<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934 (AMENDMENT NO. __ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
THOMAS GROUP, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
THOMAS GROUP, INC.
5221 N. O'CONNOR BOULEVARD
SUITE 500
IRVING, TEXAS 75039-3714
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 23, 2000
To the Holders of Common Stock of THOMAS GROUP, INC.:
Notice is hereby given that the Year 2000 Annual Meeting of Stockholders of
Thomas Group, Inc., a Delaware corporation (the "Company"), will be held at the
executive offices of the Company, 5221 N. O'Connor Boulevard, Suite 500, Irving,
Texas 75039, on Friday, June 23, 2000 at 9:00 a.m., Dallas, Texas time, for the
following purposes:
(1) To elect six persons to serve as directors until the Company's
Year 2001 Annual Meeting of Stockholders or until their successors are duly
elected and qualified; and
(2) To consider and vote upon an amendment to the 1997 Stock Option
Plan, to increase by 400,000 shares, from 350,000 to 750,000, the number of
shares of the Company's Common Stock currently available for issuance under
the 1997 Stock Option Plan; and
(3) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed May 2, 2000, at the close of business, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting and any adjournment or postponement thereof. Only
holders of record of the Company's Common Stock on that date are entitled to
vote on matters coming before the meeting and any adjournment or postponement
thereof. A complete list of stockholders entitled to vote at the meeting will be
maintained in the Company's offices at 5221 N. O'Connor Boulevard, Suite 500,
Irving, Texas 75039-3714, for 10 days prior to the meeting.
Please advise the Company's transfer agent, Harris Trust and Savings Bank,
1601 Elm Street, Suite 2320, Dallas, Texas 75201, of any change in your address.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES. IF YOU
RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT
NAMES OR AT DIFFERENT ADDRESSES, EACH SUCH PROXY CARD SHOULD BE SIGNED AND
RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED. THE PROXY CARD SHOULD
BE SIGNED BY ALL REGISTERED HOLDERS EXACTLY AS THE SHARES ARE REGISTERED. ANY
PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS
EXERCISE AND, IF PRESENT AT THE MEETING, MAY WITHDRAW IT AND VOTE IN PERSON.
By Order of the Board of Directors,
/s/ J. THOMAS WILLIAMS
J. THOMAS WILLIAMS
Chief Executive Officer
Irving, Texas
May 15, 2000
<PAGE> 3
THOMAS GROUP, INC.
5221 N. O'CONNOR BOULEVARD
SUITE 500
IRVING, TEXAS 75039-3714
------------------
PROXY STATEMENT
------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 23, 2000
The accompanying proxy, mailed together with this Proxy Statement to
stockholders on or about May 15, 2000, is solicited by Thomas Group, Inc. (the
"Company") in connection with the Annual Meeting of Stockholders to be held on
June 23, 2000 (the "Annual Meeting").
As stated in the Notice to which this Proxy Statement is attached, matters
to be acted upon at the Annual Meeting include (1) the election to the Board of
Directors of six directors to serve as directors until the Company's Year 2001
Annual Meeting of Stockholders or until their successors are duly elected and
qualified, (2) an amendment to the 1997 Stock Option Plan (the "1997 Plan"), to
increase by 400,000 shares, from 350,000 to 750,000, the number of shares of the
Company's Common Stock currently available for issuance under the 1997 Plan, and
(3) the transaction of such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
All holders of record of shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), at the close of business on May 2, 2000
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
On the Record Date, the Company had outstanding 4,683,596 shares of Common
Stock. Each share of Common Stock is entitled to one vote. The presence, in
person or by proxy, of holders of a majority of the outstanding shares of Common
Stock entitled to vote as of the Record Date is necessary to constitute a quorum
at the Annual Meeting. A plurality of the votes of the shares present in person
or represented by proxy at the Annual Meeting, provided a quorum is present, is
required for the election of directors. All other action proposed herein may be
taken upon the affirmative vote of holders of a majority of the shares of Common
Stock represented at the Annual Meeting, provided a quorum is present in person
or by proxy.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all other proposals and
will be counted as present for purposes of the item on which the abstention is
noted. Abstentions on the proposal to amend the 1997 Plan will have the effect
of a negative vote because that proposal requires the affirmative vote of
holders of at least a majority of the issued and outstanding shares of Common
Stock. Brokers who hold shares in street name for customers and do not receive
voting instructions from such customers are entitled to vote on the election of
directors. Under applicable Delaware law, a broker non-vote resulting from the
failure to deliver voting instructions to a broker will have (i) the effect of a
negative vote on the proposal to amend the 1997 Plan and (ii) no effect on the
election of directors.
Any stockholder has the unconditional right to revoke his proxy at any time
before it is voted. Any proxy given may be revoked either by a written notice
duly signed and delivered to the Secretary of the Company prior to the exercise
of the proxy, by execution of a subsequent proxy or by voting in person at the
Annual Meeting (although attending the Annual Meeting without executing a ballot
or executing a subsequent proxy will not constitute revocation of a proxy).
Where a stockholder's duly executed proxy specifies a choice with respect to a
voting matter, the shares will be voted accordingly. If no such specification is
made, the shares will be voted (i) FOR the nominees for director identified
below and (ii) FOR the proposal to amend the 1997 Plan.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 5, 2000, by (i) each
director, nominee for director and named executive officer of the Company, (ii)
all officers and directors of the Company as a group, and (iii) all persons who
are known by the Company to be beneficial owners of 5% or more of the Company's
outstanding Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED(1) PERCENT
- ------------------------------------ --------------- -------
<S> <C> <C>
John T. Chain, Jr.(2)....................................... 80,309(4) 1.7%
J. Thomas Williams(2)....................................... 95,095(5) 2.0%
Richard A. Freytag(2)....................................... 22,101(6) 0.5%
James E. Dykes(2)........................................... 11,360(7) 0.2%
David B. Mathis(2).......................................... 10,126(8) 0.2%
Timothy G. Caffrey(3)(15)................................... 2,000 *
Annette M. Zwerner(2)....................................... 15,553(9) 0.3%
Leland L. Grubb, Jr.(2)..................................... 61,484(10) 1.3%
Ian L. T. Conn(2)........................................... 10,855(11) 0.2%
Phillip J. Lovell(2)........................................ 10,147(12) 0.2%
Roger A. Crabb(2)........................................... 2,622(13) *
All officers and directors as a group (10 persons).......... 319,652(14) 6.4%
Hollybank Investments, LP(15)............................... 765,457 14.0%
P.O. Box 190240
Miami Beach, Florida 33119
Thistle Investments, LLC(15)................................ 77,400 1.6%
P.O. Box 190240
Miami Beach, Florida 33119
Dorsey R. Gardner(15)....................................... 106,800 2.2%
P.O. Box 190240
Miami Beach, Florida 33119
Edward P. Evans............................................. 251,100 5.1%
712 Fifth Avenue
New York, New York 10019
Dimensional Fund Advisors................................... 243,700 4.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- ---------------
* Less than 0.1%
(1) Except as otherwise indicated, the persons named in the table possess sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Includes shares of Common Stock held
by spouses and minor children of such persons and corporations in which
such persons hold a controlling interest. The amounts shown in the table
include shares of Common Stock issuable upon exercise of outstanding
options exercisable within 60 days of April 5, 2000.
(2) The address of the named individuals is 5221 N. O'Connor Boulevard, Suite
500, Irving, Texas 75039-3714.
(3) The address of the named individual is Kelso Management Company, One
International Place, Suite 2401, Boston, MA 02110.
(4) Includes 11,932 shares of Common Stock issuable upon exercise of
outstanding options exercisable within 60 days of April 5, 2000.
(5) Includes 87,355 shares of Common Stock issuable upon exercise of
outstanding options exercisable within 60 days of April 5, 2000.
(6) Includes 13,827 shares of Common Stock issuable upon exercise of
outstanding options exercisable within 60 days of April 5, 2000.
2
<PAGE> 5
(7) Includes 4,854 shares of Common Stock issuable upon exercise of outstanding
options exercisable within 60 days of April 5, 2000.
(8) Includes 6,852 shares of Common Stock issuable upon exercise of outstanding
options exercisable within 60 days of April 5, 2000.
(9) Includes 15,553 shares of Common Stock issuable upon exercise of
outstanding options exercisable within 60 days of April 5, 2000.
(10) Includes 55,484 shares of Common Stock issuable upon exercise of
outstanding options exercisable within 60 days of April 5, 2000.
(11) Includes 5,372 shares of Common Stock issuable upon exercise of outstanding
options exercisable within 60 days of April 5, 2000.
(12) Includes 10,147 shares of Common Stock issuable upon exercise of
outstanding options exercisable within 60 days of April 5, 2000.
(13) Includes 2,100 shares of Common Stock issuable upon exercise of outstanding
options exercisable within 60 days of April 5, 2000.
(14) The amount shown includes a total of 213,476 shares of Common Stock
issuable upon exercise of outstanding options exercisable within 60 days of
April 5, 2000.
(15) Messrs. Gardner and Caffrey serve as general partners of Hollybank
Investments, LP and, as general partners, may be deemed to beneficially own
shares owned by such entity. Except to the extent of their interests as
limited partners in Hollybank Investments, LP, Messrs. Gardner and Caffrey
disclaim beneficial ownership of any shares owned by such entity. Messrs.
Gardner and Caffrey also serve as managing members of Thistle Investments,
LLC and, as managing members, may be deemed to beneficially own shares
owned by such entity. Except to the extent of their interests as members in
Thistle Investments, LLC, Messrs. Gardner and Caffrey disclaim beneficial
ownership of any shares owned by such entity.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors that shall
constitute the entire Board of Directors shall not be less than one and shall be
fixed from time to time exclusively by the Board of Directors. The Board of
Directors has set the number of directors at six. The six nominees for director
listed below will stand for election at this Annual Meeting for a one-year term
of office expiring at the Year 2001 Annual Meeting of Stockholders or until
their successors are duly elected and qualified.
The following table sets forth certain information as to the nominees for
directors of the Company:
<TABLE>
<CAPTION>
NAME AND AGE POSITIONS AND OFFICES WITH THE COMPANY DIRECTOR SINCE
- ------------ -------------------------------------- --------------
<S> <C> <C>
J. Thomas Williams, 53.................... President, Chief Executive Officer, 1998
Director
John T. Chain, Jr., 65.................... Chairman of the Board 1995
Richard A. Freytag, 66.................... Director 1997
James E. Dykes, 62........................ Director 1995
David B. Mathis, 62....................... Director 1998
Timothy G. Caffrey, 31.................... Director Nominee --
</TABLE>
While it is not anticipated that any of the nominees will be unable to
serve, if any nominee should decline or become unable to serve as a director for
any reason, votes will be cast instead for a substitute nominee designated by
the Board of Directors or, if none is so designated, will be cast according to
the judgment of the person or persons voting the proxy.
3
<PAGE> 6
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers of the Company serve at the will of the Board of
Directors.
J. Thomas Williams became associated with the Company in 1992 and currently
serves as President, Chief Executive Officer, and a director. Prior to joining
the Company, Mr. Williams served as the Industrial Facilities Policy Director
for the United States Navy and as Chief Financial Officer for the Long Beach
Naval Shipyards.
Annette M. Zwerner, 49, has been associated with the Company since 1994 and
currently serves as Executive Vice President and Chief Operating Officer. Prior
to joining the Company, Ms. Zwerner served from 1985 to 1994 as the marketing
and planning director for the Automotive Components Group of General Motors, a
manufacturer and distributor of automotive components.
Leland L. Grubb, Jr., 54, has been associated with the Company since April
1995 and currently serves as Vice President, Chief Financial Officer and
Treasurer, and President of the Automotive Business Unit. Prior to joining the
Company, Mr. Grubb served from January 1988 to January 1995 as Chief Financial
Officer of Detroit Diesel Corporation, a manufacturer of diesel engines and
related parts, and held senior financial positions with General Motors
Corporation from July 1968 to December 1987.
Alexander W. Young, 56, currently serves as Vice President and as the
Time-to-Market Practice Leader. Mr. Young became President and Chief Operating
Officer of the Company in January 1991 and served in that role until March 1998.
Mr. Young was elected as a director of the Company in October 1991 and retired
from the Board in 1999. Mr. Young served as the Company's Vice President for
Training and Product Development from 1989 to 1991. Mr. Young served as
Executive Vice President, General Manager, and a director of Zymos Company, a
designer and manufacturer of semiconductors, from August 1986 to October 1989.
Mr. Young serves as director of DII Group, a publicly-held electronics
manufacturing company.
Jimmy C. Houlditch, 64, joined the Company in 1996 and currently serves as
President of the Aviation Business Unit. Prior to joining the Company, Mr.
Houlditch served as corporate vice president of manufacturing and productivity
for Allied Signal Corporation, as chief operating officer for Allied Signal's
Gas Turbine Company. He was previously with Texas Instruments Semiconductor as
senior vice president of automation, quality and worldwide product
rationalization and senior vice president of operations for TI's Defense Systems
Electronics Company.
Ian Conn, 63, joined the Company in 1992 and currently serves as President
of the Asia/Pacific Business Unit. Before joining the Company, Mr. Conn served
as the CEO of Philips Medical Systems, a Canadian-based manufacturer of medical
diagnostic imaging equipment.
Phillip J. Lovell, 52, joined the Company in October 1994 and currently
serves as President and Managing Director of the European Business Unit. Prior
to joining the Company, Mr. Lovell held senior general management and marketing
positions with major multinational corporations such as Braun/Gillette, Avery
and American Brands.
Roger A. Crabb, 46, joined the Company in May 1994 as Legal Counsel and
became Secretary in May 1995. Immediately prior to joining the Company, Mr.
Crabb had a private law practice, and from 1988 to 1993, Mr. Crabb served as
Associate General Counsel of Triton Energy Limited, a publicly-held oil and gas
exploration company.
John T. Chain, Jr. was elected director of the Company in May 1995 and as
Chairman of the Board in May 1998. Since December 1996, Mr. Chain has served as
President of Quarterdeck Equity Partners, Inc., a company involved in the
acquisition of suppliers to the defense and aerospace industry. Mr. Chain served
from 1991 until early 1996 as Executive Vice President for Burlington Northern
Santa Fe Corporation. From 1986 to 1991, Mr. Chain was Commander in Chief of the
U.S. Strategic Air Command. Mr. Chain currently serves on the board of directors
for Kemper, Northrop Grumman Corporation, RJR Nabisco Holdings Corp. and Nabisco
Holdings, Inc.
4
<PAGE> 7
James E. Dykes was elected director of the Company in May 1995. In 1997, he
accepted a one-year appointment as executive vice president of corporate
development. Mr. Dykes was a four-time Thomas client during his 35 year
management career in the electronics and semiconductor industries. Mr. Dykes
served from August 1994 as President and Chief Operating Officer and a director
of Intellon Corporation, a home-automation electronics company. From 1989 to
1993, Mr. Dykes was President and Chief Executive Officer of Signetics Company,
an integrated circuits company. Mr. Dykes also currently serves on the board of
directors for the following companies: Cree Research Inc., a silicon carbide
electronics company, Exar Corporation, an integrated circuits company and
Theseus Logic, an integrated circuits company.
Richard A. Freytag was elected director of the Company in September 1997.
Mr. Freytag served as president of Citicorp Banking Corporation from 1984 until
1989, when he was appointed chief executive officer. Mr. Freytag retired as an
officer of Citicorp Banking Corporation in 1996 and remained both as an outside
director and as vice chairman until January 1, 1998, when he retired as a
director. Mr. Freytag also served as a director of Citicorp Holdings, Inc.,
Citibank Overseas Investment Corporation and Citibank Delaware until January 1,
1998, at which time he retired.
David B. Mathis was elected director of the Company in August 1998. Mr.
Mathis serves as chairman and chief executive officer of Kemper Insurance
Companies, which has operations in commercial and personal insurance, risk
management, and reinsurance. Mr. Mathis' long career with Kemper has included
executive assignments with both Kemper Insurance Companies and Kemper
Corporation, its former publicly owned affiliate. Mr. Mathis also serves on the
board of directors of the American Insurance Association, IMC Global Inc., the
Museum of Science and Industry and the Chicago Symphony Orchestra.
Timothy G. Caffrey, a nominee to the Board of Directors, has served as a
General Partner of Hollybank Investments, LP and a Managing Member of Thistle
Investments, LLC from 1999 to the present. Since 1998, he has served as Vice
President of Kelso Management Co., Inc., adviser to Hollybank Investments, LP
and Thistle Investments, LLC. Prior to joining Kelso Management, Mr. Caffrey
worked as an Associate in the Technology Mergers and Acquisitions department of
Cowen & Company and as an Associate in the Corporate Finance department of
Fox-Pitt, Kelton, Inc.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established two committees: an Audit Committee;
and a Nominating, Corporate Governance and Compensation Committee.
The Audit Committee, currently composed of Messrs. Freytag, Chain, Dykes
and Mathis, met four times during the fiscal year ended December 31, 1999. This
committee monitors and makes recommendations to the Board of Directors on
matters pertaining to the financial management of the Company, including
monitoring the adequacy and effectiveness of the internal and external audit
functions, control systems, financial accounting and reporting, and adherence to
applicable legal, ethical and regulatory requirements. The Audit Committee also
reviews the financial performance and cash flow of the Company, and makes
recommendations on financial matters such as capital expenditures and dividend
policy.
The Nominating, Corporate Governance and Compensation Committee, currently
composed of Messrs. Dykes, Chain, Freytag and Mathis, met four times during the
fiscal year ended December 31, 1999. The Nominating, Corporate Governance and
Compensation Committee makes recommendations to the Board of Directors regarding
potential nominees to the Board, oversees the performance and effectiveness of
the Board, reviews the Company's compensation policies, determines the amount
and form of compensation and benefits payable to officers, reviews and approves
significant stock option awards, and establishes succession plans for executives
of the Company. The Nominating, Corporate Governance and Compensation Committee
will consider nominees recommended by stockholders, provided that the
appropriate procedures referred to under "Stockholder Proposals" are followed.
The Board of Directors held 12 meetings during the fiscal year ended
December 31, 1999. All of the directors attended at least 75% of the meetings of
the Board of Directors and its committees on which they served.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid or accrued by
the Company for services rendered during each of the three years ended December
31, 1998, to (i) the Company's then-current Chief Executive Officer and (ii) the
four other most highly compensated executive officers (collectively, the "named
executive officers") whose total cash compensation for the year ended December
31, 1999 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
---------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ------------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
J. Thomas Williams,..................... 1999 $425,000 $184,975 $10,000(2) -- $ 5,000(3)
President, Chief Executive Officer 1998 389,356 262,850 9,600 -- 3,750
1997 250,000 31,900 -- -- 33,851
Annette W. Zwerner,..................... 1999 231,062 28,000 7,200(2) -- 31,145
Executive Vice President and 1998 -- -- -- -- --
COO(1) 1997 -- -- -- -- --
Leland L. Grubb,........................ 1999 300,000 -- 7,200(2) -- 2,500(3)
Vice President, Chief Financial 1998 300,000 58,590 7,200 -- 1,000
Officer, President, Automotive 1997 300,000 39,600 7,200 -- 950
Business Unit
Philip J. Lovell,....................... 1999 200,000 -- -- -- --
Vice President, President, 1998 -- -- -- -- --
European Business Unit(1) 1997 -- -- -- -- --
Ian L.T. Conn,.......................... 1999 208,133 24,133 8,450(2) -- 32,708(4)
Vice President, President, 1998 -- -- -- -- --
Asia/Pacific Business Unit(1) 1997 -- -- -- -- --
</TABLE>
- ---------------
(1) No information is provided for the fiscal years during which Ms. Zwerner,
Mr. Lovell and Mr. Conn did not serve as executive officers of the Company.
(2) Represents car allowances for the benefit of the named executive officers.
(3) Represents the Company's contribution to such officer's account under the
Company's 401(k) Plan.
(4) Represents a cost of living adjustment of $27,708 for overseas duty, and the
Company's contribution of $5,000 to such person's account under the
Company's 401(k) Plan.
6
<PAGE> 9
STOCK OPTION GRANTS
The following table provides information concerning the grant of stock
options during the year ended December 31, 1999 to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS MARKET STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(1)
OPTIONS EMPLOYEES IN EXERCISE ON DATE EXPIRATION -----------------------------
NAME GRANTED(2) FISCAL YEAR PRICE OF GRANT DATE 5% 10%
- ---- ---------- ------------ ------------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Thomas Williams............ 1,413 1.0 $ 9.5 $ 9.5 3/10/2009 $ 8,441.96 $ 21,393.60
Annette W. Zwerner............ 1,316 0.94 9.5 9.5 3/4/2009 7,862.43 19,924.96
100 .07 -- 9.25 7/12/2009 1,506.73 2,399.21
30,000 21.39 9.7815 9.7815 8/16/2009 184,545.84 467,675.64
Leland L. Grubb............... 3,084 2.20 9.5 9.5 3/10/2009 18,425.34 46,693.45
Philip J. Lovell.............. 842 0.6 9.5 9.5 3/4/2009 5,030.52 12,748.34
100 0.07 -- 8.6875 10/12/2009 1,415.10 2,253.31
Ian L.T. Conn................. 410 0.29 9.5 9.5 3/4/2009 2,449.54 6,207.62
</TABLE>
- ---------------
(1) Potential realizable value is the amount that would be realized upon
exercise by the named executive officer of the options immediately prior to
the expiration of their respective terms, assuming the specified compound
annual rates of appreciation on Common Stock over the respective terms of
the options. These amounts represent assumed rates of appreciation only.
Actual gains, if any, on stock option exercises depend on the future
performance of the Common Stock and overall market conditions. There can be
no assurances that the potential values reflected in this table will be
achieved.
(2) These options generally vest with respect to 20% of the shares issuable
thereunder on the date of grant and 20% annually thereafter, with
incremental monthly vesting.
OPTION EXERCISES AND HOLDINGS
The following table provides information related to the number of shares
received upon exercise of options, the aggregate dollar value realized upon
exercise and the number and value of options held by the named executive
officers of the Company at December 31, 1999.
<TABLE>
<CAPTION>
UNEXERCISED OPTIONS AT DECEMBER 31, 1999
--------------------------------------------------------
NUMBER OF
SHARES SECURITIES UNDERLYING VALUE OF UNEXPIRED
ACQUIRED VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
J. Thomas Williams............. 400 $1,100 76,097/104,116 $ 138,820.88/$212,714.38
Annette W. Zwerner............. 450 1,041 13,021/ 32,095 24,066.25/ 33,191.75
Leland L. Grubb................ -- -- 57,084/ 5,000 6,997.00/ 16,562.50
Philip J. Lovell............... -- -- 7,255/ 15,687 9,130.50/ 50,628.50
Ian L.T. Conn.................. 825 $1,886 5,339/ 46 13,784.00/ 333.50
</TABLE>
- ---------------
(1) For purposes of this table, the value of the Common Stock is $11.25 per
share, the average of the high and low sale prices of the Common Stock on
December 31, 1999 as reported on the NASDAQ National Market System.
EMPLOYMENT AGREEMENTS OF CERTAIN EXECUTIVE OFFICERS
Mr. Williams is employed by the Company under an employment agreement dated
March 10, 1998. Ms. Zwerner is employed by the Company under an employment
agreement signed on July 11, 1994. Mr. Grubb is employed by the Company under an
employment agreement signed on January 2, 1996. Mr. Lovell is employed by the
Company under an employment agreement dated October 3, 1994. Mr. Conn is
employed by the Company under an employment agreement dated February 3, 1992.
7
<PAGE> 10
The employment agreement for each of the named executive officers provides
for base compensation, with each of such officers' base compensation potentially
adjusted annually by the Nominating, Corporate Governance and Compensation
Committee of the Board. Incentive awards are based on consolidated corporate
performance and, for business unit presidents, individual business unit
performance. All stock options granted under such officers' employment
agreements will have exercise prices equal to the market price per share of the
Common Stock on the date of grant, and will expire 10 years from the date of
grant.
Mr. Williams' employment agreement has a five-year term, and Mr. Grubb's
employment agreement has a five-year term. The employment agreements may be
extended by mutual agreement. The employment agreements of Ms. Zwerner and
Messrs. Lovell and Conn may be terminated at will.
The employment agreements for Messrs. Williams and Grubb may be terminated
by the employee (under certain circumstances) upon one year's notice to the
Company. The employment agreements may be terminated by the Company with or
without cause, by the employee with or without "Good Reason", upon the
disability of the employee, or upon the occurrence of a "Change in Control" of
the Company. A "Change in Control" is defined as the occurrence of any of the
following events: (i) a third party acquires securities representing 40% or more
of the Common Stock or the combined voting power of the Company's outstanding
securities, (ii) the number of directors of the Company as of the date of the
employment agreements plus the number of directors approved by two-thirds of
those initial directors (or their approved successors) cease to constitute, in
the aggregate, a majority of the members of the Board, (iii) certain
reorganizations, consolidations or mergers involving the Company, or (iv) a
dissolution or liquidation of the Company in certain circumstances. "Good
Reason" is defined to include the failure of the Board to nominate the employee
to stand for election as a director of the Company or the significant diminution
of the employee's responsibilities. In the event of a termination of the
employee by the Company without cause, by the employee with "Good Reason," upon
the disability of the employee, or upon a Change in Control, any of the
employee's stock options that are not fully vested will become fully vested and
immediately exercisable and the employee is entitled to a lump sum cash payment
based on the average compensation paid to the employee during the previous four
years. In the event of termination by the Company with cause or by the employee
without Good Reason, the employee is entitled (i) to reimbursement for expenses
incurred prior to termination, (ii) to the payment of bonuses or incentive
compensation and (iii) to exercise vested options for a period of 90 days. If
the employment of Mr. Williams or Mr. Grubb had been terminated without cause as
of January 1, 2000, such executives would have been entitled to receive
severance payments of approximately $914,963 and $486,811, respectively. The
employment agreements also contain non-competition, non-solicitation and
confidentiality covenants.
DIRECTORS' COMPENSATION
With the exception of the Chairman of the Board, each non-employee director
serving for the entirety of the 1999 calendar year earned fees of $25,000 in
cash and shares of Common Stock of the Company having a value of $25,000. Gen.
Chain, Chairman of the Board, earned director fees of $50,000 in cash and shares
of Common Stock of the Company having a value of $50,000. In addition, all
directors were reimbursed for their out-of-pocket expenses incurred in
connection with their attendance at Board and committee meetings. Directors who
are employees of the Company did not receive any compensation in their capacity
as directors.
REPORT OF THE NOMINATING, CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE ON
EXECUTIVE
COMPENSATION
The Nominating, Corporate Governance and Compensation Committee (the
"Committee") consists of Board members who are "disinterested persons" as that
term is defined in the Securities Exchange Act of 1934, and who are "outside
directors" under the Internal Revenue Code.
COMPENSATION PHILOSOPHY
The Committee works with senior management to develop and implement the
Company's executive compensation philosophy. Generally, the Company's philosophy
on executive compensation has been to provide a base cash compensation and to
provide additional incentive compensation in the form of cash
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bonuses and grants of options based on the realization of stated objectives,
expected to result in improvements in total stockholder return. Stated another
way, the Company's executive compensation policy is based on pay-
for-performance.
EXECUTIVE COMPENSATION
During 1999, Mr. Williams, the Company's Chief Executive Officer, received
a base cash compensation related primarily to competitive factors and the level
of his responsibilities.
Effective January 1, 1999, the Company adopted an Executive Incentive
Compensation Plan covering the Chief Executive Officer, the Chief Financial
Officer and the Business Unit Presidents. Under this plan, financial performance
measures are to be set at the beginning of each fiscal year. For Year 2000, for
each participant, performance will be measured by the amount of revenue
generated and the return on revenue.
The incentive awards for the CEO and CFO will be based solely on
consolidated corporate performance for each measure. The incentive award for the
Business Unit Presidents will be based on consolidated corporate performance and
individual business unit performance, weighted equally. Each plan participant
must meet a minimum threshold level of performance on both measures before any
award will be paid to the participant.
The Committee endorses the view that equity ownership by management is
beneficial in aligning management and stockholders' interests in the enhancement
of stockholder value. The Company's equity-based compensation plans facilitate
equity ownership by management.
In granting stock options under the Company's stock option plans, the
Committee considers the total number of shares available for future grants,
prior grants outstanding and estimated requirements for future grants. Option
grants to management, with the exception of grants to the CEO, generally are
proposed to the Committee by the CEO. The Committee then discusses with the CEO
his proposals and recommendations, each participant's position and scope of
responsibilities, the strategic and operational goals of the Company, and the
expected future performance of each participant to achieve these goals. Awards
granted to the CEO are determined separately by the Committee based on the same
criteria as grants to other management, as well as the Committee's perception of
the CEO's expected future contributions to the Company's achievement of its
long-term performance goals.
As the Company moves forward in its efforts to create stockholder value in
the years ahead, the Committee will continue to review, monitor and evaluate the
Company's program for executive compensation to ensure that it is internally
effective in support of the Company's strategy, is competitive in the
marketplace to attract, retain and motivate the talent needed to achieve the
Company's objectives, and appropriately rewards the creation of value on behalf
of the Company's stockholders.
The preceding report was issued by the Nominating, Corporate Governance and
Compensation Committee, comprised of:
James E. Dykes, Chairman
Gen. John T. Chain, Jr.
Richard A. Freytag
David B. Mathis
NOMINATING, CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
Compensation decisions with respect to the executive officers of the
Company are made by the Nominating, Corporate Governance and Compensation
Committee of the Board, which is comprised of Mr. Dykes, Gen. Chain, Mr. Freytag
and Mr. Mathis. From July 1997 to July 1998, Mr. Dykes served a one-year
appointment as executive vice president of corporate development for the
Company.
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the 1933 Act or the Securities Exchange
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<PAGE> 12
Act of 1934, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The following graph sets forth the Company's total shareholder return as
compared to the NASDAQ Stock Market (US) Index and an index of companies having
a market capitalization of $50 million to $75 million, over the period beginning
January 1, 1995 and ending December 31, 1999. The total shareholder return
assumes $100 invested at the beginning of the period in the Company's Common
Stock, the NASDAQ Stock Market (US) Index and the index of companies having a
market capitalization of $50 million to $75 million. The Company has chosen an
index of companies having a market capitalization of $50 million to $75 million
for the following reasons: this is the historical market capitalization range
for the Company's Common Stock, the stock price performance for companies in
that range tends to react to market forces in a similar fashion, and the Company
has no true public company peer group.
TOTAL SHAREHOLDER RETURN FOR THOMAS GROUP, INC.,
NASDAQ STOCK MARKET (US) INDEX
AND
COMPANIES WITH MARKET CAPITALIZATION OF
$50 MILLION TO $75 MILLION
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THOMAS GROUP, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH]
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12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
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<S> <C> <C> <C> <C> <C> <C>
Thomas Group, Inc. 100 216.00 144.00 200.00 164.00 180.00
Peer Group Index 100 116.41 127.64 138.93 109.99 90.24
NASDAQ Market Index 100 129.71 161.18 197.16 278.08 490.46
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1995
ASSUMED DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1999
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CERTAIN TRANSACTIONS
In 1996 the Company advanced Mr. Thomas Williams $0.2 million, pursuant to
a promissory note due December 18, 2000. Mr. Williams' employment agreement
provides that repayment of this note may be effected via bonuses to Mr.
Williams. Accordingly, through this bonus mechanism Mr. Williams repaid
approximately $0.1 million on the note during 1998, repaid a further $0.05
million on the note in January 1999, and repaid the balance in January 2000.
*****
PROPOSAL TO AMEND
THE 1997 STOCK OPTION PLAN
On April 19, 2000 the Board of Directors adopted, subject to stockholder
approval, an amendment to the 1997 Plan.
PARTICIPANTS
At December 31, 1999, the Company had 256 employees, all of whom are
eligible to participate in the 1997 Plan.
SUMMARY OF 1997 STOCK OPTION PLAN
The 1997 Stock Option Plan is intended to afford a proprietary interest in
the Company to key employees of the Company. The Company believes that stock
ownership by these persons provides added incentives to continue employment with
the Company and encourages increased efforts to promote the Company's best
interests. A maximum of 350,000 shares of the Company's Common Stock may be
issued pursuant to the 1997 Plan, subject to adjustment by reason of stock
dividends, stock splits or other capitalization changes. The following is a
brief description of the principal provisions of the 1997 Plan and is qualified
in its entirety by reference to the 1997 Plan.
The 1997 Plan is administered by the Board, if all Board members are
"disinterested" as defined in the 1997 Plan, or by a committee of two or more
disinterested members of the Board (the "Committee"). The Committee determines
the persons who receive stock options, the number of options to be granted and
the vesting schedule for the options granted. All options are granted with an
exercise price equal to 100% of the fair market value of the underlying Common
Stock at the date of grant. The Company receives no consideration upon the grant
of options.
It is intended that options under the 1997 Plan may be incentive stock
options for federal income tax purposes. Under the Internal Revenue Code, an
employee generally is not subject to regular income tax upon the grant or
exercise of an incentive option. Instead, the employee is subject to tax upon
disposition of the stock held pursuant to the exercise of the option (the "ISO
Shares"). At that time, if the employee has held the ISO Shares for at least (i)
two years from the date of grant and (ii) one year from the date of exercise
(the "Required Holding Period"), the employee will have long-term capital gain
(or loss) equal to the difference, if any, between the amount realized from the
disposition and the employee's tax basis in the ISO Shares. However, if the
employee disposes of the ISO Share prior to the Required Holding Period, a
portion (generally, the excess of the fair market value of the ISO Shares at the
date of exercise over the exercise price) of any gain realized would be taxable
to the employee as ordinary income.
All employees of the Company, including directors who are also employees,
are eligible to participate in the 1997 Plan. The 1997 Plan shall terminate on
March 31, 2007. Options having a term not to exceed 10 years will be available
to employees under the 1997 Plan. Non-Qualified Stock Options will be
transferable by the optionee. Shares issued to officers of the Company on
exercise of options may not be sold within six months of the grant of the
option.
Shares subject to options that are surrendered or expire unexercised may
again be made subject to options under the 1997 Plan.
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<PAGE> 14
In the discretion of the Board, the purchase price for shares may be paid
in cash, shares of Common Stock of the Company with a fair market value equal to
the purchase price, or both.
Notwithstanding any schedule for vesting of options contained in any option
agreement, all options granted under the 1997 Plan become immediately
exercisable if the Company is subject to a change of control as described in the
1997 Plan.
The last reported price of the Common Stock on May 1, 2000 was $11.00.
1997 PLAN BENEFITS
During 1999, no options under the 1997 Plan were granted to executive
officers, directors or non-executive employees.
THE PROPOSED AMENDMENT
Pursuant to the proposed amendment, the shares of Common Stock available
for issuance under the 1997 Plan would be increased by 400,000 shares, from
350,000 to 750,000.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1997 STOCK OPTION PLAN.
*****
SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission, and to furnish to the
Company copies of such reports. Based solely upon its review of the copies of
such forms received by it, the Company believes that, during the fiscal year
ended December 31, 1999, Company officers, directors and greater than 10%
beneficial owners complied with all such filing requirements.
AUDITORS
The Company has appointed Ernst & Young LLP ("E&Y") as the independent
auditors of the Company for the fiscal year ending December 31, 2000.
Representatives of E&Y are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so and to be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
In order for stockholder proposals to receive consideration for inclusion
in the Company's Proxy Statement for its Annual Meeting of Stockholders to take
place in 2001, such proposals must meet the requirements set forth in the rules
and regulations of the Securities and Exchange Commission, and must be received
at the Company's offices at 5221 N. O'Connor Boulevard, Suite 500, Irving,
Texas, 75039-3714, Attention: Secretary, by December 9, 2000.
The Company's By-Laws contain a provision which requires that a stockholder
may nominate a person for election as a director only if written notice of such
stockholder's intent to make such nomination has been given to the Secretary of
the Company not later than 30 days prior to an annual meeting. This provision
also requires that the notice set forth, among other things, the name and
address of the stockholder giving the notice, as it appears on the Company's
books and records, and the class and number of shares of capital stock of the
Company owned by such stockholder. Such notice must also contain such other
information regarding the nominee as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated by the Board. Such notice must also be
accompanied by the written consent of the person being nominated to the naming
of that person in the Proxy Statement as a nominee and to serve as a director if
elected. The chairman of the annual meeting shall, if facts warrant, determine
and declare to the annual meeting that a nomination has not been made in
accordance with these procedures and if the chairman should so determine, he or
she shall so declare to the
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<PAGE> 15
annual meeting and the defective nomination shall be disregarded. No stockholder
has nominated a candidate for election to the Board of Directors at the Annual
Meeting.
SOLICITATION OF PROXIES
The Company will pay the expenses of this proxy solicitation. In addition
to the solicitation by mail, some of the officers and regular employees of the
Company may solicit proxies personally or by telephone, if deemed necessary. The
Company will request brokers and other fiduciaries to forward proxy soliciting
material to the beneficial owners of shares which are held of record by the
brokers and fiduciaries, and the Company may reimburse them for reasonable
out-of-pocket expenses incurred by them in connection therewith.
OTHER MATTERS
The Annual Report to Stockholders for the fiscal year ended December 31,
1999, which includes financial statements, is enclosed herewith. The Annual
Report does not form a part of this Proxy Statement or the materials for the
solicitation of proxies to be voted at the annual meeting.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE FURNISHED AT NO
CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A
WRITTEN REQUEST OF SUCH PERSON ADDRESSED TO THOMAS GROUP, INC., 5221 N. O'CONNOR
BOULEVARD, SUITE 500, IRVING, TEXAS 75039-3714, TELEPHONE (972) 869-3400. THE
COMPANY WILL ALSO FURNISH SUCH ANNUAL REPORT ON FORM 10-K TO ANY "BENEFICIAL
OWNER" OF SUCH SECURITIES AT NO CHARGE UPON RECEIPT OF A WRITTEN REQUEST,
ADDRESSED TO THE COMPANY, CONTAINING A GOOD FAITH REPRESENTATION THAT, AT THE
RECORD DATE, SUCH PERSON WAS A BENEFICIAL OWNER OF SECURITIES OF THE COMPANY
ENTITLED TO VOTE AT THE ANNUAL MEETING. COPIES OF ANY EXHIBIT TO THE FORM 10-K
WILL BE FURNISHED UPON THE PAYMENT OF A REASONABLE FEE.
The Board of Directors is not aware of any matter, other than the matters
described above, to be presented for action at the Annual Meeting. However, if
any other proper items of business should come before the Annual Meeting, it is
the intention of the person or persons acting under the enclosed form of proxy
to vote in accordance with their best judgment on such matters.
Information contained in the Proxy Statement relating to the occupations
and security holdings of directors and officers of the Company is based upon
information received from the individual directors and officers.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT
WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors,
/s/ J. THOMAS WILLIAMS
J. THOMAS WILLIAMS
President and Chief Executive
Officer
Irving, Texas
May 15, 2000
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PROXY
THOMAS GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) J. Thomas Williams with full power of
substitution, proxies of the undersigned, with all the powers that the
undersigned would possess if personally present to cast all votes that the
undersigned would be entitled to vote at the Annual Meeting of Stockholders of
Thomas Group, Inc. (the "Company") to be held on Friday, June 23, 2000, at the
principal executive offices of the Company, 5221 N. O'Connor Boulevard, Suite
500, Irving, Texas at 9:00 A.M., Dallas time, and any and all adjournments or
postponements thereof (the "Annual Meeting"), including (without limiting the
generality of the foregoing) to vote and act as follows:
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTORS SET FORTH BELOW
AND FOR THE PROPOSAL SET FORTH ON THE REVERSE SIDE.
(Change of Address)
---------------------------------
---------------------------------
---------------------------------
---------------------------------
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
Please complete, date, sign and mail this Proxy promptly
in the enclosed envelope.
No postage is required for mailing in the United States.
-----------
SEE REVERSE
SIDE
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<PAGE> 17
THOMAS GROUP, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
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<S> <C>
FOR WITHHELD FOR ALL
1. Election of Directors, Nominees: ALL ALL EXCEPT
01 JOHN T. CHAIN, JR., 02 RICHARD A. FREYTAG, 03 J. THOMAS WILLIAMS,
04 JAMES E. DYKES, 05 DAVID B. MATHIS, 06 TIMOTHY G. CAFFREY [ ] [ ] [ ] -----------------------
Nominee Exception
2. Proposal to amend the 1997 Stock Option Plan, to increase by 400,000 FOR AGAINST ABSTAIN
shares, from 350,000 to 750,000, the number of shares of the Company's
Common Stock currently available for issuance under the 1997 Stock [ ] [ ] [ ]
Option Plan.
In his discretion, the proxy is authorized to vote upon such other
business as may properly come before the annual meeting. This proxy
will be voted at the annual meeting or any adjournment or postponement
thereof as specified. If no specifications are made, this proxy will
be voted for the election of directors and FOR the proposal set forth
above. This Proxy hereby revokes all prior proxies given with respect
to the shares of the undersigned.
Change of Address [ ]
SIGNATURE(S) DATE
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SIGNATURE(S) DATE
------------------ -----
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
</TABLE>
