<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
TECHNOLOGY SOLUTIONS COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
TECHNOLOGY SOLUTIONS COMPANY
205 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
(312) 228-4500
DEAR STOCKHOLDER:
You are cordially invited to the 1999 Annual Meeting of Stockholders of
Technology Solutions Company. The meeting will be held at the offices of Bank
of America Illinois, 231 South LaSalle Street, Chicago, Illinois 60697 on
Wednesday, April 28, 1999, starting at 10:00 a.m., local time.
The matters to be considered at the meeting are described in the accompanying
Proxy Statement. Regardless of your plans for attending in person, it is
important that your shares be represented at the meeting. Therefore, please
complete, sign, date and return your proxy card in the enclosed, post-paid
envelope. This will enable you to vote on the business to be transacted
whether or not you attend the meeting.
We hope that you can attend the 1999 Annual Meeting, but in any event, please
vote your shares by signing and returning your proxy card.
Sincerely,
[SIGNATURE]
WILLIAM H. WALTRIP
CHAIRMAN
April 5, 1999
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
TO OUR STOCKHOLDERS
The 1999 Annual Meeting of Stockholders (the "Annual Meeting") of Technology
Solutions Company (the "Company") will be held at the offices of Bank of
America Illinois, 231 South LaSalle Street, Chicago, Illinois 60697 on
Wednesday, April 28, 1999 at 10:00 a.m., local time, for the following
purposes:
1. To elect three directors, each to serve for a three-year term;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending
December 31, 1999; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only stockholders of record at the close of business on March 8, 1999, are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. A list of those stockholders will be available for examination by
any stockholder for any purpose germane to the Annual Meeting, during normal
business hours, at the principal executive office of the Company, 205 North
Michigan Avenue, Suite 1500, Chicago, Illinois 60601, for a period of ten
days prior to the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement. Whether or
not you plan to attend the Annual Meeting in person, you are urged to
complete, sign, date and return the enclosed proxy card in the enclosed,
post-paid envelope. If you attend the Annual Meeting and wish to vote in
person, you may withdraw your proxy and vote your shares personally.
By order of the Board of Directors,
Paul R. Peterson
Secretary
April 5, 1999
<PAGE>
TECHNOLOGY SOLUTIONS COMPANY
205 NORTH MICHIGAN AVENUE, SUITE 1500
CHICAGO, ILLINOIS 60601
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Technology Solutions Company (the
"Company") for use at the 1999 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the offices of Bank of America Illinois, 231 South
LaSalle Street, Chicago, Illinois, at 10:00 a.m., local time. The Company's
principal executive office is located at 205 North Michigan Avenue, Suite
1500, Chicago, Illinois 60601.
Each holder of record of shares of Common Stock, $.01 par value, of the
Company (the "Common Stock") at the close of business on March 8, 1999 (the
"Record Date"), is entitled to notice of, and to vote at, the Annual Meeting
or any adjournment thereof and will have one vote on each matter considered
for each share held on the Record Date. A majority of the shares entitled to
vote will constitute a quorum. On the Record Date there were 41,186,360
shares of Common Stock outstanding.
If you are unable to attend the Annual Meeting, you may vote by proxy. The
proxy holders will vote your shares according to your instructions. If you
return a properly signed and dated proxy card but do not mark a choice on one
or more items, your shares will be voted in accordance with the
recommendations of the Board of Directors for those items as set forth in
this Proxy Statement. The proxy card gives authority to the proxy holders to
vote your shares in their discretion on any other matter presented at the
Annual Meeting or any adjournment thereof. A proxy may indicate that all or a
portion of the shares represented by that proxy are not being voted by a
stockholder with respect to a particular matter. Any such non-voted shares
will be considered present for the purpose of determining the presence of a
quorum.
You may revoke your proxy at any time prior to voting at the Annual Meeting
by delivering written notice to the Secretary of the Company, by submitting a
subsequently dated proxy or by attending the Annual Meeting and voting in
person.
The Company will bear the cost of preparing, handling, printing and mailing
this Proxy Statement, the related proxy card and any additional material
which may be furnished to stockholders, as well as the actual expense
incurred by brokerage houses, fiduciaries and custodians in forwarding those
materials to beneficial owners of Common Stock held in their names. The
solicitation of proxies will be made by the use of the mail and through
direct communication with certain stockholders or their representatives by
certain officers, directors or employees of the Company who will receive no
additional compensation therefor. The Company has retained Morrow & Co.,
Inc., of New York, New York, a proxy soliciting organization, to solicit
management proxies for the Annual Meeting. Their fees for soliciting proxies
are estimated to be approximately $7,500, plus reasonable out-of-pocket
expenses. This Proxy Statement and the related proxy card are first being
sent or given to stockholders on or about April 5, 1999.
1
<PAGE>
The Company effected a three-for-two split of the Common Stock on August 10,
1998 (the "1998 Stock Split"). All share and per share data included in this
Proxy Statement reflect the 1998 Stock Split.
2
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors consists of seven persons and is divided into three
classes with three-year terms of office ending in different years. The terms of
the Class II Directors expire this year. The Board of Directors has nominated
three persons for election as directors in Class II to serve until the Annual
Meeting of Stockholders held in 2002 and until their successors have been
elected and qualified. The terms of the current Class III and I Directors expire
in 2000 and 2001, respectively.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the three Class II nominees recommended by the Board of Directors.
Directors are elected by a plurality of the votes cast. Stockholders may not
cumulate their votes. The three nominees receiving the highest number of votes
will be elected. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them for the nominees recommended by the Board of
Directors.
NOMINEES FOR DIRECTOR
CLASS II -- NOMINEES TO SERVE UNTIL THE 2002 ANNUAL MEETING:
MICHAEL J. MURRAY, age 54, has been a Director of the Company since July 1988.
Mr. Murray is President of Global Corporate and Investment Banking at Bank of
America Corporation and a member of the corporation's Policy Committee.
Reporting to Mr. Murray are the Global Capital Raising and Global Markets;
International Corporate Banking Group, U.S. & Canada Group, and Principal
Investing. From March 1997 until the BankAmerica-NationsBank merger in 1998,
Mr. Murray headed BankAmerica Corporation's Global Wholesale Bank and was
responsible for its business with large corporate, international, and government
clients around the world. Mr. Murray was named a BankAmerica vice chairman and
head of the U.S. and International Groups in September 1995. He had been
responsible for BankAmerica's U.S. Corporate Group since BankAmerica's merger
with Continental Bank Corporation in September 1994. Prior to the
BankAmerica-Continental Bank merger, he was vice chairman and head of Corporate
Banking for Continental Bank, which he joined in 1969. He is also currently
serving as a Director of CNF Transportation Inc., a transportation company
located in Palo Alto, California.
STEPHEN B. ORESMAN, age 66, has been a Director of the Company since July 1988.
Since 1990, he has served as President of Saltash, Ltd., a management consulting
firm. He previously served as Senior Vice President of Booz, Allen & Hamilton,
Inc. and Chairman of Booz, Allen & Hamilton International, parent and subsidiary
consulting firms. He is also currently serving as a Director of Cleveland-Cliffs
Inc. and TriNet Corporate Realty Trust, Inc.
RAYMOND P. CALDIERO, age 59, has been a Director of the Company since January
1998. He has served as Chairman, President and Chief Executive Officer of CII
Inc., a business consulting firm, since 1990. He was employed with Marriott
Corporation for over 18 years with his final position being Senior Vice
President and Assistant to the Chairman in December 1989. He is also currently
serving as a Director of EnviroSource Corporation of Horsham, Pennsylvania.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
VOTE FOR ELECTION OF THE NOMINEES LISTED ABOVE.
3
<PAGE>
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS III -- SERVING UNTIL THE 2000 ANNUAL MEETING:
JOHN R. PURCELL, age 67, has been a Director of the Company since July 1988. He
has served as Chairman and Chief Executive Officer of Grenadier Associates,
Ltd., a venture banking, merger and acquisition consulting firm, since 1989.
From February 1991 until 1997, he served as Chairman of Donnelley Marketing,
Inc., a direct marketing company. From 1987 until 1990, he served as Chairman of
Mindscape, Inc., an educational entertainment computer software company. From
1982 until 1986, he served as Chairman and President of SFN Companies, Inc., a
communications company. He previously served as Executive Vice President of CBS,
Inc. and Senior Vice President, Finance of Gannett Co., Inc. He is also
currently serving as a Director of Bausch & Lomb, Inc., Omnicom Group Inc., and
Journal Register Company.
WILLIAM H. WALTRIP, age 61, has been a Director of the Company since December
1992 and Chairman of the Board since June 1993. He also served as Chief
Executive Officer from June 1993 to June 1995. From 1996 until 1998, he served
as the Chairman of the Board of Directors and, during 1996, served as Chief
Executive Officer of Bausch & Lomb, Inc. From 1991 to 1993, he was Vice Chairman
of Unifax, Inc., a broad-line food service distributor. From 1985 to 1988, he
was President, Chief Operating Officer and a Director of IU International, a
diversified services company with major interests in transportation,
environmental services and distribution. From 1982 to 1985, he was President,
Chief Executive Officer and a Director of Purolator Courier Corporation and from
1972 to 1982, he was President, Chief Operating Officer and Director of Pan
American World Airways, Inc. He is also currently serving as a Director of
Bausch & Lomb, Inc., the Teachers Insurance and Annuity Association and Thomas &
Betts Corporation.
CLASS I -- SERVING UNTIL THE 2001 ANNUAL MEETING:
JOHN T. KOHLER, age 52, is currently the President and Chief Executive Officer
of the Company and has been a Director of the Company since June 1994. He joined
the Company as Senior Vice President in June 1992, was promoted to Executive
Vice President and named to the Office of the Chairman in September 1993, became
President and Chief Operating Officer in January 1994 and became Chief Executive
Officer in June 1995. From 1986 to 1992, he was Senior Vice President and Chief
Information Officer of Kimberly-Clark Corp. From 1983 to 1986, he was a partner
and regional practice director for the Midwest Region consulting practice of
Arthur Young. He is also currently serving as a Director of Follett Corporation
and Infosis Corp.
MICHAEL R. ZUCCHINI, age 52, has been a Director of the Company since October
1997. He has served as Chief Technology Officer of Fleet Financial Group, a
financial services company, since April 1997 and as Vice Chairman since 1993.
Since January 1997, he has served as Chairman of the Bankers Roundtable
Subcommittee on Legislation and Regulation charged with interacting with
Congress on issues related to technology. He is also currently serving as a
Director of Visa U.S.A., Inc., a credit card company.
4
<PAGE>
DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors held two regular meetings and four special meetings
during the seven-month transition period ended December 31, 1998 (the
"Transition Period"). With the exception of Mr. Murray, who attended all but one
of the meetings of the Board of Directors, and Mr. Oresman, who attended all but
two of the meetings of the Board of Directors, each director attended all of the
meetings of the Board and committees thereof on which he served.
The Board of Directors has an Audit Committee presently composed of Messrs.
Caldiero, Murray and Oresman. The Audit Committee reviews the results and scope
of the audit and other services provided by the Company's independent
accountants and recommends the appointment of independent accountants to the
Board of Directors. See "Ratification of Appointment of Independent
Accountants." The Audit Committee met twice during the Transition Period.
The Board of Directors has a Compensation Committee presently composed of
Messrs. Purcell and Zucchini. The Compensation Committee approves all executive
compensation and stock option grants. The Compensation Committee held two
regular meetings and two special meetings during the Transition Period.
Those directors who are not employees of the Company ("Outside Directors")
receive an annual fee of $25,000 plus reimbursement of expenses incurred in
attending meetings.
In addition, each Outside Director presently holds stock options issued under
the Technology Solutions Company 1993 Outside Directors Plan, as amended (the
"1993 Plan") or the Technology Solutions Company 1996 Stock Incentive Plan (the
"1996 Plan"). Any new Outside Director will receive an option to purchase 40,500
shares of Common Stock with a per share exercise price equal to the closing
price of a share of Common Stock as reported on The Nasdaq Stock Market
- -Registered Trademark- on the day the stock option is granted. In addition,
an option to purchase 40,500 shares of Common Stock will be granted to each
Outside Director at the time that a previously issued stock option granted
under the 1993 Plan or the 1996 Plan to that director becomes exercisable in
full (assuming he is an Outside Director at that time). Each stock option
granted to Outside Directors under the 1996 Plan becomes exercisable in
thirty-six monthly installments of 1,125 shares each, commencing on the last day
of the calendar month immediately following the grant of the option.
The Board of Directors does not have a nominating committee. Selection of
nominees for the Board is made by the entire Board of Directors. The names of
persons to be considered by the Board as potential nominees for the Company's
Board of Directors should be directed to the Company's Secretary, Paul R.
Peterson, at 205 North Michigan Avenue, Suite 1500, Chicago, Illinois 60601.
5
<PAGE>
RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999. Approval
of the proposal to ratify the appointment of PricewaterhouseCoopers LLP requires
the affirmative vote of a majority of the stockholders present, in person or by
proxy, at the Annual Meeting and entitled to vote thereon. If the appointment is
not ratified, the appointment of other independent accountants will be
considered by the Board of Directors. Abstentions will have the same effect as
votes against the proposal. Shares not voted by a broker acting as nominee
because the broker lacks discretionary authority to vote will be considered as
not being in attendance for the vote on the proposal. PricewaterhouseCoopers LLP
has audited the Company's financial statements since the fiscal year ended May
31, 1991, including those for the Transition Period. Representatives of
PricewaterhouseCoopers LLP are expected to be at the Annual Meeting and will be
available to respond to appropriate questions and will also have the opportunity
make a statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
VOTE FOR APPROVAL OF THE PROPOSAL TO RATIFY THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999.
6
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following table (the "Compensation Table") sets forth summary information
concerning the compensation during the periods indicated of the Company's Chief
Executive Officer and its four other most highly compensated executive officers
during the Transition Period (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
-----------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
- ----------------------------------------------------------------------------------------------------------------------
SECURITIES
FISCAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) OPTIONS (#)
- ------------------------------------------------ --------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
William H. Waltrip 1998(1) 108,333 100,000 50,000
Chairman of the Board 1998 100,000 22,000 112,500
1997 100,000 100,000 168,750
1996 176,000 125,000 67,500
- ------------------------------------------------ --------------- ---------------- ---------------- -------------------
John T. Kohler 1998(1) 320,833 230,000 75,000
President and Chief Executive Officer 1998 550,000 150,000 168,750
1997 525,000 460,000 168,750
1996 484,000 460,000 101,625
- ------------------------------------------------ --------------- ---------------- ---------------- -------------------
Kelly D. Conway 1998(1) 266,667 120,000 65,000
Group President 1998 440,000 100,000 135,000
1997 400,000 225,000 199,125
1996 340,000 385,000(2) 320,625
- ------------------------------------------------ --------------- ---------------- ---------------- -------------------
Paul R. Peterson 1998(1) 128,333 50,000 7,500
Senior Vice President, 1998 220,000 26,000 33,750
General Counsel and Secretary 1997 200,000 80,000 45,000
1996 180,000 140,000(3) 16,875
- ------------------------------------------------ --------------- ---------------- ---------------- -------------------
James S. Carluccio(4) 1998(1) 262,500 --- 25,000
Executive Vice President and 1998 450,000 50,000 22,500
Chief Technology Officer 1997 450,000 230,000 67,500
1996 430,000 320,000 33,750
- ------------------------------------------------ --------------- ---------------- ---------------- -------------------
</TABLE>
- -----------------------------
(1) The compensation figures reported cover the Transition Period from June 1,
1998 through December 31, 1998.
(2) $55,000 of the Fiscal 1996 bonus represents the accrual charge to earnings
under the employee retention program announced by the Company in February
1994. Under this program, substantially all employees of the Company,
excluding Messrs. Waltrip, Kohler and Carluccio, were awarded a special
compensation of 50 percent of their February 1994 base salary if they
remained with the Company for at least two years. This special compensation
vested 50 percent on March 1, 1995, and 50 percent on March 1, 1996. Under
the terms of this program, Mr. Conway received a total of $110,000.
(3) $40,000 of the Fiscal 1996 bonus represents the accrual charge to earnings
under the employee retention program described in Note 2 above. Under the
terms of this program, Mr. Peterson received a total of $80,000.
(4) Mr. Carluccio's employment with the Company terminated effective
February 11, 1999.
7
<PAGE>
OPTION GRANTS
The following table sets forth information with respect to individual grants of
options that were made during the Transition Period to each of the Named
Executive Officers and the potential realizable value of these options assuming
five percent and ten percent rates(1) of compound appreciation in the market
value of the Common Stock over the term of the option grants. The table also
relates those values to the gains that would be realized by all holders of
Common Stock if those rates of appreciation were achieved. No stock appreciation
rights were granted in the Transition Period.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS(2) APPRECIATION FOR OPTION TERM
- -----------------------------------------------------------------------------------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED (#) YEAR ($/SH) DATE 5%($)(1) 10%($)(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William H. Waltrip 50,000(3) 4% 21.75 06/25/08 683,923 1,733,195
- -----------------------------------------------------------------------------------------------------------------------------
John T. Kohler 75,000(3) 6% 21.75 06/25/08 1,025,884 2,599,792
- -----------------------------------------------------------------------------------------------------------------------------
Kelly D. Conway 65,000(3) 5% 21.75 06/25/08 889,100 2,253,153
- -----------------------------------------------------------------------------------------------------------------------------
Paul R. Peterson 7,500(3) 1% 21.75 06/25/08 102,588 259,979
- -----------------------------------------------------------------------------------------------------------------------------
James S. Carluccio 25,000(3) 2% 21.75 05/11/99 341,961 866,597
- -----------------------------------------------------------------------------------------------------------------------------
Potential gain by all
common stockholders(4) -- -- -- -- 560,365,052 1,420,075,064
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
(1) Amounts reflect assumed rates of appreciation set forth in the Securities
and Exchange Commission's executive compensation disclosure rules. Actual
gains, if any, on stock option exercises depend on future performance of the
Company's Common Stock and overall stock market conditions. No assurance can
be given that the amounts reflected in these columns will be achieved.
(2) Upon a sale of substantially all of the business and assets of the Company,
the Board may accelerate the exercisability of these options.
(3) Subject to option provisions regarding termination of employment, one third
of these options will become exercisable on June 25, 1999, and 1/36 of these
options become exercisable on the last day of each calendar month for 24
months thereafter.
(4) The future hypothetical value of one share of Common Stock based on a fair
market value of $21.75 on June 25, 1998, and assumed rates of appreciation
of five percent and ten percent through June 25, 2008, would be $35.43 and
$56.41, respectively. The potential realizable value for all holders of
Common Stock is based on 40,966,975 shares of Common Stock outstanding as of
December 31, 1998.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT DEC. 31, 1998(#) OPTIONS AT DEC. 31, 1998($)
SHARES --------------------------- ---------------------------
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William H. Waltrip ---- ---- 333,016 134,359 1,055,602 19,724
- -----------------------------------------------------------------------------------------------------------------------------
John T. Kohler 246,750 2,700,037 393,761 187,489 1,410,770 19,724
- -----------------------------------------------------------------------------------------------------------------------------
Kelly D. Conway ---- ---- 371,142 165,687 1,642,934 23,285
- -----------------------------------------------------------------------------------------------------------------------------
Paul R. Peterson ---- ---- 173,516 31,872 1,024,063 5,261
- -----------------------------------------------------------------------------------------------------------------------------
James S. Carluccio ---- ---- 345,000 47,500 2,168,557 7,892
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. William H. Waltrip
to serve as its Chairman of the Board of Directors. The agreement does not have
a fixed expiration date and may be terminated by either party on 90 days'
written notice. If Mr. Waltrip's employment is terminated by the Company, he
will be entitled to receive his salary and health insurance benefits for a
one-year period following the termination. If, following a change in control of
the Company (i) Mr. Waltrip's title, position, duties or salary are diminished
and he resigns within 90 days thereafter, or (ii) his employment with the
Company is terminated following his refusal to relocate for a period in excess
of six months to any location outside of the metropolitan area where he resides,
he will be entitled to receive his salary and health insurance benefits for a
one-year period following the termination. Each of Mr. Waltrip's options to
purchase Common Stock that is not then fully exercisable will become exercisable
in full upon a change in control of the Company. If Mr. Waltrip's employment
with the Company is terminated because of his death or disability, he or his
designated beneficiary will be entitled to receive his salary and health
insurance benefits for a one-year period following the termination. Mr.
Waltrip's current annual salary is $300,000.
The Company has entered into an employment agreement with Mr. John T. Kohler to
serve as its President and Chief Executive Officer. The agreement does not have
a fixed expiration date and may be terminated by either party on 90 days'
written notice. If Mr. Kohler's employment is terminated by the Company, he will
be entitled to receive his salary, bonus and health insurance benefits for a
two-year period following the termination, or until he is re-employed. If,
following a change in control of the Company (i) Mr. Kohler's title, position,
duties or salary are diminished and he resigns within 90 days thereafter, or
(ii) his employment with the Company is terminated following his refusal to
relocate for a period in excess of six months to any location outside of the
metropolitan area where he resides, he will be entitled to receive his salary,
bonus and health insurance benefits for a two-year period following the
termination. Each of Mr. Kohler's options to purchase Common Stock that is not
then fully exercisable will become exercisable in full upon a change in control
of the Company. If Mr. Kohler's employment with the Company is terminated
because of his death or disability, he or his designated beneficiary will be
entitled to receive his salary, bonus and health insurance benefits for a
one-year period following the termination. Mr. Kohler's current annual salary is
$550,000.
9
<PAGE>
The Company has entered into an employment agreement with Mr. Kelly D. Conway to
serve as its Group President. The agreement does not have a fixed expiration
date and may be terminated by either party on 90 days' written notice. If Mr.
Conway's employment is terminated by the Company, he will be entitled to receive
his salary, bonus and health insurance benefits for a two-year period following
the termination, or until he is re-employed. If, following a change in control
of the Company (i) Mr. Conway's title, position, duties or salary are diminished
and he resigns within 90 days thereafter, or (ii) his employment with the
Company is terminated following his refusal to relocate for a period in excess
of six months to any location outside of the metropolitan area where he resides,
he will be entitled to receive his salary, bonus and health insurance benefits
for a two-year period following the termination. Each of Mr. Conway's options to
purchase Common Stock that is not then fully exercisable will become exercisable
in full upon a change in control of the Company. If Mr. Conway's employment with
the Company is terminated because of his death or disability, he or his
designated beneficiary will be entitled to receive his salary, bonus and health
insurance benefits for a one-year period following the termination. Mr. Conway's
current annual salary is $480,000.
The Company has entered into an employment agreement with Mr. Paul R. Peterson
to serve as its Senior Vice President, General Counsel and Secretary. The
agreement does not have a fixed expiration date and may be terminated by either
party on 90 days' written notice. If Mr. Peterson's employment is terminated by
the Company, he will be entitled to receive his salary, bonus and health
insurance benefits for a one-year period following the termination. If,
following a change in control of the Company (i) Mr. Peterson's title, position,
duties or salary are diminished and he resigns within 90 days thereafter, or
(ii) his employment with the Company is terminated following his refusal to
permanently relocate to any location outside of the metropolitan area where he
resides, he will be entitled to receive his salary, bonus and health insurance
benefits for a one-year period following the termination. If Mr. Peterson's
employment with the Company is terminated because of his death or disability, he
or his designated beneficiary will be entitled to receive his salary, bonus and
health insurance benefits for a one-year period following the termination. Mr.
Peterson's current annual salary is $220,000.
Mr. Carluccio's employment with the Company terminated effective February 11,
1999. The Company has entered into a separation agreement with Mr. Carluccio
pursuant to which the Company has agreed to pay, subject to Mr. Carluccio's
compliance with certain terms of his employment agreement, the following: (i) an
amount representing his annual salary and average bonus, payable on February 15,
1999; (ii) an amount representing his annual salary, payable twice monthly over
the two-year period commencing on the termination date; and (iii) an amount
representing his average bonus, payable on February 15, 2000. In addition, the
Company has agreed to forgive an advance made to Mr. Carluccio in the amount of
$36,000, and to continue his health insurance and short-term disability benefits
until the earlier of February 11, 2001 or such time as Mr. Carluccio secures
other employment.
10
<PAGE>
OTHER TRANSACTIONS
On January 4, 1999, the Company extended by one year the payment date for a loan
in the amount of $600,000 made to Mr. Kohler on January 6, 1998. The loan is
payable on demand but no later than January 5, 2000, and bears interest at the
rate of 5.7 percent per annum. Mr. Kohler's outstanding balance and accrued
interest as of March 31, 1999 was $642,180.
On November 12, 1998, the Company made a loan of $1,200,000 to Mr. Conway with a
five-year term that, to the extent not forgiven in whole or in part as described
below, is payable on demand upon the cessation of Mr. Conway's employment with
the Company or its affiliates. The loan bears interest at the rate of 4.51
percent per annum, and so long as Mr. Conway remains employed by the Company or
its affiliates, the principal amount of the loan (and interest accrued thereon)
will be forgiven over a five-year period, as follows: 25% of the principal
amount on November 12, 1999; $25,000 in principal per month for the next twelve
months; $20,000 in principal per month for the next twenty-four months; and
$10,000 in principal per month for the next twelve months. Mr. Conway's
outstanding balance and accrued interest as of March 31, 1999 was $1,220,746.
11
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
TSC'S COMPENSATION PHILOSOPHY
The Company recognizes that the success of a computer system design and
implementation consulting business is based on the performance of its employees,
and that its employees are the Company's primary asset. With that understanding,
the Compensation Committee of the Board of Directors (the "Compensation
Committee") applies the following operating principles in its duties as
administrator of the Company's Executive Compensation program:
1. Be competitive in all aspects of the compensation program and
consistently demonstrate a willingness to pay levels of
compensation that are necessary to attract and retain highly
qualified executives.
2. Award stock options to executives in order to align management's
and stockholders' interests.
3. Provide variable compensation opportunities based on the
financial performance of the Company -- when objectives are met
or exceeded, the incentive awards can be attractive; when
objectives are not met, those rewards generally are not
distributed.
4. Adhere to a compensation strategy that effectively balances
short- and long-term goals of the Company.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Compensation Committee, presently comprised of two outside board members,
makes executive compensation decisions. In making these decisions, the
Compensation Committee considers recommendations made by the Company's senior
management team. Key components of the Company's Executive Compensation program
include:
1. Base salary -- designed to compensate executives competitively
within the industry.
2. Cash bonus/stock option awards -- designed to help provide a
direct link between executive compensation and the individual's
role in helping the Company attain annual performance measures.
The Compensation Committee believes this Executive Compensation program
effectively serves the interests of both the Company and its stockholders. The
Compensation Committee also believes the program allows the Company to attract
and retain outstanding executives, and motivates these executives to perform at
the highest levels.
12
<PAGE>
CEO COMPENSATION
Mr. Kohler's compensation is substantially related to the Company's performance
because his employment agreement provides for an annual bonus based, in part, on
the Company's achievement of certain revenue and profitability levels. In the
Transition Period, Mr. Kohler received a salary of $320,833 and options to
purchase 75,000 shares of Common Stock. Mr. Kohler's salary, bonus, and option
award during the Transition Period reflect the strategic importance of Mr.
Kohler to the Company, his current contribution to the Company and his
anticipated future contributions toward achievement of the Company's growth
objectives.
The foregoing report has been furnished by the Compensation Committee.
The Compensation Committee of the Board of Directors
John R. Purcell
Michael R. Zucchini
13
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information as of February 28, 1999 concerning
the beneficial ownership of Common Stock for each Director, Named Executive
Officer and all Directors and executive officers as a group. Unless otherwise
noted, the listed persons have sole voting and investment power with respect
to the shares held in their names, subject to community property laws if
applicable.
<TABLE>
<CAPTION>
NUMBER % OF TOTAL
OF OUTSTANDING
DIRECTOR NAME SHARES SHARES
- ------------- ----------- -----------
<S> <C> <C>
John T. Kohler 670,320 (1) 1.4
William H. Waltrip 364,270 (2) *
Raymond P. Caldiero 18,000 (3) *
Michael J. Murray 342,211 (4) *
Stephen B. Oresman 100,462 (5) *
John R. Purcell 881,250 (6) 1.9
Michael R. Zucchini 28,927 (7) *
NAMED
EXECUTIVE OFFICERS
- ------------------
John T. Kohler 670,320 (1) 1.4
William H. Waltrip 364,270 (2) *
Kelly D. Conway 424,629 (8) *
Paul R. Peterson 189,106 (9) *
James S. Carluccio 438,286 (10) *
All Directors and Executive
Officers as a group (11 persons) 3,596,472 (11) 7.7
</TABLE>
- ------------------------------
* less than one percent
(1) Includes 431,265 shares which Mr. Kohler has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(2) Includes 364,270 shares which Mr. Waltrip has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(3) Includes 18,000 shares which Mr. Caldiero has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(4) Includes 84,375 shares which Mr. Murray has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(5) Includes 43,875 shares which Mr. Oresman has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(6) Includes 84,375 shares which Mr. Purcell has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days. Includes 16,875 shares held by Mr. Purcell's wife and 195,000
shares held by The Purcell Foundation.
(7) Includes 21,375 shares which Mr. Zucchini has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days. Includes 1,687 shares held by Mr. Zucchini's wife.
(8) Includes 408,270 shares which Mr. Conway has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(9) Includes 82,268 shares which Mr. Peterson has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(10) Includes 347,500 shares which Mr. Carluccio has the right to acquire under
options which are currently exercisable or which will be exercisable within
60 days.
(11) Includes 2,016,147 shares which directors and executive officers have the
right to acquire under options which are currently exercisable or which
will be exercisable within 60 days.
14
<PAGE>
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth the holders of Common Stock known to the Company,
as of February 28, 1999, based on a review of reports on Schedule 13G filed with
the SEC, to own beneficially more than five percent of the Company's Common
Stock.
<TABLE>
<CAPTION>
NAME AND NUMBER
ADDRESS OF OF SHARES PERCENT
BENEFICIAL OWNER OWNED OF CLASS( 1)
------------------------------------------ ------------------ ------------
<S> <C> <C>
Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116-3741 4,806,779 (2) 11.7%
Dresdner RCM Global Investors LLC
Dresdner RCM Global Investors US Holdings LLC
Four Embarcadero Center
San Francisco, CA 94111
Dresdner Bank AG
Jurgen-Ponto-Platz 1
60301 Frankfurt, Germany 3,973,450 (3) 9.7%
GeoCapital LLC
767 Fifth Avenue, 45th Floor
New York, NY 10153 3,172,149 (4) 7.8%
</TABLE>
- ------------------------
(1) Calculated on the basis of the actual number of outstanding shares as of
February 28, 1999 in the amount of 40,971,821.
(2) Based on the most recent report on Schedule 13G, Massachusetts Financial
Services Company represented that it has sole voting power with respect
to 4,675,854 shares and sole dispositive power with respect to 4,806,779
shares.
(3) Based on the most recent joint report on Schedule 13G, Dresdner RCM
Global Investors LLC and Dresdner RCM Global Investors US Holdings LLC
each represented that it has sole voting power with respect to 2,611,050
shares and sole dispositive power with respect to 3,858,450 shares; and
Dresdner Bank AG represented that it had sole voting power with respect
to 2,726,000 shares and sole dispositive power with respect to 3,973,450
shares.
(4) Based on the most recent report on Schedule 13G, GeoCapital LLC
represented that it has sole dispositive power with respect to 3,172,149
shares.
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder return
with the S&P Computer Software and Services Index (the "S&P Computer Index") and
with The Nasdaq Stock Market-Registered Trademark- U.S. Index (the "Nasdaq
Index") for the period beginning May 31, 1993 and ending December 31, 1998,
representing the Company's last five full fiscal years and the Transition
Period. The comparison is based on the assumption that $100.00 was invested on
May 31, 1993 in each of the Company's Common Stock, the S&P Computer Index and
the Nasdaq Index.
Note: The stock price performance shown below is not necessarily indicative
of future price performance.
<TABLE>
<CAPTION>
May 31, 1993 May 31, 1994 May 31, 1995 May 31, 1996 May 31, 1997 May 31, 1998 Dec. 31, 1998
------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
TSC $ 100 $ 56 $ 89 $ 337 $ 518 $ 647 $ 345
S&P Computer Index $ 100 $ 120 $ 169 $ 236 $ 394 $ 512 $ 530
Nasdaq Index $ 100 $ 105 $ 125 $ 182 $ 205 $ 261 $ 326
</TABLE>
- ------------------------
(1) Total return assumes reinvestment of dividends.
16
<PAGE>
STOCKHOLDER PROPOSALS
In order for a stockholder proposal or nomination to be properly presented at
the Company's 2000 Annual Meeting of Stockholders (the "2000 Annual
Meeting"), the stockholder proponent must comply with the relevant notice
requirements contained in the Company's By-laws. These requirements relate to
both the timing and content of the notice. To be timely, a stockholder
proposal or nomination intended to be brought before the 2000 Annual Meeting
must be received by the Company on or after December 30, 1999 and on or prior
to January 29, 2000. All proposals and nominations should be directed to the
Secretary of the Company.
In addition, any stockholder proposal that is intended to be included in the
Company's Proxy Statement for the 2000 Annual Meeting must comply with certain
rules and regulations promulgated by the Securities and Exchange Commission. The
deadline for submitting any such proposal to the Company for inclusion in its
Proxy Statement for the 2000 Annual Meeting is December 7, 1999.
If a stockholder proposal is properly presented at the 2000 Annual Meeting in
accordance with the requirements described above and is not included as an
agenda item in the Company's Proxy Statement for that meeting, the designated
proxy holders will be permitted to exercise discretionary voting authority with
respect to that proposal if, in the Proxy Statement, the Company advises
stockholders of the nature of the proposal and how the proxy holders intend to
vote. Nevertheless, the proxy holders will not have discretionary voting
authority if the stockholder proponent satisfies certain requirements of the
Securities and Exchange Commission, including the mailing of a separate proxy
statement to stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's officers and directors, and persons who own more
than 10 percent of a registered class of the Company's equity securities
("Reporting Persons") to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Reporting Persons are required by
Securities and Exchange Commission regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of such reports
and written representations from certain Reporting Persons, the Company has
determined that all Reporting Persons complied with all filing requirements
applicable to them in the Transition Period, except that each of Messrs. Steven
Scharkss and Gerald Komlofske filed their Annual Statement of Beneficial
Ownership of Securities within ten days after the required filing date. The Form
5 filed by Mr. Scharkss reported three transactions, and Mr. Komlofske's Form 5
reported four transactions.
17
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's Transition Report on Form 10-K for the Transition
Period, without exhibits, accompanies this Proxy Statement. Financial inquiries
should be directed to Martin T. Johnson, Senior Vice President and Chief
Financial Officer, Technology Solutions Company, 205 North Michigan Avenue,
Suite 1500, Chicago, Illinois 60601. Telephone (312) 228-4500.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the Annual
Meeting, but if any other matters should properly come before the Annual
Meeting, it is intended that the persons named in the accompanying proxy card
will vote on such matters in accordance with their best judgment.
OTHER INFORMATION
STOCK LISTING
The Nasdaq Stock Market-Registered Trademark-
STOCK SYMBOL
TSCC
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services
111 Founders Plaza
11th Floor
East Hartford, CT 06108
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Chicago, IL
18
<PAGE>
PROXY
TECHNOLOGY SOLUTIONS COMPANY
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 28, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Technology Solutions Company (the
"Company") does hereby acknowledge receipt of Notice of said Annual Meeting
and the accompanying Proxy Statement, and does hereby constitute and appoint
William H. Waltrip and John T. Kohler or either of them, with full power of
substitution, to vote all shares of stock of the Company that the undersigned
is entitled to vote, as fully as the undersigned could do if personally
present, at the Annual Meeting of Stockholders of the Company to be held on
April 28, 1999 at 10:00 a.m., Local Time, at the offices of Bank of America
Illinois, 231 S. LaSalle Street, Chicago, Illinois, and at any adjournment
thereof, as indicated on the reverse side.
(Please date and sign on reverse side)
- -----------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
This Proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no election is made, this Proxy will be voted for
the three nominees listed in Proposal 1, and for the proposal to ratify the
appointment of PricewaterhouseCoopers LLP. Please mark Box Yes / / or No / /.
1. The Election of Class II Directors.
FOR all WITHHOLD
nominees AUTHORITY
listed for all nominees
listed
/ / / /
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike that nominee's name from the names listed below.
Michael J. Murray, Stephen B. Oresman and Raymond P. Caldiero
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for the fiscal year ending
December 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
3. As such proxies may in their discretion determine upon such other
matters as may properly come before the meeting.
THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN AND, IN
THE ABSENCE OF SUCH INSTRUCTIONS, SHALL BE VOTED FOR THE NOMINEES LISTED
ABOVE AND IN FAVOR OF PROPOSAL 2. IF OTHER BUSINESS IS PRESENTED AT SAID
MEETING, THIS PROXY SHALL BE VOTED ON THOSE MATTERS IN ACCORDANCE WITH THE
BEST JUDGMENT OF THE NAMED PROXIES.
You are urged to mark, sign, date and return your proxy without delay in the
return envelope provided for that purpose, which requires no postage if
mailed in the United States.
When signing the proxy, please take care to have the signature conform to the
stockholder's name as it appears on this side of the proxy. If shares are
registered in the names of two or more persons, each person should sign.
Executors, administrators, trustees and guardians should so indicate when
signing. Corporations and partnerships should sign in their full corporate
or partnership names by a duly authorized person.
Dated: _________________________, 1999
______________________________________
Signature
______________________________________
Signature if held jointly
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
