SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
COMPUTER TASK GROUP, INCORPORATED
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[COMPUTER TASK GROUP LOGO]
COMPUTER TASK GROUP,
INCORPORATED
April 3, 2003
Dear Fellow Shareholder:
You are cordially invited to attend the 2003 Annual Meeting of Shareholders
of Computer Task Group, Incorporated which will be held at our corporate
headquarters, 800 Delaware Avenue, Buffalo, New York on Thursday, May 8, 2003 at
10:00 a.m.
Your Proxy card is enclosed. Please indicate your voting instructions and
sign, date and mail the Proxy promptly in the return envelope.
Sincerely,
/s/ James R. Boldt
-----------------------------------------
James R. Boldt
Chairman and
Chief Executive Officer
[COMPUTER TASK FORCE LOGO]
COMPUTER TASK GROUP,
INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 2003
Computer Task Group, Incorporated will hold its Annual Meeting of
Shareholders at its corporate headquarters located at 800 Delaware Avenue,
Buffalo, New York on Thursday, May 8, 2003, at 10:00 a.m. for the following
purposes:
1. To elect three Class III directors to hold office until the 2006
annual meeting of shareholders and until their successors are elected and
qualified.
2. To consider and act upon any other matters that may be brought
before the meeting or any adjournment thereof.
We have selected the close of business on March 26, 2003 as the record date
for determination of shareholders entitled to notice of and vote at the meeting
or any adjournment.
Buffalo, New York
April 3, 2003
By Order of the Board of Directors,
/s/ Peter P. Radetich
--------------------------------------
Peter P. Radetich
Vice President, Secretary and
General Counsel
COMPUTER TASK GROUP,
INCORPORATED
PROXY STATEMENT
This Proxy Statement and the accompanying form of proxy are being mailed on
or about April 3, 2003, in connection with the solicitation by the Board of
Directors of Computer Task Group, Incorporated of proxies to be voted at the
annual meeting of shareholders on May 8, 2003, and any adjournment or
postponement of the meeting. The mailing address of the Company's executive
office is 800 Delaware Avenue, Buffalo, New York 14209.
The Board has selected the close of business on March 26, 2003 as the
record date for the determination of shareholders entitled to vote at the annual
meeting. On that date, the Company had outstanding and entitled to vote
20,868,834 shares of common stock, par value $.01 per share.
Each outstanding share of common stock is entitled to one vote. Shares
cannot be voted at the meeting unless the shareholder is present or represented
by proxy. If a properly executed proxy in the accompanying form is returned, the
shares represented thereby will be voted at the meeting in accordance with the
instructions contained in the proxy, unless the proxy is revoked prior to its
exercise. Under the New York Business Corporation Law and the Company's By-laws,
the presence, in person or by proxy, of one-third of the outstanding common
stock is necessary to constitute a quorum of the shareholders to take action at
the annual meeting. The shares that are present at the meeting, or represented
by a proxy, will be counted for quorum purposes regardless of whether or not a
broker with discretionary authority exercises its discretionary voting authority
with respect to any particular matter. Once a quorum is established, under the
BCL and the Company's By-laws, the directors standing for election may be
elected by a plurality of the votes cast. For voting purposes, all votes cast
"for," "against," "abstain," or "withhold authority" will be counted in
accordance with such instructions as to each item. Broker non-votes will not be
counted for any item.
ELECTION OF DIRECTORS
At the annual meeting of shareholders, three persons are to be elected to
the Board of Directors as Class III directors to hold office until the 2006
annual meeting of shareholders, respectively, and until their successors are
elected and qualified.
The shares represented by properly executed proxies will be voted, in the
absence of contrary instructions, in favor of the election of the following
nominees as Class III directors -- Randall L. Clark, John M. Palms and Daniel J.
Sullivan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
NOMINEES FOR CLASS III DIRECTORS
All nominees have consented to serve as directors, if elected. However, if
at the time of the meeting any nominee is unable to stand for election, the
persons who are designated as nominees intend to vote, in their discretion, for
such other persons, if any, as may be designated by the Board.
The following information about the Company's directors relating to their
principal occupations or employment, name and principal business of the
corporation or other organization in which their occupation or employment is
carried on, and other affiliations has been furnished to the Company by the
respective directors.
1
James R. Boldt Mr. Boldt, 51, has been the Chairman, President and Chief
Executive Officer of the Company since May of 2002. From
July of 2001 to May of 2002, he was the President and Chief
Executive Officer. From February of 2001 to June 2001, Mr.
Boldt was the Executive Vice President and Chief Financial
Officer. From 1996 until 2001, Mr. Boldt was Vice President
and Chief Financial Officer of the Company. From 1976 until
1996, Mr. Boldt held various positions with Pratt & Lambert
United Inc. most recently that of Vice President and Chief
Financial Officer. Mr. Boldt is on the Board of Directors of
the United Way of Buffalo, Child & Family Services and the
Buffalo Niagara Partnership. Mr. Boldt has been a Director
of CTG since 2001.
George B. Beitzel Mr. Beitzel, 74, has been a director of various corporate
boards since his retirement from International Business
Machines Corporation in 1987. Mr. Beitzel served at IBM for
32 years, the last 14 as a member of IBM's Board of
Directors and corporate officer. He is currently a Director
of Deutsche Bank, Gevity HR, a professional employer
organization, Bitstream, Inc., a developer of computer
software for the creation and printing of electronic
documents and Actuate Corporation, a provider of web-based
business information software. Mr. Beitzel is Chairman
Emeritus of Amherst College and the Colonial Williamsburg
Foundation. He is a graduate of the Harvard Business School
and served twelve years on the board of directors of the
Associates at Harvard Business School. Mr. Beitzel has been
a Director of CTG since 1994.
Randall L. Clark Mr. Clark, 59, has been the Chairman of the Board of
Directors of Dunn Tire Corporation since 1996. From 1992 to
1996, Mr. Clark was the Executive Vice President and Chief
Operating Officer of Pratt & Lambert United Inc. From 1985
to 1991 Mr. Clark served as the Chairman and Chief Executive
Officer of Dunlop Tire Corporation. Mr. Clark is a Director
of Taylor Devices, HSBC Bank -- Western Region,
non-executive Chairman of Merchants Mutual Insurance Company
and a Director of the Amherst Industrial Development Agency.
Mr. Clark is also on the Council for the State University of
New York at Buffalo, Chairman of the Buffalo Niagara
Enterprise, a founding Director and past President of the
Western New York International Trade Council, a Director of
the Buffalo Niagara Partnership and Chairman of AAA Western
and Central New York. Mr. Clark has been a Director of CTG
since 2002.
R. Keith Elliott Mr. Elliott, 61, retired in 2000 from his position as
Chairman of the Board of Directors of Hercules Incorporated,
a chemical specialties manufacturer. From 1991 through 1999,
Mr. Elliott served Hercules as Chairman and Chief Executive
Officer, President and Chief Executive Officer, President
and Chief Operating Officer, Executive Vice President and
Chief Financial Officer and Senior Vice President and Chief
Financial Officer. Mr. Elliott is also a Director of
Wilmington Trust Company, Checkpoint Systems, Inc.,
Windsortech, Inc., and The Institute for Defense Analysis.
Mr. Elliott has been a Director of CTG since 1998.
Randolph A. Marks Mr. Marks, 67, is co-founder of the Company and is an
independent business consultant. From 1985 to September
1990, Mr. Marks served as Chairman of the Board of American
Brass Company. Mr. Marks was engaged by the Company as a
consultant from March, 1984, until his retirement from the
Company in December, 1985. Prior to March, 1984, Mr. Marks
served as Chairman of the Board and Chief Executive Officer
of the Company commencing in June, 1979, and prior thereto
as Chairman of the Board and President of the Company from
the time of its organization in 1966. Mr. Marks has been a
Director of CTG since 1966.
2
John M. Palms Dr. Palms, Ph.D., 67, has been a Professor of Physics at the University of South
Carolina since 1991. From 1991 until 2002, he was also the President of the
University of South Carolina. From 1989 to 1991, Dr. Palms was the President and
Professor of Physics at Georgia State University. Dr. Palms is a Director of
Exelon Corporation, SIMCOM International Holdings, Inc., and Fortis, Inc., a
multinational financial services insurance company. Dr. Palms is the Chairman of
the Board of Trustees of the Institute for Defense Analysis. Mr. Palms has been a
Director of CTG since 2002.
Daniel J. Sullivan Mr. Sullivan, 56, has been the President and Chief Executive Officer of FedEx
Ground, a wholly owned subsidiary of FedEx Corporation, since 1998. From 1996 to
1998, Mr. Sullivan was the Chairman, President and Chief Executive Officer of
Caliber System. In 1995, Mr. Sullivan was the Chairman, President and Chief
Executive Officer of Roadway Services. Mr. Sullivan is a Director of the
Pennsylvania Council of Boy Scouts and a Director of the Allegheny Conference, an
organization consisting of leading CEO's in the Pittsburgh, Pennsylvania area. Mr.
Sullivan is also a Director of GDS Express in Akron, Ohio. Mr. Sullivan has been a
Director of CTG since 2002.
3
SECURITY OWNERSHIP OF THE COMPANY'S COMMON SHARES
BY CERTAIN BENEFICIAL OWNERS AND BY MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of March 26, 2003, the following persons were beneficial owners of more
than five percent of the Company's common stock. The following table shows the
nature and amount of their beneficial ownership.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF OWNERSHIP(1) OF CLASS
-------------- -------------------------------- ----------------- --------
Common Stock.................... Thomas R. Beecher, Trustee 4,187,587 20.07%
CTG Stock Employee
Compensation Trust
200 Theater Place
Buffalo, NY 14202
Common Stock.................... FleetBoston Financial 2,091,141(2) 10.02%
Corporation
100 Federal Street
Boston, MA 02110
Common Stock.................... Royce & Associates 1,609,800 7.71%
1414 Avenue of the Americas
New York, NY 10019
Common Stock.................... The TCW Group, Inc. 1,152,000(3) 5.50%
865 South Figueroa Street
Los Angeles, CA 90017
Common Stock.................... Dimensional Fund Advisors Inc. 1,107,050(4) 5.30%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
---------------
(1) The beneficial ownership information presented is based upon information
furnished by each person or contained in filings made with the Securities
and Exchange Commission. Except as otherwise indicated, each holder has sole
voting and investment power with respect to the shares indicated.
(2) FleetBoston Financial Corporation has sole voting power with respect to
1,420,541 shares and sole dispositive power with respect to 2,091,141
shares.
(3) The TCW Group, Inc. is the beneficial owner of 1,152,000 shares and has
shared voting and dispositive power with respect to said shares. The TCW
Group, Inc. may be deemed to be controlled by Societe Generale, S.A.
(4) Dimensional Fund Advisors Inc. is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. It furnishes investment
advice to four investment companies registered under the Investment Company
Act of 1940 and serves as investment manager to certain other commingled
group trusts and separate accounts. In its role as investment advisor or
manager, Dimensional possesses voting and/or investment power over the
securities of the Company that are owned by the funds and may be deemed to
be the beneficial owner of the shares of the Company held by the funds. All
securities reported herein are owned by the funds. Dimensional disclaims
beneficial ownership of such securities.
4
Security Ownership by Management
As of March 26, 2003 the directors and nominees for director individually,
the executive officers named in the compensation table, and all directors and
executive officers of the Company as a group, respectively, owned beneficially
the following amounts of the Company's common stock.
AMOUNT AND NATURE
NAME OF INDIVIDUAL OF BENEFICIAL PERCENT
OF NUMBER IN GROUP OWNERSHIP(1) OF CLASS
------------------ ----------------- --------
James R. Boldt.............................................. 305,952(2) 1.47%
George B. Beitzel........................................... 225,841(3) 1.08%
R. Keith Elliott............................................ 91,000(4) *
Randall L. Clark............................................ 45,500(5) *
Randolph A. Marks........................................... 433,530(6)(7) 2.08%
John M. Palms............................................... 45,300(8) *
Daniel J. Sullivan.......................................... 43,000(9) *
Gregory M. Dearlove......................................... 28,500(10) *
Filip J.L. Gyde............................................. 45,750(11) *
Thomas J. Niehaus........................................... 73,728(12) *
Arthur W. Crumlish.......................................... 24,895(13) *
All directors and executive officers as a group (13
persons).................................................. 1,397,478(14) 6.70%
---------------
* Less than 1 percent of outstanding shares.
(1) The beneficial ownership information presented is based upon information
furnished by each person or contained in filings made with the Securities
and Exchange Commission. Except as otherwise indicated, each holder has
sole voting and investment power with respect to the shares indicated.
(2) Amount indicated represents 42,300 shares held by Mr. Boldt in his own
name, 20,202 shares which are held by Mr. Boldt as custodian for members of
his immediate family and options to purchase 243,450 shares which are or
will become exercisable within sixty days.
(3) Amount indicated represents 58,841 shares held by Mr. Beitzel in his own
name, 13,000 shares held by Mr. Beitzel's wife, 20,000 shares held by two
trusts of which Mr. Beitzel and his wife are trustees and options to
purchase 134,000 shares that are or will become exercisable within sixty
days.
(4) Amount indicated represents 6,000 shares held by Mr. Elliott in his own
name and options to purchase 85,000 shares that are or will become
exercisable within sixty days.
(5) Amount indicated represents 5,500 shares held by the Mr. Clark's wife and
options to purchase 40,000 shares that are or will become exercisable
within sixty days.
(6) Under an agreement entered into in February 1981, upon the death of Mr.
Marks, the Company will have the option to purchase up to as many shares of
common stock owned by him as may be purchased with the proceeds of the
insurance on the life of Mr. Marks maintained by the Company (currently
$300,000 in the aggregate). The purchase price for the shares will be 90
percent of the market price of such shares on the Friday immediately
preceding the date of death.
(7) Amount indicated represents 227,530 shares held by Mr. Marks in his own
name, 6,000 shares held by Mr. Marks' wife, 20,000 shares that are owned by
a family charitable foundation, and options to purchase 180,000 shares that
are or will become exercisable within sixty days. Mr. Marks has voting and
investment power over the 20,000 shares that are owned by the family
charitable foundation of which he is a trustee.
(8) Amount indicated represents 5,300 shares held by Mr. Palms in his own name
and options to purchase 40,000 shares that are or will become exercisable
within sixty days.
(9) Amount indicated represents 3,000 shares held by Mr. Sullivan in his own
name and options to purchase 40,000 shares that are or will become
exercisable within sixty days.
5
(10) Amount indicated represents 9,000 shares held by Mr. Dearlove in his own
name, 2,000 shares held in trust for his children and options to purchase
17,500 shares that are or will become exercisable within sixty days.
(11) Amount indicated includes options to purchase 45,750 shares that are or
will become exercisable within sixty days.
(12) Amount indicated represents 33,478 shares held by Mr. Niehaus in his own
name and options to purchase 40,250 shares that are or will become
exercisable within sixty days.
(13) Amount indicated represents 645 shares held by Mr. Crumlish in his own name
and options to purchase 24,250 shares that are or will become exercisable
within sixty days.
(14) Amount indicated includes options to purchase 913,200 shares that are or
will become exercisable within sixty days.
INFORMATION ABOUT MANAGEMENT
The Board of Directors and Committees
During 2002, the Board of Directors held a total of seven meetings. Due to
illness, Randolph A. Marks attended fewer than 75 percent of the meetings of the
Board of Directors during 2002.
Compensation Committee
The Compensation Committee is composed of R. Keith Elliott, Chairman,
George B. Beitzel and John M. Palms. During 2002, this Committee held a total of
two meetings. The Compensation Committee reviews and approves the compensation
of senior management and is responsible for the administration of the Company's
stock plans, Non-qualified Key Employee Deferred Compensation Plan, and Stock
Employee Compensation Trusts.
Executive Committee
The Executive Committee is composed of R. Keith Elliott, Chairman, George
B. Beitzel and Randall L. Clark. The Committee did not meet during 2002. The
Executive Committee is empowered to act for the Board of Directors in intervals
between Board meetings, with the exception of certain matters that by law cannot
be delegated. In addition, the Committee is empowered to perform the functions
of a nominating and governance committee. The Committee meets as necessary.
Audit Committee
The Audit Committee is composed of three directors: George B. Beiztel,
Chairman, R. Keith Elliott and Daniel J. Sullivan and operates under a written
charter adopted by the Board of Directors. The Audit Committee met five times
during 2002.
The Audit Committee assists the Board of Directors in fulfilling its
oversight responsibilities by reviewing the Company's financial reports, systems
of internal controls as they relate to finance and accounting, and the Company's
auditing, accounting and financial reporting processes. The Committee's job is
one of oversight. Management is responsible for the Company's financial
reporting process including its system of internal control, and for the
preparation of consolidated financial statements in accordance with generally
accepted accounting principles. The Company's independent auditors are
responsible for auditing those financial statements. It is the Committee's
responsibility to monitor and review these processes. It is not the Committee's
duty or responsibility to conduct auditing or accounting reviews. Therefore, the
Committee has relied on management's representation that the financial
statements have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States of America
and on the representations of the independent auditors included in their report
on the Company's financial statements.
6
AUDIT COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934,
the following report of the Audit Committee shall not be incorporated by
reference into any such filing and shall not otherwise be deemed filed under
such Acts.
The Audit Committee has reviewed and discussed the audited financial
statements with management and has discussed with the independent accountants
the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. In addition, the Audit
Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees and has discussed with such
accountants their independence. The Board has determined that each of the
members of the Audit Committee is independent as defined in Sections
303.01(B)(2)(a) and (b) of the New York Stock Exchange Listing Manual.
Based on such review and discussions referred to above, the Audit Committee
has recommended to the Board of Directors that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the last fiscal year
for filing with the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
George B. Beitzel,
Chairman
R. Keith Elliott Daniel J. Sullivan
Independent Public Accountants and Fees
The Company has engaged Deloitte & Touche LLP ("Deloitte") as the principal
accountants to audit the Company's financial statements since July 7, 1998.
A representative of Deloitte will be present at the annual meeting of
shareholders of the Company. The representative will be given the opportunity to
make a statement if the representative desires to do so, and will be available
to respond to appropriate questions. To the best of the Company's knowledge, no
member of that firm has any past or present interest, financial or otherwise,
direct or indirect, in the Company or any of its subsidiaries. Matters involving
auditing and related functions are considered and acted upon by the Audit
Committee. The Audit Committee has determined that the provision of services
described under "All Other Fees," below is compatible with maintaining the
principal accountant's independence.
Audit Fees -- The aggregate fees billed for professional services rendered
for the audit of the Company's annual financial statements for the most recent
fiscal year, including the Company's foreign subsidiaries, and the reviews of
the financial statements included in the Company's Form 10-Q's are approximately
$187,313.
Financial Information Systems Design and Implementation Fees -- Deloitte
did not render any services related to financial information systems design and
implementation for the most recent fiscal year.
All Other Fees -- Aggregate fees billed for all other services rendered by
Deloitte for the most recent fiscal year are approximately $26,500 for tax
software and $86,267 for tax preparation services.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the Company's
common stock, to file with the Securities and Exchange Commission and the New
York Stock Exchange reports of ownership and changes in ownership of common
stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
The Company believes that all Section 16(a) filing requirements applicable
to its officers, directors and beneficial owners of more than 10% of its
outstanding common stock were complied with for 2002. This belief is
7
based solely on the Company's review of copies of the reports furnished to it
and written representations that no other reports were required.
Director Compensation
Each non-employee director receives a $15,000 annual retainer and a $1,500
per day fee for attending committee meetings. Directors are also reimbursed for
expenses they incur while attending board and committee meetings. Directors who
are employees of the Company do not receive additional compensation for their
services as directors.
Executive Compensation and Other Information
The following table shows the annual and long-term compensation paid to the
Chairman, President and Chief Executive Officer and to the four other most
highly compensated executive officers for services rendered in 2002, 2001, and
2000.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- --------------------- -------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SAR'S PAYOUTS COMPENSATION
PRINCIPAL POSITION (4) YEAR ($) ($) ($) ($) (#) ($) ($)(1)
---------------------- ---- -------- ------- ------------ ---------- -------- ------- ------------
James R. Boldt (2)......... 2002 $400,000 $ 0 $ 0 $0 0 $0 $ 5,500
Chairman, President and 2001 $350,182 $50,000 $ 0 $0 475,000 $0 $ 5,100
Chief Executive Officer 2000 $246,375 $ 0 $ 0 $0 113,000 $0 $ 5,100
Gregory M. Dearlove 2002 $285,000 $ 0 $ 0 $0 0 $0 $ 4,125
Vice President and 2001 $ 71,250 $38,000 $ 0 $0 100,000 $0 $ 0
Chief Financial Officer
Filip J.L. Gyde (3)........ 2002 $259,373 $ 0 $66,968 $0 0 $0 $25,260
Vice President and
General 2001 $226,454 $ 0 $57,951 $0 40,000 $0 $22,646
Manager, CTG Europe 2000 $113,129 $18,829 $44,786 $0 15,000 $0 $11,313
Thomas J. Niehaus.......... 2002 $215,000 $ 0 $ 0 $0 15,000 $0 $ 5,500
Vice President and
General 2001 $206,667 $28,010 $ 0 $0 50,000 $0 $ 5,100
Manager, CTG HealthCare 2000 $200,000 $ 0 $ 0 $0 22,000 $0 $ 5,100
Solutions
Arthur W. Crumlish (4)..... 2002 $185,000 $ 0 $ 0 $0 0 $0 $ 5,500
Vice President, Strategic 2001 $123,250 $ 6,000 $ 0 $0 50,000 $0 $ 3,852
Staffing Services 2000 $100,000 $ 7,500 $ 0 $0 9,000 $0 $ 2,500
---------------
(1) Consists of Company contributions under retirement plans.
(2) Mr. Boldt became the Company's President and Chief Executive Officer on July
16, 2001. For the period January of 2001 to June 2001, he was the Executive
Vice President and Chief Financial Officer. Additionally, a portion of Mr.
Boldt's 2000 salary and the number of options granted in 2000 reflect his
role in serving as the acting Chief Executive Officer of the Company from
June 22, 2000 to October 29, 2000. During the remaining portion of that
year, he was the Vice President and Chief Financial Officer.
(3) Other annual compensation for Mr. Gyde consists of vacation and other
premiums, including the cost of providing for a company automobile.
(4) Mr. Crumlish became the Vice President, Strategic Staffing Services on
September 24, 2001. Previously he was the controller of the Strategic
Staffing organization.
(5) During 2002, Jonathan M. Harding was Vice President and General Manager,
North America until he resigned from that position in October 2002. During
2002, Mr. Harding earned $215,000 of salary.
8
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of R.
Keith Elliott (Chairman), George B. Beitzel and John M. Palms, each of whom are
"non-employee directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934. The Committee is responsible for overseeing the
administration of the Company's employee stock and benefit plans, establishing
policies relating to the compensation of employees and setting the terms and
conditions of employment for executive officers. This Committee report describes
the various components of the Company's executive officer compensation program
and the basis on which 2002 compensation was paid to such executive officers,
including the executive officers named in the compensation tables set forth
above.
Compensation Policy -- The Committee's compensation policies are designed
to maintain a direct relationship among executive pay, financial performance of
the Company and the creation of shareholder value. Such policies seek to:
- Provide compensation opportunities that enable the Company to attract and
retain qualified executives;
- Provide compensation that is directly related to the performance of both
the Company and the individual;
- Integrate the compensation programs with the Company's annual and
long-term financial and operating objectives; and
- Align the interests of executive officers with the long-term interests of
the Company's stockholders through stock-based award opportunities that
can result in ownership of the Company's common stock.
The Company's executive compensation program attempts to achieve the
foregoing objectives by integrating annual base salary with annual cash and
stock-based incentives based on both Company and individual performance.
Measurement of Company performance is based on operating and financial
objectives set at the beginning of each year. As a result, executive
compensation tends to be higher in years in which the performance goals are
achieved or exceeded. In addition, as an executive's level of responsibility
increases, a substantial portion of his or her annual compensation is based on
performance incentives. Accordingly, there will be greater variability in an
executive's total compensation from year to year based on both the individual's
and the Company's actual performance.
Components of Executive Compensation -- The compensation paid to the
Company's executive officers, as reflected in the tables set forth in this Proxy
Statement, consisted of annual base salary, annual cash incentive compensation,
long-term stock-based incentive compensation and deferred compensation.
Annual Base Salary -- With respect to determining the base salary of
executive officers, the Committee takes into consideration a variety of factors
including the executive's level of responsibility, individual performance and
the salaries of similar positions in the Company and in comparable companies
both within and outside our industry who compete for executive talent. The
Committee also engages a compensation consultant to advise it with respect to
such matters.
Annual Cash Incentive Compensation -- Each executive officer's total annual
compensation consists in part of annual cash incentive compensation. Awards of
cash incentive compensation are based on the attainment of one or more specified
targeted levels of (i) gross profit, (ii) operating income, (iii) specific
assigned objectives, (iv) earnings per share, and (v) individual objectives. The
Committee, in awarding cash incentive compensation, considers the recipient's
individual contribution toward Company operating profitability, cost
containment, leadership, teamwork and the successful implementation of business
strategy. The objective of this form of annual compensation is to provide an
incentive to certain executives to achieve operating and financial objectives
that the Committee believes are primary determinants of shareholder value over
time.
Long-Term Stock-Based Incentive Compensation -- The third component of
executive compensation consisted of grants of stock options under the Company's
2000 Equity Award Plan. In making grants of stock options, the Committee
considered an executive's contribution toward past and the expected contribution
toward future Company performance. Any value that might be received from an
option grant depends upon increases in the price of the Company's common stock.
Accordingly, the amount of compensation to be received by an
9
executive is directly aligned with increases in shareholder value. Grants of
stock options are made to key employees of the Company who, in the opinion of
the Committee, have had and are expected to continue to have a significant
impact on the long-term performance of the Company. The awards are also intended
to reward individuals who remain with the Company and to further align their
interests with those of the Company's shareholders. The Committee strongly
believes that stock ownership by management and stock-based performance
compensation are beneficial in aligning management's and shareholders' interests
in the enhancement of shareholder value.
Stock Options Granted During 2002 -- The Committee granted stock options to
one executive officer named in the following table (see Options/SAR Grants in
2002). In general, recipients of the stock options receive the right to purchase
shares of common stock of the Company in the future at a price equal to their
fair market value determined on the date of grant. The Committee determines the
dates and terms upon which option may be exercised, as well as whether the
options will be incentive stock options or nonqualified stock options. In
determining whether to grant an individual stock options, the Committee
considers an executive's contribution toward Company performance, expected
future contribution and the number of options and shares of common stock
presently held by the executive.
Deferred Compensation -- The fourth component of executive compensation may
consist of the Company's contribution under the CTG Non-Qualified Key Employee
Deferred Compensation Plan for those executives chosen to participate in the
Plan. Executives chosen to participate in the Plan are eligible to elect to
defer a percentage of their annual cash compensation. In addition, executives
are also eligible to receive a Company contribution under the Plan in an amount
equal to a specified percentage of the sum of the executive's 2002 base salary
and bonus compensation. The Company's contribution percentage and criteria used
to determine performance targets are based on the recommendations of the
Chairman, President and CEO, subject to the approval of the Committee. The
contribution is made in cash or CTG common stock, as determined by the
Committee. No contributions were made in 2002 under this Plan.
Chief Executive Officer Compensation -- The Committee, in setting the
compensation for the position of Chief Executive Officer, sought to provide a
compensation package which depended in part upon the attainment of both annual
and long-term objectives, thereby linking the annual compensation of the CEO to
individual performance and the Company's performance. Compensation for the
position of CEO consisted of the following: (i) annual base compensation
established by the Committee, (ii) cash incentive compensation measured by
Company financial performance and the CEO's attainment of specific strategic and
organizational objectives, together with an assessment by the Committee and the
Board of Directors of the effectiveness of the CEO, (iii) long-term stock-based
incentive compensation, and (iv) a contribution under the CTG Non-Qualified Key
Employee Deferred Compensation Plan.
Mr. Boldt's 2002 compensation consisted of base compensation of $400,000.
Section 162(m) of the Internal Revenue Code -- Section 162(m) of the Code,
adopted as part of the Omnibus Budget and Reconciliation Act of 1993, generally
limits to $1 million the deduction that can be claimed by any publicly held
corporation for compensation paid to any "covered employee" in any taxable year
beginning after December 31, 1993. The term "covered employee" is defined as the
Chief Executive Officer and the four other highest paid executive officers of
the corporation. The Committee has determined that the 2000 Equity Award Plan
meets the requirements for deductibility. The Committee will, however, continue
to study whether it is desirable to cause compensation arrangements in the
future to qualify as deductible compensation. To the extent that the Committee's
compensation objectives can be achieved in a manner which maximizes the
deductibility of compensation paid by the Company, it will seek to do so.
SUBMITTED BY THE COMPENSATION COMMITTEE
R. Keith Elliott, George B. Beitzel
Chairman John M. Palms
10
COMPANY PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder returns for the Company's common stock, the S&P 500 Index, and a
Peer Group, assuming a base index of $100 at the end of 1997. The cumulative
total return for each annual period within the five years presented is measured
by dividing (1) the sum of (A) the cumulative amount of dividends for the
period, assuming dividend reinvestment, and (B) the difference between the
Company's share price at the end and the beginning of the period by (2) the
share price at the beginning of the period. The calculations exclude trading
commissions and taxes.
[GRAPH]
--------------------------------------------------------------------------------------------
Dec 97 Dec 98 Dec 99 Dec 00 Dec 01 Dec 02
--------------------------------------------------------------------------------------------
Computer Task Group, Inc. 100 76.40 41.84 11.20 11.21 9.93
--------------------------------------------------------------------------------------------
S&P 500 Index 100 128.58 155.63 141.46 124.65 97.10
--------------------------------------------------------------------------------------------
Peer Group 100 156.49 147.72 33.68 55.72 26.25
--------------------------------------------------------------------------------------------
The Peer Group comprises the following companies which are in the business
of providing software and information technology (IT) services: Alternative
Resources Corporation; American Management Systems, Incorporated; Analysts
International Corporation; Ciber, Inc.; Computer Horizons Corp.; Compuware
Corporation; Keane, Inc.; and Technology Solutions Company.
Option/SAR Grants, Exercises and Holdings
The following tables set forth certain information concerning stock options
granted and exercised during 2002, and unexercised options held as of the end of
2002, by the named executives:
OPTIONS/SAR GRANTS IN 2002
POTENTIAL
REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL
SECURITIES TOTAL RATES OF STOCK
UNDERLYING OPTIONS/SARS EXERCISE OR PRICE APPRECIATION
OPTIONS/SARS GRANTED TO BASE FOR OPTION TERM (1)
GRANTED IN EMPLOYEES IN PRICE PER EXPIRATION --------------------
NAME 2002 2002 SHARE DATE 5% ($) 10% ($)
---- ------------ ------------ ----------- ---------- -------- ---------
Thomas J. Niehaus........ 7,500 1.8% $4.35 2/7/2017 $35,200 $103,658
7,500 1.8% $4.35 2/7/2012 $19,252 $ 48,149
---------------
(1) The dollar amounts under these columns use the five (5%) percent and ten
(10%) percent annual rates of stock price appreciation prescribed by the
SEC. This presentation is not intended to forecast future appreciation of
the Company's stock.
11
AGGREGATE OPTION/SAR EXERCISES IN 2002 AND 2002 YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED AT FISCAL YEAR END AT FISCAL YEAR END
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
James R. Boldt.............. 0 $0 226,450 472,750 $20,500 $143,500
Gregory M. Dearlove......... 0 $0 17,500 82,500 $26,775 $126,225
Filip J.L. Gyde............. 0 $0 38,500 41,500 $ 3,075 $ 3,075
Thomas J. Niehaus........... 0 $0 24,125 70,375 $ 0 $ 0
Arthur W. Crumlish.......... 0 $0 23,250 45,750 $11,513 $ 48,563
Jonathan M. Harding......... 0 $0 12,500 62,500 $14,250 $ 71,250
Executive Supplemental Benefit Plan
The Company maintains an Executive Supplemental Benefit Plan (Supplemental
Plan) which provides one current and certain former executives with deferred
compensation benefits. The Supplemental Plan was amended as of December 1, 1994
in order to freeze the then current benefits, provide no additional benefit
accruals for participants and to admit no new participants. As a result of this
action, the Company reduced its annual Supplemental Plan expense from
approximately $1.1 million in 1994 to approximately $0.6 million in 2002.
Generally, the Supplemental Plan provides for retirement benefits of up to 50%
of a participating employee's base compensation at termination or as of December
1, 1994, which ever is earlier, and pre-retirement death benefits calculated
using the same formula that is used to calculate normal and early retirement
benefits. Benefits are based on service credits earned each year of employment
prior to and subsequent to admission to the Supplemental Plan through December
1, 1994. Retirement benefits and pre-retirement death benefits are paid during
the 180 months following retirement or death, respectively, while disability
benefits are paid until normal retirement age. Normal retirement is age 60. For
any participant who is a member of a successor plan, the normal retirement age
is increased to 65.
On November 30, 1994, the Supplemental Plan was also amended to provide
that in the event of a change of control, participants employed at that time
shall be entitled to receive a lump sum benefit equivalent to the present value
of 50% of their base compensation as of the date of the change of control. A
change of control will occur if (1) any person (other than the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as the ownership of stock
of the Company) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of combined voting power of
the Company's then outstanding voting securities; (2) during any period of 24
consecutive months, individuals who at the beginning of the period constitute
the Board and any new director whose election by the Board, or whose nomination
for election by the Company's stockholders, was approved by a vote of at least
two-thirds of the directors (other than in connection with the contested
election), before the beginning of the period cease, for any reason, to
constitute at least a majority thereof; or (3) the stockholders of the Company
approve a plan of complete liquidation of the Company or the sale or disposition
by the Company of all or substantially all of the Company's assets unless the
acquirer of the assets or its directors shall meet the conditions for a merger
or consolidation described in the Supplemental Plan.
Plan participants may request the Committee to begin the payment of
retirement benefits beginning at age 55. It is within the discretion of the
Compensation Committee as to whether or not a participant will be permitted to
receive early retirement benefits.
Mr. Boldt did not participate in the Supplemental Plan. There is one
current and 19 former employees that are covered by the Supplemental Plan.
12
Non-Competition and Employment Agreements
On July 16, 2001, the Company entered into an employment agreement with Mr.
Boldt. The agreement will continue in effect until either party provides 60 days
prior written notice to the other that it does not wish to continue Mr. Boldt's
employment. The agreement provides for an annual base salary of $400,000. In the
event the Company terminates Mr. Boldt's employment for other than cause (as
defined in the agreement) or Mr. Boldt terminates his employment for good reason
(as defined in the agreement) or he dies or becomes disabled, the Company will
pay as severance to Mr. Boldt an amount equal to the average annual total
compensation paid to Mr. Boldt during the three prior years (which includes the
current year). The severance is payable in 26 consecutive bi-weekly
installments. The Company will also continue certain medical benefits during
such period. If at the end of the twelve-month period, Mr. Boldt is not
employed, he will continue to receive such compensation and benefits for up to
an additional six months. The agreement also prohibits Mr. Boldt from competing
with the Company for a period of one-year following the termination of
employment.
Change in Control Agreements
On July 16, 2001, the Company entered into a change in control agreement
with Mr. Boldt. The agreement provides that upon the occurrence of a change in
control, Mr. Boldt will become fully vested in and entitled to exercise
immediately all stock related awards he has been granted under any of the
Company's plan. The Agreement goes on to provide that upon the termination of
Mr. Boldt's employment (a) without cause by the Company or by himself with good
reason within 24 months following a change in control or (b) by himself for any
reason within 6 months after a change in control, Mr. Boldt will receive three
times his full salary and bonus as well as a lump sum to cover fringe benefits.
A change in control will occur if (1) the Company's stockholders approve (a) the
dissolution or liquidation of the Company, (b) the merger or consolidation or
other reorganization of the Company with any other entity other than a
subsidiary of the Company, or (c) the sale of all or substantially all of the
Company's business or assets or (2) any person other than the Company or its
subsidiaries or employee benefit plans becomes the beneficial owner of more than
20% of the combined voting power of the Company's then outstanding securities or
(3) during any period not longer than two consecutive years, individuals who at
the beginning of such period constituted the Board cease to constitute at least
a majority thereof, unless the election of each new Board member was approved by
a vote of at least three-quarters of the Board members then still in office who
were Board members at the beginning of such period.
Each of the named executives in the cash compensation table have entered
into a change of control agreement with the Company. These agreements contain
provisions that are generally similar to that of Mr. Boldt except that in the
event their employment is terminated by the Company without cause by themselves
with good reason within 24 months after a change in control, such executives
would receive two times their salary and bonus.
Non-Qualified Key Employee Deferred Compensation Plan
On February 2, 1995 the Compensation Committee approved the creation of a
Non-Qualified Key Employee Deferred Compensation Plan. The Deferred Compensation
Plan is intended as a successor plan to the Supplemental Plan. Participants in
the Deferred Compensation Plan are eligible to (1) elect to defer a percentage
of their annual cash compensation and (2) receive a Company contribution of a
percentage of their base compensation and annual bonus if the Company attains
annual defined performance objectives.
The Chief Executive Officer, subject to the approval of the Compensation
Committee, recommends (1) those key employees who will be eligible to
participate and (2) the percentage of a participant's base and bonus
compensation which will be contributed each year to the Deferred Plan if the
Company attains annual defined performance objectives. All amounts credited to
the participant are invested, as determined by the Compensation Committee, and
the participant is credited with actual earnings of the investments. Company
contributions, including investment earnings, may be cash or the stock of the
Company.
Plan participants have a 100% nonforfeitable right to the value of their
corporation contribution account after the fifth anniversary of the employment
with the Company. If a participant terminates employment due to death,
disability, retirement at age 65, or in the event a change of control (as
defined in the CTG Executive
13
Supplemental Benefit Plan previously recited) occurs, the participant or his or
her estate will be entitled to receive the benefits accrued for the participant
as of the date of such event. Company contributions will be forfeited in the
event a participant incurs a separation from service for cause. Participants are
100% vested in their own contributions. All amounts in the Deferred Plan,
including elective deferrals, are held as general assets of the Company and are
subject to the claims of creditors of the Company. In 2002, as the Company did
not attain defined operating income objectives, no award for eligible
participants was made to the plan.
Directors' and Officers' Liability Insurance
The Company indemnifies its directors and officers to the extent permitted
by law in connection with civil and criminal proceedings against them by reason
of their service as a director or officer. As permitted by Section 726 of the
New York Business Corporation Law, the Company has purchased directors' and
officers' liability insurance to provide indemnification for the Company and all
its directors and officers. The current liability insurance policy, with a
policy period effective April 1, 2002, was issued by The Chubb Group of
Insurance Companies at an annual premium of approximately $295,000.
Certain Relationships and Related Transactions
During 2002 Mr. Marks, a director of the Company, received an annual sum of
$90,000 payable monthly under the terms of the Supplemental Plan. Under the
terms of a non-competition agreement that covered the period from March 1984
through October 1995, Mr. Marks also receives the same medical benefits as those
provided to officers of the Company. The Company also paid the premiums on a
life insurance policy for Mr. Marks with a face value of $300,000.
OTHER INFORMATION
A shareholder giving a proxy may revoke it at any time before it is
exercised. The cost of soliciting proxies in the accompanying form will be borne
by the Company. In addition to solicitations by mail, employees of the Company
(who will not be specifically compensated for such services) may solicit proxies
in person or by telephone. Arrangements will be made with brokers, custodians,
nominees and fiduciaries to forward proxies and proxy soliciting material to the
beneficial owners of the Company's shares, and the Company may reimburse
brokers, custodians, nominees or fiduciaries for their expenses in so doing.
SHAREHOLDER PROPOSALS
Proposals of shareholders which are intended to be included in the
Company's Proxy Statement relating to its May 2004 annual meeting of
shareholders must be received at the Company's principal executive offices not
later than December 4, 2003. A shareholder who wishes to present a proposal for
consideration at the 2003 annual meeting without inclusion of such proposal in
the Company's proxy materials must give written notice of the proposal to the
Secretary of the Company not later than sixty days in advance of the date of
such meeting.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other business that will be presented for consideration at
the 2003 annual meeting of shareholders. However, if any other matters properly
come before the meeting or any adjournment thereof, it is intended that the
shares represented by proxies will be voted on those matters in accordance with
the judgment of the holders of the proxies.
April 3, 2003
By Order of the Board of Directors
14
DETACH HERE
PROXY
COMPUTER TASK GROUP, INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter P. Radetich and George B. Beitzel and
each of them, as proxy or proxies, with power of substitution to vote all of the
shares of Common Stock of Computer Task Group, Incorporated (the "Company")
which the undersigned may be entitled to vote, as specified on the reverse side
of this card, and, if applicable, hereby directs the trustee of the Company's
401(K) Profit Sharing Retirement Plan (the "Plan") to vote the shares allocated
to the account of the undersigned or otherwise which the undersigned is entitled
to vote pursuant to the Plan, as specified on the reverse side of this card, at
the Annual Meeting of Shareholders of the Company to be held at the Company's
Headquarters, 800 Delaware Avenue, Buffalo, New York on Thursday, May 8, 2003 at
10:00 a.m. or at any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES ON
ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
MARK, SIGN AND DATE ON REVERSE SIDE
SEE REVERSE SEE REVERSE
SIDE SIDE
COMPUTER TASK GROUP, INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
1. Election of Directors 2. Said proxies are given discretionary authority to vote and act
upon such other matters as may properly come before the
meeting or any adjournment thereof.
CLASS III NOMINEES: (01) Randall L. Clark
(02) John M. Palms, (03) Daniel J. Sullivan
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]________________________________________
For all nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please date and sign exactly as name appears hereon. Each
joint tenant must sign. When signing as attorney, executor,
trustee, etc., give full title. If signer is a corporation,
sign in full corporate name by authorized officer. If a
partnership, sign in partnership name by an authorized
person.
Please sign, date and return this proxy today. No postage is
required. A business reply envelope is enclosed for your
convenience.
Signature: _____________________________________ Date: __________ Signature: ____________________________________ Date: __________