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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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
BUTLER 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):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
BUTLER INTERNATIONAL, INC.
110 Summit Avenue
Montvale, New Jersey 07645
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 10, 2001
The Annual Meeting of Stockholders of BUTLER INTERNATIONAL, INC. will be
held at its headquarters facility at 110 Summit Avenue, Montvale, New Jersey on
Thursday, May 10, 2001 at 4:00 p.m. for the following purposes:
1. To elect one director to hold office for a term of five years.
2. To vote on a proposal to amend the 1992 Employee Stock Plans by increasing
the aggregate number of shares of the Company's common stock that may be
subject to options thereunder by 230,000.
3. To vote on a proposal to amend the 1992 Stock Option Plan for Non-Employee
Directors by increasing the aggregate number of shares of the Company's
common stock that may be subject to options thereunder by 90,000.
4. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Only holders of record of the common stock and the 7% Series B cumulative
convertible preferred stock at the close of business on March 27, 2001 are
entitled to notice of, and to vote at, this meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors,
/s/ Warren F. Brecht
--------------------
Warren F. Brecht
Secretary
Montvale, New Jersey
April 5, 2001
____________________________________________________________
If you cannot personally attend the meeting, it is earnestly requested that you
promptly indicate your vote on the issues included on the enclosed proxy and
date, sign and mail it in the enclosed self-addressed envelope, which requires
no postage if mailed in the United States. Doing so will save the Company the
expense of further mailings. If you sign and return your proxy card without
marking choices, it will be understood that you wish to have your shares voted
in accordance with the recommendations of the Board of Directors.
____________________________________________________________
BUTLER INTERNATIONAL, INC.
110 Summit Avenue
Montvale, New Jersey 07645
April 5, 2001
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Butler
International, Inc., a Maryland corporation (the "Company"), in connection with
the Annual Meeting of Stockholders to be held on May 10, 2001 at 4:00 p.m.
Unless instructed to the contrary on the proxy, it is the intention of the
persons named in the proxy to vote the proxies FOR the election as a director of
the nominee listed below for a term expiring in 2006; FOR the proposal to amend
the 1992 Employee Stock Plans by increasing the aggregate number of shares of
the Company's common stock that may be subject to options thereunder by 230,000;
and FOR the proposal to amend the 1992 Stock Option Plan for Non-Employee
Directors by increasing the aggregate number of shares of the Company's common
stock that may be subject to options thereunder by 90,000. In the event that a
nominee for director becomes unavailable to serve, which management does not
anticipate, the persons named in the proxy reserve full discretion to vote for
any other person who may be nominated. Any stockholder giving a proxy may revoke
the same by (i) submitting written notice to the Secretary of the Company at any
time prior to the voting of such proxy, (ii) submitting a duly executed later-
dated proxy, or (iii) voting in person at the Annual Meeting. This Proxy
Statement and the accompanying proxy are being mailed on or about April 5, 2001.
Each stockholder of the Company will be entitled to one vote for each share
of common stock and each share of 7% Series B cumulative convertible preferred
stock, standing in his or her name on the books of the Company at the close of
business on March 27, 2001 (the "Record Date"). On that date, the Company had
outstanding and entitled to vote 10,095,075 shares of common stock and 5,188,922
shares of 7% Series B cumulative convertible preferred stock.
PROPOSAL 1: ELECTION OF DIRECTOR
Pursuant to the Company's Articles of Incorporation and By-Laws, as
amended, the Board of Directors currently consists of five classes of directors
having staggered terms of five years each. One Director's term expires at each
Annual Meeting, with the term of the Second Class Director expiring at this
year's Annual Meeting.
John F. Hegarty currently serves as the Second Class Director; Mr. Hegarty
advised the Company that he desires to retire from full service following the
forthcoming 2001 Annual Meeting of Stockholders. Mr. Hegarty has agreed to
continue as a Director Emeritus and serve as an advisor to the Board.
The Board has nominated Thomas F. Comeau to succeed to Mr. Hegarty's seat
on the Board. Unless instructed to the contrary on the proxy, the persons named
in the proxy will vote for the election of Mr. Comeau as Second Class Director
to hold office for five years.
Nominee for Director -- Term Expires in 2006
THOMAS F. COMEAU
Mr. Comeau, age 59, is the President of Swissport Fueling, Inc., the
fueling division of Swissport, Inc., and has been President since 1995.
Swissport is a wholly-owned subsidiary of the SAir Group, a large Swiss holding
company whose subsidiaries include Swiss Air. Swissport does business at over
130 airports worldwide. Mr. Comeau has served as Chairman of the Board of the
National Air Transportation Association and Chairman of the General Aviation
Taskforce. He has been a Director of Butler Telecom, Inc. since 1998. Mr. Comeau
holds a B.S. degree from Salem State College, Salem, Massachusetts.
The election of the Second Class Director requires a plurality of the votes
cast by holders of the shares of the Company's common stock and the Company's 7%
Series B cumulative convertible preferred stock, voting together as a single
class at a meeting with a quorum present. Brokers holding shares for beneficial
owners must vote those shares according to the specific instructions they
receive from the beneficial owners. If specific instructions are not received,
brokers may generally vote these shares in their discretion. However, exchange
rules preclude brokers from exercising their voting discretion on certain
proposals. This results in what is known as a "broker non-vote". Because
Maryland corporate law requires a plurality of the votes cast for or against the
proposal at this meeting to authorize action on this matter (as described
above), shares
1
withheld from voting on this matter and broker non-votes, which will not be
counted "for" or "against" the proposal, will have no impact on the outcome of
the election.
The Board of Directors unanimously recommends a vote FOR the election of
Mr. Thomas F. Comeau as Second Class Director.
DIRECTORS CONTINUING IN OFFICE
EDWARD M. KOPKO Director since 1985 -- Term expires in 2004
Mr. Edward M. Kopko, age 46, has been the President, Chief Executive
Officer and the Chairman of the Board of Directors of the Company since its
inception in November 1985. Mr. Kopko has also been the Chairman, President and
Chief Executive Officer of Butler Service Group, Inc. since 1989, and the
chairman of other Butler subsidiaries. Mr. Kopko is the past President and a
member of the Executive Committee of the National Technical Services
Association, the predominant trade association for the contract technical
services industry. Mr. Kopko holds a B.A. degree in economics from the
University of Connecticut, an M.A. degree in economics from Columbia University,
and he undertook doctoral work in economics at Columbia.
FREDERICK H. KOPKO, JR. Director since 1985 -- Term expires in 2002
Mr. Frederick H. Kopko, Jr., age 45, is a partner of the law firm of
McBreen & Kopko, and has been associated with that firm since January 1990. Mr.
Kopko practices in the area of corporate law. He has been a director of Mercury
Air Group, Inc. since November 1992 and a Director of Sonic Foundry, Inc. since
December 1995. Mr. Kopko received a B.A. degree in economics from the
University of Connecticut, a J.D. degree from Notre Dame Law School, and an
M.B.A. degree from the University of Chicago. He is the brother of Edward M.
Kopko.
HUGH G. McBREEN Director since 1986 -- Term expires in 2005
Mr. McBreen, age 46, is a partner of the law firm of McBreen & Kopko,
Chicago, Illinois, and has been associated with that firm since September 1983.
He is also the Secretary of Peter J. McBreen and Associates, Inc., a risk
management and loss adjustment company. Mr. McBreen practices in the area of
aviation law. He received an A.B. degree from Dartmouth College and a J.D.
degree from Notre Dame Law School.
NIKHIL S. NAGASWAMI Director since 1994 -- Term expires in 2003
Mr. Nagaswami, age 44, has been an independent management consultant since
September 1994, and is currently Managing Partner of Uniexcel Management Systems
de Mexico. From August 1992 until August 1994, he was associated with Scott
Paper Company, where he was Director-Corporate Planning and Analysis. During
1990 through 1992, when he served as an independent advisor to the Board of
Directors of Butler, he played a key role in developing Butler's long-term
strategy, restructuring its operations, and implementing management processes.
Mr. Nagaswami received a Bachelors of Technology degree in metallurgy from the
Indian Institute of Technology, a Masters of Applied Science degree in materials
science and metallurgy from the University of Delaware, and an M.B.A. degree
from the Wharton School, University of Pennsylvania, in financial management,
strategic planning and control.
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors met six times during 2000. The Board of Directors
has four standing committees: the Audit Committee, the Executive Compensation
Committee, the Stock Option Committee and the Section 162(m) Executive
Compensation Committee. The Company does not have a nominating committee of the
Board of Directors.
The Audit Committee consists of Messrs. Hegarty, McBreen, and Nagaswami.
Following the Annual Meeting, Mr. Comeau, if elected, will succeed Mr. Hegarty
as a member of the Audit Committee. The functions of the Audit Committee are to
review with the Company's independent public auditors the scope and adequacy of
the audit to be performed by such independent public auditors, and the
accounting practices, procedures, controls and policies of the Company; to
review the financial statements with the auditors and management; to review
other issues arising from the audit with the auditors and management; to inquire
about significant risks or exposures and assess the steps taken by management to
reduce such risks to the Company; and to review all related party transactions.
The Audit Committee is also responsible for recommending to the Board the
selection of their independent public accountants. The Audit Committee acts
under a written charter first adopted
2
and approved by the Board in 2000, a copy of which is attached as Appendix A.
The Committee met four times in 2000, including one meeting with the independent
auditors.
The Executive Compensation Committee consists of Messrs. Frederick H.
Kopko, Jr., Hegarty, McBreen, and Nagaswami. The Committee makes recommendations
to the Board with respect to salaries of employees (excluding Edward M. Kopko)
and is responsible for determining the amount and allocation of any incentive
bonuses among such employees. The Committee met two times during 2000.
The Stock Option Committee consists of Messrs. Hegarty and Nagaswami. The
Committee is authorized to grant stock options under the Company's Incentive
Stock Option Plan and Non-qualified Stock Option Plan, and awards under the
Company's Stock Bonus Plan. The Committee met one time during 2000.
The Section 162(m) Executive Compensation Committee consists of Messers.
Hegarty and Nagaswami. The Committee makes recommendations to the Board with
respect to the salary of Edward M. Kopko, and is responsible for establishing
objective, formula-based performance bonus goals and certification as to the
goals being met. The Committee is also responsible for determining the amount of
any incentive bonus to Edward M. Kopko. The Committee is also authorized to
grant to Mr. Kopko stock options under the Company's Stock Option Plan and the
Incentive Stock Option Plan, and awards under the Company's Stock Bonus Plan.
The Committee met one time during 2000.
Each member of the Board attended at least 75% of the appropriate board and
committee meetings.
DIRECTORS COMPENSATION
The directors of the Company, who are not also full-time employees of the
Company, receive a fee of $1,000 for attendance at each meeting of the Board of
Directors and $850 per Committee meeting attended. The cash compensation paid to
the four non-employee directors combined in 2000 was $41,600. Directors who are
not also employees have participated in the 1989 Directors Stock Option Plan,
the 1990 Employee Stock Purchase Plan, the 1992 Stock Option Plan for Non-
Employee Directors, and other option grants in prior years.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, who are appointed by the Board of
Directors, hold office for one-year terms or until their respective successors
have been duly elected and have qualified. The executive officers of the
Company's subsidiaries, who are appointed by such subsidiaries' Boards of
Directors, hold office for one-year terms or until their respective successors
have been duly elected and have qualified.
Edward M. Kopko is the Chairman of the Board of Directors and Chief
Executive Officer. (See "Directors Continuing in Office".)
Michael C. Hellriegel, age 47, was appointed Senior Vice President-Finance
and Treasurer in November 1995 and also became the Chief Financial Officer of
the Company in April 1996. Prior to that he had served as Vice President and
Controller of the Company since January 1993 and of Butler Service Group, Inc.
since August 1988. Mr. Hellriegel received a B.S. degree from St. Peter's
College and an M.B.A. degree, with a concentration in finance, from Fairleigh
Dickinson University. He is a Certified Public Accountant.
R. Scott Silver-Hill, age 47, has been Senior Vice President-Domestic
Operations since November 1995. He served as a Senior Vice President in the
Contract Technical Services Division from August 1990 to November 1995 and was a
Vice President in the Contract Technical Services Division from February 1988 to
August 1990. Mr. Silver-Hill received B.A. degrees from the University of
California at Santa Barbara in history and political science with an emphasis in
public administration.
Harley R. Ferguson, age 64, has been Senior Vice President and Chief
Information Officer of the Company since April 1995 when he joined the Company.
Mr. Ferguson was Vice President of O/E Systems from 1994 through 1995 where he
directed the Management Information Systems department. From 1985 to 1994 he was
Senior Vice President of Kelly Services, Inc. Mr. Ferguson received a Bachelor
of Science degree in mathematics and physics from Carleton University, Ottawa,
Canada.
3
PRINCIPAL STOCKHOLDERS
On the Record Date, the directors, current executive officers of the
Company, all persons known by the Company to be the beneficial owners of more
than 5% of the Company's outstanding common stock, and all directors and
officers of the Company and its subsidiaries as a group, beneficially owned the
number of shares of the Company's common stock ("Common Stock") and Series B 7%
cumulative convertible preferred stock ("Series B Preferred Stock") set forth
below. Unless otherwise stated, all shares are held directly with sole voting
and investment power. The business address of the named stockholders is the
address of the Company, except as otherwise noted. Except as disclosed in the
chart below, the Company knows of no other person or group owning 5% or more of
any class of the Company's voting securities.
Series B Total Equivalent
Common Stock/1/ Preferred Stock/2/ Voting Rights/3/
# of Shares # of Shares
Beneficially % of Beneficially % of # of % of
Name Owned Class Owned Class Shares Total
Edward M. Kopko 525,488/4/ 5.1% 1,147,277 22.1%/5/ 1,672,765 10.8%
Frederick H. Kopko, Jr. 344,953/6/ 3.4% 1,191,934 23.0%/5/ 1,536,887 10.2%
Hugh G. McBreen 283,371/7/ 2.8% 1,230,9018 23.7%/5/ 1,514,272 9.6%
John F. Hegarty 112,700/9/ 1.1% 639,97710 12.3%/5/ 752,677 4.9%
Nikhil S. Nagaswami 132,000/11/ 1.3% -- -- 132,000 0.9%
Michael C. Hellriegel 95,311/12/ 0.9% -- -- 95,311 0.6%
R. Scott Silver-Hill 109,143/13/ 1.1% 69,941 1.3% 179,084 1.2%
Harley R. Ferguson 70,859/14/ 0.7% -- -- 70,859 0.5%
Lord Abbett & Co. 1,141,157/15/ 11.3% -- -- 1,141,157 7.5%
Bear Stearns Asset 1,116,950/16/ 11.1% -- -- 1,116,950 7.3%
Management
Dimensional Fund Advisors 617,875/17/ 6.1% -- -- 617,875 4.0%
Hollybank Investment 585,750/18/ 5.8% -- -- 585,750 3.8%
All directors and officers
as a group (20 persons)19 1,956,514/20/ 17.4% 4,280,030 82.5% 6,236,544 38.0%
/1/ Assumes as to each person or entity the exercise of his or its options and
warrants.
/2/ Series B Preferred Stock consists of 5,188,922 outstanding shares, has one
vote per share, and is convertible into shares of Common Stock at a rate of
.285 per share of Series B Preferred Stock.
/3/ Does not assume conversion of Series B Preferred Stock
/4/ Includes 266,100 shares that may be purchased upon exercise of options
granted under Butler stock option plans.
/5/ Messrs. Edward M. Kopko, Frederick H. Kopko, Jr., Hugh G. McBreen and John
F. Hegarty have filed a Schedule 13D with respect to their purchases of
Series B Preferred Stock. The reporting persons disclaim the existence of a
"group" under Section 13(d) of the Exchange Act.
/6/ Includes 114,500 shares that may be purchased upon exercise of options
granted under Butler stock option plans. The business address of Mr. Kopko
is 20 North Wacker Drive, Suite 2520, Chicago, IL 60606.
/7/ Includes 5,437 shares beneficially owned by Mr. McBreen's children (as to
which Mr. McBreen disclaims beneficial ownership), 87,000 shares that may
be purchased upon exercise of options granted under Butler stock option
plans and 60,000 shares that may be purchased upon exercise of certain
additional warrants. The business address of Mr. McBreen is 20 North Wacker
Drive, Suite 2520, Chicago, IL 60606.
/8/ Includes 2,344 shares owned by Mr. McBreen's wife (as to which Mr. McBreen
disclaims beneficial ownership).
/9/ Includes 103,200 shares that may be purchased upon exercise of options
granted under Butler stock option plans.
/10/ Includes 96,702 shares beneficially owned by Mr. Hegarty's wife (as to
which Mr. Hegarty disclaims beneficial ownership).
/11/ Consists of 132,000 shares that may be purchased upon exercise of options
granted under the 1992 Stock Option Plan for Non-Employee Directors.
4
/12/ Includes 78,750 shares that may be purchased upon exercise of options
granted under Butler stock option plans.
/13/ Includes 67,500 shares that may be purchased upon exercise of options
granted under Butler stock option plans.
/14/ Includes 68,750 shares that may be purchased upon exercise of options
granted under Butler stock option plans.
/15/ Based on publicly available information reported on February 7, 2001, Lord
Abbett & Company beneficially owns 1,141,157 shares of the Company's Common
Stock. The business address of Lord Abbett & Company is 767 Fifth Avenue,
New York, NY 10153.
/16/ Based on publicly available information reported on February 17, 2001, Bear
Stearns Asset Management beneficially owns 1,116,950 shares of the
Company's Common Stock. The business address of Bear Stearns Asset
Management is 575 Lexington Avenue, New York, NY 10022.
/17/ Based on publicly available information reported on February 2, 2001,
Dimensional Fund Advisors, Inc. beneficially owns 617,875 shares of the
Company's common stock. The business address of Dimensional Fund Advisors,
Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
/18/ Based on publicly available information reported on February 14, 2001,
Hollybank Investment, L.P. and Doresy R. Gardner beneficially own 542,750
and 43,000 shares of the Company's common stock, respectively. The business
address of Hollybank Investment, L.P. and Dorsey R. Gardner is c/o Kelso
Management Company, Inc., One International Place, Suite 2401, Boston, MA
02110.
/19/ Includes the officers of the Company and its principal subsidiaries.
/20/ Includes 1,129,425 shares that may be purchased upon exercise of options
granted under Butler stock option plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Audit Committee of the Board of Directors consists of Messrs. Hegarty,
McBreen, and Nagaswami. The Executive Compensation Committee consists of Messrs.
Frederick H. Kopko, Jr., Hegarty, McBreen, and Nagaswami. The Stock Option
Committee and the Section 162(m) Executive Compensation Committee of the Board
of Directors consist of Messrs. Hegarty and Nagaswami.
During 2000, the Company paid or accrued $720,000 in legal fees and
expenses to McBreen & Kopko, of which Messrs. Frederick H. Kopko, Jr. and
McBreen are partners.
Under various stockholder-approved option plans and other stock purchase
agreements, Messrs. Frederick H. Kopko, Jr., Hegarty and McBreen have executed
primarily non-interest bearing notes payable to the Company to purchase common
stock. As of December 31, 2000, $2,412,238 remained outstanding under such
notes.
Except for one note from Frederick H. Kopko, Jr., in the original amount of
$201,600 with a December 31, 2000 balance of $127,108, the full principal amount
of each loan set forth above is currently outstanding and has been outstanding
since the date of the loans. All of the loans set forth above are currently
collateralized by all of the Series B Preferred Stock held by each director.
EXECUTIVE COMPENSATION REPORT
OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee, the Stock Option Committee, and the
162(m) Executive Compensation Committee (collectively the "Committee") oversee
the executive compensation policies and programs of the Company, including
executive and certain non-executive officers. The Company's executive
compensation programs are intended to attract and retain qualified executives
and to motivate them to achieve goals that will lead to appreciation of
stockholder value. A significant portion of each executive's compensation is
dependent upon the Company's profitability and the appreciation in the market
price of the Company's common stock. Achievement of certain other corporate
goals and individual performance objectives also impact executive compensation.
5
The main components of executive compensation are: base salary, annual
incentive cash bonus, and longer-term equity-based incentive compensation. The
Committee periodically reviews independent surveys, compensation trends, and
competitive factors in making judgments on the appropriate compensation package
for each executive employee. The Committee's decisions also acknowledge that
Butler's Retirement Program is modest compared with many other companies.
Executive Employment Agreements: Effective January 1, 1991, the Company and
--------------------------------
Edward M. Kopko, the Company's President and Chief Executive Officer, entered
into an employment agreement, which was subsequently amended and restated on
July 11, 1994. On December 15, 1998, the Board of Directors and the Executive
Compensation Committee approved the terms of an amendment to the amended and
restated employment agreement (collectively, the "Employment Agreement"). The
Employment Agreement contains a performance-based bonus plan for Mr. Kopko (the
"Performance Bonus Plan") which is intended to comply with the provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Section 162(m) generally authorizes the tax deduction of compensation in excess
of $1,000,000 per taxable year payable to a chief executive officer (and certain
other officers) only where such compensation is based on performance, satisfies
certain other requirements, and is approved by the stockholders. The Company's
stockholders approved the Performance Bonus Plan at the Company's 1999 Annual
Meeting, and Mr. Kopko's compensation in excess of $1 million is believed to be
fully tax deductible beginning with 1999. The terms of Mr. Kopko's Employment
Agreement are set forth below under "Employment Agreements".
Michael C. Hellriegel, the Company's Senior Vice President--Finance,
Treasurer, and Chief Financial Officer entered into a new employment agreement
effective January 1, 1996, as authorized by the Committee. R. Scott Silver-Hill,
the Company's Senior Vice President - Domestic Operations, entered into an
employment agreement effective July 1991, as authorized by the Committee. Harley
R. Ferguson, the Company's Senior Vice President and Chief Information Officer,
entered into an employment agreement effective April 1995, as authorized by the
Committee. The terms of these employment agreements are set forth below under
"Employment Agreements".
Base Salary: The salaries of the other executive and non-executive officers
-----------
within the purview of the Committee are based on a periodic review of surveys of
companies of comparable size and complexity. In certain cases, the Company has
hired executive talent from outside, and both base pay and other compensation
elements have been determined with the guidance of the executive search firm
used for that purpose. Except for certain equity adjustments or a significant
increase in responsibilities, annual salary increases are generally limited to
cost of living adjustments.
According to independent surveys, including particularly the Wyatt Data
Services Compensation Surveys - All Industries (Excluding Financial Services and
Non Profit Organizations) and the Mercer Information Systems Compensation
Survey, the combined base salaries of the Company's officers as a group,
including the named executive officers, are 5.6% above the median and 6.0% below
the average for their positions and company size, based on revenues. Mr.
Kopko's base salary individually is 8.1% above the median and 3.2% below the
average for his position and company size. The Wyatt Survey was used because it
covers a larger number and variety of companies than the Peer Group.
Annual Incentive Cash Bonus: Each executive officer and certain non-
---------------------------
executive officers are eligible to participate in an annual cash bonus plan. A
contractual agreement is reached early in the year, with each such officer to be
given the opportunity to earn a cash bonus based in part on the achievement of
profitability and in part on the accomplishment of several key individual,
department, or business unit objectives that are believed to be vital to the
Company's success. The financial objectives are generally based on operating
income of the Company as a whole, or of a business unit, division or region--
rather than on target thresholds. The mix between financial and non-financial
objectives depends upon the nature of each executive's responsibilities. An
officer with bottom line responsibility typically has a greater portion of
incentive bonus tied to the operating profit of his or her group. However, all
executive officers and non-executive officers have some portion of their bonus
dependent upon the successful completion of non-financial objectives such as
specific projects for their group and/or individually.
The bonuses awarded in 2000 to the officers (other than the CEO) reflect
the mix of corporate, department and individual performance achieved. This is
consistent with the Committee's intent to tie pay closely to performance. Mr.
Kopko's bonus was based primarily on the Performance Bonus Plan formula which is
a percentage of operating income as defined in his employment agreement as
amended (approximately 85% of the total bonus), and the balance equal to 25% of
the base salary based on the achievement of certain key objectives. These
objectives included a continuing migration to solutions and project work and
away from traditional staffing, enhancing stockholder value, improving gross
margins, successfully launching BlueStorm in the network consulting marketplace,
investing in training facilities to meet talent shortages in new technologies,
establishing client partnerships, strengthening customer relations, and
maintaining a high level of
6
employee satisfaction. The Committee acknowledges the decline in the Company's
share price during 2000, but notes that the decline was generally in line with
both the Peer Group and the NASDAQ Index. The Committee also notes the short-
term negative impact of the BlueStorm investment. Excluding the BlueStorm
investment, net income for 2000 was not significantly lower than the record
earnings achieved in 1999. The continuing transformation to high technology,
solutions-oriented business in both IT and telecommunications requires a longer-
term perspective.
Longer-Term Equity-Based Incentive Compensation: The Company has several
-------------------------------------------------
longer-term, equity-based plans whose purpose is to promote the interests of the
Company and its stockholders by encouraging greater management ownership of the
Company's Common Stock. Such plans provide an incentive for the creation of
stockholder value over the long term, since the full benefit of the compensation
package cannot be realized unless an appreciation in the price of the Company's
Common Stock occurs. Additionally, these plans strengthen the Company's ability
to attract and retain experienced and knowledgeable employees over a longer
period and to furnish additional incentives to those employees upon whose
judgment, initiative and efforts the Company largely depends.
These plans include the 1990 Employee Stock Purchase Plan, the 1992
Incentive Stock Option Plan, the 1992 Non-Qualified Stock Option Plan, and the
1992 Stock Bonus Plan.
The Committee believes it is important that the CEO and other senior
officers have a significant number of stock options whose value can provide a
powerful incentive to driving the Company's bottom line and stock performance.
Stock option awards are also based on an officer's level of responsibilities and
expected contribution, rather than following the achievement of certain targets.
In February 2000 a total of 32,500 incentive stock options were granted to six
officers including 12,500 for two listed executive officers. In May 2000 and
November 2000, a total of 7,500 incentive stock options were granted to four
officers. The future value of all options will depend on the Company's success
in increasing stockholder value.
Under the 1992 Stock Bonus Plan, the Committee may make awards of stock to
individuals who, in the Committee's judgment, have made significant
contributions to the Company or its subsidiaries. No stock bonus awards were
made in 2000.
The 1990 Employee Stock Purchase Plan was designed to provide long-term
incentive compensation to officers, directors and key employees. The Employee
Stock Purchase Plan, which made available $2.5 million for loans to such
officers, directors, and key employees to purchase Company stock, rewarded such
persons for, among other things, achieving long range corporate goals,
achievement of targeted profitability levels that are sustained over a longer
period of time, developing new growth objectives for each business unit based on
analysis of market potential, developing and achieving long-range sales growth,
and upgrading of technology, systems and processes. The Company forgave certain
loans in previous years. However, since 1996, the Employee Stock Purchase Plan
has been dormant as the Committee has deferred any further loan forgiveness and
has granted no new loans.
The Executive Compensation Committee believes that the executive
compensation policies and programs serve the interests of the stockholders.
Such compensation is intended to be a function of the Company's increase in
profits and share price value over a longer-term perspective.
Internal Revenue Code Section 162(m): Section 162(m) of the Code prevents
-------------------------------------
publicly held corporations, including the Company, from taking a tax deduction
for compensation paid to a "covered employee" in a taxable year to the extent
that the compensation exceeds $1 million and is not qualified performance-based
compensation under the Code. Generally, covered employees are the executive
officers named in the Summary Compensation Table. At the Company's 1999 Annual
Meeting, the Stockholders approved amendments to and restatements of the
Company's Employee Stock Plans and the Company's Performance Bonus Plan for the
President and Chief Executive Officer in compliance with Section 162(m) of the
Code. As a result, the compensation realized in connection with stock options
and cash awards granted thereunder is excluded from the deduction limit.
The Committee's intent is to preserve the deductibility of compensation
payments and benefits to the extent reasonably practical. The Committee,
however, retains the discretion to authorize compensation that does not qualify
for income tax deductibility.
EXECUTIVE COMPENSATION COMMITTEE
John F. Hegarty Frederick H. Kopko, Jr.
Hugh G. McBreen Nikhil S. Nagaswami
7
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Compensation
Awards/2/
Other Securities All
Name & Principal Annual Underlying Other
Position Year Salary ($) Bonus (Compensation ($)/1/ Options (#) Compensation ($)/3/
Edward M. Kopko 2000 436,461 752,437 283,479 -- 67,424
President and 1999 416,062 829,614 244,095 150,000 67,424
CEO 1998 403,595/4/ 823,781 102,211 -- 55,424
Michael C. Hellriegel 2000 219,298 120,000 1,074 -- 1,464
Sr. VP - Finance, 1999 161,537 81,554 1,074 30,000 1,464
Treasurer, and CFO 1998 158,224/4/ 113,416 1,074 10,000 1,330
R. Scott Silver-Hill 2000 275,000 122,825 2,835 7,500 1,645
Sr. VP Domestic 1999 250,000 121,310 2,147 -- 1,549
Operations 1998 174,958/4/ 218,599 2,147 7,500 1,398
Harley R. Ferguson 2000 204,063 84,028 -- 5,000 5,401
Sr. VP and Chief 1999 186,143 51,104 -- -- 7,488
Information Officer 1998 182,325/4/ 71,045 -- 5,000 9,575
/1/ Consists of imputed interest on loans to buy common stock of the Company.
For Mr. Kopko, in addition to imputed interest on such loans in the amount
of $117,286 for 2000, $96,578 for 1999 and $27,665 for 1998, includes tax
gross-up on imputed interest and insurance payments in the amounts of
$105,776 and $60,417, respectively, in 2000, $87,100 and $60,417,
respectively, in 1999 and $24,951 and $49,595 in 1998.
/2/ No options were repriced during the last fiscal year or at any time since
the Company's inception.
/3/ Consists of imputed cost of Company-paid term life insurance. Includes
Company insurance payments for Mr. Kopko of $66,992 each in 2000 and 1999
and $54,992 in 1998.
/4/ Salaries for 1998 include 53 payroll weeks.
Employment Agreements:
- ----------------------
Effective January 1, 1991, the Company and Edward M. Kopko, the Company's
President and Chief Executive Officer, entered into an employment agreement,
which was subsequently amended and restated on July 11, 1994. On December 15,
1998, the Board of Directors and the Executive Compensation Committee approved
the terms of an amendment to the amended and restated employment agreement
(collectively, the "Employment Agreement"). The Employment Agreement contains a
performance-based bonus plan for Mr. Kopko (the "Performance Bonus Plan") which
is intended to comply with the provisions of Section 162(m) of the Internal
Revenue Code of 1986, as amended. Section 162(m) generally authorizes the tax
deduction of compensation in excess of $1,000,000 per taxable year payable to a
chief executive officer (and certain other officers) only where such
compensation is based on performance, satisfies certain other requirements, and
is approved by the stockholders. The Company's stockholders approved the
Performance Bonus Plan at the Company's 1999 Annual Meeting, and Mr. Kopko's
compensation in excess of $1 million is believed to be fully tax deductible
beginning with 1999.
Under the Employment Agreement, Mr. Kopko has agreed to serve as President
and Chief Executive Officer of the Company, and in a similar capacity for the
Company's subsidiaries, for a term commencing on January 1, 1991 and terminating
three years after a notice of termination is given by either the Company or Mr.
Kopko, subject to earlier termination in accordance with the terms of the
Employment Agreement.
The Employment Agreement provides for base compensation and annual raises
of not less than 5% of the prior year's salary. Mr. Kopko will also receive
payment of a performance bonus (referred to in the Employment Agreement as an
annual cash bonus) in an amount equal to 5% of the Company's operating income of
$3 million or less, plus 3% of operating income above $3 million. The
Employment Agreement also provides for an incentive bonus based on the
successful completion of management objectives and other factors. In no event
is the total annual bonus to exceed four times Mr. Kopko's base salary.
8
"Operating Income" is defined in the Employment Agreement as net income of
the Company's principal operating subsidiary before adjustments for Federal and
State income taxes and taxes imposed at the federal/national level by foreign
countries (based upon income), and excluding extraordinary items. "Operating
income" is also defined to exclude such items as corporate expense allocation
from the Company and certain goodwill amortization, and to include items such as
general and administrative expense and related working capital interest income
and expense.
The Employment Agreement further provides that prior to the end of each
calendar quarter, the Company shall advance to Mr. Kopko an amount equal to the
sum of the following: (i) eighty percent (80%) of the Company's estimate of Mr.
Kopko's performance bonus for said quarter based on the operating income of the
Company, as reported to the Board of Directors for the quarter; and (ii) eighty
percent (80%) of the Company's incentive bonus for said quarter, based on
satisfactory progress toward completion of the management objectives. To the
extent that the quarterly advances exceed the annual cash bonuses, as declared,
the Employment Agreement provides that Mr. Kopko must return this excess.
Mr. Kopko is also entitled to benefits, including stock options and payment
of taxes on his behalf based on imputed income. If the Company breaches its duty
under the Employment Agreement, if Mr. Kopko determines in good faith that his
status with the Company has been reduced, or if, after a change in control of
the Company, Mr. Kopko determines in good faith that the financial prospects of
the Company have significantly declined, Mr. Kopko may terminate his employment
and receive all salary and bonus owed to him at that time, pro rated, plus three
times the highest annual salary and bonus paid to him in the three years
immediately preceding the termination.
In January 1996, the Company entered into an employment agreement with
Michael C. Hellriegel. Mr. Hellriegel's employment agreement is terminable by
either party with four months prior notice. Mr. Hellriegel is eligible for
bonuses of up to 50% of his base salary, based on the Company obtaining
specified management objectives (as defined) and other factors and a provision
for an additional bonus based on over-achievement of profit plan. The
employment agreement provides that if Mr. Hellriegel's employment is terminated
other than for cause, he will be entitled to four months salary. The agreement
provides that Mr. Hellriegel will not compete with the Company for a period of
one year after termination of employment.
In July 1991, the Company entered into an employment agreement with R.
Scott Silver-Hill. Mr. Silver-Hill's employment agreement is terminable by
either party with six months prior notice. Mr. Silver-Hill is eligible for
bonuses of up to 50% of his base salary, based on the Company obtaining
specified management objectives (as defined) and other factors and a provision
for an additional bonus based on over-achievement of operating plan. The
employment agreement provides that if Mr. Silver-Hill's employment is terminated
other than for cause, he will be entitled to six months salary. The agreement
provides that Mr. Silver-Hill will not compete with the Company for a period of
one year after termination of employment.
In April 1995, the Company entered into an employment agreement with Harley
R. Ferguson. Mr. Ferguson's employment agreement is terminable by either party
with six months prior notice. Mr. Ferguson is eligible for bonuses of up to 25%
of his base salary, based on the Company obtaining specified management
objectives (as defined) and other factors and a provision for an additional
bonus based on over-achievement of operating plan. The employment agreement
provides that if Mr. Ferguson's employment is terminated other than for cause,
he will be entitled to six months salary. The agreement provides that Mr.
Ferguson will not compete with the Company for a period of one year after
termination of employment.
OPTIONS GRANTED IN 2000
Individual Grants
Number of % of
Securities Total Options Grant Date
Underlying Options Granted to Exercise Expiration Present
Name Granted Employees in Fiscal Year Price Date/3/ Value/4/
R. Scott Silver-Hill 7,500/1/ 4.0% $9.69 2/22/10 $38,969
Harley R. Ferguson 5,000/2/ 2.7% $9.69 2/22/10 $25,979
/1/ Consists of options granted under the 1992 Stock Option Plan on February
22, 2000, of which 2,500 are exercisable on each of February 22, 2001,
2002, and 2003.
/2/ Consists of options granted under the 1992 Incentive Stock Option Plan on
February 22, 2000, of which 1,666 became exercisable on February 22, 2001,
and 1,667 will be exercisable on each of February 22, 2002 and 2003.
9
/3/ These options could expire earlier in certain situations such as an
individual's termination of employment with the Company.
/4/ The estimated fair value of stock options is measured at the date of grant
using the Black-Scholes option pricing model based on the following
assumptions: expected stock price volatility of 54% based on the average
weekly closing price of the Company's common stock for 2000; expected term
to exercise of approximately 6.7 years; and interest rates equal to the
U.S. Treasury Note rates in effect at the date of grant (6.52% for options
granted on February 22, 2000). The actual value, if any, an individual may
realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised. Consequently, there is no
assurance the value realized will be at or near the value estimated above.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 2000
AND 2000 YEAR-END OPTION VALUES
# of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options Options
at 2000 Year-End at 2000 Year-End
Shares
Name of Individual Acquired Value Exercisable/ Exercisable/
On Exercise Realized Unexercisable Unexercisable
Edward M. Kopko 125,000 $437,750 116,100/1/ $152,280
150,000 --
Michael C. Hellriegel 0 $ 0 53,750/2/ $ 25,665
25,000 --
R. Scott Silver-Hill 12,500 $ 43,775 56,250/3/ $ 54,222
11,250 --
Harley R. Ferguson 0 $ 0 61,250/4/ $ 20,325
7,500 --
/1/ Consists of non-qualified stock options to purchase 26,100 shares, granted
in 1986 and 1987 at an option price of $6.68 per share; a currently
exercisable option to purchase 90,000 shares under the 1992 Incentive Stock
Option Plan, granted on August 2, 1993, at an exercise price of $2.93 per
share; and an option to purchase 150,000 shares under the 1992 Non-
Qualified Plan, granted on December 1, 1999, at an exercise price of $8.00
per share, of which 30,000 became exercisable on December 1, 2000 and
30,000 will become exercisable on each of December 1, 2001, 2002, 2003 and
2004.
/2/ Consists of currently exercisable incentive stock options to purchase
15,000 shares granted in December 1995 at an exercise price of $2.92 per
share; currently exercisable incentive stock options for 11,250 shares
granted in January 1997 at an exercise price of $6.67 per share; currently
exercisable incentive stock options for 7,500 shares granted in December
1997 at an exercise price of $11.25 per share; incentive stock options for
15,000 shares granted in December 1998 at an exercise price of $14.58 per
share, of which 5,000 became exercisable on each of December 30, 1999 and
2000, and 5,000 will become exercisable on December, 30, 2001; and
incentive stock options for 30,000 shares granted in December 1999 at an
exercise price of $8.00 per share, of which 10,000 became exercisable on
December 1, 2000, and 10,000 will become exercisable on each of December 1,
2001 and 2002.
/3/ Consists of currently exercisable incentive stock options for 11,250
shares, granted in January 1993 at an exercise price of $2.08 per share;
currently exercisable incentive stock options for 15,000 shares granted in
December 1995 at an exercise price of $2.92 per share; currently
exercisable incentive stock options for 11,250 shares granted in December
1996 at an exercise price of $6.42 per share; currently exercisable
incentive stock options for 11,250 shares granted in December 1997 at an
exercise price of $11.25 per share; incentive stock options for 11,250
shares granted in December 1998 at an exercise price of $14.58 per share,
of which 3,750 became exercisable on each of December 30, 1999 and 2000,
and 3,750 will become exercisable on December 30, 2001 and incentive stock
options for 7,500
10
shares granted in February 2000 at an exercise price of $9.69 per share, of
which 2,500 will become exercisable on each of February 22, 2001, 2002 and
2003.
/4/ Consists of currently exercisable incentive stock options for 37,500 shares
granted in April 1995 at an exercise price of $4.08 per share; currently
exercisable incentive stock options for 11,250 shares granted in December
1996 at an exercise price of $6.42 per share; currently exercisable
incentive stock options for 7,500 shares granted in December 1997 at an
exercise price of $11.25 per share; incentive stock options for 7,500
shares granted in December 1998 at an exercise price of $14.58 per share,
of which 2,500 became exercisable on each of December 30, 1999 and 2000,
and 2,500 will become exercisable on December 30, 2001; and incentive stock
options for 5,000 shares granted in February 2000 at an exercise price of
$9.69 per share, of which 1,666 will become exercisable on February 22,
2001, and 1,667 will become exercisable on each of February 22, 2002 and
2003.
RETIREMENT PLANS
Staff employees of the Company, including the executive officers referred
to in the Summary Compensation Table, are entitled to participate in the Butler
Service Group, Inc. Defined Benefit Plan (the "Plan"), which is a non-
contributory, defined benefit retirement plan. Retirement benefits are computed
on the basis of a specified percentage of the average monthly base compensation
(during any 60 consecutive months of an employee's final 120 months of
employment which results in the highest average) multiplied by the employee's
years of credited service. The Plan provides for several optional forms of
benefit payment including a straight life annuity, a 50% joint and survivor
annuity, a period certain annuity, and a lump sum. Retirement benefits are in
addition to benefits payable from Social Security. Normal retirement age is 65,
although benefits may begin as early as age 55 with ten years of service. A
pension benefit is vested after five years of service.
The Defined Benefit Plan was frozen as of December 31, 1996. As of
December 31, 1996, the following executive officers of the Company had the
following years of credited service for retirement compensation purposes: Mr.
Kopko--11, Mr. Hellriegel--15, Mr. Silver-Hill--15, and Mr. Ferguson--2. The
following table shows the estimated annual retirement benefits payable assuming
that retirement occurs at age 65.
PENSION PLAN TABLE
Average Annual Earnings for Years of Service
the Highest Consecutive 60 Months ----------------------------------
of Last 120 Months Prior to 1/1/97 10 15 20 25
----------------------------------
$100,000....................... $11,532 $17,298 $23,064 $28,830
$150,000*...................... $17,532 $26,298 $35,064 $43,830
*Salary limited by terms of Plan and the law to $160,000 as of January 1, 1997.
For Mr. Kopko, the compensation used for service prior to 1994 is $235,840.
The above pensions are offset by pension equivalents from two other plans:
(1) The Company sponsored Employee Stock Ownership Plan ("ESOP"); and (2)
Pensions purchased from Nationwide Insurance Company due to termination of
predecessor plan. The ESOP has approximately 57,000 shares of the Company's
stock. The shares of stock were allocated to employees over seven years
beginning in 1987 and ending in 1993.
Effective January 1, 1997, a new retirement plan was implemented for staff
employees, including the executive officers referred to in the Summary
Compensation Table, and for certain salaried employees of Butler Technology
Solutions ("BTS"). The new plan is based on a partial Company matching
contribution for staff employees and BTS salaried employees who participate in
the Company's 401(k) Retirement Savings Plan.
11
PERFORMANCE GRAPH
Comparison of Five-year Cumulative Total Return
Among Butler International, Inc.
Peer Group Indices and NASDAQ Market Index
1995 1996 1997 1998 1999 2000
---------------------------------------------------
Butler International, Inc. 100.00 190.70 325.58 491.86 306.83 129.01
New Peer Group 100.00 173.75 272.78 246.74 233.54 129.97
Old Peer Group 100.00 137.31 202.99 163.72 145.67 139.62
NASDAQ Market Index 100.00 124.27 152.00 214.39 378.12 237.66
ASSUMES $100 INVESTED ON JANUARY 1, 1995
ASSUMES DIVIDENDS REINVESTED
YEAR ENDING DECEMBER 31, 2000
During the past several years, the Company has been strategically moving
its business mix to higher value added solutions and project work and away from
traditional staffing services. As a result, the old peer group index is no
longer entirely representative of the Company's strategic direction. Both the
old peer group index and a new, more representative peer group index are
presented in the Performance Graph for comparison.
Old Peer Group: Alternative Resources, CDI Corporation, Comforce
Corporation, Computer Horizons Corporation, Joule, Inc., Keane, Inc., Kelly
Services, Manpower, Inc., Modis Professional Services, National Techteam, Inc.,
On Assignment, Inc., RCM Technologies, Inc., Renaissance Worldwide, Robert Half
International, SOS Staffing Services, Inc., and Volt Information Sciences, Inc.,
weighted by market capitalization at the beginning of each period for which a
return is indicated.
New Peer Group: CDI Corporation, Comforce Corporation, Computer Horizons
Corporation, Dycom Industries, Inc., Keane, Inc., Kelly Services, Inc., Mastec,
Inc., Predictive Systems, Inc., Quanta Services, Inc., RCM Technologies, Inc.,
and SOS Staffing Services, Inc.
CERTAIN TRANSACTIONS
Edward M. Kopko previously executed, in 1990 and 1991, non-interest bearing
notes totaling $684,000 to purchase 258,333 shares of Common Stock under various
stock purchase and option plans. In 1997, Edward M. Kopko executed a non-
interest bearing note for $51,102 to purchase 7,650 shares of Common Stock
pursuant to options that had been granted under the 1985 Non-Qualified Stock
Option Plan. The outstanding aggregate balance of the loans on December 31,
2000, and the largest aggregate principal amount of the loans outstanding during
2000 was $359,352. On March 2, 1999, Edward M. Kopko executed a non-interest
bearing note for $890,625 to purchase 187,000 shares of Common Stock pursuant to
options that had been granted under the 1992 Non-Qualified Stock Option Plan. On
March 2, 1999, the Company also provided Edward M. Kopko with a loan in the
amount of $822,441 to enable him to meet his tax obligation on this exercise,
including statutory withholding taxes.
12
PROPOSAL 2: PROPOSAL TO AMEND THE 1992 EMPLOYEE STOCK PLANS
TO INCREASE THE NUMBER OF SHARES SUBJECT TO OPTIONS
The Board of Directors recommends the adoption of an amendment to the
Company's 1992 Employee Stock Plans to increase the number of shares subject to
options from 2,970,000 to 3,200,000. In 1992, the Company adopted an employee
stock-based program consisting of three integrated plans. These plans are the
1992 Stock Option Plan (the "Non-Qualified Plan"), the 1992 Incentive Stock
Option Plan (the "ISOP"), and the 1992 Stock Bonus Plan ("Stock Bonus Plan").
The purpose of the Non-Qualified Plan, the ISOP and the Stock Bonus Plan is
to promote the interests of the Company and its stockholders by strengthening
the Company's ability to attract and retain experienced and knowledgeable
employees and to furnish additional incentives to those employees upon whose
judgment, initiative and efforts the Company largely depends. Prior to
Stockholder approval of the proposed amendment to the Plans, a maximum of
2,970,000 shares may be issued thereunder. Since January 1, 1993, the Company
has granted options for 1,184,375 shares under these three plans and canceled
149,375 options, leaving a balance available of 1,935,000.
The text of the Non-Qualified Plan, the ISOP, and the Stock Bonus Plan, as
proposed to be amended (collectively, the 1992 "Employee Stock Plans") is
available from the Secretary of the Company. The following is a summary of the
1992 Employee Stock Plans, as amended.
Description of the Non-Qualified Plan
- -------------------------------------
The Non-Qualified Plan permits the Stock Option Committee (the
"Committee"), consisting of at least two members of the Board of Directors who
are not employees of the Company and who are appointed to the Committee from
time to time by the Board of Directors, to grant common stock options to
individuals who, in the judgment of the Committee, have made significant
contributions to the Company or any subsidiary thereof (including directors and
officers who are full or part-time employees of the Company, but excluding
directors who are not employees of the Company). Options granted under the Non-
Qualified Plan are not intended to qualify as "incentive stock options" under
the Code. The Non-Qualified Plan provides that the maximum term of an option
granted under the Non-Qualified Plan is ten years and that the exercise price of
options granted under the Non-qualified Plan will be not less than 100% of the
fair market value on the date of grant.
Description of the ISOP
- -----------------------
The ISOP permits the Committee to grant common stock options to individuals
who, in the judgment of the Committee, have made significant contributions to
the Company or any subsidiary thereof (including directors and officers who are
full or part-time employees of the Company, but excluding directors who are not
employees of the Company).
It is intended that all options granted under the ISOP will qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code of 1986
(the "Code"). If any such options are issued, they may be exercised at a price
that is not less than the fair market value of the stock on the day the option
is granted; provided that, if on the date of any grant the recipient holds more
than 10% of the combined voting power of all classes of the Company's stock or
of any parent or subsidiary of the Company, the exercise price must be at least
110 % of the fair market value of the stock on the day the option is granted.
The ISOP provides that the maximum term of an option granted under the ISOP is
ten years from the date of grant. The aggregate fair market value of the stock
with respect to which incentive stock options are exercisable for the first time
by an optionee during any calendar year may not exceed $100,000.
Provisions Common to the Non-Qualified Plan and the ISOP
- --------------------------------------------------------
Payment of the option exercise price in either the Non-Qualified Plan or
the ISOP may be in cash, by check, or with the consent of the Committee, by a
non-interest bearing promissory note up to the limit permitted under the Federal
Reserve Board Regulations, of term no greater than seven years, which shall be
secured by a pledge of the shares to be acquired upon exercise of the option. In
addition, payment for shares purchased under an option may, with the consent of
the Committee, be made, in whole or in part by tendering shares of Common Stock,
valued at the fair market value, in lieu of cash.
No option granted under either of the plans will be valid if not granted
before January 1, 2003. There is no formula for determining the numbers of
options to be granted under either of the plans. Any grants of options will
reflect the Committee's judgment (in its sole discretion) of the relative value
of the contribution of the grantee in respect to such matters as revenue
production and expense control.
13
The Board of Directors may, insofar as permitted by law, from time to time,
with respect to any shares of stock at the time not subject to outstanding
options, suspend or discontinue either the Non-Qualified Plan or the ISOP or
revise or amend them in any respect whatsoever except that, without approval of
the holders of a majority of Common Stock, no such revision or amendment shall
change the number of shares of stock subject to such plan (except as permitted
under certain limited circumstances), change the designation of the class of
employees eligible to receive options, remove the administration of such plan
from the Committee, or render any member of the Committee eligible to receive an
option under such plan while serving thereon.
Description of The Stock Bonus Plan
- -----------------------------------
The Stock Bonus Plan provides that the Committee may make awards of stock
to individuals who, in the judgment of the Committee, have made significant
contributions to the Company or any subsidiary thereof (including directors and
officers who are full or part-time employees of the Company, but excluding
directors who are not employees of the Company). Awards may be made by the
Committee on the basis of pre-established goals, or to reward performance, or
both. For example, the Committee may identify persons who may become eligible
for a stock award under the Plan, and establish certain goals or targets which,
if met, will entitle the persons so selected to receive such stock. Similarly,
the Committee may identify those persons who have made significant contributions
to the Company and, therefore, are deserving of special awards for their
efforts. Members of the Committee may not receive awards under the Plan. The
Plan will also serve to increase employee ownership in the Company and alignment
with stockholders, while conserving cash.
Upon the receipt of a stock award, the participant must present his award
certificate within 30 days to the Company. If a participant's employment with
the Company is terminated for any reason, other than by death or disability,
prior to the issuance of the shares, the award is deemed to have lapsed and the
shares may become subject to future awards. If a participant dies or becomes
disabled prior to the issuance of the shares, then the award may be presented by
the participant or his personal or legal representative at any time within six
months after the date of the award. Except upon death, the award is not
transferable. Consistent with the interests of the Company in increasing
employee stock ownership, shares acquired under the Plan must be held for six
months following the date of receipt of the shares.
The Plan has a term of ten years, unless extended or earlier terminated by
the Board of Directors.
Federal Income Tax Consequences
- -------------------------------
With respect to options granted under the Non-Qualified Plan, generally an
optionee does not realize taxable income, and the Company will not be allowed a
deduction on the grant date. However, the difference between the option price
and the fair market value of the stock on the date the option is exercised will
be taxable as ordinary income to the optionee and will be deductible by the
Company as compensation on such date. Gain or loss on the subsequent sale of
such stock will be eligible for capital gain or loss treatment by the optionee
and will have no federal income tax consequences to the Company. Different rules
may apply if an optionee, who is an officer, director or more than 10%
stockholder, exercises options within six months of the grant date.
With respect to options granted under the ISOP, if the optionee does not
make a disqualifying disposition of stock acquired on exercise of such options,
no income for federal income tax purposes will result to such optionee upon the
granting or exercise of the option (except that the amount by which the fair
market value of the stock at the time of exercise exceeds the option price will
be a tax preference item under the alternative minimum tax), and in the event of
any sale thereafter, any amount realized in excess of his or her cost will be
taxed as long-term capital gain and any loss sustained will be long-term capital
loss. In such case, the Company will not be entitled to a deduction for federal
income tax purposes in connection with the issuance or exercise of the option. A
disqualifying disposition will occur if the optionee makes a disposition of such
shares within two years from the date of the granting of the option or within
one year after the transfer of such shares to him or her. If a disqualifying
disposition is made, the difference between the option price and the lesser of
(i) the fair market value of the stock at the time the option is exercised or
(ii) the amount realized upon disposition of the stock will be treated as
ordinary income to the optionee at the time of disposition and will be allowed
as a deduction to the Company.
With respect to the restricted stock bonus awards, the participant will
generally realize taxable income in an amount equal to the fair market value of
the shares on the date of grant, and the Company will be allowed a tax
deduction. If there are significant restrictions on the awards, taxation would
occur when the restrictions lapse.
The described tax consequences are based on current laws, regulations and
interpretations thereof, all of which are subject to change. In addition, the
discussion is limited to federal income taxes and does not attempt to describe
state and local tax effects that may accrue to participants or the Company.
14
Plan Benefits
- -------------
As described above, the selection of the employees of the Company or
subsidiaries thereof who will receive grants under the Employee Stock Plans is
to be determined by the Committee in its sole discretion. Therefore, it is not
possible to predict the amounts that will be received by particular employees.
In February 2000, six officers, including executive officers R. Scott Silver-
Hill and Harley R. Ferguson, received aggregate options to purchase 32,500
shares of Common Stock under the 1992 ISOP. In May 2000 and November 2000, an
additional 7,500 incentive stock options were granted to four officers under the
1992 ISOP. However, no dollar value is assigned to such options because their
exercise price was the fair market value of the underlying Common Stock on the
date of grant.
Increase in the Number of Shares Reserved for Issuance
- ------------------------------------------------------
It is proposed to increase the number of shares of Common Stock reserved
for issuance under the Employee Stock Plans from 2,970,000 to 3,200,000. The
proposed increase in the number of shares issuable pursuant to the 1992 Employee
Stock Plans will enable the Company to grant additional options and other awards
to current participants, which will enable such participants to maintain their
proportionate interest in the Company, and to attract such additional personnel
as may be necessary in view of the Company's expanding operations.
In the event that the amendment to the 1992 Employee Stock Plans is not
approved by the stockholders, the Employee Stock Plans will remain in effect as
previously adopted. Any options outstanding under the Employee Stock Plans prior
to the amendment to the Employee Stock Plans shall remain valid and unchanged.
General
- -------
The adoption of this amendment to the Non-Qualified Plan, the ISOP, and the
Stock Bonus Plan requires the approval of a majority of the votes cast by
holders of the shares of Common Stock and the Company's 7% Series B Cumulative
Preferred Stock, voting together as a single class, represented at the meeting
and entitled to vote. Shares may be voted for or withheld from this matter.
Under Securities and Exchange Commission regulations regarding stockholder
approval of stock option plans, shares entitled to cast votes on this matter at
the meeting which are withheld from this matter will be treated for all purposes
relevant to this matter as being present at the meeting and entitled to vote and
thus will have the same effect as a vote of such shares against this matter.
Shares entitled to cast votes on this matter at the meeting which are the
subject of a broker non-vote on this matter will be treated for quorum purposes
relevant to this matter as being present at the meeting and entitled to vote but
not be so treated in determining whether a majority or other required percentage
of the shares present and entitled to vote on the matter has been obtained.
The Board of Directors unanimously recommends a vote FOR Proposal 2
amending the 1992 Non-Qualified Stock Option Plan, the 1992 Incentive Stock
Option Plan, and the 1992 Stock Bonus Plan.
PROPOSAL 3: PROPOSAL TO AMEND THE
1992 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
TO INCREASE THE NUMBER OF SHARES SUBJECT TO OPTIONS
The Board of Directors recommends the adoption of an amendment to the
Company's 1992 Stock Option Plan for Non-Employee Directors (the "Plan") to
increase the number of shares that may be subject to options thereunder from
735,000 to 825,000.
The purpose of the Plan is to promote the interests of the Company and its
stockholders by strengthening the Company's ability to attract and retain
experienced and knowledgeable non-employee directors and to encourage them to
acquire an increased proprietary interest in the Company. The Plan is
administered by the Board of Directors (the "Board"). The Plan provides for a
grant of options to each non-employee director on the day following each annual
meeting to purchase 18,000 shares of Common Stock at an exercise price equal to
the fair market value on the date of grant. The Plan further provides that a
newly elected non-employee director will receive an additional one-time grant of
options to purchase 18,000 shares of Common Stock on the day following the
meeting of his or her initial election at an exercise price equal to the fair
market value on the date of grant.
Currently 735,000 shares are authorized for issuance and 573,000 have been
issued under the Plan. The Company recommends an increase in the aggregate
number of shares that may be subject to options under the Plan by an additional
90,000 shares. This amendment will provide for options to be granted following
the 2002 Annual Meeting on the same terms
15
as options granted following the 2001 Annual Meeting. It will also permit
options to be granted if a new Board member is elected in the future, although
the Company does not have any current plans to nominate a new Board member.
The text of the proposed Plan is available from the Secretary of the
Company. The following is a Plan summary, as amended.
Payment of the option exercise price may be in cash, by delivery of
previously owned Common Stock having a fair market value equal to the option
price, by a combination of cash and stock, or by a non-interest bearing
promissory note, of term not greater than seven years, secured by a pledge of
the shares of common stock to be acquired upon exercise of the option. All
options granted under the Plan are non-statutory -- not intended to qualify
under Section 422 of the Internal Revenue Code of 1986, as amended. The federal
income tax consequences are similar to those described above with respect to the
Non-Qualified Plan.
If an optionee ceases to be a director before an option vests, the option
is forfeited. Each option expires ten years from the date of its grant.
Outstanding options will expire earlier if an optionee terminates service as a
director other than by reason of retirement, total disability or death. In those
events, the option will then expire one year from the date of death or
termination or on the stated grant expiration date, whichever is earlier.
Options are not transferable during the lifetime of the optionee, except that an
option may be transferable to members of the optionee's immediate family, to a
partnership whose members are only the optionee and/or members of the optionee's
immediate family, or to a trust for the benefit of only the optionee and/or
members of the optionee's immediate family. Options that are forfeited or
terminated will again be available for grant. Shares may be authorized but
unissued, currently held or reacquired shares.
The Board may amend, terminate or suspend the Plan at any time, provided
that no amendment regarding amount, price or timing of the grants may be made
more than once every six months other than to comport with changes in certain
Securities Exchange Act and Internal Revenue Code requirements. Amendments that
would materially increase the number of shares that may be issued, materially
modify the requirements as to eligibility for Plan participation, or materially
increase the benefits to Plan participants must be approved by stockholders.
Under the Plan, each of the non-employee directors will receive options to
purchase 18,000 shares of Common Stock on May 11, 2001. However, no dollar value
is assigned to the options because their exercise price will be the fair market
value of the Common Stock on the date of grant.
The adoption of this amendment to the 1992 Stock Option Plan for Non-
Employee Directors requires the approval of a majority of the votes cast by
holders of the shares of Common Stock and the Company's 7% Series B Cumulative
Preferred Stock, voting together as a single class, represented at the meeting
and entitled to vote. Shares may be voted for or withheld from this matter.
Under Securities and Exchange Commission regulations regarding stockholder
approval of stock option plans, shares entitled to cast votes on this matter at
the meeting which are withheld from this matter will be treated for all purposes
relevant to this matter as being present at the meeting and entitled to vote and
thus will have the same effect as a vote of such shares against this matter.
Shares entitled to cast votes on this matter at the meeting which are the
subject of a broker non-vote on this matter will be treated for quorum purposes
relevant to this matter as being present at the meeting and entitled to vote
but not be so treated in determining whether a majority or other required
percentage of the shares present and entitled to vote on the matter has been
obtained.
The Board of Directors unanimously recommends a vote FOR Proposal 3,
amending the 1992 Stock Option Plan for Non-Employee Directors.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the Common
Stock, to file reports of ownership and changes in ownership with the Securities
and Exchange Commission. Except as set forth below, based on its review of the
copies of such forms received by it, the Company believes that all filing
requirements applicable to its officers, directors, and greater than ten-percent
beneficial owners were complied with. Mr. Ferguson and Mr. Silver-Hill each
filed one late report reflecting the grant of an option.
STOCKHOLDERS PROPOSALS
In order for a stockholder proposal to be considered for inclusion in the
Company's proxy statement and form of proxy relating to the 2002 Annual Meeting
of Stockholders, the proposal must be received by the Company no later than
December 6,
16
2001 (120 days before the date of mailing based on this year's proxy statement
date) and meet all other requirements for inclusion in the proxy statement.
Additionally, the Company will be authorized to exercise discretionary voting
authority with respect to any stockholder proposal not disclosed in the
Company's 2002 proxy statement if the Company has not received written notice of
such proposal by February 19, 2002 (45 days before the date of mailing based on
this year's proxy statement date).
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is responsible for providing
independent objective oversight of the Company's accounting functions and
internal controls. The Company's Board of Directors has adopted a written
charter for the Audit Committee. A copy of the written charter is included as
Appendix A to this proxy statement.
The Audit Committee has reviewed and discussed the audited financial
statements in the 2000 Annual Report with management and the independent
auditors. The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61, as may be modified or supplemented.
The Audit Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as may be modified or
supplemented, and has discussed with the independent accountant the independent
accountant's independence. Based on this review and discussions, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000.
Two members of the Audit Committee, John F. Hegarty and Nikhil S.
Nagaswami, and Mr. Comeau, who will succeed Mr. Hegarty, are independent, as
independence is defined in Rule 4200(a)(15) of the National Association of
Securities Dealers' ("NASD") listing standards. Hugh G. McBreen is not deemed
to be independent based on the legal fees received by McBreen & Kopko, of which
Mr. McBreen and Mr. Frederick H. Kopko, Jr., the brother of the Chairman and
CEO, are partners. The Board of Directors, however, has determined that it is
important to the Company and in the Company's interest to have Mr. McBreen
continue to serve as a member of the Audit Committee. The reasons for the
Board's determination are Mr. McBreen's long standing relationship with and
knowledge of the Company, his understanding of the Company's business, personnel
and finances, and Mr. McBreen's knowledge and understanding of business and
finance generally.
The foregoing report is submitted by the following directors of the
Company, comprising all of the members of the Audit Committee.
AUDIT COMMITTEE
John F. Hegarty
Hugh G. McBreen
Nikhil S. Nagaswami
INDEPENDENT AUDITORS AND AUDIT FEES
The Board of Directors has appointed the firm of Deloitte & Touche LLP as
independent public auditors to audit the financial statements of the Company for
the year ending December 31, 2001. Deloitte & Touche LLP have been the auditors
for the Company and its subsidiaries since the Company's inception.
Representatives of the firm are expected to be present at the annual meeting to
respond to stockholders' questions and to have the opportunity to make any
statements they consider appropriate.
Audit Fees: The aggregate fees billed by Deloitte & Touche LLP for professional
- -----------
services rendered for the audit of the Company's annual financial statements for
the year ended December 31, 2000 and for the reviews of the financial statements
included in the Company's Quarterly Reports on Form 10-Q for that fiscal year
were $188,000.
Financial Information Systems Design and Implementation Fees: Deloitte & Touche
- -------------------------------------------------------------
LLP performed no such services during the year ended December 31, 2000.
Other Fees: The aggregate fees billed by Deloitte & Touche LLP for services
- -----------
rendered to the Company, other than the services described above under "Audit
Fees" for the year ended December 31, 2000, were $140,117. These fees were
mainly for auditing the Company's employee benefit plans and for tax
consultation.
17
After due consideration, the Audit Committee has concluded that the
provision of non-audit services is compatible with maintaining the principal
accountant's independence.
OTHER MATTERS
The Board of Directors has at this time no knowledge of any matters to be
brought before this year's Annual Meeting other than those referred to above.
However, if any other matters properly come before this year's Annual Meeting,
it is the intention of the persons named in the proxy to vote such proxy in
accordance with their judgment on such matters.
GENERAL
A copy of the Company's Annual Report to Stockholders on Form 10-K for the
fiscal year ended December 31, 2000 is being mailed, together with this Proxy
Statement, to each stockholder. Additional copies of such Annual Report and of
the Notice of Annual Meeting, this Proxy Statement and the accompanying proxy
may be obtained from Morrow & Co., Inc., 909 Third Avenue, New York, New York
10022-4799, or from the Company. The Company has retained Morrow & Co., Inc. to
assist in the solicitation of proxies, primarily from brokers, banks and other
nominees, for an estimated fee of $3,900 plus expenses. The Company will, upon
request, reimburse brokers, banks and other nominees, for costs incurred by them
in forwarding proxy material and the Annual Report to beneficial owners of
Common Stock. In addition, directors, officers and regular employees of the
Company and its subsidiaries, at no additional compensation, may solicit proxies
by telephone, telegram or in person. All expenses in connection with soliciting
management proxies for this year's Annual Meeting, including the cost of
preparing, assembling and mailing the Notice of Annual Meeting, this Proxy
Statement and the accompanying proxy, are to be paid by the Company.
The Company will provide additional copies of Form 10-K to any record or
beneficial owner of its securities, on written request, a copy of the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission for
the fiscal year ended December 31, 2000, including the financial statements and
schedules thereto. Exhibits to said report will be provided upon payment of
fees limited to the Company's reasonable expenses in furnishing such exhibits.
Written requests should be directed to Cathy D. Shea, Assistant Secretary of the
Company, 110 Summit Avenue, Montvale, New Jersey, 07645.
In order to assure the presence of the necessary quorum at this year's
Annual Meeting, and to save the Company the expense of further mailings, please
date, sign and mail the enclosed proxy promptly in the envelope provided. No
postage is required if mailed within the United States. The signing of a proxy
will not prevent a stockholder of record from voting in person at the meeting.
By Order of the Board of Directors,
/s/ Warren F. Brecht
--------------------
Warren F. Brecht
Secretary
18
APPENDIX A
BUTLER INTERNATIONAL, INC.
AUDIT COMMITTEE CHARTER
Effective July 14, 2000
Organization
The Audit Committee of the Board of Directors shall be comprised of at least
three directors who are independent of management and the Company. Members of
the Audit Committee shall be considered independent if they have no relationship
to the Company that may interfere with the exercise of their independence from
management and the Company. All Audit Committee members will be financially
literate, and at least one member will have accounting or related financial
management expertise.
Statement of Policy
The Audit Committee shall provide assistance to the directors in fulfilling
their responsibility to the stockholders, potential stockholders, and investment
community relating to corporate accounting, reporting practices of the Company,
and the quality and integrity of financial reports of the Company. In so doing,
it is the responsibility of the Audit Committee to maintain free and open
communication between the directors, the independent auditors, the internal
auditors, and the financial management of the Company.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and stockholders that the corporate
accounting and reporting practices of the Company are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
Obtain the full Board of Directors' approval of this Charter and review and
reassess this Charter as conditions dictate (at least annually).
Review and recommend to the directors the independent auditors to be selected to
audit the financial statements of the Company and its divisions and
subsidiaries.
Have a clear understanding with the independent auditors that they are
ultimately accountable to the Board of Directors and the Audit Committee, as the
stockholders' representatives who have the ultimate authority in deciding to
engage, evaluate, and if appropriate, terminate their services.
Review and concur with management's appointment, termination, or replacement of
the director of internal audit.
Meet with the independent auditors and financial management of the Company to
review the scope of the proposed audit and timely quarterly reviews for the
current year and the procedures to be utilized, the adequacy of the independent
auditor's compensation, and at the conclusion thereof review such audit or
review, including any comments or recommendations of the independent auditors.
Review with the independent auditors, the Company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any recommendations
for the improvement of such internal controls or particular areas where new or
more detailed controls or procedures are desirable. Particular emphasis should
be given to the adequacy of internal controls to expose any payments,
transactions, or procedures that might be deemed illegal or otherwise improper.
Further, the Committee periodically should review Company policy statements to
determine their adherence to the code of conduct.
Review reports received from regulators and other legal and regulatory matters
that may have a material effect on the financial statements or related Company
compliance policies.
i
Review the internal audit function of the Company including the independence and
authority of its reporting obligations, the proposed audit plans for the coming
year, and the coordination of such plans with the independent auditors.
Inquire of management, the internal auditor, and the independent auditors about
significant risks or exposures and assess the steps management has taken to
minimize such risks to the Company.
Receive prior to each meeting, a summary of findings from completed internal
audits and a progress report on the proposed internal audit plan, with
explanations for any deviations from the original plan.
Review the quarterly financial statements with financial management and the
independent auditors prior to the filing of the Form 10-Q (or prior to the press
release of results, if possible) to determine that the independent auditors do
not take exception to the disclosure and content of the financial statements,
and discuss any other matters required to be communicated to the Committee by
the auditors. The Chair of the Committee may represent the entire Committee for
purposes of this review.
Review the financial statements contained in the annual report to stockholders
with management and the independent auditors to determine that the independent
auditors are satisfied with the disclosure and content of the financial
statements to be presented to the stockholders. Review with financial
management and the independent auditors the results of their timely analysis of
significant financial reporting issues and practices, including changes in, or
adoptions of, accounting principles and disclosure practices, and discuss any
other matters required to be communicated to the Committee by the auditors. Also
review with financial management and the independent auditors their judgments
about the quality, not just acceptability, of accounting principles and the
clarity of the financial disclosure practices used or proposed to be used, and
particularly, the degree of aggressiveness or conservatism of the organization's
accounting principles and underlying estimates, and other significant decisions
made in preparing the financial statements.
Provide sufficient opportunity for the internal and independent auditors to meet
with the members of the Audit Committee without members of management present.
Among the items to be discussed in these meetings are the independent auditors'
evaluation of the Company's financial, accounting, and auditing personnel, and
the cooperation that the independent auditors received during the course of
audit.
Review accounting and financial human resources and succession planning within
the Company.
Report the results of the annual audit to the Board of Directors. If requested
by the Board, invite the independent auditors to attend the full Board of
Directors meeting to assist in reporting the results of the annual audit or to
answer other directors' questions (alternatively, the other directors,
particularly the other independent directors, may be invited to attend the Audit
Committee meeting during which the results of the annual audit are reviewed).
On an annual basis obtain from the independent auditors a written communication
delineating all their relationships and professional services as required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees. In addition, review with the independent auditors the nature and
scope of any disclosed relationships or professional services and take or
recommend that the Board of Directors take appropriate action to ensure the
continuing independence of the auditors.
Review the report of the Audit Committee in the annual report to stockholders
and the Annual Report on Form 10-K disclosing whether or not the Committee had
reviewed and discussed with management and the independent auditors as well as
discussed within the Committee (without management or the independent auditors
present), the financial statements and the quality of accounting principles and
significant judgments affecting the financial statements. In addition, disclose
the Committee's conclusion on the fairness of presentation of the financial
statements in conformity with GAAP based on those discussions.
Submit the minutes of all meetings of the Audit Committee to, or discuss the
matters discussed at each Committee meeting with, the Board of Directors.
Investigate any matter brought to its attention within the scope of its duties,
with the power to retain outside counsel for this purpose if, in its judgment,
that is appropriate.
Review the Company's disclosure in the proxy statement for its annual meeting of
stockholders that describes that the Committee has satisfied its
responsibilities under this Charter for the prior year. In addition, include a
copy of this Charter in the annual report to stockholders or the proxy statement
at least triennially or the year after any significant amendment to the Charter.
ii
PROXY PROXY
BUTLER INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
May 10, 2001
The undersigned stockholder of BUTLER INTERNATIONAL, INC. hereby appoints
HUGH G. McBREEN, NIKHIL S. NAGASWAMI , AND WARREN F. BRECHT, each with full
power of substitution, as attorneys and proxies to vote all of the shares of
stock of said Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of said Company to be held on Thursday, May 10, 2001 at
4:00 p.m. at its headquarters facility, 110 Summit Avenue, Montvale, New Jersey,
or at any and all adjournments thereof, with all powers the undersigned would
possess if personally present, as indicated below, and for the transaction of
such other business as may properly come before said meeting or any and all
adjournments thereof, all as set forth in the April 5, 2001 Proxy Statement for
said meeting:
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
1. Election of Director.
___ FOR the nominee, ___ WITHHOLD AUTHORITY to vote for the nominee,
Thomas F. Comeau Thomas F. Comeau
2. Proposal to amend the 1992 Employee Stock Plans.
___ FOR ___ AGAINST ___ ABSTAIN
3. Proposal to amend the 1992 Stock Option Plan for Non-Employee Directors.
___ FOR ___ AGAINST ___ ABSTAIN
A majority of the members of said Proxy Committee who shall be present in
person or by substitute at said meeting, or in case but one shall be present
then that one, shall have and exercise all of the powers of said Proxy
Committee.
This Proxy will be voted as directed but if no direction is indicated will
be voted FOR the election as director of the nominee listed herein; and FOR
proposals 2 and 3 as described herein. On other matters that may come before
said meeting, this Proxy will be voted in the discretion of the above-named
Proxy Committee.
________________________________
________________________________
(Signature of Stockholder)
DATED: ___________________, 2001
Note: Please sign exactly as your
name or names appear to the left.
If the stock is registered in the
name of more than one person, the
proxy should be signed by all
named holders. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title. 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.