<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Renaissance Solutions, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[X] 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>
RENAISSANCE SOLUTIONS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of
Renaissance Solutions, Inc., a Delaware corporation (the "Company"), will be
held on Friday, November 15, 1996 at 10:00 a.m. at the offices of Hale and
Dorr, 60 State Street, Boston, Massachusetts (the "Meeting") for the purpose
of considering and voting upon the following matters:
1.To approve an amendment to the Company's 1995 Equity Incentive Plan (the
"Plan") increasing from 1,100,000 to 2,100,000 the number of shares of
Common Stock authorized under the Plan; and
2.To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on October 18, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting and at any adjournments thereof.
By order of the Board of Directors,
Harry M. Lasker,
Secretary
October 23, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE NEED BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
RENAISSANCE SOLUTIONS, INC.
LINCOLN NORTH
55 OLD BEDFORD ROAD
LINCOLN, MASSACHUSETTS 01773
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Renaissance Solutions, Inc. (the
"Company") at the Special Meeting of Stockholders to be held on Friday,
November 15, 1996 at 10:00 a.m. at the offices of Hale and Dorr, 60 State
Street, Boston, Massachusetts and at any adjournments thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Special Meeting. Any proxy
may be revoked by a stockholder at any time before its exercise by delivery of
a written revocation to the Secretary of the Company. Attendance at the
Meeting will not itself be deemed to revoke a Proxy unless the stockholder
gives affirmative notice at the Meeting that the stockholder intends to revoke
the Proxy and vote in person.
On October 18, 1996, the record date for determination of stockholders
entitled to vote at the Meeting, there were outstanding and entitled to vote
an aggregate of 7,035,518 shares of Common Stock of the Company, $.0001 par
value per share (the "Common Stock"). Each share entitles the record holder to
one vote on each of the matters to be voted upon at the Meeting.
THE NOTICE OF SPECIAL MEETING, THIS PROXY STATEMENT AND THE ENCLOSED PROXY
ARE BEING MAILED TO STOCKHOLDERS ON OR ABOUT OCTOBER 23, 1996.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 31, 1996
with respect to the beneficial ownership of shares of Common Stock by (i) each
person known to the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) the directors of the Company, (iii)
the Chief Executive Officer and the other four executive officers listed in
the Summary Compensation Table below (the "Named Executive Officers"), and
(iv) the directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1)
---------------------------
NAME AND ADDRESS PERCENT OF
OF BENEFICIAL OWNER NUMBER OF SHARES CLASS
------------------- ---------------- ----------
<S> <C> <C>
Harry M. Lasker (2)............................... 975,785 13.9%
c/o Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, MA 01773
David A. Lubin (3)................................ 975,786 13.9
c/o Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, MA 01773
Melissa E. Norton (4)............................. 975,786 13.9
c/o Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, MA 01773
Gemini Consulting, Inc. (5)....................... 783,600 10.2
25 Airport Road
Morristown, NJ 07960
Putnam Investments, Inc. (6)...................... 705,783 10.1
One Post Office Square
Boston, MA 02109
David P. Norton (7)............................... 975,786 13.9
Robert S. Kaplan (8).............................. 24,902 *
John F. Rockart (9)............................... 12,500 *
Gresham T. Brebach, Jr. (10)...................... 18,012 *
Ronald K. Bohlin (11)............................. 16,256 *
George A. McMillan (12)........................... 50,075 *
All directors and executive officers as a group (8
persons) (13).................................... 3,049,102 42.9
</TABLE>
- --------
*Less than 1%
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which
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<PAGE>
the individual has the right to acquire within 60 days after August 31,
1996 through the exercise of any stock option or other right. The
inclusion herein of such shares, however, does not constitute an admission
that the named stockholder is a direct or indirect beneficial owner of
such shares. Unless otherwise indicated, each person or entity named in
the table has sole voting power and investment power (or shares such power
with his or her spouse) with respect to all shares of capital stock listed
as owned by such person or entity.
(2) Includes 117,023 shares held by The Harry M. Lasker Children's Trust, the
beneficiaries of which are Mr. Lasker's children and a trustee of which
is Mr. Lasker's spouse, as to which shares Mr. Lasker disclaims
beneficial ownership. Also includes 50,000 shares of Common Stock subject
to a stock option granted to Gemini Consulting, Inc. ("Gemini").
(3) Includes 82,856 shares held by The David A. Lubin Children's Trust, the
beneficiaries of which are Mr. Lubin's children, as to which shares Mr.
Lubin disclaims beneficial ownership. Also includes 50,000 shares of
Common Stock subject to a stock option granted to Gemini.
(4) Includes 50,000 shares of Common Stock subject to a stock option granted
to Gemini. Ms. Norton is the spouse of David P. Norton, the President,
Chief Executive Officer and a Director of the Company.
(5) Consists of warrants to purchase 633,600 shares of Common Stock from the
Company and options to purchase an aggregate of 150,000 shares of Common
Stock from Messrs. Lasker and Lubin and Ms. Norton.
(6) The information reported is based on a Schedule 13G, dated September 9,
1996, filed with the Securities and Exchange Commission by Putnam
Investments, Inc. ("PI"), Marsh & McLennan Companies, Inc. ("MMC"),
Putnam Investment Management, Inc. ("PIM") and The Putnam Advisory
Company, Inc. ("PAC"). PI is a registered investment advisor, in which
capacity it advises PIM and PAC and has shared voting power with respect
to 121,800 shares and shared dispositive power with respect to 705,783
shares. PIM has shared dispositive power with respect to 548,283 shares.
PAC has shared voting power with respect to 121,800 shares and shared
dispositive power with respect to 157,500 shares. MMC is the parent
holding company of PI. PI and MMC disclaim beneficial ownership of such
shares.
(7) Includes 975,786 shares held by Melissa E. Norton, the spouse of Mr.
Norton, as to which shares Mr. Norton disclaims beneficial ownership.
Also includes 50,000 shares of Common Stock subject to a stock option
granted to Gemini.
(8) Includes 14,900 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(9) Consists of 12,500 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(10) Consists of 18,012 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(11) Consists of 16,256 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(12) Includes 26,566 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(13) Includes 88,234 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock
3
<PAGE>
present in person or represented by proxy (including shares of Common Stock
which abstain or do not vote with respect to the matter presented for
stockholder approval) will be counted for purposes of determining whether a
quorum exists at the Meeting.
The affirmative vote of a majority of the shares present or represented and
voting on the matter is required for the approval of the amendment to the
Company's 1995 Equity Incentive Plan.
Shares which abstain from voting, and shares held in "street name" by
brokers or nominees who indicate on their proxies that they do not have
discretionary authority to vote such shares as to a particular matter, will
not be counted as votes in favor of such matter, and will also not be counted
as votes cast or shares voting on such matter. Accordingly, abstentions and
"broker non-votes" will have no effect on the voting on approval of the
amendment to the Company's 1995 Equity Incentive Plan.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives reimbursements
for expenses incurred in service of the Company as a director, receives a
quarterly retainer of $2,500 and participates in the Company's 1995 Director
Stock Option Plan.
1995 Director Stock Option Plan
The 1995 Director Stock Option Plan (the "Director Plan") was adopted by the
Board of Directors and approved by the stockholders of the Company in January
1995. Under the terms of the Director Plan, directors of the Company who are
not employees of the Company or any subsidiary of the Company are eligible to
receive non-statutory options to purchase shares of Common Stock. A total of
50,000 shares of Common Stock may be issued upon exercise of options granted
under the Director Plan. As of August 31, 1996, Mr. Kaplan and Dr. Rockart had
each been granted options to purchase 10,000 shares at an exercise price of
$12.25 per share and options to purchase 2,500 shares at an exercise price of
$28.75 per share, and 25,000 shares remained eligible for future option grants
under the Director Plan.
Each eligible director is granted an option to purchase 10,000 shares of
Common Stock on the date of his or her initial election to the Board of
Directors. Annual options to purchase 2,500 shares of Common Stock are granted
to each eligible director on April 15 of each subsequent fiscal year. The
exercise price of options granted under the Director Plan is equal to the
closing price of the Common Stock on the Nasdaq National Market on the date of
grant.
Options granted under the Director Plan are not transferrable by the
optionee except by will or by the laws of descent and distribution. No option
is exercisable after the expiration of five years from the date of grant.
COMPENSATION OF EXECUTIVE OFFICERS
Employment Agreements
The Company is a party to employment agreements (the "Employment
Agreements") with each of Messrs. Lasker, Lubin and Norton (the "Principals")
for the period commencing January 31, 1995 and ending January 31, 1997.
Pursuant to the Employment Agreements, each of Mr. Lasker and Mr. Lubin is
employed as a Co-Chairman of the Company and Mr. Norton is employed as
President and Chief Executive Officer of the Company. The Employment
Agreements originally provided for an annual base salary of $500,000.
Effective July 1, 1996, the Employment Agreements were amended to provide for
an annual base salary of $375,000. Each Principal also is eligible for bonuses
at the discretion of the Board of Directors if the Principal satisfies
targeted performance objectives. Each Employment Agreement provides that the
Principal's employment may be terminated by the Company for "cause" (as
defined in the Employment Agreement) or upon the death or disability of the
Principal. Each Employment Agreement also contains covenants by the Principal
not to solicit any of the Company's employees or customers or disclose or use
any of the Company's proprietary information
4
<PAGE>
for a period of two years following the termination of the Principal's
employment and, in the event that the Principal is terminated for cause, not
to compete with the Company during such two year period. Each Principal has
agreed to assign his right, title and interest to any inventions, software and
other works created by him or at his direction to the Company.
The Company is also a party to employment agreements with each of Messrs.
Gresham T. Brebach, Ronald K. Bohlin and George A. McMillan (the "Executive
Agreements"). The Executive Agreements provide for annual salaries of
$375,000, $300,000 and $250,000 for Messrs. Brebach, Bohlin and McMillan,
respectively. Under the Executive Agreement, each officer agrees not to
disclose any confidential information of the Company. Pursuant to the
Executive Agreement, all inventions and intellectual property rights therein,
developed, acquired or conceived by the officer during the term of his
employment become the exclusive property of the Company. Each Executive
Agreement provides that for a period of two years after the date of
termination of employment, the officer shall not solicit any of the Company's
employees or customers. Each Executive Agreement may be terminated upon 30
days' written notice by the Company or the officer for any reason or
immediately by the Company in the event that it believes that the officer has
acted in a manner detrimental to the Company's best interests. In addition,
under each Executive Agreement, in the event of certain changes in control of
the Company (as defined), all unvested stock options then held by such officer
shall immediately become exercisable as of the date of such termination.
Summary Compensation
The following table sets forth certain information with respect to the
annual and long-term compensation of the Chief Executive Officer of the
Company and each of the four other most highly compensated executive officers
of the Company (the "Named Executive Officers") for the two years ended
December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------- ------------
RESTRICTED ALL OTHER
NAME AND SALARY BONUS STOCK COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) AWARDS($) ($)(2)
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David P. Norton......... 1995 $500,000(1) $ 0 $-- $500(5)
President and Chief Ex- 1994 250,000 473,643(2) -- 500(5)
ecutive Officer
Harry M. Lasker......... 1995 500,000(1) 0 -- 500(5)
Co-Chairman and Secre- 1994 250,000 322,601(2) -- 500(5)
tary
David A. Lubin.......... 1995 500,000(1) 0 -- 500(5)
Co-Chairman and Trea- 1994 250,000 374,858(2) -- 500(5)
surer
Gresham T. Brebach,
Jr..................... 1995 373,558 69,711 -- 0
Executive Vice Presi-
dent--Client Services
George A. McMillan...... 1995 250,000(1) 77,500(3) -- 500(5)
Vice President, Chief 1994 238,269 33,750 -- (4) 500(5)
Financial Officer
and Chief Operating Of-
ficer
</TABLE>
- --------
(1) Includes $50,000 paid to the Named Executive Officer as salary in 1995
which he has repaid to the Company in 1996 in connection with the election
by the Company's Co-Chairmen and Chief Executive Officer to permanently
forego a total of $150,000 in compensation to which they were otherwise
entitled in 1995.
5
<PAGE>
(2) Includes amounts payable in 1995 for services rendered by the Named
Executive Officer in 1994.
(3) Includes $15,000 payable in 1996 for services rendered by the Named
Executive Officer in 1995.
(4) On January 17, 1994 the Company made a restricted stock award of 37,509
shares of Common Stock (after giving effect to the Company's reorganization
in April 1995) to Mr. McMillan. Mr. McMillan paid the Company $150 for such
award, representing the fair market value of the award as determined by the
Board of Directors on the date of the grant. The shares were granted
subject to a repurchase option in favor of the Company, which option lapses
over a five year period with respect to 10%, 20%, 20% and 50% of the shares
on July 7, 1994, July 6, 1995, July 6, 1996 and July 6, 1998 (representing
the day following the first anniversary of Mr. McMillan's date of hire and
the second, third and fifth anniversaries of the date of hire),
respectively.
(5) Represents the Company's 401(k) profit-sharing plan matching contribution.
Option Grants
The following table sets forth certain information concerning grants of stock
option made during fiscal 1995 to each of the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------ ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF TOTAL EXERCISE PRICE APPRECIATION FOR
SECURITIES OPTIONS GRANTED PRICE OPTIONS TERMS(2)
UNDERLYING TO EMPLOYEES PER EXPIRATION -----------------------
NAME OPTIONS GRANTED IN FISCAL YEAR SHARE DATE(1) 5% 10%
---- --------------- ---------------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
David P. Norton......... -- -- -- -- -- --
Harry M. Lasker......... -- -- -- -- -- --
David A. Lubin.......... -- -- -- -- -- --
Gresham T. Brebach,
Jr. ................... 200,048(3) 28% $8.00 1/31/05 $ 1,006,473 $ 2,550,600
George A. McMillan...... 25,006(3) 3 8.00 1/31/05 125,809 318,825
</TABLE>
- --------
(1) The expiration date of an option is the tenth anniversary of the date on
which the option was originally granted. The exercisability of these
options is accelerated upon the occurrence of a change in control.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10%, compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the Common Stock, the
optionholders' continued employment through the option period, and the date
on which the options are exercised.
(3) These stock options are exercisable in four equal annual installments
commencing on January 4, 1996, in the case of Mr. Brebach, and on July 7,
1994, in the case of Mr. McMillan.
6
<PAGE>
Year-End Option Table
The following table summarizes certain information regarding stock options
held as of December 31, 1995 by each of the Named Executive Officers. No stock
options were exercised by any of the Named Executive Officers during 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
NAME (#) ($)(1) (#) ($)(2)
---- ----------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
David P. Norton......... -- -- -- / -- -- / --
Harry M. Lasker......... -- -- -- / -- -- / --
David A. Lubin.......... -- -- -- / -- -- / --
Gresham T. Brebach,
Jr..................... -- -- 0/200,048 $0/$1,250,300
George A. McMillan...... -- -- 12,503/12,503 78,144/78,144
</TABLE>
- --------
(1) Based on the fair market value of the Common Stock as of December 29, 1995
($14.25 per share) less the option exercise price, multiplied by the
number of shares underlying the options.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Director is responsible
for establishing compensation policies with respect to the Company's executive
officers, including the Chief Executive Officer, the Co-Chairmen and the other
executive officers named in the Summary Compensation Table, and setting the
compensation for these individuals.
The Compensation Committee seeks to achieve three broad goals in connection
with the Company's executive compensation programs and decisions regarding
individual compensation. First, the Compensation Committee structures
executive compensation programs in a manner that the Committee believes will
enable the Company to attract and retain key executives. In order to ensure
continuity of certain key members of management, the Company has entered into
multi-year employment contracts. Second, except as described below, the
Compensation Committee establishes compensation programs that are designed to
reward executives for the achievement by the Company of net income goals and
the achievement by the executives of certain assigned objectives. By tying
compensation in part to particular goals, the Compensation Committee believes
that a performance-oriented environment is created for the Company's
executives. Finally, the Company's executive compensation programs are
intended to provide executives with an equity interest in the Company so as to
link a portion of the compensation of the Company's executives with the
performance of the Company's Common Stock.
The compensation programs for the Company's executives (other than Messrs.
Norton, Lasker and Lubin, the Company's founders and its Chief Executive
Officer and two Co-Chairmen) generally consist of three elements based upon
the foregoing objectives: base salary; annual cash bonus; and a stock-based
equity incentive in the form of participation in the Company's stock option
plans. In establishing base salaries for executives, the
7
<PAGE>
Compensation Committee monitors salaries at other companies, particularly
those that are in the same industry as the Company or related industries
and/or located in the same general geographic area as the Company, considers
historic salary levels of the individual and the nature of the individual's
responsibilities and compares the individual's base salary with those of other
executives at the Company. To the extent determined to be appropriate, the
Compensation Committee also considers general economic conditions, the
Company's financial performance and the individual's performance in
establishing base salaries of executives.
Messrs. Norton, Lasker and Lubin are parties to multi-year employment
agreements with the Company that fix the executive's annual base salary during
the term of the agreement, subject to increase (but not decrease) at the
discretion of the Board of Directors. The Compensation Committee believes that
the base salary levels provided for in these contracts establish appropriate
base salary levels for the covered individuals in light of the factors
described above. Moreover, these agreements include provisions prohibiting the
executive from soliciting any of the Company's employees or customers during
the term of the agreement and for a specified number of years thereafter.
The Compensation Committee generally structures cash bonuses by linking them
to annual net income goals and the achievement by the executives of certain
assigned objectives. The individual objectives set for executive officers of
the Company are generally both objective and subjective in nature and include
such goals as sales bookings, revenue, profit and departmental objectives. The
Compensation Committee believes that these arrangements tie the executive's
performance closely to a key measure of success of the Company or the
executive's business unit. None of Messrs. Norton, Lasker and Lubin was
entitled to a bonus in 1995. The Compensation Committee believes that the
substantial equity position in the Company held by these executive officers
provides them with adequate incentives.
Stock option grants in 1995 were designed to make a portion of the overall
compensation of the executive officers receiving such awards vary depending
upon the performance of the Company's Common Stock. As a result of the
applicable vesting arrangements, such grants also serve as a means for the
Company to retain the services of these individuals. In January 1995, the
Company granted options to each of the executive officers of the Company,
other than Messrs. Norton, Lasker and Lubin. The Compensation Committee
intends to evaluate the merits of option awards during 1996 and is considering
increasing the proportion of overall compensation of certain executive
officers consisting of stock options and/or other equity based incentives.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1,000,000 paid to its chief executive officer
and its four other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. In this regard, the Company has limited the
number of shares subject to stock options which may be granted to Company
employees in a manner that complies with the performance-based requirements of
Section 162(m). Based on the compensation awarded to Messrs. Lasker, Lubin and
Norton and the other executive officers of the Company, it does not appear
that the Section 162(m) limitation will have a significant impact on the
Company in the near term. While the Committee does not currently intend to
qualify its incentive awards as a performance-based plan, it will continue to
monitor the impact of Section 162(m) on the Company.
Robert S. Kaplan
John F. Rockart
8
<PAGE>
Compensation Committee Interlocks and Insider Participation
The current members of the Company's Compensation Committee are Mr. Kaplan
and Dr. Rockart. No executive officer of the Company has served as a director
or member of the compensation committee (or other committee serving an
equivalent function) of any other entity, whose executive officers served as a
director of or member of the Compensation Committee of the Company.
Comparative Stock Performance
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the period from April 4, 1995 through December
31, 1995 with the cumulative total return on (i) the Nasdaq Composite Index, and
(ii) the Russel 2000 Index. The comparison assumes the investment of $100 on
April 4, 1995 in the Company's Common Stock and in each of the indices and, in
each case, assumes reinvestment of all dividends. Prior to April 4, 1995, the
company's Common Stock was not registered under the Exchange Act.
[COMPARATIVE STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
4/4/95 12/31/95
<S> <C> <C>
Renaissance Solutions, Inc. 100 110
Nasdaq Composite Index 100 129
Russel 2000 Index 100 121
</TABLE>
9
<PAGE>
PROPOSAL 1--APPROVAL OF AMENDMENT TO 1995 EQUITY INCENTIVE PLAN
The Board of Directors believes that the continued growth and profitability
of the Company depends, in large part, upon the ability of the Company to
maintain a competitive position in attracting and retaining key personnel. As
of August 31, 1996, 52,252 shares remained available for stock option grants
and restricted stock awards to the Company's employees under the 1995 Equity
Incentive Plan (the "Plan"). Accordingly, on September 18, 1996, the Board of
Directors adopted, subject to shareholder approval, an amendment (the
"Amendment") to the Plan increasing the number of shares of Common Stock
available for issuance under the Plan from 1,100,000 to 2,100,000 (subject to
adjustment for certain changes in the Company's capitalization). If the
Amendment is approved, the Company will have additional authorized shares of
Common Stock available for future grants and awards, including grants and
awards in connection with any merger, consolidation or acquisition by the
Company.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE AMENDMENT IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THIS PROPOSAL.
Summary of the Plan
The following is a brief summary of the provisions of the Plan.
The Plan was adopted by the Board of Directors and approved by the
stockholders of the Company in January 1995. Under the terms of the Plan the
Company is authorized to make awards of restricted stock and to grant
incentive and non-statutory options to purchase shares of the Common Stock of
the Company to employees (including officers and employee directors) of, and
consultants and advisors to, the Company. Currently, a total of 1,100,000
shares of Common Stock may be issued upon exercise of options granted or
awards made under the Plan. As of August 31, 1996, (i) options to purchase a
total of 945,136 shares at a weighted average exercise price of $13.84 per
share were outstanding under the Plan, (ii) no restricted stock awards had
been made, and (iii) 52,252 shares remained available for future grants and
awards. These options generally vest in five equal annual installments
commencing on the date of grant.
The granting of options and awards under the Plan is discretionary, and the
Company cannot now determine the number or type of options and awards to be
granted in the future to any particular person or group. Pursuant to the Plan,
(i) Mr. Brebach, the Company's Executive Vice President--Client Services, and
Mr. McMillan, the Company's Vice President, Chief Financial Officer and Chief
Operating Officer, have received options to purchase 250,048 shares of Common
Stock and 56,256 shares of Common Stock, respectively, (ii) all current
executive officers of the Company, as a group, have received options to
purchase 431,328 shares of Common Stock, (iii) Mr. Kaplan, a non-employee
director, has received an option to purchase 12,004 shares of Common Stock,
and (iv) all employees, including all current officers who are not executive
officers, as a group, have received options to purchase 616,420 shares of
Common Stock.
Restricted stock awards and stock option grants under the Plan, and all
questions of interpretation with respect to the Plan, are determined by the
Board of Directors or by a committee appointed by the Board of Directors.
Stock option grants under the Plan entitle the optionee to purchase Common
Stock from the Company, for a specified exercise price, during the periods
specified in the applicable option agreement. The Board of Directors or the
committee, if one is designated, selects the persons to whom options are
granted, and determines the number of shares covered by each option, its
exercise price, its vesting schedule and its expiration date. Options are
generally not assignable or transferable except by will or the laws of descent
and distribution.
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Restricted stock awards under the Plan entitle the recipient to purchase
Common Stock from the Company under terms which provide for vesting over a
period of time and a right of repurchase of unvested stock when the
recipient's relationship with the Company terminates. The Board of Directors
or the committee, if one is designated, selects the recipients of restricted
stock awards, determines the times at which restricted stock awards are made,
and determines the number of shares of Common Stock subject to the award, the
purchase price (which can be less than the fair market value of the Common
Stock) and the vesting schedule for such shares. The recipients may not sell,
transfer or otherwise dispose of shares subject to a restricted stock award
until such shares are vested. Upon termination of the recipient's relationship
with the Company, the Company will be entitled to repurchase those shares
which are not vested on the termination date at a price equal to their
original purchase price.
As of August 31, 1996, the Company had approximately 148 employees
(including part-time employees and independent contractors and representing
138 full-time equivalent employees), all of whom were eligible to participate
in the Plan. The number of individuals receiving stock options or awards may
vary from year to year depending on various factors, such as the number of
promotions and the Company's hiring needs during the year, and thus the
Company cannot now determine award recipients.
Federal Income Tax Consequences
The following is a general summary of the federal income tax treatment of
incentive stock options, non-statutory stock options and restricted stock
awards granted under the Plan.
Incentive Stock Options. No taxable income will be recognized by an optionee
upon the grant or exercise of an incentive stock option granted under the Plan
(provided that the difference between the option exercise price and the fair
market value of the stock on the date of exercise must be included in the
optionee's "alternative minimum taxable income" as described below), and no
corresponding expense deduction will be available to the Company.
Generally, if an optionee holds shares acquired upon the exercise of
incentive stock options until the later of (i) two years from the grant of the
option and (ii) one year from the date of transfer of the purchased shares to
him or her (the "Statutory Holding Period"), any gain to the optionee upon a
sale of such shares will be treated as capital gain. The gain recognized upon
the sale of the stock is the difference between the option price and the sale
price of the stock. The net federal income tax effect on the holder of
incentive stock options is to defer, until the underlying stock is sold,
taxation of any increase in the stock's value from the time of grant to the
time of exercise, and to cause all such increase to be treated as capital
gain.
If the optionee sells the shares prior to the expiration of the Statutory
Holding Period (a "disqualifying disposition"), he or she will realize taxable
income at ordinary income tax rates in an amount equal to the lesser of (i)
the fair market value of the shares on the date of exercise less the option
price, or (ii) the amount realized on the sale less the option price, and the
Company will receive a corresponding business expense deduction. However,
special rules may apply to an optionee who is an officer or director. Any
additional gain will be treated as long-term capital gain if the shares are
held for more than one year prior to the sale and as short-term capital gain
if the shares are held for a shorter period. If the optionee sells the stock
for less than the option price, then he or she will recognize a capital loss
equal to the difference between the sale price and the option price. The loss
will be treated as a long-term capital loss if the shares are held for more
than one year prior to the sale and as a short-term capital loss if the shares
are held for a shorter period.
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<PAGE>
For purposes of the "alternative minimum tax" applicable to individuals, the
exercise of an incentive stock option is treated in the same manner as the
exercise of a non-statutory stock option. Thus, an optionee must, in the year
of option exercise, include the difference between the exercise price and the
fair market value of the stock on the date of exercise in alternative minimum
taxable income. The alternative minimum tax is imposed upon an individual's
alternative minimum taxable income at rates of 26% to 28%, but only to the
extent that such tax exceeds the taxpayer's regular income tax liability for
the taxable year.
Restricted Stock. Neither the Company nor the recipient of a restricted
stock award under the Plan will realize any federal tax consequences at the
time the award is granted. If, however, the recipient makes a Section 83(b)
election within 30 days of the date of the grant, then the recipient will
recognize ordinary income, for the year in which the award is granted, in an
amount equal to the difference between the fair market value of the stock at
the time the award is granted and the purchase price paid for the stock. If
such election is made and the recipient subsequently forfeits some or all of
the shares, then the recipient generally will not be entitled to any tax
refund. If the Section 83(b) election is not made, then the recipient will
recognize ordinary income, at the time that the forfeiture provisions or
restrictions on transfer lapse, in an amount equal to the difference between
the fair market value of the stock at the time of such lapse and the original
purchase price paid for the stock. The Company will be entitled to deduct, as
a compensation expense, the same amount as the recipient is required to
recognize as ordinary income, in the same year as the recipient includes the
amount in income for federal tax purposes, subject to the limitations of
Section 162(m) of the Code.
Any additional gain or any loss recognized upon the disposition of stock
acquired pursuant to a restricted stock award will be a capital gain or loss,
and will be a long-term capital gain or loss if the shares are held for more
than one year. For this purpose, the holding period shall begin just after the
date on which the forfeiture provisions or restrictions lapse if a Section
83(b) election is not made, or just after the award is granted if a Section
83(b) election is made.
Non-Statutory Stock Options. No taxable income is recognized by the optionee
upon the grant of a non-statutory stock option under the Plan. The optionee
must recognize as ordinary income in the year in which the option is exercised
the amount by which the fair market value of the purchased shares on the date
of exercise exceeds the option price (and the Company is required to withhold
an appropriate amount for tax purposes). However, special rules apply to
options held by officers and directors. The Company will be entitled to a
business expense deduction equal to the amount of ordinary income recognized
by the optionee, subject to the limitations of Section 162(m) of the Code. Any
additional gain or any loss recognized upon the subsequent disposition of the
purchased shares will be a capital gain or loss, and will be a long-term gain
or loss if the shares are held for more than one year.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 1997 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at
its offices, Lincoln North, 55 Old Bedford Road, Lincoln, Massachusetts 01773,
no later than December 12, 1996 in order to be considered for inclusion in the
Proxy Statement relating to that meeting.
12
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, telegraph,
facsimile and personal interviews. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward copies of the proxy
material to those persons for whom they hold shares and request instructions
for voting the Proxies. The Company will reimburse such brokerage houses and
other persons for their reasonable expenses in connection with this
distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
Harry M. Lasker,
Secretary
October 23, 1996
13
<PAGE>
RENAISSANCE SOLUTIONS, INC.
SPECIAL MEETING OF STOCKHOLDERS - NOVEMBER 15, 1996
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned, revoking all prior proxies, hereby appoints Harry M.
X Lasker, David A. Lubin and David P. Norton, and each of them, with full power
Y of substitution, as Proxies to represent and vote as designated hereon all
shares of stock of Renaissance Solutions, Inc. (the "Company") which the
undersigned would be entitled to vote if personally present at the Special
Meeting of Stockholders of the Company to be held on Friday, November 15,
1996, at 10:00 a.m., Boston Time, at the offices of Hale and Dorr, 26th Floor,
60 State Street, Boston, Massachusetts and at any adjournment thereof, with
respect to the matters set forth on the reverse side hereof.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POST-PAID RETURN ENVELOPE.
-------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-------------
[FN]
<PAGE>
X Please mark votes
- --- as in this example.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
1. To approve an amendment to
the Company's 1995 Equity
Incentive Plan (the "Plan")
increasing from 1,100,000
to 2,100,000 the number of
shares of Common Stock
authorized under the Plan.
For___ Against___ Abstain___
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT___ THE MEETING___
IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
Please sign exactly as name appears
hereon. If the stock is registered in
the names of two or more persons, each
should sign. When signing as an
executor, administrator, trustee,
guardian, or attorney, please give full
title as such. If a corporation, please
sign in full corporate name by an
authorized officer. If a partnership,
please sign in full partnership name by
an authorized person.
Signature:___________________ Date:____ Signature:__________________ Date:____
