our stock on that date.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION/
AWARDS
--------------
ANNUAL SHARES OF
COMPENSATION COMMON STOCK ALL OTHER
-------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($) OPTIONS(#) ($)
- ------------------------------------------------------------ --------- --------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Roger H. Ballou............................................. 1998 150,000 100,000 393,689 0
Chairman and Chief Executive Officer
J. Raymond Lewis, Jr........................................ 1998 150,000 100,000 393,689 18,200
President and Chief Operating Officer
Walter S. Berman............................................ 1998 150,000 100,000 393,689 0
Executive Vice President and Chief Financial Officer
Stanley Fisher.............................................. 1998 157,100 0
former officer 1997 328,436 3,000,000
</TABLE>
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
SHARES OF TOTAL VALUE AT ASSUMED
COMMON OPTIONS ANNUAL RATES OF STOCK
STOCK GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------ ----------- ------------- ----------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roger H. Ballou..................... 368,689(1) 25.1 14.00 Jul. 31, 2008 3,246,131 8,226,334
25,000(2) 1.7 13.625 Feb. 12, 2009 214,217 542,869
J. Raymond Lewis, Jr................ 368,689(1) 25.1 14.00 Jul. 31, 2008 3,246,131 8,226,334
25,000(2) 1.7 13.625 Feb. 12, 2009 214,217 542,869
Walter S. Berman.................... 368,689(1) 25.1 14.00 Jul. 31, 2008 3,246,131 8,226,334
25,000(2) 1.7 13.625 Feb. 12, 2009 214,217 542,869
</TABLE>
- ------------------------
(1) Exercisable in four equal installments beginning on July 31, 1999.
(2) Exercisable in three equal installments beginning on February 12, 2000.
None of our executive officers exercised any options to purchase shares of
common stock during 1998. As of December 31, 1998, Messrs. Ballou, Lewis and
Berman each held options to purchase 393,689 shares of common stock, none of
which were exercisable or in-the-money.
EMPLOYMENT AGREEMENTS
We have entered into Senior Management Agreements with each of Messrs.
Ballou, Lewis and Berman. Each Senior Management Agreement has a term of three
years and is automatically extended for additional one-year terms as long as
neither Global Vacation Group nor the executive has provided notice of
termination within 60 days of the end of the term. Each of our executive
officers currently receives an annual base salary of $200,000, which may be
increased following annual review by the board of directors. Each of these
executives also will be eligible to receive an annual bonus in an amount not to
exceed 100% of his annual base salary, as determined by the board of directors
based upon the achievement of budgetary and other objectives set by the board of
directors. In February 1999, the board of directors determined to award each of
Messrs. Ballou, Lewis and Berman a bonus for 1998 comprised of $100,000 in cash
and an option to purchase 25,000 shares of common stock at a per share exercise
price of $13.625. Previously, on July 31, 1998, we granted each of these
executive officers options to purchase 368,689 shares of common stock at an
exercise price equal to $14.00, which was the initial public offering price.
If we terminate an executive officer's employment without cause or if an
executive officer terminates his employment for good reason, including, in
either case, following a change of control of Global Vacation Group, then the
executive will be entitled for 12 months to monthly severance payments equal to
one-twelfth of his base salary and bonus for the previous year. If we terminate
an executive officer's employment based upon a failure to achieve stated
performance goals, then he will be entitled to these monthly severance payments
for three months. Under the terms of the Senior Management Agreements, each of
our executives officers has agreed to preserve the confidentiality and the
proprietary nature of all information relating to Global Vacation Group and its
business. Each executive officer also has agreed to non-competition and
non-solicitation provisions which will be in effect during the term of his
Senior Management Agreement and for one year after the termination of the Senior
Management Agreement.
7
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to July 1998, we had no separate compensation committee or other board
committee performing equivalent functions with respect to determining
compensation for our executives, and those functions were performed by the board
of directors which included Mr. Ballou, our Chief Executive Officer. Following
our initial public offering, the board of directors established a Compensation
Committee consisting of Mr. Ballou, our Chairman and Chief Executive Officer,
and Messrs. Malek and Sullivan, both of whom are non-employee directors. The
Compensation Committee makes recommendations to the full board of directors
concerning salary and bonus compensation and benefits for executive officers of
Global Vacation Group, except that Mr. Ballou does not participate in
recommending or approving his own compensation.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return* on our
common stock from July 31, 1998, which is the date the common stock began
trading on the New York Stock Exchange, through February 26, 1999, with the
cumulative total return of the Russell 2000, Wilshire 5000 and a peer group
index. The graph assumes the investment of $100 in Global Vacation Group common
stock on July 31, 1998.
8
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GVG RUSSELL 2000 WILSHIRE 5000 PEER GROUP
<S> <C> <C> <C> <C>
7/31/98 100 100 100 100
8/3/98 97.5 98.48 99.17 97.83
8/4/98 90.42 95.68 95.69 92.08
8/5/98 91.67 94.98 96.05 91.31
8/6/98 92.92 96.87 97.05 91.88
8/7/98 92.92 99.06 97.56 92.08
8/10/98 95.83 98.07 96.95 92.32
8/11/98 92.5 95.44 95.42 90.49
8/12/98 94.17 97.33 96.81 89.93
8/13/98 94.17 96.21 96 87.86
8/14/98 92.5 95.96 95.14 88.68
8/17/98 92.92 96.24 96.59 90.06
8/18/98 90.42 97.98 98.08 89.43
8/19/98 90.42 96.69 97.72 87.31
8/20/98 90.42 95.71 97.05 87.31
8/21/98 89.58 94.26 95.94 85.86
8/24/98 89.17 93.79 96.31 84.16
8/25/98 87.92 92.86 96.58 83.28
8/26/98 82.5 90.63 95.47 80.51
8/27/98 78.33 87.22 91.72 76.86
8/28/98 75 85.42 90.38 75.93
8/31/98 66.67 80.51 84.31 67.69
9/1/98 60 82.48 87.23 66.84
9/2/98 59.58 84.01 87.23 65.05
9/3/98 55.83 82.5 86.31 65.03
9/4/98 49.17 82.68 85.71 62.47
9/8/98 52.92 86.23 89.77 64.16
9/9/98 52.92 84.02 88.28 62.02
9/10/98 50 82.18 86.02 62.83
9/11/98 51.67 84.25 88.35 62.9
9/14/98 50.83 85.22 90 64.98
9/15/98 51.25 85.22 90.72 64.04
9/16/98 52.08 85.73 91.45 63.1
9/17/98 48.75 84.64 89.47 63.79
9/18/98 48.33 86.54 89.84 64.29
9/21/98 49.17 86.39 90.03 63.66
9/22/98 50 87.73 90.72 65.98
9/23/98 52.08 89.58 93.73 68.78
9/24/98 53.33 88.21 91.8 67.48
9/25/98 53.33 87.91 91.9 66.72
9/28/98 49.17 87.67 92.17 65.38
9/29/98 49.17 87.15 92.13 63.89
9/30/98 47.92 86.62 89.7 60.11
10/1/98 46.67 83.39 86.88 58.2
10/2/98 46.25 83.31 87.98 56.45
10/5/98 43.33 80.24 86.38 55.69
10/6/98 43.33 79.23 85.9 52.75
10/7/98 40.83 76.77 84.38 52.62
10/8/98 36.25 73.92 82.73 48.98
10/9/98 40 75.85 84.94 48.05
10/12/98 39.17 77.57 86.5 50.48
10/13/98 38.33 76.31 85.99 47.88
10/14/98 38.33 77.42 86.95 47.45
10/15/98 38.33 79.76 90.54 46.95
10/16/98 38.33 81.68 91.52 53.24
10/19/98 39.17 83.97 92.35 55.07
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
10/20/98 40.42 85.36 92.74 53.49
10/21/98 40.42 85.75 93.28 54.62
10/22/98 39.17 87.29 94.07 54.88
10/23/98 38.33 87.44 93.57 56
10/26/98 38.33 88.64 93.9 56.51
10/27/98 45 88.51 93.54 59.35
10/28/98 44.17 88.5 93.58 57.47
10/29/98 43.75 89.22 95.07 57.11
10/30/98 45.83 90.09 96.66 58.19
11/2/98 47.5 92.15 97.74 61.91
11/3/98 44.58 92.33 97.63 61.14
11/4/98 50.83 93.62 98.41 62.77
11/5/98 53.33 94.53 99.59 62.07
11/6/98 52.08 95.37 100.33 62.96
11/9/98 52.92 94.92 99.57 64.04
11/10/98 53.33 94.55 99.35 63.59
11/11/98 52.5 93.74 98.76 62.71
11/12/98 51.67 93.44 98.49 61.9
11/13/98 50.83 92.76 98.92 61.52
11/16/98 49.58 93.01 99.65 63.14
11/17/98 51.67 92.78 99.95 60.26
11/18/98 59.58 93.42 100.56 61.26
11/19/98 70.83 93.95 101.22 62.14
11/20/98 73.33 93.93 102.03 62.27
11/23/98 75 94.85 103.94 62.71
11/24/98 70.83 94.48 103.49 63.03
11/25/98 71.25 95.13 104 64.79
11/27/98 69.58 95.79 104 65.93
11/30/98 62.5 94.76 102.21 68.32
12/1/98 61.67 94.99 102.99 68.2
12/2/98 62.5 94.7 102.71 67.62
12/3/98 61.25 94.1 101.18 66.99
12/4/98 59.17 94.91 103.1 68.5
12/7/98 60 95.57 104.12 69.45
12/8/98 58.33 95.65 103.73 68.95
12/9/98 57.08 95.76 103.81 69.07
12/10/98 53.33 94.46 102.18 68.5
12/11/98 53.33 94.19 102.14 69.07
12/14/98 52.92 92.42 100.03 67.81
12/15/98 52.92 92.81 101.64 65.42
12/16/98 50 92.88 101.66 69.69
12/17/98 49.58 93.81 102.99 70.06
12/18/98 49.58 94.68 103.82 71.32
12/21/98 50.83 95.73 105.14 71.26
12/22/98 52.5 95.35 105.21 70.91
12/23/98 52.5 96.44 107.22 73.15
12/24/98 55 96.62 107.19 73.65
12/28/98 57.5 97.27 107.4 75.73
12/29/98 57.5 97.77 108.59 76.86
12/30/98 56.25 98.13 108.08 78.16
12/31/98 56.67 100.53 108.61 79.38
1/4/99 57.5 100.36 108.51 77.18
1/5/99 60.42 100.56 109.7 76.3
1/6/99 63.33 101.92 111.91 76.61
1/8/99 66.67 101.92 111.7 76.42
1/11/99 67.08 102.73 112.3 77.99
1/12/99 62.5 103.19 111.74 81.08
1/13/99 57.92 101.81 109.79 84.91
1/14/99 59.17 101.22 109.16 83.47
1/15/99 61.25 100.08 110.5 83.68
1/19/99 62.5 101.74 110.5 85.23
1/20/99 62.5 102.65 110.5 85.54
1/21/99 62.08 102.59 110.5 85.29
1/22/99 60 101.02 110.5 85.22
1/25/99 59.58 100.64 110.5 85.57
1/26/99 60 100.56 110.5 83.65
1/27/99 61.25 101.33 110.5 84.84
1/28/99 63.33 100.33 109.84 85.1
1/29/99 66.67 101.01 111.52 87.05
2/1/99 74.17 101.78 112.52 88.75
2/2/99 77.5 101.51 112.18 87.93
2/3/99 80 100.47 111.21 84.91
2/4/99 83.33 100.95 112.18 84.47
2/5/99 87.92 99.53 110.32 83.66
2/8/99 93.75 98.33 109.22 83.15
2/9/99 93.33 97.99 109.37 80.12
2/10/99 90.83 96.04 107.02 79.74
2/11/99 90.83 94.81 107.28 78.86
2/12/99 91.25 96.76 109.86 77.61
2/16/99 95 94.92 107.89 80.37
2/17/99 91.67 94.44 108.52 78.3
2/18/99 86.67 92.8 106.97 74.83
2/19/99 81.67 93.17 108.01 64.76
2/22/99 79.17 93.46 108.26 66.02
2/23/99 75.42 94.78 110.86 66.4
2/24/99 72.92 95.06 110.91 67.34
2/25/99 71.25 94.17 109.67 68.29
2/26/99 70 93.55 108.91 66.59
</TABLE>
- ------------------------
* Cumulative Total Return assumes an initial investment of $100 on July 31,
1998 and the reinvestment of dividends. We paid no dividends during the
period presented.
REPORT ON EXECUTIVE COMPENSATION
The board of directors and its Compensation and Stock Option Committees have
prepared the following report on our policies with respect to the compensation
of executive officers for 1998. The
10
<PAGE>
board of directors makes all decisions on compensation of our executive officers
other than stock option components based upon recommendations of the
Compensation Committee. Decisions as to the grant of stock options are made by
the Stock Option Committee.
Executive compensation consists of salary, benefits and stock options. We
believe the overall compensation package must be competitive within the travel
industry and must be based principally on productivity. As a result, our
compensation packages should be highly leveraged with incentives while base
salaries will remain relatively constant.
The Compensation Committee reviews executive salaries each year and
determines appropriate incentive bonuses for the prior year as well as
appropriate adjustments to base salaries for the up-coming year. Incentive
bonuses will be paid only to the extent that Global Vacation Group meets
specific performance objectives. The Compensation Committee determined that
Global Vacation Group should pay incentive bonuses for 1998 to its executive
officers as set forth below and that Global Vacation Group pay its executive
officers the base salaries for 1999 set forth below:
<TABLE>
<CAPTION>
1998 INCENTIVE
EXECUTIVE OFFICER BONUS 1999 BASE SALARY
- ------------------------------------------------------- ------------------- ----------------
<S> <C> <C>
Roger H. Ballou........................................ $ 100,000 $ 200,000
J. Raymond Lewis, Jr................................... 100,000 200,000
Walter S. Berman....................................... 100,000 200,000
</TABLE>
In addition, the Compensation Committee recommended, and the Stock Option
Committee agreed, to grant each of these executive officers an option to
purchase 25,000 shares of common stock.
The Compensation Committee recognizes the importance of stock options in
attracting and retaining highly qualified people. Global Vacation Group granted
options to purchase over 1.6 million shares of common stock to its executives,
employees, non-employee directors and consultants during the second half of 1998
following completion of the initial public offering. In light of this high level
of activity in 1998, the Compensation Committee and the Stock Option Committee
have agreed that few additional options should be granted to existing employees
in 1999. Global Vacation Group will continue to grant options, however, to new
hires on a basis consistent with the practice established in 1998.
As part of the benefits component of the overall compensation package,
Global Vacation Group will establish a 401(k) plan in 1999. Under the terms of
the plan and in keeping with our overall compensation philosophy, Global
Vacation Group's contribution to the plan will be discretionary and will be
based on the performance of Global Vacation Group relative to corporate
budgetary goals on an annual basis. Within this framework, Global Vacation Group
will make discretionary contributions on behalf of each employee in amount equal
to 0-4% of the employee's base salary. The Global Vacation Group contributions
will be made in stock, and employees will be eligible to receive the Global
Vacation Group contributions whether or not they are making voluntary
contributions themselves. Executive officers will be eligible to participate in
the 401(k) plan on the same basis as all other employees.
Mr. Ballou has served as our Chairman and Chief Executive Officer since the
recapitalization transaction in March 1998. We believe our success over this
past year, particularly the successful completion of our initial public
offering, is directly attributable to Mr. Ballou's leadership. As noted above,
we determined that an incentive bonus be paid to Mr. Ballou for 1998 in the form
of cash and an option. We believe this bonus was warranted based on his
demonstrated ability to grow Global
11
<PAGE>
Vacation Group through acquisitions and to complete the process of taking Global
Vacation Group public.
Respectfully submitted,
<TABLE>
<S> <C>
THE BOARD OF DIRECTORS COMPENSATION COMMITTEE
ROGER H. BALLOU ROGER H. BALLOU
KENNETH M. DUBERSTEIN FREDERIC V. MALEK
FREDERIC V. MALEK JAMES M. SULLIVAN
CARL J. RICKERTSEN
JAMES M. SULLIVAN STOCK OPTION COMMITTEE
KENNETH M. DUBERSTEIN
JAMES M. SULLIVAN
</TABLE>
12
<PAGE>
TRANSACTIONS WITH RELATED PARTIES
Thayer Equity Investors III, L.P. is a Delaware limited partnership whose
sole general partner is TC Equity Partners, L.L.C. TC Equity Partners, L.L.C.
has sole voting and investment power with respect to the 9,457,249 shares of
common stock owned by Thayer Equity Investors III, L.P. TC Co-Investors, LLC is
a Delaware limited liability company whose managing member is TC Management,
L.L.C. TC Management, L.L.C. has sole voting and investment power with respect
to the 86,122 shares of common stock owned by TC Co-Investors, LLC. Frederic V.
Malek and Carl J. Rickertsen, directors of Global Vacation Group, are members of
TC Equity Partners, L.L.C. and TC Management, L.L.C. As a result, Messrs. Malek
and Rickertsen may receive benefits from transactions involving these entities
or their affiliates.
In connection with the recapitalization transaction, Thayer Equity Investors
III, L.P. purchased an interest in Global Vacation Group and subsequently
received 3,016,023 shares of common stock valued at $0.82 per share and 22,249
shares of convertible preferred stock valued at $1,000 per share, for a total
equity interest valued at $24.7 million, which was the amount paid by Thayer for
its interest. In addition, we paid Thayer Equity Investors III, L.P. $430,000
for financial and management services in connection with the recapitalization
transaction.
Between March 30, 1998 and May 5, 1998, Thayer Equity Investors III, L.P.
purchased 3,083,977 shares of common stock at $0.82 per share and 22,751 shares
of convertible preferred stock at $1,000, paying cash in an aggregate amount of
$25.3 million. Also on March 30, 1998, TC Co-Investors, LLC purchased 49,292
shares of common stock at $0.82 per share and 363.64 shares of convertible
preferred stock at a purchase price of $1,000 per share for an aggregate
consideration of $404,044.
On March 30, 1998, in connection with the Senior Management Agreements,
Global Vacation Group sold to our executives officers the number of shares
indicated below:
<TABLE>
<CAPTION>
FULLY VESTED PERFORMANCE
CONVERTIBLE FULLY VESTED TIME VESTING VESTING
EXECUTIVE OFFICER PREFERRED STOCK COMMON STOCK COMMON STOCK COMMON STOCK
- ------------------------------------------------- ------------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
(SHARES) (SHARES) (SHARES) (SHARES)
Roger H. Ballou.................................. 60 62,359 216,887 135,554
J. Raymond Lewis, Jr............................. 105 27,791 54,217 33,892
Walter S. Berman................................. 260 53,319 72,292 45,189
</TABLE>
Messrs. Ballou, Lewis and Berman paid an aggregate of $1.0 million in cash
for these shares. Concurrent with Global Vacation Group's initial public
offering in August 1998, the shares of convertible preferred stock listed above
converted into 4,512, 7,897 and 19,555 shares of common stock, respectively for
Messrs. Ballou, Lewis and Berman.
As of March 15, 1999, Global Vacation Group amended the vesting arrangements
for each executive's unvested shares. This amendment involved accelerating the
vesting of all unvested shares to March 15, 1999, subject to a restriction on
the sale or other transfer of such shares based on a schedule similar to the
original vesting schedule, or in certain circumstances at later dates than the
original vesting schedule. This sale restriction, however, will not apply under
certain circumstances, including a change of control of Global Vacation Group.
The accelerated vesting of the common stock created an immediate and
substantial tax burden for these executives. As part of the amendment to the
vesting arrangements, Global Vacation Group has agreed to loan Messrs. Ballou,
Lewis and Berman up to $1.2 million, $300,000 and $400,000, respectively, which
are the amounts estimated to equal the tax owed by the executives as a result of
the acceleration of the vesting of their shares. Each loan will bear interest at
a rate of 6% per year and must be repaid when the executive's employment is
terminated or by March 15, 2003, whichever comes first. Global Vacation Group
has agreed, however, to waive repayment of approximately 42 percent of
11
<PAGE>
the principal of each loan over time if the executive remains employed through
March 15, 2003, and repayment of all interest on each loan if Global Vacation
Group meets certain agreed upon performance objectives.
Thayer Equity Investors III, L.P. funded a substantial portion of the costs
we incurred in connection with the recapitalization transaction and four
acquisitions we completed after the recapitalization transaction and before our
initial public offering. Between March 30, 1998 and May 5, 1998, we made
payments to Thayer Equity Investors III, L.P. of approximately $670,000 as
reimbursement for these costs. A substantial portion of these costs related to
consulting and expense payments made by Thayer Equity Investors III, L.P. to our
executive officers, each of whom was a consultant to Thayer Equity Investors
III, L.P. prior to joining us. Of this amount, Mr. Ballou received approximately
$363,000 as consideration for financial and management consulting services.
In addition, on March 30, 1998, we entered into a Professional Services
Agreement with TC Management, L.L.C. and agreed to pay TC Management, L.L.C. a
fee equal to 1% of the amount of any debt or equity financing we consummated
following the recapitalization transaction. In exchange for these payments, TC
Management, L.L.C. agreed to provide financial and management consulting
services. Between March 30, 1998 and May 5, 1998, we paid a total of $605,000
under this agreement. This agreement terminated upon the closing of our initial
public offering.
Concurrently with our initial public offering, we issued 3,394,079 shares of
common stock to Thayer Equity Investors III, L.P. and TC Co-Investors, LLC and
31,964 shares of common stock to our executive officers upon conversion of the
convertible preferred stock owned by these shareholders, including a 15% annual
dividend payable on the convertible preferred stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and officers and beneficial owners of more than 10% of our outstanding equity
securities to file with the SEC initial reports of ownership of our equity
securities and to file subsequent reports when there are changes in their
ownership. Based on a review of reports submitted to us for 1998, we believe
that all Section 16(a) filing requirements for that year applicable to these
persons were complied with on a timely basis.
12
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
We have appointed Arthur Andersen LLP to act as Global Vacation Group's
independent public accountants for 1999, pending ratification by shareholders at
the 1999 Annual Meeting. Representatives of Arthur Andersen LLP will be present
at the 1999 Annual Meeting. They will be given an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
WE RECOMMEND THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS GLOBAL VACATION GROUP'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999. We have not made any determination as to
what course of action we will take if the shareholders do not ratify this
appointment.
DATE FOR SUBMISSION OF SHAREHOLDER NOMINATIONS AND PROPOSALS
Under the SEC's proxy soliciting rules, we must receive proposals of
shareholders intended to be presented at the 2000 annual meeting no later than
December 8, 1999 in order to be considered for inclusion in our proxy statement
and form of proxy relating to the 2000 annual meeting. However, nothing in this
paragraph shall be deemed to require us to include in our proxy statement and
proxy relating to the 2000 annual meeting of shareholders any shareholder
proposal which may be omitted under applicable SEC regulations.
Under the Global Vacation Group bylaws, any shareholder who intends to
nominate a person to serve on the board of directors or present a proposal for
action at the 2000 annual meeting of shareholders must file a copy thereof with
our corporate secretary between January 7, 2000 and February 6, 2000.
OTHER BUSINESS TO BE TRANSACTED
We do not know of any other matters to be presented for action by the
shareholders at the 1999 Annual Meeting. If, however, any other matters not now
known are properly brought before the meeting, your proxy will be voted on these
matters as determined by a majority of the board of directors.
By Order of the Board of Directors
Roger H. Ballou
Chairman of the Board
and Chief Executive Officer
Washington, D.C.
April 16, 1999
13
<PAGE>
REVOCABLE PROXY
GLOBAL VACATION GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Global Vacation Group, Inc. hereby appoints
Roger H. Ballou, Walter S. Berman and Larry R. Gilbertson, or any of them,
attorneys and proxies of the undersigned, with full power of substitution and
with authority in each of them to act in the absence of the other, to vote and
act for the undersigned shareholder at the 1999 Annual Meeting of Shareholders
to be held at 9:00 a.m., on May 12, 1999, at the Willard Inter-Continental
Hotel, 1401 Pennsylvania Ave., N.W., Washington, D.C. 20004, and at any
adjournments thereof, upon the following matter:
1. ELECTION OF DIRECTOR:
To elect Kenneth M. Duberstein as a director for a term expiring at the
annual meting of shareholders in 2002 and until his successor shall have
been elected and qualified
/ / FOR / / AGAINST / / ABSTAIN
2. RATIFICATION OF APPOINTMENT OF AUDITORS:
To ratify the appointment of Arthur Andersen LLP as Global Vacation Group's
independent auditors for the fiscal year ending December 31, 1999
/ / FOR / / AGAINST / / ABSTAIN
This proxy when properly executed will be voted in the manner directed
herein. IF THIS PROXY IS EXECUTED BUT NO DIRECTION IS MADE, THE VOTES ENTITLED
TO BE CAST BY THE UNDERSIGNED WILL BE CAST:
(1) FOR THE ELECTION OF MR. DUBERSTEIN;
(2) FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP; AND
(3) IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS ON ANY OTHER MATTER THAT MAY COME BEFORE THE 1999 ANNUAL
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned shareholder may revoke this proxy at any time before it is
voted by delivering to the Secretary of Global Vacation Group either a written
revocation of the proxy or a duly executed proxy bearing a later date, or by
appearing at the 1999 Annual Meeting and voting in person. The undersigned
shareholder hereby acknowledges receipt of notice of the 1999 Annual Meeting and
Proxy Statement dated April 16, 1999 and hereby revokes any proxy or proxies
heretofore given.
(Continued and to be dated and signed on reverse side)
<PAGE>
(Continued from other side)
If you receive more than one proxy card, please sign and return all cards
in the accompanying envelope.
/ / I PLAN TO ATTEND THE MAY 12, 1999 ANNUAL SHAREHOLDERS MEETING
Date: , 1999.
--------------------------------------
(Signature of Shareholder or Authorized
Representative)
--------------------------------------
(Print name)
Please date and sign exactly as name
appears hereon. Each executor,
administrator, trustee, guardian,
attorney-in-fact and other fiduciary
should sign and indicate his or her
full title. In the case of stock
ownership in the name of two or more
persons, both persons should sign.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY TO ENSURE A QUORUM
AT THE 1999 ANNUAL MEETING. IT IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
DELAY IN RETURNING YOUR PROXY MAY SUBJECT GLOBAL VACATION GROUP TO ADDITIONAL
EXPENSE.
