<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
[ ] 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 Section 240.14a-11(c) or Section
240.14a-12
GLOBAL VACATION GROUP, INC.
---------------------------
(Name of Registrant as Specified in Its Charter)
---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee Paid:
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(4) Date filed:
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<PAGE> 2
GLOBAL VACATION GROUP, INC.
1420 NEW YORK AVENUE, N.W.
SUITE 550
WASHINGTON, D.C. 20005
(202) 347-1800
April 14, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of shareholders
of Global Vacation Group, Inc. to be held on Thursday, May 18, 2000, at 9:00
a.m., at the Willard Inter-Continental Hotel, 1401 Pennsylvania Ave., N.W.,
Washington, D.C. 20004.
The 2000 Annual Meeting has been called for the following purposes:
- to elect two directors each to serve 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 2000
Annual Meeting or any adjournments thereof.
It is important that your shares be represented at the 2000 Annual Meeting.
Whether or not you plan to attend the 2000 Annual Meeting, please complete,
date, sign and return the enclosed proxy card in the enclosed envelope for which
postage has been paid.
Very truly yours,
/s/ ROGER H. BALLOU
Roger H. Ballou
Chairman of the Board
President and Chief Executive Officer
<PAGE> 3
GLOBAL VACATION GROUP, INC.
1420 NEW YORK AVENUE, N.W.
SUITE 550
WASHINGTON, D.C. 20005
(202) 347-1800
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 2000
------------------------
THIS IS NOTICE that the 2000 Annual Meeting of shareholders of Global
Vacation Group, Inc. ("Global Vacation Group," or the "Company") will be held at
the Willard Inter-Continental Hotel, 1401 Pennsylvania Ave., N.W., Washington,
D.C. 20004 on Thursday, May 18, 2000, at 9:00 a.m., for the following purposes:
(1) To elect two directors, each to serve 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 2000
Annual Meeting or any adjournments thereof.
The board of directors has fixed April 12, 2000 as the record date for the
2000 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 2000 Annual
Meeting. All shareholders are cordially invited to attend the 2000 Annual
Meeting.
If there are not sufficient votes to approve any one or more of the
foregoing proposals at the scheduled time of the 2000 Annual Meeting, the 2000
Annual Meeting may be adjourned in order to permit us to solicit further
proxies.
By Order of the Board of Directors
/s/ ROGER H. BALLOU
Roger H. Ballou
Chairman of the Board
President and Chief Executive Officer
Washington, D.C.
April 14, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE 2000 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
2000 ANNUAL MEETING AND VOTING IN PERSON.
<PAGE> 4
GLOBAL VACATION GROUP, INC.
1420 NEW YORK AVENUE, N.W.
SUITE 550
WASHINGTON, D.C. 20005
(202) 347-1800
------------------------
PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 2000
------------------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
We are furnishing this proxy statement to shareholders of Global Vacation
Group, Inc. ("Global Vacation Group," or the "Company") as part of our
solicitation of proxies to be used at the 2000 Annual Meeting of shareholders.
We will hold the 2000 Annual Meeting at the Willard Inter-Continental Hotel,
1401 Pennsylvania Ave., N.W., Washington, D.C. 20004 on Thursday, May 18, 2000,
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 2000 Annual Meeting, we will vote the shares as instructed.
WE WILL VOTE SIGNED BUT UNMARKED PROXIES:
1. FOR THE ELECTION OF CARL J. RICKERTSEN AND JAMES M. SULLIVAN AS
DIRECTORS; 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 2000 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 2000 Annual Meeting. Accordingly, if any other
matters are properly brought before the 2000 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 2000 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 2000 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 14, 2000.
The securities which can be voted at the 2000 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 12, 2000 as the record date for
determination of shareholders entitled to vote at the 2000 Annual Meeting. The
number of shares of common stock outstanding on the record date was 14,392,825.
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
2000 Annual Meeting. We have appointed inspectors to tabulate shareholders'
votes. Abstentions and broker non-votes will be counted for purposes of
determining the
<PAGE> 5
presence of a quorum at the 2000 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,
1999 accompanies this Proxy Statement. GLOBAL VACATION GROUP HAS FILED ITS
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 WITH THE SEC.
SHAREHOLDERS MAY OBTAIN, FREE OF CHARGE, A COPY OF OUR 1999 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> 6
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 15, 2000 with
respect to the ownership of shares of Global Vacation Group common stock.
<TABLE>
<CAPTION>
PERCENT OF COMMON
NAME AND ADDRESS NUMBER OF SHARES STOCK OUTSTANDING
---------------- ---------------- -----------------
<S> <C> <C>
Roger H. Ballou, Chairman, President and
Chief Executive Officer
1420 New York Avenue, N.W., Suite 550,
Washington, D.C. 20005.................................... 556,369(1) 3.8
Jay G. Stuart, Executive Vice President, Chief Financial
Officer and Treasurer
1420 New York Avenue, N.W., Suite 550
Washington, D.C. 20005.................................... 45,150(2) *
Kenneth M. Duberstein, Director
2100 Pennsylvania Avenue, N.W., Suite 500,
Washington, D.C. 20037.................................... 4,675(3) *
Frederic V. Malek, Director
1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, DC 20004...................................... 19,050 *
Carl J. Rickertsen, Director
1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, DC 20004...................................... 0 --
James M. Sullivan, Director
10400 Fernwood Road, Suite 632,
Bethesda, Maryland 20817.................................. 5,675(4) *
J. Raymond Lewis, Jr., Former officer
c/o 1420 New York Avenue, N.W., Suite 550
Washington, D.C. 20005.................................... 141,415(5) *
Thayer Equity Investors III, L.P.
1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, DC 20004...................................... 9,457,249 65.7
Frontier Capital Management Co., Inc.
99 Summer Street
Boston, MA 02110.......................................... 735,880(6) 5.1
Executive officers and directors as a group (6 persons)..... 630,919(7) 4.3
</TABLE>
- ---------------
* Less than one percent.
(1) Includes 11,650 shares owned by Mr. Ballou's children. Mr. Ballou disclaims
beneficial ownership of these shares. Also includes 100,507 shares which Mr.
Ballou may acquire upon exercise of options exercisable within 60 days of
March 15, 2000.
(2) Mr. Stuart shares voting and investment power over all of these shares with
his spouse. Also includes 37,500 shares which Mr. Stuart may acquire upon
exercise of options exercisable within 60 days of March 15, 2000.
(3) Includes 2,675 shares which Mr. Duberstein may acquire upon exercise of
options exercisable within 60 days of March 15, 2000.
(4) Includes 2,675 shares which Mr. Sullivan may acquire upon exercise of
options exercisable within 60 days of March 15, 2000.
(5) Mr. Lewis served as our President and Chief Operating Officer until his
resignation in October 1999. Includes 92,173 shares which Mr. Lewis may
acquire upon exercise of options exercisable within 60 days of March 15,
2000.
3
<PAGE> 7
(6) Frontier Capital Management filed a Schedule 13G with the SEC dated February
11, 2000 reporting sole voting and dispositive power over these shares.
(7) Includes 143,357 shares which the executive officers and directors may
acquire upon exercise of options exercisable within 60 days of March 15,
2000.
4
<PAGE> 8
ELECTION OF DIRECTORS
(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 2000 Annual Meeting, shareholders will elect two directors, each to
serve for a three-year term. Our nominees are Carl J. Rickertsen and James M.
Sullivan. Each of Messrs. Rickertsen and Sullivan has confirmed that he will
stand for election and will serve if elected as a director. However, if either
Mr. Rickertsen and Mr. Sullivan 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 THE ELECTION OF MESSRS. RICKERTSEN AND
SULLIVAN AS DIRECTORS TO HOLD OFFICE UNTIL THE 2003 ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED. YOUR PROXY
WILL BE VOTED FOR THE ELECTION OF MESSRS. RICKERTSEN AND SULLIVAN UNLESS YOU
SPECIFY OTHERWISE ON THE ENCLOSED CARD.
NOMINEES AND CONTINUING DIRECTORS
<TABLE>
<CAPTION>
AGE AT
MARCH 31, DIRECTOR TERM POSITION(S) HELD WITH
2000 SINCE EXPIRES GLOBAL VACATION GROUP
--------- -------- ------- ---------------------
<S> <C> <C> <C> <C>
NOMINEES:
Carl J. Rickertsen......................... 39 1998 2000 Director
James M. Sullivan.......................... 56 1998 2000 Director
CONTINUING DIRECTORS:
Roger H. Ballou............................ 48 1998 2001 Chairman, President and
Chief Executive Officer
Frederic V. Malek.......................... 63 1998 2001 Director
Kenneth M. Duberstein...................... 55 1998 2002 Director
</TABLE>
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
e-Plus, Inc., Iconixx Corporation, CapeSuccess LLC, Colorado Prime, Inc. and
SAGA 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.
Roger H. Ballou has served as our Chairman and Chief Executive Officer
since March 1998 and as our President since November 1999. 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
5
<PAGE> 9
positions with American Express Travel Related Services Company, Inc., serving
most recently as President -- Travel Services Group. Mr. Ballou currently serves
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 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 Richard Ellis, Inc., Northwest Airlines,
Colorado Prime, Inc., PaineWebber Family of Mutual Funds, and SAGA SYSTEMS, Inc.
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
and Cinergy Corporation. He also serves on the Board of Governors of the
American Stock Exchange L.L.C. and the National Association of Securities
Dealers, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1999, the board of directors held five regular meetings and four
special meetings. 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 three meetings during
1999.
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 three meetings during 1999.
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 1999.
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 nominations for the 2000 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
6
<PAGE> 10
and the nominating shareholder. To be timely for this 2000 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 2001 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 December 21,
1999, we issued options to acquire 10,000 shares to each of Messrs. Duberstein
and Sullivan at an exercise price of $2.9375 per share, which was the market
price of our stock on that date.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth certain information concerning the annual
and long-term compensation for our chief executive officer and two other most
highly compensated officers during the year ended December 31, 1999 (the "Named
Executive Officers"). Mr. Stuart, our Executive Vice President, Chief Financial
Officer and Treasurer, joined us in May 1999. Mr. Lewis served as our President
and Chief Operating Officer until leaving the Company in October 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------------
AWARDS PAYOUT
---------- ---------
SHARES OF
COMMON
ANNUAL STOCK
COMPENSATION UNDERLYING LTIP ALL OTHER
--------------------- OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR SALARY ($) BONUS($) (#) ($) ($)
------------------------------ ---- ---------- -------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Roger H. Ballou........................ 1999 200,000 -0- -0- 1,032,583(1) 2,192
Chairman, President and Chief 1998 150,000 100,000 393,689 -0- -0-
Executive Officer
Jay G. Stuart.......................... 1999 133,334 75,000 225,000 -0- 159
Executive Vice President,
Chief Financial Officer and Treasurer
J. Raymond Lewis, Jr................... 1999 166,667 -0- -0- 258,172(2) 50,715(3)
Former officer 1998 150,000 100,000 393,689 -0- 18,200(4)
</TABLE>
- ---------------
(1) As of March 16, 1999, Global Vacation Group accelerated the vesting of all
135,554 of Mr. Ballou's unvested performance vesting restricted shares to
March 16, 1999, as described further below under the caption "Transactions
with Related Parties." The dollar amount reported above represents the
product of the number of performance vesting restricted shares for which
vesting was accelerated times the difference between $8.4375, the closing
price of a share of Global Vacation Group common stock on The New York Stock
Exchange on March 16, 1999, and $.82, the price per share Mr. Ballou paid
for the performance vesting shares in March 1998.
(2) As of March 16, 1999, Global Vacation Group accelerated the vesting of all
33,892 of Mr. Lewis's unvested performance vesting restricted shares to
March 16, 1999, as described further below under the caption "Transactions
with Related Parties." The dollar amount reported above represents the
product of the number of performance vesting restricted shares for which
vesting was accelerated times $8.4375, the closing price of a share of
Global Vacation Group common stock on The New York Stock Exchange on
7
<PAGE> 11
March 16, 1999, and $.82, the price per share Mr. Lewis paid for the
performance vesting shares in March 1998.
(3) Represents $33,334 severance payments made to Mr. Lewis pursuant to his
resignation agreement, effective October 31, 1999. Pursuant to his
resignation agreement, Mr. Lewis sold to Global Vacation Group 74,554 shares
of Global Vacation Group common stock to cancel a certain promissory note
dated April 24, 1999. The transaction resulted in $14,458 of compensation to
Mr. Lewis. Mr. Lewis also received $2,923 in executive benefits in 1999.
(4) Represents executive benefits received pursuant to Senior Management
Employment Agreement.
None of our executive officers exercised any options to purchase shares of
common stock during 1999. The following table sets forth certain information
concerning exercised and unexercised options held by the Named Executive
Officers at December 31, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS
SHARES AT DECEMBER 31, 1999 AT DECEMBER 31, 1999(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger H. Ballou....................... -- -- 92,173 301,516 $-- $--
Jay G. Stuart......................... -- -- -- 225,000 -- --
J. Raymond Lewis, Jr.................. -- -- 92,173 -- -- --
</TABLE>
- ---------------
(1) Based on the closing price of $2.875 per share of Global Vacation Group
common stock on December 31, 1999, as reported by The New York Stock
Exchange.
The following table sets forth information relating to options to purchase
common stock granted to the Named Executive Officers during 1999:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
SHARES OF TOTAL ANNUAL RATES OF
COMMON OPTIONS STOCKPRICE
STOCK GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roger H. Ballou............................... -0- -0- -- -- -- --
Jay G. Stuart................................. 150,000(1) 23.9 6.00 5/3/2009 566,005 1,434,368
75,000(2) 12.0 2.9375 12/21/2009 138,553 351,121
J. Raymond Lewis, Jr.......................... -0- -0- -- -- -- --
</TABLE>
- ---------------
(1) Exercisable in four equal installments beginning on May 3, 2000.
(2) Exercisable in four equal installments beginning on December 21, 2000.
EMPLOYMENT AGREEMENTS
We have entered into Senior Management Agreements with each of Messrs.
Ballou and Stuart. 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
8
<PAGE> 12
board of directors. In December 1999, the board of directors determined to award
Mr. Stuart a $75,000 cash bonus for his contributions in 1999.
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.
Under the terms of a resignation agreement entered into between Mr. Lewis
and the Company in October 1999, Mr. Lewis is eligible to receive severance
payments equal to $200,000 payable as salary continuation in equal semi-monthly
installments for a period of 12 months ending on October 31, 2000. The Company
will, during this period, provide health, life, accident and disability
insurance benefits on the same basis as other senior executives. In the event
Mr. Lewis becomes employed on or after May 1, 2000 the benefits and severance
payments will cease.
In addition, pursuant to that resignation agreement all non-vested options,
covering an aggregate of 301,517 shares of common stock, held by Mr. Lewis were
terminated on October 31, 1999. Under the terms of the resignation agreement,
all vested options, exercisable for 92,172.25 shares at an option exercise price
of $14.00 per share, held by Mr. Lewis remain in full force and effect and will
terminate, if unexercised, on October 31, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee consists 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 our common stock began
trading on the New York Stock Exchange, through December 31, 1999, with the
cumulative total return of the Russell 2000, Wilshire 5000 and a peer group. The
9
<PAGE> 13
graph assumes the investment of $100 in Global Vacation Group common stock and
each index on July 31, 1998, and the reinvestment of all dividends paid. We paid
no dividends during the period presented.
[LINE GRAPH]
<TABLE>
<CAPTION>
TRAVEL PEER GROUP
GVG RUSSELL 2000 INDEX WILSHIRE 5000 INDEX*
--- ------------------ ------------- -----------------
<S> <C> <C> <C> <C>
7/31/98 $ 100.00 $ 100.00 $ 100.00 $ 100.00
12/31/98 56.6667 98.2445 108.611 79.8965
12/31/99 19.1667 117.52 113.145 42.4242
</TABLE>
* Peer Group Index is made up of Ambassadors International, Inc., Travel
Services, Inc., Resortquest International, Inc., and Navigant International,
Inc.
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 1999. The 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 1999 to its executive
officers as set forth below and that Global Vacation Group pay its executive
officers the base salaries for 2000 set forth below:
<TABLE>
<CAPTION>
1999
INCENTIVE 2000 BASE
EXECUTIVE OFFICER BONUS SALARY
----------------- --------- ---------
<S> <C> <C>
Roger H. Ballou............................................. $ 0 $200,000
Jay G. Stuart............................................... 75,000 200,000
</TABLE>
The Stock Option 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
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<PAGE> 14
stock to its executives, employees, non-employee directors and consultants
during the second half of 1998 following completion of our initial public
offering. In 1999, the Stock Option Committee granted options to purchase an
aggregate of 626,500 additional shares of common stock to our employees. Mr.
Stuart, who joined us in May 1999, received options to purchase 225,000 of those
shares.
As part of the benefits component of the overall compensation package,
Global Vacation Group established a 401(k) plan in 1999. Under the terms of the
plan and in keeping with our overall compensation philosophy, for 2000, as in
1999, 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.
1999 CHIEF EXECUTIVE OFFICER COMPENSATION
Global Vacation group considers several factors in establishing an
executive compensation package. For the chief executive officer, or "CEO," these
include competitive pay practices, individual performance level, experience,
achievement of strategic goals and, most importantly, the financial performance
of Global Vacation Group. As with other executive officers' compensation
packages, Global Vacation Group's board of directors and Compensation Committee
has determined that the CEO package should be highly leveraged with incentives
while base salaries will remain relatively constant.
Mr. Ballou has served as our Chairman and Chief Executive Officer since
March 1998, and as our President since November 1999. Mr. Ballou's base salary
in 1999 was $200,000. Mr. Ballou will be eligible to receive a bonus for his
efforts in 2000, with the maximum cash bonus payable equal to Mr. Ballou's 2000
base salary of $200,000. For 2000, the actual amount paid as a bonus to Mr.
Ballou will be based on Global Vacation Group's ability to meet its budgeted
pre-tax income targets, budgeted net income targets, and on Mr. Ballou's ability
to achieve specified non-financial management goals.
Respectfully submitted,
Compensation Committee
Roger H. Ballou
Frederic V. Malek
James M. Sullivan
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<PAGE> 15
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.
On March 30, 1998, in connection with their Senior Management Agreements,
Global Vacation Group sold to certain of our then-executive 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
----------------- --------------- ------------ ------------ ------------
(SHARES) (SHARES) (SHARES) (SHARES)
<S> <C> <C> <C> <C>
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 16, 1999, Global Vacation Group amended the vesting
arrangements for each such executive's unvested shares. This amendment involved
accelerating the vesting of all unvested shares to March 16, 1999, subject to a
restriction on the sale of such shares based on a schedule similar to 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 loaned Messrs. Ballou, Lewis and
Berman $1.2 million, $0.3 million and $0.4 million, respectively, which are the
amounts estimated to equal the tax owed by each executive as a result of the
acceleration of the vesting of their shares. Repayments of the loans made to
each executive were to have been made from sales of vested Global Vacation Group
shares.
Mr. Ballou's loan bears interest at a rate of 6% per year and must be
repaid when his employment is terminated or by March 15, 2003, whichever comes
first. Global Vacation Group intends, however, to forgive and extinguish Mr.
Ballou's obligation to repay 10.56% of the maximum principal amount of his loan
then outstanding on each March 16 that Mr. Ballou remains employed with Global
Vacation Group, ending March 16, 2003. In addition, if Global Vacation Group
achieves aggregate net income, after income taxes, equal to or greater than
$69.0 million for the four-year period beginning January 1, 1999 and ending
December 31, 2002, Global Vacation has agreed to forgive and extinguish all
interest payable on Mr. Ballou's loan on March 16, 2003. If Global Vacation
Group achieves aggregate net income, after income taxes, between $60.0 million
and $69.0 million over that period, Global Vacation Group has agreed to forgive
and extinguish a portion of the interest payable on Mr. Ballou's loan, with 0%
forgiven at $60.0 million, increasing proportionally until 100% of the interest
payable is forgiven at $69.0 million. For example, if Global Vacation Group
achieves $64.5 million in aggregate net income, after income taxes, during that
period, Global Vacation Group will forgive 50% of the interest payable on Mr.
Ballou's loan on March 16, 2003.
In addition, Global Vacation Group has agreed to forgive all interest
payable on Mr. Ballou's loan if Global Vacation Group is sold in a transaction
in which the fair value of the consideration paid to the Global Vacation Group
shareholders would produce a 30% annualized return to the shareholders of record
of Global
12
<PAGE> 16
Vacation Group as of March 16, 1999, based on the closing price of a share of
Global Vacation Group common stock of $8.4375 on that date.
To the extent that Mr. Ballou has paid any interest due on his loan before
all or any portion of that interest is forgiven, Global Vacation Group has
agreed to apply all amounts previously paid to reduce the principal balance of
Mr. Ballou's loan due on March 16, 2003.
When made, the terms of the loans made to Messrs. Lewis and Berman were
substantially identical to those described above. Because each of Messrs. Lewis
and Berman have resigned from Global Vacation Group, however, their repayment
obligations have changed.
Mr. Lewis left Global Vacation Group in October 1999. Under the terms of a
resignation agreement entered into between Mr. Lewis and the Company in October
1999, Mr. Lewis is eligible to receive severance payments equal to $200,000
payable as salary continuation in equal bi-monthly installments for a period of
12 months ending on October 31, 2000. The Company will, during this period,
provide health, life, accident and disability insurance benefits on the same
basis as other senior executives. In the event Mr. Lewis becomes employed on or
after May 1, 2000 the benefits and severance payments will cease.
In addition all non-vested options held by Mr. Lewis were terminated on
October 31, 1999, and all vested options (exercisable for 92,173 shares at an
exercise price of $14.00 per share) held by Mr. Lewis remain in full force and
effect and will terminate, if unexercised, on October 31, 2000.
In consideration for the cancellation by the Company of a promissory note
dated April 24, 1999 in the aggregate amount of $270,000, Mr. Lewis sold to the
Company 74,554 shares of the Company's common stock which Mr. Lewis originally
acquired pursuant to his Senior Management Agreement. Following that repurchase
by Global Vacation Group, Mr. Lewis continues to be the owner of 49,243 shares
of Global Vacation Group common stock). Mr. Lewis' resignation agreement also
contains standard mutual releases and non-compete, non-solicitation, and
confidentiality provisions.
Mr. Berman left Global Vacation Group in May 1999. At the time of his
departure, Mr. Berman and Global Vacation Group entered into a resignation
agreement pursuant to which Mr. Berman's Senior Management Agreement was
terminated, all stock options granted to Mr. Berman, both vested and non-
vested, were terminated and no severance payments were made.
In addition, pursuant to the resignation agreement, Global Vacation Group
repurchased 37,637 shares of common stock previously issued to Mr. Berman at an
aggregate price of $30,862, or $.82 per share. In addition, under the terms of
the resignation agreement Mr. Berman agreed not to transfer 61,770 shares of the
Company's common stock until on or after April 1, 2005, unless the Company is
sold, or Mr. Berman dies. Mr. Berman's resignation agreement also contains
standard non-compete, non-solicitation and confidentiality provisions.
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 1999, we believe
that all Section 16(a) filing requirements for that year applicable to these
persons were complied with on a timely basis.
13
<PAGE> 17
INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
We have appointed Arthur Andersen LLP to act as Global Vacation Group's
independent public accountants for 2000, pending ratification by shareholders at
the 2000 Annual Meeting. Representatives of Arthur Andersen LLP will be present
at the 2000 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, 2000. 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 2001 annual meeting no later than
December 15, 2000 in order to be considered for inclusion in our proxy statement
and form of proxy relating to the 2001 annual meeting. However, nothing in this
paragraph shall be deemed to require us to include in our proxy statement and
proxy relating to the 2001 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 2001 annual meeting of shareholders must file a copy thereof with
our corporate secretary between January 14, 2001 and February 13, 2001.
OTHER BUSINESS TO BE TRANSACTED
We do not know of any other matters to be presented for action by the
shareholders at the 2000 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
/s/ ROGER H. BALLOU
Roger H. Ballou
Chairman of the Board
President and Chief Executive Officer
Washington, D.C.
April 14, 2000
14
<PAGE> 18
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, Jay G. Stuart 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 2000 Annual Meeting of Shareholders
to be held at 9:00 a.m., on May 18, 2000, 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 DIRECTORS:
To elect Carl J. Rickertsen and James M. Sullivan to serve as
directors for a term expiring at the annual meting of shareholders
in 2003 and until their successors shall have been elected and
qualified
<TABLE>
<S> <C> <C>
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY [ ] ________________________________
TO VOTE FOR ALL Instruction: To vote for
NOMINEES all nominees except as indicated
on the line above.
</TABLE>
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, 2000
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
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 MESSRS. RICKERTSEN AND SULLIVAN;
(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 2000 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 2000 Annual Meeting and voting in person. The undersigned
shareholder hereby acknowledges receipt of notice of the 2000 Annual Meeting and
Proxy Statement dated April 14, 2000 and hereby revokes any proxy or proxies
heretofore given.
(Continued and to be dated and signed on reverse side)
<PAGE> 19
(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 18, 2000 ANNUAL STOCKHOLDERS MEETING
Date: , 2000.
--------------------------------------------
(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 2000 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.
