<PAGE> 1
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. )
Filed by the Registrant [ ]
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 sec. 240.14a-11(c) or sec. 240.14a-12
TEAM, 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)(l) 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:
- --------------------------------------------------------------------------------
<PAGE> 2
TEAM, INC.
1019 SOUTH HOOD STREET
ALVIN, TEXAS 77511
(281) 331-6154
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 1997
To the Shareholders of Team, Inc.:
The 1997 Annual Meeting of Shareholders of Team, Inc. (the "Company") will
be held on Thursday, October 30, 1997 at 3:00 p.m. Houston time, at the Nolan
Ryan Center, 2925 South Hwy. 35 Bypass, Alvin, Texas 77511 for the following
purposes:
1. To elect two persons to serve as Class II Directors for a term of three
years on the Company's Board of Directors consisting of three classes of
directors with staggered terms;
2. To consider and vote on a proposal to approve the appointment of
Deloitte & Touche LLP as the independent certified public accountants to audit
the Company's accounts for the fiscal year ending May 31, 1998; and
3. To transact such other business as may properly come before the meeting
and all adjournments thereof.
The Board of Directors has fixed the close of business on September 12,
1997 as the record date for determination of shareholders who are entitled to
notice of and to vote either in person or by proxy at the Annual Meeting of
Shareholders and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
Even if you plan to attend the meeting, YOU ARE REQUESTED TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY AS SOON AS POSSIBLE.
By Order of the Board of Directors
/s/ WILLIAM A. RYAN
William A. Ryan
Chairman of the Board of Directors,
President and Chief Executive
Officer
September 25, 1997
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY.
<PAGE> 3
TEAM, INC.
1019 SOUTH HOOD STREET
ALVIN, TEXAS 77511
(281) 331-6154
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of Team,
Inc., a Texas corporation (the "Company"), to be voted at the 1997 Annual
Meeting of Shareholders (the "1997 Annual Meeting"), and at any adjournment
thereof, to be held at the time and place and for the purposes set forth in the
accompanying Notice. This Proxy Statement and enclosed form of proxy are being
mailed to shareholders beginning on or about September 26, 1997.
The Company will bear costs of soliciting proxies in the accompanying form.
In addition to the solicitation made hereby, proxies may also be solicited by
telephone, telegram or personal interview by officers and employees of the
Company. The Company will reimburse brokers or other persons holding stock in
their names or in the names of their nominees for their reasonable expenses in
forwarding proxy material to beneficial owners of stock.
All duly executed proxies received prior to the 1997 Annual Meeting will be
voted in accordance with the choices specified thereon, unless revoked as
described below. As to any matter for which no choice has been specified in a
proxy, the shares represented thereby will be voted by the persons named in the
proxy: (1) FOR the election of the two nominees listed herein as Class II
Directors for a term of three years; (2) FOR the proposal to approve the
appointment of Deloitte & Touche LLP as independent certified public accountants
of the Company for the fiscal year ending May 31, 1998; and (3) in the
discretion of such person in connection with any other business that may
properly come before the meeting. Shareholders may revoke their proxy at any
time prior to the exercise thereof by written notice to Mr. Kenneth M. Tholan of
the Company at the above address of the Company, by the execution and delivery
of a later dated proxy or by attendance at the meeting and voting their shares
in person. Proxy cards that are not signed or that are not returned are treated
as not voted for any purposes.
VOTING SECURITIES
As of the close of business on September 12, 1997, the record date for
determining shareholders entitled to vote at the 1997 Annual Meeting, the
Company had outstanding and entitled to vote 5,940,842 shares of common stock.
Each share of common stock is entitled to one vote with respect to each matter
to be acted upon at the meeting. The holders of a majority of the total shares
of common stock of the Company issued and outstanding as of September 12, 1997,
whether present in person or represented by proxy, will constitute a quorum for
the transaction of business at the meeting. Abstentions, or with respect to the
election of directors withholds, are counted for purposes of determining the
presence or absence of a quorum for the transaction of business while broker
non-votes are not so counted. Additionally, abstentions and/or withholds are
counted in tabulations of the votes cast on proposals presented to shareholders,
whereas broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
PROPOSAL ONE -- ELECTION OF DIRECTORS
GENERAL
The Company's Restated Articles of Incorporation and Bylaws provide that
the Company's Board of Directors will consist of not less than five nor more
than nine persons, the exact number to be fixed from time-to-time by the Board
of Directors. The Board of Directors has fixed the number of directors
constituting the Board of Directors at five, divided into three classes with
staggered three-year terms.
<PAGE> 4
The Board of Directors has nominated two Class II Directors to be elected
to serve a three-year term expiring on the date of the Annual Meeting of
Shareholders of the Company to be held in 2000, and to hold office until their
successors are duly elected and qualified. Messrs. Jack M. Johnson, Jr. and E.
Theodore Laborde have been nominated by the Board of Directors to stand for
re-election as Class II Directors for a three-year term.
Directors are elected by a plurality of votes cast at the Annual Meeting.
Unless contrary instructions are set forth in the proxies, the persons with full
authority to act as proxies at the 1997 Annual Meeting will vote all shares
represented by such proxies for the election of the nominees named therein as
directors. Should any of the nominees become unable or unwilling to accept
nomination or election, it is intended that the persons acting under the proxy
will vote for the election, in the nominee's stead, of such other persons as the
Board of Directors of the Company may recommend. The management has no reason to
believe that either of the nominees will be unable or unwilling to stand for
election or to serve if elected.
NOMINEES
Set forth below is certain information as of September 12, 1997 concerning
the nominees for election as Class II Directors at the 1997 Annual Meeting,
including the business experience of each for at least the past five years:
<TABLE>
<CAPTION>
PRESENT POSITION DIRECTOR
NAME AGE WITH THE COMPANY SINCE
---- --- ---------------- --------
<S> <C> <C> <C>
Jack M. Johnson, Jr.............................. 59 Director 1992
E. Theodore Laborde.............................. 59 Director 1991
</TABLE>
Mr. Johnson has been Managing General Partner of Wintermann & Company, a
general partnership that owns approximately 25,000 acres of real estate in Texas
which is used in farming, ranching and oil and gas exploration activities, for
more than the past five years. Mr. Johnson is also President of Winco
Agriproducts, an agricultural products company that primarily processes rice for
seed and commercial sale, and is on the Board of Directors of Houston National
Bank located in Houston, Texas with assets of approximately $100 million. Mr.
Johnson is also a Director of Security State Bank in Anahuac, Texas.
Mr. Laborde has served in various capacities with J & H Marsh & McLennan,
Inc., an insurance brokerage firm, in New Orleans, Louisiana, for approximately
35 years. Since 1982, Mr. Laborde has acted as Managing Director of the New
Orleans operation. J & H Marsh & McLennan, Inc. is a subsidiary of Marsh &
McLennan Companies.
DIRECTORS CONTINUING IN OFFICE
Set forth below is certain information concerning the three directors
continuing in office until the expiration of their respective terms, including
the business experience of each for at least the past five years:
<TABLE>
<CAPTION>
PRESENT POSITION DIRECTOR EXPIRATION OF
NAME AGE WITH THE COMPANY SINCE PRESENT TERM
---- --- ---------------- -------- -------------
<S> <C> <C> <C> <C>
William A. Ryan................ 70 Chairman of the Board of 1987 1999
Directors, President and Chief
Executive Officer
Sidney B. Williams............. 64 Director 1973 1998
George W. Harrison............. 69 Director 1995 1998
</TABLE>
Mr. Ryan was elected Chairman of the Board of Directors, President and
Chief Executive Officer of the Company in August of 1995. Previously, Mr. Ryan
was President and Chief Operating Officer of Continental Materials Corporation
in Chicago, Illinois, from 1974 until his retirement in August 1995. Continental
Materials Corporation engages in the business of manufacturing heating and
cooling equipment and producing minerals and mineral products, and its common
stock is listed on the American Stock Exchange.
2
<PAGE> 5
Mr. Williams is a sole shareholder of a professional corporation which is a
partner in the law firm of Chamberlain, Hrdlicka, White, Williams & Martin in
Houston, Texas and has been a partner in that firm for more than the past five
years.
Mr. Harrison has been a director of the Company since November 1995. He is
currently a consultant for the Company and previously served as Team's Senior
Vice President and was involved in most aspects of the Company including
operations, engineering, manufacturing, marketing and research and development.
Mr. Williams and Mr. Laborde are brothers-in-law.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six regular meetings and two telephone
conference meetings during the fiscal year ended May 31, 1997. No director
attended fewer than 75% of the meetings held by the Board and the Committees on
which he served.
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee but does not have a Nominating Committee. The Executive
Committee is composed of Messrs. Ryan and Williams. The Executive Committee is
responsible for assisting with the general management of the business and
affairs of the Company during intervals between meetings of the Board of
Directors. The Executive Committee met weekly during fiscal 1997.
The Audit Committee is composed of Messrs. Laborde, Johnson and Harrison.
The Audit Committee is charged with the duties of recommending the appointment
of the independent certified public accountants; reviewing their fees; ensuring
that proper guidelines are established for the dissemination of financial
information to the Company's shareholders; meeting periodically with the
independent certified public accountants, the Board of Directors and certain
officers of the Company and its subsidiaries to ensure the adequacy of internal
controls and reporting; reviewing consolidated financial statements; and
performing any other duties or functions deemed appropriate by the Board. The
Audit Committee met one time during fiscal 1997.
The Compensation Committee, composed of Messrs. Johnson and Williams
reviews management performance and makes recommendations to the Board of
Directors concerning management compensation and other corporate benefits. The
Compensation Committee met three times during fiscal 1997 regarding specific
employee matters.
COMPENSATION OF DIRECTORS
All non-employee directors currently receive an annual fee of $20,000 of
which one-half ($10,000) is paid in cash on a quarterly basis. The remaining
$10,000 is paid in Company stock on July 1 of each year with the number of
shares calculated by dividing $10,000 by the closing price per share on the
preceding business day.
In December 1991, the Company adopted the Non-Employee Directors' Stock
Option Plan, as amended through March 28, 1997 (the "Non-Employee Director
Plan"), which authorizes options to purchase 220,000 shares of common stock for
directors of the Company who are not employees of the Company or any of its
affiliates. During the year, the Board of Directors approved the amendment of
the Non-Employee Director Plan to increase the maximum number of shares which
may be offered from 220,000 to 265,000 shares. The purpose of the Non-Employee
Director Plan is to attract and to retain the services of experienced and
knowledgeable independent individuals as directors, to extend to them the
opportunity to acquire a proprietary interest in the Company so that they will
apply their best efforts for the benefit of the Company, and to provide such
individuals with an additional incentive to continue in their position. Pursuant
to the Non-Employee Director Plan, each non-employee director receives automatic
grants of options upon such director's appointment, re-appointment, election or
re-election to the Board of Directors equal to the product obtained by
multiplying five thousand (5,000) by the number of years, or any part of any
year, that such director is appointed or elected to serve on the Board of
Directors. The exercise price of the options is equal to the fair market value
of the Company's common stock on the date of grant, and the options expire ten
3
<PAGE> 6
years after the date of grant. In December 1996, the Board of Directors repriced
all outstanding options to $2.125 per share. Options to purchase 5,000 shares
vest on the date of grant and each anniversary thereafter until all of the
options granted are fully vested. Currently, under the Non-Employee Director
Plan, one director has been granted options to purchase 30,000 shares at $2.125
per share, one director has been granted options to purchase 25,000 shares at
$2.125 per share, one director has been granted options to purchase 40,000
shares at $2.125 per share, and one director has been granted options to
purchase 80,000 shares at $2.125 per share. None of the Company's directors
exercised their options under the Non-Employee Director Plan during the
preceding fiscal year.
CURRENT DIRECTORS AND EXECUTIVE AND OTHER OFFICERS
The following table sets forth information regarding the current directors
and executive and other officers of the Company:
<TABLE>
<CAPTION>
YEAR YEAR
ELECTED ELECTED
NAME OF AS AS
DIRECTOR OR OFFICER AGE DIRECTOR OFFICER POSITION WITH COMPANY
------------------- --- -------- ------- ---------------------
<S> <C> <C> <C> <C>
William A. Ryan(1)................... 70 1987 1995 Chairman of the Board of
Directors, President and
Chief Executive Officer
Kenneth M. Tholan.................... 58 -- 1996 Executive Vice President and
Chief Operating Officer
Margie E. Rogers..................... 54 -- 1996 Vice President, Chief
Financial Officer, Secretary
and Treasurer
John P. Kearns....................... 41 -- 1996 Vice President
Clark A. Ingram...................... 41 -- 1996 Vice President
William H. Nelson.................... 31 -- 1996 Controller and Assistant
Secretary
Sidney B. Williams (1)(3)............ 64 1973 -- Director
George W. Harrison (2)............... 70 1995 1974 Director
E. Theodore Laborde (2).............. 59 1991 -- Director
Jack M. Johnson, Jr.(2)(3)........... 59 1992 -- Director
</TABLE>
- ---------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Mr. Tholan joined the Company in June 1996 as General Manager of the
Company and shortly thereafter was elected as Vice President. In 1997, he was
named Executive Vice President and Chief Operating Officer. Previously, from
1993 to 1996, Mr. Tholan held the position of Vice President and General Manager
for Furmanite America, Inc. (a Kaneb company) with responsibility for the
Southwest Division, as well as engineering and manufacturing of on-site
mechanical services for the refinery, chemical and other related industries.
From 1989 to 1992, Mr. Tholan served as Vice President of Smith Diamond, a
division of Smith International, Inc. He was responsible for the engineering,
manufacturing and sales of synthetic diamond bits and other related products to
the oil and gas industry.
Ms. Rogers joined the Company in 1989 as Corporate Controller and assumed
the position of Assistant Secretary in 1995. In 1996, she assumed the positions
of Vice President, Secretary, Treasurer and Chief Accounting Officer of the
Company. In 1997, she was named Chief Financial Officer.
Mr. Kearns joined the Company in 1980 as a design engineer and assumed his
position as Vice President of Engineering and Manufacturing in 1996. Mr. Kearns
has been involved with the Company's engineering, manufacturing and research and
development functions for more than the last five years.
Mr. Ingram joined the Company in 1988 as Risk and Human Resource Manager
and assumed his position as Vice President of Human Resources in 1996. Mr.
Ingram has been involved with the Company's human resources, insurance and
employee benefits for more than the last five years.
4
<PAGE> 7
Mr. Nelson joined the Company in 1993 as Assistant Controller and assumed
his position of Assistant Secretary in 1996 and Corporate Controller in 1997.
Prior to joining the Company, Mr. Nelson was employed by the accounting firm of
Coopers & Lybrand.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10 percent
of a registered class of the Company's equity securities to file reports of
ownership and changes of ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10 percent stockholders are required to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely on its review of the forms received by the Company, or written
representations from certain reporting persons that no Form 5 reports were
required for those persons, the Company believes that during the year ended May
31, 1997, all filing requirements applicable to the Company's officers,
directors and greater than 10 percent shareholders were satisfied.
EMPLOYMENT AND OTHER AGREEMENTS
Mr. Ryan is a party to an employment and consulting agreement with the
Company. This agreement terminates on May 31, 2002, unless terminated earlier
with or without cause by either Mr. Ryan or the Company. Pursuant to the terms
of such employment agreement, Mr. Ryan has agreed not to disclose any
confidential information regarding the Company without the prior written consent
of the Company. Further, Mr. Ryan has agreed not to compete with the Company for
a period of two years following his termination of employment. Pursuant to such
employment agreement, in the event Mr. Ryan is terminated without cause or
resigns, he would be entitled to severance payments for a specific length of
time. Also, if Mr. Ryan's employment is terminated, for the remainder of the
term of the Agreement, Mr. Ryan will consult with the Company and receive a
consulting fee of $50,000 per year. See also "Deferred Compensation Plan for Mr.
Ryan."
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth compensation information for the fiscal
years ended May 31, 1997, 1996 and 1995 for the Chief Executive Officer and the
other executive officers of the Company earning in excess of $100,000 during the
Company's 1997 fiscal year (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS SATION AWARD(S) SARS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
------------------ ---- ------- ------ ------- ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William A. Ryan,(1)................. 1997 212,692(3) 50,000 -- -- -- -- --
Chairman of the Board of
Directors, 1996 230,769(3) -- -- -- 60,000(4) -- --
President and Chief Executive
Officer
Kenneth M. Tholan,(2)............... 1997 118,808 20,000 -- -- 15,000 -- --
Executive Vice President
</TABLE>
- ---------------
(1) Mr. Ryan was named an executive officer during fiscal 1996.
(2) Mr. Tholan was named an executive officer during fiscal 1997.
(3) Includes $175,000 and $125,000 for 1997 and 1996, respectively, deferred at
the option of Mr. Ryan. See "Deferred Compensation Plan for Mr. Ryan."
(4) Includes options to purchase 40,000 shares which were repriced in December
1995 and options to purchase 20,000 shares which were granted to Mr. Ryan in
December 1995.
5
<PAGE> 8
FISCAL 1998 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Ryan is a party to a new employment agreement with the Company
effective June 1, 1997 and terminating May 31, 2002. Pursuant to the terms of
such employment agreement, Mr. Ryan will receive an annual salary of $100,000
and is guaranteed a performance bonus of not less than $50,000 annually. In the
event Mr. Ryan ceases to be the Company's Chief Executive Officer, he will
continue to receive this salary for one year. Thereafter and until the
termination of the employment agreement, Mr. Ryan will act as a consultant for
the Company and will receive $50,000 annually. Pursuant to the terms of the
employment agreement, Mr. Ryan has agreed not to disclose any confidential
information regarding the Company without the prior written consent of the
Company and, under certain circumstances, not to compete with the Company for a
period of two years following his termination of employment.
DEFERRED COMPENSATION PLAN FOR MR. RYAN
Effective January 1, 1996, an agreement was entered into with Mr. Ryan by
which he is permitted, prior to the beginning of each calendar year, to elect to
defer a designated portion of his regular annual salary for income tax purposes.
The deferred salary is contributed by the Company into a trust held and managed
by a designated bank, until distributed to Mr. Ryan in the future. The amount of
such deferred salary in fiscal 1997 and 1996 is included in the above Summary
Compensation Table. The trust is treated as a grantor trust for federal income
tax purposes. As a result, the agreement provides that the annual income tax on
the trust's taxable income shall be paid by the Company and not charged to the
trust. Therefore, the trust's taxable income for 1996 will be included in the
Company's consolidated federal tax return.
OPTION GRANTS IN FISCAL 1997
The following table sets forth additional information with respect to stock
options granted in 1997 to the Named Executive Officers:
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME OPTIONS 1997 PRICE DATE VALUE
---- ---------- ------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Kenneth M. Tholan(1)................... 15,000 100% $2.00 11/30/99 $ 16,200
</TABLE>
- ---------------
(1) Pursuant to the vesting schedule in Mr. Tholan's Option Agreement, 7,500
shares are currently exercisable, 3,750 become exercisable on January 1,
1998 and 3,750 become exercisable January 1, 1999.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides certain information with respect to any
options exercised during the fiscal year ended May 31, 1997 by each of the Named
Executive Officers and the value of their options at the end of fiscal 1997:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER NUMBER OF UNEXERCISED IN-THE-MONEY
OF SHARES OPTIONS AT END OPTIONS AT END
ACQUIRED OF FISCAL 1997 OF FISCAL 1997
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Ryan............ -- N/A 60,000 -- -- --
Kenneth M. Tholan.......... -- N/A 7,500 7,500 -- --
</TABLE>
6
<PAGE> 9
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Jack M. Johnson, Jr. -- Chairman
Sidney B. Williams
COMPENSATION COMMITTEE REPORT
Pursuant to rules adopted by the Securities and Exchange Commission, the
Compensation Committee of the Board of Directors (the "Committee"), which is
composed entirely of independent outside directors, has furnished the following
report on executive compensation:
The Committee's major responsibilities include, but are not limited to, the
following:
1. Reviewing the Company's major compensation and benefit practices,
policies and programs with respect to executive officers;
2. Reviewing executive officers' salaries and bonuses; and
3. Administering the Company's stock option plans.
Following review and approval by the Committee, all issues pertaining to
the compensation of, and the grant of options to, the executive officers are
submitted to the full Board of Directors for approval.
COMPENSATION PHILOSOPHY
The Committee's compensation philosophy operates on several different
levels. First, the Committee must ensure that the compensation is competitive in
order to attract and retain highly qualified executives. In order to facilitate
the first objective, the Committee as a rule considers various compensation
surveys and proxy statements for companies in the industry of comparable size
and complexity to the Company. Second, in order to motivate its executives, the
Committee links executive pay levels to the performance of the Company through
the grant of options pursuant to the stock option program. Third, the Committee
endeavors to reward outstanding individual contributions to the Company and to
set compensation at levels that reflect each executive officer's individual
contribution towards the Company's goals through its bonus and stock option
programs. The Committee endeavors to support the Company's commitment to
providing superior shareholder value. The compensation and related programs are
designed to reward and motivate executives for the accomplishment of the
Company's commitment to its shareholders.
COMPENSATION PROGRAM COMPONENTS
To achieve its compensation goals, the compensation program consists of
four components -- base salary, bonuses, various employee benefits (including
medical and life insurance and 401(k) plan benefits generally available to the
employees of the Company) and the Company's stock option plan. The total program
is structured to deliver a significant percentage of pay through at-risk pay
programs which reward executives if the performance of the Company warrants.
Maximizing shareholder value is a basic principle underlying the Company's pay
programs.
Annually, the Committee seeks to review the base salary of each executive
officer to determine its fairness. During its annual consideration of the base
salaries of the executive officers, the Committee considers the level of
responsibility, experience and performance of each executive officer. The
Committee also takes into account the competitive conditions of the marketplace,
the Company's profitability as well as the cost of living index. When reviewing
competitive conditions of the marketplace, the Committee considers the Company's
pay levels with those of companies of similar size and complexity. As the
Company believes there is no survey data relating to the Company's service
industries, the Company studies compensation surveys for companies of a similar
size and complexity and various other data and information brought to its
attention, including proxy statements, of companies in the Company's service
industry. Based on such information, the Committee endeavors to ensure that the
pay levels fall in the median range of the amounts paid by the
7
<PAGE> 10
comparable companies. In certain circumstances, bonuses may be awarded to those
executive officers who have made outstanding individual contributions during the
current fiscal year.
Additionally, all executive officers are eligible to receive stock options,
at the Committee's discretion, giving them the right to purchase shares of the
Company's stock at a specified price in the future. By increasing senior
management's equity position in the Company, the interests of the shareholders
and the executives will be more closely aligned. To that end, Mr. Tholan was
granted an option to purchase 15,000 shares in July 1996 for the price of $2.00
per share.
The Company granted Mr. Tholan a $15,000 increase in salary upon his
promotion to Executive Vice President. Ms. Rogers received an $11,500 increase
in salary upon her promotion to Chief Financial Officer. Subsequent to year end,
the officers of the Company received bonuses commensurate with levels of
responsibility and individual performance.
PERFORMANCE MEASURES
When evaluating annual executive compensation, the Committee considers the
Company's earnings, adjusted for certain unusual or non-recurring items, return
on net investment and cash flows. These factors are compared to the Company's
prior year's performance, its annual business plan and the performance of other
companies which operate in the same industry segments as the Company. These
performance measures assist the Committee in ensuring that the interests of its
shareholders, as well as its executives, are represented in a fair and equitable
manner.
No specific fixed weighting or formula is applied to such performance
measures. Rather, the Committee exercises its judgment in evaluating financial
and non-financial factors and in determining appropriate compensation.
OTHER
The Omnibus Budget Reconciliation Act of 1993 (the "Act") restricts the
ability of a publicly-held corporation to deduct compensation in excess of
$1,000,000 paid to its Chief Executive Officer and the four most highly
compensated officers. During the 1997 fiscal year, the threshold was not met for
any of the executive officers. However, the Committee continually reviews all
aspects of the Act in order to determine future compliance issues regarding
same.
This Compensation Committee Report was for the most part prepared by
management at the direction of the Committee, and approved by the Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Williams served on the Committee and Board of Directors during fiscal
1997. Mr. Williams is also a sole shareholder of a professional corporation
which is a partner in the law firm of Chamberlain, Hrdlicka, White, Williams and
Martin in Houston, Texas which rendered services to the Company during fiscal
1997. Fees to the law firm did not exceed five percent of that law firm's gross
revenue for its last full fiscal year. In addition, each of the members of the
Committee has been granted options under the Company's Non-Employee Director
Plan.
8
<PAGE> 11
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following graph compares the Company's cumulative total stockholder
return on its common stock for a five-year period (May 31, 1992 to May 31,
1997), with the cumulative total return of the American Stock Exchange Market
Value Index ("ASEMVI"), and a peer group of companies selected by the Company.
The "Peer Group" is described in more detail below. The graph assumes that the
value of the investment in the Company's common stock and each index was $100 at
May 31, 1992 and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN*
NEW PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) TEAM INC ASEMVI PEER GROUP
<S> <C> <C> <C>
1992 100 100 100
1993 75.93 111.03 59.28
1994 67.50 111.60 55.88
1995 29.53 124.69 38.50
1996 42.19 172.95 60.61
1997 31.64 175.56 68.75
</TABLE>
ASSUMES INITIAL INVESTMENT OF $100
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
9
<PAGE> 12
COMPARISON OF CUMULATIVE TOTAL RETURN
OLD PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) TEAM INC ASEMVI PEER GROUP
<S> <C> <C> <C>
1992 100 100 100
1993 76 111 80
1994 68 111 64
1995 30 125 48
1996 42 173 55
1997 32 176 50
</TABLE>
The peer group is composed of five companies which provide industrial
and/or leak repair services. The first graph reflects the Company's new peer
group selected in good faith based on similar line of business basis. The peer
group was changed due to the sale of the Company's environmental engineering and
consulting division. The members of the new peer group are C. H. Heist Corp.,
Industrial Holdings, Inc., Kaneb Services, Inc., Matrix Service Company and
Versar, Inc. The returns of each company have been weighted according to their
respective market capitalization for purposes of arriving at a peer group
average. The second graph was prepared for comparative purposes and charts the
performance of the company against its old peer group. The members of the old
peer group are Air and Water Technologies Corporation, Dames & Moore, Inc.,
International Testing Services, Inc., Kaneb Services, Inc. and Versar, Inc.
The foregoing graph is based on historical data and is not necessarily
indicative of future performance.
10
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock (the only class of voting securities of
the Company) as of September 12, 1997 of (a) each person known by the Company to
be the beneficial owner of more than 5% of the outstanding Common Stock, (b)
each director or nominee for director of the Company, (c) the Named Executive
Officers and (d) all executive and other officers and directors of the Company
as a group. The information shown assumes the exercise by each person (or all
directors and officers as a group) of the vested stock options owned by such
person and the exercise by no other person (or group) of stock options. Unless
otherwise indicated, the address of each person named below is the address of
the Company at 1019 S. Hood St., Alvin, Texas 77511.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED(1) PERCENTAGE
------------------------------------ --------------- ----------
<S> <C> <C>
William A. Ryan....................................... 125,500(2) 2.0%
Sidney B. Williams.................................... 120,906(3) 2.1%
1400 Citicorp Center
1200 Smith Street
Houston, Texas 77002
E. Theodore Laborde................................... 35,886(4) 0.6%
601 Poydras Street, Suite 1850
New Orleans, Louisiana 70130
Jack M. Johnson, Jr................................... 34,000(5) 0.6%
127 N. McCarty
Eagle Lake, Texas 77434
George W. Harrison.................................... 177,063(6) 3.0%
2119 Sieber Drive
Houston, Texas 77017
Kenneth M. Tholan..................................... 12,500(7) 0.2%
All directors and executive and other officers
as a group (10 persons)............................. 527,975(8)(9) 8.4%
Armstrong International, Inc.......................... 700,000(10) 11.8%
2081 S.E. Ocean Blvd., 4th Floor
Stuart, Florida 34996-3376
Brinson Partners, Inc................................. 483,600(11) 5.5%
209 South LaSalle
Chicago, Illinois 60604-1295
Dimensional Fund Advisors, Inc........................ 382,200(12) 8.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ---------------
(1) The information as to beneficial ownership of common stock has been
furnished, respectively, by the persons and entities listed. Each
individual or entity has sole power to vote and dispose of all shares
listed opposite his or its name except as indicated below.
(2) Includes 10,500 shares owned by Joan Ryan, Mr. Ryan's wife, and 110,000
shares which may be acquired pursuant to the exercise of stock options by
Mr. Ryan.
(3) Includes 2,685 shares owned by Nancy Williams, Mr. William's wife, and
1,000 shares held as custodian under the Uniform Gift to Minors Act for Mr.
William's nephews. Mr. Williams disclaims any economic interest in these
shares. Also includes 75,000 shares which may be acquired pursuant to the
exercise of stock options by Mr. Williams.
(4) Includes 1,886 shares owned by Mr. Laborde and his wife, Mary Laborde, as
joint tenants. Also includes 30,000 shares which may be acquired pursuant
to the exercise of stock options by Mr. Laborde.
(5) Includes 25,000 shares which may be acquired pursuant to the exercise of
stock options by Mr. Johnson.
11
<PAGE> 14
(6) Includes 45,000 shares which may be acquired pursuant to the exercise of
stock options by Mr. Harrison.
(7) Includes 12,500 shares which may be acquired pursuant to the exercise of
stock options by Mr. Tholan.
(8) Includes 308,000 shares which may be acquired pursuant to the exercise of
stock options.
(9) Includes shares allocated to employees through their participation in the
Company's Employee Stock Ownership Plan and the Salary Deferral Plan and
Trust. According to the latest statements for said plans, no shares are
allocated to the Named Executives. However, 4,415 shares are allocated to
other officers in the Salary Plan and Trust and 891 shares in the Employee
Stock Ownership Plan.
(10) The Company has relied upon information contained in Schedule 13D/A filed
with the SEC on August 4, 1997 and Form 4 filed with the SEC on September
5, 1997. According to Schedule 13D/A, 650,000 shares are owned by Armstrong
International, Inc., and according to Form 4, 50,000 shares are owned by
Merrill H. Armstrong and Barbara I. Armstrong, both of whom are officers of
Armstrong International, Inc.
(11) The Company has relied upon information contained in Schedule 13G/A filed
with the SEC on February 12, 1997. According to the amended Schedule 13G,
the shares are owned directly in part by Brinson Partners, Inc., a Delaware
corporation, and in part by Brinson Trust Company, an Illinois corporation,
which is a wholly-owned subsidiary of Brinson Partners, Inc. Brinson
Partners, Inc. is wholly-owned by Brinson Holdings, Inc., a Delaware
corporation, which is wholly-owned by SBC Holding (USA), Inc., a Delaware
corporation, which is wholly-owned by Swiss Bank Corporation, a Swiss
banking corporation.
(12) The Company has relied upon information contained in Schedule 13G filed
with the SEC on February 5, 1997. Dimensional Fund Advisors, Inc.
("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 382,200 shares of Team, Inc. stock as of December
31, 1996, all of which shares are held in portfolios of DFA Investment
Dimensions Group, Inc., a registered open-end investment company, or in
series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles
for qualified employee benefit plans, all of which Dimensional Fund
Advisors, Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
The Company does not know of any arrangement that may at a subsequent date
result in a change of control of the Company.
PROPOSAL TWO -- APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Audit Committee has recommended and the Board of Directors
has approved and now recommends the appointment of Deloitte & Touche LLP as
independent certified public accountants to audit the Company's accounts for the
fiscal year ended May 31, 1998. The firm has audited the Company's accounts
since 1974. Approval of the appointment will require the affirmative vote of a
majority of the shares represented and voted at the meeting.
A representative of Deloitte & Touche LLP will attend the 1997 Annual
Meeting with the opportunity to make a statement if such representative desires
to do so and to respond to appropriate questions presented at the meeting.
OTHER BUSINESS
Management does not intend to bring any business before the meeting other
than the matters referred to in the accompanying notice and at this date has not
been informed of any matters that may be presented to the meeting by others. If,
however, any other matters properly come before the meeting, it is intended that
the persons named in the accompanying proxy will vote, pursuant to the proxy, in
accordance with their best judgment on such matters.
12
<PAGE> 15
SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the Company's Annual
Meeting of Shareholders in 1998 must be received by the Company no later than
May 28, 1998 in order to be eligible for inclusion in the Company's Proxy
Statement and form of proxy used in connection with such meeting.
By Order of the Board of Directors
/s/ WILLIAM A. RYAN
William A. Ryan
Chairman of the Board of Directors,
President and Chief Executive
Officer
September 25, 1997
13
<PAGE> 16
THIS MAP SHOWING THE NOLAN RYAN CENTER IS PROVIDED FOR THE CONVENIENCE OF
SHAREHOLDERS ATTENDING THE 1997 ANNUAL MEETING. COMPLIMENTARY PARKING WILL BE
PROVIDED. IN CASE OF ANY DIFFICULTY, PLEASE TELEPHONE THE COMPANY AT (281)
331-6154.
TEAM, INC.
ANNUAL MEETING
(2925 SOUTH HWY. 35 BYPASS)
[NOLAN RYAN CENTER]
<PAGE> 17
PROXY CARD PROXY CARD
TEAM, INC.
The undersigned hereby appoints Kenneth M. Tholan and Margie E. Rogers, and
either or both of them, with full power of substitution in each, as proxy or
proxies of the undersigned to represent and vote all of the shares of common
stock of Team, Inc. ("Company"), which the undersigned is entitled to vote at
the 1997 Annual Meeting of Stockholders of the Company to be held on Thursday,
October 30, 1997, at 3:00 p.m. Houston time, at the Nolan Ryan Center, 2925
South Hwy. 35 Bypass, Alvin, Texas 77511, and at any adjournments or
postponements thereof.
The Board of Directors recommends a vote FOR the nominees for class II
Directors and FOR proposals 2 and 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY AS SOON AS POSSIBLE IN THE
ENCLOSED ENVELOPE. THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS
SPECIFIED FOR A PROPOSAL, THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL.
Any proxies previously given by the undersigned are hereby revoked. Receipt of
Notice of the above Annual Meeting of Shareholders and of the related Proxy
Statement is hereby acknowledged.
(Continued and to be signed on reverse side.)
<PAGE> 18
TEAM, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C> <C> <C>
WITHHOLD
AUTHORITY
FOR all to vote for FOR all nominees, except
nominees all nominees vote withheld for those named below:
1. Election of two Class II members of the Board of Directors: [ ] [ ] [ ]
Nominees: Jack M. Johnson, Jr. ___________________________
E. Theodore Laborde Nominee Exceptions
FOR AGAINST ABSTAIN
2. Proposal to approve the appointment of [ ] [ ] [ ]
Deloitte & Touche as the independent
certified public accountants of the
Company
FOR AGAINST ABSTAIN
3. In their discretion on such other matters as [ ] [ ] [ ]
may properly come before the meeting and
any adjournments thereof.
Dated: _______________________________ , 1997
Signature(s):________________________________
________________________________
NOTE: (When signing as attorney, executor, administrator,
trustee, guardian, corporate officer or other agent,
please give full title.)
</TABLE>
