<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 [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
National Techteam, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
National Techteam, Inc.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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
NATIONAL TECHTEAM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of National TechTeam, Inc., a Delaware
corporation (the "Company"), will be held on Wednesday, May 26, 1998 at 10:00
a.m. local time at the Holiday Inn, 5801 Southfield Expressway (at Ford Road),
Detroit, Michigan.
The items of business to be considered and acted upon are:
1. Election of the Company's Board of Directors (See Page 3).
2. Ratification of the selection of Ernst & Young as
auditors for the Company for the year ending
December 31, 1998 (See Page 10).
3. Transaction of such other business as may properly come
before the meeting or any adjournment or adjournments thereof.
All of the above matters are more fully described in the accompanying
Proxy Statement.
Only shareholders of record at the close of business on April 14, 1998,
the record date, will be entitled to vote at the meeting and at any adjournment
thereof. A list of all shareholders of record April 14, 1998 will be open for
inspection by all shareholders at the place of and during the Annual Meeting.
By Order of the Board of Directors,
April 21, 1998 Lawrence A. Mills
Vice President,
Chief Financial Officer,
Treasurer and Secretary
THE BOARD OF DIRECTORS OF THE COMPANY HOPES THAT YOU WILL FIND IT
CONVENIENT TO ATTEND THE MEETING IN PERSON. IN ANY EVENT, IN ORDER THAT YOUR
SHARES MAY BE REPRESENTED AT THIS MEETING AND TO ASSURE A QUORUM, PLEASE
COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES IN THE ACCOMPANYING ENVELOPE. IF YOU
ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY BY SO NOTIFYING THE SECRETARY AT
THE ANNUAL MEETING AND VOTE YOUR STOCK PERSONALLY. PROXIES CAN ALSO BE REVOKED
BY SUBMITTING TO THE COMPANY A PROXY WITH A LATER DATE AND BY DELIVERY TO THE
SECRETARY OF THE COMPANY OF WRITTEN INSTRUCTIONS WHICH BY THEIR TERMS REVOKE
THE PROXY.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE PROXY. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL
TITLE AS SUCH. A PROXY EXECUTED BY A CORPORATION SHOULD BE SIGNED IN ITS
CORPORATE NAME BY AN AUTHORIZED OFFICER.
1
<PAGE> 3
PROXY STATEMENT
The enclosed Proxy is solicited by the Board of Directors of National
TechTeam, Inc., a Delaware corporation (the "Company"), for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. The
solicitation is being made by mail and the Company may also use its officers
and regular employees to solicit Proxies from shareholders either in person or
by telephone, telegraph or letter without additional compensation. The Company
may also use the services of independent Proxy soliciting agents to solicit
Proxies from shareholders. The entire cost of solicitation, which represents
the amount normally expended for a solicitation relating to an uncontested
election of directors, will be borne by the Company. Those costs include
charges by brokers and other custodians, nominees and fiduciaries for
forwarding Proxies and other Proxy materials to the beneficial owners of Common
Stock.
The Annual Report of the Company on Form 10-K for the year ended December
31, 1997 (without exhibits) as filed with the Securities and Exchange
Commission accompanies this Proxy Statement. The Annual Report on Form 10-K is
incorporated in this Proxy Statement by reference and is deemed a part of the
Proxy soliciting material.
The Common Stock of the Company is its only outstanding class of voting
securities. Each shareholder of record at the close of business on April 14,
1998 (the "record date") is entitled to vote at the meeting. As of the close
of business on the record date, the Company had 14,579,842 shares outstanding.
Each share is entitled to one vote on each of the matters to come before the
meeting and is not entitled to cumulative voting rights. A majority of the
outstanding shares of Common Stock will constitute a quorum for the meeting.
The five nominees for election as a director receiving the highest number of
votes will be elected as directors of the Company. The favorable vote of the
holders of a majority of the shares of the Company's Common Stock that are
present, either in person or by Proxy, at the Annual Meeting will be required
to ratify the selection of Ernst & Young as the Company's auditors for the year
ending December 31, 1998.
When Proxies are returned properly executed, the shares represented
thereby will be voted in accordance with the shareholder's instructions.
Shareholders are urged to specify their choices by marking the enclosed Proxy.
Any Proxy which is not revoked and which does not otherwise indicate a
preference will be voted in favor of (i) the nominees for director set forth
herein, (ii) the ratification of the selection of Ernst & Young as the
Company's auditors for the year ending December 31, 1998 and (iii) in
accordance with the judgment of the person or persons voting the Proxies on any
other matter that may properly be brought before the meeting. Means have been
provided whereby a shareholder may withhold his vote for any director and may
abstain from voting on any matter other than the election of directors. The
Proxies also confer discretionary authority to vote the shares represented
thereby on any matter which was not known on the date of this Proxy Statement
but may properly be presented for action at the meeting.
Participants in the National TechTeam, Inc. 401(k)/Profit-Sharing Plan and
Trust have the right to instruct the trustee of such Plan how to vote shares of
stock allocated to their Directed Investment accounts. The Plan also provides
that the trustee shall vote any shares held by Directed Investment accounts as
to which instructions have not been received in the same ratio as voted by all
voting Participants of all Directed Investment accounts.
The execution of a Proxy will in no way affect a shareholder's right to
attend the Annual Meeting and to vote in person. Any shareholder giving a
Proxy has the power to revoke that Proxy at any time before it is voted by
giving written notice of revocation to the Company's Secretary at the principal
executive office of the Company or at the Annual Meeting.
The mailing address of the Company's principal executive office is 835
Mason Avenue, Suite 200, Dearborn, Michigan 48124 and its telephone number at
that address is (313) 277-2277. The approximate date on which this Proxy
Statement and the enclosed Proxy are first being mailed to shareholders is
April 21, 1998.
VOTING TABULATION
Vote Required: Under provisions of the Delaware General Corporation Law,
the election of the Company's Directors requires a plurality of the votes
represented in person or by Proxy at the meeting and the selection of the
Company's auditors for the year ended December 31, 1998 will require the
favorable vote of the holders of a majority of the shares of the Company's
common stock that are present, either in person or by Proxy, at the annual
meeting.
Effect of Abstention: A shareholder who abstains from voting on any or
all proposals will be included in the number of shareholders present at the
meeting for the purpose of determining whether a quorum exists for the conduct
of business. However, because directors are elected by a plurality vote, an
abstention with respect to the election of the Company's directors has no
impact once a quorum exists and thus will not be counted either in favor of or
against the election of the nominees. In the case of the proposal for
ratification of the selection of Ernst & Young as independent auditors, an
abstention will effectively count as a vote against such proposal.
2
<PAGE> 4
VOTING TABULATION - CONTINUED
Effect of Broker Non-Vote: Brokers holding shares for the account of
their clients may vote such shares either in the manner directed by their
clients or in their own discretion if permitted by the exchange or other
organization of which they are members. Members of the New York Stock Exchange
are permitted to vote their clients' Proxies in their own discretion as to each
of the Company's proposals. Proxies which are voted by brokers on at least one
but not all of the proposals are referred to as "broker non-votes." Broker
non-votes will be included in determining the presence of a quorum. However, a
broker non-vote is not treated as present and entitled to vote and will have
the effect of neither a vote in favor of or against the proposal.
ELECTION OF DIRECTORS
AND MANAGEMENT INFORMATION
Directors are to be elected at the Annual Meeting to hold office until the
next Annual Meeting and until their successors are elected and qualified. Each
nominee named below has consented to be named and nominated in this Proxy
Statement and to continue to serve as a director if elected. The nominees for
directorship were elected at the last Annual Meeting and presently are all of
the directors of the Company. While it is not anticipated that any of the
nominees will be unable to serve, if any nominee is not a candidate for
election as a director at the Annual Meeting, the proxy will be voted for the
election of a substitute nominee proposed by the present Board of Directors or
the number of directors will be reduced accordingly.
The Company's Bylaws provide that, until the Board of Directors shall
otherwise determine, the number of director positions shall be seven. The Board
has not identified any candidates to fill the two vacancies existing on the
Board and has no present intention of nominating any persons to fill those
positions. If, after the Annual Meeting, the Board identifies any persons to
fill the two vacancies, shareholders will not have an opportunity to approve
such persons prior to their appointment as directors.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE ELECTION
OF KIM A. COOPER, WILLIAM F. COYRO JR., WALLACE D. RILEY, RICHARD G. SOMERLOTT
AND LEROY H. WULFMEIER, III AS DIRECTORS OF THE COMPANY. PROXIES SOLICITED BY
MANAGEMENT WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE IN THEIR
PROXIES.
Unless specifically instructed to the contrary, all Proxies will be voted
for the election of Kim A. Cooper, William F. Coyro Jr., Wallace D. Riley,
Richard G. Somerlott and LeRoy H. Wulfmeier, III as directors of the Company.
Those persons have agreed to serve if elected, and the Company does not know of
any reason why any of those nominees may not be able to serve as directors if
elected. In the event that any of those nominees are unable to serve for good
cause, or will not serve as director of the Company, and such fact is known by
the Company at the Annual Meeting, all Proxies may be voted at the Annual
Meeting for any other person duly nominated for the position created by that
inability or unwillingness to serve.
NOMINEES
The following is a description of the background of the persons who are
being nominated for election as directors of the Company.
KIM A. COOPER, 39, became a director in March 1996. Between 1984 and
1994, Mr. Cooper was employed by WordPerfect Corporation in sales and as its
Vice President, Worldwide Customer Services. Between 1994 and 1996, he was
employed by Novell, Inc. as its Vice President, Worldwide Marketing and
Business Development. In January 1996 he founded and became the Chairman and
Chief Executive Officer of Digital Harbor, L.C., a component software company
developing Internet applications. Mr. Cooper is a member of the Board's Audit
Committee.
WILLIAM F. COYRO JR., 54, was the founder, President and Chief Executive
Officer of Computer Trade Development ("CTD"), the predecessor of the Company,
from 1979 until 1987. Dr. Coyro has since continued as Chief Executive Officer
and Chairman of the Board of the Company through the date hereof. From 1974 to
1979 Dr. Coyro practiced full time as a dentist.
3
<PAGE> 5
NOMINEES - CONTINUED
WALLACE D. RILEY, 70, is an attorney at law and since 1968 has been a
partner with the firm of Riley & Roumell. Mr. Riley previously served as a
director of the Company from 1987 to 1988 and from 1993 to the present. He is
the past President of the State Bar of Michigan as well as past President of
the American Bar Association. He was a member of the Board of Governors of the
American Bar Association from 1977-1980, and a trustee of the Federal Bar
Foundation since 1968. He has been a Special Attorney General for the State of
Michigan since 1969. Mr. Riley is a member of the Board's Compensation
Committee.
RICHARD G. SOMERLOTT, 56, is a dentist and a managing partner of
Endodontics Associates Professional Corporation. Dr. Somerlott has been a
director and shareholder of the Company, including its predecessor, CTD, since
its inception. Dr. Somerlott is a member of the Board's Audit Committee.
LEROY H. WULFMEIER, III, 52, is an attorney at law and from 1970 through
1997 has been a partner with the firm of Schureman, Frakes, Glass & Wulfmeier.
In 1997, Mr. Wulfmeier joined the firm of Wulfmeier and Ottenwess, PLC. Mr.
Wulfmeier has been a director and shareholder of the Company, including its
predecessor, CTD, since its inception. Mr. Wulfmeier is a member of the
Board's Compensation Committee.
INFORMATION REGARDING BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors has established two standing committees (Audit and
Compensation), the current members of which are identified above. These
committees act in an advisory capacity to the full Board of Directors. All
committees report to the full Board of Directors with respect to matters
considered at each committee meeting held.
The principal functions of the Audit Committee are to review the scope of
the annual audit and the annual audit report of the independent accountants,
recommend the firm of independent accountants to perform such audits, consider
non-audit functions proposed to be performed by the independent accountants,
ascertain whether the recommendations of auditors are satisfactorily
implemented and recommend such special studies or actions which the Committee
deems desirable. During 1997, three meetings of the Audit Committee were held.
The Compensation Committee reviews the compensation practices followed,
makes all decisions involving the compensation of executive officers of the
Company and reviews Management's salary recommendations for each other person
at or above the level of Vice President. In addition, the Committee reviews
stock option grant recommendations pursuant to the Company's 1990 Nonqualified
Employee Stock Option Plan. During 1997, seven meetings of the Compensation
Committee were held.
During the year ended December 31, 1997, the Board of Directors held 11
meetings. All directors attended at least 75% of the meetings that were held
during the year.
INFORMATION REGARDING EXECUTIVE MANAGEMENT
All executive officers serve at the pleasure of the Board of Directors.
There are no family relationships among any of the directors or executive
officers of the Company. The following is a description of the background of
the Company's executive officers not otherwise described above.
PRESENT POSITION
NAME AGE WITH THE COMPANY
----------------- --- ----------------------------
Harry A. Lewis 54 President and Chief
Operating Officer
L. Kevin Dohrmann 39 Vice President
and Chief Technology Officer
Lawrence A. Mills 53 Vice President,
Chief Financial Officer,
Treasurer and Secretary
William J. Popp 35 Vice President of Sales
and Marketing
4
<PAGE> 6
INFORMATION REGARDING EXECUTIVE MANAGEMENT - CONTINUED
HARRY A. LEWIS. Mr. Lewis joined TechTeam in January 1998 and is the
Company's President and Chief Operating Officer. Mr. Lewis retired from
Chrysler Corporation in December 1996. Prior to his retirement, Mr. Lewis spent
his entire career with Chrysler Corporation. From July 1993 until his
retirement he held the positions of Vice President, Finance Strategy and
Planning and Vice President, Process Management and Continuous Improvement.
Prior to July 1993, Mr. Lewis held various management positions in Management
Information Systems and Finance.
L. KEVIN DOHRMANN. Mr. Dohrmann joined TechTeam in April 1996 and is the
Company's Vice President of Operations and Chief Technology Officer. Between
1987 and 1996, Mr. Dohrmann was employed by Inacom Corporation as a support
engineer and from 1993 until early 1996, as Vice President and Chief Technology
Officer.
LAWRENCE A. MILLS. Mr. Mills joined the Company in December 1993 as its
Chief Financial Officer. In June 1994 he was appointed Treasurer. In February
1995 he was appointed Chief Operating Officer, a position which he held until
March 1996. In May 1997, he was appointed Secretary. Previously, Mr. Mills
was employed by the Michigan Gas Utilities Division of UtiliCorp United Inc. as
its Vice President - Administration and Strategic Development from 1989 through
1993.
WILLIAM J. POPP. Mr. Popp joined TechTeam in December 1996 and is the
Company's Vice President of Sales. Between 1991 and 1996, Mr. Popp was employed
by Novell, Inc. in various sales management positions. Between 1989 and 1991,
Mr. Popp was employed by Lotus Development, Inc. in various sales roles.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
The following table sets forth as of April 14, 1998, the record date, the
shares of Common Stock beneficially owned by: (i) any person (including any
"group" as that term is used in Section 13 (d)(3) of the Securities Exchange
Act of 1934, as amended, known by the Company to be the beneficial owner of
more than 5% of the Company's voting securities; (ii) each director of the
Company; (iii) each executive officer of the Company; and (iv) all current
directors and executive officers of the Company as a group. All persons listed
below have sole voting and investment power with respect to their shares of
stock unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED (1) COMMON STOCK (1)
---------------- ------------------- ----------------
<S> <C> <C> <C>
The Capital Group Companies, Inc. 1,435,000 9.51%
333 South Hope Street
Los Angeles, CA 90071
The TCW Group, Inc. 1,175,586 7.79
965 South Fegueroa Street
Los Angeles, CA 90017
William F. Coyro Jr. (2)* 402,619 (3)(4) 2.67
LeRoy H. Wulfmeier, III (2)* 277,689 (5)(6) 1.84
Richard G. Somerlott (2)* 204,119 (5) 1.35
Wallace D. Riley (2)* 91,800 (7) **
Kim A. Cooper (2)* 36,625 (8) **
Harry A. Lewis (2) None (9) **
Lawrence A. Mills (2) 16,000 (10) **
L. Kevin Dohrmann (2) 10,000 (11) **
William J. Popp (2) 5,865 (12) **
</TABLE>
5
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT - CONTINUED
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED (1) COMMON STOCK (1)
---------------------------------- ------------------- ----------------
<S> <C> <C> <C>
Current Directors and Executive 1,044,717 (13) 6.92
Officers as a Group (nine persons)
</TABLE>
* A director of the Company.
** Less than 1%.
DIRECTORS AND EXECUTIVE OFFICERS
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and include shares not
presently outstanding but which are subject to exercise within 60 days
through options, warrants, rights or conversion privileges. For the
purpose of computing the percentage of the outstanding shares owned by a
shareholder, shares subject to such exercise are deemed to be outstanding
securities of the class owned by that stockholder but are not deemed to be
outstanding for the purpose of computing the percentage by any other
person.
(2) A director and/or executive officer of the Company.
(3) Includes 2,000 shares of Common Stock owned by certain members of the
family of William F. Coyro, Jr., the beneficial ownership of which he
disclaims.
(4) Includes options to purchase 5,000 shares of Common Stock at $4.50 per
share and 18,000 shares of Common Stock at $25.75. Does not include
options to purchase 4,000 shares of Common Stock at $4.82, 10,000 shares
of Common Stock at $4.50 per share and 72,000 shares of Common Stock at
$25.75 all of which are not exercisable until August, 1998 or later.
(5) Includes options to purchase 10,000 shares of Common Stock at $7.00 per
share, 10,000 shares of Common Stock at $25.75, 10,000 shares of Common
Stock at $23.00 and 10,000 shares of Common Stock at $10.313.
(6) Includes 15,870 shares of Common Stock owned by LeRoy H. Wulfmeier, III,
as custodian for his minor child, the beneficial ownership of which he
disclaims.
(7) Includes options to purchase 10,000 shares of Common Stock at $25.75,
10,000 shares of Common Stock at $23.00, and 10,000 shares of Common Stock
at $10.313.
(8) Includes options to purchase 15,000 shares of Common Stock at $5.00 per
share, 10,000 shares of Common Stock at $23.00, and 10,000 shares of
Common Stock at $10.313.
(9) Does not include options to purchase 100,000 shares of Common Stock at
$10.00 per share which are not exercisable until January, 1999 or later.
(10) Includes options to purchase 4,000 shares of Common Stock at $5.69 per
share, 5,000 shares of Common Stock at $4.50 per share, and 5,000 shares
of Common Stock at $25.75. Does not include options to purchase 4,000
shares of Common Stock at $5.69 per share, 10,000 shares of Common Stock
at $4.50, and 20,000 shares of Common Stock at $25.75 all of which are not
exercisable until August, 1998 or later.
(11) Includes options to purchase 5,000 shares of Common Stock at $5.00 per
share and 5,000 shares of Common Stock at $25.75. Does not include options
to purchase 15,000 shares of Common Stock at $5.00 per share and 20,000
shares of Common Stock at $25.75 which are not exercisable until August,
1998 or later.
(12) Includes options to purchase 5,000 shares of Common Stock at $20.00 per
share. Does not include options to purchase 20,000 shares of Common Stock
at $20.00 per share and 20,000 shares of Common Stock at $10.00 per share
which are not exercisable until July, 1998 or later.
(13) Includes the shares and options in footnotes (3) through (11) above.
6
<PAGE> 8
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Such officers,
directors and greater than ten-percent shareholders are required by SEC rules
to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1997 all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than ten-percent beneficial owners were complied with, except
(1) In May 1997, Mr. LeRoy Wulfmeier, a director of the Company, filed a Form 4
to correct a small discrepancy with respect to the amount of his beneficial
ownership prior to April 1997; and (2) Following the departure of Jonathan D.
Ahlbrand from the Company on August 6, 1997, William J. Popp assumed most of
the responsibilities over sales previously assigned to Mr. Ahlbrand. Mr. Popp
filed a Form 3 as an Executive Officer of the Company on October 1, 1997.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no compensation as such
for services as members of the Board of Directors or committees thereof. Under
the Company's 1996 Non-Employee Directors Stock Plan, each nonemployee director
receives 100 shares of the Company's Common Stock for attendance at each
meeting of the Board of Directors. The plan also provides for an automatic and
non-discretionary grant to each nonemployee director on the last business day
of each February of a nonstatutory option to purchase 10,000 shares of the
Company's Common Stock at an exercise price of one hundred percent (100%) of
the fair market value of the Common Stock on the date of the grant.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and each of the other four most highly compensated executive
officers whose salary plus bonus exceeded $100,000, in all capacities during
the last three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
LONG TERM CURRENT
COMPENSATION ANNUAL
ANNUAL COMPENSATION AWARDS SALARY
NAME AND ---------------------------------------------- -------------------- --------------
PRINCIPAL POSITION YEAR SALARY BONUS 401(K) MATCH (1) OTHER OPTIONS (2)
- ------------------------ ---- -------- -------- ------------ ------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
William F. Coyro, Jr. 1997 $239,423 $112,500 $4,846 $4,050 (3) -- $250,000
Chairman and Chief 1996 209,230 -0- 4,567 100,000 (4)
Executive Officer 1995 (5) 177,547 6,300 4,620 25,000
Jonathan D. Ahlbrand (6) 1997 96,923 78,042 -0- -- --
Senior Vice President 1996 132,788 -0- -0- 55,000
1995 4,808 -0- -0- 25,000
L. Kevin Dohrmann (7) 1997 134,000 44,872 1,955 12,000 140,000
Vice President 1996 106,730 -0- -0- 50,000
and Chief Technology
Officer
Lawrence A. Mills 1997 134,000 59,307 4,020 -- 140,000
Senior Vice President, 1996 124,423 -0- 3,600 25,000
Chief Financial Officer, 1995 (8) 107,909 3,600 3,345 25,000
Treasurer and Secretary
William J. Popp (9) 1997 153,288 10,000 -0- 45,000 173,000
Vice President, 1996 -0- -0- -0- --
Sales
</TABLE>
7
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS - CONTINUED
(1) Amounts disclosed in this column consist of the Company's matching
contribution under the Company's 401(k) Retirement Savings Plan.
(2) Includes Stock Options granted under the Company's 1990 Nonqualified
Stock Option Plan. The Company has not awarded SAR's.
(3) Represents portion of premiums paid on life insurance that are taxable to
Dr. Coyro. Commencing in 1997, the Company advanced $214,885 to an
insurance company that carries insurance policies on the life of Dr.
Coyro. The advances are collateralized by the cash value of the underlying
life policies. The advances are to be repaid in future years.
(4) Of these, 10,000 options were declined.
(5) In 1995 the Company advanced $126,800 to William F. Coyro Jr. The
advance represented Federal, State, and Social Security taxes due on
taxable income resulting from the exercise of stock options. The amounts
were remitted to the appropriate taxing entity. The advances were repaid
to the Company prior to December 31, 1995.
(6) Mr. Ahlbrand joined the Company in December 1995 and resigned in August
1997.
(7) Mr. Dohrmann joined the Company in April 1996.
(8) During 1995, the Company advanced $107,000 to an insurance company that
carries an insurance policy on the life of Mr. Mills. The advance is
collateralized by the cash value of the underlying life policy. The
advance is to be repaid by Mr. Mills in future years.
(9) Mr. Popp joined the Company in December 1996. Salary data includes
commissions at the current draw rate.
OPTION GRANTS AND EXERCISES
The following tables set forth information as to the individuals named in
the Summary Compensation Table above, concerning options granted in 1997, the
value realized upon the exercise in 1997 of previously granted options and the
value of unexercised options.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997 (1)
-------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
PERCENT OF TOTAL OPTION TERM
OPTIONS OPTIONS GRANTED IN EXERCISE ---------------------------
NAME GRANTED YEAR PRICE 5% 10%
- ----------------- ------- ------------------ ----------- --------- --------
<S> <C> <C> <C> <C> <C>
L. Kevin Dohrmann 12,000 1.78% 10.00 $ 40,800 $ 92,600
William J. Popp 25,000 3.71% 20.00 170,000 385,800
20,000 2.97% 10.00 68,000 154,300
</TABLE>
(1) All stock options were granted under the Company's 1990 Nonqualified
Stock Option Plan. The Company has not awarded SAR's. Option exercise
prices are at or above the market price on the date of grant. Options
have a five year term and are exercisable in equal increments over five
years. The exercise price and Federal tax withholdings may be paid in
cash or with shares of TechTeam stock.
8
<PAGE> 10
OPTION GRANTS AND EXERCISES - CONTINUED
<TABLE>
<CAPTION>
OPTION EXERCISES IN 1997 AND DECEMBER 31, 1997 VALUE TABLE
- ------------------------------------------------------------------------------------------------
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT AT
NAME ON EXERCISE REALIZED DECEMBER 31, 1997 DECEMBER 31, 1997 (1)
- -------------------- --------------- ------------ -------------------- ---------------------
<S> <C> <C> <C> <C>
William F. Coyro Jr. 46,000 $355,180 109,000 (2) $22,500
Jonathan D. Ahlbrand 5,000 49,063 -0- -0-
L. Kevin Dohrmann 5,000 50,900 57,000 (3) 20,000
Lawrence A. Mills 17,000 246,720 48,000 (5) 35,740
William J. Popp -0- -0- 45,000 (6) -0-
</TABLE>
(1) Represents the difference between the exercise price of in-the-money
options exercisable within 60 days of the date hereof and the closing
price of the Company's common stock on December 31, 1997 multiplied by the
number of exercisable options.
(2) Of this amount, 86,000 options are not exercisable until August, 1998 or
later.
(3) Of this amount, 47,000 options are not exercisable until August, 1998 or
later.
(4) Of this amount, 34,000 options are not exercisable until August, 1998 or
later.
(5) Of this amount, 40,000 options are not exercisable until July, 1998 or
later.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING
REPORT AND THE PERFORMANCE GRAPH INCLUDED HEREIN SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company and establishes the compensation
plans and specific compensation levels of all Executive Officers.
The Company's executive compensation philosophy is to pay for performance.
The objectives of the Company's executive compensation program are to: (1)
provide compensation that enables the Company to attract and retain key
executives; (2) create incentives in the form of bonuses for contributions to
superior earnings by the Company; and (3) align the Company's executives'
interest with its shareholders' desire for superior returns through long-term
stock ownership opportunities.
The Company's executive compensation program provides a compensation
opportunity that the Committee believes, in its judgment and experience, is
competitive with other companies of comparable size and complexity. Actual
compensation levels may be greater or less than compensation levels at other
companies based upon annual and long-term Company performance and individual
performance. The Compensation Committee uses its discretion to establish
executive compensation at levels in its judgment warranted by external or
internal factors and an executive's individual circumstances.
EXECUTIVE COMPENSATION PROGRAM COMPONENTS. The Company's executive
compensation program consists of base salary, cash incentives and long-term
incentives. BASE SALARY. The Compensation Committee decides the base pay
levels for executives according to the impact the individual has on the Company
and on its performance, the skills and experiences required by the position,
salaries paid by other companies for comparable positions, and the performance
of the Company. Base salaries for executives are maintained at levels that the
Compensation Committee believes, based on its own judgment and experience, are
competitive with other companies of comparable size and complexity. CASH
INCENTIVES. Cash incentives for Executive Officers other than the Chairman and
CEO were provided in prior years by way of an annual bonus plan based on
performance. The Chairman and CEO's bonus is at the discretion of the
Compensation Committee. However, no bonus plans have been submitted by the
Compensation Committee to the Board of Directors for 1997 or 1998 for Executive
Officers or the Chairman and CEO. The Committee and the Board of Directors
believe that an executive's desire to achieve continually improving results of
operations is enhanced if that performance is rewarded by way of cash bonuses.
LONG-TERM INCENTIVES. Long-term incentives are provided by way of stock
9
<PAGE> 11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION - CONTINUED
options. The Committee and Board of Directors believe that management's
ownership of a significant equity interest in the Company
is a major incentive in building shareholder wealth and aligning the long-term
interests of management and shareholders. Stock options, therefore, are
granted at the market value of the Common Stock on the date of grant and
typically become exercisable in installments of 20% per year beginning one year
after the date of the grant. The value received by the executive from an
option is dependent upon increases in the price of the Company's Common Stock
over the market price on the date of the grant. Consequently, the value of the
compensation is aligned directly with increases in shareholder value. Grants
of stock options are made by the Board of Directors based upon the executive's
contribution toward Company performance and expected contribution toward
meeting the Company's goals.
1997 CHIEF EXECUTIVE COMPENSATION. The Compensation Committee annually reviews
and approves the compensation of Dr. William F. Coyro Jr., the Chief Executive
Officer. Dr. Coyro's base salary for 1997 represented an increase over Dr.
Coyro's 1996 base salary and was based upon a number of factors, including:
(1) the Compensation Committee's assessment of the 1996 performance of the
Company and of Dr. Coyro; (2) Expectations for the Company's 1997 performance;
and (3) the Committee's assessment, based on its own judgment and experience,
of market compensation for this position.
COMPENSATION NOT QUALIFYING FOR TAX DEDUCTIBILITY. Section 162(m) of the
Internal Revenue Code, adopted in 1994, provides in general that compensation
to certain individual executive officers during any year in excess of $1
million is not deductible by a public company. The Committee believes that,
given the range of salaries and number of stock options of executive officers
of the Company, the $1 million threshold of Section 162(m) will not be reached
by an executive officer of the Company in the near future. Accordingly, the
Committee has not considered what its policy regarding compensation not
qualifying for Federal tax deductibility might be; however, it intends to do so
at such time that the threshold is within range of any executive officer.
Wallace D. Riley
LeRoy H. Wulfmeier
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases office space in a building in Harper Woods, Michigan
that is owned by an affiliate of Jonathan D. Ahlbrand, who was a Senior Vice
President of the Company for a portion of 1997. The lease has a remaining term
of 5 years with the right to renew at the Company's option for five (5) years
and provides for annual rental payments of $102,200, or $5.75 per square foot.
The Company believes the terms of the lease are no less favorable to the
Company than would be obtained from an unaffiliated third party.
During 1996, the Company guaranteed a loan in the amount of $375,000 for
the benefit of Mr. Jonathan Ahlbrand, the proceeds of which, in part, were
applied to discharge a loan for $160,000 plus interest at 2% over the prime
rate, made by the Company to Mr. Ahlbrand in 1996. The Company's guarantee is
secured by a mortgage on and an assignment of the land contract purchaser's
interest in a building owned by an affiliate of Mr. Ahlbrand, a portion of
which is leased by the Company, as well as by indemnification agreements from
the affiliate, and its principals, including Mr. Ahlbrand.
PROPOSAL TO RATIFY SELECTION OF
INDEPENDENT ACCOUNTANTS
The Board of Directors proposes and recommends that the shareholders
ratify the Board's selection of Ernst & Young as independent auditors to make
an examination of the Company's financial statements for its current year
ending December 31, 1998. Ernst & Young and its predecessor, Ernst & Whinney,
have been auditing the Company's financial statements for the last eleven (11)
years.
All professional services rendered by Ernst & Young during the year were
furnished at customary rates. The performance of professional services, other
than audit services, is reviewed and approved, including a review for
independence, by the Audit Committee of the Board of Directors only if the
services to be rendered are considered to be material or unusual in nature. In
all other cases, authorization for the services is made by the Management of
the Company. The performance of audit services is approved on an annual basis
by the Board of Directors.
A representative of Ernst & Young will be present at the Annual Meeting
with the opportunity to make a statement if he or she decides to do so and will
be available to respond to appropriate questions.
10
<PAGE> 12
PROPOSAL TO RATIFY SELECTION OF INDEPENDENT ACCOUNTANTS - CONTINUED
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" RATIFICATION
OF THE SELECTION OF ERNST & YOUNG AS AUDITORS FOR THE COMPANY. PROXIES
SOLICITED BY MANAGEMENT WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE
IN THEIR PROXIES.
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total return on the
Company's Common Stock from January 1, 1993 through December 31, 1997 with the
Nasdaq Stock Market-US Index (the "Nasdaq US Index") and the Nasdaq Computer &
Data Processing Services Stocks (the "Nasdaq Computer Index") . The graph
assumes that the value of the investment in the Company's Common Stock, the
Nasdaq US Index and the Nasdaq Computer Index was $100 on January 1, 1993 and
that all dividends were reinvested.
The graph displayed below is presented in accordance with Securities and
Exchange Commission requirements. Stockholders are cautioned against drawing
any conclusions from the data contained therein, as past results are not
necessarily indicative of future performance. This graph in no way reflects
the Company's forecast of future financial performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
TOTAL RETURN INDEX
- -----------------------------------------------------------------
DEC 92 DEC 93 DEC 94 DEC 95 DEC 96 DEC 97
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ US 100% 115% 112% 159% 195% 240%
NASDAQ COMPUTER 100% 106% 129% 196% 242% 297%
NATIONAL TECHTEAM 100% 170% 191% 205% 727% 327%
</TABLE>
11
<PAGE> 13
MISCELLANEOUS MATTERS
At the Annual Meeting of Shareholders, in addition to the matters
described above, there will be an address by the Chairman of the Board of the
Company and a general discussion period during which shareholders will have an
opportunity to ask questions about the business and operations of the Company.
As of the date of this Proxy Statement the Board of Directors knows of no
other matters which may properly be, or are likely to be, brought before the
meeting. However, if any proper matters are brought before the meeting, the
person named in the enclosed Proxy will vote them as the Board of Directors may
recommend.
SHAREHOLDER PROPOSALS
If a shareholder desires to submit a proposal for consideration at the
next Annual Shareholders Meeting and to have that proposal submitted on the
Company's Proxy statement and form of Proxy, pursuant to the rules of the
Securities and Exchange Commission, that proposal must be received by the
Company no later than December 22, 1998.
ANNUAL REPORT
All shareholders of record on April 14, 1998 have been sent, or are
currently being sent, a copy of the Company's 1997 Annual Report, which
contains audited financial statements of the Company for the year ended
December 31, 1997. Shareholders not receiving such Annual Report may obtain
one by sending a written request to the Company's Secretary, Lawrence A. Mills,
at the Company's office located at 835 Mason Avenue, Suite 200, Dearborn,
Michigan 48124.
By order of the Board of Directors
Lawrence A. Mills
Vice President,
Chief Financial Officer,
Treasurer and Secretary
Dated: April 21, 1998
12
<PAGE> 14
NATIONAL TECHTEAM, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS MAY 26, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NATIONAL TECHTEAM, INC. AND WILL BE VOTED.
The undersigned hereby appoints William F. Coyro, Jr. and Lawrence A. Mills or
any one or more of them acting in the absence of the others, as attorneys and
proxies of the undersigned with fall power of substitutions for and in the name
of the undersigned, to represent the undersigned at the Annual
Meeting of the Shareholders of National TechTeam, Inc., a Delaware corporation
(the "Company") to be held in the Holiday Inn, 5801 Southfield Expressway (at
Ford Road), Detroit, Michigan at 10:00 a.m. local time, May 26, 1998, and any
adjournment or adjournments thereof, and to vote all shares of stock of the
Company standing in the name of the undersigned, with all the powers the
undersigned would possess if personally present at such meeting:
1. Election of directors of the Company:
Nominees: Kim A. Cooper, William F. Coyro, Jr., Wallace D. Riley, Richard G.
Somerlott, and LeRoy H. Wulfmeier III
[ ] FOR all nominees listed above, except vote withheld from the following
nominees (if any).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
2. Ratification of the selection of Ernst & Young as the Company's auditors for
the current year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion on such other matters as may properly come before the
meeting.
MANAGEMENT AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR ELECTION OF THE
DIRECTORS SET FORTH ABOVE AND FOR RATIFICATION OF THE SELECTION OF THE COMPANY'S
AUDITORS.
(Continues and to be signed on the reverse side)
<PAGE> 15
This proxy will be voted as directed but, where no direction is given,
it will be voted FOR approval of all of the foregoing nominees and FOR
ratification of the selection of the Company's auditors.
Copies of the Notice of Meeting dated April 21, 1998 and the Proxy
Statement dated April 21, 1998 have been received by the undersigned.
PLEASE DATE AND SIGN HERE
Dated: ______________________________
Name: ______________________________
PLEASE DATE, SIGN, AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.
/ / Please check here if you plan to attend this meeting.
