SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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 Section240.14a-12
TMP WORLDWIDE INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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TMP WORLDWIDE INC.
622 THIRD AVENUE
NEW YORK, NEW YORK 10017
212-351-7000
May 17, 2002
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 11:00 a.m. on Wednesday, June 19, 2002, at the
offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, 31st Floor, New York,
New York 10103.
At the meeting you will be asked to elect seven directors of the Company. In
addition, we will be pleased to report on the affairs of the Company and a
discussion period will be provided for questions and comments of general
interest to stockholders.
We look forward to greeting personally those stockholders who are able to be
present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to vote at your earliest convenience. You may vote by mail with the
enclosed proxy card or by telephone or on the Internet by following the
instructions on the proxy card.
Thank you for your cooperation.
Very truly yours,
[LOGO]
Andrew J. McKelvey
Chairman of the Board
of Directors and CEO
TMP WORLDWIDE INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
NEW YORK, NEW YORK
May 17, 2002
The 2002 annual meeting of stockholders of TMP Worldwide Inc. will be held
on Wednesday, June 19, 2002 at 11:00 a.m. at the offices of Fulbright & Jaworski
L.L.P., 666 Fifth Avenue, 31st Floor, New York, New York 10103 for the following
purposes:
(1) To elect seven directors to serve for the ensuing year; and
(2) To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.
All stockholders of record at the close of business on April 24, 2002 will
be entitled to notice of and to vote at the meeting or any postponements or
adjournments of the meeting.
All stockholders are cordially invited to attend the meeting in person.
Stockholders who are unable to attend the meeting in person are requested to
complete and date the enclosed form of proxy and return it promptly in the
envelope provided. No postage is required if mailed in the United States. You
may also vote by telephone or on the Internet by following the instructions on
the enclosed form of proxy. Stockholders who attend the meeting may revoke their
proxy and vote their shares in person.
MYRON F. OLESNYCKYJ
SECRETARY
TMP WORLDWIDE INC.
622 THIRD AVENUE
NEW YORK, NEW YORK 10017
------------------------
PROXY STATEMENT
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This proxy statement contains information related to the annual meeting of
stockholders of TMP Worldwide Inc. to be held on Wednesday, June 19, 2002,
beginning at 11:00 a.m. at the offices of Fulbright & Jaworski L.L.P., 666 Fifth
Avenue, 31st Floor, New York, New York, and at any postponements or adjournments
thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, stockholders will act upon the matter outlined in the
notice of meeting on the cover page of this proxy statement, consisting of the
election of directors. In addition, management will report on the performance of
the Company during 2001 and respond to questions from stockholders. The Board of
Directors is not currently aware of any other matters which will come before the
meeting.
Proxies for use at the meeting are being solicited by the Board of Directors
of the Company. Proxies were mailed to stockholders on or about May 17, 2002 and
will be solicited chiefly by mail. The Company will make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy material to the beneficial owners of the shares and will reimburse
them for their expenses in so doing. Should it appear desirable to do so in
order to ensure adequate representation of shares at the meeting, officers,
agents and employees of the Company may communicate with stockholders, banks,
brokerage houses and others by telephone, facsimile or in person to request that
proxies be furnished. All expenses incurred in connection with this solicitation
will be borne by the Company. The Company has no present plans to hire special
employees or paid solicitors to assist in obtaining proxies, but reserves the
option of doing so if it should appear that a quorum otherwise might not be
obtained.
WHO IS ENTITLED TO VOTE AT THE MEETING?
Only stockholders of record at the close of business on April 24, 2002, the
record date for the meeting, are entitled to receive notice of and to
participate in the annual meeting, or any postponements and adjournments
thereof. If you were a stockholder of record on that date, you will be entitled
to vote all of the shares you held on that date at the meeting, or any
postponements or adjournments of the meeting.
The Company has two classes of common stock: common stock and Class B common
stock. Holders of both common stock and Class B common stock as of the record
date will be entitled to participate at the meeting.
WHAT ARE THE VOTING RIGHTS OF THE HOLDERS OF COMMON STOCK AND CLASS B COMMON
STOCK?
Each outstanding share of common stock will be entitled to one vote on each
matter acted upon. Each outstanding share of Class B common stock will be
entitled to ten votes on each matter acted upon.
1
On April 24, 2002, there were 106,698,637 shares of common stock
outstanding, and 4,762,000 shares of Class B common stock outstanding. Andrew J.
McKelvey, our Chairman and CEO, holds all of the Class B common stock which
combined with the common stock held by him gives him in excess of 41% of the
combined voting power of the Company. Except as set forth in "Stock Ownership,"
we believe that no other stockholder of the Company has in excess of 1% of the
combined voting power of the Company. It is expected that Mr. McKelvey will vote
for Proposal No. 1.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting in person or by proxy, of the holders of a
majority of the outstanding shares of common stock and Class B common stock as
of the record date will constitute a quorum, permitting the conduct of business
at the meeting. As of the record date, 106,698,637 shares of common stock,
representing the same number of votes, were outstanding, and 4,762,000 shares of
Class B common stock, representing in the aggregate 47,620,000 votes, were
outstanding. Thus, the presence of holders representing at least 77,159,319
votes will be required to establish a quorum. Proxies received but marked as
abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum. "Broker non-votes" are shares held by brokers
or nominees which are present in person or represented by proxy, but which are
not voted on a particular matter because instructions have not been received
from the beneficial owner. Under applicable Delaware law, the effect of broker
non-votes on a particular matter depends on whether the matter is one as to
which the broker or nominee has discretionary voting authority under the
applicable rule of the New York Stock Exchange. The effect of broker non-votes
on the specific items to be brought before the meeting is discussed under
Proposal No. 1.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
in the enclosed return envelope it will be voted as you direct or you may vote
by telephone or on the Internet as detailed below. If you are a registered
stockholder and attend the meeting, you may deliver your completed proxy card in
person. "Street name" stockholders who wish to vote at the meeting will need to
obtain a proxy from the institution that holds their shares.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
If you are a registered stockholder (that is, you hold your stock in
certificate form), you may vote by telephone, or electronically through the
Internet, by following the instructions included with your proxy card.
If your shares are held in "street name", please check your proxy card and
contact your broker or nominee to determine whether you will be able to vote by
telephone or electronically. A large number of banks and brokerage firms are
participating in ADP Investor Communication Services online program. This
program provides eligible stockholders the opportunity to vote via the Internet
or by telephone. Voting forms will provide instructions for stockholders whose
bank or brokerage firm is participating in ADP's program. If you vote by
telephone or electronically through the Internet, please do not mail your proxy.
Stockholders not wishing to vote electronically through the Internet or whose
form does not reference Internet or telephone voting information should complete
and return the enclosed proxy card.
Signing and returning the proxy card or submitting the proxy via the
Internet or by telephone does not affect the right to vote in person at the
meeting.
2
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with the Secretary of the
Company either a notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although, attendance at the meeting alone will
not by itself revoke a previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board recommends a vote to approve Proposal
No. 1, for election of the nominated slate of directors to serve for the ensuing
year, as set forth in the notice of meeting on the cover page of this proxy
statement. With respect to any other matter that properly comes before the
meeting, the proxy holders will vote in accordance with their best judgment.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The seven nominees receiving the highest number of
affirmative votes of the votes cast at the meeting, either in person or by
proxy, shall be elected as directors. A properly executed proxy card marked
"WITHHOLD AUTHORITY" with respect to the election of one or more directors will
not be voted with respect to the director or directors indicated, although it
will be counted for purposes of determining whether there is a quorum.
OTHER ITEMS. For each other item that may properly come before the meeting,
the affirmative vote of the holders of a majority of the shares represented in
person or by proxy entitled to vote on the item will be required for approval. A
properly executed proxy marked "ABSTAIN" with respect to any such matter will
not be voted, although it will be counted for purposes of determining whether
there is a quorum. Accordingly, an abstention will have the effect of a negative
vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
3
STOCK OWNERSHIP
WHO ARE THE LARGEST NON-AFFILIATE OWNERS OF THE COMPANY'S STOCK?
The following table sets forth information regarding the beneficial
ownership determined in accordance with the rules of the Securities and Exchange
Commission (the "SEC"), which generally attribute beneficial ownership of
securities to persons who possess sole or shared voting power and/or investment
power with respect to those securities, of the Company's Common Stock held by
each non-affiliated person known by the Company to own beneficially more than
five percent (5%) of the Company's outstanding Common Stock.
AMOUNT AND NATURE OF PERCENTAGE OF COMBINED
BENEFICIAL OWNERSHIP OF COMMON VOTING
NAME OF BENEFICIAL OWNER COMMON STOCK STOCK POWER
------------------------ ----------------------- ------------- --------
Putnam Investments, LLC(1)......................... 6,405,328 6.0% 4.2%
One Post Office Square
Boston, MA 02109
Capital Group International, Inc.(2)............... 6,378,390 6.0% 4.1%
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Goldman Sachs Asset Management(3).................. 5,598,998 5.3% 3.6%
32 Old Slip
New York, NY 10005
T. Rowe Price Associates, Inc.(4).................. 5,564,028 5.2% 3.6%
100 E. Pratt Street
Baltimore, MD 21202
--------------------------
(1) Putnam Investments, LLC may be deemed to beneficially own 6,405,328 shares
of our Common Stock which are held of record by clients of Putnam
Investments, LLC. Putnam Investments, LLC does not have sole voting or sole
dispositive power with respect to any of the shares and has shared voting
power with respect to 691,463 shares and shared dispositive power with
respect to 6,405,328 shares. Information with respect to Putnam Investments,
LLC, including their percentage ownership, has been derived from their
Schedule 13G dated February 15, 2002 as filed with the SEC.
(2) Capital Group International, Inc. may be deemed to beneficially own
6,378,390 shares of our Common Stock which are held of record by clients of
Capital Group International, Inc. Capital Group International, Inc. has sole
voting power with respect to 5,824,290 of the shares and sole dispositive
power with respect to 6,378,390 of the shares and does not have shared
voting power or shared dispositive power with respect to any of the shares.
Information with respect to Capital Group International, Inc., including
their percentage ownership, has been derived from their Schedule 13G/A dated
February 11, 2002 as filed with the SEC.
(3) Goldman Sachs Asset Management may be deemed to beneficially own 5,598,998
shares of our Common Stock which are held of record by clients of Goldman
Sachs Asset Management. Goldman Sachs Asset Management has sole voting power
with respect to 4,470,748 shares and sole dispositive power with respect to
5,598,998 of the shares and does not have shared voting power or dispositive
power with respect to any shares. Information with respect to Goldman Sachs
Asset Management, including their percentage ownership, has been derived
from their Schedule 13G dated February 14, 2002 as filed with the SEC.
(4) T. Rowe Price Associates, Inc. may be deemed to beneficially own 5,564,028
shares of our Common Stock which are held of record by clients of T. Rowe
Price Associates, Inc. T. Rowe Price Associates, Inc. has sole voting power
with respect to 980,658 shares and sole dispositive power with respect to
5,564,028 of the shares and does not have shared voting power or dispositive
power with respect to any shares. Information with respect to T. Rowe Price
Associates, Inc., including their percentage ownership, has been derived
from their Schedule 13G dated February 12, 2002 as filed with the SEC.
4
HOW MUCH STOCK DO THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table sets forth information as of March 31, 2002 (except as
otherwise noted in the footnotes), regarding the beneficial ownership determined
in accordance with the rules of the SEC, of the Company's Common Stock held by:
(i) each director and nominee for director of the Company; (ii) each executive
officer named in the Executive Compensation Summary Table (see "Executive
Compensation"); and (iii) all directors and executive officers of the Company as
a group. Except as otherwise specified, the named beneficial owner has the sole
voting and investment power over the shares listed.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENTAGE OF
COMMON STOCK/CLASS B PERCENTAGE OF CLASS B
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK COMMON STOCK
------------------------ ----------------------- ------------- -------------
Andrew J. McKelvey(1)......................... 20,037,467 18.8% 100%
James J. Treacy(2)............................ 1,186,996 1.1 --
Jeffrey C. Taylor(3).......................... 468,090 * --
Paul M. Camara(4)............................. 877,394 * --
John Mclaughlin(5)............................ 17,500 * --
George R. Eisele(6)........................... 155,755 * --
Steven Potter(7).............................. 5,000 * --
Ronald J. Kramer(8)........................... 25,000 * --
Michael Kaufman(9)............................ 32,500 * --
John Swann(10)................................ 31,740 * --
John Gaulding(11)............................. 13,750 * --
All directors and executive officers as a
group (19 persons)(12)...................... 23,366,852 21.9% 100%
--------------------------
* Less than 1%
(1) Includes 4,762,000 shares of Class B Common Stock which are convertible, on
a share for share basis, into Common Stock. Each share of Class B Common
Stock has ten votes per share. Also includes 4,115 shares of Common Stock
owned by Mr. McKelvey's wife, 200 shares of Common Stock owned by
Mr. McKelvey's daughter and 1,106 shares of Common Stock held by TMP's
401(k) Plan. Mr. McKelvey disclaims beneficial ownership of the shares owned
by his wife.
(2) Includes 600 shares of Common Stock owned by Mr. Treacy's daughters, 1,106
shares of Common Stock held by TMP's 401(k) Plan, and 657,082 shares of
Common Stock issuable upon the exercise of options which are exercisable
within 60 days of March 31, 2002.
(3) Includes 1,106 shares of Common Stock held by TMP's 401(k) Plan and 391,199
shares of Common Stock issuable upon the exercise of options which are
exercisable within 60 days of March 31, 2002.
(4) Includes 1,106 shares of Common Stock held by TMP's 401(k) Plan and 673,500
shares of Common Stock issuable upon the exercise of options which are
exercisable within 60 days of March 31, 2002.
(5) Consists of 17,500 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 2002.
(6) Includes 907 shares of Common Stock held by TMP's 401(k) Plan and 4,250
shares of Common Stock issuable upon the exercise of options which are
exercisable within 60 days of March 31, 2002.
(7) Consists of 5,000 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 2002. Mr. Potter
resigned as an executive officer effective October 21, 2001.
(8) Consists of 25,000 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 2002.
(9) Consists of 32,500 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 2002.
(10) Consists of 31,740 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 2002.
(11) Consists of 13,750 shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of March 31, 2002.
(12) Includes 4,762,000 shares of Class B Common Stock which are convertible, on
a share for share basis, into Common Stock, 11,536 shares held by TMP's
401(k) plan and 16,367,534 shares beneficially owned. Also includes
2,225,782 shares subject to options which are exercisable within 60 days of
March 31, 2002. Mr. Potter resigned as an executive officer of the Company
on October 21, 2001, consequently, his option to purchase 5,000 shares of
Common Stock is not included.
5
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Seven directors (constituting the entire Board) are to be elected at the
annual meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the 2003 annual meeting and
until their successors are duly elected and qualified. Each nominee has
consented to serve if elected. In the event any of these nominees shall be
unable to serve as a director, the shares represented by the proxy will be voted
for the person, if any, who is designated by the Board of Directors to replace
the nominee. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The nominees, their ages, the year in which each first became a director and
their principal occupations or employment during the past five years are:
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
------- -------- --------------- -----------------------------------------
Andrew J. McKelvey................... 67 1967 Chairman of the Board, CEO and a director
since founding the Company in 1967. Mr.
McKelvey has a B.A. from Westminster
College. Mr. McKelvey was a member of the
Board of Directors of the Yellow Pages
Publishers Association and the
Association of Directory Marketing from
1994 through September 1996.
Mr. McKelvey is the father of Stuart
McKelvey who serves as the Company's
Group President, Asia/Pacific.
James J. Treacy...................... 44 1998 Director of the Company since September
1998, Chief Operating Officer since
February 1998, President since November
2001. Mr. Treacy joined the Company in
June 1994 as Chief Executive Officer of
the Advertising and Communications
Division. Mr. Treacy served as the
Company's Executive Vice President-
Finance and Strategy from April 1996 to
February 1998. Prior to joining the
Company, Mr. Treacy was Senior Vice
President--Western Hemisphere Treasurer
for the WPP Group USA, Inc. Mr. Treacy
received a B.B.A. from Sienna College and
a M.B.A. from St. John's University. Mr.
Treacy is a member of the Sienna College
Board of Associate Trustees.
George R. Eisele..................... 65 1987 Director of the Company since September
1987 and Executive Vice President of TMP
Worldwide Direct, the Company's response
marketing division, since 1989. Mr.
Eisele attended Fairleigh Dickinson
University and Drexel University.
6
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
------- -------- --------------- -----------------------------------------
John Gaulding........................ 56 2001 Director of the Company since June 2001.
Previously, Mr. Gaulding was a director
from January 1996 to October 1999. Mr.
Gaulding is a private investor and
business consultant in the fields of
strategy and organization. He was
Chairman and Chief Executive Officer of
National Insurance Group, a publicly
traded financial information services
company, from April through July 11,
1996, the date of such company's sale.
For six years prior thereto, he was
President and Chief Executive Officer of
ADP Claims Solutions Group. From 1985 to
1990, Mr. Gaulding was President and
Chief Executive Officer of Pacific Bell
Directory, the yellow page publishing
unit of Pacific Telesis Group.
Mr. Gaulding served as co-chairman of the
Yellow Pages Publishers Association from
1987 to 1990. He holds a B.S. from the
University of California at Los Angeles
and a M.B.A. from the University of
Southern California. Mr. Gaulding is also
a director of Ants Software, Inc., a
publicly traded corporation.
Michael Kaufman...................... 56 1997 Director of the Company since October
1997. Until July 1, 2000 Mr. Kaufman was
President of SBC/Prodigy Transition. Mr.
Kaufman previously served as President
and CEO of Pacific Bell's Consumer's
Market Group. Prior thereto, Mr. Kaufman
was the President and CEO of Pacific Bell
Communications, a subsidiary of SBC
Communications Inc., and from 1993
through April 1997 he was the regional
president for the Central and West Texas
market area of Southwestern Bell
Telephone. Mr. Kaufman holds a B.A. and a
M.B.A. from the University of Wisconsin.
7
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
------- -------- --------------- -----------------------------------------
Ronald J. Kramer..................... 43 2001 Director of the Company since February
2000. Mr. Kramer has been President of
Wynn Resorts, an entertainment and gaming
company, since April 2002. Mr. Kramer
previously was a managing director of
Dresdner Kleinwort Wasserstein (formerly
Wasserstein Perella & Co.) from July 1999
until November 2001. Prior thereto, Mr.
Kramer was the Chairman and CEO of
Ladenburg Thalmann Group Inc. and had
been employed there for over five years.
Mr. Kramer is also a director of Griffon
Corporation, Lakes Gaming and New Valley
Corporation. Mr. Kramer holds a B.S. from
the Wharton School of the University of
Pennsylvania and a M.B.A. from New York
University Graduate School of Business.
John Swann........................... 66 1996 Director of the Company since September
1996. In 1995, Mr. Swann founded Cactus
Digital Imaging Systems, Ltd., a large
Canadian supplier of electronically
produced large format color prints. Mr.
Swann sold Cactus Digital Imaging
Systems, Ltd. in June 2000.
HOW ARE DIRECTORS COMPENSATED?
BASE COMPENSATION. Each of the Company's non-employee directors receives
$25,000 per year for services rendered as a director, plus a per meeting fee of
$1,000 for each meeting of the Board of Directors or a committee of the Board of
Directors attended in person or telephonically (limited to a maximum fee of
$1,000 per day), plus reimbursement of expenses incurred in connection with his
or her duties as director and life insurance in accordance with the Company's
standard life insurance offering for employees.
OPTIONS. The Company adopted the 1996 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan"), pursuant to which options to acquire a
maximum aggregate of 360,000 shares of Common Stock may be granted to
non-employee directors. Pursuant to the Directors' Plan, each of
Messrs. Kaufman and Swann, its only non-employee directors at the time, was
granted an option to purchase 22,500 shares of common stock at a purchase price
per share equal to the fair market value of the common stock on the date of such
director's election to the Board of Directors ($11.81 in the case of
Mr. Kaufman and $7.00 in the case of Mr. Swann). The options have a ten-year
term and become exercisable as determined by the Compensation Committee. The
options may be exercised by payment in cash, check or shares of common stock.
The Company no longer makes grants under the Directors' Plan.
The Company adopted the 1999 Long Term Incentive Plan pursuant to which each
new non-employee director of the Company is automatically granted an option to
purchase 22,500 shares of common stock upon his or her commencement of service
as a non-employee director. Accordingly, Mr. Kramer received such option in
February 2000 and Mr. Gaulding received such option in June 2001, each at an
exercise price equal to the fair market value of the common stock on the date of
8
grant. In addition, each non-employee director of the Company is automatically
granted an option to purchase 5,000 shares of common stock under the 1999 Long
Term Incentive Plan on the day following each annual meeting that occurs at
least one year after the first anniversary of the date he or she first became a
non-employee director. Accordingly, Messrs. Kaufman, Kramer and Swann each
received such option in June 2001. Automatic option grants will have a ten-year
term and an exercise price equal to the fair market value of the common stock on
the date of grant. Options granted to non-employee directors upon their
commencement of service are 50% vested on the date of grant and will generally
become fully vested on the first anniversary of the date of grant. Options
granted to non-employee directors on an annual basis will generally become 50%
vested on each of the first two anniversaries of the date of grant. In
April 2001, each of Messrs. Kaufman, Kramer and Swann, the Company's
non-employee directors at the time, received an additional option to purchase
10,000 shares of common stock at an exercise price of $30.63, the fair market
value of the common stock on the date of the grant.
HOW OFTEN DID THE BOARD MEET DURING THE YEAR ENDED DECEMBER 31, 2001?
During the fiscal year ended December 31, 2001, the Board of Directors held
one meeting and acted eleven times by unanimous written consent in lieu of a
meeting. Each director attended at least 75% of the total number of meetings of
the Board and the Committees on which he served.
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board of Directors has standing Executive, Compensation, Audit and
Strategy Committees.
EXECUTIVE COMMITTEE. The Executive Committee possesses all of the powers of
the Board except certain powers specifically reserved by Delaware law to the
Board or the stockholders of the Company. The Executive Committee is currently
composed of Messrs. McKelvey and Treacy. During 2001, the Executive Committee
did not meet but acted twelve times by unanimous consent in lieu of a meeting.
COMPENSATION COMMITTEE. The Compensation Committee is charged with
recommending to the Board the compensation for the Company's executives and
administering the Company's stock option and benefit plans. The Compensation
Committee is currently composed of Messrs. Kaufman, Gaulding and Kramer. During
2001, the Compensation Committee held one meeting and acted twenty-two times by
unanimous consent in lieu of a meeting.
AUDIT COMMITTEE. The Audit Committee is charged with recommending to the
Board the appointment of independent auditors of the Company, as well as
discussing and reviewing with the independent auditors, the scope of the annual
audit and results thereof. The Audit Committee is currently composed of
Messrs. Kramer, Gaulding and Kaufman. During 2001, the Audit Committee met four
times.
STRATEGY COMMITTEE. The Strategy Committee is charged with recommending to
the Board strategic plans. The Strategy Committee is currently composed of
Messrs. Treacy, Gaulding, Kaufman and Kramer. During 2001, the Strategy
Committee held one meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who beneficially own more than ten percent of the Company's common
stock, to file initial reports of ownership and reports of changes in ownership
with the SEC and the National Association of Securities Dealers, Inc. Executive
officers, directors and greater than ten percent beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based upon a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
9
directors, the Company believes that during fiscal 2001 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with.
VOTE REQUIRED
The seven nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them,
a quorum being present, shall be elected as directors. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1-ELECTION OF DIRECTORS" TO BE IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL THEREOF.
10
AUDIT MATTERS
WHAT SERVICES HAVE BEEN PROVIDED BY THE COMPANY'S AUDITORS?
AUDIT FEES. The Company incurred professional fees from BDO Seidman, LLP
("BDO"), its principal auditor and BDO International affiliate firms in the
amount of $3.8 million, related to auditing and review services during 2001.
ALL OTHER FEES. The Company incurred professional fees from BDO, its
principal auditor, in the amount of $4.0 million, related to other services
during 2001 which include $1.5 million in connection with acquisition
consulting, due diligence and SEC filings related to acquisitions, $1.5 million
in connection with tax services, $0.7 million in connection with statutory
audits and reviews and $0.3 million in connection with other services.
The Company's Audit Committee has considered whether the non-audit services
provided by the Company's auditors in connection with the year ended
December 31, 2001 were compatible with the auditors' independence.
REPORT OF AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company serves as the
representative of the Board of Directors for general oversight of the Company's
financial accounting and reporting process, system of internal controls, audit
process, and process for monitoring compliance with laws and regulations. Each
of the members of the Audit Committee is independent, as defined under the
listing standards of the Nasdaq National Market. The Audit Committee operates
under a written charter adopted by the Board of Directors.
The Committee has implemented procedures to ensure that during the course of
each fiscal year it devotes the attention that it deems necessary or appropriate
to each of the matters assigned to it under the Committee's charter. To carry
out its responsibilities, the Committee met four times during 2001.
In overseeing the preparation of the Company's financial statements, the
Committee met with both management and the Company's outside auditors to review
and discuss all financial statements prior to their issuance and to discuss
significant accounting issues. Management advised the Committee that all
financial statements were prepared in accordance with generally accepted
accounting principles, and the Committee discussed the statements with both
management and the outside auditors. The Committee's review included discussion
with the outside auditors of matters required to be discussed pursuant to
STATEMENT ON AUDITING STANDARDS NO. 61 (COMMUNICATION WITH AUDIT COMMITTEES) and
NO. 90 (AUDIT COMMITTEE COMMUNCIATIONS).
With respect to the Company's outside auditors, the Committee, among other
items, discussed with BDO Seidman, LLP, matters relating to BDO Seidman, LLP's
independence, including the disclosures made to the Committee as required by the
INDEPENDENCE STANDARDS BOARD STANDARD NO. 1 (INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEES).
Finally, the Committee continued to monitor the scope and adequacy of the
Company's internal auditing program, including proposals for adequate staffing
and to strengthen internal procedures and controls where appropriate.
On the basis of these reviews and discussion, the Committee recommended to
the Board of Directors that the Board approve the inclusion of the Company's
audited financial statements in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, for filing with the Securities and Exchange
Commission.
Members of the Audit Committee
RONALD J. KRAMER, CHAIRMAN
JOHN GAULDING
MICHAEL KAUFMAN
11
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee was formed in September 1996 and currently
consists of Messrs. Kaufman, Gaulding and Kramer, each of whom is an independent
non-employee director. The Compensation Committee is charged with recommending
to the Board of Directors the compensation for the Company's executives and
administering the Company's stock option and benefit plans.
WHAT IS THE COMPANY'S PHILOSOPHY OF EXECUTIVE COMPENSATION?
The Company believes that executive compensation should be closely related
to increased stockholder value. One of the Company's strengths contributing to
its successes is a strong management team, many of whom have been with the
Company for a number of years. The Committee believes that low executive
turnover has been instrumental to the Company's success, and that the Company's
compensation program has played a major role in limiting executive turnover. The
compensation program is designed to enable the Company to attract, retain and
reward capable employees who can contribute to the continued success of the
Company, principally by linking compensation with the attainment of key business
objectives. Equity participation and a strong alignment to stockholders'
interests are key elements of the Company's compensation philosophy.
Accordingly, the Company's executive compensation program is designed to provide
competitive compensation, support the Company's strategic business goals and
reflect the Company's performance.
The compensation program reflects the following principles:
- Compensation should encourage increased stockholder value.
- Compensation programs should support the short- and long-term strategic
business goals and objectives of the Company.
- Compensation programs should reflect and promote the Company's values and
reward individuals for outstanding contributions toward business goals.
- Compensation programs should enable the Company to attract and retain
highly qualified professionals.
The Company's executive compensation is comprised of two components, base
salary and incentives, each of which is intended to serve the overall
compensation philosophy.
BASE SALARY. The Company's salary levels are intended to be consistent with
competitive pay practices and level of responsibility, with salary increases
reflecting competitive trends, the overall financial performance and resources
of the Company, general economic conditions as well as a number of factors
relating to the particular individual, including the performance of the
individual executive, and level of experience, ability and knowledge of the job.
INCENTIVES. Incentives consist of stock options and cash awards paid to the
Company's senior and middle management executives. Mr. McKelvey does not receive
incentives. Incentive payments in 2001 to Mr. Treacy were based on obtaining
operational efficiencies and spearheading the Company's investor relations.
Mr. Taylor's incentive was based on growth in Internet billings and traffic and
growing brand awareness. Mr. Camara's incentive was based on new business goals
and spearheading award winning advertising campaigns. Mr. Mclaughlin's incentive
was based on achieving operational efficiencies in the executive search
division. In 2001, other key executives were granted stock options based on
revenue, divisional or regional profit, client retention or other preset
objectives related to performance as set forth in the Company's 2001 annual
plan.
The Committee strongly believes that the pay program should provide
employees with an opportunity to increase their ownership and potentially gain
financially from Company stock price
12
increases. By this approach, the best interests of stockholders, executives and
employees will be closely aligned. Therefore, executives and other employees are
eligible to receive stock options, giving them the right to purchase shares of
common stock of the Company at a specified price in the future. The grant of
options is based primarily on a key employee's potential contribution to the
Company's growth and profitability, based on the Committee's discretionary
evaluation. Options are granted at the prevailing market value of the Company's
common stock and will only have value if the Company's stock price increases.
Generally, grants of options vest over a period of time and executives must be
employed by the Company for such options to vest.
HOW IS THE COMPANY'S CHIEF EXECUTIVE OFFICER COMPENSATED?
As Chief Executive Officer and Chairman of the Board, Mr. McKelvey is
compensated pursuant to an amended employment agreement, effective as of
November 15, 1996 which ended November 14, 2001 and was automatically renewed
through November 14, 2002. Pursuant to his amended employment agreement, the
base salary for Mr. McKelvey was $500,000 during the Company's fiscal year ended
December 31, 2001. Such base salary represents no increase over the previous
year's salary. The amended employment agreement was entered into by the Company
as a recognition of Mr. McKelvey's services to the Company as well as an
acknowledgment of his stature in the industry.
The aggregate compensation of Mr. McKelvey was deemed appropriate by the
Compensation Committee considering the overall performance of the Company and
Mr. McKelvey.
HOW IS THE COMPANY ADDRESSING INTERNAL REVENUE CODE LIMITS ON DEDUCTIBILITY OF
COMPENSATION?
Section 162(m) of the Code generally limits to $1,000,000 the annual income
tax deduction for certain "non-performance based" compensation paid to the chief
executive officer or any of the four other highest paid offices of a publicly
held corporation. The Company's 1999 Long Term Incentive Plan permits the grant
of several types of awards. Some will qualify for the exception to the deduction
limitation for performance-based compensation and others may not qualify for the
exception. We believe that the stock options, stock appreciation rights and
performance-based awards granted under the 1999 Long Term Incentive Plan can be
structured to qualify for the exception for performance-based compensation. In
general, the Compensation Committee wishes to structure performance-based awards
in a way that will preserve the deductibility of compensation under such awards.
The Compensation Committee may from time to time approve awards which would not
qualify for the performance-based compensation exception. It is not anticipated
that loss of deduction, if any, for compensation realized by any executive
officer under the Company's existing compensation plans will be material.
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. The Committee believes its
compensation practices are directly tied to stockholder returns and linked to
the achievement of annual and longer-term financial and operational results of
the Company on behalf of the Company's stockholders. In view of the Company's
performance and achievement of goals and competitive conditions, the
Compensation Committee believes that compensation levels during 2001 adequately
reflect the Company's compensation goals and policies.
Members of the Compensation Committee
MICHAEL KAUFMAN, CHAIRMAN
JOHN GAULDING
RONALD J. KRAMER
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On September 16, 1996, the Company's Board of Directors established a
Compensation Committee, which currently consists of Messrs. Kaufman, Gaulding
and Kramer, to recommend compensation for the Company's executives and to
administer the Company's stock option and other benefit plans. Prior to
September 16, 1996, all matters concerning executive officer compensation were
addressed by the entire Board of Directors. In October 1997, June 2001 and
February 2000, respectively, Mr. Kaufman, Mr. Gaulding and Mr. Kramer each
received stock options to purchase 22,500 shares of common stock, at respective
exercise prices of $11.81 per share, $61.82 per share and $63.07 per share,
which was equal to the fair market value on the date of grant. Additionally,
Messrs. Kaufman, Gaulding and Kramer receive shares under the 1999 Long Term
Incentive Plan which provides that each non-employee director be granted an
option to purchase 5,000 shares of common stock on the day following each annual
meeting that occurs at least one year after the first anniversary of the date
they first became a non-employee director. Additionally, in April 2001, each of
Messrs. Kaufman and Kramer received an option to purchase 10,000 shares of
common stock at an exercise price of $30.63, the fair market value of the common
stock on the date of the grant.
EMPLOYMENT AGREEMENTS
The Company has entered into an amended employment agreement with Andrew J.
McKelvey, effective as of November 15, 1996 for a term which ended on
November 14, 2001. On November 14, 2001 the amended employment agreement was
automatically renewed for a one year term. The agreement provides for automatic
renewal for successive one year terms unless either party notifies the other to
the contrary at least 90 days prior to the expiration of the then current term.
The agreement also provides that Mr. McKelvey will serve as Chairman of the
Board and CEO of the Company and will be nominated for election as a director
during all periods of his employment. Under the agreement, as amended,
Mr. McKelvey is entitled to an annual base salary of $500,000 and an annual
bonus, based on exceeding earnings per share targets, not to exceed $500,000.
Under the agreement, Mr. McKelvey may terminate his employment upon 90 days
prior written notice for any reason. The agreement also provides that in the
event Mr. McKelvey's employment is terminated by the Company prior to its
expiration for reasons other than for "cause," the Company shall pay
Mr. McKelvey his base salary for the remaining term of the agreement at the
times it would have been payable had he remained employed. The agreement further
provides that in the event of Mr. McKelvey's voluntary resignation, termination
of his employment by the Company for cause or nonrenewal of the agreement,
Mr. McKelvey shall not be entitled to any severance, and in the event of his
disability or death he or his estate shall be paid his base salary for a period
of 180 days after any such termination at the times it would have been payable
had he remained employed. The agreement also contains confidentiality
provisions, whereby Mr. McKelvey agrees not to disclose any confidential
information regarding the Company and its affiliates.
The Company has entered into a second amended employment agreement, as
amended with James J. Treacy, effective as of October 1, 1999, for an indefinite
term on an at-will basis. The agreement provides that either party may terminate
the agreement for any reason. Pursuant to the agreement, as amended effective
November 1, 2001, Mr. Treacy will serve as President and Chief Operating Officer
of the Company for an annual base salary of $675,000 and an annual bonus
equivalent to a percentage, ranging from 40% to 50%, of his salary if certain
goals mutually agreed upon by Mr. Treacy and the Chief Executive Officer are
attained by Mr. Treacy and/or the Company. The agreement provides that in the
event Mr. Treacy is terminated for "cause" or voluntarily resigns, he shall not
be entitled to any severance, and in the event Mr. Treacy is terminated by
reason of his death, disability or for other reasons, he or his estate shall be
entitled to his base salary and minimum annual bonus for a period of one year
after the effective date of his termination payable at the times they would have
been payable had he remained employed, less income earned by him from the
performance of any personal services
14
during such period. The agreement provides that in the event Mr. Treacy's
employment is terminated by death all of his options shall become fully vested
and exercisable for the shorter of one year or the balance of the term provided
in the stock option agreement. In addition, upon a change in control of the
Company, Mr. Treacy's options generally become fully vested and immediately
exercisable. The agreement contains confidentiality provisions, whereby
Mr. Treacy agrees not to disclose any confidential information regarding the
Company and its affiliates, as well as nonsolicitation provisions which prohibit
Mr. Treacy from soliciting any active or prospective accounts of the Company or
its affiliates for a period of one year following termination.
The Company's subsidiary, TMP Interactive Inc., is a party to an amended and
restated employment agreement with Jeffrey C. Taylor. This agreement provides
for automatic renewal for successive one year terms, on a calendar basis, unless
either party notifies the other to the contrary at least 60 days prior to its
expiration. The agreement provides that Mr. Taylor will serve as Global Director
Interactive and currently provides Mr. Taylor with a base salary of $400,000 per
year and annual bonuses of at least $75,000 per year based on formulae mutually
agreed to by the parties. Under the agreement, Mr. Taylor may terminate his
employment upon written notice for certain material alterations in his
responsibilities, duties, and authorities or upon 90 days prior written notice
for any reason. The agreement provides that in the event Mr. Taylor's employment
is terminated by TMP Interactive Inc. prior to its expiration for reasons other
than cause or is terminated by Mr. Taylor for certain material alterations in
his responsibilities, duties and authorities, TMP Interactive Inc. shall pay
Mr. Taylor his base salary and his annual bonus from the preceding year or, if
not yet issued a minimum of $100,000 and all of Mr. Taylor's options to purchase
TMP stock shall become fully vested and Mr. Taylor and his immediate family
shall be provided with specified insurance for a period of one year. The
agreement also provides that in the event of Mr. Taylor's voluntary resignation,
termination of his employment by TMP Interactive Inc. for "cause" or non-renewal
of the agreement, Mr. Taylor shall not be entitled to any severance, and in the
event of his disability or death he or his estate shall be paid his base salary
and certain other benefits for a period of 90 days at the times they would have
been payable had he remained employed. The agreement contains confidentiality
provisions, whereby Mr. Taylor agrees not to disclose any confidential
information regarding TMP Interactive Inc. and its affiliates, as well as
non-competition provisions. The non-competition covenants generally survive the
termination or expiration of Mr. Taylor's employment for two years, provided
that in certain circumstances TMP Interactive Inc. must pay Mr. Taylor one-half
of his base salary and one-half of his minimum annual bonus for the duration of
the non-competition obligation. Mr. Taylor's agreement also prohibits him from
soliciting or servicing customers or prospective customers of TMP
Interactive Inc. and its affiliates for a period of two years following the
termination or expiration of his employment.
The Company has entered into a letter agreement with John Mclaughlin, dated
February 7, 2002. Pursuant to terms of the agreement Mr. Mclaughlin will serve
as Group President, Americas for an annual base salary of $475,000 and shall be
eligible to receive a bonus of up to 100% of his base salary. Upon the
commencement of his employment as Group President, Americas, Mr. Mclaughlin
received an option to purchase 125,000 shares of the Company's common stock. The
agreement provides that in the event of a change in control of the Company all
of Mr. Mclaughlin's options shall automatically become fully vested and
immediately exercisable. Under the agreement, if Mr. Mclaughlin is terminated
for any reason other than for cause he shall receive, upon the execution of a
general release, a severance payment equal to one year's salary and he shall
continue to participate in the Company's medical and dental plans for three
months following his termination of employment.
15
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information concerning all cash and non-cash
compensation paid or to be paid by the Company as well as certain other
compensation awarded, earned by and paid, during the fiscal years indicated, to
the Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company for such periods in all capacities in which
they served, and one additional individual who was not serving as an executive
officer as of December 31, 2001.
EXECUTIVE COMPENSATION SUMMARY TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------------ -----------------------------
AWARDS
-----------------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPEN- UNDERLYING COMPEN-
POSITION YEAR SALARY BONUS SATION OPTIONS/SARS SATION
--------------------------------------- -------- -------- ---------- ------------- ------------- -------------
Andrew J. McKelvey,
Chairman of the Board and CEO........ 2001 $500,031 -- $ 3,400(1) -- --
2000 500,000 -- 3,400(1) -- --
1999 833,364 -- 21,874(1) -- --
James J. Treacy,
Chief Operating Officer and
President............................ 2001 508,365 $ 850,000 3,400(2) 305,000 --
2000 475,000 118,750 3,400(2) -- --
1999 329,576 35,000 3,200(2) 400,000 --
Jeffrey C. Taylor,
Global Director Interactive.......... 2001 400,000 550,000 3,400(3) -- --
2000 400,000 150,000 46,827(3) -- --
1999 400,000 112,500 67,375(3) 2,000,000 --
Paul M. Camara,
Executive Vice President
Creative/Sales/Marketing............. 2001 500,000 855,000 3,400(2) 200,000 --
2000 500,031 125,000 3,400(2) -- --
1999 359,148 -- 3,200(2) 500,000 --
John Mclaughlin
Group President, Americas(4)......... 2001 250,000 400,000 -- 55,000 --
2000 200,000 150,000 -- -- --
1999 182,500 3,063,138(5) -- 32,500 --
Steven Potter
Former CEO, Executive Search(6)...... 2001 322,820 500,000 3,400(2) -- --
2000 400,000 1,000,000 3,400(2) -- --
1999 200,000 3,242,138 3,200(2) 20,000 --
------------------------------
(1) Matching contributions made to the Company's 401(k) Plan were $3,400, $3,400
and $3,200 in 2001, 2000 and 1999, respectively. Also includes lease
payments for an automobile of $18,674 in 1999.
(2) Represents matching contributions made to the Company's 401(k) Plan.
(3) Matching contributions made to the Company's 401(k) Plan were $3,400, $3,400
and $3,200 in 2001, 2000 and 1999, respectively. Also includes lease
payments for an automobile of $16,800 in 1999, and $43,427 and $47,375 in
2000 and 1999, respectively, representing Mr. Taylor's commission
compensation.
(4) Mr. Mclaughlin was named an executive officer of the Company effective
February 19, 2002.
(5) Represents a $300,000 cash bonus and $2,763,138 stock bonus earned in
connection with the pre-acquisition results of a pooled company.
(6) Mr. Potter resigned as an executive officer of the Company effective
October 21, 2001.
16
OPTION GRANTS FOR 2001
The following table sets forth information with respect to option grants in
2001 to each of the persons named in the Executive Compensation Summary Table.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (3)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR (2) ($/SH) DATE 5%($) 10%($)
---- ------------- --------------- ----------- ---------- --------- ----------
Andrew J. McKelvey............ -- -- -- -- -- --
James J. Treacy............... 5,000 0.1% $30.63 4/4/11 96,315 244,082
200,000(4) 3.6% $41.75 9/10/11 5,251,270 13,307,750
100,000 1.8% $27.50 11/1/11 1,729,460 4,382,792
Jeffrey C. Taylor............. -- -- -- -- -- --
Paul Camara................... 200,000(4) 3.6% $41.75 9/10/11 5,251,270 13,307,750
John Mclaughlin............... 5,000 0.1% $30.63 4/4/11 96,315 244,082
50,000 0.9% $27.50 11/1/11 864,730 2,191,396
Steven Potter................. 17,741(5) 0.3% $27.26 4/19/02 -- --
------------------------
(1) Options generally vest in four equal annual installments commencing on the
first anniversary date of the grant.
(2) Based on options to purchase 5,579,000 shares granted in 2001 under the 1999
Long Term Incentive Plan.
(3) These amounts represent assumed rates of appreciation in the price of the
Company's common stock during the terms of the options in accordance with
rates specified in applicable federal securities regulations. Actual gains,
if any, on stock option exercises will depend on the future price of the
common stock and overall stock market conditions. The 5% rate of
appreciation over the terms of each of the $27.50, $30.63 and $41.75 stock
prices on each date of grant would result in a stock price of $44.79, $49.89
and $68.01, respectively. The 10% rate of appreciation over the terms of
each of the $27.50, $30.63 and $41.75 stock prices on each date of grant
would result in a stock price of $71.33, $79.45 and $108.29, respectively.
There is no representation that the rates of appreciation reflected in this
table will be achieved.
(4) These options become fully vested and immediately exercisable on
September 10, 2002.
(5) These options were cancelled upon Mr. Potter's resignation as an executive
officer of the Company effective October 21, 2001.
OPTION VALUES FOR 2001
The following table sets forth information with respect to (i) shares
acquired upon the exercise of stock options in 2001, (ii) the number of
securities underlying unexercised options and (iii) the value of
17
unexercised options held by each of the persons named in the Executive
Compensation Summary Table as of December 31, 2001:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT YEAR END OPTIONS AT YEAR END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
Andrew J. McKelvey........... -- -- -- -- -- --
James J. Treacy.............. -- -- 657,082 341,250 $16,880,872 $ 2,920,763
Jeffrey C. Taylor(2)......... 244,563 $8,391,368 391,199 1,453,801 7,849,662 28,492,355
Paul M. Camara............... -- -- 673,500 250,000 15,684,150 1,703,000
John Mclaughlin.............. 24,136 1,302,148 17,500 70,000 254,344 1,055,031
Steven Potter................ -- -- 5,000 -- -- --
------------------------
(1) Computed based upon the difference between the stock option exercise price
and $42.90, the closing price of the Company's Common Stock on December 31,
2001.
(2) During 2001, Mr. Taylor exercised options to purchase 22,500, 563, 16,500
and 205,000 shares at exercise prices of $3.33, $6.44, $13.44 and $23.47,
respectively. The closing price of the Company's common stock on the date of
exercise ranged from $46.30 to $59.15.
STOCK OPTION AWARDS
In January 1996, the Company's Board of Directors adopted the 1996 Stock
Option Plan (the "1996 Stock Option Plan"), which, as amended, provides for the
issuance of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and non-statutory stock
options, to purchase an aggregate of up to 6,000,000 shares of the Common Stock
of the Company. The 1996 Stock Option Plan permits the grant of options to
officers, employees and consultants of the Company and its affiliates.
In December 1998, the Company's Board of Directors adopted the Company's
1999 Long Term Incentive Plan and granted options to purchase an aggregate of
666,000 shares of Common Stock to certain of its executive officers and
directors. Such options were granted at a per share exercise price of $13.437,
the fair market value of the Company's common stock on the date of grant. In
2001, the Company's executive officers and directors received, in aggregate,
options to purchase 270,500 shares of common stock at a per share exercise price
of $30.625, options to purchase 37,500 shares of common stock at a per share
exercise price of $61.82, options to purchase 400,000 shares of common stock at
a per share exercise price of $41.75 and options to purchase 295,000 shares of
common stock at a per share exercise price of $27.50. The exercise price of all
of the option grants was determined based upon the fair market value of the
Company's common stock on the grant date. The Company no longer makes grants
under the 1996 Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. McKelvey, Eisele, Camara and Mr. Thomas Collison have approximately
69.4%, 10%, 5% and 5% interests, respectively, in International Drive, L.P., the
lessor of the Company's 48,000 square foot office in Mt. Olive, New Jersey. This
lease runs through December 2004 and the Company's rent for this space is
$46,200 per month.
On January 1, 1999, TMP Worldwide Communications Inc., the Company's
Canadian recruitment advertising subsidiary, entered into a management agreement
with TMPW Canada Inc., a recruitment advertising company owned by Mr. Swann,
pursuant to which TMP Worldwide Communications Inc. provides management services
in exchange for a percentage of the billings of TMPW Canada Inc. which is agreed
to from time to time. The agreement has no stated term but is terminable by
either
18
party on 30 days' notice. For the year ended December 31, 2001, TMPW
Canada Inc. paid approximately $247,000 to TMP Worldwide Communications Inc. for
management services.
Beginning in June 1999, the Company periodically used the service of an
aircraft from a company owned by Mr. McKelvey, and in connection therewith,
$145,000 was paid in 2001.
An investment company, 50% of which is owned by Mr. McKelvey, pays
approximately $80,000 annually, to the Company for office rent.
The Company believes that all transactions with the aforementioned directors
and executive officers were made on terms no less favorable to the Company than
would have been obtained from unaffiliated third parties and were approved or
ratified by the entire Board, including disinterested directors.
PERFORMANCE GRAPH
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
1996 1997 1998 1999 2000 2001
TMP WORLDWIDE INC. 100 180.39 329.41 1113.73 862.75 672.94
SIC CODE INDEX 100 144.13 205.59 383.56 294.54 251.37
NASDAQ MARKET INDEX 100 122.32 172.52 304.29 191.25 152.46
S&P COMPOSITE INDEX 100 133.36 171.47 207.56 188.66 166.24
The above graph compares the performance of the Company from December 12,
1996, the date that the Company's Common Stock commenced trading on the Nasdaq
National Market, through December 31, 2001, against the performance of (i) the
Standard & Poor's 500 Composite Index, (ii) the Nasdaq National Market Index and
(iii) the Company's Peer Group (SIC Code Index) for the same period. The
companies included in the Company's Peer Group are Catalina Marketing Corp.,
Clean Systems Technology, Cordiant Communications Group plc, Digital Generation
Systems, Inc., Emailthatpays.com, Inc., Grey Global Group, Inc., Havas
Advertising Ads, Hearme Incorporated, Interpublic Group of Companies, Inc.,
Kupper Parker Communications, Lamar Advertising Co., Leapnet, Inc., Obie Media
Corp., Omnicom Group, Inc., Princeton Video Image, Promotions.com Inc.,
Publicis-Ariely Ltd., Publicis Groupe SA Ads, Total Film Group, Valueclick Inc.
and WPP Group plc.
19
The Nasdaq National Market Index is included because it was utilized in the
Company's proxy statement for the 2001 Annual Meeting of Stockholders. The
Company decided to change from the Nasdaq National Market Index to the
Standard & Poor's 500 Composite Index based on its admission to the Standard &
Poor's 500 Composite Index in June of 2001.
RELATIONSHIP WITH INDEPENDENT AUDITORS
BDO Seidman, LLP have been the independent auditors for the Company since
November 15, 1992 and will serve in that capacity for the 2002 fiscal year. A
representative of BDO Seidman, LLP will be present (either in person or by
telephone) at the meeting and will have an opportunity to make a statement if he
desires to do so, and will respond to appropriate questions from stockholders.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting, it is
the intention of the persons named in the enclosed proxy to vote on such matters
in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Stockholder proxies obtained by the Board of Directors in connection with
the annual meeting of stockholders in the year 2003 will confer on the
proxyholders discretionary authority to vote on any matters presented at the
meeting which were not included in the proxy statement, unless notice of the
matter to be presented at the meeting is provided to the Company's Corporate
Secretary not later than April 2, 2003.
All stockholder proposals which are intended to be presented at the 2003
annual meeting of the Company must be received by the Company no later than
January 17, 2003 for inclusion in the Board of Directors' proxy statement and
form of proxy relating to that meeting.
The prompt return of your proxy will be appreciated and helpful in obtaining
the necessary vote. Therefore, whether or not you expect to attend the meeting,
please sign the proxy and return it in the enclosed envelope or vote by
telephone or on the Internet.
By Order of the Board of Directors
Myron F. Olesnyckyj
SECRETARY
Dated: May 17, 2002
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: TMP WORLDWIDE INC.,
ATTENTION: MYRON F. OLESNYCKYJ, ESQ., 622 THIRD AVENUE, NEW YORK, NEW YORK
10017.
20
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TMP | TWO ALTERNATE WAYS TO VOTE YOUR PROXY |
WORLDWIDE | VOTE BY TELEPHONE OR INTERNET |
INC. | 24 HOURS A DAY - 7 DAYS A WEEK |
| SAVE YOUR COMPANY MONEY - IT'S FAST AND CONVENIENT |
----------------------------------------------------
TELEPHONE INTERNET MAIL
--------- -------- ----
1-866-388-1539 https://www.proxyvotenow.com/tmp
o Mark, sign and date your Proxy
o Go to the website address Card.
o Use any touch-tone telephone. listed above.
OR OR o Detach card from Proxy Form.
o Have your Proxy Form in hand. o Have your Proxy Form in hand.
o Return the card in the postage-
o Enter the Control Number located o Enter the Control Number located in paid envelope provided.
the in the box below. box below.
o Follow the simple recorded o Follow the simple instructions.
instructions.
Your telephone or internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned the proxy card. IF YOU
HAVE SUBMITTED YOUR PROXY BY TELEPHONE OR THE INTERNET THERE IS NO NEED FOR YOU
TO MAIL BACK YOUR PROXY.
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| |
| |
| |
| CONTROL NUMBER FOR |
| TELEPHONE OR INTERNET VOTING |
------------------------------
1-866-388-1539
CALL TOLL-FREE TO VOTE
- DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET -
Please return the proxy |X|
|_| card promptly using the Votes must be indicated
enclosed envelope. (x) in Black or Blue ink.
1. ELECTION OF DIRECTORS
FOR all nominees |_| WITHHOLD AUTHORITY to vote |_| *EXCEPTIONS |_|
listed below for all nominees listed below
Nominees: 01 Andrew J. McKelvey, 02 George R. Eisele, 03 John Gaulding,
04 Ronald J. Kramer, 05 Michael Kaufman, 06 John Swann,
07 James J. Treacy
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
To change your address, please mark this box. |_|
*Exceptions
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2. Transaction of such other business as may properly come before the meeting
and any adjournments thereof.
NOTE: THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT
WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1. THE PROXIES ARE AUTHORIZED TO VOTE
IN THEIR DISCRETION WITH RESPECT TO OTHER MATTERS WHICH MAY COME BEFORE THE
MEETING.
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----- NOTE: Please mark, date and sign exactly as name appears hereon,
including designation as executor, trustee, etc, if applicable. A
corporation must sign in its name by the President or other authorized
officer. All co-owners must sign.
Date Share Owner sign here Co-Owner sign here
---------------------------------- ----------------------------------
| | | | |
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TMP WORLDWIDE INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Andrew J. McKelvey and James J. Treacy,
and each of them, with full power of substitution, as proxies to vote on behalf
of the undersigned all shares which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders of the Company to be held at the offices of
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, 31(st)Floor, New York, New York
10103 at 11:00 A.M. on Wednesday, June 19, 2002, and at any adjournments
thereof, with all powers the undersigned would possess if personally present,
upon the matters set forth in the Notice of Annual Meeting and Proxy Statement,
as directed on the reverse side hereof.
ANY PROXY HERETOFORE GIVEN BY THE UNDERSIGNED WITH RESPECT TO SUCH SHARES
IS HEREBY REVOKED. RECEIPT OF THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
IS HEREBY ACKNOWLEDGED.
(To be Completed, Signed and Dated on Reverse Side)
TMP WORLDWIDE INC.
P.O. BOX 11281
NEW YORK, N.Y. 10203-0281