<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (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
Cambridge Technology Partners (Massachusetts), Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
not applicable
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(2) Aggregate number of securities to which transaction applies:
not applicable
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
not applicable
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
not applicable
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(5) Total fee paid:
not applicable
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[_] Fee paid previously with preliminary materials.
not applicable
- --------------------------------------------------------------------------------
[_] 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:
not applicable
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
not applicable
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(3) Filing Party:
not applicable
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(4) Date Filed:
not applicable
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Notes:
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
EIGHT CAMBRIDGE CENTER
CAMBRIDGE, MASSACHUSETTS 02142
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
To The Stockholders:
The Annual Meeting of Stockholders of Cambridge Technology Partners
(Massachusetts), Inc., a Delaware corporation (the "Company"), will be held on
May 24, 2000 at 10:00 A.M. at the Company's headquarters, Eight Cambridge
Center, Cambridge, Massachusetts 02142, for the following purposes:
1. To elect a Board of Directors for the ensuing year; and
2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Stockholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on March 31, 2000, the record date
fixed by the Board of Directors for this purpose. A list of eligible
stockholders will be available during regular business hours at the offices of
the Company for the ten days before the meeting for inspection by any
stockholder for any purpose germane to the meeting.
By Order of the Board of Directors,
Joseph A. LaSala, Jr.
Secretary
Cambridge, Massachusetts
April 24, 2000
Stockholders are requested to sign the enclosed proxy card and return it in
the enclosed stamped envelope by return mail or vote by telephone or via the
Internet in accordance with the instructions listed on the proxy card.
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
EIGHT CAMBRIDGE CENTER
CAMBRIDGE, MASSACHUSETTS 02142
----------------
PROXY STATEMENT
April 24, 2000
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Cambridge Technology Partners (Massachusetts), Inc. (the
"Company") for use at the Annual Meeting of Stockholders of the Company to be
held on May 24, 2000, at 10:00 A.M., at the Company's headquarters, Eight
Cambridge Center, Cambridge, Massachusetts 02142, or at any adjournments
thereof.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended December 31, 1999, is being provided together with this
proxy statement to all stockholders entitled to vote. It is anticipated that
this proxy statement and the accompanying proxy will be first provided to
stockholders on or about April 24, 2000.
Only stockholders of record as of the close of business on March 31, 2000
will be entitled to vote at the meeting and any adjournments thereof. As of
March 31, 2000, 62,809,904 shares of Common Stock of the Company were issued
and outstanding. Each share outstanding as of March 31, 2000 will be entitled
to one vote, and stockholders may vote in person or by proxy. Stockholders may
vote by proxy by completing, signing, dating, and returning the accompanying
proxy card or by voting by telephone or via the Internet in accordance with
the instructions listed on the proxy card. Submitting a proxy will not in any
way affect a stockholder's right to attend the meeting and vote in person. Any
stockholder submitting a proxy has the right to revoke it by written notice to
the Secretary at any time before it is exercised or by submitting to the
Secretary or by telephone or Internet, in accordance with the instructions
listed on the proxy card, a later dated proxy relating to the same shares
prior to the time the earlier dated proxy is exercised. For those stockholders
who submit a proxy by telephone or via the Internet, the date on which the
proxy is submitted in accordance with the instructions listed on the proxy
card is the date of the proxy.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as a director, as well as abstentions
and broker "non-votes" with respect to all other matters being submitted to
stockholders, are counted as present or represented for purposes of
determining the presence or absence of a quorum for the meeting. A "non-vote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because, in respect of the
other proposal, the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. Votes may be
cast in favor of or withheld from each nominee.
The Board of Directors has named Jack L. Messman, John J. Gavin, Jr. and
Joseph A. LaSala, Jr., to serve as proxies for the meeting. Each of the
persons named as proxies in the proxy is a director and/or officer of the
Company. All properly submitted proxies received in time to be cast at the
meeting will be voted. With respect to the election of a Board of Directors,
any stockholder submitting a proxy has a right to withhold authority to vote
for any individual nominee or group of nominees to the Board of Directors by
writing the name(s) of such individual or group in the space provided on the
proxy card, checking the box next to the name(s) of such individual or group
if voting by proxy via the Internet or, if using the telephone to vote by
proxy, by following the verbal instructions for entering the two digit number
appearing on the proxy card immediately before the
1
<PAGE>
name(s) of such individual or group. The proxies will be voted as stated below
and under "Election of Directors." If no choice has been specified on the
proxy, the shares represented by the proxy will be voted FOR all nominees
listed on the proxy card.
The Board of Directors knows of no other matter to be presented at the
meeting. If a matter is presented at the meeting upon which a vote may be
properly taken and upon which the persons named as proxies in the proxies may
exercise discretion under applicable law, shares represented by all proxies
received by the Board of Directors will be voted with respect to that matter
in accordance with the judgment and discretion of the persons named as proxies
in the proxies.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of March 31, 2000, the name of each
person who, to the Company's knowledge, beneficially owned more than 5% of the
shares of Common Stock of the Company outstanding at that date, the number of
shares beneficially owned by each of these persons, and the percentage of the
outstanding shares of the Company beneficially owned by each of these persons.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Class
------------------- ----------------------- ----------
<S> <C> <C>
Safeguard Scientifics, Inc.(1).............. 9,997,389(2) 15.9%
800 The Safeguard Building
434 Devon Park Drive
Wayne, PA 19087
FMR Corp.(3)................................ 3,552,700 5.7%
82 Devonshire Street
Boston, MA 02109
Lord Abbett & Co.(4)........................ 3,524,373 5.6%
767 Fifth Avenue
New York, NY 10153
Massachusetts Financial Services 3,175,136(6) 5.1%
Company(5).................................
500 Boylston Street
Boston, MA 02116
</TABLE>
- --------
(1) Shares are held of record by Safeguard Delaware, Inc. and Safeguard
Scientifics (Delaware), Inc., wholly-owned subsidiaries of Safeguard
Scientifics, Inc. This information was obtained from a Form 4 filed by
Safeguard Scientifics, Inc. on or about March 10, 2000.
(2) Safeguard Scientifics, Inc. possesses shared voting and investment power
with respect to the shares.
(3) Shares are held of record by Fidelity Management & Research Company,
Fidelity Management Trust Company and Fidelity International Limited,
wholly-owned subsidiaries of FMR Corp. This information was obtained from
Schedule 13G filed by FMR Corp. with the Securities and Exchange
Commission on or about February 11, 2000.
(4) This information was obtained from Schedule 13G filed by Lord Abbett & Co.
with the Securities and Exchange Commission on or about February 2, 2000.
(5) This information was obtained from Schedule 13G filed by Massachusetts
Financial Services Company with the Securities and Exchange Commission on
or about February 8, 2000.
(6) Massachusetts Financial Services Company has sole investment power with
respect to all shares shown and sole voting power with respect to
2,953,836 of the shares shown. Massachusetts Financial Services Company
does not have any voting power with respect to 221,300 of the shares
shown.
2
<PAGE>
PROPOSAL--ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at six. Directors
of the Company are elected annually to hold office until the next annual
meeting of stockholders and until their successors have been duly elected and
qualified.
Shares represented by all proxies received by the Board of Directors and not
marked or voted so as to withhold authority to vote for any individual
director or for any group of directors will be voted (unless one or more
nominees are unable or unwilling to serve) for the election of the nominees
named below. The Board of Directors knows of no reason why any nominee should
be unable or unwilling to serve, but if any nominee should be unable or
unwilling to serve, proxies will be voted or withheld in accordance with the
judgment of the persons named as proxies in the proxies with respect to the
directorship for which that nominee was unable or unwilling to serve.
The nominees for director are Jack L. Messman, Warren V. Musser, Robert E.
Keith, Jr., John W. Poduska, Sr., Ph.D., James I. Cash, Jr., Ph.D., and James
D. Robinson III. All six nominees are currently directors of the Company.
Directors and Executive Officers
The Company's executive officers are appointed by, and serve at the
discretion of, the Board of Directors. Each executive officer is a full-time
employee of the Company. The directors and executive officers of the Company
are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Jack L. Messman(1).............. 60 President, Chief Executive Officer and
Director
Gerard Van Kemmel............... 60 Executive Vice President and Chief
Operating Officer
Quentin J.F. Baer............... 51 Executive Vice President, Cambridge
Management Consulting
Ian P. Clarkson................. 45 Executive Vice President, Cambridge
Management Consulting
Ralph Linsalata................. 61 Executive Vice President, NEWCO
Investments
H. Carvel Moore................. 43 President, Cambridge North America and
President, Excell Data Corporation
Alan J. Friedman................ 52 Senior Vice President, Human Resources,
Enterprise Learning and Knowledge
Management
John J. Gavin Jr. .............. 44 Senior Vice President, Chief Financial
Officer and Treasurer
Joseph A. LaSala, Jr. .......... 45 Senior Vice President, General Counsel
and Secretary
Timothy G. Mead................. 47 Senior Vice President, Corporate
Marketing Worldwide
Maurice Olivier................. 49 Senior Vice President, Strategy and
Corporate Development and Europe
Warren V. Musser(1)(2).......... 73 Chairman of the Board and Director
James I. Cash, Jr., Ph.D.(3).... 52 Director
Robert E. Keith, Jr.(1)(3)...... 58 Director
John W. Poduska, Sr., Ph.D.(2).. 62 Director
James D. Robinson III(4)........ 64 Director
</TABLE>
- --------
(1) Member of Executive Committee.
(2) Member of Management Resource Committee.
(3) Member of Audit Committee.
(4) Member of Nominating Committee.
3
<PAGE>
Jack L. Messman became President and Chief Executive Officer of the Company
in August 1999. He has been a director of the Company since October 1992.
Prior to August 1999, Mr. Messman had been the Chief Executive Officer of
Union Pacific Resources Group Inc., an energy company, since 1991 and its
Chairman since 1996. From May 1988 to April 1991, Mr. Messman was Chairman of
the Board of Directors, and Chief Executive Officer of USPCI, Inc., a
subsidiary of Union Pacific Corporation. Mr. Messman is also a director of
Metallurg Inc., Novell, Inc., Safeguard Scientifics, Inc., Tandy Corp., and
USDATA Corporation.
Gerard Van Kemmel was elected Executive Vice President and Chief Operating
Officer of the Company in June 1999. He joined the Company in November 1997 in
connection with the Company's combination with Peter Chadwick Holdings Limited
and served initially as the Company's Senior Vice President, Cambridge
Management Consulting. Prior to joining the Company, Mr. Van Kemmel was
Chairman of Continental Europe for Peter Chadwick Holdings Limited from July
1997 to November 1997. From 1966 until 1996, Mr. Van Kemmel was employed by
Andersen Consulting, holding many positions including France Andersen Managing
Partner, Worldwide Executive Committee member and Chairman of the Andersen
Worldwide Board. Mr. Van Kemmel also served as a senior advisor to the French
Minister of Finance from 1996 to January 1997.
Quentin J. F. Baer joined the Company in November 1997 in connection with
the Company's combination with Peter Chadwick Holdings Limited, a strategic
management consulting company (now a wholly-owned subsidiary of the Company
renamed Cambridge Management Consulting Holdings Limited), and serves as the
Company's Executive Vice President, Cambridge Management Consulting. Prior to
joining the Company, Mr. Baer was Chairman of Peter Chadwick Holdings Limited
from 1990 to November 1997.
Ian P. Clarkson joined the Company in November 1997 in connection with the
Company's combination with Peter Chadwick Holdings Limited and serves as the
Company's Executive Vice President, Cambridge Management Consulting. Prior to
joining the Company, Mr. Clarkson was Chief Executive Officer of Peter
Chadwick Holdings Limited from 1987 to 1997.
Ralph T. Linsalata joined the Company in December 1999 as its Executive Vice
President, NEWCO Investments. Before joining the Company, Mr. Linsalata served
as a senior vice president of Hill Holiday Advertising, Inc., holding
positions as a Strategic Consultant and Managing Director of that company's
interactive group since March 1997. From 1994 to 1997, Mr. Linsalata served as
Chief Executive Officer of Weston Corporate Development, Inc.
H. Carvel Moore joined the Company in August of 1998 in connection with the
Company's acquisition of Excell Data Corporation, a systems integration and
consulting company, and has served since March 2000 as the Company's
President, Cambridge North America and President, Excell Data Corporation.
Prior to March 2000, Mr. Moore had served as Senior Vice President, North
American Business Unit and as President of Excell Data Corporation. Prior to
joining the Company, Mr. Moore was President and Chief Operating Officer of
Excell Data Corporation from October 1997 to August 1998. From November 1996
to October 1997, Mr. Moore was Executive Vice President of Business
Development and Consulting Services of Excell Data Corporation. From March
1995 to October 1996, Mr. Moore was Vice President, Business Development of
Excell Data Corporation. From 1993 until March 1995, Mr. Moore was a Business
Unit Executive of International Business Machines.
Alan J. Friedman serves as the Company's Senior Vice President of Human
Resources, Enterprise Learning and Knowledge Management. He joined the Company
in December 1999 as Vice President of Learning and Knowledge Management and
assumed his current responsibilities in January 2000. Prior to joining the
Company, Mr. Friedman was Senior Vice President of Human Resources for Arthur
D. Little, Inc.
John J. Gavin Jr. joined the Company in February 2000 as Senior Vice
President, Chief Financial Officer and Treasurer. Prior to joining the
Company, he had served in several positions at Data General Corporation,
including as Vice President and Chief Financial Officer since January 1999,
Vice President and Corporate Controller from October 1996 to January 1999, and
Vice President and Treasurer from January 1991 to October 1996.
4
<PAGE>
Joseph A. LaSala, Jr. joined the Company in March 2000 as Senior Vice
President, General Counsel and Secretary. Prior to joining the Company, he
served as Vice President, General Counsel and Secretary of Union Pacific
Resources Group Inc. since January 1996. Mr. LaSala had joined that company in
January 1995 as Assistant General Counsel.
Timothy G. Mead was elected Senior Vice President, Corporate Marketing
Worldwide, in December 1999. He joined the Company in May 1996 as Vice
President, Strategic Marketing. Prior to joining the Company, Mr. Mead served
as Vice President of Marketing at Ptech, Inc. Before joining Ptech, Inc., Mr.
Mead spent 12 years in various positions at the Cahners division of
Reed/Elsevier PLC, notably as managing director of integrated marketing
services.
Maurice Olivier joined the Company in February 2000 as its Senior Vice
President, Strategy and Corporate Development. In March 2000, he assumed
responsibility for the Company's European operations. From 1998 until joining
the Company, Mr. Olivier served as Senior Vice President and Managing
Director, Europe and Asia, for Arthur D. Little, Inc., and since 1996 he had
held the title of Senior Vice President and Managing Director, Europe, for
that company. Prior to joining Arthur D. Little, Inc., Mr. Olivier served as
Administrateur-Delegue for XEBUR S.C., a Belgian company. He is currently a
director of Delft Instruments N.V., of the Netherlands.
Warren V. Musser became a director of the Company in March 1991 and Chairman
of the Board in December 1992. Since 1953, Mr. Musser has been Chairman of the
Board and Chief Executive Officer of Safeguard Scientifics, Inc., a developer
and operator of information technology companies, particularly those
associated with the Internet. Mr. Musser is Chairman of the Board of CompuCom
Systems, Inc., and is a director of DocuCorp International, Inc. and Sanchez
Computer Associates, Inc. Mr. Musser is a trustee of Brandywine Realty Trust.
Mr. Musser serves on a variety of civic, educational and charitable boards of
directors, and serves as vice president/development, Cradle of Liberty
Council, Boy Scouts of America, vice chairman of The Eastern Technology
Council, and chairman of the Pennsylvania Partnership on Economic Education.
James I. Cash, Jr., Ph.D. became a director of the Company in September
1995. Dr. Cash has been the James E. Robison Professor of Business
Administration at the Graduate School of Business Administration at Harvard
University since 1988. From 1992 until 1995, Dr. Cash served as the Chairman
of the Harvard University MBA Program. Dr. Cash is also a director of Knight-
Ridder, Inc., State Street Boston Corporation, The Chubb Corporation, WinStar
Communications, Inc., and General Electric Corporation.
Robert E. Keith, Jr. became a director of the Company in March 1991. Mr.
Keith has been a Managing Director since December 1991 and a General Partner
since 1995 of Technology Leaders Management L.P., a venture capital fund, and
a Managing Director and General Partner of Technology Leaders Management II
L.P., a venture capital fund, since December 1994. From July 1991 until
February 1996, Mr. Keith was President and Chief Operating Officer of
Technology Leaders Management, Inc. and since February 1996 he has been
President and Chief Executive Officer. Mr. Keith is also Vice Chairman of the
Board of Safeguard Scientifics, Inc. and a director of Sun Source, Inc.
John W. Poduska, Sr., Ph.D. became a director of the Company in September
1992. Dr. Poduska has been the Chairman of Advanced Visual Systems, Inc., a
provider of visualization software, since January 1992. From December 1989
until December 1991, Dr. Poduska was President and Chief Executive Officer of
Stardent Computer, Inc., a computer manufacturer. From December 1985 until
December 1989, Dr. Poduska was founder, Chairman and Chief Executive Officer
of Stellar Computer, Inc., a computer manufacturer and the predecessor of
Stardent Computer, Inc. Prior to founding Stellar Computer, Inc., Dr. Poduska
founded Apollo Computer Inc. and Prime Computer Inc. Dr. Poduska is also a
director of Union Pacific Resources Group Inc., Safeguard Scientifics, Inc.
and eMerge Interactive, Inc.
James D. Robinson III became a director of the Company in December 1995. Mr.
Robinson is co-founder, Chairman and Chief Executive Officer of RRE Investors,
LLC, a private information technology venture investment firm, and Chairman of
Violy Byorum & Partners Holdings, LLC, a private firm specializing in
5
<PAGE>
financial advisory and investment banking activities in Latin America. He is
Chairman, Chief Executive Officer and sole shareholder of J.D. Robinson
Incorporated, a strategic consulting company. He previously served as Chairman
and Chief Executive Officer of American Express Company, a financial services
company, from 1977 to 1993. Mr. Robinson is a director of Bristol-Myers Squibb
Company, The Coca-Cola Company, First Data Corporation, Concur Technologies,
Inc., InfiCorp Holdings, Inc., The Interactive Connection and Ibero-American
Media Partners. Mr. Robinson is a limited partner and advisor to International
Equity Partners. Mr. Robinson is a member of the Business Council and the
Council on Foreign Relations. He is Honorary Co-Chairman of Memorial Sloan-
Kettering Cancer Center, an honorary trustee of the Brookings Institution, and
Chairman Emeritus of the World Travel and Tourism Council. Mr. Robinson served
as Co-Chairman of the Business Roundtable and as Chairman of the Advisory
Committee on Trade Policy and Negotiations.
Board Committees and Meetings
The Board of Directors of the Company held eight meetings during 1999. The
Management Resource Committee, of which Mr. Musser and Dr. Poduska are the
current members, reviews and recommends the compensation arrangements for
senior management of the Company, including salaries, bonuses, and grants of
options to purchase shares under the Company's stock option plans. The
Management Resource Committee also administers the Company's stock ownership
programs. The Management Resource Committee held four meetings during 1999.
The Executive Committee, of which Messrs. Messman, Musser and Keith are
members, has the authority to perform functions on behalf of the full Board of
Directors between meetings, except those functions that are required by law to
be performed by the full Board of Directors. The Executive Committee held no
meetings during 1999. The Audit Committee, of which Mr. Keith and Dr. Cash are
members, recommends to the Company the firm to be appointed as independent
accountants to audit the Company's financial statements, discusses the scope
and results of the audit with the independent accountants, and reviews with
management and the independent accountants the Company's interim and year-end
financial and operating results. The Audit Committee also considers the
adequacy of the internal accounting controls and audit procedures of the
Company and reviews the non-audit services to be performed by the independent
accountants. The Audit Committee and the Board of Directors of the Company
each adopted the Audit Committee's current charter on March 21, 2000. The
Audit Committee held five meetings during 1999. The Nominating Committee, of
which Mr. Robinson is the sole member, reviews and makes recommendations
regarding candidates for service on the Company's Board of Directors. The
Nominating Committee will consider nominees recommended by stockholders and
the Board of Directors. Any such recommendations should be submitted in
writing to the Secretary of the Company at the Company's principal executive
offices in accordance with the nominating procedures set forth in the
Company's Amended and Restated By-Laws. The Nominating Committee held no
meetings during 1999. During 1999, each director attended at least 75% of the
aggregate of (i) the total number of meetings of the Board of Directors and
(ii) the total number of meetings held by all committees of the Board on which
such director served.
6
<PAGE>
Stock Ownership of Directors and Executive Officers
The following table sets forth certain information as of March 31, 2000 with
respect to beneficial ownership of shares of the Company's Common Stock by all
directors and all executive officers named in the Summary Compensation Table
set forth below under "Compensation and Other Information Concerning Executive
Officers and Directors--Executive Compensation" individually, and by all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Beneficial Owner Ownership (1) Class (2)
---------------- ------------- ----------
<S> <C> <C>
Jack L. Messman(3)................................... 379,874 *
Gerard Van Kemmel(4)................................. 154,941 *
Ian P. Clarkson(5)................................... 218,549 *
Quentin J.F. Baer(6)................................. 263,561 *
H. Carvel Moore(7)................................... 110,279 *
Warren V. Musser(8).................................. 445,566 *
James I. Cash, Jr., Ph.D.(9)......................... 129,749 *
Robert E. Keith, Jr.(10)............................. 119,516 *
John W. Poduska, Sr., Ph.D.(11)...................... 231,249 *
James D. Robinson III(12)............................ 112,349 *
All directors and executive officers as a group (16
persons)(13)........................................ 2,178,776 3.4
</TABLE>
- --------
* Less than one percent.
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares. The shares shown include
shares issuable pursuant to options held by the named person that may be
exercised within 60 days of March 31, 2000.
(2) Percentages of ownership are based upon 62,809,904 shares of Common Stock
issued and outstanding as of March 31, 2000. Shares of Common Stock that
may be acquired pursuant to options that are exercisable within 60 days
of March 31, 2000 are deemed outstanding for computing the percentage
ownership of the person holding such options, but are not deemed
outstanding for the percentage ownership of any other person.
(3) Includes 300,000 shares of restricted stock and 74,374 shares issuable
pursuant to stock options which are exercisable within 60 days of March
31, 2000.
(4) Includes 83,566 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
(5) Includes 47,916 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
(6) Includes 47,916 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
(7) Includes 68,765 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
(8) Includes 23,749 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000. Does not include 9,997,389
shares beneficially owned by Safeguard Scientifics, Inc. Mr. Musser
disclaims beneficial ownership of the shares beneficially owned by
Safeguard Scientifics, Inc.
(9) Includes 1,000 shares held in a Uniform Gifts to Minors Act account for a
minor child and 128,749 shares issuable pursuant to stock options which
are exercisable within 60 days of March 31, 2000.
(10) Includes 23,749 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
(11) Includes 158,749 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
(12) Includes 98,749 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
(13) Includes 769,425 shares issuable pursuant to stock options which are
exercisable within 60 days of March 31, 2000.
7
<PAGE>
Certain Relationships and Related Transactions
Jack L. Messman is a Director of Tandy Corporation, which in 1999 paid the
Company approximately $3,122,000 for consulting services.
In June 1992, the Company entered into a lease for its former Vassar Street,
Cambridge, Massachusetts facility. Payments by the Company under this lease
for 1999 were approximately $833,000. The approximate minimum payments due
from the Company under this lease for 2000 are $854,193. These payments
include base rent charges, a management fee equal to one percent of base rent
and a monthly parking charge. Annual increases in base rent under the lease
are based on increases in the Consumer Price Index--Urban Wage Earners and
Clerical Workers, U.S. City Average, All Items. The Company is also
responsible for all operating expenses, real estate taxes and utility charges,
and most insurance and maintenance obligations for the leased premises. The
leased premises include approximately 62,000 square feet of rentable floor
space. The lease term is for an initial term of fifteen years, with two
options to extend for periods of five years each. In June 1999, the Company
vacated this facility and subleased its space to the Massachusetts Institute
of Technology for a term ending in August 2007 at a current annual rental rate
of $1,137,124 plus annual real estate tax payments of $208,975. This facility
is owned by a trust of which Mr. Musser, a director of the Company, is the
sole beneficiary. The Company's Board of Directors believes the lease terms
are no less favorable to the Company than could be obtained by the Company
from an unrelated third party.
During 1999, the Company received consulting services from J.D. Robinson
Incorporated. The Company paid $151,700 for these services. Mr. Robinson, a
director of the Company, is Chairman and Chief Executive Officer and the sole
shareholder of J.D. Robinson Incorporated.
On November 13, 1998, the Company made a loan to Mr. Moore, an executive
officer of the Company, in the amount of $220,000. The loan agreement has
since been amended to extend the term and increase the interest rate. The
interest rate on the loan is 5.32% per annum. The full amount of the loan and
accrued interest thereon are due and payable on October 31, 2000.
On November 2, 1998, the Company made a loan to Mr. Theo Schnitfink, a
former executive officer and current employee of the Company, in the amount of
200,000 Netherlands Guilders. The interest rate on the loan was 5.06% per
annum. On December 21, 1998, the Company made an additional loan to Mr.
Schnitfink in the amount of 400,000 Netherlands Guilders. The full amount of
such loans and accrued interest thereon have not been repaid. On February 24,
2000, the Company made a loan to Mr. Schnitfink in the amount of $1,000,000,
secured by certain real estate, shares of Company securities and life
insurance proceeds. The interest rate on the loan is prime plus 1% per annum.
The loan and accrued interest thereon are due February 24, 2002 or the
termination of Mr. Schnitfink's employment with the Company, if earlier.
On December 31, 1998, the Company made a loan to Mr. Arthur Toscanini, a
former executive officer of the Company, in the amount of $400,000. The
interest rate on the loan was 5.06% per annum. The full amount of the loan and
accrued interest thereon was repaid to the Company in February 1999.
8
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The table below shows compensation information with respect to services
rendered to the Company in all capacities during the years ended December 31,
1999, 1998 and 1997 for the Chief Executive Officer, the former Chief
Executive Officer and the four other most highly compensated executive
officers of the Company in 1999 (with the current and former Chief Executive
Officers, collectively the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation(1) Compensation(2)
--------------------- ------------------------
Restricted Securities
Name and Principal Fiscal Stock Underlying All Other
Position Year Salary($) Bonus($)(3) Awards($) Options(#) Compensation
------------------ ------ --------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jack L. Messman......... 1999 $270,833 $500,000 $4,328,400(4) 1,300,000 $67,684(5)
President and Chief
Executive Officer
Gerard Van Kemmel(6).... 1999 550,000 412,500 -- 75,000 47,553(7)
Executive Vice 1998 310,306 202,102 -- 11,595(8) --
President and
Chief Operating Officer 1997 29,150 7,280 -- 11,595(9) --
Quentin J.F. Baer(10)... 1999 420,000 273,000 -- 100,000 86,850(11)
Executive Vice 1998 382,250 166,279 -- 50,000 110,078(11)
President,
Cambridge Management 1997 36,724 196,539 -- 50,000(8) 6,244(11)
Consulting
50,000(9)
Ian P. Clarkson(12)..... 1999 420,000 273,000 -- 100,000 73,769(13)
Executive Vice 1998 382,250 166,279 -- 50,000 100,127(13)
President,
Cambridge Management 1997 36,724 196,539 -- 50,000(8) 6,244(13)
Consulting
50,000(9)
H. Carvel Moore......... 1999 321,229 207,000 -- 130,000 13,200(14)
President, Cambridge 1998 86,154 -- -- 130,043 --
North America;
President, Excell Data
Corporation
James K. Sims........... 1999 421,667 -- -- -- 276,573(15)
Former Chief Executive 1998 575,000 -- -- 449,141 74,485(15)
Officer and President 1997 500,000 -- -- 325,000 10,295(15)
250,000(16)
</TABLE>
- --------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits was less than the lower of
$50,000 or 10% of the total of annual salary and bonus for the Named
Officer for such year.
(2) The Company did not make any restricted stock awards during 1998 or 1997.
The Company did not grant any stock appreciation rights or make any long-
term incentive plan payouts during 1999, 1998 or 1997.
(3) In 1997, executive officers of the Company, with the support of the
Management Resource Committee, elected to waive their individual bonuses
in order to increase the bonus pool available to other employees of the
Company. In 1997, Messrs. Van Kemmel, Baer and Clarkson received cash
bonuses pursuant to a bonus plan administered by Peter Chadwick Holdings
Limited, a corporation which became a wholly owned subsidiary of the
Company in November 1997.
(4) On August 27, 1999, the Board of the Directors of the Company awarded Mr.
Messman 300,000 shares of restricted stock of the Company. The closing
price of the Company's common stock on that date was $14.438, and Mr.
Messman was required to pay the Company the par value of the shares, $.01
per share. The Company's right to repurchase the shares of restricted
stock expires as follows: (i) 33.33% on December 31, 2000, (ii) 33.33% on
the earlier to occur of either July 31, 2002 or the first date on which
the closing price of the Company's common stock equals or exceeds
$28.876, and (iii) 33.33% on the
9
<PAGE>
earlier to occur of either January 31, 2003 or the first date on which the
closing price of the Company's common stock equals or exceeds $36.095.
Dividends would be paid on the restricted stock in the event that
dividends are paid on common stock. On December 31, 1999, without applying
any discount due to the restricted nature of these shares, the shares of
restricted stock had an aggregate market value of $6,975,000, based on the
last reported sale price of the Company's Common Stock on the Nasdaq
National Market ($26.25 per share) on such date. Mr. Messman holds no
other shares of restricted stock.
(5) All other compensation includes (a) Company contributions to a 401(k)
plan of $3,200 in 1999 and (b) premiums paid by the Company for life
insurance of $64,484 in 1999.
(6) Mr. Van Kemmel became an employee of the Company on November 24, 1997 and
an executive officer of the Company on June 8, 1998. Salary and bonus
amount presented for 1997 represent compensation paid by the company to
Mr. Van Kemmel during the period from November 24, 1997 to December 31,
1997.
(7) All other compensation includes (a) Company contributions to a 401(k)
plan of $3,200 in 1999 and (b) premiums paid by the Company for life
insurance of $44,353 in 1999.
(8) In October 1998, in order to re-establish the incentive nature of
outstanding stock options with exercise prices greater than the then
current fair market value of the Company's Common Stock, the Company
offered to holders of outstanding stock options granted on or after April
24, 1997 the opportunity to exchange those options for options covering
an equivalent number of shares with an exercise price equal to the then
current fair market value of the Company's Common Stock (the "October
1998 Option Grants"). These options were granted in connection with the
October 1998 Option Grants, in exchange for an equivalent number of
previously outstanding stock options. October 1998 Option Grants are
subject to restrictions on exercisability.
(9) These options were cancelled in connection with the October 1998 Option
Grants.
(10) Mr. Baer became an employee and executive officer of the Company on
November 24, 1997. Salary amounts presented for 1997 represent
compensation paid by the Company to Mr. Baer during the period from
November 24, 1997 to December 31, 1997. Bonus amounts presented for 1997
represent bonus compensation paid by the Company to Mr. Baer for bonus
amounts earned during the second half of 1997.
(11) All other compensation includes (a) Company contributions to a defined
contribution retirement plan for the benefit of Mr. Baer of $26,881,
$53,516 and $6,244 in 1999, 1998 and 1997, respectively, and (b) premiums
paid by the Company for life insurance of $59,969 and $57,562 in 1999 and
1998, respectively. Mr. Baer has collaterally assigned this life
insurance policy to the Company to secure the repayment to the Company of
up to the entire amount of the premiums paid by the Company pursuant to
this policy.
(12) Mr. Clarkson became an employee and executive officer of the Company on
November 24, 1997. Salary amounts presented for 1997 represent
compensation paid by the Company to Mr. Clarkson during the period from
November 24, 1997 to December 31, 1997. Bonus amounts presented for 1997
represent bonus compensation paid by the Company to Mr. Clarkson for
bonus amounts earned during the second half of 1997.
(13) All other compensation includes (a) Company contributions to a defined
contribution retirement plan for the benefit of Mr. Clarkson of $24,701,
$53,516 and $6,244 in 1999, 1998 and 1997, respectively, and (b) premiums
paid by the Company for life insurance of $49,068 and $46,611 in 1999 and
1998, respectively. Mr. Clarkson has collaterally assigned this life
insurance policy to the Company to secure the repayment to the Company of
up to the entire amount of the premiums paid by the Company pursuant to
this policy.
(14) All other compensation includes (a) Company contributions to a 401(k)
plan of $3,200 in 1999 and (b) premiums paid by the Company for life
insurance of $10,000 in 1999.
(15) All other compensation includes (a) Company contribution to 401(k) plan
of $3,200, $5,000 and $4,750 in 1999, 1998 and 1997, respectively, (b)
premiums paid by the Company for supplemental disability insurance of
$6,980 and $5,545 in 1998 and 1997, respectively, (c) premiums paid by
the Company for life insurance of $62,541 and $62,502 in 1999 and 1998,
respectively (Mr. Sims collaterally assigned this life insurance policy
to the Company to secure the repayment to the Company of up to the entire
amount of the premiums paid by the Company pursuant to this policy), and
(d) $210,833 of severance payments in connection with the replacement of
Mr. Sims as President and Chief Executive Officer.
(16) In accordance with the rules of the Securities and Exchange Commission,
option grants shown in the Summary Compensation Table below in the column
"Long Term Compensation--Options" for 1998 include both the total number
of stock options granted in 1998 and the number of stock options issued
in the October 1998 Option Grants. Option grants shown in this column for
1997 include both the total number of stock options granted in 1997 and
the number of stock options issued on April 24, 1997 (the "April 1997
Option Grants") in exchange for outstanding options granted prior to
1997. These options were granted in connection with the April 1997 Option
Grants, in exchange for an equivalent number of previously outstanding
stock options. The vesting schedule for these options was re-started
based on the April 24, 1997 grant date.
10
<PAGE>
Employment and Severance Agreements
Mr. Messman's employment with the Company is governed by an employment
agreement providing for a one-year employment term that automatically extends
for successive one-year terms unless terminated by either party 30 days before
the next anniversary. If the Company removes Mr. Messman from his current
position, other than for just cause (as defined in Mr. Messman's employment
agreement), or if a change in control of the Company occurs and Mr. Messman is
not offered comparable employment, then Mr. Messman is entitled to continued
employment as an advisor to the Company for two years, during which time he
would continue to receive his base salary, a bonus based on the average of
prior bonuses, and other employee benefits. Mr. Messman's stock option
agreements and restricted stock award agreement also provide for immediate
vesting of all unvested shares in the event of a change in control of the
Company, Mr. Messman's resignation or the Company's termination of his
employment without just cause.
Mr. Van Kemmel's employment with the Company is governed by an employment
agreement providing for three months' notice prior to termination of
employment (except termination for cause) by either the Company or Mr. Van
Kemmel. If the Company terminates Mr. Van Kemmel's employment without cause,
in addition to the three-month notice period or salary and benefits in lieu of
three month's prior notice, Mr. Van Kemmel shall receive continued salary and
benefits (including stock option vesting and exercisability) for nine months
from the date of termination.
If the Company terminates Mr. Baer's or Mr. Clarkson's employment on less
than six months' notice (other than for certain reasons specified in their
respective agreements with the Company), Mr. Baer or Mr. Clarkson, as the case
may be, is entitled to receive payments of up to the amount which would have
been paid to him in respect of his base salary during the period from the date
of his termination through the date that is six months after his receipt of
the Company's termination notice, with the payments being made over the
period.
If the Company terminates Mr. Moore's employment other than for cause, he is
entitled to receive severance payments equal to his base salary and benefits
for twelve months, subject to his compliance with certain non-competition and
non-solicitation covenants.
In the event of a merger, consolidation, liquidation or sale of
substantially all of the assets of the Company, stock options granted to
executive officers generally become fully exercisable immediately prior to the
event and terminate immediately after the event.
11
<PAGE>
Option Grants in 1999
The following table shows information regarding stock options granted to the
Named Officers during the year ended December 31, 1999. The Company did not
grant any stock appreciation rights in 1999.
Stock Option Grants in 1999
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of Stock
Shares Options Price Appreciation For
Underlying Granted to Exercise Option Term(3)
Options Employees in Price Per Expiration ----------------------
Name Granted(1) Fiscal Year Share (2) Date 5% 10%
---- ---------- ------------ --------- ---------- -- -----------
<S> <C> <C> <C> <C> <C> <C>
Jack L. Messman......... 1,200,000(4)(5) 24.0% $ 14.438 (6) $6,501,142 $15,048,873
100,000(4) 23.375 (6) 877,108 2,030,333
Gerard Van Kemmel....... 250,000(4) 8.8 16.125 (6) 1,512,659 3,501,510
150,000(4) 16.1875 (6) 911,113 2,109,049
75,000(4) 23.375 (6) 657,831 1,522,750
Ian P. Clarkson......... 100,000(4) 1.8 23.375 (6) 877,108 2,030,333
Quentin J.F. Baer....... 100,000(4) 1.8 23.375 (6) 877,108 2,030,333
H. Carvel Moore......... 30,000(4) 2.4 $17.1875 (6) 193,479 447,868
100,000(4) $ 23.375 (6) 877,108 2,030,333
James K. Sims........... -- -- -- -- -- --
</TABLE>
- --------
(1) Each option becomes fully exercisable immediately prior to a merger,
consolidation, liquidation or sale of substantially all of the assets of
the Company and terminates immediately after the effective date of a
merger, consolidation, liquidation or sale. Options granted to a Named
Officer generally terminate three months after the Named Officer ceases to
be employed by the Company, except in cases of death or disability.
(2) The exercise price per share of each option was determined by the
Management Resource Committee to be equal to the fair market value per
share of Common Stock on the date of grant.
(3) These amounts represent hypothetical gains that could be achieved for the
respective options if each portion of the option were exercised just prior
to its expiration. These gains are based on assumed rates of appreciation
of 5% and 10% compounded annually from the date the respective options
were granted to their expiration dates. The gains shown are net of the
option exercise price, but do not include deductions for taxes or other
expenses associated with the exercise of the options or sale of the
underlying shares. The actual gains, if any, on the stock option exercises
will depend on the future performance of the Common Stock, the
optionholder's continued employment through the option period, the date on
which the options are exercised, and the date on which the underlying
shares of Common Stock are sold.
(4) This option becomes vested and exercisable with respect to 25% of the
shares of Common Stock subject to the option on the first anniversary of
the date of grant, and an additional 2.083% of the shares subject to the
option become vested and exercisable as of each succeeding calendar month,
so that the option becomes exercisable in full on the fourth anniversary
of the date of grant.
(5) In addition, 300,000 of any remaining unvested Option shares will vest
immediately if the closing price of the Company's common stock on the
Nasdaq Stock Market equals or exceeds $28.876, and an additional 300,000
of any remaining unvested Option shares will vest immediately if the
closing price of the Company's common stock on the Nasdaq Stock Market
equals or exceeds $36.095.
(6) This option will expire with respect to 25% of the shares subject to the
option on each of the fifth, sixth, seventh and eighth anniversaries of
the date of grant, with expiration to apply to shares subject to the
option in the order in which they vest.
12
<PAGE>
Option Exercises and Year-End Values
The following table provides information regarding stock option exercises by
the Named Officers and the number and value of the Named Officers' unexercised
options at December 31, 1999.
Aggregated Option Exercises During 1999 and
Option Values at December 31, 1999
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Unexercised Options In-The-Money Options
Acquired at Fiscal Year-End at Fiscal Year-End(2)
on Value ------------------------- -------------------------
Name Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jack L. Messman......... 0 $ 0 72,291 1,308,334 $1,226,158 $14,473,152
Gerard Van Kemmel....... 0 0 74,547 487,048 638,830 4,023,066
Ian P. Clarkson......... 0 0 37,500 162,500 315,625 696,875
Quentin J.F. Baer....... 0 0 37,500 162,500 315,625 696,875
H. Carvel Moore......... 7,500 63,375 48,445 204,098 380,294 1,159,814
James K. Sims........... 428,149 2,981,421 963,657 533,336 6,404,195 2,846,891
</TABLE>
- --------
(1) Value realized is calculated as the difference between the fair market
value of the underlying securities at the exercise date of the options and
the aggregate exercise price. Actual gains on stock option exercises
depend on the value of the underlying securities on the date such
securities are actually sold.
(2) Value is based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on December 31, 1999
($26.25 per share, the last reported sale price of the Company's Common
Stock on the Nasdaq National Market on December 31, 1999) multiplied by
the number of shares underlying the option. The actual gains, if any, on
stock option exercises will depend on the future performance of the Common
Stock, the optionholder's continued employment through the option period,
the date on which the options are exercised, and the date on which the
underlying shares of Common Stock are sold.
Compensation of Directors
Directors receive no cash compensation for their services as directors,
except for reimbursement of expenses incurred in connection with attending
meetings of the Board of Directors and its committees. The Company's non-
employee directors are entitled to participate in the Company's 1995 Non-
Employee Director Stock Option Plan (the "Director Plan"). See "--Non-Employee
Director Stock Options."
Non-Employee Director Stock Options
Non-employee directors of the Company are eligible to participate in the
Company's Director Plan. The Director Plan authorizes the grant of options for
a maximum of 150,000 shares of Common Stock. The number of shares of Common
Stock issuable under the Director Plan or subject to outstanding options is
subject to adjustment for changes in the Company's Common Stock. Each non-
employee director who also is not an employee or officer of Safeguard
Scientifics, Inc. or any related entity automatically receives an option for
30,000 shares of Common Stock upon the date such person is first elected to
the Board of Directors. Twenty-five percent (25%) of each option vests one
year after the date of grant and an additional 2.083% vests monthly
thereafter.
The exercise price per share of options granted under the Director Plan is
100% of the fair market value of the Company's Common Stock on the date the
option is granted. Options expire on the tenth anniversary of the date of the
option grant. Options may not be assigned or transferred except by will or by
the laws of descent or distribution and are exercisable only while the
optionee is serving as a director of the Company or within 90 days after the
optionee ceases to serve as a director of the Company (except that if a
director dies or becomes disabled while serving as a director of the Company,
all options granted under the Director Plan become immediately exercisable and
may be exercised at any time prior to the scheduled expiration date of the
option).
13
<PAGE>
On December 14, 1999, each non-employee director received an option for
10,000 shares of Common Stock pursuant to the Company's 1991 Stock Option Plan
at an exercise price equal to the fair market value of the Company's Common
Stock on such date. These options were immediately exercisable and expire on
December 14, 2003.
Compensation Committee Interlocks and Insider Participation
During 1999, John W. Poduska, Sr. and Warren V. Musser served on the
Management Resource Committee of the Board of Directors, which is responsible
for setting and administering the policies that govern executive compensation
and the stock ownership programs of the Company within guidelines and plans
approved by the Board of Directors. Mr. Musser is a director and officer of
Safeguard Scientifics, Inc. Mr. Poduska is a director of Safeguard
Scientifics, Inc. Mr. Messman, President of the Company, is also a Director of
Safeguard Scientifics, Inc. In this capacity, he is in a position to influence
the compensation of officers and directors of Safeguard Scientifics, Inc.
In June 1992, the Company entered into a lease for its former Vassar Street,
Cambridge, Massachusetts facility. In June 1999 the Company vacated this
facility and subleased its space to the Massachusetts Institute of Technology.
This facility is owned by a trust of which Mr. Musser, a director of the
Company, is the sole beneficiary. See "Certain Relationships and Related
Transactions."
14
<PAGE>
Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock for the period from
December 31, 1994 through December 31, 1999, with the cumulative total return
for the Nasdaq Market Index, a set of peer issuers engaged in the business of
information technology professional services, and an SIC Code Index that
includes organizations in the Company's Standard Industrial Classification
(SIC) code number 7373-Computer Integrated System Design. The comparison
assumes $100 was invested on December 31, 1994 in the Company's Common Stock
and in each of the foregoing indices and assumes reinvestment of dividends, if
any. The Company has included a peer issuer index(/1/) (the "Peer Index") in
this performance graph in addition to the SIC Code 7373 index that the Company
has presented in prior years. Because the SIC Code 7373 index contains a large
number of companies that do not provide information technology professional
services, the Company believes that comparison to these companies is less
meaningful than comparison to the companies in the Peer Index.
[GRAPH]
[PLOT POINTS TO COME]
(1) The companies in the Peer Index are the Company, American Management
Systems, AnswerThink Consulting, AppNet Inc., Braun Consulting Inc.,
Breakaway Solutions, Inc., Ciber, Inc., Cognizant Tech Solutions Corp.,
Complete Business Solutions, Computer Sciences Corp., Cysive, Inc., Diamond
Technology Partners, Inc., Electronic Data Systems, Igate Capital
Corporation, IMRGlobal Corporation, IXL Enterprises, Inc., Keane, Inc.,
Management Network Group, MarchFirst, Inc., Metamor Worldwide, Inc., Modem
Media, Poppe Tyson, Modis Professional Services, Perot Systems Corp.,
Predictive Systems, Inc., Proxicom, Inc., Rare Medium Group, Inc.,
Razorfish, Inc., Sapient Corporation, Scient Corporation, Syntel, Inc.,
Tanning Technology Corp., US Interactive, Inc., and Viant, Inc.
15
<PAGE>
REPORT OF MANAGEMENT RESOURCE COMMITTEE ON EXECUTIVE COMPENSATION
General
The Management Resource Committee is responsible for setting and
administering the policies that govern executive compensation and the stock
ownership programs of the Company within guidelines and plans approved by the
Board of Directors.
Compensation Philosophy and Review
The Company's executive compensation philosophy is to design a compensation
program that enables the Company to attract, retain and motivate high quality
executive officers capable of maximizing stockholder value. The current
compensation program includes three components: base salary, performance-based
cash bonus, and equity incentives. This program rewards executive officers for
long-term strategic management and enhancement of stockholder value by
providing an opportunity to acquire equity ownership in the Company,
emphasizing both annual and long-term performance, and supporting a
performance-based environment to promote a team-oriented focus for executive
officers. The Management Resource Committee based its recommendations for 1999
in part on its review of compensation survey information compiled by
management consulting firms concerning base salary, total cash compensation
(base salary and annual incentives) and total direct compensation (total cash
plus long-term incentives) for the highest paid officers at selected
companies, including service companies with revenues between $750 million and
$1.5 billion.
Annual Base Salary
Base salaries for executive officers are targeted at competitive market
levels for their respective positions, levels of responsibility, and
experience. When Mr. Messman agreed to serve as the Company's President and
Chief Executive Officer in August 1999, his initial base salary was $650,000
per annum. In July 1999, when Mr. Van Kemmel was promoted to Executive Vice
President and Chief Operating Officer, his initial base salary was $400,000
per annum. In 1999, the Management Resource Committee approved the following
other base salaries for 1999: Mr. Baer, $420,000; Mr. Clarkson, $420,000; and
Mr. Moore, $280,000.
Executive Bonus Plan
An executive cash bonus plan was established in 1991 and is reviewed and
updated annually. In December 1997, the Management Resource Committee set the
terms for the 1998 Executive Bonus Plan (the "Plan"), which excluded Messrs.
Baer, Clarkson and Van Kemmel. This Plan established a target for pre-tax
income for 1999 and a cash bonus pool for executive officers based on
achieving target levels. The percentage of the bonus pool available to
executive officers for 1999 depended on the extent to which the pre-tax income
target for 1999 was met. If 1999 pre-tax income equaled or exceeded the
target, 100% of the bonus pool would be available for bonuses; if 1999 pre-tax
income was less than the target but greater than 1998 pre-tax income, a pro-
rated portion of the bonus pool would be made available. No bonuses would be
payable if 1999 pre-tax income was less than the 1998 level. The Management
Resource Committee determined, in light of the failure to meet established
criteria in 1999, that no cash bonuses would be paid under the Plan in 1999.
The Management Resource Committee awarded cash bonuses to certain executive
officers for individual performance achievements in 1999, based on the
committee's subjective determination in each case that the bonus was merited.
Equity Incentives
The Management Resource Committee believes that equity compensation aligns
employees' long-term objectives with those of stockholders in striving to
maximize the Company's value. The Company's 1991 Stock Option Plan provides
all employees with the opportunity to receive stock options. These options
typically vest ratably over a four year period. Each executive officer was
granted stock options at the time of hiring and periodically thereafter,
including option grants during 1999.
16
<PAGE>
Other Compensation Plans
The Company has various broad-based employee benefit plans, including
401(k), insurance and other benefit plans for its employees. The Company
offers the 1994 Employee Stock Purchase Plan pursuant to the provisions of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"),
under which employees may purchase up to 3,000 shares of Common Stock annually
at a discount to market price; provided that no employee is allowed to
purchase more than $25,000 of fair market value of such stock in any calendar
year.
Compensation of the Chief Executive Officer
Mr. Messman negotiated the terms of his compensation when he agreed to serve
as the Company's President and Chief Executive Officer in August 1999. The
Board of Directors agreed to the initial compensation terms of Mr. Messman's
employment in recognition of the value of his prior experience, achievements
and existing knowledge of the Company. A significant component of Mr.
Messman's compensation, particularly the stock option and restricted stock
awards he received in August 1999, was also calculated to compensate Mr.
Messman for unvested equity compensation that he was entitled to receive from
his previous employer but would forfeit by accepting employment with the
Company. Mr. Messman's initial base salary is $650,000 per annum. Pursuant to
his employment agreement with the Company, Mr. Messman is entitled to an
annual performance-based cash incentive bonus. At the discretion of the Board
of Directors, Mr. Messman may receive an annual bonus equal to 100% of his
base salary for above average performance and up to 200% of his annual base
salary for exceptional performance. In December 1999, the Board of Directors
awarded Mr. Messman a bonus of $500,000.
In connection with his agreement to accept employment with the Company, Mr.
Messman received an award of 300,000 shares of restricted common stock, for
which Mr. Messman is required to pay par value. These shares vest over three
years, with accelerated vesting if the closing price of the Company's common
stock reaches certain targeted levels. (Vesting terminates the Company's right
to repurchase the shares.) Mr. Messman also received an award of stock options
to purchase 1,200,000 shares of the Company's common stock. These options vest
over four years, with accelerated vesting if the closing price of the
Company's common stock reaches certain targeted levels. In December 1999, in
recognition of Mr. Messman's contribution and efforts to date, the Management
Resource Committee awarded Mr. Messman an option to purchase 100,000 shares of
the Company's common stock.
Mr. Sims, who was replaced as President and Chief Executive Officer of the
Company in August 1999, received no stock option grants or cash bonus awards
in 1999.
Deductibility of Executive Compensation Expenses
In general, under Section 162(m) of the Code, the Company cannot deduct, for
federal income tax purposes, compensation in excess of $1,000,000 paid to any
Named Officer, except to the extent such excess constitutes performance-based
compensation. The policy of the Company is to qualify future compensation
arrangements to ensure deductibility, except in those limited cases where
stockholder value is maximized by an alternate approach.
The Management Resource Committee
John W. Poduska, Sr., Ph.D.
Warren V. Musser
17
<PAGE>
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 holders of more than 10% of the Company's
Common Stock to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common Stock of
the Company. These individuals are required by regulations of the Securities
and Exchange Commission to furnish the Company with copies of all such
filings. Based on its review of the copies of such filings received by it with
respect to the fiscal year ended December 31, 1999, the Company believes that
all required persons complied with all Section 16(a) filing requirements with
respect to the fiscal year ended December 31, 1999, except that each of Arthur
Toscanini, Malcolm Frank and James Sims (all former executive officers of the
Company) and James Cash (a Director of the Company) did not report one
transaction on a timely basis and filed a late report with respect to such
transaction.
INDEPENDENT AUDITORS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP,
independent accountants, to serve as auditors for the fiscal year ending
December 31, 2000. PricewaterhouseCoopers LLP has served as the Company's
auditors and outside accountants since 1991. It is expected that a member of
the firm will be present at the Annual Meeting of Stockholders with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions. Ratification of the selection of auditors is not
required under the laws of the State of Delaware.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting
of the Company must be received at the Company's principal executive offices
no later than December 26, 2000. The Company's By-laws provide that any
proposal, to be eligible for consideration at the next annual meeting of the
Company, must be received at the Company's principal executive offices not
later than the close of business on March 26, 2001 nor earlier than the close
of business on February 23, 2001. The proposal must also comply with the other
procedural requirements set forth in the Company's By-Laws, a copy of which is
on file with the Securities and Exchange Commission. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail--Return
Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Company may
also be made of some stockholders in person or by mail, telephone, facsimile
transmission or other means of electronic transmission following the original
solicitation. The Company may retain a proxy solicitation firm to assist in
the solicitation of proxies in connection with the Annual Meeting. If the
Company retains a proxy solicitation firm, it will pay that firm customary
fees, expected to be approximately $10,000, plus expenses.
18
<PAGE>
CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
Proxy For Annual Meeting of Stockholders
May 24, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jack L. Messman, John J. Gavin, Jr. and
Joseph A. LaSala, Jr., and each of them acting singly, proxies, with full power
of substitution, to vote all shares of stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Cambridge Technology Partners (Massachusetts), Inc. to be held on May 24,
2000, at 10:00 A.M., at the Company's headquaters, Eight Cambridge Center,
Cambridge, Massachusetts 02142, and at any adjournment thereof, upon matters set
forth in the Notice of Annual Meeting of Stockholders and Proxy Statement dated
April 24, 2000, a copy of which has been received by the undersigned. the
proxies are further authorized to vote, in their judgment and discretion, upon
such other business as may properly come before the meeting or any adjournment
thereof and with respect to which the proxies are entitled to exercise
discretion under applicable law.
(Continued on the reverse side)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO
DIRECTIONS IS GIVEN, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AS DESCRIBED IN
THE PROPOSAL. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE JUDGMENT
AND DISCRETION OF THE PROXIES NAMED HEREIN WITH RESPECT TO ANY OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING, AND ANY ADJOURNMENT THEREOF, AND WITH
RESPECT TO WHICH THE PROXIES NAMED HEREIN ARE ENTITLED TO EXERCISE DISCRETION
UNDER APPLICABLE LAW.
Please Mark your votes as
indicated in this example.
[X]
To elect a Board of Directors for the ensuing year.
FOR WITHHELD Nominess: Jack L. Messman, Warren V. Musser,
[_] [_] Robert E. Keith, Jr., John W. Poduska, Sr.,
James I. Cash, Jr., James D. Robisnson III
--------------------------------------------------
FOR (expect vote withheld from above nominess(s)).
Dated: _________,2000
______________________________
___________________________
Signature of Stockholder(s)
______________________________
_____________
Print Name(s)
(If signing as attorney, executor,
trustee or guardian, please give your
full title as such. If shares are held
jointly, each bolder should sign.)
[_] Check this box if you plan on
attending the Annual Meeting of Stock
holders in person.
