<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BTG, 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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
(BTG LOGO)
BTG, INC.
3877 FAIRFAX RIDGE ROAD
FAIRFAX, VIRGINIA 22030
July 15, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 annual meeting of BTG, Inc.
(the "Company") on Wednesday, August 5, 1998, at 10:00 a.m. at the Hyatt Regency
Reston, 1800 Presidents Street, Reston, Virginia 20190.
At this meeting, you will be asked to vote, in person or by proxy, on the
following matters: (i) election of three directors, each for a three-year term;
(ii) ratification of the appointment of the Company's independent auditors;
(iii) a shareholder proposal, if it is presented at the meeting; and (iv) any
other business as may properly come before the meeting. The official Notice of
Meeting, proxy statement, and form of proxy are included with this letter. The
matters listed in the Notice of Meeting are described in detail in the proxy
statement.
It is important that your shares be represented at the 1998 annual meeting,
whether or not you are personally able to attend. You are urged to complete,
sign, and mail the enclosed proxy card as soon as possible.
Sincerely,
/s/ EDWARD H. BERSOFF
Edward H. Bersoff
Chairman of the Board, President, and
Chief Executive Officer
<PAGE> 3
BTG, INC.
3877 FAIRFAX RIDGE ROAD
FAIRFAX, VIRGINIA 22030
(703) 383-8000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 5, 1998
NOTICE IS HEREBY GIVEN that the 1998 annual meeting of shareholders (the
"Annual Meeting") of BTG, Inc. (the "Company" or "BTG") will be held on
Wednesday, August 5, 1998, at 10:00 a.m. at the Hyatt Regency Reston, 1800
Presidents Street, Reston, Virginia 20190, for the following purposes:
1) To elect three directors, each for a three-year term;
2) To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending March 31, 1999;
3) To consider and take action on a shareholder proposal, if it is
presented at the meeting; and
4) To transact such other business as may properly come before the meeting
or any adjournments thereof.
Pursuant to the Company's bylaws, the Board of Directors has fixed June 15,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting. Only holders of record of BTG common stock
as of that date will be entitled to notice of and to vote at the Annual Meeting
or any adjournments thereof.
In the event that there are not sufficient votes to approve any one or more
of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation of proxies by BTG.
By order of the Board of Directors of
BTG, Inc.
/s/ EDWARD H. BERSOFF
Edward H. Bersoff
Chairman of the Board, President, and
Chief Executive Officer
Fairfax, Virginia
July 15, 1998
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE, AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
BTG, INC.
3877 FAIRFAX RIDGE ROAD
FAIRFAX, VIRGINIA 22030
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 5, 1998
SOLICITATION, VOTING, AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are being furnished to the shareholders of BTG, Inc., a Virginia
corporation ("BTG" or the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the 1998 Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be held on
Wednesday, August 5, 1998, at 10:00 a.m. at the Hyatt Regency Reston, 1800
Presidents Street, Reston, Virginia 20190, and any adjournments thereof.
If the enclosed form of proxy is properly executed and returned to BTG in
time to be voted at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions thereon. EXECUTED BUT UNMARKED PROXIES
WILL BE VOTED: (i) FOR THE ELECTION OF EACH OF THE THREE NOMINEES OF THE BOARD
OF DIRECTORS TO SERVE AS DIRECTORS, EACH FOR A THREE-YEAR TERM; (ii) FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS; AND (iii) AGAINST THE SHAREHOLDER PROPOSAL, IF IT IS
PRESENTED AT THE ANNUAL MEETING. If any other matters are properly brought
before the Annual Meeting, proxies will be voted in the discretion of the proxy
holders. BTG is not aware of any such matters that are proposed to be presented
at its Annual Meeting.
The cost of soliciting proxies in the form enclosed herewith will be borne
by BTG. In addition to the solicitation of proxies by mail, directors, officers
and regular employees of BTG, without extra remuneration, may solicit proxies
personally, by telephone, telegram, or otherwise. BTG may request persons, firms
and corporations holding shares in their name or in the names of their nominees,
which are beneficially owned by others, to send proxy materials to and obtain
proxies from the beneficial owners and will reimburse the holders for their
reasonable expenses in doing so. It is anticipated that this proxy statement
will be mailed to shareholders on or about July 15, 1998.
The securities which can be voted at the Annual Meeting consist of shares
of common stock (no par value) ("Common Stock") of BTG. Each share entitles its
owner to one vote on each matter presented to the shareholders. The Board of
Directors has fixed June 15, 1998 as the record date (the "Record Date") for the
determination of shareholders entitled to vote at the Annual Meeting. On the
Record Date, there were approximately 317 record holders of Common Stock and the
number of shares outstanding as of that date was 8,782,496. The presence, in
person or by proxy, of at least a majority of the total number of outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting. Shareholders' votes will be tabulated by a representative of First
Union National Bank of North Carolina, which has been appointed by the Board of
Directors to act as inspector of election for the Annual Meeting. Under Virginia
corporate law and the Company's bylaws, directors are elected by a plurality of
votes of shares present (in person or by proxy) and entitled to vote. Unless
otherwise required by law or the Company's Articles of Incorporation or bylaws,
any other matter put to a shareholder vote will be decided by the affirmative
vote of a majority of the votes cast on the matter. For purposes of that
tabulation, abstentions and broker non-votes have no effect on the vote.
The presence of a shareholder at the Annual Meeting will not automatically
revoke the shareholder's proxy. However, a shareholder may revoke a proxy at any
time prior to its exercise by filing with the Secretary of BTG a written notice
of revocation, by delivering to BTG a duly executed proxy bearing a later date,
or by attending the Annual Meeting and voting in person.
<PAGE> 5
------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE PROPOSALS SET FORTH IN ITEMS 1 AND 2 OF THIS PROXY STATEMENT,
AND AGAINST THE PROPOSAL IN ITEM 3.
------------------------
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of June 15, 1998 by: (i) each
director and nominee for director; (ii) the Chief Executive Officer and each of
the other four most highly compensated executive officers, each of whose total
annual salary and bonus exceeded $100,000 during the year ended March 31, 1998,
and one additional individual for whom disclosure would have been required, but
for the fact that he was not an executive officer as of March 31, 1998 (the
"Named Executive Officers"); (iii) all persons known to the Company to be
beneficial owners of more than 5% of the outstanding Common Stock; and (iv) all
directors and executive officers as a group. Under the rules of the Securities
and Exchange Commission ("SEC"), a person is deemed a "beneficial owner" of a
security if such person has or shares the power to vote or direct the voting of
such security or the power to dispose or direct the disposition of such
security. A person is also deemed to be a beneficial owner of any securities of
which that person has the right to acquire beneficial ownership within 60 days.
More than one person may be deemed to be a beneficial owner of the same
securities.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF COMMON
NAME SHARES STOCK OUTSTANDING
---- --------- -----------------
<S> <C> <C>
Edward H. Bersoff, Chairman, President, Chief
Executive Officer, and Acting Chief Financial
Officer(1)........................................ 1,327,246 15.11%
Heartland Advisors, Inc.(2)......................... 1,249,500 14.23
Wellington Management Co., LLP(3)................... 840,800 9.57
Donald M. Wallach, Director(4)...................... 293,312 3.34
Clifton Y. Bumgardner, Senior Vice President(5)..... 175,314 2.00
Marilynn D. Bersoff, Senior Vice President(6)....... 99,488 1.13
Randall C. Fuerst, Senior Vice President(7)......... 55,037 *
John M. Hughes(8)................................... 14,496 *
Alan G. Merten, Director(9)......................... 14,254 *
Ruth M. Davis, Director(10)......................... 14,090 *
Earle C. Williams, Director(11)..................... 7,600 *
Raymond T. Tate, Director(12)....................... 9,985 *
Ronald L. Turner, Director(13)...................... 3,000 *
Steven W. Baldwin(14)............................... 654 *
All directors and executive officers as a group (15
persons)(15)...................................... 2,143,716 24.41
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) The address of Dr. Bersoff, and each other officer and director of BTG, is
c/o BTG, Inc., 3877 Fairfax Ridge Road, Fairfax, Virginia 22030. The number
of shares listed does not include (i) 22,667 additional shares issuable
upon the exercise of options granted by the Company which are not
exercisable within 60 days of June 15, 1998; (ii) 92,487 shares of Common
Stock and 15,500 shares of Common Stock underlying options (7,001 of which
are exercisable within 60 days of June 15, 1998) owned by Marilynn D.
Bersoff, Dr. Bersoff's wife; and (iii) 5,750 shares of Common Stock owned
by Dr. Bersoff's mother. Dr. Bersoff has no shares of Common Stock
underlying options granted by the Company which are exercisable within 60
days of June 15, 1998.
(2) The address of Heartland Advisors, Inc. is 790 North Milwaukee Street,
Milwaukee, WI 53202.
(3) The address of Wellington Management Company, LLP is 75 State Street,
Boston, MA 02109.
2
<PAGE> 6
(4) Includes (i) 4,500 shares of Common Stock underlying options granted by the
Company, which are exercisable within 60 days of June 15, 1998; (ii)
114,130 shares held in joint tenancy with Shoshana Wallach, Mr. Wallach's
wife; and (iii) 47,050 shares held by Wallach Associates, Inc. Employee
Profit Sharing Plan Trust, in which Mr. Wallach has a majority interest.
(5) Includes 9,001 shares of Common Stock underlying options granted by the
Company, which are exercisable within 60 days of June 15, 1998. Does not
include 11,333 additional shares issuable upon the exercise of options
granted by the Company, which are not exercisable within 60 days of June
15, 1998.
(6) Includes 7,001 shares of Common Stock underlying options granted by the
Company, which are exercisable within 60 days of June 15, 1998. Does not
include (i) 8,499 additional shares issuable upon the exercise of options
granted by the Company, which are not exercisable within 60 days of June
15, 1998; and (ii) 1,327,246 shares of Common Stock and 22,667 shares of
Common Stock underlying options granted by the Company which are not
exercisable within 60 days of June 15, 1998, which are owned by Edward H.
Bersoff, Marilynn Bersoff's husband.
(7) Includes 6,167 shares of Common Stock underlying options granted by the
Company, which are exercisable within 60 days of June 15, 1998. Does not
include 13,333 additional shares issuable upon the exercise of options
granted by the Company, which are not exercisable within 60 days of June
15, 1998.
(8) Includes 3,834 additional shares issuable upon the exercise of options
granted by the Company, which are exercisable within 60 days of June 15,
1998. Does not include 11,166 additional shares issuable upon the exercise
of options granted by the Company, which are not exercisable within 60 days
of June 15, 1998. As of May 15, 1998, the Company no longer employed Mr.
Hughes, who had been Chief Financial Officer.
(9) Includes 2,000 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1998.
(10) Includes 4,000 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1998.
(11) Includes 1,000 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1998. Mr. Williams
was appointed to the Board effective February 3, 1998.
(12) Includes 4,000 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1998.
(13) Includes 3,000 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1998.
(14) Represents only those shares reported on Mr. Baldwin's SEC Form 5 dated
February 17, 1998. As of February 6, 1998, the Company no longer employed
Mr. Baldwin, who had been a Senior Vice President.
(15) Includes only incumbent officers and directors on March 31, 1998, and
includes 54,671 shares of Common Stock issuable upon the exercise of
options granted by the Company, which are exercisable within 60 days of
June 15, 1998.
3
<PAGE> 7
ELECTION OF DIRECTORS
(ITEM ONE)
The Company's Board of Directors consists of seven members. The directors
serve three-year terms, which are staggered to provide for the election of
approximately one-third of the Board of Directors each year. At the Annual
Meeting, Ronald L. Turner, Alan G. Merten, and Earle C. Williams each will be
nominated for three-year terms. (Mr. Williams was appointed by the Board of
Directors, in February of 1998, to serve in the Board seat vacated by the
resignation of James V. Kimsey.) Unless otherwise instructed on the proxy, it is
the intention of the persons named in the proxy to vote the shares represented
by each properly executed proxy for the election of the three nominee directors
listed below. The Board of Directors believes that each nominee will stand for
election and will serve if elected. However, if any person nominated by the
Board of Directors fails to stand for election or is unable to accept election,
proxies will be voted by the proxy holders for the election of such other person
or persons as the Board of Directors may recommend. There is no cumulative
voting for election of directors. Assuming the presence of a quorum at the
Annual Meeting, directors will be elected by a plurality vote.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
Set forth below is certain information with respect to the nominees of the
Board of Directors for election as directors at the Annual Meeting, and other
directors whose terms do not expire until subsequent annual meetings.
<TABLE>
<CAPTION>
FOR TERM TO
NAME AGE POSITION DIRECTOR SINCE EXPIRE
---- --- -------- -------------- -----------
<S> <C> <C> <C> <C>
Ronald L. Turner.......................... 51 Director 1995 2001
Alan G. Merten............................ 56 Director 1996 2001
Earle C. Williams......................... 68 Director 1998 2001
</TABLE>
Ronald L. Turner is currently President and Chief Operating Officer of
Ceridian Corporation ("Ceridian"), an information services company. From 1993 to
1997 he served as the President and Chief Executive Officer of Computing Devices
International, a defense electronics business that was sold by Ceridian in 1997.
From 1987 to 1993 he served as President and Chief Executive Officer of
GEC-Marconi Electronic Systems Division. Mr. Turner also currently serves on the
board of FLIR Systems, Inc.
Alan G. Merten became the President of George Mason University on July 1,
1996. From 1989 until accepting this position, he served as Dean of the Johnson
Graduate School of Management at Cornell University. Dr. Merten currently serves
on the boards of Smith Barney Concert Investment Series, Comshare, Inc., and
INDUS International, Inc.
Earle C. Williams served as President and Chief Executive Officer of BDM
International, Inc. from 1972 until his retirement in 1992 and as a Director of
that company from 1972 through 1997. Mr. Williams is presently a member of the
Board of Directors of GAMMA-A Technologies, Inc., GTS Duratek, Inc., and The
Parsons Corporation. He is also a director of the Potomac Knowledgeway Project,
the Wolftrap Foundation for the Performing Arts, and the Auburn University
Foundation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ITS NOMINEES
FOR DIRECTORS.
4
<PAGE> 8
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
FOR TERM
TO
NAME AGE POSITION DIRECTOR SINCE EXPIRE
---- --- -------- -------------- --------
<S> <C> <C> <C> <C>
Ruth M. Davis............... 69 Director 1986 1999
Raymond T. Tate............. 74 Director 1988 1999
Donald M. Wallach........... 63 Director 1982 2000
Edward H. Bersoff........... 55 Chairman of the Board, 1982 2000
President, Chief
Executive Officer, and
Acting Chief Financial
Officer
</TABLE>
Ruth M. Davis is Chair of The Aerospace Corporation, a
government-chartered, not-for-profit corporation, and has served since 1981 as
President and Chief Executive Officer of the Pymatuning Group, Inc., which
specializes in industrial modernization strategies and technology management.
Dr. Davis also currently serves on the boards of Air Products and Chemicals,
Inc., Consolidated Edison Company of New York, Inc., Ceridian Corporation,
Premark International, Inc., Varian Associates, Inc., and Tupperware. She served
as Assistant Secretary of Energy for Resource Applications from 1979 to 1981 and
as a Deputy Undersecretary of Defense for Research and Advanced Technology from
1977 to 1979.
Raymond T. Tate has served since 1979 as President of Raymond Tate
Associates, Inc., a technology consulting firm. From 1994 to October 1996, he
served as Chairman of the Board, President, and Chief Executive Officer of
Ashton Technology Group, Inc., a technology company primarily involved in
financial transactions and neural network research and development activities.
He is a former Deputy Assistant Secretary of the Navy and a former Deputy
Director of the National Security Agency.
Donald M. Wallach has served since 1965 as the President of Wallach
Associates, Inc., a professional recruiting and employment counseling firm which
recruits primarily executive and technical professionals in the fields of
defense, electronics, intelligence, computer science, and information
technology.
Edward H. Bersoff has served as the Company's President, Chief Executive
Officer, and Chairman of the Board of Directors since the Company's founding in
1982 and Acting Chief Financial Officer since May 1998. From 1975 until 1982, he
was employed by CTEC, Inc., a provider of systems integration services, serving
first as Vice President, then Executive Vice President, and later as President.
Previously, he was employed by Logicon, Inc., a provider of advanced technology
systems and services to national security, civil, and industrial clients, and
the National Aeronautics and Space Administration, in Cambridge, Massachusetts.
Dr. Bersoff serves as a director of Phillips Business Information, Inc.,
Government Technology Services, Inc., and the American Electronics Association,
and is a trustee of the Eugene and Agnes Meyer Foundation. He is the husband of
Marilynn D. Bersoff, Secretary and Senior Vice President for Administration of
the Company.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors acts as the nominating committee for selecting
nominees for election as directors. The Company's bylaws permit shareholders
eligible to vote at the Annual Meeting to make nominations for directors if such
nominations are made pursuant to timely notice in writing to the Secretary of
the Company. The bylaws also permit shareholders to propose other business to be
brought before an annual meeting, provided that such proposals are made pursuant
to timely notice in writing to the Secretary of the Company. To be timely,
notice must be delivered to, or mailed to and received at, the principal
executive offices of the Company no later than 90 days prior to the date of the
anniversary of the immediately preceding annual meeting. A shareholder's notice
of nomination must also set forth certain information specified in Section 2.3.6
of the Company's bylaws concerning each person the shareholder proposes to
nominate for election and the nominating shareholder. No such nominations have
been received in connection with the Annual Meeting. One shareholder proposal
was received. It is discussed under Item 3, below.
5
<PAGE> 9
The members of the Organization and Compensation Committee of the Company's
Board of Directors (the "Compensation Committee") during most of fiscal 1998
were Messrs. Tate, Wallach, and Kimsey, all of whom are non-employee directors.
(Mr. Kimsey resigned from the Board and was succeeded on the Committee by Dr.
Merten effective March 23, 1998.) The Compensation Committee has authority over,
and performs all the duties related to, compensation of the management of the
Company, including determining policies and practices, changes in compensation
and benefits for management, determination of employee benefits, and all other
matters relating to employee compensation, including administering the Company's
1995 Employee Stock Option Plan (the "Option Plan"), the Directors Stock Option
Plan, and the 1997 Non-Employee Director Stock Purchase Plan. The Compensation
Committee met two times in fiscal 1998.
The members of the Audit Committee of the Company's Board of Directors
during most of fiscal 1998 were Drs. Davis and Merten and Mr. Turner, all of
whom are non-employee directors. (Dr. Merten was succeeded on the Committee by
Mr. Williams effective March 23, 1998.) The Audit Committee, among other things,
makes recommendations concerning the engagement of independent auditors, reviews
the results and scope of the annual audit and other services provided by the
Company's independent auditors, and reviews the adequacy of the Company's
internal accounting controls. In fiscal 1998, the Audit Committee met seven
times.
During the 12 months ended March 31, 1998, the Board of Directors held ten
meetings. No incumbent director attended fewer than 75 percent of the total
number of meetings of the Board of Directors and committees of the Board of
Directors on which he or she served.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive quarterly payments of $3,000,
and fees of $2,000 per Board of Directors meeting and $1,000 per committee
meeting attended. Attendance via telephone is compensated at one-half of the
normal rate. The directors also receive reimbursement for reasonable expenses
incurred in attending meetings.
The Company has adopted a Directors Stock Option Plan (the "Directors
Option Plan"). Under that plan, options to purchase up to an aggregate of
100,000 shares of Common Stock are available for grants to directors of the
Company who are not officers or employees of the Company or any subsidiary of
the Company (each an "Eligible Director"). On August 30, 1995, the effective
date of the Directors Option Plan (the "Effective Date"), each Eligible Director
then serving on the Board of Directors was granted an initial option to purchase
shares of Common Stock, the number of which varied depending upon each Eligible
Director's years of service as a director of the Company, as follows: (1) more
than seven years of service -- 2,500 shares; (2) between three and seven years
of service -- 2,000 shares; (3) between zero and three years of service -- 1,500
shares; and (4) no years of service -- 1,000 shares. The Directors Option Plan
provides that each Eligible Director whose commencement of service is after the
Effective Date is granted an initial option to purchase 1,000 shares of Common
Stock as of the date of the Eligible Director's commencement of service. An
Eligible Director is also granted an additional option to purchase 1,000 shares
of Common Stock for each year that the Eligible Director continues to be an
Eligible Director. The Directors Option Plan will terminate in 2006, unless
terminated at an earlier date by the Board of Directors. During fiscal 1998, no
directors exercised options to purchase shares under the Directors Option Plan.
The Company also has adopted a Non-Employee Director Stock Purchase Plan
(the "Director Purchase Plan"). Under that plan, non-employee directors may
elect to have their fees as directors retained by the Company and used to
purchase shares of Common Stock of the Company. Generally, retained fees are
accumulated during the period commencing on April 1 of each year and ending
March 31 of the following year (the "Accumulation Period"). The purchase price
for each share (the "Purchase Price") is the fair market value of the Common
Stock on the first or last trading day of such Accumulation Period, whichever is
lower. Under the Director Purchase Plan, 100,000 shares of Common Stock are
available for purchase by non-employee directors of the Company. During the
Accumulation Period ending March 31, 1998, five directors had elected to
purchase an aggregate of 6,068 shares under the Director Purchase Plan.
6
<PAGE> 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 1998, the Company paid Wallach Associates, Inc. $10,500 for
professional recruiting services. The common stock of Wallach Associates, Inc.
is wholly owned by Donald M. Wallach, a director of BTG.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the Named Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
FOR THE ANNUAL COMPENSATION SECURITIES
FISCAL YEAR -------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION ENDED MARCH 31, SALARY($) BONUS($) OPTIONS(#) COMPENSATION
--------------------------- --------------- --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Edward H. Bersoff................ 1998 $398,334 $ 0 10,000 $52,146(1)
Chairman of the Board, 1997 357,007 0 9,000 37,407
President and Chief Executive 1996 296,194 150,000 0 9,557
Officer
Randall C. Fuerst................ 1998 214,376 50,000 7,000 38,425(1)
Senior Vice President and 1997 197,113 0 7,000 17,688
General Manager,
Systems Engineering
John M. Hughes(2)................ 1998 244,376 0 6,000 23,584(1)
Senior Vice President and 1997 229,548 0 4,000 16,575
Chief Financial Officer 1996 219,723 40,000 0 10,055
Clifton Y. Bumgardner............ 1998 209,584 20,000 6,000 47,394
Senior Vice President and
Chief Technical Officer
Steven W. Baldwin(3)............. 1998 170,625 58,333 10,000 30,489(1)
Senior Vice President,
Technology Systems
Marilynn D. Bersoff.............. 1998 184,292 25,000 5,000 19,318(1)
Senior Vice President and 1997 166,179 0 4,000 13,440
Secretary 1996 130,104 40,000 0 8,600
</TABLE>
- ---------------
(1) This amount includes Company contributions under the Company's 401(k) profit
sharing plan, Company-paid life insurance premiums, and reimbursement of the
cost of uninsured medical expenses, tax preparation, financial planning, and
certain legal expenses (capped at $12,000 per year).
(2) As of May 15, 1998, the Company no longer employed Mr. Hughes.
(3) As of February 6, 1998, the Company no longer employed Mr. Baldwin.
7
<PAGE> 11
STOCK OPTIONS
Option Grants. The following table contains information with respect to
grants of stock options for Common Stock to each of the Named Executive Officers
during the year ended March 31, 1998. All such grants were made under the Option
Plan. Under the Option Plan, options to purchase up to an aggregate of 1,250,000
shares of Common Stock are available for grants to key employees. As of March
31, 1998, options to purchase 352,500 shares of Common Stock had been granted
since the inception of the Option Plan. Of those, options to acquire 14,166
shares had been exercised and options to acquire 295,583 shares were outstanding
under the Option Plan. The Company does not have any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------- POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATE
NUMBER OF OF STOCK
SECURITIES % OF TOTAL SECURITIES PRICE APPRECIATION
UNDERLYING UNDERLYING OPTIONS EXERCISE FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION ----------------------
NAME GRANTED(1) IN FISCAL YEAR ($/SH)(2) DATE(3) 5% 10%
---- ---------- --------------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Edward H. Bersoff...... 10,000 9.7% $20.08 4/02/02 $56,224 $130,520
John M. Hughes(4)...... 6,000 5.8 18.25 4/02/07 71,175 187,245
Randall C. Fuerst...... 7,000 6.8 18.25 4/02/07 83,038 218,452
Clifton Y.
Bumgardner........... 6,000 5.8 18.25 4/02/07 71,175 187,245
Marilynn D. Bersoff.... 5,000 4.8 20.08 4/02/02 28,112 65,260
Steven W. Baldwin(5)... 2,500 2.4 18.25 4/02/07 29,656 78,019
7,500 7.2 13.375 6/13/07 65,203 171,534
</TABLE>
- ---------------
(1) Except as noted, all options included in this table vest in equal
installments over a three-year period beginning April 2, 1999, two years
after the date of grant.
(2) The option exercise prices on all options granted under the Option Plan may
not be less than 100% of the fair market value of Common Stock on the grant
date, as defined in the Option Plan. The options are not subject to any
provision that could cause the exercise price to be lowered (other than for
anti-dilution purposes).
(3) Under the Option Plan, options can only be exercised so long as the optionee
is employed by BTG or a subsidiary of BTG and for three months after
termination of employment, but not later than ten years after the grant.
(4) As of May 15, 1998, the Company no longer employed Mr. Hughes.
(5) Mr. Baldwin received two separate option grants in fiscal 1998. Installment
vesting of the second of these grants was to have begun June 13, 1999. As of
February 6, 1998, the Company no longer employed Mr. Baldwin, and his
options terminated.
8
<PAGE> 12
Option Exercises and Year-End Value. The following table provides
information regarding the exercise of options during the year ended March 31,
1998, as well as the fiscal year-end value of all unexercised options held by
the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
MARCH 31, 1998 MARCH 31, 1998(1)
ACQUIRED IN VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
---- ----------- -------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Bersoff........... 12,332 $64,115 22,667 8,001 $ 2,411 $25,804
John M. Hughes(2)........... 7,500 36,625 12,500 2,500 3,594 3,594
Randall C. Fuerst........... 2,600 8,650 15,667 8,333 122,497 56,659
Clifton Y. Bumgardner....... 2,500 8,125 13,333 7,000 1,916 28,700
Marilynn D. Bersoff......... 4,000 14,320 9,833 5,667 548 22,686
Steven W. Baldwin(3)........ 0 0 12,500 0 0 0
</TABLE>
- ---------------
(1) Based on a per share value of $9.1875 on March 31, 1998.
(2) As of May 15, 1998, the Company no longer employed Mr. Hughes.
(3) As of February 6, 1998, the Company no longer employed Mr. Baldwin. His
options terminated on May 6, 1998.
EMPLOYMENT AGREEMENTS
Pursuant to an agreement dated as of October 24, 1997, Edward H. Bersoff
serves as the President and Chief Executive Officer of the Company. Dr. Bersoff
is paid minimum annual cash compensation of $400,000 and is employed for a term
ending on March 31, 2002. This term is automatically extended for successive
two-year periods unless written notice to terminate is given at least six months
prior to the expiration of the term or any such two-year extension of the term.
Dr. Bersoff's minimum annual cash compensation for such two-year extensions will
increase by 10% for each such extension. Dr. Bersoff's employment may be
terminated by the Board of Directors of the Company for willful and gross
misconduct and in the case of death or illness or disability which prevents Dr.
Bersoff from substantially fulfilling his duties for a period in excess of six
consecutive months. If Dr. Bersoff's employment is terminated because of death
or illness or disability, he or his estate, as the case may be, will be paid the
cash compensation due Dr. Bersoff for a period of three months following the
date of termination. The agreement includes a covenant by Dr. Bersoff not to be
involved, directly or indirectly, in a business enterprise that competes with
the Company during the term of his employment and for two years thereafter. In
addition, under the terms of his employment agreement, Dr. Bersoff will be
nominated to serve as a director of BTG during the term of his employment.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is comprised of three non-employee members of
the Board of Directors. It has been authorized to oversee the Company's
executive compensation program as well as the Option Plan. The committee
establishes the salary and option levels for the executive officers of the
Company and approves the recommendation of the Chief Executive Officer with
respect to other key executive employees of the Company. All decisions by the
committee relating to compensation of executive officers and other key
employees, including the awarding of stock options, are reviewed by the full
Board of Directors.
The Company's executive compensation program has been designed to attract
and retain highly qualified executive personnel in order to enhance the
financial strength and profitability of the Company. The Company supports a
pay-for-performance policy that rewards individuals for achieving goals that
further the long-term plans of the Company. The Compensation Committee is
mindful of the need to maintain competitive compensation opportunities while
encouraging superlative performance. The program is designed to recruit and
retain talented executives who are critical to the Company's long-term success.
9
<PAGE> 13
Executive compensation consists of three components: base salary; annual
incentive bonus; and stock options. The Compensation Committee reviews base
salaries for executive officers annually, prior to the start of each fiscal
year. Prior to fiscal year 1997, compensation was reviewed annually before the
start of the calendar year. Although base salaries are generally competitive
with those of comparable companies, the Compensation Committee's philosophy is
to provide a substantial portion of the incentive for performance through
incentive bonuses and stock options. Incentive bonuses are paid only to the
extent that predetermined corporate, business unit, and individual goals are
achieved.
In order to qualify for an incentive bonus, each key employee must
negotiate the terms of a BTG Performance Agreement (BPA) with his or her
supervisor. The BPA of the Chief Executive Officer is a reflection of the steps
required to be satisfied in implementing the then current five-year strategic
plan of the Company. Each executive officer's BPA is geared toward the
satisfaction of that portion of the Chief Executive's BPA as is appropriate,
thereby linking incentive compensation, in the form of the annual bonus, to the
short and long-term goals of the Company. Satisfaction of performance objectives
is measured quarterly and serves, along with the fulfillment of predetermined
corporate and business unit goals, as the basis for the granting of key employee
bonuses.
To encourage growth and shareholder value, stock options are granted
pursuant to the Option Plan to key management personnel who are in a position to
make substantial contributions to the long-term success of the Company. The
Compensation Committee believes that this focuses attention on managing the
Company from the perspective of an owner with an equity interest in the
business. For fiscal year 1998, the Compensation Committee, in consultation with
the entire Board of Directors, determined that a total of $170,000 in incentive
bonuses would be paid to the executive officers of the Company. In addition, a
bonus of $58,333 was paid to Steven Baldwin in accordance with an agreement
dated October 20, 1995, and executed in connection with the acquisition by the
Company of Concept Automation, Inc. of America.
Like all Company employees, the Named Executive Officers participate in the
Company's 401(k) Profit Sharing Plan. The Compensation Committee also provides
reimbursement for the cost of health care not covered by insurance, tax
preparation, financial planning, and legal expenses related to estate planning,
adoptions and divorce, to a maximum of $12,000 per year to all senior corporate
officers.
Dr. Bersoff has served in his current capacity as Chairman of the Board,
President, and Chief Executive Officer since founding the Company in 1982 and as
Acting Chief Financial Officer since May 1998. The Compensation Committee
believes that the success of BTG since its founding, and more particularly since
going public in December of 1994, has been directly related to Dr. Bersoff's
local, regional, and national activities as well as his entrepreneurial
abilities. Throughout his term, Dr. Bersoff has served as a leader within the
Company as well as within the greater metropolitan Washington business
community. The Compensation Committee's general approach in setting the Chief
Executive Officer's compensation is to tie a significant portion of his
compensation to Company performance, and to seek to be competitive with other
companies of similar size in the Company's industry. The Compensation Committee
believes that Dr. Bersoff's efforts to implement the Company's plan to
restructure its organization and refocus on its core competencies of systems
engineering and systems integration justify his salary of $398,334. However, due
to the failure to achieve certain of the goals established in his BPA, no
incentive bonus was paid for fiscal year 1998. Although Dr. Bersoff's salary for
fiscal 1998 represents an 11.6% increase over his salary for fiscal 1997, Dr.
Bersoff's combined salary and bonus for fiscal 1998 remain 10.7% lower than his
combined salary and bonus for fiscal 1996.
Respectfully submitted,
Organization and Compensation
Committee
Alan G. Merten
Raymond T. Tate
Donald M. Wallach, Chairman
10
<PAGE> 14
STOCK PERFORMANCE CHART
The following chart compares the percentage change in the cumulative total
shareholder return on the Common Stock since the Company's initial public
offering completed in December 1994, with the cumulative total return on the
NASDAQ Composite Index and a peer group of companies. The NASDAQ Composite Index
is a broad-based, capitalization-weighted index of all NASDAQ stocks. The peer
group consists of six companies each of whose business focus is similar to that
of the Company. While none of the selected peers offers a range of products and
services fully comparable to that of the Company, each is recognized as a
provider of high technology electronic, computer and communications equipment
and engineering services primarily to the Government and other Government
resellers. The returns of each company have been weighted according to its
respective stock market capitalization for the purpose of arriving at a peer
group average. Dividends paid by those peer companies that pay dividends are
assumed to be reinvested at the end of the ex-dividend month without any
transaction cost. The members of the peer group are as follows: American
Management Systems, Incorporated, Analysis and Technology, Inc., CACI
International, Inc., GRC International, Inc., Microdyne Corporation, and Nichols
Research Corp. This list differs from the peer group used in prior years. Three
of the companies previously listed among the prior peer group -- Computer Data
Systems, Inc., Logicon, Inc., and Questech, Inc. -- have been acquired by other
companies and their stock is no longer publicly traded. Also deleted is
Government Technology Services, Inc., because the Company is no longer in the
same line of business as that entity. Accordingly, the Company has restated the
results for the old peer group for fiscal year 1997 and has added results for
the new peer group as of that year. The comparison assumes $100 was invested on
December 23, 1994 in the Company's Common Stock, in the peer group composites,
and in the NASDAQ Composite Index, and assumes reinvestment of dividends, as
previously described.
<TABLE>
<CAPTION>
Measurement Period Nasdaq Composite Old New
(Fiscal Year Covered) BTG, Inc Index Peer Group Return Peer Group Return
<S> <C> <C> <C> <C>
12/23/94 100.00 100.00 100.00 100.00
3/31/95 96.87 110.34 98.29
3/31/96 123.43 148.85 153.14
3/31/97 218.75 166.38 227.38 169.77
3/31/98 114.84 251.18 235.14
</TABLE>
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers, and certain beneficial holders of
Common Stock to file reports with the SEC on Forms 3, 4, and 5 to report their
ownership of and transactions in Common Stock. During the Company's fiscal year
1998, Alan Merten failed timely to report 1 transaction, and Raymond Tate failed
timely to report 2 transactions.
11
<PAGE> 15
INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM TWO)
The Board of Directors has renewed the appointment of KPMG Peat Marwick LLP
to act as the Company's independent public accountants for fiscal 1999, subject
to ratification by shareholders at the Annual Meeting. Representatives of KPMG
Peat Marwick LLP will be present at the Annual Meeting. They will be given an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions. Unless otherwise indicated, properly executed
proxies will be voted in favor of ratifying the appointment of KPMG Peat Marwick
LLP to audit the books and accounts of the Company for the fiscal year ending
March 31, 1999. No determination has been made as to what action the Board of
Directors would take if the shareholders do not ratify the appointment.
YOUR PROXY WILL BE VOTED FOR THIS PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
SHAREHOLDER PROPOSAL
(ITEM THREE)
A shareholder of the Company has advised the Company of his intent to
present the following proposal for a vote of the shareholders at the Annual
Meeting. The Board of Directors and the Company take no responsibility for this
proposal:
To enhance share value, the shareholders recommend that the Board of
Directors explore the possible sale of the Company for cash and/or
securities valued at no less than $16.00 (Sixteen Dollars) per
share.
To be adopted, the proposal must be approved by the affirmative vote of the
majority of the shares voting on the proposal present in person or represented
by proxy at the Annual Meeting. Any shares not voted (by abstention, broker
non-vote or otherwise) have no effect on such vote. The proposing shareholder
has not submitted a statement in support of the proposal. The name, address, and
number of shares of Common Stock owned by the shareholder proponent will be
furnished by the Company upon request.
YOUR DIRECTORS RECOMMEND A VOTE AGAINST THIS PROPOSAL.
Your Board of Directors believes that adopting this proposal would not
serve any useful purpose and would be contrary to the best interests of the
Company and its shareholders. The Board of Directors and management of the
Company are committed to the maximization of shareholder value. The Board of
Directors and management are continually reviewing all of the options open to
the Company, including the sale, merger, or other disposition of Company assets.
However, the Board of Directors and the management believe that it would be
counter to the best interests of the Company formally to adopt a resolution that
puts the Company up for sale. Such an action could adversely affect the
Company's ability to retain and recruit employees of the caliber necessary to
compete in the information technology arena. The Board of Directors has
previously approved the sale of certain assets of the Company where it believed
that such sale was in the best interest of the Company and would result in a
maximization of shareholder value. The Board of Directors will continue to
exercise its business judgment to make such decisions.
YOUR PROXY WILL BE VOTED AGAINST THIS PROPOSAL IF IT IS PRESENTED AT THE
MEETING, UNLESS YOU SPECIFY OTHERWISE.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE INCLUDED
IN PROXY MATERIALS
Any proposal submitted under SEC Rule 14a-8 for inclusion in next year's
annual meeting proxy statement must be received by BTG by April 16, 1999. Any
other proposal for consideration by shareholders at next year's annual meeting
must be received by BTG by May 7, 1999.
12
<PAGE> 16
OTHER BUSINESS TO BE TRANSACTED
As of the date of this proxy statement, the Board of Directors of BTG knows
of no other business which may come before the Annual Meeting. If any other
business is properly brought before the Annual Meeting, it is the intention of
the proxy holders to vote or act in accordance with their best judgment with
respect to such matters.
By order of the Board of Directors of
BTG, Inc.
/s/ EDWARD H. BERSOFF
Edward H. Bersoff
Chairman of the Board, President, and
Chief Executive Officer
Fairfax, Virginia
July 15, 1998
COPIES OF THE ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED MARCH
31, 1998, ACCOMPANY THIS PROXY STATEMENT. SHAREHOLDERS MAY OBTAIN, FREE OF
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K BY WRITING TO BTG,
INC., ATTENTION: INVESTOR RELATIONS, 3877 FAIRFAX RIDGE ROAD, FAIRFAX, VIRGINIA
22030, OR BY E-MAIL: [email protected]
13
<PAGE> 17
REVOCABLE PROXY
BTG, INC.
3877 FAIRFAX RIDGE ROAD FAIRFAX, VIRGINIA 22030
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE
ONLY AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 5, 1998, AND AT
ANY ADJOURNMENT THEREOF.
The undersigned, being a shareholder of BTG, Inc. (the "Company"), hereby
appoints Edward H. Bersoff as proxy and hereby authorizes such proxy to
represent the undersigned at the Annual Meeting of Shareholders of the Company
to be held at the Hyatt Regency Reston, 1800 Presidents Street, Reston, VA 20190
on August 5, 1998 at 10:00 a.m., Eastern Time, and at any adjournment of said
meeting, and thereat to act with respect to all votes that the undersigned would
be entitled to cast, if then personally present, in accordance with the
following instructions. The undersigned shareholder hereby revokes any proxy or
proxies heretofore given.
1. Proposal to elect the following three nominees for Director, each for a
three-year term expiring at the 2001 Annual Meeting:
Ronald L. Turner Alan G. Merten Earle C. Williams
[ ] FOR all the nominees listed above.
[ ] WITHHOLD AUTHORITY to vote for the following nominee(s):
2. Proposal to ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending March 31, 1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal submitted by a shareholder, as set forth in the Proxy Statement, if
it is presented at the Annual Meeting:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To vote in its discretion, upon any other business that may properly come
before that Annual Meeting or any adjournment thereof. Except with respect to
procedural matters incident to the conduct of the Meeting, management is not
aware of any other matters which should come before the Annual Meeting:
(Continued and to be signed and dated on reverse side)
(continued from reverse side)
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of
Shareholders of BTG, Inc. called for August 5, 1998, and a Proxy Statement prior
to signing this Proxy.
[ ] I PLAN TO ATTEND THE AUGUST 5, 1998 ANNUAL SHAREHOLDERS MEETING
Dated: , 1998
--------------------------
--------------------------------------
SIGNATURE
Note: Please sign exactly as your name
appears on this proxy. Only one
signature is required where the stock
is held jointly. When signing in a
representative capacity, please give
title.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER. IF NO DIRECTION IS OTHERWISE MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3, IF PRESENTED AT THE MEETING, AT
THE DISCRETION OF THE PROXY. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS
VOTED BY DELIVERY TO THE SECRETARY OF THE COMPANY EITHER A WRITTEN REVOCATION OF
THE PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY APPEARING AT THE
ANNUAL MEETING AND VOTING IN PERSON.
