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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Renaissance Worldwide, Inc.
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(Name of Registrant as Specified In Its Charter)
Renaissance Worldwide, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
RENAISSANCE WORLDWIDE, INC.
52 Second Avenue
Waltham, MA 02451
April 2, 2001
To Our Stockholders:
We cordially invite you to attend our 2001 Annual Meeting of Stockholders
(the "Meeting"), which will be held on Thursday, May 3, 2001, at our
headquarters, 52 Second Avenue, Waltham, Massachusetts at 10:00 a.m. Eastern
Time.
At the Meeting you are being asked to elect one Class III director to serve
for a three-year term, to approve the 2001 Directors Stock Plan, and to approve
a reverse stock split.
Please read the proxy statement, which describes the nominee for the Board
and the other proposals for shareholder consideration. When you have finished
reading the statement, please promptly mark, sign, and return your proxy card
in the enclosed envelope to ensure that your shares will be represented.
We hope that many of you will be able to attend the Meeting in person. I
look forward to seeing you there.
Sincerely yours,
/s/ G. Drew Conway
G.DREW CONWAY
Chairman and Chief Executive Officer
RENAISSANCE WORLDWIDE, INC.
52 Second Avenue
Waltham, MA 02451
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 3, 2001
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Renaissance Worldwide, Inc. will be held at our headquarters, 52
Second Avenue, Waltham, Massachusetts at 10:00 a.m. Eastern Time, on Thursday,
May 3, 2001, for the following purposes:
1. to elect one Class III director;
2. to adopt the 2001 Directors Stock Plan;
3. to approve a reverse stock split in a range between one-for-four and
one-for-six; and
4. to transact any other business that may properly come before the
meeting or any at any adjournment.
Stockholders of record at the close of business on March 15, 2001, are
entitled to notice of and to vote at the Meeting.
If you are unable to be present at the Meeting, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope.
By Order of the Board of Directors
/s/ Christopher D. T. Guiffre
CHRISTOPHER D. T. GUIFFRE
Clerk
Waltham, Massachusetts
April 2, 2001
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. PLEASE SIGN
AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON.
RENAISSANCE WORLDWIDE, INC.
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Annual Meeting of Stockholders
May 3, 2001
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PROXY STATEMENT
The Board of Directors (our "Board") of Renaissance Worldwide, Inc.
("Renaissance" or the "Company") is delivering these proxy materials in
connection with the solicitation of proxies to be voted at our 2001 Annual
Meeting of Stockholders (the "Meeting") and at any adjournment or postponement.
You are invited to attend the Meeting, which will be held on Thursday, May
3, 2001, beginning at 10:00 a.m. Eastern Time at our headquarters, 52 Second
Avenue, Waltham, Massachusetts.
This proxy statement, the proxy card, and the Company's 2000 Annual Report
are being mailed starting April 2, 2001.
Stockholders Entitled to Vote
Holders of record of our common stock at the close of business on March 15,
2001, are entitled to receive this notice and to vote their shares at the
Meeting. On that date, there were 53,205,027 shares of common stock
outstanding. Each share is entitled to one vote on each matter properly brought
before the meeting.
Proxies
Your vote is important. Stockholders of record may vote their proxies by
mail. If you vote by mail, simply mark your proxy, date and sign it, and return
it in the postage-paid envelope provided.
Proxies may be revoked at any time before they are exercised by (1) written
notice to the Company's Clerk, (2) timely delivery of a valid, later-dated
proxy or (3) voting by ballot at the Meeting.
Voting at the Annual Meeting
Voting by mail will in no way limit your right to vote at the Meeting if you
later decide to attend in person. If your shares are held in the name of a
bank, broker or other holder of record, you must obtain a proxy, executed in
your favor, from the holder of record to be able to vote at the Meeting.
All shares that have been properly voted and not revoked will be voted at
the Meeting in accordance with your instructions. If you sign your proxy card
but do not give voting instructions, your shares will be voted as recommended
by our Board.
Voting on Other Matters
If any other matters are properly presented at the Meeting for
consideration, the persons named in the enclosed form of proxy will have the
discretion to vote on those matters for you. At the date this proxy statement
went to press, we did not know of any other matter to be raised at the Meeting.
Required Vote
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to vote at the Meeting is necessary to constitute a quorum.
Abstentions and broker "non-votes" are counted as present and entitled to vote
for purposes of determining a quorum. A broker non-vote occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that
particular item and has not received instructions from the beneficial owner.
Under the rules of the New York Stock Exchange applicable to member firms,
brokers will have discretionary authority to vote shares held in their name for
the election of directors, for the adoption of the 2001 Directors Stock Plan,
and for the approval of the reverse stock split even if they do not receive
instructions from the beneficial owners. Thus, there will be no broker non-
votes at the Meeting.
The director nominee receiving the most votes will be elected as a Class III
director. Abstentions are not counted for purposes of the election of directors
and will have no effect on the outcome.
The approval of Proposal 2 requires the affirmative vote of a majority of
the shares present or represented by proxy and entitled to vote. The approval
of Proposal 3 requires the affirmative vote of a majority of all shares
outstanding. Abstentions will have the effect of votes against these proposals.
Cost of Proxy Solicitation
We will pay the expenses of soliciting proxies. Our directors, officers or
employees may solicit proxies in person or by telephone, electronic
transmission, facsimile transmission or by telegram. We will reimburse brokers
and other persons for their reasonable charges and expenses in forwarding
soliciting materials to their principals.
2
Proposal Number 1
ELECTION OF CLASS III DIRECTOR
Our Board is divided into three classes, as nearly equal in number as
possible, so that each class will serve for three years, with one class of
directors being elected each year.
Nominee
The nominee is G. Drew Conway, currently designated as a class III director,
whose term expires at the Meeting. If elected, Mr. Conway would serve for a
term of three years expiring at the 2004 Annual Meeting and until his successor
is elected. We expect that Mr. Conway will be able to serve, but if he is
unable to serve, the proxies reserve discretion to vote, or refrain from
voting, for a substitute nominee.
G. Drew Conway is the Company's founder and has served as its Chief
Executive Officer and Chairman of the Board since July 1999. From May 1986 to
July 1999, Mr. Conway served as our President, Chief Executive Officer and
Chairman of the Board. From 1983 until 1986, Mr. Conway was a founder and
principal of The Experts, a technical staffing company. Mr. Conway is 43 years
old.
The persons named in the enclosed proxy intend to vote the proxy in favor of
the election of G. Drew Conway as a Class III director, unless the proxy card
indicates that authority to vote for his election is withheld.
Other Directors
Robert P. Badavas, a class I director, became a director of Renaissance in
May 1996. Mr. Badavas has been a Senior Corporate Advisor in the Office of the
Chairman of Aether Systems, Inc., a provider of wireless data products and
services to the Fortune 1000 and Government, since January 2001. Mr. Badavas
was President and Chief Executive Officer of Cerulean Technology, Inc., a
provider of mobile information systems applications, from December 1995 through
December 2000. Aether Systems, Inc. acquired Cerulean Technology in September
2000. From October 1986 through October 1995, Mr. Badavas was employed by
Chipcom Corporation, a manufacturer of intelligent network switching systems,
where he served in a variety of Senior Executive positions including, among
others, as Senior Vice President, Finance, Chief Financial Officer and
Treasurer. Mr. Badavas is 48 years old.
Paul C. O'Brien, a class II director, became a director of Renaissance in
April 1996. Mr. O'Brien is the President of The O'Brien Group, Inc., a
consulting firm in the areas of telecommunications and information technology
that he founded in January 1995. Before founding the O'Brien Group, Mr. O'Brien
was employed by NYNEX New England (now Verizon), a telecommunications company,
most recently as Chairman of the Board from 1993 to December 1994, and
President and Chief Executive Officer from 1988 to 1993. Mr. O'Brien is also a
director of MangoSoft, Inc. and CeNeS Pharmaceuticals, plc, and is non-
executive Chairman of the Board of Merlot Communications, Inc. Mr. O'Brien is
61 years old.
New Director
In response to a recently adopted listing requirement of the Nasdaq National
Market ("Nasdaq") that a listed company have at least three independent
directors on its Audit Committee who meet the independence and financial
literacy requirements for Audit Committee members no later than June 2001, our
Board has been engaged in efforts to secure a qualified candidate to join its
ranks. If a candidate accepts an offer to join our Board, the Board would
expand its membership by one seat and elect the individual to a Class III
directorship, with a seat on both the Audit and Compensation Committees, so as
to have one independent director in each class.
Board of Directors and Committees
The Board held 16 meetings during 2000. Each director attended all of the
Board meetings held during this period. The Board currently has two standing
committees, the Audit Committee and the Compensation Committee. The Board does
not have a Nominating Committee or a committee performing similar functions.
Both the Audit Committee and the Compensation Committee are composed of
Messrs. Badavas and O'Brien. The Audit Committee held
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two meetings during the twelve months ended December 30, 2000. The Audit
Committee has the responsibility of recommending to the Board the independent
auditors that we will engage, reviewing with management and with the
independent auditors our internal accounting procedures and controls, and
reviewing with the independent auditors the scope and results of their audit.
The Compensation Committee held two meetings during the twelve months ended
December 30, 2000. The Compensation Committee has the responsibility of
providing recommendations to the Board regarding compensation matters and
administering our stock option and stock purchase plans.
Director Compensation
In May of 1998, the stockholders approved the 1998 Directors Stock Plan (the
"1998 Directors Plan"). From that date until December 11, 2000, independent
directors were compensated pursuant to the terms of the 1998 Directors Plan.
Proposal Number 2 in this proxy statement relates to a new 2001 Directors Stock
Plan (the "Stock Plan"), which, if approved, and in combination with the 2001
Directors Cash Compensation Plan (the "Cash Plan"), will replace the 1998
Directors Plan. The Board approved the Cash Plan on December 11, 2000. At the
same meeting, the Board approved the Stock Plan, subject to shareholder
approval. The Stock Plan is described in Proposal Number 2. The Cash Plan is
described below.
The purpose of the Cash Plan is to promote the recruiting and retention of
highly qualified independent directors for the Company. The Company believes
that paying its independent directors cash compensation that is competitive
with similarly situated companies will serve to enhance the Company's ability
to attract and retain the services of such persons. Under the Cash Plan, each
independent director shall be paid, on the date of the Annual Meeting of
Stockholders, an annual retainer in an amount equal to $12,000. In addition,
each independent director shall be paid: $3,000 per Board Meeting attended in
person; $1,000 per Board Meeting attended via conference call; and $1,000 per
Audit Committee Meeting or Compensation Committee Meeting.
On May 25, 2000, the date of the Company's 2000 Annual Meeting of
Stockholders, each outside director was awarded an option to purchase 7,972
shares of common stock and an option to purchase 2,500 shares of common stock,
each under the 1998 Directors Plan, and each with an exercise price equal to
the fair market value on the date of grant. On June 1, 2000, each outside
director was awarded an option to purchase 50,000 shares of common stock of our
subsidiary, GovConnect, Inc. ("GovConnect") and 50,000 shares of common stock
of a former subsidiary, Align360, Inc. ("Align360"), each with an exercise
price equal to fair market value on the date of grant. The majority of the
assets of Align360 were sold in the first quarter of 2001 and the outside
directors will not realize any compensation in connection with their Align360
options because the options were not in-the-money at the time of the sale and
have been terminated in connection with the dissolution of Align360. On August
25, 2000, each outside director was granted an additional option to purchase
100,000 shares of common stock under the Company's 1996 Stock Plan with an
exercise price equal to $1.50, the fair market value on that date. Each outside
director was paid $5,000 in cash under the Cash Plan for attendance at the
December 11, 2000, Board, Audit Committee, and Compensation Committee Meetings.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS ELECTION
OF THE NOMINEE DESCRIBED IN PROPOSAL NUMBER 1.
4
Proposal Number 2
2001 DIRECTORS STOCK PLAN
In May of 1998, the stockholders approved the 1998 Directors Plan relating
to compensation for outside directors. The 1998 Directors Plan provided for
annual retainers of $12,000 for each outside director, of which one-half of
such annual retainer would be paid in stock options having a fair market value
equal to one-half of the retainer amount. Under the 1998 Directors Plan, each
outside director also would be entitled to elect to have all or any portion of
the balance of the annual retainer paid in an equivalent value of stock
options. In addition, on the date of each annual meeting, each outside
director, who served during the preceding year, would be awarded options to
purchase 2,500 shares with an exercise price equal to the fair market value on
such date.
In order to attract qualified candidates to serve as Members of our Board,
and in particular to fill a third outside director seat on the Company's Audit
Committee as required by Nasdaq no later than June 2001, we intend to terminate
the 1998 Directors Plan and replace it with the Cash Plan and the Stock Plan.
The Cash Plan is described above in "Director Compensation" and the Stock Plan
is described below. With this proposal, the Company seeks stockholder approval
of the Stock Plan.
The purpose of Stock Plan is to promote the recruiting and retention of
highly qualified independent directors and to strengthen the commonality of
interest between independent directors and stockholders by providing for the
grant of options to purchase shares of the Company's common stock. The Company
believes that the granting of such options will serve to enhance the Company's
ability to attract and retain the services of such persons, to provide
additional incentives to them, and to encourage the highest level of
performance by offering them a proprietary interest in the Company's success.
Any share figures used in the Stock Plan would be subject to pro rata
adjustment in the event of a reverse stock split, which is described in
Proposal Number 3 of this proxy statement.
The aggregate number of shares of common stock which may be issued and sold
pursuant to options granted under the Stock Plan shall not exceed three hundred
and fifty thousand (350,000) shares. Shares of common stock issued under this
Stock Plan may be either authorized but unissued shares or treasury shares. If
any option granted under the Stock Plan shall terminate or expire without being
fully excised, the shares which have not been purchased thereunder will again
become available for purposes of the Stock Plan.
The Stock Plan will be administered by our Board, whose construction and
interpretation of the terms and provisions of the Stock Plan shall be final and
conclusive. The Board may delegate its power to administer the Stock Plan to a
committee consisting of not less than two independent directors of the Company.
Directors of the Company who are not employees of the Company or any of its
subsidiaries will be eligible to receive options under the Stock Plan (each, an
"Eligible Director"). All options granted under the Stock Plan shall be non-
statutory stock options which are not intended to meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
which are intended to be taxed under Section 83 of the Code.
Each Eligible Director shall be automatically granted an option to purchase
fifty thousand (50,000) shares of common stock on the date that he or she is
first elected a director of the Company. This option is referred to as the
"Initial Award." On the date of each annual meeting of stockholders, including
the 2001 Annual Meeting of Stockholders, immediately prior to the meeting, each
Eligible Director who served during the preceding year shall be awarded an
option to purchase twenty-five thousand (25,000) shares of common stock
(prorated if the Eligible Director did not serve for the entire preceding
year). These options are referred to as the "Annual Awards."
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The price per share at which each option granted under the Stock Plan to an
Eligible Director may be exercised (the "Option Price") shall be the fair
market value of a share of common stock (the "Market Price") on the date of
grant of the option. The Market Price of the common stock on a given date shall
be determined based on (i) the average of the high and low sales prices of the
common stock on such date on the principal national securities exchange or
market system in which the common stock is traded or (ii) if the high and low
sales prices are not available, the fair market value of the common stock as
determined by the Board.
Each option granted under the Stock Plan shall be evidenced by and subject
to the terms and conditions of an Option Agreement. Each option shall expire 10
years from the date of grant of such option. The Initial Award shall be
exercisable in three equal annual installments commencing on the first
anniversary of the date of grant. The Annual Award shall be exercisable on the
first anniversary of the date of grant.
If the Stock Plan is approved by the Company's stockholders, it will become
effective at the 2001 Annual Meeting of Stockholders.
2001 Directors Stock Plan
Name and Position or Group Number of Units
-------------------------- ---------------
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Executive Group Not eligible
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Non-Executive Director Group Options to purchase 25,000 shares
(currently two persons) of common stock per year issued at
each Annual Meeting(1)
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Non-Executive Officer
Employee Group Not eligible
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(1) Messrs. Badavas and O'Brien would be eligible to receive Annual Awards of
options to purchase 25,000 shares of Renaissance common stock at each
Annual Meeting of Stockholders. They would not be eligible for an Initial
Award. Any additonal independent directors would be eligible for an Initial
Award of options to purchase 50,000 shares of Renaissance common stock plus
Annual Awards on an on-going basis.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE FOR PROPOSAL NUMBER 2.
6
Proposal Number 3
REVERSE STOCK SPLIT
Summary
In February 2001, our Board approved by unanimous vote, and recommended that
the stockholders approve, a proposed amendment (the "Reverse Stock Split
Amendment") to the Company's Restated Articles of Organization, as amended,
that will give the Board the discretion to effect (or, alternatively, to
abandon) a reverse split of the common stock (the "Reverse Stock Split") at any
time prior to December 31, 2001. The form of the proposed Reverse Stock Split
Amendment is attached hereto as Appendix A. Under the terms of the Reverse
Stock Split, the Company would issue one new share of common stock in exchange
for not more than six, and not less than four, outstanding shares of common
stock. The exact ratio will be the number between four and six, in increments
of 0.1, such that when multiplied by the average closing price of the common
stock on the five trading days prior to the effectiveness of the Reverse Stock
Split results in a product that is the closest possible number to $5.00 per
share. If implemented, the Reverse Stock Split Amendment would be effective on
such date as it is filed with the Massachusetts Secretary of State (the
"Effective Date").
On the Effective Date, the Reverse Stock Split will result in the automatic
conversion of between four and six shares (as determined in the manner
described above) of issued and outstanding common stock into one share of
common stock. Fractional shares of common stock will not be issued as a result
of the Reverse Stock Split, but instead, the Company will pay each holder of a
fractional interest an amount in cash based on the average of the high and low
sales prices of the common stock on the Effective Date. Except for adjustments
that may result from the treatment of fractional shares as described above,
each stockholder will hold the same percentage of common stock outstanding
immediately following the Reverse Stock Split as such stockholder held
immediately prior to the Reverse Stock Split. The Reverse Stock Split will not
alter the par value of the common stock or the number of shares authorized for
issuance, but will simply reduce the number of shares of common stock issued
and outstanding by the factor used to calculate the Reverse Stock Split.
If the Reverse Stock Split proposal is approved by the stockholders, the
Reverse Stock Split will be effected only upon a determination by the Board
that the Reverse Stock Split is in the best interest of the Company and its
stockholders at that time. Notwithstanding approval of the Reverse Stock Split
proposal by the stockholders of the Company, the Board may, in its sole
discretion, determine not to effect the Reverse Stock Split or to delay such
action based on the then-current trading price of the common stock or certain
other factors described herein.
Reasons for this proposal
The primary purpose of the Reverse Stock Split is to combine outstanding
shares of common stock because a share of common stock outstanding after giving
effect to the Reverse Stock Split is likely to trade at a higher price per
share than a share of common stock outstanding before giving effect to the
Reverse Stock Split. A higher trading price is needed to ensure that the common
stock will remain eligible for listing on Nasdaq.
In addition to meeting other requirements, the Company's common stock must
maintain a minimum bid price of $1.00 per share in order to remain eligible for
continued listing on Nasdaq. During the 180 days preceding March 15, 2001, the
Company's stock price has traded in the $0.63 to $1.72 range. During that
period, the stock price fell below $1.00 per share long enough to result in a
warning letter from Nasdaq, dated January 2, 2001. That letter warned the
Company of the possibility of delisting if the Company did not return to
compliance with Nasdaq listing guidelines within 90 days. On January 30, 2001,
the Company regained compliance with Nasdaq listing requirements, and the
Company received a letter to that effect from Nasdaq, dated January 31, 2001.
Although the Company's common stock traded above $1.00 per share from January
17, 2001 through March 14, 2001, the last reported sale price of Company's
common stock on March 15, 2001, was $0.75. There can be no assurance that the
Company will be able to continue to trade above $1.00 per share.
7
The Company believes, but cannot assure, that a Reverse Stock Split will
increase the chances that the Company's common stock will trade above the $1.00
minimum bid price established by Nasdaq listing requirements. Further, there
can be no assurance that the Company will continue to meet other Nasdaq listing
requirements. The Reverse Stock Split will not result in any changes to the
Nasdaq listing requirements applicable to the Company.
The Company believes that maintaining the listing of its common stock on
Nasdaq is in the best interest of the Company and its stockholders. Inclusion
in Nasdaq increases liquidity and may potentially minimize the spread between
the "bid" and "asked" prices quoted by market makers. Further, a Nasdaq listing
may enhance the Company's access to capital and increase the Company's
flexibility in responding to anticipated capital requirements. The Company
believes that prospective investors will view an investment in the Company more
favorably if its shares qualify for listing on Nasdaq.
The Company also believes that the current per share price level of the
common stock has reduced the effective marketability of the Company's shares of
common stock because of the reluctance of many leading brokerage firms to
maintain active analyst coverage of low-priced stocks or to recommend low-
priced stocks to their clients. Some investors may view low-priced stock as
speculative and unattractive, although some other investors may be attracted to
low-priced stock because of the greater trading volatility sometimes associated
with such securities. Moreover, because there are some institutional investors
who are prohibited from holding, or choose not to hold, stocks with prices less
than $5.00 per share, the current stock price may be limiting the Company's
stockholder base. Such a limited stockholder base may have the undesirable
effect of artificially limiting the demand for the stock, thus depressing the
stock price.
The Company believes that some brokerage houses may have policies and
practices that tend to discourage individual brokers within those firms from
dealing in low-priced stock. Those policies and practices pertain to the
payment of brokers commissions and to time-consuming procedures that function
to make the handling of low-priced stocks unattractive to brokers from an
economic standpoint. The Company also believes that, because brokerage
commissions on low-priced stock may represent a higher percentage of the stock
price than commissions on higher-priced stock, the current share price of the
common stock can result in individual stockholders paying transaction costs
(commissions, markups or markdowns) that represent a higher percentage of their
total share value than would be the case if the share price were substantially
higher.
If the common stock is not listed on Nasdaq and the trading price of the
common stock were to remain below $1.00 per share, trading in the common stock
would also be subject to the requirements of rules promulgated under the
Exchange Act that require additional disclosures by broker-dealers in
connection with any trades involving a stock defined as a "penny stock"
(generally, a non-Nasdaq equity security that has a market price of less than
$5.00 per share, subject to certain exceptions). In such event, the additional
burdens imposed upon broker-dealers to effect transactions in the common stock
could further limit the market liquidity of the common stock and the ability of
investors to trade the common stock.
In the event that the common stock is delisted from Nasdaq, sales of the
common stock would likely be conducted only in the over-the-counter market or
potentially in regional exchanges. This may have a negative impact on the
liquidity and price of the common stock and investors may find it more
difficult to purchase or dispose of, or to obtain accurate quotations as to the
market value of, the common stock. The Reverse Stock Split will not affect the
Company's periodic reporting requirements with the Securities and Exchange
Commission, nor has the Board recommended the Reverse Stock Split as the first
step in a going private transaction.
For all the above reasons, management believes that the Reverse Stock Split
is in the best interests of the Company and its stockholders. There can be no
assurance, however, that the Reverse Stock Split will have the desired
consequences. Specifically, there can be no assurance that, after the Reverse
Stock Split, the market price of the common stock will not decrease to its pre-
split levels or that the market capitalization of the Company after the
proposed Reverse Stock Split will not be less than the Company's market
capitalization before the proposed Reverse Stock Split.
8
Effect of this proposal
Although the Company expects to file the Reverse Stock Split Amendment in
June of 2001, the actual timing of the filing will be determined by the Board
based upon its evaluation as to when such action is most advantageous to the
Company and its stockholders. Further, notwithstanding approval of this
proposal by the stockholders of the Company, the Board may elect not to file
the Reverse Stock Split Amendment at all if it believes it is in the best
interests of the Company and its stockholders not to do so.
After the Effective Date of the Reverse Stock Split, each stockholder will
own a reduced number of shares of common stock but will hold the same
percentage of the outstanding shares (subject to adjustments for fractional
interests resulting from the RReverse Stock Split) as the stockholder held
prior to the Effective Date. The number of shares of common stock that may be
purchased upon the exercise of outstanding options, warrants, and other
securities convertible into, or exercisable or exchangeable for, shares of
common stock, and the per share exercise or conversion prices thereof, will be
adjusted appropriately for the Reverse Stock Split in accordance with their
terms as of the Effective Date. In addition, the appropriate adjustments under
the terms of the Company's Shareholder Rights Plan, dated as of June 13, 2000,
will be made as of the Effective Date to the number and price of shares that
may be purchased under the Shareholder Rights Plan to give effect to the
Reverse Stock Split. Based on a brokers search conducted in connection with the
Meeting, the Company has learned that there are 157 record stockholders and
approximately 6,000 beneficial owners. Three of the record stockholders
currently hold between one and nine shares of common stock and may therefore be
cashed out in the Reverse Stock Split. The Company does not know the number of
shares held by each beneficial owner and therefore cannot predict how many
beneficial owners may be cashed out in the Reverse Stock Split. Because only
beneficial owners with fewer than six shares could be cashed out completely in
the Reverse Stock Split, the Company does not believe that the Reverse Stock
Split will lead to a material reduction in the number of beneficial owners.
The Reverse Stock Split may also result in some stockholders owning "odd
lots" of less than 100 shares of common stock received as a result of the
Reverse Stock Split. Brokerage commissions and other costs of transactions in
odd lots may be higher, particularly on a per-share basis, than the cost of
transactions in even multiples of 100 shares.
If adopted, the Reverse Stock Split Amendment will not affect the par value
of the common stock because the Company's common stock has no par value.
Accordingly, the Reverse Stock Split Amendment will not affect the Company's
additional paid-in capital account.
The Board considered reducing the number of shares of authorized common
stock in connection with the Reverse Stock Split but determined that the
availability of additional shares may be beneficial to the Company in the
future. The availability of additional authorized shares will allow the Board
to issue shares for corporate purposes, if appropriate opportunities should
arise, without further action by stockholders or the time delay involved in
obtaining stockholder approval (except to the extent that approval is otherwise
required by applicable law).
Based on the 53,205,027 shares common stock outstanding as of March 15,
2001, the approximate number of shares of common stock that would be
outstanding as a result of the Reverse Stock Split using the following examples
of exchange ratios are as follows (without giving effect to the cash out of
fractional shares):
Exchange Ratio Shares Outstanding
- -------------- ------------------
1-for-4...................................................... 13,301,257
1-for-5...................................................... 10,641,005
1-for-6...................................................... 8,867,505
Shares outstanding as of March 15, 2001, reflects the results of the on-
going stock buyback program, under which the Company has repurchased a total of
4,354,812 shares of its common stock as of March 15, 2001.
The Reverse Stock Split will affect all stockholders equally and will not
affect any stockholder's proportionate equity interest in the Company (except
with respect to adjustments for fractional interests). None of the rights
currently accruing to holders of the common stock, options or warrants to
purchase common stock will be affected by the Reverse Stock Split. Following
the Reverse Stock Split, each share of the common stock resulting from the
Reverse Stock Split will entitle
9
the holder thereof to one vote per share and will otherwise be identical to the
outstanding common stock immediately prior to the Effective Date.
Exchange of stock certificates; no fractional shares
The combination and reclassification of shares of common stock pursuant to
the Reverse Stock Split will occur automatically on the Effective Date without
any action on the part of stockholders of the Company and without regard to the
date on which certificates evidencing shares of common stock prior to the
Reverse Stock Split are physically surrendered for new certificates. As of the
Effective Date, between four and six shares of common stock will be converted
and reclassified into one share of post-split common stock.
For example, if a 1-for-5 Reverse Stock Split is implemented, a holder of
1,000 shares immediately prior to the Effective Date would hold 200 shares
after the Effective Date. Alternatively, if a 1-for-4 Reverse Stock Split is
implemented, a holder of 1,000 shares immediately prior to the Effective Date
would hold 250 shares after the Effective Date. Fractional shares of common
stock will not be issued as a result of the Reverse Stock Split, but instead,
the Company will pay each holder of a fractional interest an amount in cash
equal to the value of such fractional interest on the Effective Date.
As soon as practicable after the Effective Date, transmittal forms will be
mailed to each holder of record of shares of common stock, to be used in
forwarding such holder's stock certificates for surrender and exchange for
certificates evidencing the number of shares of common stock such stockholder
is entitled to receive as a consequence of the Reverse Stock Split. The
transmittal forms will be accompanied by instructions specifying other details
of the exchange. Upon receipt of such transmittal form, each stockholder should
surrender the certificates evidencing shares of common stock prior to the
Reverse Stock Split in accordance with the applicable instructions. Each holder
who surrenders certificates will receive new certificates evidencing the whole
number of shares of common stock that such stockholder holds as a result of the
Reverse Stock Split. Stockholders will not be required to pay any transfer fee
or other fee in connection with the exchange of certificates.
The Company estimates that its aggregate expenses relating to the Reverse
Stock Split will not be material.
STOCKHOLDERS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE UNTIL
THEY RECEIVE A TRANSMITTAL FORM FROM THE COMPANY.
As of the Effective Date, each certificate representing shares of common
stock outstanding prior to the Effective Date will be deemed canceled and, for
all corporate purposes, will be deemed only to evidence the right to receive
the number of shares of common stock into which the shares of common stock
evidenced by such certificate have been converted as a result of the Reverse
Stock Split.
Federal income tax consequences
The following discussion generally describes certain United States federal
income tax consequences of the proposed Reverse Stock Split to stockholders of
the Company. This discussion is limited to United States persons who hold their
Renaissance common stock as capital stock. The following does not address any
foreign, state, local tax or alternative minimum income, or other federal tax
consequences of the proposed Reverse Stock Split. The actual consequences for
each stockholder will be governed by the specific facts and circumstances
pertaining to such stockholder's acquisition and ownership of the common stock.
Thus, the Company makes no representations concerning the tax consequences for
any of its stockholders and recommends that each stockholder consult with such
stockholder's own tax advisor concerning the tax consequences of the Reverse
Stock Split, including federal, state and local, or other income tax.
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the proposed Reverse Stock Split. However, the Company believes
that, because the Reverse Stock Split is not part of a plan to periodically
increase a stockholder's proportionate interest in the assets or earnings and
profits of the Company, the proposed Reverse Stock Split will have the
following income tax effects:
1. A stockholder will not recognize taxable gain or loss as a result of
the Reverse
10
Stock Split, except to the extent a stockholder receives cash in lieu of
fractional shares. Cash payments in lieu of a fractional share of post-
split common stock should be treated as if the fractional share were issued
to the stockholder and then redeemed by the Company for cash. Generally, a
stockholder receiving such payment should recognize gain or loss equal to
the difference, if any, between the amount of cash received and the
stockholder's basis in the fractional share. Such gain or loss generally
will be capital gain or loss.
2. In the aggregate, a stockholder's basis in post-split common stock
will equal such stockholder's basis in the shares of pre-split common stock
exchanged therefor (but not including the basis allocated to a fractional
share for which the stockholder is entitled to receive cash), and such
stockholder's holding period for post-split common stock will include the
holding period for pre-split common stock exchanged therefor.
3. The proposed Reverse Stock Split will constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of
1986, as amended, and the Company will not recognize any gain or loss as a
result of the Reverse Stock Split.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE FOR PROPOSAL NUMBER 3.
11
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the beneficial ownership of
Renaissance common stock as of March 1, 2001 by (i) each person who is known to
us to beneficially own more than 5% of our outstanding common stock, (ii) the
Chief Executive Officer and each of our four most highly paid executive
officers plus no more than two former highly paid executive officers (we refer
to this group as our named executive officers), (iii) each director of the
Company, and (iv) all our current executive officers and directors as a group.
Except as otherwise indicated, each of the stockholders named below has sole
voting and investment power over the shares of common stock listed as
beneficially owned.
Shares Percentage of
Names of Directors, Named Executive Beneficially Outstanding
Officers and 5% Stockholders Owned(1) Shares
----------------------------------- ------------ -------------
G. Drew Conway(2)(3) 11,965,120 22.33%
Robert P. Badavas(4) 50,857 *
Paul C. O'Brien(4) 123,857 *
Joseph F. Pesce(5) 170,428 *
Christopher D. T. Guiffre(6) 57,034 *
Raye L. LaPlante(7) -- *
Edward H. Longo, Jr.(8) 41,750 *
State of Wisconsin Investment Board(9) 5,820,000 10.86%
Mellon Financial Corporation(10) 3,364,240 6.28%
S Squared Technology Group(11) 3,062,000 5.71%
MFS Investment Management(12) 2,903,972 5.42%
Dimensional Fund Advisors Inc.(13) 2,758,500 5.15%
All directors and executive officers(five
persons)(14) 12,409,046 23.16%
- --------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting or investment power with respect to the shares. Shares
of common stock subject to options currently exercisable or exercisable
within 60 days are deemed outstanding for determining the share ownership
and percentage of the person holding such options, but are not deemed
outstanding for determining the percentage of any other person.
(2) Mr. Conway's address is c/o Renaissance Worldwide, 52 Second Avenue,
Waltham, MA 02451.
(3) Includes 495,550 shares of common stock held by the Conway Family
Foundation and Mr. Conway's five children, as to which Mr. Conway
disclaims beneficial ownership.
(4) Includes 50,857 shares of common stock issuable upon the exercise of
options currently exercisable or exercisable within 60 days, none of which
are currently in-the-money.
(5) Includes 162,500 shares of common stock issuable upon the exercise of
options currently exercisable or exercisable within 60 days, none of which
are currently in-the-money.
(6) Includes 48,500 shares of common stock issuable upon the exercise of
options currently exercisable or exercisable within 60 days, none of which
are currently in-the-money.
(7) Includes no shares of common stock issuable upon the exercise of options
currently exercisable or exercisable within 60 days.
(8) Includes no shares of common stock issuable upon the exercise of options
currently exercisable or exercisable within 60 days.
(9) The information reported is based on a Schedule 13G, dated February 9,
2001, filed with the Commission by the State of Wisconsin Investment Board
("SWIB"). SWIB is a public pension fund, in which capacity it has sole
voting power and sole dispositive power with respect to 5,820,000 shares.
SWIB's address is P.O. Box 7842, Madison, WI 53707.
(10) The information reported is based on a Schedule 13G, dated January 22,
2001, filed with the Commission by Mellon Financial Corporation
("Mellon"). Mellon is a parent holding company, in which capacity it
12
or its direct or indirect subsidiaries have sole voting power with respect
to 3,303,540 shares and sole dispositive power with respect to 3,364,240
shares. Mellon's address is c/o Mellon Financial Corporation, One Mellon
Center, Pittsburgh, PA 15258.
(11) The information reported is based on a Schedule 13G, dated February 14,
2001, filed with the Commission by S Squared Technology Corp. ("S
Squared"). S Squared is a registered investment adviser, in which
capacity it has sole voting power and sole dispositive power with respect
to 3,062,000 shares. S Squared's address is 515 Madison Avenue, New York,
NY 10022.
(12) The information reported is based on a Schedule 13G, dated February 12,
2001, filed with the Commission by Massachusetts Financial Services
Company ("MFS"). MFS is a registered investment adviser, in which
capacity it has sole voting power with respect to 2,741,931 shares and
sole dispositive power with respect to 2,903,972 shares. MFS's address is
500 Boylston Street, Boston, MA 02116.
(13) The information reported is based on a Schedule 13F, dated as of December
31, 2000, filed with the Commission by Dimensional Fund Advisors, Inc.
("Dimensional") and information provided to the Company by Dimensional.
Dimensional, an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, furnishes investment advice to four
investment companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other investment vehicles,
including commingled group trusts (These investment companies and
investment vehicles are the "Portfolios"). In its role as an investment
advisor and investment manager, Dimensional possessed both investment and
voting power over 2,758,500 shares as of December 31, 2000. The
Portfolios own all securities reported in this statement, and Dimensional
disclaims beneficial ownership of such securities.
(14) Includes 312,714 shares of common stock issuable upon the exercise of
options currently exercisable or exercisable within 60 days, none of
which are currently in-the-money.
13
EXECUTIVE COMPENSATION
The following table sets forth information regarding all compensation
awarded to, earned by, or paid to our Chairman and Chief Executive Officer and
each of our other named executive officers, during fiscal 2000, 1999, and 1998.
Summary Compensation Table(1)
Long-term
Compensation
------------
Annual
Compensation(2) Securities
----------------- Underlying All Other
Year Salary Bonus Options(3) Compensation
---- -------- -------- ------------ ------------
G. Drew Conway............ 2000 $494,306 $315,000(4) -- $10,495(5)
Chairman and Chief 1999 481,000 -- -- 9,757(5)
Executive Officer 1998 412,237 -- -- 6,645(5)
Joseph F. Pesce(6)........ 2000 326,923 170,000(4) 450,000 500(7)
Executive Vice President, 1999 143,269 75,000 250,000 --
Chief Financial Officer 1998 -- -- -- --
and Treasurer
Christopher D.T.
Guiffre(8)............... 2000 195,939 115,900(4) 175,000 500(7)
Vice President, General 1999 -- -- -- --
Counsel and Clerk 1998 -- -- -- --
Raye L. LaPlante(9)....... 2000 317,789 25,000 -- 500(7)
President, ITCS Division 1999 -- -- -- --
1998 -- -- -- --
Edward H. Longo, Jr.(10).. 2000 579,326 -- -- --
President and Chief 1999 158,654 -- 500,000 --
Operating Officer 1998 -- -- -- --
- --------
(1) The periods in the table are for the fiscal years ended December 30, 2000,
December 25, 1999, and December 26, 1998.
(2) Annual compensation amounts do not include the dollar value of perquisites
and other personal benefits which did not exceed the lesser of $50,000 or
10% of salary and bonus for any named executive officer.
(3) Includes Renaissance options only. Messrs. Conway, Pesce, and Guiffre were
awarded GovConnect and Align360 options in 2000. For more information on
options granted to our named executive officers, see "Options Granted in
Last Fiscal Year" and "Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values" below.
(4) Includes annual and/or quarterly bonus and bonus in connection with the
sale of the Enterprise Solutions Group.
(5) Represents the taxable value of premiums paid on a spit dollar life
insurance policy.
(6) Mr. Pesce's employment began in June 1999.
(7) Represents the Company's matching contribution under the Company's 401(k)
plan.
(8) Mr. Guiffre became an executive officer in March 2000.
(9) Mr. LaPlante became an executive officer in March 2000, and his employment
terminated in February 2001.
(10) Mr. Longo's employment began in July 1999 and terminated in September
2000.
14
Employment Agreements
In connection with our initial public offering in June 1996, the Company
entered into an employment agreement with Mr. Conway employing Mr. Conway as
our Chief Executive Officer. Mr. Conway's agreement had a term of four years
and an annual base salary of $400,000, $425,000, $475,000 and $525,000 in the
first through fourth years of the term, plus bonus compensation as determined
by the Compensation Committee. Mr. Conway's agreement provided that if we
terminated Mr. Conway's employment without "cause" (as defined) or if Mr.
Conway terminated his employment for "good reason" (as defined), then the
Company would pay Mr. Conway severance equal to two years of base compensation
plus a portion of the bonus paid or payable with respect to the immediately
preceding full employment year based on days of service in the year of
termination. Mr. Conway's agreement contained non-competition and non-
solicitation covenants during the period of his employment and for a two-year
period thereafter. In addition, Mr. Conway's agreement provided that if his
employment was terminated at the end of the term of the agreement, then Mr.
Conway would have been entitled to severance equal to one year of base
compensation. The Company did not terminate Mr. Conway's employment and pay him
one year of severance at the end of the term of his employment agreement.
Accordingly, Mr. Conway continues to be employed at the rate of pay for the
fourth year of his employment agreement.
The Company has entered into an employment agreement with Mr. Pesce under
which we employ Mr. Pesce as our Executive Vice President, Chief Financial
Officer and Treasurer. Mr. Pesce's agreement is not a contract of employment
for a specific term, and Mr. Pesce remains an at-will employee of the Company.
Mr. Pesce's annual base salary is $350,000, which is subject to increase from
time-to-time. In addition, Mr. Pesce is also eligible for bonus compensation of
up to 40% per year of his then-current annual base salary. Mr. Pesce's
Agreement provides that, if we terminate his employment without "cause" (as
defined), or if Mr. Pesce terminates his employment for "good reason" (as
defined) or for any reason with 60 days notice at any time within six months
after a "change of control" (as defined), the Company will pay Mr. Pesce
severance equal to 12 months of base salary plus full bonus compensation. Mr.
Pesce's agreement also contains non-solicitation covenants during the term of
his employment and for a one-year period thereafter.
The Company has entered into an employment agreement with Mr. Guiffre under
which we employ Mr. Guiffre as our Vice President, General Counsel and Clerk.
Mr. Guiffre's agreement is not a contract of employment for a specific term,
and Mr. Guiffre remains an at-will employee of the Company. Mr. Guiffre's
annual base salary is $225,000, which is subject to increase from time-to-time.
In addition, Mr. Guiffre is also eligible for bonus compensation of up to 40%
per year of his then-current annual base salary. Mr. Guiffre's Agreement
provides that, if we terminate his employment without "cause" (as defined), or
if Mr. Guiffre terminates his employment for "good reason" (as defined) or for
any reason with 60 days notice at any time within six months after a "change of
control" (as defined), the Company will pay Mr. Guiffre severance equal to 12
months of base salary plus full bonus compensation. Mr. Guiffre's agreement
also reaffirms his acceptance of and adherence to the terms of the Company's
standard Non-solicitation, Non-competition and Confidentiality Agreement.
15
The following table sets forth certain information concerning grants of
stock options made during 2000 to each of the named executive officers:
Options Granted in Last fiscal Year
Individual grants
------------------------------------------------
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price
Number of % of Total Appreciation for
Securities Options Exercise Option
Underlying Granted to or Base Terms($)(3)
Options Employees in Price Expiration -----------------
Name Plan Granted(1) Fiscal Year(2) ($/share) Date 5% 10%
---- ----------- ---------- -------------- --------- ---------- ------- ---------
G. Drew Conway Renaissance -- -- -- -- -- --
GovConnect 250,000(4) 6.8% 1.00 06/01/10 157,224 398,436
Align360 250,000(4) 6.1% 0.50 06/01/10 78,612 199,218
------- ------- ---------
500,000 235,836 597,654
Joseph F. Pesce Renaissance 100,000(5) 5.00 03/01/10 314,447 796,871
Renaissance 350,000(5) 1.50 07/12/10 330,169 836,714
------- ------- ---------
450,000 13.3% 644,616 1,633,585
GovConnect 250,000(4) 6.8% 1.00 06/01/10 157,224 398,436
Align360 250,000(4) 6.1% 0.50 06/01/10 78,612 199,218
------- ------- ---------
950,000 880,452 2,231,239
Christopher D.T. Guiffre Renaissance 25,000(5) 5.00 03/01/10 78,612 199,218
Renaissance 150,000(5) 1.50 08/25/10 141,501 358,592
------- ------- ---------
175,000 5.2% 220,113 557,810
GovConnect 50,000(4) 1.4% 1.00 06/01/10 31,445 79,687
Align360 75,000(4) 1.8% 0.50 06/01/10 23,584 59,765
------- ------- ---------
300,000 275,142 697,262
Raye L. LaPlante Renaissance -- -- -- -- -- --
Edward H. Longo, Jr. Renaissance -- -- -- -- -- --
- --------
(1) The table shows Renaissance option grants, GovConnect option grants, and
Align360 option grants. The majority of Align360's assets were sold on
February 23, 2001. Align360 has been dissolved and, pursuant to the terms
of such options, all Align360 stock options have been terminated.
(2) Percentage amounts represent the percent of total options granted under the
particular stock option plan.
(3) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10%, compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the Common Stock, the
option holders' continued employment through the option period, and the
date on which the options are exercised.
(4) These options are exercisable only upon an IPO or change of control.
(5) These options are exercisable in full one year after the date of grant.
16
The following table sets forth information about option exercises during
2000 and the number and value of options held by each of the named executive
officers on December 30, 2000.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-end(#) at Fiscal Year-end($)
Acquired on Realized ------------------------- -------------------------
Exercise(#) Value($) Exercisable Unexercisable Exercisable Unexercisable
----------- ----------- -------- ----------- ------------- ----------- -------------
G. Drew Conway Renaissance -- -- -- -- -- --
GovConnect -- -- -- 250,000 -- 625,000(2)
Align360 -- -- -- 250,000 -- -- (3)
Joseph F. Pesce Renaissance -- -- 62,500 637,500 -- -- (1)
GovConnect -- -- -- 250,000 -- 625,000(2)
Align360 -- -- -- 250,000 -- -- (3)
Christopher D.T. Guiffre Renaissance -- -- 14,750 205,250 -- -- (1)
GovConnect -- -- -- 50,000 -- 125,000(2)
Align360 -- -- -- 75,000 -- -- (3)
Raye L. LaPlante Renaissance -- -- 25,000 75,000 -- -- (1)
Edward H Longo, Jr. Renaissance -- -- -- -- -- --
- --------
(1) Based upon the market price of $0.78 per share, which was the closing price
per share of common stock on Nasdaq on December 29, 2000, less the option
exercise price payable per share.
(2) Based upon the price of $3.50 per share, which was the Company's reasonable
estimate of fair market value price per share of GovConnect, Inc. common
stock on December 29, 2000, less the option exercise price payable per
share of $1.50 per share.
(3) Based upon the price of $0.30 per share, which was the Company's reasonable
estimate of fair market value price per share of Align360, Inc. common
stock on December 29, 2000, less the option exercise price payable per
share of $0.50 per share.
17
Report of the Compensation Committee of the Board of Directors
The following report of the Compensation Committee of the Board (the
"Compensation Committee") describes the compensation policies applicable to our
executive officers, including the Chief Executive Officer, with respect to
compensation for 2000. The information in this report is considered "soliciting
material" or "filed" with the SEC, and it is not incorporated by reference into
any of our future filings with the SEC.
Compensation Philosophy
The Compensation Committee's philosophy in setting compensation policies for
executive officers is to maximize stockholder value over time. The Compensation
Committee establishes compensation policies that apply to the executive
officers, including Mr. Conway, and evaluates the performance of these
officers. The Compensation Committee strongly believes that executive
compensation should be directly linked to continuous improvements in corporate
performance, reduction in expenses, and increases in stockholder value. In this
regard, the Compensation Committee has adopted the following guidelines for
compensation decisions:
. Provide a competitive total compensation package that enables us to
attract and retain key executive talent.
. Align pay programs with our annual and long-term business strategies and
objectives.
. Provide variable compensation opportunities that are directly linked to
our performance and that link executive reward to stockholder return.
The Compensation Committee focuses primarily on the following three
components in forming the total compensation package for its executive
officers:
. Base Salary
. Incentive Bonus
. Long-Term Incentives
Base Salary
The Compensation Committee intends to compensate our executive officers,
including Mr. Conway, competitively within the industry. In order to evaluate
our competitive position in the industry, the Compensation Committee reviews
and analyzes the compensation packages, including base salary levels, offered
by other companies with which we compete. In addition, the Compensation
Committee also subjectively evaluates the level of performance of each
executive officer, including Mr. Conway, in order to determine current and
future appropriate pay levels.
The Compensation Committee sets Mr. Conway's salary, which is currently
determined by reference to the fourth year pay rate of Mr. Conway's employment
agreement. The Compensation Committee believes that Mr. Conway's compensation
is competitive within the industry. For our other executive officers,
Mr. Conway, in consultation with the committee, has established base salary
ranges that it believes are competitive in the industry, linking a portion of
these executives' total compensation to quarterly and annual bonuses.
Incentive Bonus
During 2000, the executive officers of the Company received incentive
bonuses that were determined by the Chief Executive Officer in consultation
with the Compensation Committee. These bonuses were based on the Chief
Executive Officer's assessment of each executive's overall performance, taking
into account the executive's individual performance and impact on the Company,
the performance of the group under the executive's control and its impact on
the Company, the contribution of the executive to the achievement of
significant Company objectives (including the sale of the Enterprise Solutions
Group), and upon the overall performance of the Company.
Mr. Conway declined to be awarded a bonus for fiscal years 1997, 1998 and
1999. In 2000, Mr. Conway received $315,000 in bonuses for accomplishments in
that year, including, among others, various strategic divestitures, resizing
and restructuring the remaining two business units and their administrative
support groups, and paying off all outstanding debt under the terminated credit
facility.
Long-Term Incentives
The principal form of long-term incentive compensation is the grant of stock
options. The Compensation Committee is responsible for determining the
individuals to whom grants should be made, the timing of grants, the exercise
price per share and the number of shares subject to each
18
option. Other than stock options, the Compensation Committee made no other
long-term performance awards during the last fiscal year. Stock option awards
are granted based on individual and/or corporate performance as determined
subjectively by the Compensation Committee. The Compensation Committee
considers grants of options to executive officers during each fiscal year.
Stock options provide our executive officers with the opportunity to share
in the appreciation of the value of the stock. The Compensation Committee
believes that stock options directly motivate an executive to maximize long-
term stockholder value. The option vesting periods encourage key employees to
continue their employment with us.
All options to executive officers to date have been granted at the fair
market value of the underlying common stock on the date of the grant. The
Compensation Committee considers the grant of each option subjectively,
considering factors such as the individual performance of executive officers
and competitive compensation packages in the industry. Certain executive
officers received option grants in 2000 as disclosed previously in this proxy
statement
In adopting and administering executive compensation plans and arrangements,
the Compensation Committee considers whether the deductibility of such
compensation will be limited under Section 162(m) of the Internal Revenue Code
of 1986, as amended, and, in appropriate cases, may attempt to structure such
compensation so that any limitation will not apply.
Summary
The Compensation Committee believes that its executive compensation
philosophy of paying its executive officers by means of competitive base
salaries and bonus and long-term incentives, as described in this report,
serves the interests of the Company and our stockholders.
COMPENSATION COMMITTEE
Paul C. O'Brien
Robert P. Badavas
Report of the Audit Committee of the Board of Directors
The Audit Committee of the Board (the "Audit Committee") reviews the
Company's internal accounting procedures and consults with and reviews the
services provided by the Company's independent auditors. The Audit Committee
also has the responsibilities and authority described in its written charter.
The Audit Committee charter has been adopted by the board of directors and is
attached hereto as Appendix B. The Audit Committee met twice during 2000. The
members of the Audit Committee are independent, as defined in Rule 4200(a)(15)
of the National Association of Securities Dealers, Inc.'s listing standards.
The Company expects to add a third member to the Audit Committee no later than
June 2001.
The Audit Committee reviewed and discussed the Company's audited financial
statements for the year ended December 30, 2000 with management and discussed
with PriceWaterhouseCoopers LLP, the Company's independent auditors, the
matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standards, AU Section 380). The Audit Committee also received the
written disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No. 1, and has discussed with
PriceWaterhouseCoopers LLP its independence. Based on its review and these
discussions, the Audit Committee recommended to the Board that the audited
financial statements be included in the Company's Annual Report on Form 10-K
for the year ended December 30, 2000.
The fees billed to the Company by Pricewater-houseCoopers for fiscal year
2000 were as follows: Audit Fees. PricewaterhouseCoopers' fee for its audit of
the Company's annual financial statements and its review of the Company's
quarterly financial statements was $552,500. Financial Information Systems
Design and Implementation Fees. PricewaterhouseCoopers did not bill the Company
any fees related to financial information systems design and implementation.
All Other Fees. PricewaterhouseCoopers billed the Company a total of $938,600
for services rendered in connection with separate audits for the Company's
Business Strategy Group and Enterprise Solutions Group which were required as
part of their sale, audits of Company sponsored ERISA benefit plans, tax
compliance, statutory audits, and stock option plan consulting. The Committee
has considered whether the provision of the services included in the category
"All Other Fees" is compatible with maintaining PricewaterhouseCoopers'
independence.
AUDIT COMMITTEE
Robert P. Badavas
Paul C. O'Brien
19
Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's common stock during the period from
its initial public offering (June 5, 1996) through December 30, 2000 with the
cumulative total return on the Nasdaq stock index and the peer group index (the
"Peer Group"). The comparison assumes $100 was invested on June 5, 1996 in the
Company's common stock and in each of such indices and assumes reinvestment of
dividends, where applicable. The Peer Group is the Media General Information
Technology Services Index.
[Stock Performance Graph Here]
6/5/96 12/28/96 12/27/97 12/26/98 12/25/99 12/30/00
------ -------- -------- -------- -------- --------
Renaissance Worldwide, Inc. 100.00 279.41 255.88 70.24 80.94 9.93
Media General Information
Technology Services Index 100.00 91.17 98.45 124.14 151.80 92.96
NASDAQ Market Index 100.00 102.89 125.86 177.52 313.09 196.79
Compensation Committee Interlocks and Insider Participation
Messrs. Badavas and O'Brien, neither of who is or was an executive officer
or employee of Renaissance, served on the Compensation Committee during fiscal
year 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who beneficially own more than ten percent
of our outstanding common stock, to file with the SEC initial reports of
ownership and reports of changes in ownership. Officers, directors and greater-
than-ten-percent stockholders must furnish us with copies of all Section 16(a)
forms they file. To the Company's knowledge, based solely on a review of the
copies of such forms furnished to the Company and written representations from
the Company's directors and executive officers, all required Section 16(a)
filings were timely made.
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 2000, Mr. Conway executed a promissory note in favor of the
Company, representing amounts owed to the Company in connection with loans made
during 2000 for tax purposes. The principal amount of the note, all of which is
currently outstanding, is $1,860,000 and the interest rate is 6%.
In June 2000, Terry L. Hunter, a former director of the Company, executed a
promissory note in favor of Renaissance Worldwide, Inc. The principal amount of
the note, all of which is currently outstanding, is $108,000 and the interest
rate on the note is 7%.
On September 19, 1995, we entered into four lease agreements, each with a
term ending on September 30, 2010, with the 189 Wells Avenue Realty Trust for a
total of approximately 18,800 square feet of office space located at 189 Wells
Avenue, Newton, Massachusetts at an annual rent of approximately $357,000.
During fiscal 1997 we expanded our rental space with the Trust to 28,000 square
feet at annual rent of approximately $500,000. Our executive offices were
located in this space until November, 1999. In March 2000, the building was
sold and the Company was released from the lease obligation. Mr. Conway was the
sole beneficiary of the Trust. Management believes that the terms of each lease
agreement were no less favorable to us than could be obtained in a transaction
with an unrelated third party.
During 1997, we entered into a contract with KNC LLC, an entity controlled
by Mr. Conway, to use an airplane for corporate travel purposes. In early 2000,
KNC LLC terminated its airplane lease and the Company ceased using the plane.
Total amounts paid to this entity were approximately, approximately $707,000
during 1998, approximately $425,000 during 1999, and $321,000 during 2000. We
paid for the usage on a per-flight-hour basis at a rate which management
believes approximated market prices.
We have adopted a policy that all material transactions between Renaissance
and our officers, directors and other affiliates must (i) be approved by a
majority of the Board, including a majority of the disinterested directors, and
(ii) be on terms no less favorable to us than could be obtained from
unaffiliated third parties.
AUDIT MATTERS
PricewaterhouseCoopers LLP has been selected to audit our financial
statements for the fiscal year ending December 29, 2001, and to report the
results of their examination.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Meeting and will be afforded the opportunity to make a statement if he or
she desires to do so and to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Any stockholder wishing to include a proposal in our proxy statement for the
Annual Meeting of Stockholders in 2002 must submit it to us no later than
November 28, 2001. If a stockholder wishes to present a proposal before the
Annual Meeting of Stockholders in 2002, but does not wish to have the proposal
considered for inclusion in our proxy statement, such stockholder must also
give written notice to the Clerk at our principal executive offices no later
than March 4, 2002 and no earlier than February 2, 2002; provided, however,
that if the Annual Meeting of Stockholders in 2002 is more than 30 days before
or more than 60 days after the first anniversary of the Annual Meeting of
Stockholders in 2001, the notice must be received no earlier than the close of
business on the 90th day prior to the meeting and no later than the close of
business on the later of (i) the 60th day prior to the meeting and (ii) the
10th day following public announcement of the meeting.
21
OTHER BUSINESS
The Board knows of no business that will come before the Meeting for action
except as described in the accompanying Notice of Meeting. However, as to any
such business, the persons designated as proxies will have discretionary
authority to act in their best judgment.
FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS
A copy of our Annual Report to Stockholders accompanies this proxy
statement. We filed our Form 10-K for the fiscal year ended December 30, 2000
with the SEC on March 16, 2001.
22
Appendix A
FORM OF REVERSE STOCK SPLIT AMENDMENT
That, the Corporation's Restated Articles of Organization, as amended, be
further amended by inserting the following in Article III:
"Upon the filing of these Articles of Amendment with the Massachusetts
Secretary of the Commonwealth (the "Effective Date"), each [insert
appropriate split number, as determined in accordance with the proposal,
which shall be not more than six (6) and not less than four (4), in
increments of 0.1] shares of Common Stock of the Corporation, no par
value per share, issued and outstanding or held in the treasury of the
Corporation shall be reclassified and combined into one (1) share of
Common Stock. There shall be no fractional shares issued. Stockholders
who otherwise would be entitled to receive fractional shares shall be
entitled to receive a cash payment in lieu thereof at a price equal to
the fraction to which the stockholder would otherwise be entitled
multiplied by the average of the high and low sales prices of the Common
Stock on the Effective Date. The ownership of a fractional interest will
not give the holder thereof any voting, dividend or other rights except
to receive payment therefor as described herein."
23
Appendix B
RENAISSANCE WORLDWIDE, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") is appointed by the Board of Directors
(the "Board") of Renaissance Worldwide, Inc. (the "Company") to assist the
Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the compliance by the Company with legal and regulatory
requirements and (3) the independence and performance of the Company's internal
and external auditors.
The members of the Committee shall meet the independence and experience
requirements of the Nasdaq Stock Market, Inc. The members of the Committee
shall be appointed by the Board.
The Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Committee may request any
officer or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Committee shall meet no less than twice per year. The Committee shall
make regular reports to the Board.
The Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices as
well as the adequacy of internal controls that could significantly affect
the Company's financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
4. Review with management the Company's quarterly financial statements prior
to the release of quarterly earnings.
5. Meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control
such exposures.
6. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditing
executive, if any, or management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Committee and the Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board
Standard 1, discuss such reports with the auditor, and if so determined by
the Committee, take or recommend that the full Board take appropriate
action to oversee the independence of the auditor.
10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Committee, recommend that the Board
replace the independent auditor.
24
11. Review the need for, and appropriateness of, having an internal auditing
executive and take all appropriate action in connection therewith.
12. Review the significant reports to management prepared by the internal
auditing executive, if any, and management's responses.
13. Meet with the independent auditor prior to the audit to review the
planning and scope of the audit.
14. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
15. Obtain reports from management and the Company's internal auditing
executive, if any, that the Company's subsidiary/foreign affiliated
entities are in conformity with applicable legal requirements and the
Company's policies on conduct and ethics as set forth in the Company's
Employee Handbook (the "Code of Conduct").
16. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of the
audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b) Any changes required in the planned scope of the audit.
(c) The internal audit executive responsibilities and budget, if any.
18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
19. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's Code of Conduct.
20. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators or
governmental agencies.
21. Meet at least annually with the Company's Chief Financial Officer, the
internal auditing executive, if any, and the independent auditor in
separate executive sessions.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. Such
responsibilities belong to management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Code of Conduct.
25
Vote by Telephone Vote by Internet
- ----------------- ----------------
It's fast, convenient and immediate! It's fast, convenient, and your
Call Toll-Free on a Touch-Tone Phone vote is immediately confirmed and
1-877-PRX-VOTE (1-877-779-8683) posted.
- ------------------------------------ --------------------------------------
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/rww
3. Enter your 14-digit Voter Control 3. Enter your 14-digit Voter Control
Number located on your Proxy Card Number located on your Proxy Card
above your name. above your name.
4. Follow the recorded instructions. 4. Follow the recorded instructions.
- ------------------------------------- --------------------------------------
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/rww
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
[1529 - RENAISSANCE WORLDWIDE, INC] [FILE NAME: ZRW14A.ELX]
[VERSION - (2)] [03/19/01] [ORIG. 03/15/01]
DETACH HERE
[X] Please mark votes as in this example
1. Election of Class III Director 2. Proposal to adopt the 2001
Directors Stock Plan as more
Nominees: FOR WITHHELD fully described in the Proxy
G. Drew Conway [_] [_] Statement.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Proposal to approve a reverse
stock split as more fully described
in the Proxy Statement.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. To transact any other business that
may properly come before the
meeting or any adjournment(s) thereof.
MARK HERE FOR ADDRESS CHANGE
AND NOTE AT LEFT [_]
Note: Please sign exactly as name
appears on this card and date. Where
shares are held jointly, both holders
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If corporation, please sign in
full corporate name and indicate the
signer's office. If a partnership,
sign in partnership name.
Signature:_____________________ Date:__________
Signature:_____________________ Date:__________
[1529 - RENAISSANCE WORLDWIDE, INC] [FILE NAME:ZRW14B.ELX]
[VERSION - (1)] [03/15/01] [ORIG. 03/15/01]
DETACH HERE
PROXY
RENAISSANCE WORLDWIDE, INC.
Proxy Solicited on Behalf of the Board of Directors of the Company for its
Annual Meeting to be held May 3, 2001
The undersigned appoints G. Drew Conway and David C. Sweetser, and each of
them, as proxies, each with the power of substitution, and authorizes them to
represent and vote all shares of Common Stock of Renaissance Worldwide, Inc.
held by the undersigned at the Annual Meeting of Stockholders to be held at the
Company's headquarters, 52 Second Avenue, Waltham, Massachusetts 02451 at 10:00
a.m. (Eastern Time), on Thursday, May 3, 2001, and at any adjournments thereof
for the purposes set forth on the reverse side. The undersigned instructs and
authorizes such proxies or their substitutes to act on the following matters as
specified by the undersigned, and authorizes such proxies to vote on such other
matters that may properly come before the meeting in the discretion of the proxy
so acting. All previously dated proxies given by the undersigned in respect to
said meeting are hereby revoked.
- ---------------- ----------------
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED SEE REVERSE SIDE
- ---------------- ON REVERSE SIDE ----------------