SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CBT GROUP PUBLIC LIMITED COMPANY
-----------------------------------------------------
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
CBT GROUP PUBLIC LIMITED COMPANY
NOTICE OF ANNUAL GENERAL MEETING
Notice is Hereby Given that the ANNUAL GENERAL MEETING of Shareholders of
CBT Group Public Limited Company, a corporation organized under the laws of
the Republic of Ireland (the "Company"), will be held at The Berkeley Court
Hotel, Lansdowne Road, Dublin 4, Ireland on Tuesday, June 17, 1997 at 11:00
a.m. (the "Meeting") for the purpose of transacting the following business:
ORDINARY BUSINESS
1. By separate resolutions to re-elect as directors the following persons
who retire by rotation and, being eligible, offer themselves for re-
election in accordance with the Company's Articles of Association.
(A) Mr. William G. McCabe; and
(B) Mr. John P. Hayes.
2. To elect as a director Mr. James J. Buckley who was appointed during the
year.
3. To receive and consider the Report of the Directors and the Consolidated
Financial Statements of the Company for the year ended December 31, 1996
and the Auditors' Report to the Members.
4. To authorize the directors to fix the remuneration of the Company's
auditors for the year ending December 31, 1997.
SPECIAL BUSINESS
To consider and, if thought fit, to pass the following resolution, which
resolution will be proposed as an ordinary resolution:
5. THAT the 1994 Share Option Plan (the "1994 Plan") be and it is hereby
amended to increase the total number of shares reserved for issuance
thereunder by 464,905 Ordinary Shares and that the directors of the
Company be and they are hereby authorized to do such acts and things as
they may consider necessary or expedient to establish and carry into
effect the increase in the number of shares available for issuance under
the 1994 Plan.
To conduct any other ordinary business of the Company as may properly come
before the Meeting.
By Order of the Board
/s/ Jennifer M. Caldwell
Jennifer M. Caldwell
Secretary
1st May, 1997
Registered Office:
Beech Hill
Clonskeagh
Dublin 4, Ireland
NOTES:
1. The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
2. Those persons whose names appear in the Register of Members of the Company
("Members") on the date materials are dispatched to shareholders are
entitled to receive notice of the Meeting or any adjournment or
postponement thereof. In addition, Members on the date of the Meeting are
entitled to attend and vote at the Meeting.
3. The Company, at the request of The Bank of New York, as Depositary for the
Ordinary Shares underlying the American Depositary Shares, has set Tuesday,
April 22, 1997 as the Record Date for the determination of holders of
American Depositary Receipts representing such American Depositary Shares
(collectively, the "ADS Holders") entitled to give instructions for the
exercise of voting rights at the Meeting or any adjournment or postponement
thereof. ADS Holders may not vote at the Meeting; however, the Depositary
has the right to vote all of the Ordinary Shares represented by American
Depositary Shares, subject to certain limitations. Voting of the American
Depositary Shares is more fully described in the Proxy Statement
accompanying this Notice.
4. Members entitled to attend and vote at the Meeting may appoint a proxy or
proxies to attend, speak and vote in his or her place. A proxy need not be
a shareholder of the Company. To be valid, proxy forms must be deposited
with the Company's Registrars, AIB Bank, Registrars' & New Issue
Department, Bankcentre, P.O. Box 954, Ballsbridge, Dublin 4, Ireland not
later than 11:00 a.m. on Sunday, June 15, 1997. Completion of the proxy
form does not preclude a Member from attending the Meeting and from voting
thereat.
5. The Register of Directors' Interests and particulars of directors'
transactions in the share capital of the Company and its subsidiary
companies required to be kept under section 59 of the Companies Act, 1990
will be available for inspection at the Meeting. Otherwise it will be open
for inspection at the Registered Office of the Company during normal
business hours on any weekday (Saturdays, Sundays and Irish Public holidays
excluded) from the date of this Notice until the date of the Meeting.
YOUR VOTE IS IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
FORM AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE POSTAGE-PREPAID
ENVELOPE ENCLOSED FOR THAT PURPOSE. IF YOU ATTEND THE MEETING,
YOU MAY VOTE IN PERSON EVEN IF YOU HAVE RETURNED A PROXY.
2
CBT GROUP PUBLIC LIMITED COMPANY
BEECH HILL
CLONSKEAGH
DUBLIN 4, IRELAND
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of CBT Group Public Limited
Company (referred to herein as "CBT" or the "Company") for use at its Annual
General Meeting of Shareholders to be held on Tuesday, June 17, 1997 at 11:00
a.m., local time (the "Annual General Meeting"), or at any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
General Meeting. The Annual General Meeting will be held at The Berkeley Court
Hotel, Lansdowne Road, Dublin 4, Ireland.
These proxy solicitation materials (the "Proxy Statement") and the Report of
the Directors and the Consolidated Financial Statements of the Company for the
year ended December 31, 1996 and the Auditors' Report to the Members, were
first mailed on or about May 1, 1997 to all Ordinary Shareholders entitled to
attend and vote at the Annual General Meeting.
RECORD DATE FOR VOTING OF AMERICAN DEPOSITARY SHARES
The Bank of New York, as the Registrar and Transfer Agent for the Company's
American Depositary Shares ("ADSs"), as well as the Depositary for the
Ordinary Shares represented by the ADSs (the "Depositary"), has fixed the
close of business on Tuesday, April 22, 1997 (which date has been established
as the record date by the Company) as the record date (the "Record Date") for
the determination of holders of ADSs of the Company entitled to give
instructions for the exercise of voting rights at the Annual General Meeting
and any adjournment or postponement thereof.
As of the Record Date, a total of 9,298,111 Ordinary Shares of IR37.5p each
in the capital of the Company were issued and outstanding (or, 18,596,222
equivalent ADSs). Effective as of May 15, 1996, the Company split its ADSs
such that each Ordinary Share of the Company that is deposited with the
Depositary is now represented by two ADSs. The ADSs are quoted in the Nasdaq
National Market under the symbol "CBTSY." As of the Record Date there were
approximately 124 registered holders of ADSs. The Ordinary Shares represented
by the ADSs are held by AIB Custodial Nominees Limited A/C BONY on behalf of
the Depositary on the Register of Members of the Company.
The Depositary has the right, subject to certain limitations set forth in
the Deposit Agreements dated as of April 13, 1995 and November 30, 1995, both
as amended and restated as of April 11, 1996, among the Company, the
Depositary and the owners and beneficial owners of American Depositary
Receipts representing ADSs (the "Deposit Agreements"), to vote all of the
Ordinary Shares represented by ADSs. Under the terms of the Deposit
Agreements, however, the Depositary is required to cast its votes with respect
to those Ordinary Shares for which it receives instructions from the holders
of the ADSs representing such Ordinary Shares in accordance with the
instructions received. Holders of ADSs may not vote at the Annual General
Meeting. See "Voting of ADSs."
QUORUM; VOTING OF ORDINARY SHARES
Holders of Ordinary Shares of the Company whose names appear in the Register
of Members ("Members") maintained by the Company's Registrars, AIB Bank,
Registrars' & New Issue Department, Bankcentre, P.O. Box 954, Ballsbridge,
Dublin 4, Ireland, on the date materials are dispatched to Members of the
Company are entitled to receive notice of the Annual General Meeting or any
adjournment or postponement thereof. In addition, Members on the date of the
Annual General Meeting are entitled to attend and vote at the Annual General
Meeting.
1
The presence at the Annual General Meeting, either in person or by proxy, of
three (3) persons entitled to vote at the Annual General Meeting, and who
together hold not less than one-third of the voting share capital of the
Company in issue, each being a Member or a proxy for a Member or a duly
authorized representative of a corporate Member, constitutes a quorum for the
transaction of business. Abstentions will be counted for the purposes of
determining the presence or absence of a quorum for the transaction of
business. However, abstentions will have no effect on the outcome of the
voting as they will not be considered as votes cast with respect to any
matter.
Voting at the Annual General Meeting will be by a show of hands unless a
poll (a count of the number of shares voted) is duly demanded. On a show of
hands, each shareholder present in person and every proxy shall have one vote.
However, no individual shall have more than one vote and, on a poll, each
shareholder shall have one vote for each share of which he or she is the
holder. Where there is an equality of votes, whether on a show of hands or on
a poll, the chairman of the meeting is entitled to a casting vote in addition
to any other vote he may have. A proxy has the right to demand or join in
demanding a poll. On a poll, a person entitled to more than one vote need not
use all his or her votes or cast all the votes he or she uses in the same way.
If a choice is specified in the proxy as to the manner in which it is to be
voted, the persons acting under the proxy will vote the Ordinary Shares
represented thereby in accordance with such choice. If no choice is specified,
the shares will be voted for each proposal set forth in the accompanying
Notice of Annual General Meeting, as more fully described in this Proxy
Statement, and in the discretion of the proxyholders as to any other matter to
properly come before the Annual General Meeting.
VOTING OF ADSs
Under the terms of the Deposit Agreements, whenever the Depositary receives
notice of any meeting of holders of Ordinary Shares, the Depositary is
required to fix a record date, which shall be the record date, if any,
established by the Company for such purpose or, if different, as close thereto
as practicable, for the determination of the owners of ADSs who will be
entitled to give instructions for the exercise of voting rights at any such
meeting, subject to the provisions of the Deposit Agreements.
Upon receipt of notice of any meeting of the Company or the solicitation for
consents or proxies from the holders of Ordinary Shares, the Depositary is
required, if so requested in writing by the Company, as soon as practicable
thereafter, to mail to all owners of ADSs a notice, the form of which shall be
in the sole discretion of the Depositary, containing (a) the information
contained in the notice of meeting received by the Depositary from the
Company; (b) a statement that the owners of ADSs as at the close of business
on a specified record date are entitled (subject to any applicable provisions
of Irish law and of the Memorandum and Articles of Association of the Company)
to instruct the Depositary as to the exercise by the Depositary of the voting
rights, if any, pertaining to the number of Ordinary Shares represented by
their respective ADSs; (c) a statement that owners of ADSs who instruct the
Depositary as to the exercise of their voting rights will be deemed to have
instructed the Depositary or its authorized representative to call for a poll
with respect to each matter for which instructions are given, (subject to any
applicable provisions of Irish law and of the Memorandum and Articles of
Association of the Company); and (d) a statement as to the manner in which
such instructions may be given (including an express indication that
instructions may be given or deemed to be given in accordance with the next
paragraph if no instruction is received) to the Depositary to give a
discretionary proxy to a person designated by the Company. Upon the written
request of an owner of ADSs on such record date, received on or before the
date established by the Depositary for such purpose, the Depositary will
endeavor, insofar as practicable, to vote or cause to be voted the number of
Ordinary Shares represented by such ADSs in accordance with the instructions
set forth in such request. Accordingly, pursuant to the Memorandum and
Articles of Association of the Company and applicable Irish law, the
Depositary will cause its authorized representative to attend each meeting of
holders of Ordinary Shares and call for a poll as instructed in accordance
with clause (c) above for the purpose of effecting such vote. The Depositary
will not vote or attempt to exercise the rights to vote that attach to the
Ordinary Shares other than in accordance with such instructions or deemed
instructions.
The Deposit Agreements provide that if no instructions are received by the
Depositary from any owner of ADSs with respect to any of the Ordinary Shares
represented by the ADSs on or before the date established by
2
the Depositary for such purpose, the Depositary will deem such owner of ADSs
to have instructed the Depositary to give a discretionary proxy to a person
designated by the Company with respect to such Ordinary Shares and the
Depositary will give a discretionary proxy to a person designated by the
Company to vote such Ordinary Shares, under circumstances and according to the
terms as set forth in the Deposit Agreements; provided, that no such
instructions will be deemed given and no such discretionary proxy will be
given when the Company notifies the Depositary (and the Company agrees to
provide such notice as promptly as practicable in writing) that the matter to
be voted upon is one of the following:
(1) is a matter not submitted to shareholders by means of a proxy
statement comparable to that specified in Schedule 14A promulgated by
the U.S. Securities and Exchange Commission (the "Commission")
pursuant to the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act");
(2) is the subject of a counter-solicitation, or is part of a proposal
made by a shareholder which is being opposed by management (i.e. a
contest);
(3) relates to a merger or consolidation (except when the Company's
proposal is to merge with its own wholly-owned subsidiary, provided
its shareholders, dissenting thereto, do not have rights of
appraisal);
(4) involves rights of appraisal;
(5) authorizes mortgaging of property;
(6) authorizes or creates indebtedness or increases the authorized amount
of indebtedness;
(7) authorizes or creates preferred shares or increases the authorized
amount of existing preferred shares;
(8) alters the terms or conditions of any shares then outstanding or
existing indebtedness;
(9) involves the waiver or modification of preemptive rights (except when
the Company's proposal is to waive such rights with respect to shares
being offered pursuant to share option or purchase plans involving the
additional issuance of not more than 5% of the Company's outstanding
Ordinary Shares) (see Item (12) below);
(10) alters voting provisions or the proportionate voting power of a class
of shares, or the number of its votes per share (except where
cumulative voting provisions govern the number of votes per share for
election of directors and the Company's proposal involves a change in
the number of its directors by not more than 10% or not more than
one);
(11) changes the existing quorum requirements with respect to shareholder
meetings;
(12) authorizes the issuance of Ordinary Shares, or options to purchase
Ordinary Shares, to directors, officers, or employees in an amount
which exceeds 5% of the total amount of the class outstanding (when no
plan is amended to extend its duration, the Company shall factor into
the calculation the number of Ordinary Shares that remain available
for issuance, the number of Ordinary Shares subject to outstanding
options and any Ordinary Shares being added; should there be more than
one plan being considered at the same meeting, all Ordinary Shares are
aggregated);
(13) authorizes (a) a new profit-sharing or special remuneration plan, or a
new retirement plan, the annual cost of which will amount to more than
10% of the average annual income of the Company before taxes for the
preceding five years, or (b) the amendment of an existing plan which
would bring its costs above 10% of such average annual income before
taxes (should there be more than one plan being considered at the same
meeting, all costs are aggregated; exceptions may be made in cases of:
(i) retirement plans based on agreement or negotiations with labor
unions (or which have been or are to be approved by such unions), and
(ii) any related retirement plan for the benefit of non-union
employees having terms substantially equivalent to the terms of such
union-negotiated plan, which is submitted for action of shareholders
concurrently with such union-negotiated plan);
(14) changes the purposes or powers of the Company to an extent which would
permit it to change to a materially different line of business and it
is the Company's stated intention to make such a change;
3
(15) authorizes the acquisition of property, assets or a company, where the
consideration to be given has a fair value of 20% or more of the
market value of the previously outstanding shares of the Company;
(16) authorizes the sale or other disposition of assets or earning power of
20% or more of those existing prior to the transactions;
(17) authorizes a transaction not in the ordinary course of business in
which an officer, director or substantial security holder has a direct
or indirect interest; or
(18) reduces earned surplus by 51% or more or reduces earned surplus to an
amount less than the aggregate of three years' Ordinary Share
dividends computed at the current dividend rate.
Since each proposal to be acted upon at the Annual General Meeting is a
matter for which the Depositary may deem that instruction has been given for
the Depositary to give a discretionary proxy to a person designated by the
Company where no instruction is received, the Depositary will give a
discretionary proxy to a person designated by the Company to vote such
Ordinary Shares for which no instruction has been given.
The Depositary will make available for inspection by the owners of ADSs at
its Corporate Trust Office any reports and communications, including any proxy
soliciting material, received from the Company, which are both (a) received by
the Depositary as the holder of the Ordinary Shares and (b) generally made
available to the holders of Ordinary Shares by the Company. The Depositary
will also send to the owners of ADSs copies of such reports when furnished by
the Company pursuant to the Deposit Agreements.
SOLICITATION OF PROXIES
The cost of preparing, assembling, printing and mailing the Proxy Statement,
the Notice of Annual General Meeting of Shareholders and the enclosed form of
proxy, as well as the cost of soliciting proxies relating to the Annual
General Meeting, will be borne by the Company. The Company will request banks,
brokers, dealers and voting trustees or other nominees, including the
Depositary in the case of the ADSs, to solicit their customers who are owners
of shares listed of record and names of nominees, and will reimburse them for
reasonable out-of-pocket expenses of such solicitation. The original
solicitation of proxies by mail may be supplemented by telephone, telegram and
personal solicitation by officers and other regular employees of the Company.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual General Meeting and voting in person.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL GENERAL MEETING
Subject to applicable laws, proposals of shareholders of the Company that
are intended to be presented by such shareholders at the Company's next Annual
General Meeting of Shareholders must be received by the Company at its offices
located at 1005 Hamilton Court, Menlo Park, California 94025 no later than
January 1, 1998 and satisfy the conditions established by the Commission in
order that such proposals may be considered for possible inclusion in the
Proxy Statement and form of proxy relating to that meeting.
PROPOSAL ONE(A) AND ONE(B)
RE-ELECTION OF DIRECTORS
The Memorandum and Articles of Association of the Company, as amended (the
"Articles"), provide that the Company may have up to a maximum number of ten
(10) directors, which number may be changed by resolution of the shareholders.
There are currently seven (7) directors of the Company, one of whom was
4
appointed during the year by the Board of Directors. As is customary for many
Irish companies, the Company's Board of Directors typically consists of fewer
than the maximum number of authorized directors. The Company believes that
benefits are derived from having vacancies on the Board, particularly in the
areas of attracting qualified board members and responding to shareholder
concerns. Mr. John M. Fortune has advised the Company of his intention to
resign from the Board of Directors of the Company with effect from the closing
of the Annual General Meeting. In accepting Mr. Fortune's resignation, the
Board of Directors unanimously commended him for his many contributions to the
Company over the years.
Proxies cannot be voted for a greater number of persons than the number of
nominees named in Proposals 1(A) and 1(B). At each Annual General Meeting of
Shareholders, approximately one-third (1/3) of the existing directors must
retire by rotation; however, such director(s) are eligible for re-election
and, if re-elected, shall serve until the next rotation and until his
successor is elected and qualified or until such director's resignation, death
or removal. Any director elected by the Board of Directors during the year,
whether to fill a vacancy (including a vacancy created by an increase in the
Board of Directors) or otherwise, must stand for re-election at the next
Annual General Meeting of Shareholders. In accordance with the Articles, Mr.
William G. McCabe and Mr. John P. Hayes, as the longest serving directors,
must retire by rotation.
Mr. McCabe, being eligible, offers himself for re-election.
PROPOSAL ONE(A) VOTE REQUIRED
The affirmative vote of the holders of a majority of the Ordinary Shares in
the capital of the Company represented, in person or by proxy, and voting at
the Annual General Meeting will be required to approve the re-election of Mr.
McCabe. Unless otherwise instructed, the proxyholders will vote the proxies
"FOR" the re-election of Mr. McCabe to the Company's Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL ONE(A).
Mr. Hayes, being eligible, offers himself for re-election.
PROPOSAL ONE(B) VOTE REQUIRED
The affirmative vote of the holders of a majority of the Ordinary Shares in
the capital of the Company represented, in person or by proxy, and voting at
the Annual General Meeting will be required to approve the re-election of Mr.
Hayes. Unless otherwise instructed, the proxyholders will vote the proxies
"FOR" the re-election of Mr. Hayes to the Company's Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL ONE(B).
PROPOSAL TWO
As noted above, the Articles provide for a total of ten (10) directors. Mr.
James J. Buckley was appointed to serve as the seventh director of the Company
in October 1996. The Board of Directors is recommending that the shareholders
elect Mr. Buckley to serve as the seventh member of the Board of Directors of
the Company.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Ordinary Shares in
the capital of the Company represented, in person or by proxy, and voting at
the Annual General Meeting will be required to approve the election of Mr.
Buckley. Unless otherwise instructed, the proxyholders will vote the proxies
"FOR" the election of Mr. Buckley to the Company's Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL TWO.
5
INFORMATION REGARDING DIRECTORS
The following table sets forth certain information as of the Record Date for
the current directors of the Company, including the nominees to be re-elected
at the Annual General Meeting, and the nominee for director of the Company:
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
William G. McCabe 40 Chairman of the Board
James J. Buckley 46 Chief Executive Officer, President and
Director
Gregory M. Priest 33 Vice President, Finance, Chief Financial
Officer, Assistant Secretary and Director
John P. Hayes 43 Group Financial Controller and Director
Patrick J. McDonagh 45 Director
John M. Grillos 55 Director
John M. Fortune 43 Director
William G. McCabe has been Chairman of the Board of the Company since
September 1991. From September 1991 to December 1996, Mr. McCabe also served
as Chief Executive Officer of the Company.
James J. Buckley joined the Company as President and Chief Operating Officer
in September 1996. In October 1996, Mr. Buckley was appointed to serve as a
director of the Company, and in December 1996 he was appointed Chief Executive
Officer of the Company. Prior to joining the Company, Mr. Buckley served as
President, Apple Americas and Senior Vice President of Apple Computer, Inc.
from November 1995 to April 1996, President, Apple USA from October 1993 to
November 1995 and Vice President and General Manager for Apple USA's Higher
Education Division from April 1992 to October 1993. Mr. Buckley also served in
various sales, marketing and managerial positions at Apple Computer following
his employment there in 1985.
Gregory M. Priest has been the Vice President, Finance and Chief Financial
Officer of the Company since December 1995. In June 1996, Mr. Priest was
elected to serve as a director of the Company. From July 1990 to December
1995, Mr. Priest was an attorney with Wilson Sonsini Goodrich & Rosati,
Professional Corporation, a private law firm representing technology
companies, where he was elected to the partnership in 1995. From June 1989 to
July 1990, Mr. Priest served as a law clerk to Justice Thurgood Marshall of
the United States Supreme Court.
John P. Hayes has been Group Financial Controller and a director of the
Company since 1991. From 1987 to 1991, Mr. Hayes served as the Company's
Financial Controller.
Patrick J. McDonagh was a founding member of the Company and has been a
director of the Company since September 1989. He has not taken an active role
in the Company's management since 1991 and is currently a private investor.
John M. Grillos has been a director of the Company since February 1994. Mr.
Grillos is a Partner of ITech Partners, L.P., a venture capital partnership
focused on very early stage information technology companies. Mr. Grillos has
been employed by Robertson, Stephens & Company LLC, an investment banking
firm, in its venture capital group, since 1988. Mr. Grillos is also a member
of the Board of Directors of Summit Design, Inc.
John M. Fortune has been a director of the Company since March 1990 and
served as Vice President, Finance and Corporate Development and Chief
Financial Officer of the Company from January 1995 until November 1995 and is
currently a private investor. From April 1993 to January 1995, Mr. Fortune
acted as a consultant to the Company for certain special financial and
strategic projects. Prior to that period, Mr. Fortune was an Executive
Director of the Company. Before joining the Company, Mr. Fortune was a
Director of Corporate Finance with the Investment Bank of Ireland Limited.
There are no family relationships among any of the directors or executive
officers of the Company.
6
BOARD MEETINGS AND COMMITTEES
The Board of Directors, which has an Audit Committee, Compensation
Committee, Stock Option Committee and Non-Officer Stock Option Committee, held
a total of four meetings during the financial year ended December 31, 1996
(the "Last Fiscal Year"). No incumbent director attended fewer than seventy-
five percent (75%) of such meetings of the Board of Directors or committee
thereof occurring during his tenure as a director or member of any committee
of the Board of Directors.
The Audit Committee currently consists of Messrs. McDonagh and Grillos.
During the Last Fiscal Year, the Audit Committee held two meetings. The Audit
Committee oversees actions taken by the Company's independent auditors,
recommends the engagement of auditors and reviews the Company's internal
audits.
The Stock Option Committee currently consists of Messrs. McDonagh and
Grillos. During the Last Fiscal Year, the Stock Option Committee did not hold
any formal meetings but took several actions by unanimous written consent. The
Stock Option Committee administers the Company's employee share option plans,
grants share options to officers of the Company and grants share options to
non-officers of the Company in excess of 10,000 shares per grant. See "Board
Compensation Committee and Stock Option Committee Report on Executive
Compensation" in this Proxy Statement.
In January 1996, the Board of Directors established the Non-Officer Stock
Option Committee which consists of Messrs. McCabe and Hayes. During the Last
Fiscal Year, the Non-Officer Stock Option Committee did not hold any formal
meetings but took several actions by unanimous written consent. The Non-
Officer Stock Option Committee grants share options which are less than 10,000
shares per grant to non-officers of the Company.
The Compensation Committee currently consists of Messrs. McCabe, Fortune,
Grillos and McDonagh. During the Last Fiscal Year, the Compensation Committee
held two meetings. As a result of Mr. Fortune's decision to resign from the
Board of Directors with effect from the date of the Annual General Meeting,
the Compensation Committee will consist of Messrs. McCabe, Grillos and
McDonagh. The Compensation Committee reviews and approves the compensation of
executives of the Company and makes recommendations to the Board of Directors
with respect to standards for setting compensation levels. See "Board
Compensation Committee and Stock Option Committee Report on Executive
Compensation" in this Proxy Statement.
The Board of Directors does not have a Nominating Committee or any committee
performing similar functions.
COMPENSATION OF DIRECTORS
No director receives any cash compensation for his services as a member of
the Board of Directors, although each director is reimbursed for his expenses
in attending Board and related Committee meetings. Directors who serve on
committees of the Board of Directors receive no additional compensation.
On October 15, 1996, Mr. Grillos was granted an option to purchase a total
of 3,750 Ordinary Shares (or, 7,500 ADSs) of the Company at an exercise price
of $116.00 per Ordinary Share (or, $58.00 per ADS) under the Company's 1990
Share Option Scheme. The option vests as to one-third of the shares subject to
the option on each of the first, second and third anniversaries of the date of
grant.
7
PROPOSAL FOUR
AUTHORIZATION OF DIRECTORS TO FIX AUDITORS' REMUNERATION
Ernst & Young have been the Company's independent auditors since September
10, 1993. The shareholders are now being requested to approve the
authorization of the Company's Board of Directors to fix the remuneration of
the Company's auditors for the year ending December 31, 1997.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Ordinary Shares in
the capital of the Company represented, in person or by proxy, and voting at
the Annual General Meeting will be required to authorize the directors to fix
the remuneration of the Company's auditors. Unless otherwise instructed, the
proxyholders will vote the proxies "FOR" the authorization of the directors to
fix the remuneration of the Company's auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL FOUR.
PROPOSAL FIVE
INCREASE IN NUMBER OF SHARES UNDER THE 1994 SHARE OPTION PLAN
In November 1994, the Company's Board of Directors and its shareholders
adopted and approved the 1994 Share Option Plan (the "1994 Plan"). The 1994
Plan currently provides for the issuance of up to 1,096,854 Ordinary Shares of
the Company. On April 22, 1997, the Board of Directors approved, subject to
receipt of shareholder approval, an amendment to the 1994 Plan increasing the
total number of Ordinary Shares reserved for issuance thereunder to 1,561,759.
At the Annual General Meeting, the shareholders are being requested to
approve an amendment to the 1994 Plan to increase the number of shares
reserved for issuance thereunder by 464,905 Ordinary Shares.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Ordinary Shares in
the capital of the Company represented, in person or by proxy, and voting at
the Annual General Meeting will be required to approve the amendment to the
1994 Plan. Unless otherwise instructed, the proxyholders will vote the proxies
"FOR" the amendment to the 1994 Plan increasing the total number of shares
reserved for issuance thereunder by 464,905 Ordinary Shares.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL FIVE.
As of March 31, 1997, options to purchase a total of 921,364 Ordinary Shares
were outstanding and options to purchase 94,105 Ordinary Shares remained
available for future grant (without giving effect to the increase in shares
being presented to the shareholders for approval at the Annual General
Meeting) under the 1994 Plan.
The Company relies heavily on its 1994 Plan to attract and retain high
quality executives and key personnel. Accordingly, the Board of Directors
believes that it is in the Company's best interests to increase the number of
shares reserved for issuance under the 1994 Plan so that the Company may
continue to provide ongoing incentives to the Company's employees in the form
of options to purchase the Company's Ordinary Shares in amounts consistent
with past practices.
8
SUMMARY OF THE 1994 PLAN
A description of the principal features of the 1994 Plan, as amended to
date, is set forth below.
General. The 1994 Plan permits the granting of options to purchase Ordinary
Shares of the Company. Options granted under the 1994 Plan may be either
"incentive share options," as defined in Section 422 of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"), or nonstatutory share options.
The purposes of the 1994 Plan are to attract and retain the best available
personnel for the Company, provide additional incentive to current employees,
consultants and directors of the Company and promote the success of the
Company's business.
Administration of the 1994 Plan. The 1994 Plan must be administered by
either the Board of Directors or a committee appointed by the Board (the
"Administrator"). The 1994 Plan is currently being administered by the Stock
Option Committee of the Board of Directors and by a Non-Officer Stock Option
Committee for certain smaller grants to non-officers. The interpretation and
construction of any provision of the 1994 Plan by the Administrator are final
and binding.
Eligibility. The 1994 Plan provides that options may be granted to employees
(including officers and directors who are also employees), consultants of the
Company and its subsidiaries, and members of the Board of Directors of the
Company. Incentive share options may be granted only to employees. The
Administrator selects the participants and determines the number of shares to
be subject to each option. As of December 31, 1996, there were approximately
481 full-time employees and 15 consultants eligible to receive share options
under the 1994 Plan.
Terms of Options. The terms of options granted under the 1994 Plan are
determined by the Administrator. Each option is evidenced by a written
agreement between the Company and the person to whom such option is granted,
and is subject to additional terms and conditions set forth in the 1994 Plan.
The exercise price of options granted under the 1994 Plan is determined by
the Administrator and must not be less than 100% of the fair market value of
the ADSs (which the option to purchase Ordinary Shares may be exercised into
at the election of the optionee), in the case of incentive share options, and
may be determined by the Administrator subject to applicable laws, in the case
of nonstatutory share options, on the date the option is granted. Fair market
value per share is based on the closing sales price of the ADSs as reported on
the Nasdaq National Market on the last trading day prior to the date of grant.
Incentive share options granted to shareholders owning more than 10% of the
Company's outstanding shares are subject to the additional restriction that
the exercise price must be at least 110% of the fair market value. The method
of payment of the exercise price of the shares purchased upon exercise of an
option is determined by the Administrator and may include cash, check,
promissory note or such other consideration and method of payment for the
issuance of shares to the extent permitted under applicable laws.
The Administrator determines when options become exercisable, provided that
the optionee must generally earn the right to exercise the option by
continuing to perform services for the Company. Options granted under the 1994
Plan expire ten years from the date of grant, unless a shorter period is
provided in the notice of grant. No option may be exercised by any person
after such expiration. In addition, incentive share options granted to
shareholders owning more than 10% of the Company's outstanding shares may not
have a term of more than five years. An option is non-transferable by the
holder otherwise than by will or the laws of descent or distribution, and is
exercisable during the holder's lifetime only by the optionee, or in the event
of the optionee's death, by a person who acquires the right to exercise the
option by bequest or inheritance or by reason of the death of the holder.
Adjustment and Change in Control. In the event any change is made in the
Company's capitalization, such as a share split, combination or
reclassification, appropriate adjustments shall be made to the purchase price
and to the number of shares subject to the option. In the event of the
proposed dissolution or liquidation of the Company, all options will terminate
immediately prior to the consummation of such actions, unless otherwise
provided by the Board. In the event of a proposed sale of all or substantially
all of the assets of the Company, or
9
the merger of the Company with or into another corporation, the successor
corporation shall assume all outstanding options or substitute new options
therefor, unless the Board determines in its discretion to accelerate the
exercisability of such options.
Amendment and Termination of the 1994 Plan. The Board may amend or terminate
the 1994 Plan from time to time in such respects as it may deem advisable,
provided that, to the extent necessary and desirable to comply with Section
422 of the Code or any other applicable law, rule or regulation, the Company
shall obtain shareholder approval of any 1994 Plan amendment in such a manner
and to such a degree as is required by the applicable law, rule or regulation.
Any amendment or termination of the 1994 Plan shall not affect options already
granted and such options shall remain in full force and effect as if the 1994
Plan had not been amended or terminated, unless mutually agreed otherwise
between the optionee and the Board, which agreement must be in writing and
signed by the optionee and the Company. The 1994 Plan will terminate in
November 2004. Any options outstanding under the 1994 Plan at the time of its
termination will remain outstanding until they expire by their terms.
TAX INFORMATION
Options granted under the 1994 Plan may be either "incentive share options,"
as defined in Section 422 of the Code, or nonstatutory share options.
If an option granted under the 1994 Plan is an incentive share option, an
optionee who is subject to taxation under the Code with respect to the option
will recognize no income upon grant of the incentive share option and incur no
tax liability due to the exercise unless the optionee is subject to the
alternative minimum tax. The Company will not be allowed a deduction for
federal income tax purposes as a result of the exercise of an incentive share
option regardless of the applicability of the alternative minimum tax. Upon
the sale or exchange of the shares at least two years after grant of the
option and one year after receipt of the shares by the optionee, any gain or
loss will be treated as long-term capital gain or loss. If these holding
periods are not satisfied, the optionee will recognize ordinary income equal
to the difference between the exercise price and the lower of (i) the fair
market value of the shares at the date of the option exercise or (ii) the sale
price of the shares. Different rules for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an officer, director
or 10% shareholder of the Company. The Company will be entitled to a deduction
in the same amount as the ordinary income recognized by the optionee. Any
additional gain or any loss recognized on such a premature disposition of the
shares will be characterized as long-term or short-term capital gain or loss.
All other options which do not qualify as incentive share options are
referred to as nonstatutory share options. An optionee will not recognize any
taxable income at the time the optionee is granted a nonstatutory share
option. However, upon its exercise, the optionee will recognize ordinary
income for tax purposes generally measured as the excess of the then fair
market value of the shares purchased over the purchase price. The income
recognized by an optionee who is also an employee of the Company will be
subject to tax withholding by the Company by payment in cash or out of the
current earnings paid to the optionee. Upon resale of such shares by the
optionee, any difference between the sale price and the exercise price, to the
extent not recognized as ordinary income as provided above, will be treated as
long-term or short-term capital gain or loss.
THE FOREGOING BRIEF SUMMARY OF THE AFFECT OF FEDERAL INCOME TAXATION UPON
THE PARTICIPANT AND THE COMPANY WITH RESPECT TO SHARES PURCHASED UNDER THE
1994 PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE
APPLICABLE PROVISION OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS
THE TAX CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE PROVISIONS OF THE INCOME
TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY OTHER THAN THE UNITED
STATES IN WHICH THE PARTICIPANT MAY RESIDE.
PARTICIPATION IN THE 1994 PLAN
The grant of share options under the 1994 Plan to executive officers,
including the officers named in the Summary Compensation Table contained in
this Proxy Statement, is subject to the discretion of the Administrator. As of
the date of this Proxy Statement, there has been no determination by the
Administrator with respect to future grants under the 1994 Plan. Accordingly,
future grants are not determinable.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's equivalent ADSs as of March 31, 1997 by (a) each
director and nominee for director, (b) each of the Named Executive Officers
(as defined below in "EXECUTIVE COMPENSATION AND OTHER MATTERS--Summary
Compensation Table"); (c) each person who is known by the Company to be the
beneficial owner of more than five percent (5%) of the Company's ADSs; and (d)
all current directors and executive officers as a group. The number and
percentage of shares beneficially owned is determined under the rules of the
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the individual has sole or shared voting power
or investment power and also any shares that the individual has the right to
acquire within sixty (60) days of the Record Date through the exercise of
share options or other rights. Unless otherwise indicated, each person has
sole voting and investment power (or shares such powers with his spouse) with
respect to the shares shown as beneficially owned.
A total of 18,595,722 equivalent ADSs of the Company were issued and
outstanding as of March 31, 1997.
APPROXIMATE
EQUIVALENT ADSS PERCENTAGE
NAME OF PERSON OR IDENTITY OF GROUP BENEFICIALLY OWNED OWNED
----------------------------------- ------------------ -----------
Putnam Investments, Inc. (1).................... 2,412,256 13.0%
One Post Office Square
Boston, MA 02109
Standard Life Assurance Co. plc (2)............. 1,170,000 6.3
32/33 College Green
Dublin 2, Ireland
William G. McCabe (3)........................... 699,998 3.6
Morten G. Weaver (4)............................ 223,132 1.2
William A. Beamish (5).......................... 87,136 *
John M. Todd (6)................................ 34,872 *
Gregory M. Priest(7)............................ 18,150 *
John M. Grillos................................. 2,408 *
John P. Hayes (8)............................... 2,818 *
John M. Fortune................................. 1,484 *
James J. Buckley................................ -- *
Patrick J. McDonagh............................. -- *
All current directors and executive officers as
a group (14 persons)(9)......................... 1,341,860 6.9
- - --------
* Less than 1%.
(1) All of such shares are represented by ADSs. Based on information contained
in the Schedule 13G/A filed with the Commission for the fiscal year ended
December 31, 1996 by Putnam Investment Management, Inc. ("PIM"), Putnam
Advisory Company, Inc. ("PAC") and Putnam New Opportunities Fund ("Fund"),
investment managers (together with their parent corporations, Putnam
Investments, Inc. ("PI") and Marsh & McClennan Companies, Inc. ("MMC")).
MMC does not have any sole voting power, shared voting power, sole
dispositive power or shared dispositive power with respect to the shares.
PI does not have any sole voting power, shared voting power or sole
dispositive power with respect to the shares and has shared dispositive
power with respect to all of the shares. PIM does not have any sole voting
power, shared voting power and sole dispositive power with respect to the
shares and has shared dispositive power with respect to 2,351,456 shares.
PAC does not have any sole voting power, shared voting power or sole
dispositive power with respect to the shares and has shared dispositive
power with respect to 60,800 shares. Fund does not have any sole voting
power, shared voting power or sole dispositive power with respect to the
shares and has shared dispositive power with respect to 1,052,900 shares.
The shares were acquired for investment purposes by such investment
managers for certain of their advisory clients.
11
(2) These shares are registered in the name of Ulster Bank Dublin Nominees
Limited.
(3) Represents 699,998 equivalent ADSs issuable upon the exercise of share
options held by Mr. McCabe, which options are exercisable within sixty
(60) days of April 22, 1997.
(4) Includes 33,537 equivalent ADSs issuable upon the exercise of share
options held by Mr. Weaver, which options are exercisable within sixty
(60) days of April 22, 1997.
(5) Includes 77,438 equivalent ADSs issuable upon the exercise of share
options held by Mr. Beamish, which options are exercisable within sixty
(60) days of April 22, 1997.
(6) Represents 34,872 equivalent ADSs issuable upon the exercise of share
options held by Mr. Todd, which options are exercisable within sixty (60)
days of April 22, 1997. Mr. Todd resigned his position as an executive
officer of the Company effective March 31, 1997.
(7) Represents 18,150 equivalent ADSs issuable upon the exercise of share
options held by Mr. Priest, which options are exercisable within sixty
(60) days of April 22, 1997.
(8) Represents 2,818 equivalent ADSs issuable upon the exercise of share
options held by Mr. Hayes, which options are exercisable within sixty (60)
days of April 22, 1997.
(9) Includes 955,440 equivalent ADSs issuable upon the exercise of options
held by current officers and directors of the Company as a group, which
options are exercisable within sixty (60) days of April 22, 1997.
12
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE OFFICERS
In addition to Messrs. McCabe, Buckley, Priest and Hayes, the following
persons were executive officers of the Company as of the Record Date:
NAME AGE POSITION
---- --- --------
William A. Beamish.......... 42 Vice President, Product Strategy and Development
William B. Lewis............ 41 Vice President, North American Sales
Jeffrey N. Newton........... 42 Vice President, Business Development
Gregory G. Olson............ 43 Vice President, Marketing
Morten G. Weaver............ 35 Vice President, Pacific Rim Sales
William A. Beamish has been Vice President, Product Strategy and Development
of the Company since 1993. Mr. Beamish joined CBT Systems Ltd. ("CBT Ireland")
in 1985 as a design consultant. He became head of product development in 1988
and Development Center Manager in 1990.
William B. Lewis became Vice President, North American Sales of the Company
in March 1997. From January 1996 until March 1997, Mr. Lewis served as the
Company's Area Vice President of Sales for the southern region and served as
Regional Vice President of Sales for the southern region from January 1994 to
January 1996. Mr. Lewis joined the Company as a sales manager for the southern
region in April 1992 and served in that capacity until January 1994.
Jeffrey N. Newton became Vice President, Business Development of the Company
in March 1997. From January 1996 until March 1997, Mr. Newton served as the
Company's Area Vice President of Sales for the northern region and served as
Regional Vice President of Sales for the northern region from January 1994 to
January 1996. Mr. Newton joined the Company as a sales manager for the
northern region in April 1992 and served in that capacity until January 1994.
Gregory G. Olson has been Vice President, Marketing of the Company since
December 1996. Prior to joining the Company, Mr. Olson served as Manager,
Direct Marketing and Advertising for Apple Computer, Inc.'s America's Division
from December 1995 to December 1996. Mr. Olson also served as Manager, Direct
Marketing and Advertising for Apple Computer, Inc. in the United States from
June 1994 to December 1995 and held various marketing and advertising
managerial positions with Apple Computer, Inc. from July 1989 to June 1994.
Morten G. Weaver was appointed Vice President, Pacific Rim Sales in January
1997. He served as Vice President, U.S. Sales of the Company from January 1992
to January 1997 and from January 1991 to January 1992, he served as CBT
Systems USA Ltd's senior sales representative.
Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve until their successors have been duly elected. There
are no family relationships among the executive officers of the Company.
IMPORTANT NOTE ABOUT SHARE NUMBERS AND DOLLAR VALUES
Effective May 15, 1996, the Company effected a two-for-one split of its
ADSs, such that each ADS is now represented by one-half of one Ordinary Share
of the Company. The share numbers in this section give effect to such ADS
split unless otherwise noted. All references to "dollars" or "$" are to U.S.
dollars unless otherwise noted.
13
SUMMARY COMPENSATION TABLE
The following table discloses, for the Last Fiscal Year, compensation earned
by each individual serving as the Company's Chief Executive Officer and each
of the four other most highly compensated executive officers (collectively,
the "Named Executive Officers") and compensation earned by the Named Executive
Officers for the fiscal years ended December 31, 1995 and 1994:
ANNUAL COMPENSATION LONG-TERM COMPENSATION
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
OPTIONS TO
NAME AND PRINCIPAL OTHER ANNUAL PURCHASE ADS ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION(2) EQUIVALENTS COMPENSATION(3)
------------------ ---- --------- -------- --------------- ------------ ---------------
William G. McCabe(4).... 1996 $120,000 $380,000 $ -- 200,000 $31,800
Chairman of the Board 1995 120,000 410,000 -- 250,000 32,080
1994 120,000 232,500 -- 93,332 39,000
James J. Buckley(4)..... 1996 125,618 50,000 -- 485,000 --
President, Chief
Executive Officer and
Director
Morten G. Weaver........ 1996 69,835 194,196 -- 36,500 --
Vice President, 1995 66,000 252,907 -- 30,000 --
Pacific Rim Sales 1994 65,000 148,109 -- 38,332 --
John M. Todd(5)......... 1996 66,792 217,658 -- 19,000 6,817
European Sales Director 1995 66,172 137,586 -- 30,000 6,630
1994 67,412 71,298 -- 38,332 6,250
Gregory M. Priest(6).... 1996 125,000 89,250 -- 5,000 --
Vice President, Finance, 1995 5,208 -- -- 160,000 --
Chief Financial Officer
and Director
William A. Beamish...... 1996 80,000 85,000 -- 25,000 6,360
Vice President, Product 1995 70,000 91,000 34,449 30,000 6,980
Strategy and Development 1994 70,000 72,345 -- 26,666 6,380
- - --------
(1) Salary includes amount deferred pursuant to the Company's 401(k) plan.
(2) Includes $24,000 paid to Mr. Beamish for rental reimbursement in 1995.
(3) Represents $39,000 paid to Mr. McCabe; $6,250 paid to Mr. Todd; and $6,380
paid to Mr. Beamish in 1994, $32,080 paid to Mr. McCabe; $6,630 paid to
Mr. Todd; and $6,980 paid to Mr. Beamish in 1995, and $31,800 paid to Mr.
McCabe; $6,817 paid to Mr. Todd; and $6,360 paid to Mr. Beamish in 1996
pursuant to a defined contribution pension scheme.
(4) Mr. McCabe was the Chairman of the Board, Chief Executive Officer and
President until September 1996, when he stepped down as President. In
September 1996, Mr. Buckley joined the Company as President and Chief
Operating Officer. In December 1996, Mr. Buckley became the Chief
Executive Officer of the Company. Consequently, Mr. Buckley's compensation
information is from September 1996 through December 1996.
(5) Mr. Todd resigned his position as an executive officer of the Company
effective March 31, 1997.
(6) Mr. Priest joined the Company as Vice President, Finance and Chief
Financial Officer in December 1995.
14
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to options granted
during the Last Fiscal Year to the Named Executive Officers:
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF
EQUIVALENT ADSs PERCENT OF TOTAL EXERCISE STOCK PRICE APPRECIATION FOR
OVER WHICH OPTIONS GRANTED PRICE PER OPTION TERM(1)
OPTIONS WERE TO EMPLOYEES IN EQUIVALENT EXPIRATION ------------------------------
NAME GRANTED(2)(3) LAST FISCAL YEAR ADS(4) DATE 5% 10%
- - ---- --------------- ---------------- ---------- ---------- -------------- ---------------
William G. McCabe(5).... 200,000 13.1% $22.625 1/16/06 $ 2,845,748 $ 7,211,685
James J. Buckley........ 485,000 31.7 39.25 7/25/06 11,971,795 30,338,880
Morten G. Weaver........ 24,000 1.6 22.625 1/16/06 355,719 901,461
12,500(6) 0.8 34.00 4/12/06 267,280 677,341
John M. Todd(7)......... 14,000 0.9 22.625 1/16/06 199,202 504,818
5,000 0.3 34.00 4/12/06 106,912 270,936
Gregory M. Priest....... 5,000 0.3 34.00 4/12/06 106,912 270,936
William A. Beamish...... 20,000 1.3 22.625 1/16/06 284,575 721,168
5,000 0.3 34.00 4/12/06 106,912 270,936
- - --------
(1) Potential realizable value assumes that the share price (based on the fair
market value of the ADSs) increases from the date of grant until the end
of the option term (10 years) at the annual rate specified (5% and 10%).
If the price of the ADSs were to increase at such rates from the price at
December 31, 1996, the last trading day of the Last Fiscal Year ($54.25
per ADS) over the next ten years, the resulting ADS price at 5% and 10%
appreciation would be approximately $88.37 and $140.71, respectively. The
assumed annual rates of appreciation are specified in Commission rules and
do not represent the Company's estimate or projection of future share
price. The Company does not necessarily agree that this method can
properly determine the value of an option.
(2) All options in this table were granted under the Company's 1994 Share
Option Plan (the "1994 Plan") or 1990 Share Option Scheme (the "1990
Plan"). The options expire ten years from the date of grant, subject to
earlier termination in the event of the optionee's cessation of service
with the Company. The 1994 Plan and the 1990 Plan are currently
administered by the Stock Option Committee of the Board of Directors,
which has broad discretion and authority to amend outstanding options and
to reprice options, whether through an exchange of options or an amendment
thereto.
(3) Unless otherwise indicated, options generally vest over four years such
that 12/48ths of the equivalent ADSs subject to the option vest one year
from the respective date of grant and as to 1/48th each month thereafter.
(4) Options were granted at an exercise price equal to the fair market value
of the Company's ADSs, as determined by reference to the closing price of
the ADSs as reported on the Nasdaq National Market on the last trading day
prior to the date of grant.
(5) The equivalent ADSs subject to this option became fully vested on January
16, 1996.
(6) 5,000 equivalent ADSs subject to this option vested on April 12, 1997 and
the balance of the equivalent ADSs vest as to 1/20th each month
thereafter.
(7) Mr. Todd resigned his position as an executive officer of the Company
effective March 31, 1997.
15
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information with respect to option exercises in
the Last Fiscal Year by the Named Executive Officers and the value of such
officers' unexercised options at December 31, 1996:
NUMBER OF EQUIVALENT ADSs
SUBJECT TO UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
EQUIVALENT FISCAL YEAR-END FISCAL YEAR END(3)
ADSS ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(1) REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
William G. McCabe....... -- $ -- 849,998 -- $39,401,126 $ --
James J. Buckley........ -- -- -- 485,000 -- 7,275,000
Morten G. Weaver........ 95,414 5,465,569 15,000 61,082 693,750 2,209,553
John M. Todd (4)........ 97,000 4,465,950 68,874 43,582 3,547,133 1,741,478
Gregory M. Priest....... 39,430 1,349,501 3,904 121,666 123,680 3,797,876
William A. Beamish...... 95,000 5,250,511 138,892 25,000 7,243,291 733,750
- - --------
(1) Employees of the Company, including the Named Executive Officers, have a
choice of acquiring either Ordinary Shares or ADSs representing such
Ordinary Shares upon exercise of options.
(2) Market value of underlying shares based on the closing price of the ADSs
on the Nasdaq National Market on the date of exercise, minus the exercise
price.
(3) Market value of shares underlying in-the-money share options based on the
closing price of $54.25 per ADS on the Nasdaq National Market on December
31, 1996 (the last trading day of the Last Fiscal Year), minus the
exercise price.
(4) Mr. Todd resigned his position as an executive officer of the Company
effective March 31, 1997.
EMPLOYMENT CONTRACTS AND ARRANGEMENTS
On January 2, 1996, the Company entered into an Employment Agreement with
Mr. Gregory M. Priest, pursuant to which agreement the Company agreed to
employ Mr. Priest as Vice President, Finance and Chief Financial Officer of
the Company. It was also agreed that Mr. Priest would be nominated to serve as
a director of the Company. Under the terms of the agreement, Mr. Priest
receives an annual minimum base salary of $125,000 and a scheduled annual
bonus of up to $100,000 based upon the satisfaction of certain performance
goals for the Company, which annual bonus shall not be less than $30,000. The
agreement does not contain any specified minimum term of employment and both
parties have acknowledged that Mr. Priest's employment with the Company is at-
will. In the event the Company terminates Mr. Priest for any reason other than
Cause (as defined in the agreement) or the Company otherwise breaches any
material term of the agreement, the Company agrees to employ Mr. Priest as a
consultant or part-time employee until the value of vested options previously
granted to Mr. Priest (as represented by the difference between the aggregate
fair market value and aggregate exercise price thereof) equals a specified
percentage of Mr. Priest's compensation at the time of such termination or
breach.
On July 24, 1996, the Company executed an offer letter with Mr. James J.
Buckley pursuant to which Mr. Buckley became the President and Chief Operating
Officer of the Company, effective as of September 1, 1996. In accordance with
the terms of the offer letter, Mr. Buckley receives an annual base salary of
$385,000 and a targeted bonus of approximately $150,000, subject to the
achievement of certain performance objectives. In connection with the offer
letter, Mr. Buckley received an option to purchase an aggregate of 485,000
equivalent ADSs of the Company at an exercise price equal to the fair market
value of the Company's ADSs on such date. The ADSs subject to the option vest
over four years, with the initial 25% vesting after one year and remainder on
a monthly basis thereafter.
16
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Last Fiscal Year, the Compensation Committee of the Board of
Directors consisted of directors McCabe, Fortune, McDonagh and Grillos, and
the Stock Option Committee consisted of directors McDonagh and Grillos.
Messrs. McDonagh and Grillos, who have served as members of each of the
Compensation Committee and the Stock Option Committee since they were
established in February 1995, were not executive officers or employees of the
Company during the Last Fiscal Year.
Mr. McCabe has served on the Compensation Committee since February 1995 and
is the Chairman of the Board of the Company. Mr. McCabe also served as the
Chief Executive Officer of the Company through December 1996 and President of
the Company through September 1996. Mr. Fortune served as the Vice President,
Finance and Chief Financial Officer of the Company until November 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ownership of CBT Technology
Approximately 9% of the CBT (Technology) Limited ("CBT T") outstanding share
capital, representing a special non-voting class, is owned by Stargazer
Productions ("Stargazer"), an unlimited company which is wholly-owned by
officers and key employees of the Company. CBT T has in the past and may in
the future declare and pay dividends to Stargazer, and Stargazer may pay
dividends to its shareholders out of such amounts. Any such dividends would be
treated as compensation expense by the Company and would be included in the
Company's operating expenses under U.S. generally accepted accounting
principles.
Loan to Mr. Priest
In February 1996, Mr. Gregory M. Priest, the Company's Vice President,
Finance and Chief Financial Officer and a director of the Company, received an
interest-free loan from the Company in the amount of $125,000 with principal
payable in four annual installments, commencing in February 1997. In February
1997, Mr. Priest repaid to the Company $31,250 of the principal amount due
under the loan. As of the date hereof, $93,750 remains outstanding under the
loan. The largest aggregate amount outstanding under the loan during the Last
Fiscal Year was $125,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers (as
defined in the rules under Section 16) and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file certain reports with the Commission and the NASD regarding ownership of,
and transactions in, the Company's securities. Such officers, directors and
ten percent holders are also required by the Commission's rules to furnish to
the Company copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during the Company's Last Fiscal Year all Section 16(a) filing
requirements applicable to its executive officers, directors and ten percent
holders were complied with, except that, after leaving the Company, Mr.
Richard P. Ream, a former officer of the Company, filed one Form 4 late with
respect to one transaction.
17
BOARD COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Portions of the following report are presented by each of the Company's
Compensation Committee (the "Compensation Committee") and Stock Option
Committee (the "Stock Option Committee") of the Board of Directors with
respect to the compensation of the Company's executive management.
Actual compensation earned during the Last Fiscal Year for the Named
Executive Officers is shown in the Summary Compensation Table contained in
this Proxy Statement.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee reviews and approves the compensation of
executives of the Company and makes recommendations to the Board of Directors
with respect to standards for setting compensation levels.
Compensation Philosophy. At the direction of the Board of Directors and
pursuant to the charter of the Compensation Committee, the Compensation
Committee endeavors to ensure that the compensation programs for executive
officers of the Company and its subsidiaries are effective in attracting and
retaining key executives responsible for the success of the Company. These
programs are administered in a manner that seeks to meet the long-term
interests of the Company and its shareholders and are designed to align total
compensation for senior management with corporate performance.
The Compensation Committee believes that the Company's overall financial
performance should be an important factor in the total compensation of the
Company's executive officers. At the executive officer level, the Compensation
Committee has a policy that a significant proportion of total compensation
should consist of variable, performance-based components, such as bonuses and
share option grants, which can increase or decrease to reflect changes in
corporate and individual performance. These incentive compensation programs
are intended to reinforce management's commitment to enhancement of
profitability and shareholder value.
The Compensation Committee takes into account various qualitative and
quantitative indicators of corporate and individual performance in determining
the level and composition of compensation for the chief executive officer and
other executive officers. The Compensation Committee considers such corporate
performance measures as revenues, net income and earnings per share in setting
executive compensation levels. The specific factors used, and the weights
given to various factors, varies between each executive based on his or her
responsibilities. The Compensation Committee also appreciates the importance
of achievements that may be difficult to quantify, and accordingly recognizes
qualitative factors, such as successful supervision of major corporate
projects and demonstrated leadership ability.
Base salary for the chief executive officer and other executive officers are
established at levels considered appropriate in light of the duties and scope
of responsibilities of each officer's position. Salaries are reviewed
periodically and adjusted as warranted to reflect sustained individual officer
performance. The Compensation Committee focuses primarily on total annual
compensation, including incentive awards, rather than base salary alone, as
the appropriate measure of executive officer performance and contribution.
Chief Executive Officer Compensation. Generally, the criteria used in
determining the compensation of the Company's Chief Executive Officer is the
same as that which is used for executive management. During the Last Fiscal
Year, Mr. McCabe served as the Chief Executive Officer of the Company until
December 1996. Mr. McCabe's base salary of $120,000 has not changed from the
level established in the fiscal year ended December 31, 1993.
In September 1996, the Company hired Mr. James J. Buckley to serve as the
Company's President and Chief Operating Officer. Mr. Buckley's compensation,
including salary, bonus, and an option grant, was determined in accordance
with the Company's established policy of providing competitive compensation
18
packages to attract and retain highly motivated and successful executives. Mr.
Buckley's salary for 1996 represents the pro rata portion of such compensation
based on services he rendered from September 1996 through the end of the Last
Fiscal Year. In December 1996, Mr. Buckley became the Chief Executive Officer
of the Company. Mr. Buckley's salary of $385,000 did not change upon becoming
the Chief Executive Officer of the Company.
As set forth in the Summary Compensation Table in this Proxy Statement, Mr.
McCabe received a bonus with respect to 1996 based on both quantitative
factors, including the Company's overall financial performance in 1996, and
qualitative factors, including his leadership in managing the Company's
expanding operations and role in establishing key development and marketing
alliances for the Company. Other qualitative factors included the recruitment
and hiring of qualified senior management.
Mr. Buckley's bonus was determined pursuant to similar factors, but was
primarily based on his performance and the Company's financial performance
prior to accepting the position as Chief Executive Officer of the Company in
December 1996.
The Compensation Committee also approved the compensation of the Company's
other executive officers for 1996, following the principles and procedures
outlined in this report.
Section 162(m). To the extent readily determinable and as one of the factors
in its consideration of compensation matters, the Compensation Committee
considers the anticipated tax treatment to the Company and to the executives
of various payments and benefits. Some types of compensation payments and
their deductibility, such as the spread on exercise of non-qualified share
options, depend upon the timing of an executive's vesting or exercise of
previously granted rights. Further, interpretations of and changes in the tax
laws and other factors beyond the Compensation Committee's control also affect
the deductibility of compensation. For these and other reasons, the
Compensation Committee will not necessarily limit executive compensation to
that deductible under Section 162(m). The Compensation Committee will consider
various alternatives to preserving the deductibility of compensation payments
and benefits to the extent reasonably practicable and to the extent consistent
with its other compensation objectives.
REPORT OF THE STOCK OPTION COMMITTEE
The Stock Option Committee oversees provision of long-term incentives for
executives and other key employees through share option grants under the
Company's 1990 Share Option Scheme (the "1990 Plan"), 1994 Share Option Plan
(the "1994 Plan") and 1996 Supplemental Stock Option Plan (the "1996 Plan").
Grants under the 1990 Plan or 1994 Plan are made to executives at the time
they join the Company and are made periodically to executive management for
individual performance. Grants under the 1996 Plan are made to employees and
consultants at the time they join the Company and are made periodically for
individual performance. Grants are not made to executive officers or directors
under the Company's 1996 Plan. The purpose of share option grants is to
provide incentives to perform at a level which will enhance the overall
financial performance of the Company's business and maximize long-term
shareholder value and to reward prior performance.
For grants to executives, the Stock Option Committee is responsible for
determining, subject to the terms and conditions of the plans, the timing of
such grants, the exercise price per share, the vesting provisions and the
number of shares subject to each option grant. The Stock Option Committee
primarily grants share options to executive officers under the 1994 Plan.
In 1996, based upon recommendations from executive management, the Stock
Option Committee granted share options to executive officers of the Company,
including the Chief Executive Officer, under the Company's share option plans.
In approving grants under the 1990 Plan, 1994 Plan and 1996 Plan, including
grants to non-executive officers of the Company, the Stock Option Committee
considers quantitative and qualitative factors.
19
In addition to the 1990 Plan, 1994 Plan and 1996 Plan, executives are
eligible to participate in the Company's 1995 Employee Share Purchase Plan
which permits the purchase of shares at a discount through payroll deductions.
Share Option Grants to the Chief Executive Officer. Based on the financial
performance of the Company in 1995, the Stock Option Committee granted Mr.
McCabe an option to purchase a total of 200,000 equivalent ADSs at $22.625 per
equivalent ADS under the 1990 Plan. Mr. Buckley did not receive any options in
connection with his services as the Company's Chief Executive Officer in 1996.
Respectfully Submitted by:
The Members of the Compensation Committee The Members of the Stock Option Committee
William G. McCabe John M. Grillos
John M. Fortune Patrick J. McDonagh
Patrick J. McDonagh
John M. Grillos
20
PERFORMANCE GRAPH
The ADSs are quoted in the Nasdaq National Market. Set forth below is a
graph comparing the value of an investment of $100 in cash of (i) the
Company's ADSs at the initial public offering price on April 13, 1995 of $8.00
per ADS (as adjusted for the ADS split in May 1996); (ii) the Nasdaq National
Market (US); and (iii) the Hambrecht & Quist Technology Index, as if all such
investments were made on April 13, 1995 and assuming dividend reinvestment
through December 31, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG CBTSY, H&Q TECHNOLOGY INDEX AND NASDAQ STOCK MARKET-US
PERFORMANCE GRAPH APPEARS HERE
Measurement Period H&Q TECHNOLOGY NASDAQ STOCK
(Fiscal Year Covered) CBTSY INDEX MARKET-US
- - ------------------- ---------- -------------- -----------
- - -
Measurement Pt- 04/13/95 $100 $100 $100
FYE 12/29/95 $165.63 $130.66 $127.33
FYE 06/30/96 $289.06 $139.38 $144.15
FYE 12/29/96 $339.06 $156.77 $156.62
21
OTHER MATTERS
The Report of the Directors and the Consolidated Financial Statements of the
Company and Auditors' Report to the Members for the Last Fiscal Year were
approved by the Board of Directors of the Company on April 30, 1997. Irish law
requires the Company to provide its Members for receipt and consideration such
Report of the Directors and the Consolidated Financial Statements of the
Company and Auditors' Report to the Members for the Last Fiscal Year at the
Annual General Meeting of Shareholders. In this regard, included as part of
the proxy materials dispatched to Members is a copy of the Report of the
Directors and the Consolidated Financial Statements of the Company and
Auditors' Report to the Members for the Last Fiscal Year.
Representatives of Ernst & Young are expected to be present at the Annual
General Meeting with the opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
The Company knows of no other matters to be submitted at the Annual General
Meeting. If any other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the
shares they represent as the Board of Directors may recommend.
By Order of the Board of Directors
Dated: May 1, 1997
22
CBT GROUP PUBLIC LIMITED COMPANY
THIS PROXY FOR THE ANNUAL GENERAL MEETING IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
The undersigned Member of CBT Group PLC, a corporation organized under the
laws of the Republic of Ireland (the "Company"), hereby acknowledges receipt of
the Notice of Annual General Meeting of Shareholders and Proxy Statement, each
dated May 1, 1997, and hereby appoints James J. Buckley, Gregory M. Priest and
Jennifer M. Caldwell, and each of them, proxies and attorneys-in-fact, each
with full power of substitution, or of as proxy
and attorney in fact (see Note 2 below), on behalf and in the name of the
undersigned, to represent the undersigned at the Company's Annual General
Meeting to be held at 11:00 a.m. on Tuesday, June 17, 1997 at the Berkeley
Court Hotel, Lansdowne Road, Dublin 4, Ireland, and at any adjournments
thereof, and to vote all shares which the undersigned would be entitled to vote
if then and there personally present, on all matters set forth on the reverse
side hereof and in their discretion upon such other matters as may properly
come before the Annual General Meeting.
NOTES:
1. A proxy may (i) vote on a show of hands or on a poll, (ii) demand or join in
demanding a poll and (iii) speak at the Annual General Meeting.
2. If it is desired to appoint as proxy any person other than those set forth
above, please delete the names set forth above and insert the name and
address of your own proxy in the space provided. The alteration should be
initialled. A proxy need not be a shareholder of the Company.
3. In the case of a corporation, this form must be executed either under its
Common Seal or under the hand of an officer or attorney duly authorized.
4. In the case of joint holders, the signature of any one of them will suffice,
but the names of all joint holders should be shown. The vote of the senior
joint holder who tenders a vote, whether in person or by proxy, shall be
accepted to the exclusion of the votes of the other joint holders, and for
this purpose seniority shall be determined by the order in which the names
stand in the Register of Members in respect of the joint holding.
5. To be effective, the proxy form and the power of attorney or other
authority, if any, under which it is signed, or a notarially certified copy
of such power or authority must be deposited with the Company's Registrars,
AIB Bank, Registrars' & New Issue Department, Bankcentre, P.O. Box 954,
Ballsbridge, Dublin 4, Ireland not less than 48 hours before the time
appointed for the holding of the Annual General Meeting or adjourned Annual
General Meeting.
6. Any alterations made to this proxy form should be initialled.
7. On a poll a person entitled to more than one vote need not use all his or
her votes or cast all the votes he or she uses in the same way.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY IN THE ENVELOPE
PROVIDED.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL
BE VOTED "FOR" EACH OF THE PROPOSALS SET FORTH BELOW AND AS SAID PROXIES DEEM
APPROPRIATE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
GENERAL MEETING, INCLUDING, AMONG OTHER THINGS, CONSIDERATION FOR ANY MOTION
MADE FOR ADJOURNMENT OF THE ANNUAL GENERAL MEETING (INCLUDING, WITHOUT
LIMITATION, FOR PURPOSES OF SOLICITING ADDITIONAL VOTES FOR APPROVAL OF THE
PROPOSALS SET FORTH BELOW).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR AGAINST ABSTAIN
ORDINARY BUSINESS --- ------- -------
1A) Proposal to re-elect William G. McCabe as a director of [_] [_] [_]
the Company.
1B) Proposal to re-elect John P. Hayes as a director of the [_] [_] [_]
Company.
2. Proposal to elect James J. Buckley as a director of the [_] [_] [_]
Company.
3. Proposal to authorize the directors of the Company to [_] [_] [_]
fix the remuneration of the Company's auditors.
SPECIAL BUSINESS
4. Proposal to authorize and approve an amendment to the [_] [_] [_]
Company's 1994 Share Option Plan increasing the total
number of shares reserved for issuance thereunder by
464,905 Ordinary Shares.
Mark here if you plan to attend the Mark here, and indicate below,
Annual General Meeting. [_] for a change of address. [_]
Please sign exactly as name appears
below. When shares are held by
joint tenants, both should sign.
When signing as attorney, as
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Date: , 1997
---------------------------
Signature: Signature:
---------------------------- ---------------------------
---------------------------- -------------------------------------
(Print Name) (Print Name)