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)
Definitive Proxy Statement /x/
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GP STRATEGIES CORPORATION
-------------------------
(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):
No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
GP STRATEGIES CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 8, 2000
To the Stockholders:
The Annual Meeting of Stockholders of GP Strategies Corporation (the
"Company") will be held at the Sheraton Columbia Hotel, 10207 Wincopin Circle,
Columbia, Maryland, on the 8th day of June, 2000, at 11:00 a.m., local time, for
the following purposes:
1. To elect nine Directors to serve until the next Annual Meeting and until
their respective successors are elected and qualify.
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only stockholders of record as of the close of business on April 21, 2000 are
entitled to receive notice of and to vote at the meeting. A list of such
stockholders shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
ten days prior to the meeting, at the offices of the Company's subsidiary,
General Physics Corporation, 6700 Alexander Bell Drive, Columbia, Maryland.
By Order of the Board of Directors
Lydia M. DeSantis
Secretary
New York, New York
May 2, 2000
If you do not expect to be present at the meeting, please fill in, date and
sign the enclosed Proxy and return it promptly in the enclosed return envelope.
<PAGE>
GP STRATEGIES CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
---------------
New York, New York
May 2, 2000
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of Directors
of GP Strategies Corporation, a Delaware corporation (the "Company"), for use
only at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at
the Sheraton Columbia Hotel, 10207 Wincopin Circle, Columbia, Maryland, on the
8th day of June, 2000, at 11:00 a.m., local time, and at any adjournments
thereof. The approximate date on which this Proxy Statement and the accompanying
Proxy were first given or sent to security holders was May 2, 2000.
Each Proxy executed and returned by a stockholder may be revoked at any time
thereafter, by written notice to that effect to the Company, attention of the
Secretary, prior to the Annual Meeting, or to the Chairman, or the Inspectors of
Election, at the Annual Meeting, or by the execution and return of a later-dated
Proxy, except as to any matter voted upon prior to such revocation.
The Proxies in the accompanying form will be voted in accordance with the
specifications made and where no specifications are given, such Proxies will be
voted FOR the nine nominees for election as directors named herein. In the
discretion of the proxy holders, the Proxies will also be voted FOR or AGAINST
such other matters as may properly come before the meeting. The management of
the Company is not aware that any other matters are to be presented for action
at the meeting. Although it is intended that the Proxies will be voted for the
nominees named herein, the holders of the Proxies reserve discretion to cast
votes for individuals other than such nominees in the event of the
unavailability of any such nominee. The Company has no reason to believe that
any of the nominees will become unavailable for election. The Proxies may not be
voted for a greater number of persons than the number of nominees named. The
election of directors will be determined by a plurality of the votes of the
shares of Common Stock and Class B Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote on the election of directors.
Accordingly, in the case of shares that are present or represented at the Annual
Meeting for quorum purposes, not voting such shares for a particular nominee for
director, including by withholding authority on the Proxy, will not operate to
prevent the election of such nominee if he or she otherwise receives a plurality
of the votes.
<PAGE>
VOTING SECURITIES
The Board of Directors has fixed the close of business on April 21, 2000 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting. The issued and outstanding capital stock
of the Company on April 21, 2000 consisted of 11,273,824 shares of Common Stock,
each entitled to one vote, and 800,000 shares of Class B Stock, each entitled to
ten votes. A quorum of the stockholders is constituted by the presence, in
person or by proxy, of holders of record of Common Stock and Class B Stock,
representing a majority of the number of votes entitled to be cast. The only
difference in the rights of the holders of Common Stock and the rights of
holders of Class B Stock is that the former class has one vote per share and the
latter class has ten votes per share. The Class B Stock is convertible at any
time into shares of Common Stock on a share for share basis at the option of the
holders thereof.
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Common Stock and
Class B Stock beneficially owned as of April 3, 2000, by each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock or Class B Stock.
<TABLE>
<CAPTION>
Amount and Nature of Percent Of
Title of Name and Address Beneficial Class(1)
Class of Beneficial Owner Ownership
<S> <C> <C> <C> <C>
Class B Stock Jerome I. Feldman 843,750 shares(2)(3)(4) 78.5%
c/o GP Strategies Corporation
9 West 57th Street
Suite 4170
New York, NY 10019
Class B Stock Andersen Weinroth & Co., L.P. 200,000 shares(4)(5) 25.0%
1330 Avenue of the Americas New
York, NY 10019
8.6%
Class B Stock Scott N. Greenberg 75,000 shares(6)
c/o GP Strategies Corporation
9 West 57th Street
Suite 4170
New York, NY 10019
Common Stock Jerome I. Feldman 850,136 shares(3)(4)(7) 7.0%
Common Stock Cardinal Capital Management, L.L.C. 1,378,400 shares(8) 12.2%
One Fawcet Place
Greenwich, CT 06830
Common Stock J.L. Kaplan Associates, LLC 870,500 shares(9) 7.7%
222 Berkeley Street
Boston, MA 02116
Common Stock Wanger Asset Management L.P. 800,000 shares(10) 7.1%
227 West Monroe Street
Chicago, IL 60606
Common Stock Martin M. Pollak 835,335 shares(3)(11) 7.0%
c/o GP Strategies Corporation
9 West 57th Street
Suite 4170
New York, NY 10019
Common Stock Caxton International Limited 687,900 shares (12) 6.1%
315 Enterprise Drive
Plainsboro, NJ 08536
Common Stock Dimensional Fund Advisors, Inc. 671,505 shares (13) 6.0%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
- - ---------
(1) The percentage of class calculation for Common Stock assumes for each
beneficial owner that (i) all options are exercised in full and all shares
of Class B Stock are converted into Common Stock only by the named
beneficial owner and (ii) no other options are exercised and no other
shares of Class B Stock are converted by any other stockholder. The
percentage of class calculation for Class B Stock assumes for each
beneficial owner that (i) all options to purchase Class B Stock are
exercised in full only by the named beneficial owner, (ii) no other options
to purchase Class B Stock are exercised by any other stockholder, and (iii)
no shares of Class B Stock are converted into Common Stock by the named
beneficial owner or any other stockholder.
(2) Includes 275,000 shares of Class B Stock issuable upon exercise of
currently exercisable stock options held by Mr. Feldman.
(3) On December 29, 1998, Martin M. Pollak granted certain rights of first
refusal with respect to his Class B Stock and options to purchase Class B
Stock to Mr. Feldman and his family, and Mr. Feldman granted certain
tag-along rights with respect to Class B Stock and options to purchase
Class B Stock to Mr. Pollak and his family.
<PAGE>
(4) The Company, Andersen Weinroth & Co., L.P. ("AW"), and Mr. Feldman have
entered into a Stockholders Agreement, dated February 11, 2000 (the "AW
Stockholders Agreement"), pursuant to which Mr. Feldman has (i) granted
certain tag-along rights to AW with respect to shares of Class B Stock
and options to purchase Class B Stock and (ii) agreed to vote all of his
shares of Class B Stock in favor of the election of G. Chris Andersen or
Stephen Weinroth if either of them is nominated by the Company to serve
on the Board of Directors. Messrs. Andersen and Weinroth are the general
partners of AW. As a result of the AW Stockholders Agreement, Messrs.
Feldman, Andersen, and Weinroth and AW may be deemed members of a "group"
for purposes of Section 13(d) under the Securities Exchange Act of 1934,
as amended, (the "Exchange Act"). None of Messrs. Feldman, Andersen, and
Weinroth and AW admits that he or it should be deemed to be a member of
such a group.
(5) Pursuant to the AW Stockholders Agreement, AW is required to exercise its
right to convert its shares of Class B Stock into Common Stock (i) upon
the transfer of such shares to an unrelated party (other than pursuant to
the exercise of the tag-along right granted to AW by Mr. Feldman), (ii)
if neither Mr. Andersen or Mr. Weinroth is on the Board of Directors
(both of Messrs. Andersen and Weinroth have agreed to resign from the
Board of Directors if requested by the Board of Directors to do so for
any reason), and (iii) at the request of the Company.
(6) Includes 75,000 shares of Class B Stock issuable upon exercise of currently
exercisable stock options held by Mr. Greenberg.
(7) Includes (i) 1,173 shares of Common Stock held by members of Mr.
Feldman's family, (ii) 568,750 shares of Common Stock issuable upon
conversion of Class B Stock held by Mr. Feldman, (iii) 275,000 shares of
Common Stock issuable upon conversion of Class B Stock issuable upon
exercise of currently exercisable stock options held by Mr. Feldman, and
(iv) 213 shares of Common Stock allocated to Mr. Feldman's account
pursuant to the provisions of the General Physics Corporation Profit
Investment Plan, a defined contribution plan (the "GPC Plan"). Mr.
Feldman disclaims beneficial ownership of the 1,173 shares of Common
Stock held by members of his family.
(8) Based on a Schedule 13G filed by Cardinal Capital Management, L.L.C. with
the Securities and Exchange Commission (the "SEC").
(9) Based on a Schedule 13G filed by J. L. Kaplan Associates, LLC with the SEC.
(10) Based on a Schedule 13G filed by Wanger Asset Management, L.P. ("Wanger")
and Acorn Investment Trust ("Acorn") with the SEC. Wagner and Acorn have
informed the Company that the shares have been acquired by Wagner on
behalf of its discretionary clients, including Acorn.
(11) Includes (i) 633,877 shares of Common Stock issuable upon exercise of
currently exercisable stock options held by Mr. Pollak, (ii) 6,132 shares
of Common Stock held by his wife, (iii) 1,617 shares of Common Stock held
by a foundation of which Mr. Pollak is a trustee, and (iv) 31,250 shares
of Common Stock issuable upon conversion of Class B Stock held by Mr.
Pollak. Mr. Pollak disclaims beneficial ownership of the 6,132 shares of
Common Stock held by his wife and the 1,617 shares held by the
foundation.
(12) Based on a Schedule 13D filed jointly by Caxton International Limited,
Bruce S. Kovner, and GDK, Inc. with the SEC.
(13) Based on a Schedule 13G filed by Dimensional Fund Advisors Inc.
("Dimensional") with the SEC. Dimensional has informed the Company that
the shares are owned by advisory clients of Dimensional and that
Dimensional disclaims beneficial ownership of such shares.
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of April 3, 2000,the beneficial
ownership of Common Stock, Class B Stock, and voting stock by each director and
nominee for director, each of the named executive officers, and all directors
and executive officers as a group.
<TABLE>
<CAPTION>
Total Number Total
Of Shares of Number of
Common Percent Shares of Percent
Stock of Class B Stock of
Beneficially Common Beneficially Class B Percent of
Owned Stock Owned(1) Owned Stock(2) Voting Stock(3)
<S> <C> <C> <C> <C> <C> <C>
Jerome I. Feldman(4) 850,136(5) 7.0% 843,750(6) 78.5% 38.3%
Scott N. Greenberg(4) 190,981(7) 1.7% 75,000(8) 8.6% 4.3%
John C. McAuliffe 84,211(9)(10) * - - *
G. Chris Andersen 200,000(11)(12) 1.7% 200,000(12)(13) 25.0% 10.4%
Sheldon L. Glashow(14) 6,179(9) * - - *
Roald Hoffmann(14) 18,000(9) * - - *
Bernard M. Kauderer(14) 6,179(9) * - - *
Ogden R. Reid(14) 13,429(9) * - - *
Gordon Smale(15) 6,000(9) * - - *
Directors and Executive 1,375,115(16) 11.0% 1,118,750(17)) 97.3% 49.8%
Officers as a Group
(9 persons)
- - ------------------
</TABLE>
* The number of shares owned is less than one percent of the outstanding shares
or voting stock.
(1) The percentage of class calculation for Common Stock assumes for each
beneficial owner and directors and executive officers as a group that (i)
all options are exercised in full and all shares of Class B Stock are
converted into Common Stock only by the named beneficial owner or members
of the group and (ii) no other options are exercised and no other shares
of Class B Stock are converted by any other stockholder.
<PAGE>
(2) The percentage of class calculation for Class B Stock assumes for each
beneficial owner and directors and executive officers as a group that (i)
all options to purchase Class B Stock are exercised in full only by the
named beneficial owner or members of the group, (ii) no other options to
purchase Class B Stock are exercised by any other stockholder, and (iii)
no shares of Class B Stock are converted into Common Stock by the named
beneficial owner, members of the group, or any other stockholder.
(3) The percentage of voting stock calculation sets forth the percentage of
the aggregate number of votes of all holders of Common Stock and Class B
Stock represented by the Common Stock and Class B Stock beneficially owned
by each beneficial owner and directors and executive officers as a group
and assumes for each beneficial owner and directors and executive officers
as a group that (i) all options are exercised in full only by the named
beneficial owner or members of the group, (ii) no other options are
exercised by any other stockholder, and (iii) no shares of Class B Stock
are converted into Common Stock by the named beneficial owner, members of
the group, or any other stockholder. Based on the Common Stock and Class B
Stock outstanding at April 3, 2000, if no options are exercised and no
shares of Class B Stock are converted into Common Stock by Mr. Feldman,
AW, or any other stockholder, Mr. Feldman and AW would own 29.5% and 10.4%
of the voting stock, respectively.
(4) Member of the Executive Committee.
(5) See footnotes 3, 4, and 7 to Principal Stockholders table.
(6) See footnotes 2, 3, and 4 to Principal Stockholders table.
(7) Includes (i) 102,125 shares of Common Stock issuable upon exercise of
currently exercisable stock options held by Mr. Greenberg, (ii) 75,000
shares of Common Stock issuable upon conversion of Class B Stock issuable
upon exercise of currently exercisable stock options held by Mr.
Greenberg, and (iii) 138 shares of Common Stock allocated to Mr.
Greenberg's account pursuant to the provisions of the GPC Plan.
(8) See footnote 6 to Principal Stockholders table.
(9) Includes 73,143 shares for John C. McAuliffe, 6,000 shares for Sheldon L.
Glashow, 18,000 shares for Roald Hoffmann, 6,000 shares for Bernard M.
Kauderer, 13,000 shares for Ogden R. Reid, and 6,000 shares for Gordon
Smale, issuable upon exercise of currently exercisable stock options.
(10) Includes 3,912 shares of Common Stock allocated to Mr. McAuliffe's
account pursuant to the provisions of the GPC Plan.
(11) Includes 200,000 shares of Common Stock issuable upon conversion of Class
B Stock held by AW.
<PAGE>
(12) Mr. Andersen is a general partner of AW and may be deemed to own the
shares of Class B Stock and Common Stock beneficially owned by AW.
However, Mr. Andersen disclaims beneficial ownership of these shares,
except to the extent of his pecuniary interest in these shares.
(13) See footnotes 4 and 5 to Principal Stockholders table.
(14) Member of the Audit Committee.
(15) Member of the Compensation Committee.
(16) Includes (i) 224,268 shares of Common Stock issuable upon exercise of
currently exercisable stock options, (ii) 768,750 shares of Common Stock
issuable upon conversion of Class B Stock, (iii) 350,000 shares of Common
Stock issuable upon conversion of Class B Stock issuable upon exercise of
currently exercisable stock options, and (iv) 4,263 shares of Common Stock
allocated to accounts pursuant to the provisions of the GPC Plan.
(17) Includes 350,000 shares of Class B Stock issuable upon exercise of
currently exercisable stock options.
As of April 3, 2000, the Company owned 2,842,300 shares of SGLG, Inc.
("SGLG") common stock, constituting approximately 92% of the outstanding shares.
On December 29, 1998, the Company and Messrs. Feldman and Pollak entered
into an agreement (the "Exchange Agreement"). Pursuant to the Exchange
Agreement, on January 4, 1999, Mr. Pollak transferred to Mr. Feldman options to
purchase 193,750 shares of Class B Stock in exchange for options to purchase
172,422 shares of Common Stock plus 26,495 shares of Common Stock (the
"Exchange"). In addition, Mr. Pollak granted certain rights of first refusal
with respect to his Class B Stock and options to purchase Class B Stock to Mr.
Feldman and his family, and Mr. Feldman granted certain tag-along rights with
respect to Class B Stock and options to purchase Class B Stock to Mr. Pollak and
his family. In addition, Mr. Pollak agreed that, until May 31, 2004, during any
period commencing on the date any person or group commences or enters into, or
publicly announces an intention to commence or enter into, and ending on the
date such person abandons, a tender offer, proxy fight, or other transaction
that may result in a change in control of the Company, he will vote his shares
of Common Stock and Class B Stock on any matter in accordance with the
recommendation of the Board of Directors. On September 22, 1999, the Company and
Messrs. Feldman and Pollak entered into an agreement (the "Second Exchange
Agreement") pursuant to which Mr. Pollak transferred to Mr. Feldman options to
purchase 212,500 shares of Class B Stock and in exchange Mr. Feldman transferred
to Mr. Pollak options to purchase 227,705 shares of Common Stock plus 24,372
shares of Common Stock (the "Second Exchange"). The Exchange, the other
provisions of the Exchange Agreement, and the Second Exchange may have resulted
in, or may at a subsequent date result in, a change of control of the Company
from Messrs. Feldman and Pollak jointly to Mr. Feldman.
<PAGE>
ELECTION OF DIRECTORS
Nine directors will be elected at the Annual Meeting to hold office until the
next Annual Meeting of Stockholders and until their respective successors are
elected and qualify. The Proxies solicited by this proxy statement may not be
voted for a greater number of persons than the number of nominees named. It is
intended that these Proxies will be voted for the following nominees, but the
holders of these Proxies reserve discretion to cast votes for individuals other
than the nominees for director named below in the event of the unavailability of
any such nominee. The Company has no reason to believe that any of the nominees
will become unavailable for election. Set forth below are the names of the
nominees, the principal occupation of each, the year in which first elected a
director of the Company and certain other information concerning each of the
nominees.
Jerome I. Feldman is founder and since 1959 has been President and Chief
Executive Officer and a Director of the Company. He has also been Chairman of
the Board of the Company since June 1999. He has been a Director of Five Star
Products, Inc. ("Five Star"), a wholesale distributor of home decorating,
hardware and finishing products, since 1994, a Director of GSE Systems, Inc.
("GSE"), a company engaged in the business of real time simulation and process
automation in the power and process industries, since 1994, and Chairman of the
Board of GSE since 1997. Mr. Feldman is also Chairman of the New England
Colleges Fund and a Trustee of Northern Westchester Hospital. Age 71
Scott N. Greenberg has been a Director of the Company since 1987 and Executive
Vice President and Chief Financial Officer since June 1998. He was Vice
President and Chief Financial Officer from 1989 to June 1998 and Vice President,
Finance from 1985 to 1989. He has been a Director of Five Star since 1998 and a
director of GSE since May 1999. Age 43
John C. McAuliffe has been a Director of the Company since 1997, Senior Vice
President of the Company since June 1998 and President of General Physics
Corporation ("GPC"), a wholly-owned subsidiary of the Company, since 1997. He
was Executive Vice President and Chief Operating Officer of GPC from 1994 to
1997; Senior Vice President from 1993 to 1994; Chief Financial Officer and
Treasurer from 1992 to 1993; and Vice President, Finance from 1991 to 1992. Age
41
G. Chris Andersen has been a Director of the Company since February 2000. Mr.
Andersen is one of the founders of Andersen Weinroth & Co., L.P., which
commenced operations in January 1996. From 1992 to 1995, he was Vice Chairman
and head of International Investment Banking at PaineWebber Incorporated and
prior thereto was a Managing Director and head of the Investment Banking Group
at Drexel Burnham. Mr. Andersen serves as a director of four other public
companies, Sunshine Mining and Refining Company, TEREX Corporation, Compost
America, and Headway Corporate Resources, Inc. Age 62.
Sheldon L. Glashow, Ph.D. has been a Director of the Company since 1997. Dr.
Glashow is the Higgins Professor of Physics and the Mellon Professor of the
Sciences at Harvard University. He was the recipient of the Nobel Prize in
Physics in 1971. He has been a Director of GSE since 1995 and a Director of
Interferon Sciences, Inc. ("ISI"), a biopharmaceutical company, since 1991. Dr.
Glashow is a foreign member of the Russian Academy of Sciences. Age 67
<PAGE>
Roald Hoffmann, Ph.D. has been a Director of the Company since 1988. He has
been the John Newman Professor of Physical Science at Cornell University since
1974. Dr. Hoffmann is a member of the National Academy of Sciences and the
American Academy of Arts and Sciences. In 1981, he shared the Nobel Prize in
Chemistry with Dr. Kenichi Fukui. Age 62
Bernard M. Kauderer has been a Director of the Company since 1997. He retired
from the United States Navy in 1986 as Vice Admiral. He was Former Commander,
Submarine Force, United States Atlantic and Pacific Fleets. He has been a
consultant to industry and government since 1986. Age 68
Ogden R. Reid has been a Director of the Company since 1979. Mr. Reid had been
Editor and Publisher of the New York Herald Tribune and of its International
Edition; United States Ambassador to Israel; a six-term member of the United
States Congress and a New York State Environmental Commissioner. Age 74
Gordon Smale has been a Director of the Company since 1997. He has been
President and a Director of Atlantic Oil Corporation, a producing oil and gas
company, since 1970; President of Atmic, Inc., an oil and gas management
company, since 1983; Chairman of the Board of CamWest Inc., an oil and gas
exploration and development company, since 1992; and Manager of Cedar Ridge LLC,
a methane coal gas exploration and development company, since 1994. Age 68
Herbert R. Silverman, who had been a Director of the Company since 1994,
retired from the Board of Directors on April 1, 2000.
Pursuant to the AW Stockholders Agreement, the Company agreed, subject to its
fiduciary duties, (a) if Mr. Andersen was then willing and able to serve on the
Board of Directors, promptly after the sale on February 11, 2000 of 200,000
shares of Class B Stock to AW, to nominate Mr. Andersen to serve on the Board of
Directors and to use its best efforts to cause him to be elected to the Board of
Directors and (b) if Mr. Andersen shall cease to serve on the Board of Directors
as a result of his death, disability or voluntary resignation and Stephen
Weinroth is then willing and able to serve on the Board of Directors, to
nominate Mr. Weinroth to serve on the Board of Directors and to use its best
efforts to cause him to be elected to the Board of Directors. The Company has no
obligation to renominate Mr. Andersen or Mr. Weinroth to serve on the Board of
Directors, and both of Messrs. Andersen and Weinroth have agreed to resign from
the Board of Directors if requested by the Board of Directors to do so for any
reason. Also pursuant to the AW Stockholders Agreement, Mr. Feldman has agreed
to vote all of his shares of Class B Stock in favor of the election of Mr.
Andersen or Mr. Weinroth if either of them is nominated by the Company to serve
on the Board of Directors.
Board of Directors
The Board of Directors has the responsibility for establishing broad corporate
policies and for the overall performance of the Company, although it is not
involved in day-to-day operating details. Members of the Board of Directors are
kept informed of the Company's business by various reports and documents sent to
them as well as by operating and financial reports made at Board and Committee
meetings. The Board of Directors held ten meetings in 1999. All of the directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and of committees of the Board on which they served, except for Roald
Hoffmann and Gordon Smale. The Board of Directors has an Executive Committee,
Compensation Committee, and Audit Committee. In 1999, the Board of Directors
also had a Special Negotiating Committee.
The Executive Committee, consisting of Jerome I. Feldman and Scott N.
Greenberg, meets on call and has authority to act on most matters during the
intervals between Board meetings. The committee formally acted ten times in 1999
through unanimous written consent.
<PAGE>
The Audit Committee reviews the internal controls of the Company and the
objectivity of its financial reporting. It meets with appropriate Company
financial personnel and the Company's independent certified public accountants
in connection with these reviews. This committee recommends to the Board of
Directors the appointment of the independent certified public accountants to
serve as auditors for the following year in examining the books and records of
the Company. This Committee met once in 1999. The Audit Committee consists of
Ogden R. Reid, Roald Hoffmann, Sheldon L. Glashow and Bernard M. Kauderer.
The Compensation Committee, consisting of Herbert R. Silverman (prior to his
retirement) and Gordon Smale, has the authority to act with respect to the
executive compensation of the Company. In 1999, the Compensation Committee held
three meetings.
Directors Compensation
Directors who are not employees of the Company or its subsidiaries
receive an annual fee of $5,000, payable quarterly, and $1,000 for each meeting
of the Board of Directors attended, but do not receive any additional
compensation for service on committees of the Board of Directors, other than the
Special Negotiating Committee. Employees of the Company or its subsidiaries do
not receive additional compensation for serving as directors. During 1999,
Admiral Kauderer, Dr. Glashow, Mr. Reid, and Mr. Silverman each received an
additional $15,000 for his service on the Special Negotiating Committee.
EXECUTIVE COMPENSATION
The following table and notes present the compensation paid by the Company and
subsidiaries to its President and Chief Executive Officer and the Company's
other executive officers.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Long Term
Compensation Compensation All Other
Salary Bonus Stock/Options Compensation
Name and Principal Position Year ($) ($) (# Shares)(1) ($)
- - --------------------------- ---- ------- ------------ ---------------- ----------
<S> <C> <C> <C> <C>
Jerome I. Feldman 1999 450,899 - 100,000 124,067(2)
President and Chief 1998 320,780 - - 87,867(3)
Executive Officer 1997 336,008 135,950(4) 125,000 181,379(5)
Scott N. Greenberg 1999 235,300 - 100,000 28,888(6)
Executive Vice President 1998 227,000 - - 29,316(7)
and Chief Financial Officer 1997 218,112 51,570(8) 87,125 78,116(9)
John C. McAuliffe 1999 241,313(10) 410,000(10) 120,000 26,239(11)
Senior Vice President 1998 211,585(10) 90,000(10) 10,000 26,288(12)
President, General Physics 1997 200,979(10) 75,000(10) 60,000 105,920(13)
Corporation
</TABLE>
(1) Consists of options to purchase shares of Common Stock granted pursuant
to the Company's 1973 Non-Qualified Stock Option Plan, as amended (the
"Plan").
(2) Includes $49,000 in cash and Common Stock received in connection with the
merger of the Company and GPC (the "Merger"); a $4,000 matching
contribution to the Company's 401(k) Savings Plan (the "401(k) Savings
Plan"); and $21,067 for split dollar life insurance premiums.
(3) Includes $49,000 in cash and Common Stock received in connection with the
Merger; $20,304 for group term life insurance premiums; a $4,000 matching
contribution to the 401(k) Savings Plan; and $14,563 for split dollar
life insurance premiums.
(4) Includes $50,000 as a bonus from GPC for services rendered to GPC and
$85,950 in shares of ISI common stock, deferred at the election of the
Mr. Feldman from 1996 to 1997, for services rendered to ISI.
(5) Includes $147,000 in cash and Common Stock received in connection with
the Merger; $11,340 for group term life insurance premiums; a $3,800
matching contribution to the 401(k) Savings Plan; and $19,239 for split
dollar life insurance premiums.
(6) Includes $24,500 in cash and Common Stock received in connection with the
Merger; a $4,000 matching contribution to the 401(k) Savings Plan; and
$388 for split dollar life insurance premiums.
(7) Includes $24,500 in cash and Common Stock received in connection with the
Merger; a $4,000 matching contribution to the 401(k) Savings Plan; and
$816 for group term life insurance premiums.
(8) Bonus received from ISI in shares of ISI common stock, deferred at the
election of Mr. Greenberg from 1996 to 1997, for services rendered to
ISI.
(9) Includes $73,500 in cash and Common Stock received in connection with the
Merger; a $3,800 matching contribution to the 401(k) Savings Plan; and
$816 for group term life insurance premiums.
(10) Paid by GPC for services rendered solely to GPC.
(11) Includes $20,134 in cash and Common Stock received in connection with the
Merger; $5,700 contributed by GPC under the GPC Plan, and $405 for split
dollar life insurance premiums paid by GPC.
(12) Includes $20,153 in cash and Common Stock received in connection with the
Merger; $5,700 contributed by GPC under the GPC Plan, and $435 for group
term life insurance premiums paid by GPC.
(13) Consists of $100,650 in cash and Common Stock received in connection with
the Merger; $4,940 contributed by GPC under the GPC Plan; and $330 for
group term life insurance premiums paid by GPC.
<PAGE>
The following table and notes contain information concerning the grant
of stock options in 1999 to the named executive officers.
<TABLE>
OPTION GRANTS IN 1999
<CAPTION>
Potential Realizable
Percent Value at Assumed
of Total Annual Rates of
Options Exercise Stock Price
Options Granted to or Base Appreciation for
Granted Employees Price Market Expiration Option Term(2)
Name (#)(1) in 1999 ($/Sh) Value($/Sh) Date 5%($) 10%($)
- - ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerome I. Feldman 100,000 12% 8.00 8.00 05/31/04 221,025 488,408
Scott N. Greenberg 100,000 12% 8.00 8.00 06/30/04 221,025 488,408
John C. McAuliffe 20,000 2% 14.625 14.625 02/10/04 80,812 178,574
100,000 12% 8.00 8.00 06/30/04 221,025 488,408
- - ----------
</TABLE>
(1) Options to purchase Common Stock granted pursuant to the terms of the
Plan. The options are exercisable cumulatively at the rate of 20% per
annum for a period of five years from the date of grant.
(2) Represents gain that would be realized assuming the options were held for
the entire five year term and the stock price increased at compounded
rates of 5% and 10% from a base price of $8.00 or $14.625 per share. The
potential realizable values per option or per share under such 5% and 10%
rates of stock appreciation would be $2.21 and $4.88 from a base price of
$8.00 per share and $4.04 and $8.93 from a base price of $14.625 per
share. These amounts represent assumed rates of appreciation only. Actual
gain, if any, on option exercise and Common Stock holdings will be
dependent on overall market conditions and on the future performance of
the Company and its Common Stock. There can be no assurance that the
amounts reflected in this table will be achieved.
The following table and notes contain information concerning the exercise of
stock options during 1999 and unexercised options held at the end of 1999 by the
named executive officers. Unless otherwise indicated, options are to purchase
Common Stock.
<TABLE>
AGGREGATED OPTION EXERCISES IN 1999
AND YEAR-END OPTION VALUES
<CAPTION>
Exercisable/Unexercisable Value of Unexercised
Shares Options In-the-Money Options at
Acquired Value at December 31, 1999(#) December 31, 1999($)(1)
Name on Exercise(#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- - ---- -------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerome I. Feldman 214,762(2) 85,915 425,000(3) 53,623 -0- -0-
Scott N. Greenberg -0- -0- 102,125(3) 110,000 -0- -0-
John C. McAuliffe -0- -0- 68,286 131,714 -0- -0-
- - ---------
</TABLE>
(1) Calculated based on $6.125, which was the closing price of the Common
Stock as reported by the New York Stock Exchange on December 31, 1999.
(2) Includes 193,750 shares of Class B Stock.
(3) Includes options to purchase 425,000 and 75,000 shares of Class B Stock
held by Messrs. Feldman and Greenberg, respectively.
The following table and notes contain information concerning the exercise of
stock options pursuant to the GTS Duratek, Inc. Stock Option Plan of the Company
during 1999 and unexercised options held at the end of 1999 by the named
executive officers.
<TABLE>
AGGREGATED OPTION EXERCISES IN 1999
AND YEAR-END OPTION VALUES
<CAPTION>
Shares Exercisable/Unexercisable Value of Unexercised
Acquired Value Options at In-the-Money Options at
on Exercise(#) Realized($)(1) December 31, 1999(#) December 31, 1999 ($)(1)
Name (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- - ---- ------------- --------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerome I. Feldman 85,000 353,875 15,000 -0- 89,550 -0-
- - ------------
</TABLE>
(1) Calculated based on the closing price of the Duratek common stock, as
reported by Nasdaq National Market on December 31, 1999, which was $7.875.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for administering the
compensation program for the executive officers of the Company. The Compensation
Committee consisted of Herbert R. Silverman (prior to his retirement) and Gordon
Smale.
The Compensation Committee's executive compensation policies are designed
to offer competitive compensation opportunities for all executives which are
based on personal performance, individual initiative, and achievement, as well
as assisting the Company in attracting and retaining qualified executives. The
Compensation Committee also endorses the position that stock ownership by
management and stock-based compensation arrangements are beneficial in aligning
management's and stockholders' interests in the enhancement of stockholder
value.
Compensation paid to the Company's executive officers generally consists
of the following elements: base salary, annual bonus, and long-term compensation
in the form of stock options and the 401(k) Savings Plan. The compensation for
the executive officers of the Company is determined by a consideration of each
officer's initiative and contribution to overall corporate performance and the
officer's managerial abilities and performance in any special projects that the
officer may have undertaken. Competitive base salaries that reflect the
individual's level of responsibility are important elements of the Company's
executive compensation philosophy. Subjective considerations of individual
performance are considered by the Compensation Committee in establishing annual
bonuses and other incentive compensation.
The Company has certain broad-based employee benefit plans in which all
employees, including the named executives, are permitted to participate on the
same terms and conditions relating to eligibility and subject to the same
limitations on amounts that may be contributed. In 1999, the Company also made
matching contributions to the 401(k) Savings Plan for those participants.
<PAGE>
Mr. Feldman's 1999 Compensation
Mr. Feldman's compensation in 1999 was determined principally by the
terms of his employment agreements with the Company, which were negotiated with
the Compensation Committee of the Board of Directors. Mr. Feldman's
then-existing employment agreement with the Company terminated on May 31, 1999,
and effective June 1, 1999 the Company and Mr. Feldman entered into a new
five-year employment agreement, which is described below. In considering Mr.
Feldman's compensation and the terms of the new employment agreement, the
Compensation Committee considered Mr. Feldman's significant contribution to the
strategic redirection of the Company over the last several years, his role with
respect to the divestiture of the Company's non-core assets, and the Company's
transformation into a global performance improvement and training company.
However, based on the Company's disappointing financial performance in the last
half of 1999, the Compensation Committee did not believe that a bonus was
warranted in 1999.
Herbert R. Silverman Gordon Smale
Employment Agreements
Jerome I. Feldman. As of June 1, 1999, Jerome I. Feldman and the Company
entered into an employment agreement pursuant to which Mr. Feldman is employed
as the President and Chief Executive Officer of the Company until May 31, 2004,
unless sooner terminated.
Commencing June 1, 1999, Mr. Feldman's base annual salary is $400,000,
with annual increases of $25,000. The Company and Mr. Feldman have agreed to
negotiate in good faith to formulate an annual incentive based compensation
arrangement based on the Company's achieving certain financial milestones which
will be fair and equitable to Mr. Feldman and the Company and its stockholders.
Each December, the Board of Directors is required to determine Mr. Feldman's
bonus for the year then ending, based upon the Company's revenues, profits or
losses, financing activities, and such other factors deemed relevant by the
Board of Directors. Pursuant to the employment agreement, the Company has
granted Mr. Feldman under the Company's option plan options to purchase 100,000
shares of the Company's Common Stock at an exercise price of $8.00 per share,
the market price on the date of grant. Such options vest 20% immediately and 20%
on each June 1 commencing June 1, 2000 and terminate on May 31, 2004. The
Company is required to provide Mr. Feldman with an automobile, to pay for
country club dues, which membership is to be used primarily to further the
Company's business, and to maintain the existing life and disability insurance
covering Mr. Feldman. The maturity date of the Company's presently outstanding
loans to Mr. Feldman was extended to May 31, 2004, and all contractual
restrictions imposed by the Company on the disposition by Mr. Feldman of shares
of Class B Stock were terminated.
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Mr. Feldman to substantially
perform his duties or obligations or (ii) the willful engaging by Mr. Feldman in
misconduct which is materially monetarily injurious to the Company. If the
employment agreement is terminated for Cause, the Company is required to pay Mr.
Feldman his full salary through the date his employment is terminated. If Mr.
Feldman's employment is terminated by his death, the Company is required to pay
to his heirs, in a lump sum, an amount equal to his full salary for the period
ending May 31, 2004. If, as a result of Mr. Feldman's incapacity due to physical
or mental illness, he is absent from his duties on a full-time basis for the
entire period of six consecutive months, and he does not return within 30 days
of notice, the Company may terminate his employment. Mr. Feldman is entitled to
receive his full salary during the disability period until his employment is
terminated.
<PAGE>
Mr. Feldman can terminate the employment agreement for Good Reason, which
is defined to include (i) a change in control of the Company or (ii) a failure
by the Company to comply with any material provision of the employment agreement
which has not been cured within ten days after notice. A "change in control" of
the Company is defined as (i) a change in control of a nature that would be
required to be reported in response to Item 1(a) of Current Report on Form 8-K
("Form 8-K") pursuant to Section 13 or 15(d) of the Exchange Act, other than a
change of control resulting in control by Mr. Feldman or a group including Mr.
Feldman, (ii) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than Mr. Feldman or a group including Mr. Feldman, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities,
or (iii) at any time individuals who were either nominated for election or
elected by the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board.
If the Company wrongfully terminates the employment agreement or Mr.
Feldman terminates the employment agreement for Good Reason, then (i) the
Company is required to pay Mr. Feldman his full salary through the termination
date; (ii) the Company is required to pay as severance pay to Mr. Feldman an
amount equal to (a) Mr. Feldman's average annual cash compensation received from
the Company during the three full calendar years immediately preceding the
termination date, multiplied by (b) the greater of (i) the number of years
(including partial years) that would have been remaining in the employment
period if the employment agreement had not so terminated and (ii) three, such
payment to be made (c) if termination is based on a change of control of the
Company, in a lump sum or (d) if termination results from any other cause, in
substantially equal semimonthly installments payable over the number of years
(including partial years) that would have been remaining in the employment
period if the employment agreement had not so terminated; (iii) all options to
purchase the Company's Common Stock granted to Mr. Feldman under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Mr. Feldman's employment by the Company
had not terminated and, if Mr. Feldman's termination is based on a change of
control of the Company and Mr. Feldman elects to surrender any or all of such
options to the Company, the Company is required to pay Mr. Feldman a lump sum
cash payment equal to the excess of (a) the fair market value on the termination
date of the securities issuable upon exercise of the options surrendered over
(b) the aggregate exercise price of the options surrendered; (iv) the Company is
required to maintain in full force and effect, for a number of years equal to
the greater of (a) the number of years (including partial years) that would have
been remaining in the employment period if the employment agreement had not so
terminated and (b) three, all employee benefit plans and programs in which Mr.
Feldman was entitled to participate immediately prior to the termination date;
and (v) if termination of the employment agreement arises out of a breach by the
Company, the Company is required to pay all other damages to which Mr. Feldman
may be entitled as a result of such breach.
Notwithstanding the foregoing, the Company shall not be obligated to pay
any portion of any amount otherwise payable to Mr. Feldman if the Company could
not reasonably deduct such portion solely by operation of Section 280G ("Section
280G") of the Internal Revenue Code of 1986, as amended.
Scott N. Greenberg. As of July 1, 1999, Scott N. Greenberg and the
Company entered into an employment agreement pursuant to which Mr. Greenberg is
employed as the Executive Vice President of the Company. Unless sooner
terminated pursuant to its terms, the employment agreement terminates on June
30, 2004, provided that if the employment agreement has not been terminated
prior to June 30, 2002, the employment agreement is extended on June 30, 2002 to
June 30, 2005.
Commencing July 1, 1999, Mr. Greenberg's base annual salary is $250,000,
with annual increases to be determined by the Board of Directors of not less
than the greater of (i) 3% and (ii) the percentage increase in the Consumer
Price Index. The Company agreed to pay Mr. Greenberg a signing bonus of
$300,000, which Mr. Greenberg waived. Mr. Greenberg is entitled to an annual
bonus based upon the percentage increase in GPC's earnings before interest,
taxes, depreciation and amortization, excluding extraordinary or unusual
nonrecurring items of income and expense ("EBITDA"), from GPC's EBITDA for the
prior year, up to 50% of his base salary. Pursuant to the employment agreement,
the Company has granted Mr. Greenberg under the Company's option plan options to
purchase 100,000 shares of the Company's Common Stock at an exercise price of
$8.00 per share, the market price on the date of grant. Such options vest 20%
immediately and 20% on each July 1 commencing July 1, 2000 and terminate on June
30, 2004. The Company is required to provide Mr. Greenberg with an automobile
and to maintain the existing life and disability insurance covering Mr.
Greenberg.
<PAGE>
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Mr. Greenberg to
substantially perform his duties or obligations or (ii) the willful engaging by
Mr. Greenberg in misconduct which is materially monetarily injurious to the
Company. If the employment agreement is terminated for Cause, the Company is
required to pay Mr. Greenberg his full salary through the date his employment is
terminated. If Mr. Greenberg's employment is terminated by his death, the
Company is required to pay to his spouse or estate his full salary for a period
of one year. If, as a result of Mr. Greenberg's incapacity due to physical or
mental illness, he is absent from his duties on a full-time basis for the entire
period of six consecutive months, and he does not return within 30 days of
notice, the Company may terminate his employment. Mr. Greenberg is entitled to
receive his full salary during the disability period until his employment is
terminated.
Mr. Greenberg can terminate the employment agreement for Good Reason,
which is defined to include (i) a change in control of the Company, (ii) a
management change in control of the Company, or (iii) a failure by the Company
to comply with any material provision of the employment agreement which has not
been cured within ten days after notice. A "change in control" of the Company is
defined as any of the following, but only if not approved by the Board of
Directors, (i) a change in control of a nature that would be required to be
reported in response to Item 1(a) of Form 8-K, other than a change of control
resulting in control by Mr. Feldman or Mr. Greenberg or a group including Mr.
Feldman or Mr. Greenberg, (ii) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than Mr. Feldman or Mr. Greenberg or
a group including Mr. Feldman or Mr. Greenberg, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities, (iii) the
Company and its affiliates owning less than a majority of the voting stock of
GPC, (iv) the sale of all or substantially all of the assets of GPC, or (v) at
any time when there has not been a management change of control of the Company,
individuals who were either nominated for election or elected by the Board of
Directors of the Company cease for any reason to constitute at least a majority
of the Board. A "management change in control" of the Company is defined as (i)
an event that would have constituted a change of control of the Company if it
had not been approved by the Board of Directors or (ii) a change in control of
the Company of a nature that would be required to be reported in response to
Item 1(a) of Form 8-K, resulting in control by a buy-out group including Mr.
Feldman but not Mr. Greenberg.
If the Company wrongfully terminates the employment agreement or Mr.
Greenberg terminates the employment agreement for Good Reason (other than as a
result of a management change of control), (i) the Company is required to pay
Mr. Greenberg his full salary and provide him his benefits through the
termination date, and pay him his full annual bonus for the calendar year in
which termination occurs; (ii) the Company is required to pay as severance pay
to Mr. Greenberg an amount equal to (a) Mr. Greenberg's average annual cash
compensation received from the Company during the three full calendar years
immediately preceding the termination date, multiplied by (b) the greater of (I)
the number of years (including partial years) that would have been remaining in
the employment period if the employment agreement had not so terminated but was
not subsequently extended and (II) three, such payment to be made (c) if
termination is based on a change of control of the Company, in a lump sum or (d)
if termination results from any other cause, in substantially equal semimonthly
installments payable over the number of years (including partial years) that
would have been remaining in the employment period if the employment agreement
had not so terminated but was not subsequently extended; (iii) all options to
purchase the Company's Common Stock granted to Mr. Greenberg under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Mr. Greenberg's employment by the Company
had not terminated and, if Mr. Greenberg's termination is based on a change of
control of the Company and Mr. Greenberg elects to surrender any or all of such
options to the Company, the Company is required to pay Mr. Greenberg a lump sum
cash payment equal to the excess of (a) the fair market value on the termination
date of the securities issuable upon exercise of the options surrendered over
(b) the aggregate exercise price of the options surrendered; (iv) the Company is
required to maintain in full force and effect, for a number of years equal to
the greater of (a) the number of years (including partial years) that would have
been remaining in the employment period if the employment agreement had not so
terminated but was not subsequently extended and (b) three, all employee benefit
plans and programs in which Mr. Greenberg was entitled to participate
immediately prior to the termination date; and (v) if termination of the
employment agreement arises out of a breach by the Company, the Company is
required to pay all other damages to which Mr. Greenberg may be entitled as a
result of such breach.
<PAGE>
If Mr. Greenberg terminates the employment agreement for Good Reason as a
result of a management change of control, (i) the Company is required to pay Mr.
Greenberg his full salary and provide him his benefits through the termination
date, and pay him his full annual bonus for the calendar year in which
termination occurs; (ii) the Company is required to pay as severance pay to Mr.
Greenberg a lump sum amount equal to twice Mr. Greenberg's average annual cash
compensation received from the Company during the three full calendar years
immediately preceding the termination date; (iii) all options to purchase the
Company's Common Stock granted to Mr. Greenberg under the Company's option plan
or otherwise immediately become fully vested and terminate on such date as they
would have terminated if Mr. Greenberg's employment by the Company had not
terminated and, if Mr. Greenberg elects to surrender any or all of such options
to the Company, the Company is required to pay Mr. Greenberg a lump sum cash
payment equal to the excess of (a) the fair market value on the termination date
of the securities issuable upon exercise of the options surrendered over (b) the
aggregate exercise price of the options surrendered; and (iv) the Company is
required to maintain in full force and effect for two years all employee benefit
plans and programs in which Mr. Greenberg was entitled to participate
immediately prior to the termination date.
Notwithstanding the foregoing, the Company shall not be obligated to pay
any portion of any amount otherwise payable to Mr. Greenberg if the Company
could not reasonably deduct such portion solely by operation of Section 280G.
John C. McAuliffe. As of July 1, 1999, John C. McAuliffe and GPC entered
into an employment agreement pursuant to which Mr. McAuliffe is employed as
President of GPC. Unless sooner terminated pursuant to its terms, the employment
agreement terminates on June 30, 2004, provided that if the employment agreement
has not been terminated prior to June 30, 2002, the employment agreement is
extended on June 30, 2002 to June 30, 2005, and if the employment agreement has
not been terminated prior to June 30, 2003, the employment agreement is extended
on June 30, 2003 to June 30, 2006.
Commencing July 1, 1999, Mr. McAuliffe's base annual salary is $250,000,
with annual increases to be determined by the Board of Directors of GPC of not
less than 5%. GPC paid Mr. McAuliffe a signing bonus of $300,000. In addition,
Mr. McAuliffe was given the right to allocate bonuses in an aggregate amount of
up to $800,000 to other GPC employees, provided that such employees agreed to
return their bonus if their employment with GPC terminates prior to July 1,
2002. Mr. McAuliffe is entitled to an annual bonus based upon the percentage
increase in GPC's EBITDA from GPC's EBITDA for the prior year, up to 50% of his
base salary. Pursuant to the employment agreement, the Company has granted Mr.
McAuliffe under the Company's option plan options to purchase 100,000 shares of
the Company's Common Stock at an exercise price of $8.00 per share, the market
price on the date of grant. Such options vest 20% immediately and 20% on each
July 1 commencing July 1, 2000 and terminate on June 30, 2004. GPC is required
to provide Mr. McAuliffe with an automobile, to pay up to $10,000 for country
club dues, which membership is to be used primarily to further the GPC's
business, and to maintain the existing life and disability insurance covering
Mr. McAuliffe.
GPC may terminate the employment agreement for Cause, which is defined as
(i) the willful and continued failure by Mr. McAuliffe to substantially perform
his duties or obligations or (ii) the willful engaging by Mr. McAuliffe in
misconduct which is materially monetarily injurious to GPC. If the employment
agreement is terminated for Cause, GPC is required to pay Mr. McAuliffe his full
salary through the date his employment is terminated. If Mr. McAuliffe's
employment is terminated by his death, GPC is required to pay to his spouse or
estate his full salary for a period of one year. If, as a result of Mr.
McAuliffe's incapacity due to physical or mental illness, he is absent from his
duties on a full-time basis for the entire period of six consecutive months, and
he does not return within 30 days of notice, GPC may terminate his employment.
Mr. McAuliffe is entitled to receive his full salary during the disability
period until his employment is terminated.
<PAGE>
Mr. McAuliffe can terminate the employment agreement for Good Reason,
which is defined to include (i) a change in control of the Company or (ii) a
failure by GPC to comply with any material provision of the employment agreement
which has not been cured within ten days after notice. A "change in control" of
the Company is defined as (i) a change in control of a nature that would be
required to be reported in response to Item 1(a) of Form 8-K, other than a
change of control resulting in control by Mr. Feldman or Mr. McAuliffe or a
group including Mr. Feldman or Mr. McAuliffe, (ii) a change in control of a
nature that would be required to be reported in response to Item 1(a) of Form
8-K, resulting in control by a buy-out group including Mr. Feldman but not Mr.
McAuliffe, (iii) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than Mr. Feldman or Mr. McAuliffe or a group
including Mr. Feldman or Mr. McAuliffe, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities, (iv) the Company and its
affiliates owning less than a majority of the voting stock of GPC, (v) the sale
of all or substantially all of the assets of GPC, or (vi) at any time
individuals who were either nominated for election or elected by the Board of
Directors of the Company cease for any reason to constitute at least a majority
of the Board.
If GPC wrongfully terminates the employment agreement or Mr. McAuliffe
terminates the employment agreement for Good Reason, (i) GPC is required to pay
Mr. McAuliffe his full salary and provide him his benefits through the
]termination date, and pay him his full annual bonus for the calendar year in
which termination occurs; (ii) GPC is required to pay as severance pay to Mr.
McAuliffe an amount equal to (a) Mr. McAuliffe's average annual cash
compensation received from GPC during the three full calendar years immediately
preceding the termination date, multiplied by (b) the greater of (I) the number
of years (including partial years) that would have been remaining in the
employment period if the employment agreement had not so terminated but was not
subsequently extended and (II) three, such payment to be made (c) if termination
is based on a change of control of the Company, in a lump sum or (d) if
termination results from any other cause, in substantially equal semimonthly
installments payable over the number of years (including partial years) that
would have been remaining in the employment period if the employment agreement
had not so terminated but was not subsequently extended; (iii) all options to
purchase the Company's Common Stock granted to Mr. McAuliffe under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Mr. McAuliffe's employment by GPC had not
terminated and, if Mr. McAuliffe's termination is based on a change of control
of the Company and Mr. McAuliffe elects to surrender any or all of such options
to GPC, GPC is required to pay Mr. McAuliffe a lump sum cash payment equal to
the excess of (a) the fair market value on the termination date of the
securities issuable upon exercise of the options surrendered over (b) the
aggregate exercise price of the options surrendered; (iv) GPC is required to
maintain in full force and effect, for a number of years equal to the greater of
(a) the number of years (including partial years) that would have been remaining
in the employment period if the employment agreement had not so terminated but
was not subsequently extended and (b) three, all employee benefit plans and
programs in which Mr. McAuliffe was entitled to participate immediately prior to
the termination date; and (v) if termination of the employment agreement arises
out of a breach by GPC, GPC is required to pay all other damages to which Mr.
McAuliffe may be entitled as a result of such breach.
Notwithstanding the foregoing, GPC shall not be obligated to pay any
portion of any amount otherwise payable to Mr. McAuliffe if GPC could not
reasonably deduct such portion solely by operation of Section 280G.
The Company guaranteed the performance by GPC of its obligations under
Mr. McAuliffe's employment agreement.
Certain Transactions
Pursuant to the Consulting and Severance Agreement dated December 29,
1998 between the Company and Martin M. Pollak, the former Executive Vice
President and Treasurer of the Company and the beneficial owner of 7.0% of the
Company's Common Stock, Mr. Pollak receives $200,000 per year for a five-year
period ending May 31, 2004. During this period, Mr. Pollak is receiving certain
benefits, including life insurance, medical benefits, use of an automobile, use
of an office, and secretarial support.
The Exchange Agreement and Second Exchange Agreement are described under
the caption "Security Ownership of Directors and Named Executive Officers." In
the Second Exchange Agreement, the Company granted certain registration rights
to Mr. Pollak and consented to the Second Exchange.
The AW Stockholders Agreement is described under the captions "Principal
Stockholders" and "Election of Directors."
The Company has made loans to Jerome I. Feldman, the Chairman of the
Board, President, and Chief Executive Officer of the Company. Mr. Feldman
primarily utilized the proceeds of such loans to exercise options to purchase
Class B Stock. Such loans bear interest at the prime rate of Fleet Bank and are
secured by the purchased Class B Stock. As of March 31, 2000, the aggregate
amount of indebtedness outstanding was approximately $4,882,000, which was the
largest aggregate amount of indebtedness outstanding since January 1, 1999.
During the first quarter of 1999, Mr. Feldman sold 43,593 shares of
Common Stock owned by him to the Company at their then market value and received
proceeds of approximately $828,000. The Company is holding such 43,593 shares as
treasury stock and Mr. Feldman utilized the proceeds of such sale to reduce his
outstanding indebtedness to the Company.
For the year ended December 31, l999, Michael Feldman received salary
from GPC of approximately $120,000. Michael Feldman is the son of Jerome I.
Feldman.
<PAGE>
PERFORMANCE GRAPH
The following table compares the performance of the Common Stock for
the periods indicated with the performance of the NYSE Market Index and the MG
Group Index/Education and Training Services assuming $100 were invested on
December 31, 1994 in the Common Stock, the NYSE Market Index and the MG Group
Index/Education and Training Services. Values are as of December 31 of the
specified year assuming that all dividends were reinvested.
Comparison of 5-Year Cumulative Total Return
Company/Index Name 1994 1995 1996 1997 1998 1999
GP STRATEGIES 100.00 118.10 106.03 191.38 206.90 84.48
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MG GROUP INDEX/
EDUCTION AND
TRAINING SERVICES 100.00 182.55 333.15 441.01 495.92 319.50
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NYSE MARKET INDEX 100.00 129.66 156.20 205.49 244.52 267.75
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equities, to file reports of ownership and changes in ownership with
the SEC and the New York Stock Exchange. Officers, directors and greater than
10% shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the period January
1, 1999 to April 3, 2000, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with, except that
Jerome I. Feldman, Scott N. Greenberg and John C. McAuliffe each filed one late
report.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the Company's 2001
proxy statement provided they are received by the Company no later than January
3, 2001 and are otherwise in compliance with applicable SEC regulations. In
addition to the above requirements, the Company's By-laws provide that any
stockholder wishing to nominate a candidate for director or to propose other
business at an annual meeting of stockholders of the Company must give written
notice that is received by the Secretary of the Company not less than 90 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders (no later than March 10, 2001 with respect to the 2001 Annual
Meeting of Stockholders); provided that in the event that the annual meeting is
called for a date that is not within 30 days before or after such anniversary
date, such notice must be received not later than the close of business on the
tenth day following the day on which public disclosure of the date of the annual
meeting was first made. Such notice must provide certain information specified
in the Company's By-laws. Copies of the Company's By-laws are available to
stockholders without charge upon request to the Company's Secretary at the
Company's address set forth above.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has recommended, and the Board of Directors has
selected, the firm of KPMG LLP to serve as independent auditors for the Company
for the year ending December 31, 2000. KPMG LLP has audited the Company's books
since 1970. The Board considers KPMG LLP to be well qualified for the function
of serving as the Company's auditors.
A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if so desires and is
expected to be available to respond to appropriate questions from stockholders.
GENERAL
So far as is now known, there is no business other than that described
above to be presented for action by the stockholders at the meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the meeting and any adjournments thereof in
accordance with the discretion of the persons named therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. It is
expected that the solicitations will be made primarily by mail, but employees or
representatives of the Company may also solicit proxies by telephone or
telegraph and in person, and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxy material to their principals at the
expense of the Company.
Lydia M. DeSantis
Secretary
<PAGE>
GP STRATEGIES CORPORATION
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held June 8, 2000
This proxy is solicited on behalf of the Board of Directors
Revoking any such prior appointment, the undersigned, a stockholder of GP
Strategies Corporation, hereby appoints Jerome I. Feldman and Scott N.
Greenberg, and each of them, attorneys and agents of the undersigned, with full
power of substitution, to vote all shares of the Common Stock of the undersigned
in said Company at the Annual Meeting of Stockholders of said Company to be held
at the Sheraton Columbia Hotel, 10207 Wincopin Circle, Columbia, Maryland on
June 8, 2000, at 11:00 a.m., local time, and at any adjournments thereof, as
fully and effectually as the undersigned could do if personally present and
voting, hereby approving, ratifying and confirming all that said attorneys and
agents or their substitutes may lawfully do in place of the undersigned as
indicated below.
This proxy when properly executed will be voted as directed. If no direction is
indicated, this proxy will be voted for proposal (1).
1. Election of Directors: G. Chris Andersen, Jerome I. Feldman, Scott N.
Greenberg, Sheldon L, Glashow, Roald Hoffmann, Bernard M. Kauderer, John C.
McAuliffe, Ogden R. Reid, and Gordon Smale.
For Withhold For All Except
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below)
- - ------------------------------------------------------------------
2. Upon any other matters which may properly come before the meeting or any
adjournments thereof.
<PAGE>
Please sign exactly as name appears below.
Dated , 2000
Signature
Signature if held jointly
Please mark, sign, date, and return the proxy card promptly
using the enclosed envelope. When shares are held by joint
tenants both should sign. When signing as attorney, as
executor, administrator, trustee or guardian, please give
full title as such. If signer is a corporation, please sign
in full corporate name by President or other authorized
officer. If a partnership please sign in partnership name by
authorized person.
