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 Section 240.14a-11(c) or Section
240.14a-12
ANALYSTS INTERNATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
AIC ANALYSTS INTERNATIONAL CORPORATION LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 17, 1996
The annual meeting of shareholders of Analysts International Corporation
will be held at the Edina Country Club, 5100 Wooddale Avenue, Edina, Minnesota
on October 17, 1996 at 3 o'clock p.m., for the following purposes:
1. to elect six directors of the Company;
2. to ratify the appointment of Deloitte & Touche LLP as independent
auditors to examine the Company's accounts for the fiscal year ending
June 30, 1997;
3. to increase the number of authorized common shares to 40,000,000;
4. to approve a stock option plan for non-employee directors; and
5. to transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on August 28, 1996 are
entitled to notice of and to vote at the meeting.
Your attention is directed to the Proxy Statement accompanying this Notice
for a more complete statement of the matters to be considered at the meeting. A
copy of the Annual Report for the year ended June 30, 1996 also accompanies this
Notice.
By Order of the Board of Directors
[SIGNATURE]
Thomas R. Mahler
SECRETARY
Approximate date of mailing of proxy materials:
September 5, 1996
Please sign, date and return your proxy in the enclosed envelope.
AIC ANALYSTS INTERNATIONAL CORPORATION LOGO
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 17, 1996
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of proxies in the accompanying form. Shares will be voted in
the manner directed by the shareholders. Proxies that are signed by shareholders
but lack any such specification will be voted in favor of the election of
directors, ratification of auditors, the increase in authorized common shares
and approval of the 1996 Stock Option Plan for Non-Employee Directors as set
forth herein. A shareholder giving a proxy may revoke it at any time before it
is exercised by (a) delivering to the Secretary of the Company, at or prior to
the meeting, a later dated duly executed proxy relating to the same shares, or
(b) delivering to the Secretary of the Company, at or prior to the meeting, a
written notice of revocation bearing a later date than the proxy. Any written
notice or proxy revoking a proxy should be sent to Analysts International
Corporation, 7615 Metro Boulevard, Minneapolis, Minnesota 55439, Attention:
Thomas R. Mahler, Secretary.
Shareholders of record on August 28, 1996 are entitled to receive notice of
and to vote at the meeting. As of the record date, there were outstanding and
entitled to be voted at the meeting 7,326,281 common shares, each share being
entitled to one vote.
The four proposals which have been properly submitted for action by
shareholders at the annual meeting are as listed in the Notice of Annual Meeting
of Shareholders. Management is not aware of any other items of business which
will be presented for shareholder action at the annual meeting. Should any other
matters properly come before the meeting for action by shareholders, the shares
represented by proxies will be voted in accordance with the judgment of the
persons voting the proxies.
The affirmative vote of the holders of a majority of the outstanding common
shares present and entitled to vote is required for election to the Board of
Directors of each of the nominees and for the approval of the other proposals
described in this Proxy Statement. For this purpose, a shareholder who abstains
is considered to be present and entitled to vote at the meeting, and is in
effect casting a negative vote, but a shareholder (including a broker) who does
not give authority to a proxy to vote, or withholds authority to vote, shall not
be considered present and entitled to vote.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
Unless otherwise directed by the shareholders, shares represented by proxies
will be voted in favor of the election of the following nominees for directors
to serve until the next annual meeting and until their successors are elected
and qualified. Each nominee is at present a member of the Board of Directors and
was previously elected as a director by the shareholders. If any nominee is
unable to stand for election, it is intended that shares represented by proxy
will be voted for a substitute nominee recommended by the Board of Directors,
unless the shareholder otherwise directs. Management is not aware that any
nominee is unable to so stand for election.
NAMES, PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS COMMON SHARES PERCENT
AND SELECTED OTHER INFORMATION CONCERNING NOMINEES FOR DIRECTORS OWNED(1) OF CLASS
- ------------------------------------------------------------------------------------------------------------------------------
VICTOR C. BENDA President and Chief Operating Officer of the Company 373,003(2) 5.1%
Director since 1970
Age -- 65
- ------------------------------------------------------------------------------------------------------------------------------
WILLIS K. DRAKE Chairman of the Board (retired) of Data Card Corporation, a 21,033 *
Director since 1982 manufacturer of embossing and encoding equipment
Age -- 73
Mr. Drake is also a director of Innovex, Inc., Digi International, Inc. and Telident, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
FREDERICK W. LANG Chairman and Chief Executive Officer of the Company 192,675(3) 2.6%
Director since 1966
Age -- 71
- ------------------------------------------------------------------------------------------------------------------------------
MARGARET A. LOFTUS Principal in Loftus Brown - Wescott, Inc., business consultants, 450 *
Director since 1993 since 1989. Formerly Vice President - Software, Cray Research,
Age -- 52 Inc.
Ms. Loftus is also Board Chair of Unimax Systems Corporation.
- ------------------------------------------------------------------------------------------------------------------------------
EDWARD M. MAHONEY Chairman and CEO (retired) of Fortis Advisers, Inc., an 6,918 *
Director since 1980 investment advisor, and Fortis Investors, Inc., a broker-dealer
Age -- 66
Mr. Mahoney is also a director of the eleven Fortis mutual fund companies.
- ------------------------------------------------------------------------------------------------------------------------------
ROBB PRINCE Financial Consultant and former Vice President and Treasurer of 1,000 *
Director since 1994 Jostens Inc., a school products and recognition company
Age -- 55
Mr. Prince is also a director of the eleven mutual fund companies managed by Fortis Advisers, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
All directors and executive officers as a group (8 in number) 668,204(4) 9.1%
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Except as otherwise indicated, each person possesses sole voting and
investment power with respect to shares shown as beneficially owned.
Ownership and percent of class owned is provided as of August 28, 1996. An
asterisk indicates the shares held are less than one percent of total
shares outstanding.
(2) Includes (a) 15,378 shares held by members of his family and as to which he
disclaims beneficial ownership and (b) 30,625 shares subject to an option
exercisable within 60 days of August 28, 1996.
(3) Includes (a) 2,800 shares held by members of his family and as to which he
disclaims beneficial ownership and (b) 9,375 shares subject to an option
exercisable within 60 days of August 28, 1996.
(4) Includes 43,000 shares subject to options exercisable within 60 days of
August 28, 1996. Also includes shares owned by non-director executive
officers as follows: Thomas R. Mahler -- 17,097 and Gerald M. McGrath --
54,500.
2
BOARD COMMITTEES AND COMPENSATION
The two standing committees of the Board of Directors are the Audit
Committee and the Compensation Committee. Current committee members are as
follows:
NAME OF COMMITTEE MEMBERSHIP
- ------------------------------ --------------------------------------------
Audit Committee Willis K. Drake, Margaret A. Loftus and
Edward M. Mahoney
Compensation Committee Willis K. Drake, Edward M. Mahoney and Robb
Prince
The Audit Committee, which is made up entirely of non-employee Directors,
held two meetings during the fiscal year and consulted with one another on
Committee matters between meetings. The Committee's purpose is to oversee the
Company's accounting and financial reporting policies and practices and to
assist the Board of Directors in fulfilling its fiduciary and corporate
accountability responsibilities. Its responsibilities include selecting the
Company's independent certified public accountants; reviewing and approving the
scope of the annual audit as proposed by the independent certified public
accountants; reviewing the results of the annual audit; and considering
recommendations of the independent certified public accountants regarding the
Company's system of internal accounting controls and financial reporting. The
Company's independent certified public accountants always have direct access to
Audit Committee members.
The Compensation Committee, which also is made up entirely of non-employee
Directors, held three meetings during the fiscal year and consulted with one
another on Committee matters during the year. The Committee's purpose is to
monitor management compensation for consistency with corporate objectives and
shareholders' interests. It recommends to the full Board the annual salaries and
incentive plans for executive officers; monitors and makes recommendations to
the full Board regarding retirement plans for executive officers; grants options
under the Company's employee stock option plans; and oversees and monitors
compensation plans.
The Board of Directors does not have a nominating committee.
During the fiscal year, there were six regular meetings and one special
meeting of the Board of Directors; combined attendance of incumbent directors at
meetings of the Board of Directors and of standing committees was 100%.
Directors who are not officers or employees of the Company each received a
quarterly fee of $3,500 and fees of $700 for each Board of Directors meeting and
$500 for each committee meeting attended.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES.
3
PROPOSAL NUMBER TWO
APPOINTMENT OF AUDITORS
Unless otherwise directed by the shareholders, shares represented by proxy
at the meeting will be voted in favor of ratification of the appointment of the
firm of Deloitte & Touche LLP to examine the accounts of the Company for the
year ending June 30, 1997. Management believes that neither Deloitte & Touche
LLP nor any of its partners presently has or has held within the past three
years any direct or indirect interest in the Company. A representative of
Deloitte & Touche LLP is expected to be present at the annual meeting and will
be given an opportunity to make a statement if so desired and to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
PROPOSAL NUMBER THREE
INCREASE IN AUTHORIZED COMMON SHARES
Unless otherwise directed by the shareholders, shares represented by proxy
at the meeting will be voted in favor of increasing the number of authorized
common shares to 40,000,000.
The Board of Directors recommends that shareholders consider and approve an
amendment to Article V of the Company's Articles of Incorporation which would
increase the number of authorized common shares from 20,000,000 to 40,000,000.
The proposed amendment, if adopted, would not change the provisions of the
present Article V in any manner other than to increase the number of authorized
common shares. The text of Article V, as proposed to be amended, is set forth in
Exhibit A.
As of August 28, 1996, of the currently authorized common shares, 7,326,281
shares were outstanding.
AiC's common shares have been split six times. Most recently, the Board
declared a two-for-one stock split to be effected in the form of a 100% stock
dividend payable September 30, 1996 to shareholders of record on September 9,
1996. After giving effect to the split, the Company will have outstanding
14,652,562 common shares and 1,239,770 common shares reserved for issuance under
the Company's stock option plans, leaving only 4,107,668 authorized common
shares available.
Although currently authorized shares are sufficient to meet all presently
known needs, the Board considers it desirable that the Company have the
flexibility to issue additional common shares without further shareholder
action, unless required by law or stock exchange regulation. The availability of
these additional shares will enhance the Company's flexibility in connection
with possible stock splits, stock dividends, acquisitions, financings, and other
corporate purposes.
The Company does not have any commitment or understanding at this time for
the issuance of any of the additional common shares.
Although the Company is not aware of any pending or threatened efforts to obtain
control of the Company, the availability for issuance of additional common
shares could enable the Board of Directors to render more difficult or
discourage an attempt to do so. For example, the issuance of common shares in a
public or private sale, merger or similar transaction would increase the number
of outstanding shares, thereby diluting the interest of a party attempting to
obtain control of the Company.
4
Holders of common shares do not have preemptive rights to subscribe to
additional securities that may be issued by the Company, which means that
current shareholders do not have a prior right to purchase any new issue of
capital stock of the Company in order to maintain their proportionate ownership.
However, shareholders wishing to maintain their interest may be able to do so
through normal market purchases.
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE INCREASE IN AUTHORIZED COMMON SHARES.
PROPOSAL NUMBER FOUR
APPROVAL OF THE 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Unless otherwise directed by the shareholders, shares represented by proxy
at the meeting will be voted in favor of ratification of the 1996 Stock Option
Plan for Non-Employee Directors.
In July 1996, the Board of Directors adopted, subject to approval by the
Company's shareholders, the 1996 Stock Option Plan for Non-Employee Directors
(the "Plan"). The Plan is designed to assist the Company in attracting,
retaining and compensating highly qualified individuals who are not employees of
the Company for service as members of the Board and to provide them with a
proprietary interest in the Company's common shares. The Board believes the Plan
will be beneficial to the Company and its shareholders by allowing non-employee
directors to have a personal financial stake in the Company, in addition to
underscoring their common interest with shareholders in increasing the value of
the Company's stock over the long term. Non-employee directors also receive cash
remuneration for their services, as described above under "Board Committees and
Compensation."
DESCRIPTION OF THE PLAN
The following summary description of the Plan is qualified in its entirety
by reference to the full text of the Plan, which is attached to this Proxy
Statement as Exhibit B.
If approved by the Company's shareholders, the Plan will provide for
automatic yearly grants of options to purchase 2,000 common shares (subject to
adjustment as provided in the Plan) to each active director serving on the Board
at the time of the grant who is not an employee of the Company or any of its
subsidiaries or affiliates. For Fiscal 1997, the Plan would provide a grant to
Ms. Loftus and Messrs. Drake, Mahoney and Prince; Messrs. Benda and Lang would
not be eligible to participate. Each option grant, vesting in equal installments
over five years and having a ten-year term, will permit the holder to purchase
shares at their fair market value on the date the option was granted. Payment
for shares to the Company may be in cash, common shares of the Company or a
combination thereof. The Plan will expire, unless earlier terminated, on June
19, 2006.
Option grants under the Plan will be made on January 3 of each year (or the
first business day thereafter on which the Company's common shares are traded on
the principal securities exchange on which they are listed), commencing on
January 3, 1997.
The following table sets forth summary information concerning the
hypothetical value of option grants for a single year to all eligible directors
under the Plan, based on the assumption that such grants had been made at the
beginning of Fiscal 1997.
5
1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
TERM(2)
NUMBER OF ------------------------
PLAN PARTICIPANTS SHARES(1) 5% 10%
- -------------------------------------------------------- ----------- ----------- -----------
Willis K. Drake......................................... 2,000 $ 51,254 $ 129,890
Margaret A. Loftus...................................... 2,000 51,254 129,890
Edward M. Mahoney....................................... 2,000 51,254 129,890
Robb Prince............................................. 2,000 51,254 129,890
Non-employee directors as a group....................... 8,000 205,016 519,560
- ------------------------
(1) Number of shares acquirable with each annual option grant.
(2) Amounts shown in these columns are based upon a hypothetical grant date of
July 1, 1996, at the then-current fair market value of the Company's common
shares [$40.75]. Amounts have been determined by multiplying the exercise
price by the annual appreciation rate shown (compounded for the term of the
options), multiplying the result by the number of shares covered by the
options and subtracting the aggregate exercise price of the options. The
calculations are made at the 5% and 10% rates set by rules of the Securities
and Exchange Commission, and therefore are not intended to forecast possible
future appreciation of the Company's common shares. As of August 27, 1996,
the closing price of the Company's common shares was $36 per share.
All options will expire ten years after the date of the grant, subject to
Plan provisions relating to death, retirement or disability. In the event of
termination of service at or after age 65 with 10 or more years of service as a
director of the Company or by reason of permanent disability or death of the
holder of any option, each of the then outstanding options of such holders shall
become immediately exercisable in full, and shall be exercisable by the holder,
or the holder's legal representative, at any time within a period of five years
after such termination of service, permanent disability or death, but in no
event after the expiration date of the option. If a participating director
terminates service on the Board for any other reason, his or her outstanding
options may be exercised only to the extent that they were exercisable at the
time of such termination and expire three months after such termination. Each
option will be non-assignable and non-transferable other than by will or the
laws of descent and distribution.
An aggregate of 80,000 shares of common stock will be subject to the Plan.
Shares subject to options that terminate unexercised will be available for
future option grants. Adjustments will be made in the number and kind of shares
subject to the Plan and outstanding options, and in the purchase price of
outstanding options, in the event of any change in the Company's outstanding
shares by reasons of any stock split or stock dividend, recapitalization,
merger, consolidation, combination or exchange of shares or other similar
corporate change.
ADMINISTRATION
The Plan will be administered by a committee appointed by the Board and
consisting of directors who are not eligible to participate in the Plan. The
initial members of the committee will be Messrs. Benda and Lang. The committee
will be authorized to interpret the Plan, establish and amend rules relating to
the Plan and make other determinations necessary or advisable for the
administration of
6
the Plan, but will have no discretion with respect to the selection of directors
to receive options, the number of shares subject to the Plan or to each grant or
the purchase price for shares subject to option. The committee will also have no
authority to increase Plan benefits materially.
The committee may terminate the Plan at any time or amend it in whole or in
part, except that the provisions specifying amounts, pricing and timing of
grants may not be amended more than once every six months, other than to comport
with specified changes in applicable law. In addition, any amendment that
increases the number of shares subject to the Plan or to any option or extends
the period during which options may be granted will require approval by the
Company's shareholders.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The options granted under the Plan will be non-statutory options not
intended to qualify under Section 422 of the Internal Revenue Code. The grant of
options will not result in taxable income to the director or a tax deduction of
the Company. The exercise of an option will result in taxable ordinary income to
the director and a corresponding deduction for the Company, in each case equal
to the difference between the fair market value of the shares on the date the
option was granted (the option price) and their fair market value on the date
the option was exercised.
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE 1996 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the
Company's executive compensation program. The Compensation Committee, consisting
of three non-employee directors, meets formally and consults informally during
the year. A more complete description of the functions of the Compensation
Committee is set forth above under the caption "Board Committees and
Compensation."
COMPENSATION PHILOSOPHY AND OBJECTIVES. The Company's executive
compensation philosophy is to pay for performance. The objectives of the
Company's executive compensation program are to:
- Provide compensation that enables the Company to attract and
retain key executives.
- Reward the achievement of desired Company performance goals.
- Align the interest of the Company's executives to shareholder
return through long-term opportunities for stock ownership.
The executive compensation program provides an overall level of compensation
opportunity that the Compensation Committee believes, in its judgment and
experience, is competitive with other companies of comparable size and
complexity. Actual compensation levels may be greater or less than compensation
levels at other companies based upon annual and long-term Company performance as
well as individual performance. The Compensation Committee uses its discretion
to establish executive compensation at levels in its judgment warranted by
external or internal factors as well as an
7
executive's individual circumstances. In arriving at what it considers
appropriate levels and components of compensation, the Compensation Committee
from time to time utilizes industry compensation data provided by Watson Wyatt
Worldwide, a nationally recognized compensation consulting firm.
EXECUTIVE COMPENSATION PROGRAM COMPONENTS. The Company's executive
compensation program consists of base salary, annual cash bonus incentives and
long-term incentives in the form of stock options. The particular elements of
the compensation program are discussed more fully below.
BASE SALARY. Base pay levels of executives are determined by the potential
impact of the individual on the Company and its performance, the skills and
experiences required by the position, salaries paid by other companies for
comparable positions, and personal and corporate development goals and the
overall performance of the Company. Base salaries for executives are maintained
at levels that the Compensation Committee believes, based on its own judgment
and experience, are competitive with other companies of comparable size and
complexity. Executive salary increases have been less than 5% per year over the
past three years.
ANNUAL CASH BONUS INCENTIVES. The Compensation Committee emphasizes annual
cash bonus incentives as a means of rewarding executives for significant Company
and individual performance. Prior to the beginning of each fiscal year, the
Compensation Committee establishes objective performance criteria for incentive
compensation for each executive officer, taking into account business conditions
and profit projections for the coming year. Incentive compensation for each
executive officer is based on attainment of the performance criteria so
established. Performance criteria for each of the past three fiscal years for
Mr. Lang, CEO of the Company, Mr. Benda, Mr. Mahler and Mr. McGrath have been
based on the Company's attainment of specified pre-tax profit objectives.
The Compensation Committee believes that this incentive arrangement creates
a direct relationship between the most important measure of Company performance
- - profit - and executive compensation.
LONG-TERM INCENTIVES. Long-term incentives are provided in the form of
stock options. The Committee and the Board of Directors believe that
management's ownership of a significant equity interest in the Company is a
major incentive in building shareholder wealth and aligning the long term
interests of management and shareholders. Stock options, therefore, are granted
at the market value of the common shares on date of grant and typically vest in
installments of 25% per year beginning one year after grant. The value received
by the executive from an option granted depends completely on increases in the
market price of the Company's common shares over the option exercise price.
Consequently, the value of the compensation is aligned directly with increases
in shareholder value. Grants of stock options are made by the Compensation
Committee based upon the executive's contribution toward Company performance and
expected contribution toward meeting the Company's long-term strategic goals.
TAX DEDUCTIBILITY CONSIDERATIONS. Effective January 1, 1994, deductibility
of compensation paid to the Company's four executive officers is limited to $1
million per executive, except for certain "performance-based" compensation as
defined in Section 162(m) of the Internal Revenue Code of 1986, as amended. The
Committee has been advised that compensation attributable to stock options
granted under plans approved by shareholders will qualify as performance-based
compensation. For 1996, compensation in the form of salary and cash bonus
incentives will not exceed the limit and therefore will be fully deductible, and
the Committee does not anticipate that compensation in these
8
forms for any individual executive officer will exceed the deductibility limit
in the foreseeable future. The Committee will take appropriate action to
preserve the deductibility of executive compensation at such future time as it
deems necessary.
E.M. Mahoney, Chair
W.K. Drake
R. Prince
MEMBERS OF THE COMPENSATION COMMITTEE
9
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer and the other three executive officers of the Company.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------ ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(#) COMPENSATION(2)
- ---------------------------------------------------------------------- ---- -------- -------- ------------ ---------------
F.W. Lang ............................................................ 1996 $321,800 $257,440 26,976 $1,693
Chairman & Chief Executive Officer 1995 $309,420 $247,536 10,000 $1,517
1994 $295,000 $140,629 0 $1,412
V.C. Benda ........................................................... 1996 $283,000 $226,400 20,000 $ 986
President and Chief Operating Officer 1995 $272,100 $217,680 10,000 $ 851
1994 $262,000 $124,926 0 $ 736
T.R. Mahler .......................................................... 1996 $167,800 $ 67,120 11,315 $ 286
Secretary and General Counsel 1995 $161,330 $ 64,532 7,000 $ 281
1994 $155,000 $ 37,042 0 $ 363
G.M. McGrath ......................................................... 1996 $167,800 $ 67,120 12,160 $ 433
Vice President - Finance and Treasurer 1995 $161,330 $ 64,532 7,000 $ 394
1994 $155,000 $ 37,042 0 $ 264
<FN>
- ------------------------
(1) Represents amounts paid with respect to the fiscal years shown under the
incentive compensation plans described herein.
(2) Represents life insurance premiums paid for each executive.
OPTIONS
The following tables show certain information regarding stock options
granted during fiscal 1996 to the Company's four executive officers, the number
of options exercised by them during the fiscal year and the number and value of
options unexercised at fiscal year end.
AGGREGATED OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE
% OF TOTAL VALUE(2)
NUMBER OF OPTIONS GRANTED EXERCISE EXPIRATION -----------------
NAME OPTIONS GRANTED(1) IN FISCAL YEAR PRICE DATE 5% 10%
- ------------------------------------------------------ ------------------ --------------- -------- ---------- ------- --------
20,000 11.9 $37.75 4/29/01 $208,400 $461,000
6,976 4.1 43.00 6/3/01 82,875 183,120
F.W. Lang.............................................
20,000 11.9 37.75 4/29/01 208,400 461,000
V.C. Benda............................................
6,315 3.7 28.50 1/18/01 49,699 109,818
5,000 3.0 37.75 4/29/01 52,100 115,250
T.R. Mahler...........................................
7,160 4.3 28.50 1/18/01 56,349 124,512
5,000 3.0 37.75 4/29/01 52,100 115,250
G.M. McGrath..........................................
<FN>
- ------------------------
(1) All options were granted at an exercise price equal to the fair market
value on the date of grant. The grants provide that the options are not
exerciseable during the first year after the grant, and thereafter become
exerciseable at the rate of 25% per year for each of the next four years.
10
(2) The dollar amounts under these columns are the result of calculations at 5%
and 10% rates required by rules of the Securities and Exchange Commission
and are not intended to forecast possible future appreciation, if any, of
the stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUE
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT END OF YEAR END OF YEAR
ACQUIRED VALUE --------------------------- ---------------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE(2)
- -------------------------------------- ----------- ----------- ----------- ------------- -------------- ----------------
F.W. Lang............................. 18,750 $ 450,469 11,875 43,851 $300,625 $492,399
V.C. Benda............................ -- -- 30,625 36,875 788,125 499,375
T.R. Mahler........................... 11,250 132,188 1,750 20,315 36,469 313,409
G.M. McGrath.......................... 12,500 142,813 500 21,160 8,031 324,316
<FN>
- ------------------------
(1) Value calculated at the market value on date of exercise less the exercise
price.
(2) Value calculated at the market value on June 30, 1996 less the option
exercise price.
EMPLOYMENT CONTRACTS. Agreements with Messrs. Lang, Benda, Mahler and
McGrath provide that, following a change in control, the Company will (i)
continue their employment for specified periods (36 months in the case of
Messrs. Lang and Benda and 12 months in the case of Messrs. Mahler and McGrath)
without reduction in compensation or benefits and (ii) provide them with a
severance payment should the Company terminate their employment during those
periods. The amount of the severance payment would be 2.99 times annualized
compensation for Messrs. Lang and Benda and one times annualized compensation
for Messrs. Mahler and McGrath. Other agreements with Messrs. Lang, Benda,
Mahler and McGrath provide that they are entitled to receive incentive
compensation under their incentive compensation plans described above for the
balance of the fiscal year in the event of a change in control.
SENIOR EXECUTIVE RETIREMENT PLAN. Messrs. Lang, Benda, Mahler and McGrath
are eligible for retirement benefits under this plan, which provides for an
annual payment equal to 60% of average cash compensation (30% of compensation
for Messrs. Mahler and McGrath) for the highest five years of the last ten years
of employment. The benefit is payable for fifteen years in the case of
retirement after age 65. Estimated annual benefits payable to Messrs. Lang,
Benda, Mahler and McGrath under this plan following retirement at age 65 (age 71
for Mr. Lang), are $296,660, $261,078, $70,476, and $70,476, respectively. A
trust agreement has been entered into with Norwest Bank Minnesota, N.A., as
trustee, under which the trustee is to hold the assets required to fund this
plan and make the required distributions.
11
STOCK PERFORMANCE GRAPH
The following graph compares the Company's five-year cumulative total return
to the NASDAQ Index and a peer group index selected by the Company over a five
year period beginning July 1, 1991 and ending June 30, 1996. The total
shareholder return assumes $100 invested at the beginning of the period in AiC
Common Stock and in each of the foregoing indices. It also assumes reinvestment
of all dividends. Past financial performance should not be considered to be a
reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.
COMPARISON OF CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AIC NASDAQ U.S. PEER GROUP
1991 100.00 100.00 100.00
1992 125.80 120.13 97.18
1993 224.01 151.08 127.01
1994 192.88 152.52 186.28
1995 311.92 203.59 258.15
1996 513.42 261.37 389.77
Assumes initial investment of $100
* Total return assumes reinvestment of divi-
dends
Note: Total returns based on market
capitalization
The peer group index reflects the stock performance of the following publicly
traded companies in the Company's industry: American Management Systems,
Computer Data Systems, Inc., Computer Horizons, Computer Sciences, Computer Task
Group, and Keane Inc.
12
OTHER INFORMATION
PRINCIPAL SHAREHOLDERS
The table below sets forth certain information as to each person or entity
known to the Company to be the beneficial owner of more than 5% of the Company's
common stock:
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ------------------------------ ------------------ --------
Janus Capital Corporation 390,450(1) 5.3%
100 Fillmore Street, Suite 300
Denver, CO 80206-4923
Putnam Investments, Inc. 545,501(2) 7.4%
One Post Office Square
Boston, MA 02109
T. Rowe Price Associates, Inc. 461,500(3) 6.3%
100 East Pratt Street
Baltimore, MD 21202
- ------------------------
(1) As reported in its Schedule 13G dated February 13, 1996, Janus Capital
Corporation has shared voting power and shared dispositive power over
390,450 shares. Voting and dispositive power is reported as being shared
with Janus Venture Fund and Thomas H. Bailey, who are affiliated with Janus
Capital Corporation.
(2) As reported in its Schedule 13G dated January 29, 1996, Putnam Investments,
Inc. has shared voting power of 171,500 shares and shared dispositive power
over 374,001 shares. Voting and dispositive power is reported as being
shared with Putnam Investments, Inc., Marsh & McLennan Companies, Inc.,
Putnam Investment Management, Inc., and The Putnam Advisory Company, Inc.,
who are all affiliated with Putnam Investments, Inc.
(3) As reported in its Schedule 13G dated February 14, 1996, T. Rowe Price
Associates has sole voting power over 30,500 shares and has shared
dispositive power over 431,000 shares.
SOLICITATION OF PROXIES
Expenses in connection with the solicitation of proxies will be paid by the
Company. Solicitation will be conducted primarily by mail, and, in addition,
directors, officers and employees of the Company may solicit proxies personally,
by telephone or by mail at no additional compensation to them. The Company will
reimburse brokerage houses and other custodians for their reasonable expenses in
forwarding proxy materials to beneficial owners of common stock. The Company has
retained D. F. King & Co., Inc., 60 Broad Street, New York, New York 10004 to
assist with solicitation of proxies from brokerage houses and other custodians
who are record holders of shares owned beneficially by others, the estimated
cost of which is $3,500 plus out of pocket expenses.
13
1997 SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the annual meeting in
1997 must be submitted to the Company in appropriate written form on or before
May 7, 1997.
By Order of the Board of Directors
[SIGNATURE]
Thomas R. Mahler
SECRETARY
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE AND SIGN THE
ENCLOSED PROXY EXACTLY AS YOUR NAME APPEARS THEREON AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
14
ANALYSTS INTERNATIONAL CORPORATION
PROXY FOR 1996 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints F. W. Lang and
T. R. Mahler or either one of them with full power of substitution, as proxy or
proxies, to vote all Common Shares of Analysts International Corporation of the
undersigned at the Annual Meeting of Shareholders on October 17, 1996 and at all
adjournments thereof, on the following matters:
1. ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed
below) below
V. C. Benda, W. K. Drake, F. W. Lang, M. A. Loftus, E. M. Mahoney, and R. Prince
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE as independent
auditors for the year ending June 30, 1997.
/ / FOR / / AGAINST / / ABSTAIN
3. INCREASE AUTHORIZED COMMON SHARES
/ / FOR / / AGAINST / / ABSTAIN
4. APPROVE 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, upon such other matters as may properly come before
the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS
SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR
OF THE ABOVE MATTERS.
Please complete, sign and mail this Proxy promptly in the enclosed envelope,
which requires no postage if mailed in the United States.
Dated ______________________, 1996
__________________________________
Signature of Shareholder
__________________________________
Signature of Shareholder
(Please sign your name exactly as
it appears hereon. In the case of
stock held in joint tenancy, all
joint tenants must sign.
Fiduciaries should indicate title
and authority.)
EXHIBIT A
ARTICLE V
The total authorized number of shares of the Corporation shall be 40,000,000
common shares of the par value of ten cents (10 CENTS) per share.
The shareholders shall have no preemptive or other rights to subscribe for
any shares, or securities convertible into shares of the corporation.
There shall be no cumulative voting of shares of the corporation.
The Board of Directors is hereby authorized and empowered to accept or
reject subscriptions for shares made after incorporation and to issue authorized
but unissued shares from time to time for such consideration as the Board of
Directors may determine, but not less than the par value of the shares so
issued.
The Board of Directors is hereby authorized and empowered to fix the terms,
provisions and conditions of options, warrants or rights to purchase or
subscribe for shares of corporation, including the price or prices at which
shares may be purchased or subscribed for and to authorize the issuance thereof.
EXHIBIT B
ANALYSTS INTERNATIONAL CORPORATION
1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSES.
The 1996 Stock Option Plan for Non-Employee Directors (the "Plan") is
established to attract, retain and compensate highly qualified individuals who
are not employees of Analysts International Corporation (the "Company") for
service as members of the Board of Directors ("Non-Employee Directors") and to
provide them with an ownership interest in the Company's common shares (the
"Shares"). The Plan will be beneficial to the Company and its shareholders by
allowing these Non-Employee Directors to have a personal financial stake in the
Company through an ownership interest in the Shares, in addition to underscoring
their common interest with shareholders in increasing the value of the Shares
over the long term.
2. EFFECTIVE DATE.
The Plan will be effective as of the date it is adopted by the Board of
Directors of the Company, subject to the approval of the Plan by the holders of
at least a majority of the outstanding Shares present, or represented, and
entitled to vote at the 1996 Annual Meeting of Shareholders.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee consisting of two members of
the Board of Directors who are not eligible to participate in the Plan (the
"Committee"). Subject to the provisions of the Plan, the Committee shall be
authorized to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make all other determinations necessary
or advisable for the administration of the Plan; provided, however, that the
Committee shall have no discretion with respect to the eligibility or selection
of Non-Employee Directors to receive options under the Plan, the number of
shares of stock subject to any options or the Plan, or the purchase price
thereunder; and provided further, that the Committee shall not have the
authority to take any action or make any determination that would materially
increase the benefits accruing to participants under the Plan. The Committee's
interpretation of the Plan, and all actions taken and determinations made by the
Committee pursuant to the powers vested in it hereunder, shall be conclusive and
binding upon all parties concerned including the Company, its shareholders and
persons granted options under the Plan. The Chairman of the Board of the Company
shall be authorized to implement the Plan in accordance with its terms and to
take or cause to be taken such actions of a ministerial nature as shall be
necessary to effectuate the intent and purposes thereof.
4. PARTICIPATION IN THE PLAN.
All active members of the Company's Board of Directors who are not as of the
date of any option grant hereunder employees of the Company or any of its
subsidiaries or affiliates shall be eligible to participate in the Plan.
Directors emeritus and honorary directors shall not be eligible to participate.
5. NON-QUALIFIED STOCK OPTIONS.
Only non-qualified stock options ("options") may be granted under this Plan.
6. TERMS, CONDITIONS AND FORM OF OPTIONS.
(a) OPTION GRANT DATES. Options to purchase 2,000 Shares (as adjusted
pursuant to Section 8) shall be automatically granted on an annual basis to each
eligible Non-Employee Director on January 3rd (or the first succeeding business
day thereafter on which the Shares are traded on the principal securities
exchange on which they are listed) of each year, commencing January 3, 1997.
(b) EXERCISE PRICE. The exercise price per share for which each option is
exercisable shall be 100% of the fair market value per share on the date the
option is granted, which shall be the average of the high and low price of the
Shares based upon its consolidated trading as generally reported for the
principal securities exchange on which the Shares are listed.
(c) EXERCISABILITY AND TERMS OF OPTIONS. Each option granted under the Plan
shall become exercisable in four equal installments, commencing on the first
anniversary of the date of the grant and annually thereafter. Each option
granted under the Plan shall expire ten years from the date of the grant, and
shall be subject to earlier termination as hereinafter provided.
(d) TERMINATION OF SERVICE. In the event of the termination of service as a
member of the Board by the holder of any option, other than at or after age 65
with 10 or more years of service as a director of the Company, or by reason of
permanent disability or death, the then outstanding options of such holder shall
be exercisable only to the extent that they were exercisable on the date of such
termination and shall expire three months after such termination, or on their
stated expiration date, whichever occurs first.
(e) RETIREMENT, DISABILITY OR DEATH. In the event of termination of service
at or after age 65 with 10 or more years of service as a director of the Company
or by reason of permanent disability or death of the holder of any option, each
of the then outstanding options of such holder shall become immediately
exercisable in full, and shall be exercisable by the holder, or the holder's
legal representative, at any time within a period of five years after such
termination of service, permanent disability or death, but in no event after the
expiration date of the option.
(f) PAYMENT. The option price shall be paid in cash (whether or not such
cash is loaned by the Company to the participant for such purpose) or by the
surrender of Shares, valued at their fair market value on the date of exercise,
or by any combination of cash and Shares.
7. NUMBER OF SHARES SUBJECT TO THE PLAN.
These may be purchased pursuant to options under the Plan not to exceed an
aggregate of 80,000 Shares (as adjusted pursuant to Section 8). Any Shares
subject to an option grant which for any reason expires or is terminated
unexercised as to such Shares shall again be available for issuance under the
Plan.
8. DILUTION AND OTHER ADJUSTMENT.
In the event of any change in the outstanding Shares by reason of any stock
split, stock dividend, recapitalization, merger, consolidation, combination or
exchange or other similar corporate change, such equitable adjustments shall be
made in the Plan and the grants thereunder, including the exercise price of
outstanding options, as the Committee determines are necessary or appropriate,
including, if necessary, any adjustments in the maximum number of shares
referred to in Section 7 of the Plan. Such adjustment shall be conclusive and
binding for all purposes of the Plan.
9. MISCELLANEOUS PROVISIONS.
(a) RIGHTS AS SHAREHOLDER. A participant under the Plan shall have no
rights as a holder of Shares with respect to option grants hereunder, unless and
until certificates for Shares are issued to the participant.
B-2
(b) ASSIGNMENT OR TRANSFER. No options granted under the Plan or any rights
or interest therein shall be assignable or transferable by a participant except
by will or the laws of descent and distribution. During the lifetime of a
participant, options granted hereunder are exercisable only by, and payable only
to, the participant.
(c) AGREEMENTS. All options granted under the Plan shall be evidenced by
agreements in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Committee shall adopt.
(d) COMPLIANCE WITH LEGAL REGULATIONS. During the term of the Plan and the
term of any options granted under the Plan, the Company shall at all times
reserve and keep available such number of shares as may be issuable under the
Plan. If in the opinion of counsel for the Company the transfer, issue or sale
of any Shares under the Plan shall not be lawful for any reason, including the
inability of the Company to obtain from any regulatory body having jurisdiction
the authority deemed by such counsel to be necessary to such transfer, issuance
or sale, the Company shall not be obligated to transfer, issue or sell any such
Shares. In any event, the Company shall not be obligated to transfer, issue or
sell any Shares to any participant unless a registration statement which
complies with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), is in effect at the time with respect to such Shares or other
appropriate action has been taken under and pursuant to the terms and provisions
of the Securities Act, or the Company receives evidence satisfactory to the
Committee that the transfer, issuance or sale of such Shares, in the absence of
an effective registration statement or other appropriate action, would not
constitute a violation of the terms and provisions of the Securities Act. The
Company's obligation to issue Shares upon the exercise of any option granted
under the Plan shall in any case be subject to the Company being satisfied that
the Shares purchased are being purchased for investment and not with a view to
the distribution thereof, if at the time of such exercise a resale of such
Shares would otherwise violate the Securities Act in the absence of an effective
registration statement relating to such Shares.
(e) COSTS AND EXPENSES. The costs and expenses of administering the Plan
shall be borne by the Company and not charged to any option or to any
Non-Employee Director receiving an option.
10. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENTS. The Committee may from time to time amend the Plan in whole
or in part; provided, that no such action shall adversely affect any rights or
obligations with respect to any options theretofore granted under the Plan, and
provided further, that the provisions of Sections 4 and 6 hereof may not be
amended more than once every six months, other than to comport with changes in
the Internal Revenue Code or regulations thereunder.
Unless the holders of at least a majority of the outstanding Shares present,
or represented, and entitled to vote at a meeting of shareholders shall have
first approved thereof, no amendment of the Plan shall be effective which would
(i) increase the maximum number of Shares referred to in Section 7 of the Plan
or the number of Shares subject to options that may be granted pursuant to
Section 6(a) of the Plan to any one Non-Employee Director or (ii) extend the
maximum period during which options may be granted under the Plan.
With the consent of the Non-Employee Director affected, the Committee may
amend outstanding agreements evidencing options under the Plan in a manner not
inconsistent with the terms of the Plan.
B-3
(b) TERMINATION. The Committee may terminate the Plan (but not any options
theretofore granted under the Plan) at any time. The Plan (but not any options
theretofore granted under the Plan) shall in any event terminate on, and no
options shall be granted after, June 19, 2006.
11. COMPLIANCE WITH SEC REGULATIONS.
It is the Company's intent that the Plan comply in all respects with Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any related regulations. If any provision of this Plan is later found
not to be in compliance with such Rule and regulations, the provision shall be
deemed null and void. All grants and exercises of options under this Plan shall
be executed in accordance with the requirements of Section 16 of the Exchange
Act and regulations promulgated thereunder.
12. GOVERNING LAW.
The validity and construction of the Plan and any agreements entered into
thereunder shall be governed by the laws of the State of Minnesota.
B-4