<PAGE> 1
As filed with Securities and Exchange Commission on May 27, 1999. File No.
0-26040
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 [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
COMPUTER LEARNING CENTERS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] 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:
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(4) Date filed:
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<PAGE> 2
1999
NOTICE OF
ANNUAL MEETING
AND PROXY STATEMENT
COMPUTER LEARNING CENTERS, INC.
<PAGE> 3
COMPUTER LEARNING CENTERS, INC.
11350 RANDOM HILLS ROAD, SUITE 240
FAIRFAX, VIRGINIA 22030
------------------------------
June 21, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held at 1:00 p.m. on July 27, 1999 at the Computer Learning Center of
Alexandria, 6295 Edsall Road, Suite 210, Alexandria, Virginia, 22312.
We urge you to participate in the business of the Annual Meeting by
completing and returning the enclosed proxy as promptly as possible. Your vote
is important.
The accompanying Notice of Annual Meeting and Proxy Statement provide
information about the matters to be acted upon by the stockholders. The Proxy
Statement also contains information about the role and responsibility of the
Board of Directors and the committees of the Board and provides important
information about each nominee for election as Director.
Sincerely,
/s/ REID R. BECHTLE
Reid R. Bechtle
Chief Executive Officer
<PAGE> 4
COMPUTER LEARNING CENTERS, INC.
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 27, 1999
------------------------------
The 1999 Annual Meeting of Stockholders of Computer Learning Centers, Inc.
(the "Company") will be held Tuesday, July 27, 1999 at 1:00 p.m. at the Computer
Learning Center of Alexandria, 6295 Edsall Road, Suite 210, Alexandria,
Virginia, 22312 for the following purposes:
1. To elect two Class I Directors to serve until the 2002 Annual
Meeting of Stockholders.
2. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants for the current
fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All stockholders of record at the close of business on June 15, 1999 will
be entitled to vote at the meeting. The stock transfer books of the Company will
remain open following the record date.
It is important that your shares be represented at this meeting. Whether or
not you expect to be present, please fill in, date, sign and return the enclosed
proxy form in the accompanying addressed, postage-prepaid envelope. If you
attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
/s/ CHARLES L. COSGROVE
Charles L. Cosgrove,
Secretary
June 21, 1999
<PAGE> 5
COMPUTER LEARNING CENTERS, INC.
11350 RANDOM HILLS ROAD, SUITE 240
FAIRFAX, VIRGINIA 22030
------------------------------
PROXY STATEMENT
------------------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 27, 1999
This Proxy Statement and accompanying proxy are being furnished to
stockholders on or about June 21, 1999, in connection with the solicitation by
the Board of Directors of Computer Learning Centers, Inc. (the "Company") of
proxies to be voted at the Annual Meeting of Stockholders to be held at 1:00
p.m., on Tuesday, July 27, 1999, at the Computer Learning Center of Alexandria,
6295 Edsall Road, Suite 210, Alexandria, Virginia, and at any adjournments of
that meeting. All proxies will be voted in accordance with the stockholders'
instructions, and if no choice is specified, the proxies will be voted in favor
of the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation or a subsequently dated proxy to the Secretary of the Company
or by voting in person at the Annual Meeting.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 31, 1999 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WITHOUT EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON
WRITTEN REQUEST TO THE SECRETARY, COMPUTER LEARNING CENTERS, INC., 11350 RANDOM
HILLS ROAD, SUITE 240, FAIRFAX, VIRGINIA 22030. EXHIBITS WILL BE PROVIDED UPON
WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
At the close of business on June 15, 1999, the record date for determining
the stockholders entitled to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 17,493,251 shares, $.01 par value per
share, of the Company (the "Common Stock"). Stockholders are entitled to one
vote per share. The presence in person or by proxy of stockholders holding a
majority of such shares will constitute a quorum for the transaction of business
at the Annual Meeting. Shares of Common Stock present in person or represented
by proxy (including shares which abstain or do not vote with respect to one or
more of the proposals presented for stockholder approval) will be counted for
purposes of determining whether a quorum is present.
Election of Directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of the other matters
to be voted on will require the affirmative vote of a majority of the shares
present or represented at the meeting. Shares that abstain from voting with
respect to a specific proposal 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 proposal will not be counted as
votes in favor of such proposal. Accordingly, broker non-votes and abstentions
will have the effect of a vote against any matter that requires the affirmative
vote of a certain percentage of the votes cast or shares voting on the proposal.
The Board of Directors knows of no matters, other than those reported
below, which are to be brought before the Annual Meeting. If other matters
properly come before the Annual Meeting, however, it is the intention of the
persons named in the enclosed form of proxy to vote such proxy in accordance
with their judgment on such matters.
All expenses of solicitation of proxies will be borne by the Company.
Present and former officers, Directors and other employees of the Company may
solicit proxies by telephone, telegram or mail, or by meetings with stockholders
or their representatives. The Company will reimburse brokers, banks or other
<PAGE> 6
custodians, nominees and fiduciaries for their charges and expenses in
forwarding proxy material to beneficial owners.
PROPOSAL ONE: ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six Directors
divided into three classes. The Board is comprised of two Class I Directors, two
Class II Directors and two Class III Directors, with members of each class
holding office for staggered three-year terms. Each Director serves (subject to
his earlier death, resignation or removal) until the Annual Meeting of
Stockholders held in the year that is three years after such Director's election
and thereafter until such Director's successor is elected and has qualified.
At the Annual Meeting, two Directors are to be elected to hold office for a
three-year term to expire at the 2002 Annual Meeting of Stockholders. Unless
there is a contrary indication, the persons named in the accompanying form of
proxy intend to vote such proxy for the election to the Board of Directors of
Reid R. Bechtle and Harry H. Gaines, the current Directors whose terms expire
this year.
Each of the nominees has consented to serve as a Director. If for any
reason a nominee should become unable or unwilling to accept nomination or
election, the persons named in the accompanying form of proxy intend to vote
such proxy for the election of such other person as the Board may recommend.
Alternatively, the Board may reduce the number of Directors to eliminate the
vacancy.
A brief summary of each Director's principal occupation, business
affiliations and other information follows. Unless otherwise indicated, the
principal occupation of each Director has been the same for the past five years.
There is no family relationship between any of the Directors or executive
officers of the Company.
NOMINEES FOR DIRECTOR
Nominees for Term Expiring at 2002 Annual Meeting
Reid R. Bechtle, age 46, joined the Company in 1991 as President of the
Company's Computer Learning Center division and has been a Director and Chief
Executive Officer of the Company since October 1994. Mr. Bechtle also served as
President of the Company from October 1994 to October 1998. From 1982 to 1991,
he served as President of Multi-List, Inc., a software services subsidiary of
PRC/Litton, Inc.
Harry H. Gaines, age 61, has been Chairman of the Board of Directors since
October 1994 and has served as a Director since 1987. From 1987 to October 1994
and from 1988 to October 1994, he served as President and Chief Executive
Officer of the Company and of Mohr Development Company, respectively. From 1989
through September 1995, Mr. Gaines served as President of Blessing/White Inc., a
professional management company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
ABOVE.
DIRECTORS CONTINUING IN OFFICE
Term Expiring at 2000 Annual Meeting
Ira D. Cohen, age 47, has served as a Director of the Company since 1987.
Since 1988, he has been a Managing Director of The Updata Group, Inc., an
investment banking firm that specializes in mergers and acquisitions for the
information technology industry. From 1984 to 1986, he served as Chief Financial
Officer for CGA Computer, Inc., and from 1986 to 1988 he served as Chief
Financial Officer of Updata Software, Inc. Mr. Cohen is a certified public
accountant. Mr. Cohen is also a director of Datastream Systems, Inc. and
Alphanet Solutions, Inc.
Stephen P. Reynolds, age 47, has served as a Director of the Company since
August 1996. Mr. Reynolds has served in various capacities with General Atlantic
Partners II, L.P. or its predecessors since April 1980 and currently serves as
special advisor. He also serves as a member of the Boards of Directors of SS&C
Technologies, Inc., Brigham Exploration Company, Inc., Solo Serve Corporation
and MAPICS, Inc.
2
<PAGE> 7
Term Expiring at 2001 Annual Meeting
John L. Corse, age 57, has served as a Director of the Company since
October 1994, and as President and Chief Operating Officer since November 1998.
From September 1997 to October 1998, Mr. Corse was a self-employed business
consultant. From February 1995 to August 1997, he has served as President of
Hughes Advanced Systems, a subsidiary of Hughes Aircraft Corporation and a
provider of information systems and services to businesses. From 1993 to 1995,
Mr. Corse was a self-employed business consultant. From 1992 to 1993, he served
as President and Chief Executive Officer of Security Software America, Inc., a
software publisher serving government contractors and government agencies.
Ralph W. Clark, age 58, has served as a Director of the Company since
October 1994. He was formerly Chairman of Frontec AMT Inc., a software company.
From 1988 to 1994, Mr. Clark was a Vice President of International Business
Machines Corporation ("IBM"), where he served as Assistant General Manager of
the Application Software Group, President of the General and Public Sector
Division (a software division), and, most recently, President of Skill Dynamics,
IBM's education division.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors are the Audit and
Compensation Committees. The Company does not have a nominating committee.
The Audit Committee supports the independence of the Company's independent
auditors and the objectivity of the Company's financial statements. The Audit
Committee (a) reviews the Company's principal policies for accounting, internal
control and financial reporting, (b) recommends to the Board of Directors the
engagement or discharge of the independent auditors, (c) reviews with the
independent auditors the plan, scope and timing of their audit, and (d) reviews
the independent auditors' fees and, after completion of the audit, reviews with
management the independent auditors' report. The Audit Committee also reviews
the annual financial statements of the Company, the independence of the
independent auditors, the adequacy of the Company's internal accounting control
system, and the Company's policies on business integrity and ethics and
conflicts of interest. The Audit Committee held two meetings during fiscal 1999.
The members of the Audit Committee are Ralph W. Clark and Stephen P. Reynolds.
The Compensation Committee (a) reviews and makes recommendations to the
Board of Directors with respect to the direct and indirect compensation and
employee benefits of the Chief Executive Officer and other elected officers of
the Company, (b) reviews, administers and makes recommendations to the Board of
Directors with respect to any incentive plans and bonus plans that include
elected officers, and (c) reviews the Company's policies relating to the
compensation of senior management and other employees. In addition, the
Committee reviews management's long-range planning for executive development and
succession, establishes and periodically reviews policies on perquisites, and
performs certain other review functions relating to management compensation and
employee relations policies. The Compensation Committee held four meetings
during fiscal 1999. The current members of the Compensation Committee are Ira D.
Cohen and Harry H. Gaines. John L. Corse was a member of the Compensation
Committee prior to his appointment of President and Chief Operating Officer,
which occurred in November 1998.
During fiscal 1999, there were six regular meetings of the Board of
Directors. Each of the Directors attended 83% or more of the aggregate number of
meetings of the Board of Directors and the standing Board committees on which he
served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and Directors and persons who own greater than ten
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the Nasdaq Stock Market.
Based solely on a review of the forms it has received and on written
representations from certain reporting persons that no such forms were required
for them, the Company believes that during the fiscal year ended
3
<PAGE> 8
January 31, 1999 all Section 16(a) filing requirements applicable to its
officers, Directors and ten percent beneficial owners were complied with by such
persons, except the non-employee directors, who were one day late filing Form 5
for the fiscal year ended January 31, 1999.
PROPOSAL TWO: RATIFY THE SELECTION BY THE BOARD OF DIRECTORS OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS FOR THE CURRENT FISCAL YEAR
In accordance with the recommendation of the Audit Committee, the Board of
Directors has reappointed PricewaterhouseCoopers LLP as independent accountants
of the Company for fiscal 2000. Although ratification of the reappointment of
PricewaterhouseCoopers LLP is not legally required, the Board believes it is
appropriate for the stockholders to ratify such action. In the event the
stockholders do not ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants, the Company will reconsider such appointment.
A representative of PricewaterhouseCoopers LLP, which has served as the
Company's independent accountants since 1987, will attend the meeting, will have
the opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate questions. The Board of Directors reserves
the right to replace the independent accountants at any time upon the
recommendation of the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
4
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid or accrued during each of the last three fiscal years for the Company's
Chief Executive Officer and each of the Company's other executive officers,
based on salary and bonus earned during the fiscal year (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUSES(1) COMPENSATION(2) COMPENSATION(3)
--------------------------- ---- -------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Reid R. Bechtle..................... 1999 $265,000 $ 0 $14,496 $2,513
Chief Executive Officer 1998 250,000 312,000 14,496 2,399
1997 225,000 320,000 14,496 3,000
John L. Corse....................... 1999 57,885 26,875 2,700 2,319
President/Chief Operating Officer 1998 -- -- -- --
1997 -- -- -- --
Charles L. Cosgrove................. 1999 183,750 0 6,000 2,319
Vice President/Chief Financial
Officer 1998 161,500 165,000 6,000 2,064
1997 145,833 150,000 5,676 2,068
Susan L. Luster..................... 1999 157,500 0 0 2,500
Vice President of Operations 1998 157,500 157,500 0 2,363
1997 151,250 150,000 0 1,988
Christine M. Strachota.............. 1999 150,000 50,000 0 1,313
Vice President of International 1998 -- -- -- --
Operations 1997 -- -- -- --
Marie A. Bennett.................... 1999 13,933 10,000 0 0
Vice President of Regulatory
Compliance 1998 -- -- -- --
1997 -- -- -- --
</TABLE>
- ------------------------------
(1) All bonus amounts shown above were accrued during the stated fiscal year and
paid in the subsequent fiscal year except for the amount shown for Marie A.
Bennett, whose bonus was paid in December 1998. As a condition of their
joining the Company, Mr. Corse, Ms. Strachota and Ms. Bennett received a
bonus of $26,875, $50,000 and $10,000, respectively.
(2) Represents contributions toward automobile allowances made by the Company on
behalf of the Named Executive Officers indicated.
(3) Represents contributions to the Company's 401(k) Plan made by the Company on
behalf of the Named Executive Officers indicated.
COMPENSATION OF DIRECTORS
No Director who is an employee of the Company is compensated for service as
a member of the Board of Directors or any committee of the Board of Directors.
As compensation for serving on the Board of Directors, each Director who is not
also an employee of the Company is entitled to receive an annual fee of $8,000
for attendance of the full Board and an annual fee of $2,000 for all committee
meetings. Directors also are entitled to reasonable expenses incurred by them in
connection with their attendance at Board or committee meetings. Insurance
policies in the name of the Company provide for the indemnification of the
Company's Directors and officers, as well as for the reimbursement to the
Company for amounts paid by the Company above certain
5
<PAGE> 10
limits in indemnifying its Directors and officers. For a description of the
Company's 1995 Non-Employee Director Stock Option Plan, see "Stock Plans" below.
CERTAIN TRANSACTIONS
In February 1997, Reid R. Bechtle, the Company's Chief Executive Officer,
entered into an employment agreement that has a term of one year but shall be
automatically renewed for successive one-year periods unless the Company
notifies Mr. Bechtle of non-renewal at least 90 days prior to the end of the
initial term or any renewal term. The agreement provides for an annual salary of
$265,000, which may be increased from time to time by the Compensation
Committee, a guaranteed annual bonus equal to 25% of Mr. Bechtle's salary and an
additional annual bonus payable based on achievement by the Company of certain
revenue and income targets. In the event Mr. Bechtle's employment is terminated
other than for cause, as defined in the agreement, or due to his voluntary
resignation, he is entitled to receive an amount equal to two times his then
effective base salary and guaranteed bonus. In addition, if Mr. Bechtle's
employment is terminated as the result of a change of control as defined in the
agreement, he is entitled to receive an amount equal to three times the greater
of (i) the average annual total compensation paid to him over the Company's last
three fiscal years or (ii) total compensation paid during the Company's fiscal
year ended January 31, 1999.
In January 1998, the Company entered into a severance agreement with the
Chief Financial Officer of the Company, Charles L. Cosgrove. The agreement will
expire upon the termination of Mr. Cosgrove's employment with the Company for
any reason whatsoever. The agreement provides for an annual salary of not less
than $165,000, which may be increased from time to time by the Compensation
Committee of the Company's Board of Directors. In addition, the agreement
specifies that Mr. Cosgrove shall be eligible to receive an annual bonus payable
under the Company's bonus plan in accordance with the bonus criteria established
by the Company's Board of Directors. In the event Mr. Cosgrove's employment is
terminated without cause or he resigns for good reason as defined in the
agreement, he is entitled to receive a lump sum payment in an amount equal to
one (1) times his base salary in effect as of the date of termination. In
addition, if Mr. Cosgrove's employment is terminated as a result of a change in
control as defined in the agreement, he will receive a lump sum amount equal to
one and one-half (1.5) times his base salary plus one and one-half (1.5) times
his prior fiscal year bonus or current year target bonus, whichever is larger.
In June 1998, the Company entered into a severance agreement with the Vice
President of Operations of the Company, Susan L. Luster. The agreement will
expire upon the termination of Ms. Luster's employment with the Company for any
reason whatsoever. The agreement provides for an annual salary of not less than
$157,500, which may be increased from time to time by the Compensation
Committee. In the event Ms. Luster's employment is terminated without cause or
resignation for reasons defined in the agreement, she is entitled to a lump sum
of 12 months of salary for termination. In addition, if Ms. Luster's employment
were terminated as a result of a change in control as defined in the agreement,
she will receive a lump sum amount equal to one and one-half (1.5) times her
base salary.
In November 1998, the Company entered into a severance agreement with the
President and Chief Operating Officer of the Company, John L. Corse. The
agreement will expire upon the termination of Mr. Corse's employment with the
Company for any reason whatsoever. The agreement provides for an annual salary
of not less than $215,000, which may be increased from time to time by the
Compensation Committee. In the event Mr. Corse's employment is terminated
without cause or resignation for reasons defined in the agreement, he is
entitled to a lump sum of one and one-half (1.5) times his annual salary for
termination. In addition, if Mr. Corse's employment were terminated as a result
of a change in control as defined in the agreement, he will receive a lump sum
amount equal to two times his current base salary and two times his annual bonus
of the prior fiscal year.
STOCK PLANS
The Company has a Long-Term Incentive Plan that provides for award of
incentive and non-statutory stock options and stock appreciation rights to
certain directors, officers and key employees. The plan is administered by the
Compensation Committee of the Board of Directors. The Company has reserved
6
<PAGE> 11
2,326,374 shares of Common Stock for grant under the plan. As of April 30, 1999,
options to purchase 95,771 shares of Common Stock were outstanding under this
Long-Term Incentive Plan. The Company has provided that no further grants may be
made under the Long-Term Incentive Plan.
The Company's 1998 Stock Incentive Plan provides a variety of awards,
including stock options, stock appreciation rights and restricted and
unrestricted stock grants to the Company's employees, officers, consultants and
advisors. Stock options may be granted either in the form of incentive stock
options or non-statutory stock options. The option exercise price of incentive
stock options may not be less than the fair market value of common stock on the
date of grant. The Company has reserved 1,000,000 shares of Common Stock for
grant under this plan. As of April 30, 1999, options to purchase 154,650 shares
of common stock were outstanding under this plan, and 845,350 options were
available for grant.
The Company's 1995 Stock Incentive Plan provides a variety of awards,
including stock options, stock appreciation rights and restricted and
unrestricted stock grants to the Company's employees, officers, consultants and
advisors. Stock options may be granted either in the form of incentive stock
options or non-statutory stock options. The option exercise price of incentive
stock options may not be less than the fair market value of common stock on the
date of grant. The Company has reserved 1,460,460 shares of Common Stock for
grant under this plan. As of April 30, 1999 options to purchase 1,327,000 shares
of common stock were outstanding under this plan, and 1,460 options were
available for grant.
The Company's 1995 Non-Employee Director Stock Option Plan (the "Director's
Plan") provides that each Director elected to a three-year term by the
stockholders will receive an option to purchase 11,000 shares of Common Stock on
the date following his or her election and each Director elected to fill a
vacancy on the Board will receive an option to purchase 11,000 shares of Common
Stock, multiplied by a fraction the numerator of which is the number of years
(counting any portion of a year as one year) remaining in such Director's term
and the denominator of which is three. Options to purchase Common Stock under
the Director's Plan will vest in three equal increments on the first, second and
third anniversary of grant, except that options exercisable for less than 11,000
shares will vest over such period and in such amounts, if any, as may be
determined by the Directors.
Incentive and non-statutory options are exercisable at a price not less
than 100% and 50%, respectively, of the fair market value of the common stock at
the date of grant, as determined by the Compensation Committee. Stock
appreciation rights provide for payments equal to the base amount of the right,
as determined by the administration committee. No such appreciation rights are
outstanding. Options may be granted in tandem with appreciation rights; however,
holders of such tandem awards are subject to restrictions on the matter of
exercise as defined in the plan. Generally, stock options and rights vest
ratably over five years. All options and rights must be exercised within ten
years from date of grant.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE PRICE PRESENT VALUE
NAME GRANTED(1) FISCAL YEAR PER SHARE(2) EXPIRATION DATE ($)(3)
---- ---------- ------------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
John L. Corse................... 100,000 30.98% $5.06 12/13/08 $309,000
Charles L. Cosgrove............. 50,000 15.49% 5.06 12/13/08 154,500
Christine M. Strachota.......... 30,000 9.30% 9.56 4/15/08 151,800
20,000 6.20% 5.06 12/13/08 61,800
Marie A. Bennett................ 20,000 6.20% 5.06 12/13/08 61,800
</TABLE>
- ------------------------------
(1) Numbers shown represent options to purchase Common Stock. Mr. Corse's
options do not include an additional 11,000 options issued from the
Director's Plan which were granted prior to him being appointed President
and Chief Operating Officer of the Company.
7
<PAGE> 12
(2) Stock options granted at 100% of fair market value of Common Stock on the
date of grant. With the exception of Mr. Cosgrove, as to whom 20% of the
options vested upon grant, with the remaining options vesting in 20%
increments over the next four years, all other options become exercisable in
20% increments over five years.
(3) Grant date present value is determined using the Black-Scholes model. The
model makes assumptions about future variables, so the actual value of
options may be greater or less than the values stated in the table. For new
options granted during fiscal year 1999, the calculations assume no dividend
yield, volatility of approximately 69% and a risk-free rate of return of
4.8% based on Zero Coupon Treasury Bonds for five-year maturities on the
respective grant dates.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL-YEAR END AT FISCAL YEAR-END(1)
VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Reid R. Bechtle.............. 0 $ 0 438,080 239,998 $259,219 $ 0
John L. Corse................ 0 0 18,534 111,000 20,976 10,000
Charles L. Cosgrove.......... 30,000 49,950 46,004 146,496 1,000 78,700
Susan L. Luster.............. 0 0 72,000 48,000 155,520 103,680
Christine M. Strachota....... 0 0 0 50,000 0 2,000
Marie A. Bennett............. 0 0 0 20,000 0 2,000
</TABLE>
- ------------------------------
(1) The closing price for the Company's Common Stock on the Nasdaq Stock Market
on January 31, 1999 was $5.16. Value is calculated on the basis of the
difference between the option exercise price and $5.16, multiplied by the
number of "in-the-money" shares of Common Stock underlying the option. Upon
exercise of his options, Mr. Cosgrove retained ownership of his shares, and
as of January 31, 1999, these shares are owned by Mr. Cosgrove.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report sets forth the executive compensation policies of the Committee
with respect to the Company's executive officers in general and the rationale
for the specific decisions affecting the compensation for Mr. Reid R. Bechtle,
the Company's Chief Executive Officer in fiscal 1999. This report also discusses
the relationship between the compensation of the Named Executive Officers and
the performance of the Company.
The Company's executive compensation program is designed to promote the
following objectives:
- To provide competitive compensation that will help attract, retain and
reward highly qualified executives who contribute to the long-term
success of the Company.
- To align management's interests with the success of the Company by
placing a portion of the executive's compensation at risk in relation to
the Company's performance.
- To align management's interests with stockholders by including long-term
equity incentives.
The Committee reviewed the compensation policies adopted with respect to
all of the Company's executive officers and confirmed that executive officer
compensation must be related to the Company's performance and must emphasize
increasing stockholder value. The Committee determined that the current
compensation policies sufficiently tied the executive officers' compensation to
the Company's performance.
The Committee determined that the Company's continued success is due in
part to its skilled executives. In setting and administering the Company's
compensation policies and programs, the Committee considers
8
<PAGE> 13
compensation provided to executives of corporations similar to the Company in
terms of assets, sales, revenues and earnings. The Company's executive
compensation programs are designed to attract, reward and retain skilled
executives and to provide incentives which vary upon the attainment of
short-term operating performance objectives and long-term performance goals. The
main objective is to provide Company executives with incentives directly linked
to the creation of stockholder value.
The Committee's Role. The Committee is responsible for the administration
of the executive compensation program and reviews all proposed new or amended
employee benefit plans. From February 1998 through October 1998, the Committee
was composed of John L. Corse, Harry H. Gaines and Ira D. Cohen. In November
1998, John L. Corse was appointed President and Chief Operating Officer of the
Company, which necessitated his departure from the Compensation Committee.
Neither of the remaining two Directors are eligible to participate in any of the
plans which make up the Company's executive compensation program.
The Committee may select consultants from nationally recognized independent
compensation and benefits consulting firms to provide expert advice on any
aspect of the Company executive compensation program. The Committee may request
written reports or hold private meetings with such consultants in order to
obtain independent opinions on compensation proposals. The Committee has met,
and will continue to meet, in executive sessions which are not attended by any
of the Company's executives or managers.
Performance Evaluation. The Committee met in executive session in March
1999 to review the overall performance of the Chief Executive Officer,
particularly with respect to the Company's long range strategies and the
achievement of both financial and non-financial objectives. Paramount
consideration was given to the Chief Executive Officer's role in building
stockholder value and improving the return on the stockholders' investment.
The Compensation Program. The compensation program for the Company
executives presently consists of base salary, annual incentive bonus, long-term
incentives and employee benefits. It is the intent of the Committee that
incentives based on long-term performance should be the major component in the
pay package for senior executives. Discussed below is each element of the
compensation program.
Base Salary. Salaries are set and administered to reflect the value of the
job in the marketplace and individual contribution and performance. Salaries
provide a necessary element of stability in the total pay program and, as such,
are not subject to significant variability. Salary increases are based primarily
on merit. The Company's executive salaries are evaluated in relation to a
competitive annualized merit increase guideline of 4.5% for expected levels of
individual performance. Actual increases can vary from the guideline depending
primarily on individual performance. The normal interval between salary reviews
for the Chief Executive Officer and other executives is 12 months.
Mr. Bechtle's salary was increased effective April 1, 1998 to $265,000, an
increase of 6.0% after 12 months. Among the other Named Executive Officers, Mr.
Cosgrove's salary was increased effective April 1, 1998 to $187,500, an increase
of 13.6% after 12 months.
Annual Incentive Bonus. The amounts of annual bonus awards are based on
corporate financial performance for the year compared to annual performance
goals established at the beginning of the year. The Board of Directors, based
upon the recommendations of the Compensation Committee, establishes a base,
middle, and high performance plan based upon revenue, net income, earnings per
share, and individual performance goals. The incentive is structured to allow
for incentive payment targets of 50% to 100% of base salary on a graduated
basis. The incentive plan is structured to award no bonuses to the plan
participants if minimum performance goals are not achieved. The Committee
believes that allowing the executive team to earn amounts in excess of the base
bonus plan (50% of base salary) will encourage outstanding performance and
closely aligns management toward increasing shareholder value. For fiscal 1999,
such performance goals were: (1) fiscal 1999 net income and earnings per share
compared to plan; (2) fiscal 1999 revenue compared to plan; and (3) individual
performance goals related to long-term growth of the Company.
For fiscal 1999, Mr. Bechtle's targeted bonus was 50% of salary or
$132,500. As a result of not achieving the net income, earnings per share and
revenue plans for fiscal 1999, the Compensation Committee recommended and the
Board of Directors concurred, that Mr. Bechtle receive only the guaranteed
portion of
9
<PAGE> 14
his annual bonus which equals 25% of Mr. Bechtle's salary or $66,250. Provided
that the Company's financial objectives were not achieved, Mr. Bechtle waived
the right to receive the guaranteed portion of his bonus.
Stock Option Awards. The Compensation Committee also believes that equity
ownership by key executives provides a valuable incentive for such executives
and helps align executive's and stockholders' interests. Stock option awards
provide long-term incentives which are directly related to the performance of
the Company's Common Stock. Options generally vest at the rate of 20% per year
and have 10-year terms.
Employee Benefits. Executives also participate in the Company's
broad-based employee benefits program which includes a 401(k) plan, group
medical and dental coverage, group life insurance and other benefit plans.
Discussion of the Committee's Policy Regarding Qualifying Compensation for
Deductibility Under Section 162(m) of the Internal Revenue Code.
Tax legislation known as the Omnibus Budget Reconciliation Act of 1993
("OBRA") created a new Code subsection 162(m), under which the allowable
deduction for compensation paid or accrued with respect to the chief executive
officer and each of the four most highly compensated executive officers of a
publicly held corporation is limited to no more than $1 million per year for
taxable years on or after January 1, 1994. Certain types of compensation are
exempted from this deduction limitation, including payments subject to: (a) the
attainment of an objective performance goal or goals; (b) an outside director
requirement; and (c) a stockholder approval requirement.
It is the policy of the Committee to establish a competitive executive
compensation program and to design and administer incentive plans which relate
directly to the Company's overall performance and the individual executive's
specific contribution.
In light of OBRA, it is the policy of the Committee to modify where
necessary the executive compensation plans so as to maximize the tax
deductibility of compensation paid to its executive officers, and the Committee
does not anticipate paying any compensation in 1998 that is not fully tax
deductible. Accordingly, the 1998 Stock Option Plan and the 1995 Stock Option
Plan include a fixed limit on the number of options that may be granted to any
individual in any given year.
This report is furnished by the members of the Committee:
Ira D. Cohen
Harry H. Gaines
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board of Directors
are Mr. Cohen and Mr. Gaines. No member of the Compensation Committee is an
executive officer or employee of the Company.
10
<PAGE> 15
PERFORMANCE GRAPH
The performance graph set forth below compares the cumulative total
shareholder return on the Company's Stock with the S&P 500 Index and an Industry
Group Index for the period from June 1, 1995 through January 31, 1999. The graph
assumes the investment of $100 at the close of trading on May 31, 1995 in the
Company's Common Stock, the S & P 500 Index and the Industry Group Index and
assumes re-investment of all dividends, if any. The industry group consists of
the following companies selected on the basis of the similar nature of their
business: DeVry, Inc., Whitman Education Group, Inc., ITT Educational Services,
Inc., Education Management Corporation and Quest Education Corporation. The
Company believes that, including itself, these companies represent the majority
of the market value of publicly traded companies whose primary business is
vocational education and training. The Company's Common Stock commenced trading
on the Nasdaq Stock Market on May 31, 1995.
chart
<TABLE>
<CAPTION>
COMPUTER LEARNING
CENTERS, INC. S&P 500 INDUSTRY GROUP
----------------- ------- --------------
<S> <C> <C> <C>
1995 100.00 100.00 100.00
1996 114.71 121.09 154.52
1997 380.15 152.99 293.37
1998 1339.45 194.15 329.93
1999 203.00 257.00 588.00
</TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
S&P 500 INDEX AND INDUSTRY GROUP INDEX
<TABLE>
<CAPTION>
JUNE 1, 1995 JANUARY 31, 1999
------------ ----------------
<S> <C> <C>
The Company............................................... $100 $203
S&P 500 Index............................................. $100 $257
Industry Group Index...................................... $100 $588
</TABLE>
11
<PAGE> 16
SECURITY OWNERSHIP
The following table sets forth, as of April 30, 1999, to the best knowledge
of the Company, the number of shares of the Company's Common Stock owned by (i)
any person (including any group) known by management to beneficially own more
than 5% of the Company's Common Stock, (ii) each Director of the Company and
nominee for Director, (iii) each of the Named Executive Officers and (iv) all
Directors and executive officers as a group. Unless otherwise indicated in a
footnote, each individual or group possesses sole voting and investment power
with respect to the shares indicated as beneficially owned.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED(1)
------------------------------------ ---------------- ------------------
<S> <C> <C>
General Atlantic Entities (2)............................... 2,944,716 16.8%
125 East 56th Street
New York, NY 10022
Fidelity Investments (3).................................... 2,595,690 14.8%
82 Devonshire Street
Boston, MA 02109-3614
First Union Corporation (4)................................. 1,305,900 7.5%
One First Union Center
Charlotte, NC 28288-0137
Harry H. Gaines (5)......................................... 257,244 1.5%
Stephen P. Reynolds (6)..................................... 30,374 *
Ira D. Cohen (7)............................................ 34,674 *
John L. Corse (8)........................................... 66,534 *
Ralph W. Clark (9).......................................... 48,700 *
Reid R. Bechtle (10)........................................ 615,710 3.4%
Charles L. Cosgrove (11).................................... 96,084 *
Susan L. Luster (12)........................................ 82,000 *
Christine M. Strachota (13)................................. 6,000 *
Marie A. Bennett............................................ 0 --
All Directors and executive officers as a group (10
persons)(14).............................................. 1,237,320 6.8%
</TABLE>
- ------------------------------
* Less than 1%
(1) Each stockholder possesses sole voting and investment power with respect to
the shares listed, except as otherwise noted. Amounts shown include shares
issuable within the 60-day period following April 30, 1999 pursuant to the
exercise of options.
(2) This information based on Schedule 13G, Amendment No. 2, received by the
Company on or about April 24, 1998. Includes 1,716,378 shares held by
General Atlantic Corporation ("GAC"), which retains sole voting power with
respect to such shares, 1,228,338 shares held by General Atlantic Partners
II, L.P. ("GAP") and GAP-CLC Partners, L.P. ("GAP-CLC") (collectively, the
"General Atlantic Entities"). The General Atlantic Entities retain shared
voting power with respect to the shares held by GAP and GAP-CLC. Stephen P.
Reynolds, a Director of the Company, is a special advisor to GAP-CLC and
disclaims beneficial ownership of shares owned by the General Atlantic
Entities.
(3) This information based on Schedule 13D received by the Company on or about
January 8, 1999.
(4) This information based on Schedule 13G filed with the Securities and
Exchange Commission on February 9, 1999.
(5) Includes 7,330 shares issuable pursuant to the exercise of Director options
within 60 days after April 30, 1999.
(6) Mr. Reynolds, a Director of the Company, is a special advisor to GAP-CLC.
Mr. Reynolds disclaims beneficial ownership of all of such shares
referenced in note (2), except to the extent of his
12
<PAGE> 17
proportionate pecuniary interests therein. Includes 21,374 shares issuable
pursuant to the exercise of Director options within 60 days after April 30,
1999.
(7) Includes 11,984 shares issuable pursuant to the exercise of Director
options within 60 days after April 30, 1999.
(8) Includes 18,534 shares issuable pursuant to the exercise of Director
options within 60 days after April 30, 1999.
(9) Includes 26,010 shares issuable pursuant to the exercise of Director
options within 60 days after April 30, 1999.
(10) Includes 438,080 shares issuable pursuant to the exercise of options within
60 days after April 30, 1999.
(11) Includes 61,004 shares issuable pursuant to the exercise of options within
60 days after April 30, 1999.
(12) Includes 72,000 shares issuable pursuant to the exercise of options within
60 days after April 30, 1999.
(13) Includes 6,000 shares issuable pursuant to the exercise of options within
60 days after April 30, 1999
(14) Includes 662,316 shares issuable pursuant to the exercise of options within
60 days after April 30, 1999. See note (2) and notes (5) through (13)
above.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The date by which stockholder proposals must be received by the Company for
inclusion in proxy material relating to the 2000 Annual Meeting of Stockholders
is March 30, 2000. Under the terms of the Company's Bylaws, stockholders who
intend to present an item of business at the 2000 Annual Meeting (other than a
proposal submitted for inclusion in the Company's Proxy materials) must provide
notice of such business to the Company's Secretary no later than June 27, 2000.
By Order of the Board of Directors
/s/ CHARLES L. COSGROVE
Charles L. Cosgrove, Secretary
June 21, 1999
13
<PAGE> 18
COMPUTER LEARNING CENTERS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 27, 1999
The undersigned, having received notice of the meeting and
management proxy statement therefor, and revoking all prior proxies, hereby
appoints Reid R. Bechtle and Charles L. Cosgrove, and each of them, as Proxies,
each with the power to appoint his substitute, and hereby authorizes them, to
represent and vote, as designated below, all shares of Common Stock of Computer
Learning Centers, Inc. (the "Company") which the undersigned would be entitled
to vote if personally present at the Annual Meeting of Stockholders to be held
on July 27, 1999 or any adjournment thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF. Attendance of the undersigned at the meeting or any adjournment
thereof will not be deemed to revoke this proxy unless the undersigned shall
revoke this proxy in writing.
(TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 19
<TABLE>
<CAPTION>
[X] Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES AND EACH OF THE PROPOSALS LISTED BELOW.
<S> <C>
WITHHOLD AUTHORITY
TO VOTE FOR ALL NOMINEES FOR AGAINST ABSTAIN
FOR LISTED BELOW [ ] [ ] [ ]
Proposal 1: [ ] [ ] Proposal 2:
To elect two Proposal to ratify the selection of
Class I Directors to PricewaterhouseCoopers LLP to serve as the
serve until the 2002 Annual Meeting of Stockholders Company's independent accountants for fiscal
2000.
NOMINEES: Reid R. Bechtle
Harry H. Gaines THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS. THIS PROXY WILL BE VOTED AS
FOR all nominees listed (except as marked to the contrary listed below). DIRECTED. IN THE ABSENCE OF DIRECTIONS, THIS
PROXY WILL BE VOTED FOR THE DIRECTORS NAMED
ABOVE, AND FOR PROPOSAL 2.
- -----------------------------------------------------------------------
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND
RETURN THIS PROXY PROMPTLY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED
WITHIN THE UNITED STATES.
SIGNATURE(S)_______________________________________________________________ DATE_________________________
NOTE: Please sign exactly as name or names appear on Stock Certificates (as indicated hereon).
</TABLE>
