SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended
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
CATALYST INTERNATIONAL, INC.
- -----------------------------------------------------------------------------
(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):
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Notes:
[CATALYST LOGO]
CATALYST INTERNATIONAL, INC.
8989 NORTH DEERWOOD DRIVE
MILWAUKEE, WISCONSIN 53223
__________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 2000
__________________
To our Shareholders:
Catalyst International, Inc. will hold its Annual Meeting of
Shareholders on Tuesday, April 25, 2000 at 8:00 a.m. C.D.T. at its corporate
headquarters located at 8989 North Deerwood Drive, Milwaukee, Wisconsin
53223, for the following purposes:
(1) To elect two Class II directors to serve for three-year terms;
(2) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for 2000; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Shareholders of record at 5:00 p.m. C.D.T. on March 31, 2000 are
entitled to notice of and to vote at the Annual Meeting and at all
adjournments thereof.
You are cordially invited to attend the Annual Meeting. Your vote is
important. Holders of a majority of the outstanding shares must be present
in person or by proxy in order for the Annual Meeting to be held.
We urge you to date, sign, and return the accompanying Proxy Card in the
enclosed envelope whether or not you expect to attend the Annual Meeting in
person. If you attend the Annual Meeting and wish to vote your shares
personally, you may do so by revoking your proxy at any time prior to the
voting thereof.
By Order of the Board of Directors,
/s/ Mark T. Ehrmann
Mark T. Ehrmann, Secretary
April 10, 2000
[CATALYST LOGO]
CATALYST INTERNATIONAL, INC.
8989 NORTH DEERWOOD DRIVE
MILWAUKEE, WISCONSIN 53223
__________________
PROXY STATEMENT
__________________
The enclosed Proxy Card is solicited by the Board of Directors of
Catalyst International, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held on Tuesday, April 25, 2000, at 8:00 a.m. C.D.T., at
the Company's corporate headquarters located at 8989 North Deerwood Drive,
Milwaukee, Wisconsin 53223 (the "Annual Meeting").
Only holders of record of the 7,965,476 shares of Common Stock
outstanding at the close of business on March 31, 2000 (the "Record Date")
are entitled to notice of and to vote at the Annual Meeting. The presence,
in person or by proxy, of a majority of the shares of the Common Stock
outstanding on the Record Date will constitute a quorum. Abstentions and
broker non-votes (i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owners or other
persons entitled to vote shares as to a matter with respect to which brokers
or nominees do not have discretionary power to vote) will be treated as
present for purposes of determining the quorum. Neither abstentions nor
broker non-votes will have an impact on the election of Directors. With
respect to Proposal Two, abstentions and broker non-votes will have the same
effect as a vote against the proposal. Each share of Common Stock entitles
its holder to cast one vote on each matter to be voted upon at the Annual
Meeting.
This Proxy Statement, Notice of Annual Meeting of Shareholders, and
Proxy Card, together with the Company's 1999 Annual Report to Shareholders,
including audited financial statements for the year ended December 31, 1999,
are being mailed to shareholders of the Company commencing on or about April
10, 2000.
The proxy holders, Sean P. McGowan and Mark T. Ehrmann, will vote all
shares of Common Stock represented by Proxy Cards that are properly signed
and returned by shareholders. If you properly sign and return your Proxy
Card, but do not specify your choices, your shares will be voted by the proxy
holders as recommended by the Board of Directors. The Proxy Card also
authorizes the proxy holders to vote the shares represented with respect to
any matters not known at the time this Proxy Statement was printed that may
properly be presented for consideration at the Annual Meeting. You must
return a signed Proxy Card if you want the proxy holders to vote your shares
of Common Stock.
If the accompanying Proxy Card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained thereon. Each shareholder may revoke a previously granted proxy at
any time before it is exercised by written notice of revocation or by
submitting a duly executed proxy bearing a later date to the Secretary of the
Company or by attending the Annual Meeting and revoking the proxy prior to
the Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's directors are divided into three classes, designated as
Class I, Class II, and Class III. In 1999, the Board approved an increase in
the Board size from five to six members by adding one Class III Director. On
February 25, 2000, the Board accepted the nomination of and elected Elizabeth
J. Reeves as a Class III Director for a term expiring at the Company's 2001
Annual Meeting of Shareholders. Information regarding Ms. Reeves is included
below.
The Nominating Committee of the Board of Directors has proposed the
following individuals, each of whom is currently a Class II Director, be
reelected for a new term of three years. If elected at the Annual Meeting,
each nominee for election as a Class II Director will serve until the
expiration of his term at the Company's 2003 Annual Meeting of Shareholders
or until his successor is duly elected and qualified. Nominees receiving the
largest number of affirmative votes will be elected as Class II Directors up
to the maximum number of Directors to be chosen at election.
NOMINEES FOR DIRECTOR
CLASS II DIRECTORS (TERM TO EXPIRE IN 2003)
DOUGLAS B. CODER, 64, has served as a Director of the Company since July
1992 and as Chairman of the Board since January 1997. Mr. Coder has served
as a principal of the Coder Company (a real estate brokerage firm) and DBC
Realty (a real estate holding company) since 1969 and 1971, respectively.
TERRENCE L. MEALY, 69, has served as a Director of the Company since
July 1992. Mr. Mealy has been an attorney in private practice since 1957 and
is a member of the State Bar of Iowa.
CONTINUING DIRECTORS
CLASS I DIRECTORS (TERM TO EXPIRE IN 2002)
JAMES F. GOUGHENOUR, 62, has served as a Director of the Company since
January 1997. Since June 1997, Mr. Goughenour has served as Vice President
of Technology, Planning, and Operations Services at Sealy, Inc. Prior
thereto, Mr. Goughenour served successively as Vice President of Information
Technologies, Customer Service, Distribution, Logistics, and Process
Improvement & Technology for HON Industries (a manufacturer of office
furniture and fireplaces).
SEAN P. McGOWAN, 40, has served as President and Chief Executive Officer
of the Company since August 1997. Mr. McGowan has served as a Director of
the Company since April 1997 and as a Director of the Company's wholly owned
subsidiary, Catalyst WMS International Limited, since August 1997. From
January 1997 to August 1997, Mr. McGowan served as President and Chief
Operating Officer; and from May 1996 to January 1997 as Senior Vice
President-North American Operations. Prior to joining the Company, Mr.
McGowan served as General Manager and as Sales Manager at Professional
Control Corporation from 1991 to 1996; as General Manager and part-owner of
All-Prox Distribution Services, Inc., from 1986 to 1991; and as a salesman
for Sencon, an industrial controls corporation, with territories including
the East Coast and Midwest from 1982 to 1985.
CLASS III DIRECTORS (TERM TO EXPIRE IN 2001)
ROY J. CARVER, 56, 0has served as a Director of the Company since April
1994. Since 1982, Mr. Carver has served as Chairman of the Board of Carver
Pump Company (a manufacturer of pumps and related products). Since 1982, Mr.
Carver has served as a Director of Bandag, Inc. (a tire retreading company).
ELIZABETH J. REEVES, 37, has served as a Director of the Company since
February 2000. Ms. Reeves has served as Senior Vice President-Strategic
Initiatives of SAP America, Inc. since January 2000. Prior thereto, Ms.
Reeves served successively as Vice President-Partner and Solutions Support,
Services Sector; as Director, Strategic Sales Initiative; as Industry
Manager, High Tech Center of Expertise; and Consultant, Sales and
Distribution Applications. Prior to joining SAP America, Inc., Ms. Reeves
served as Operations Manager of Curtis Matheson Scientific from February 1990
to June 1993 and in Chrysler Corporation's International Operations Executive
Training Program from July 1988 to November 1990.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors recommends you vote FOR the election of the
individuals nominated to serve as Class II directors and your proxy will be
so voted unless you specify otherwise.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has standing Audit, Compensation, Long Range
Planning, and Nominating Committees. The Board of Directors does not have a
Finance Committee. The Board of Directors held seven meetings in 1999. Each
director attended at least 75% of the full board meetings and meetings of
committees on which such Director served in 1999.
The Audit Committee consisted of Messrs. Carver, Goughenour, and Mealy.
In 1999, the Audit Committee nominated the Company's independent auditors for
approval by the Board of Directors and reviewed the scope, results, and costs
of the audit with the Company's independent auditors. It also reviewed the
financial statements of the Company and the audit function to assure full
compliance with the requirements of regulatory agencies and full disclosure
of necessary information to the shareholders of the Company. The Audit
Committee was established in November 1995 and held three meetings in 1999.
It has recommended ratifying the appointment of Ernst & Young LLP as the
independent auditors of the Company for the year ending December 31, 2000.
The Compensation Committee consisted of Messrs. Carver, Coder,
Goughenour, and Mealy. In 1999, the Compensation Committee established
compensation levels for the executive officers of the Company, including the
quarterly bonus plan for senior management, and administered the Company's
1993 Stock Option Plan, as amended, and 1997 Director Stock Option Plan. The
Compensation Committee held two meetings in 1999.
The Long Range Planning Committee consisted of Messrs. Carver, Coder,
Goughenour, McGowan, and Mealy. In 1999, the Long Range Planning Committee
determined the Company's future strategies. The Long-Range Planning
Committee held two meetings in 1999.
The Nominating Committee consisted of Messrs. Carver, Coder, and Mealy.
In 1999, the Nominating Committee nominated persons for election as directors
of the Company. Shareholders are also entitled to nominate candidates for
the Board of Directors, and the Nominating Committee will consider nominees
recommended by shareholders, in accordance with the procedures set forth in
the Company's By-Laws. The Nominating Committee held two meetings in 1999.
DIRECTOR COMPENSATION
The 1997 Director Stock Option Plan (Director Plan) allows non-employee
directors to receive stock options in lieu of cash compensation for
attendance at Board of Directors and Committee meetings. Non-employee
directors are entitled to receive a fee of $1,500 (or its equivalent in stock
options) for each Board of Directors meeting they attend and $500 (or its
equivalent in stock options) for each Committee meeting they attend and are
entitled to be reimbursed for their expenses incurred in connection with
their responsibilities as directors.
In addition, Messrs. Carver, Coder, Goughenour, and Mealy were granted
options to purchase 10,000 shares of common stock on the effective date of
the Director Plan and are entitled to an option to purchase 5,000 shares of
common stock on each anniversary of the Director Plan. The exercise price of
each grant is equal to the market price of the Company's common stock on the
date of grant. The Director Plan provides for the issuance of 250,000
nonqualified stock options to directors. The options are exercisable for ten
years from the date of grant.
During 1999, Mr. Coder received compensation of $7,500 per month (equal
to $90,000 annually) and full medical benefits in consideration for
performing his duties as Chairman of the Board. Mr. Coder's compensation was
increased to $100,000 annually for 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 furnished to the Company
pursuant to Section 16(a) of the Securities and Exchange Act of 1934, as
amended, the Company believes that all executive officers and directors are
in compliance with the filing requirements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates, as of February 25, 2000 (unless otherwise
noted), beneficial ownership of Common Stock by (i) directors, (ii) those
executive officers named in the Summary Compensation Table appearing under
"Executive Compensation," below, (iii) persons known by the Company to be
beneficial owners of more than 5% of its outstanding Common Stock, and (iv)
all directors and executive officers of the Company as a group. Unless
otherwise indicated, the person listed has sole voting and investment power.
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owners Ownership Class
- -----------------------------------------------------------------------------
Roy J. Carver 252,956 (1) 3.20%
2415 Park Avenue
Muscatine, IA 52761
Douglas B. Coder 801,218 (2) 10.13%
8711 East Pinnacle Peak Road #127
Scottsdale, AZ 85255
James F. Goughenour 16,362 (3) *
2703 Southwick Drive
Greensboro, NC 27455
Sean P. McGowan 339,000 (4) 4.29%
8989 North Deerwood Drive
Milwaukee, WI 53223
Terrence L. Mealy 931,252 (5) 11.78%
301 East Second Street
Muscatine, IA 52761
Elizabeth J. Reeves 0 (6) *
950 Tower Lane, 12th Floor
Foster City, CA 94404
John F. Kramer 66,500 (7) *
8989 North Deerwood Drive
Milwaukee, WI 53223
Michael D. Schulz 56,418 (8) *
8989 North Deerwood Drive
Milwaukee, WI 53223
David M. Kogut 80,282 (9) 1.02%
8989 North Deerwood Drive
Milwaukee, WI 53223
Steven S. Rishel 65,450 (10) *
8989 North Deerwood Drive
Milwaukee, WI 53223
FMR Corp. 569,659 (11) 7.24%
82 Devonshire Street
Boston, MA 02109
SAP Aktiengesellschaft Systeme, Anwendungen,
Produkte in der Datenverarbeitung 759,485 (12) 9.7%
Neurottstrasse
D-69190 Walldorf, Germany
SAP America, Inc. 759,485 (13) 9.7%
950 Tower Lane, 12th Floor
Foster City, CA 94404
State of Wisconsin Investment Board 1,388,000 (14) 17.64%
Post Office Box 7842
Madison, WI 53707
All directors and executive officers
as a group (19 persons) 3,054,065 (15) 38.63%
- -----
*Less than 1% of the outstanding Common Stock.
(1) Includes options to purchase 18,214 shares, all of which are immediately
exercisable.
(2) Includes 37,271 shares held by Mr. Coder's spouse, 286,240 shares held
by S&S Partnership and 104,498 shares held in trust for the benefit of
Mr. Coder's children. Mr. Coder disclaims beneficial ownership of all
such shares. Mr. Coder has sole voting and investment power with
respect to 355,137 shares and shared voting and investment power with
respect to 428,009 shares. Also includes options to purchase 18,072
shares, all of which are immediately exercisable.
(3) Includes options to purchase 5,000 shares, all of which are immediately
exercisable.
(4) Includes options to purchase 320,000 shares which are exercisable within
60 days of February 25, 2000.
(5) Includes 6,000 shares held by Mr. Mealy's spouse. Mr. Mealy disclaims
beneficial ownership of all such shares. Mr. Mealy has sole voting and
investment power with respect to 907,089 shares and shared voting and
investment power with respect to 6,000 shares. Also includes options to
purchase 18,163 shares, all of which are immediately exercisable.
(6) Ms. Reeves was elected to the Board of Directors on February 25, 2000.
(7) Includes options to purchase 65,000 shares which are exercisable within
60 days of February 25, 2000.
(8) Represents options to purchase 56,418 shares which are exercisable
within 60 days of February 25, 2000.
(9) Includes options to purchase 75,832 shares which are exercisable within
60 days of February 25, 2000.
(10) Includes options to purchase 65,000 shares which are exercisable within
60 days of February 25, 2000.
(11) This information is based on a Schedule 13G dated February 14, 2000.
(12) This information is based on a Schedule 13D dated September 10, 1999.
The 759,485 shares are directly owned by SAP America, Inc.; however, SAP
America, Inc. shares voting power with SAP Aktiengesellschaft Systeme,
Anwendungen, Produkte in der Datenverarbeitung.
(13) This information is based on a Schedule 13G dated February 10, 2000.
The 759,485 shares are directly owned by SAP America, Inc.; however, SAP
America, Inc. shares voting power with SAP Aktiengesellschaft Systeme,
Anwendungen, Produkte in der Datenverarbeitung.
(14) This information is based on a Schedule 13G dated February 10, 2000.
(15) Includes options to purchase 762,626 shares which are exercisable within
60 days of February 25, 2000.
EXECUTIVE OFFICERS*
Name Age Position
- ---- --- --------
Sean P. McGowan 40 President, Chief Executive Officer
John F. Kramer 36 Executive Vice President-External Operations
Michael D. Schulz 47 Executive Vice President-Operations, Chief
Operating Officer
Lynne B. Briggs 39 Senior Vice President-Software Engineering
David M. Kogut 48 Senior Vice President-SAP Alliance
James G. Stowers 56 Senior Vice President-Corporate Development
Peter J. Briehl 42 Vice President-Development and Delivery
Judith K. Fearn 38 Vice President-European Operations
David L. Harney 61 Vice President-Research and Development
Douglas J. Kennedy 36 Vice President-Professional Services-
Customer Support
Steven S. Rishel 34 Vice President-Marketing
Timothy Sherlock 47 Vice President-Finance and Administration,
Chief Financial Officer
Bradley M. Steger 31 Vice President-Professional Services-Projects
Daniel A. Trew 48 Vice President-Product Strategy
- -----
* Information current as of March 31, 2000
SEAN P. McGOWAN has served as President and Chief Executive Officer
since August 1997. Mr. McGowan has served as a Director of the Company since
April 1997, as a Director of the Company's wholly owned subsidiary, Catalyst
WMS International Limited, since August 1997. From January 1997 to August
1997, Mr. McGowan served as President and Chief Operating Officer; and from
May 1996 to January 1997 as Senior Vice President-North American Operations.
Prior to joining the Company, Mr. McGowan served as General Manager and as
Sales Manager at Professional Control Corporation from 1991 to 1996; as
General Manager and part-owner of All-Prox Distribution Services, Inc., from
1986 to 1991 and as a salesman for Sencon, an industrial controls
corporation, with territories including the East Coast and Midwest from 1982
to 1985.
JOHN F. KRAMER has served as Executive Vice President-External
Operations since September 1999. From November 1998 to September 1999, Mr.
Kramer served as Vice President-Sales; from October 1996 to November 1998, as
Vice President-North American Sales; and from January 1996 to October 1996,
as Regional Sales Manager for the Northeast United States. Prior to joining
the Company, Mr. Kramer was employed as a Regional Salesperson for
Pansophic/Computer Associates from December 1990 to January 1996.
MICHAEL D. SCHULZ has served as Executive Vice President-Operations and
Chief Operating Officer since January 1998. Prior to joining the Company,
Mr. Schulz was with Case Corporation and served as Director of Information
Systems from December 1996 to January 1998; as Director Information Services,
Worldwide Data Centers and Global Network Operations from August 1995 to
December 1996; and as Director of European Data Systems from June 1990 to
August 1995.
LYNNE B. BRIGGS has served as Senior Vice President-Software Engineering
since December 1999. Prior thereto, Ms. Briggs served as Vice President-
Software Engineering since November 1998; as Director-Product Development
from September 1997 to November 1998; as Director-Application Design from
August 1996 to April 1997; and as a Project Manager from January 1996 to
August 1996. Ms. Briggs left the Company briefly and served as Director of
Staff Planning at Carson Pirie Scott from April 1997 to September 1997.
Prior to joining the Company in January 1996, Ms. Briggs served as Chief
Information Officer for Chestnut Health Systems from 1994 to 1995.
DAVID M. KOGUT has served as Senior Vice President-SAP Alliance since
September 1999. Prior thereto, Mr. Kogut served as Senior Vice President-
Complementary Services from July 1998 to September 1999; as Senior Vice
President-Customer Satisfaction from October 1997 to July 1998; as Senior
Vice President-Operations from January 1997 to October 1997; as Vice
President-Customer Service from October 1995 to January 1997; as Vice
President-Marketing from October 1993 to October 1995; and as Vice President-
Systems Integration since rejoining the Company in October 1991.
JAMES G. STOWERS is one of the cofounders of the Company and has served
as its Senior Vice President-Corporate Development since October 1999. Prior
thereto, Mr. Stowers served as Vice President-International Sales from April
1994 to October 1999; and as a Vice President of the Company with various
marketing, sales, and management responsibilities. Mr. Stowers was a
Director of the Company from August 1982 to November 1993.
PETER J. BRIEHL has served as Vice President-Development and Delivery
since October 1997. Prior thereto, Mr. Briehl served as Director of Advanced
Technology from August 1996 to October 1997 and as Manager of Software
Distribution from February 1996 to August 1996. Prior to joining the
Company, Mr. Briehl was employed for over twenty years by the United States
Marine Corps and served as the Training and Operations Head at the Computer
Science School in Quantico, Virginia from July 1994 to February 1996.
JUDITH K. FEARN has served as Vice President-European Operations since
December 1995. Prior thereto. Ms. Fearn served as the Company's Managing
Director-United Kingdom since May 1994. Ms. Fearn has been a Director of the
Company's wholly owned subsidiary, Catalyst WMS International Limited, since
May 1995.
DOUGLAS J. KENNEDY has served as Vice President-Professional Services-
Customer Support since February 1999. From August 1996 to February 1999, Mr.
Kennedy served as Vice President-Professional Services Organization; as
Director-Retail Operations of the Company from December 1995 to August 1996;
and as a Project Manager from November 1994 to November 1995. Prior to
joining the Company, Mr. Kennedy worked in various positions at Woolworth
Corporation.
DAVID L. HARNEY has served as Vice President-Research and Development
since December 1992 and as Vice President-Software Development from February
1991 to December 1992.
STEVEN S. RISHEL has served as Vice President-Marketing since August
1996. Prior to joining the Company, Mr. Rishel served as a Regional Manager
at Computer Technology Corporation from August 1993 to August 1996. Prior
thereto, Mr. Rishel served as a Regional Manager at Tayio America.
TIMOTHY SHERLOCK has served as Vice President-Finance and Administration
and Chief Financial Officer since June 1999. Prior to joining the Company,
Mr. Sherlock served as Chief Financial Officer, Secretary, and Vice President
of Advanced Learning Systems from December 1997 to June 1999 and as
Controller from March 1996 to December 1997. Prior thereto, Mr. Sherlock
served as Controller of Decisionmark Corporation from May 1995 to February
1996 and as Finance Manager for the Software Division and other corporate
financial positions of Cray Research, Inc. from May 1983 to April 1995.
BRADLEY M. STEGER has served as Vice President-Professional Services-
Projects since December 1999. Prior thereto, Mr. Steger served as Director,
Professional Services-Projects from February 1999 to December 1999; as
Manager, Third Party Interfaces from April 1997 to February 1999; as General
Manager of Dallas Operations from August 1996 to April 1997; on assignment in
the UK office responsible for Projects/Pre-Sales from June 1994 to August
1996; and various positions within the Company from April 1991 to June 1994.
DANIEL A. TREW has served as Vice President-Product Strategy since
November 1998. From August 1997 to November 1998, Mr. Trew served as a
Product Manager in the Marketing Group and from January 1994 to August 1997,
as Director-Logistics Technology. Prior thereto, Mr. Trew served as a
consultant with IBM Consulting Services.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation paid by the Company to the Chief Executive Officer and each of
the four most highly compensated executive officers (collectively, the "Named
Executive Officers") of the Company for services rendered in all capacities
to the Company for the years ended December 31, 1999, 1998, and 1997.
SUMMARY COMPENSATION TABLE
Annual Long Term
Compensation Compensation Awards
------------------- Securities Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#)(1)(2)
- --------------------------- ---- --------- -------- -------------------
Sean P. McGowan 1999 300,000 42,000 50,000
President and Chief 1998 200,000 52,500 50,000
Executive Officer 1997 210,435 - 150,000
Michael D. Schulz 1999 190,000 11,250 45,000
Executive Vice President 1998 140,000 15,000 87,000
and Chief Operating Officer
John F. Kramer 1999 175,000 39,624 (3) 90,000
Executive Vice President- 1998 110,000 66,232 (3) 15,000
External Operations 1997 110,000 87,112 (3) 33,000
Steven S. Rishel 1999 175,000 6,250 -
Vice President-Marketing 1998 110,000 9,375 15,000
1997 100,000 6,250 33,000
David M. Kogut 1999 145,000 5,000 -
Sr. Vice President- 1998 135,000 7,500 -
SAP Alliance 1997 131,632 - 65,000
(1) None of the Named Executive Officers held restricted stock at the end of
1999.
(2) Option grants noted herein represent the option grants in the period in
which they were originally granted. Due to repricings effected by the
Company, some of the original option grants were repriced in subsequent
periods.
(3) Represents sales commissions paid to Mr. Kramer.
OPTIONS. The Company granted options to the Named Executive Officers
during fiscal 1999 as set forth below.
OPTION GRANTS IN LAST FISCAL YEAR (1999)
Potential Realizable
Percentage Value at Assumed
of Total Annual Rates
Number of Options of Stock Price
Securities Granted to Appreciation
Underlying Employees Exercise for Option Term
Options in Fiscal Price Expiration ----------------
Name Granted 1999 ($/Share) Date 5%($) 10%($)
- ---- --------- ---------- --------- --------- ------- -------
Sean P. McGowan 50,000(1) 9.51% 8.50 12/03/09 267,280 677,341
Michael D. Schulz 15,000(2) 2.85% 13.125 04/26/09 123,814 313,768
30,000(3) 5.71% 8.50 12/03/09 160,368 406,404
John F. Kramer 20,000(2) 3.80% 13.125 04/26/09 165,085 418,357
40,000(2) 7.61% 13.8125 09/17/09 347,464 880,543
30,000(1) 5.71% 8.50 12/03/09 160,368 406,404
Steven S. Rishel 0 0.00%
David M. Kogut 0 0.00%
- -----
(1) One-third (1/3) of the options vest on the first anniversary of the date
of grant and 2 7/9% of the options vest each month thereafter, provided
the executive remains an employee of the Company. In addition, all of
the options vest upon a change in control of the Company.
(2) The options vest 20% on the first anniversary of the date of grant and 1
2/3% each month thereafter, provided the executive remains an employee
of the Company. In addition, all of the options vest upon a change in
control of the Company.
(3) The options vest 20% on the first anniversary of the date of grant and 1
2/3% each month thereafter, provided the executive remains an employee
of the Company.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information regarding the value of stock
options held at December 31, 1999 by the Chief Executive Officer and the
other Named Executive Officers. Neither the Chief Executive Officer nor any
of the Named Executive Officers exercised options in 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options
Options/SAR at Fiscal Year-End at Fiscal Year-End
------------------------------ --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Sean P. McGowan 270,000 100,000 $2,570,000 $500,000
Michael D. Schulz 53,834 78,166 $ 381,436 $361,814
John F. Kramer 55,000 100,000 $ 431,625 $185,000
Steven S. Rishel 50,000 15,000 $ 417,875 $ 86,250
David M. Kogut 70,500 35,750 $ 699,750 $329,438
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company and Mr. Coder are parties to a letter agreement dated
October 23, 1998, as subsequently amended, under which the Company agreed to
pay certain health benefits to Mr. Coder and his immediate family
through a period which expires no later than December 31, 2011. In addition,
the Company and Mr. Coder are parties to a letter agreement dated December 3,
1999 wherein Mr. Coder agreed to serve as Chairman of the Board through April
2002, receive compensation therefor as provided in such agreement, and
continue to receive such compensation for a period of two years thereafter.
The Company and Mr. McGowan are parties to a letter agreement dated
October 23, 1998 under which the Company agreed to accelerate the vesting
schedule of Mr. McGowan's stock options upon a change in control (as defined
in such letter agreement) and extend the time in which Mr. McGowan may
exercise his stock options to 14 months from his last day of employment. In
addition, the Company agrees to pay certain health, life, and disability
benefits to Mr. McGowan and his immediate family for a period of 18 months
from his last day of employment.
The Company and Mr. Kramer are parties to a letter agreement dated
December 5, 1997 under which the Company agreed to accelerate the vesting
schedule of Mr. Kramer's stock options upon a change in control (as defined
in such letter agreement).
The Company and Mr. Schulz are parties to a letter agreement dated April
27, 1998 under which the Company agreed to accelerate the vesting schedule of
certain of Mr. Schulz's stock options upon a change in control (as defined in
such letter agreement).
The Company and Mr. Stowers are parties to a letter agreement dated
October 23, 1998 which sets forth the terms under which Mr. Stowers will
continue to serve as Senior Vice President-Corporate Development through May
31, 2000. Under the agreement, Mr. Stowers receives a base salary as
provided in such agreement and is entitled to participate in the benefit
plans generally provided by the Company to its executive officers, including
annual bonus plans, vacation plans, and welfare plans. In addition, the
Company agrees to pay certain health benefits to Mr. Stowers and his
immediate family through a period which expires no later than December 31,
2018. The agreement prohibits Mr. Stowers from competing with the Company
during his employment and for a period of four years thereafter.
The Company and Mr. Rishel are parties to a letter agreement dated
December 5, 1997 under which the Company agreed to accelerate the vesting
schedule of Mr. Rishel's stock options upon a change in control (as defined
in such letter
agreement).
The Company and Mr. Sherlock are parties to a letter agreement dated
June 14, 1999 under which the Company agreed to accelerate the vesting
schedule of Mr. Sherlock's stock options upon a change in control (as defined
in such letter agreement).
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for establishing compensation levels for the executive
officers of the Company, including the annual bonus plan for executive
officers and for administering the Company's 1993 Stock Option Plan, as
amended, and 1997 Director Stock Option Plan. During 1999, the Committee was
comprised of four non-employee directors: Messrs. Carver, Coder, Goughenour,
and Mealy. The Committee's overall objective is to establish a compensation
policy that will (i) attract, retain, and reward executives who contribute to
achieving the Company's business objectives; (ii) motivate executives to
obtain these objectives; and (iii) align the interests of executives with
those of the Company's long-term investors.
The Company compensates executive officers with a combination of salary
and incentives designed to focus their efforts on maximizing both the near-
term and long-term financial performance of the Company. In addition, the
Company's compensation program rewards individual performance that furthers
Company goals. The executive compensation program includes the following:
(i) base salary; (ii) quarterly incentive bonuses; (iii) long-term equity
incentive awards in the form of stock option grants; and (iv) other benefits.
Each executive officer's compensation package is designed to provide an
appropriately weighted mix of these elements which together provide a level
of compensation roughly equivalent to that paid by companies of similar size
and complexity.
BASE SALARY: Base Salary levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within a
range of base salaries that the Committee believes are paid to similar
executive officers at companies deemed comparable based on the similarity in
revenue level, industry segment, and competitive employment market to the
Company. In addition, the Committee generally takes into account the
Company's past financial performance and future expectations, as well as the
performance of the executives and changes in the executives'
responsibilities.
INCENTIVE BONUSES: The Committee recommends the payment of quarterly
bonuses to provide an incentive to these persons to be productive over the
course of each fiscal year. These bonuses are awarded only if the Company
achieves or exceeds certain corporate performance objectives. The amount of
the incentive bonus to each executive officer is based on the individual
executive's performance.
EQUITY INCENTIVES: Stock options are used by the Company for payment of
long-term compensation to provide a stock-based incentive to improve the
Company's financial performance and to assist in the recruitment, retention,
and motivation of professional, managerial, and other personnel. Generally,
stock options are granted to eligible employees from time to time based
primarily upon the individual's actual and/or potential contributions to the
Company and the Company's financial performance. Stock options are designed
to align the interests of the Company's executive officers with those of its
shareholders by encouraging executive officers to enhance the value of the
Company, the price of the common stock, and hence, the shareholders' return.
In addition, the vesting of stock options over a period of time is designed
to create an incentive for the individual to remain with the Company. The
Company grants new options to its executives, including the Chief Executive
Officer, on an ongoing basis to provide continuing incentives to the
executives to meet future performance goals and to remain with the Company.
During the fiscal year ended December 1999, options to purchase an aggregate
of 337,000 shares of common stock were granted to the Company's executive
officers.
BENEFITS: Benefits offered to the Company's executive officers are
served as a safety net of protection against the financial catastrophes that
can result from illness, disability, or death. With the exception of the
one-time executive loan program discussed below, benefits offered to the
Company's executive officers are substantially the same as those offered to
all of the Company's regular employees.
In 1993, the Company established a tax-qualified deferred compensation
401(k) Savings Plan (the "Plan") covering all of the Company's eligible full-
time employees. Under the Plan, participants may elect to contribute,
through salary reductions, up to 15% of their annual compensation subject to
a statutory maximum. In 1999, the Company provided additional matching
contributions in the amount of 25% under the Plan. The Plan is designed to
qualify under Section 401 of the Internal Revenue Code so that the
contributions by employees or by the Company to the Plan, and income earned
on plan contributions, are not taxable to employees until withdrawn from the
Plan, and so that contributions by the Company will be deductible by the
Company when made.
CEO COMPENSATION: The Committee annually reviews the performance and
compensation of the Chief Executive Officer based on the assessment of his
past performance and its expectation of his future contributions to the
Company's performance. Mr. McGowan has served as the Company's Chief
Executive Officer since August 1997. In 1999, Mr. McGowan's base salary was
set at $300,000, which the Committee believes to be a reasonable salary. In
addition, Mr. McGowan received incentive bonuses totaling $42,000.
EXECUTIVE LOAN PROGRAM: During 1999, the Committee was concerned that
the Company's senior executives would be attractive candidates for other
companies in the software industry. The Committee also believed that because
the executives were, as a group, relatively young, a substantial portion of
their net worth was based on the unrealized value of the executives' options
in the Company's stock. In order to provide some additional cash liquidity
for executives, in September 1999, the Board approved a one-time executive
loan program, under which the Company would guaranty a loan made by a
commercial bank to an executive, in order to facilitate the issuance of a
loan by the bank to the executive. The program expired on March 31, 2000 and
each executive was entitled to have one loan guaranteed by the Company. Each
loan was also secured by other assets of the executive. The Company may, at
its discretion, reimburse the executive for interest on the loan or provide
other cash compensation to the executive in connection with the loan. The
Company executed one guarantee under the program, which carries an aggregate
maximum limit of $600,000.
COMPLIANCE WITH INTERNAL REVENUE CODE: Section 162(m) of the Internal
Revenue Code imposes a limit on tax deductions for annual compensation (other
than performance-based compensation) in excess of one million dollars paid by
a corporation to its Chief Executive Officer and the other four most highly
compensated executive officers of a corporation. The Company has not
established a policy with regard to Section 162(m) of the Code, since the
Company has not and does not currently anticipate paying cash compensation in
excess of one million dollars per annum to any employee. None of the
compensation paid by the Company in 1999 was subject to the limitations on
deductibility. The Board of Directors will continue to assess the impact of
Section 162(m) on its compensation practices and determine what further
action, if any, is appropriate.
Compensation Committee
Roy J. Carver
Douglas B. Coder
James F. Goughenour
Terrence L. Mealy
PERFORMANCE GRAPH
The following graph compares cumulative total shareholder return of the
Common Stock with the cumulative total return of the Nasdaq Stock Market (r)
Index from the date of the Company's initial public offering (November 16,
1995) to the most recent fiscal year end (December 31, 1999). In addition,
the graph also compares the Company's performance to that of the Nasdaq
Computer and Data Processing Stock Index. The graph assumes that the value
of the investment in the common stocks and each index was $100 on November
16, 1995 and that all dividends were reinvested. The Company has not paid
any cash dividends on its Common Stock and does not intend to do so in the
foreseeable future. The performance graph is not necessarily indicative of
future performance.
[GRAGH]
Nasdaq Stock Nasdaq Computer
Measurement Catalyst Market (U.S. and Data Processing
Period International, Inc.($) Companies)($) Stocks($)
- ----------- ---------------------- ------------- -------------------
11/16/95 100 100 100
12/31/95 88 101 100
12/31/96 36 124 123
12/31/97 31 152 151
12/31/98 92 214 270
12/31/99 98 387 571
FINANCIAL AND OTHER INFORMATION
With respect to the Company's (i) financial statements, (ii)
management's discussion and analysis of financial condition and results of
operations, and (iii) qualitative and quantitative disclosures about market
risks, the Company's 1999 Annual Report to Shareholders is incorporated
herein by reference.
PROPOSAL TWO
RATIFICATION OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee and subject to ratification
by the Shareholders at the Annual Meeting, the Board of Directors has
appointed Ernst & Young LLP, an independent public accounting firm, to audit
the financial statements of the Company for the year ending December 31,
2000. Ernst & Young LLP has audited the Company since 1993. Representatives
of Ernst & Young LLP will attend the Annual Meeting, have the opportunity to
make a statement if they so desire, and be available to answer questions.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors recommends you vote FOR the ratification of the
appointment of Ernst & Young LLP and your proxy will be so voted unless you
specify otherwise. The affirmative vote of holders of a majority of shares
of Common Stock present in person or represented by proxy at the Annual
Meeting and entitled to vote thereon is required to ratify the appointment of
Ernst & Young LLP as the Company's independent auditors for the year ending
December 31, 2000.
SUBMISSION OF SHAREHOLDER PROPOSALS
In accordance with the Company's By-Laws, nominations, other than by or
at the direction of the Board of Directors, of candidates for election as
directors at the Company's 2001 Annual Meeting of Shareholders and other
proposals to be submitted for consideration at the Company's 2001 Annual
Meeting of Shareholders must be received by the Company no later than January
25, 2001 and must otherwise be in accordance with the requirements of the
Company's By-Laws. To be considered for inclusion in the proxy statement for
the Company's 2001 Annual Meeting of Shareholders, shareholder proposals for
consideration at the Company's 2001 Annual Meeting of Shareholders must be
received by the Company at the Company's principal executive offices by
January 25, 2001. Such nominations or proposals must be submitted to
Catalyst International, Inc., 8989 North Deerwood Drive, Milwaukee, Wisconsin
53223, Attention: Corporate Secretary. To avoid disputes as to the date of
receipt, it is suggested that any shareholder proposal be submitted by
certified mail, return receipt requested.
OTHER MATTERS
Although management is not aware of any other matters that may come
before the Annual Meeting, if any such matters should be properly presented,
the persons named in the accompanying proxy intend to vote such proxy in
accordance with their best judgment.
The expenses of printing and mailing proxy material, including expenses
involved in forwarding materials to beneficial owners of stock, will be borne
by the Company. No solicitation other than by mail is contemplated, except
that officers, employees, or agents of the Company may solicit the return of
proxies from certain shareholders by telephone, personal solicitation, or
facsimile.
Shareholders may obtain a copy of the Company's Annual Report to the
Securities and Exchange Commission as filed on Form 10-K at no cost by
writing to the Investor Relations Department, Catalyst International, Inc.,
8989 North Deerwood Drive, Milwaukee, Wisconsin 53223 or on the Company's web
site at www.catalystwms.com. Exhibits to Form 10-K will be furnished upon
payment of the Company's reasonable expenses in furnishing the exhibits.
By Order of the Board of Directors,
/s/ Mark T. Ehrmann
Mark T. Ehrmann, Secretary
CATALYST INTERNATIONAL, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CATALYST INTERNATIONAL, INC.
Annual Meeting of Stockholders - April 25, 2000
The undersigned hereby appoints Sean P. McGowan and Mark T. Ehrmann, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorized each of them to represent and to vote, as designated
hereon, all of the shares of common stock of Catalyst International, Inc.
held of record by the undersigned on March 31, 2000, at the 2000 Annual
Meeting of Stockholders of Catalyst International, Inc. to be held on April
25, 2000 or at any adjournment or postponement thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be vote "FOR" (i) the election of the nominees as Class II Directors and
(ii) ratification of Ernst & Young LLP as the Company's independent auditors
for 2000, all as more fully described in the accompanying Proxy Statement.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
CATALYST INTERNATIONAL, INC. 2000 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1-DOUGLAS B. CODER
2-TERRENCE L. MEALY
[_] FOR the nominees [_] WITHHOLD AUTHORITY
listed to the left. to vote for the nominees
listed to the left.
(Instructions: To withhold authority to vote for
any indicated nominee, write the number(s) of the
nominee(s) in the box provided to the right.) - - - - > [________________]
2. To ratify the appointment of Ernst & Young LLP as the Company's
Independent auditors for 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
Check appropriate box
Indicate changes below:
Address Change? [_] Name Change? [_]
Date ____________________________ NO. OF SHARES _________________________
_______________________________________
SIGNATURE(S) IN BOX
Please sign exactly as your name appears
on this Proxy. When shares are held by
joint tenants, both should sign. When
signing as an attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.