SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
COMPUTER TASK GROUP, INCORPORATED
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
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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(CTG LOGO)
COMPUTER TASK GROUP, INCORPORATED
April 8, 2005
Dear Fellow Shareholder:
You are cordially invited to attend the 2005 Annual Meeting of Shareholders
of Computer Task Group, Incorporated which will be held at our corporate
headquarters, 800 Delaware Avenue, Buffalo, New York on Wednesday, May 11, 2005
at 10:00 a.m.
Your Proxy card is enclosed. Please indicate your voting instructions and
sign, date and mail the Proxy promptly in the return envelope.
Sincerely,
/s/ James R. Boldt
-----------------------------------------
James R. Boldt
Chairman and
Chief Executive Officer
(CTG LOGO)
COMPUTER TASK GROUP,
INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 2005
Computer Task Group, Incorporated will hold its Annual Meeting of
Shareholders at its corporate headquarters located at 800 Delaware Avenue,
Buffalo, New York on Wednesday, May 11, 2005, at 10:00 a.m. for the following
purposes:
1. To elect three members of the Board of Directors, whose terms are
described in the proxy statement.
2. To consider and act upon any other matters that may be brought
before the meeting or any adjournment thereof.
We have selected the close of business on March 25, 2005 as the record date
for determination of shareholders entitled to notice of and vote at the meeting
or any adjournment.
Buffalo, New York
April 8, 2005
By Order of the Board of Directors,
/s/ Peter P. Radetich
--------------------------------------
Peter P. Radetich
Senior Vice President, Secretary and
General Counsel
COMPUTER TASK GROUP,
INCORPORATED
PROXY STATEMENT
This Proxy Statement and the accompanying form of proxy are being mailed on
or about April 8, 2005, in connection with the solicitation by the Board of
Directors of Computer Task Group, Incorporated of proxies to be voted at the
annual meeting of shareholders on May 11, 2005, and any adjournment or
postponement of the meeting. The mailing address of the Company's executive
office is 800 Delaware Avenue, Buffalo, New York 14209.
The Board has selected the close of business on March 25, 2005 as the
record date for the determination of shareholders entitled to vote at the annual
meeting. On that date, the Company had outstanding and entitled to vote
20,868,834 shares of common stock, par value $.01 per share.
Each outstanding share of common stock is entitled to one vote. Shares
cannot be voted at the meeting unless the shareholder is present or represented
by proxy. If a properly executed proxy in the accompanying form is returned, the
shares represented thereby will be voted at the meeting in accordance with the
instructions contained in the proxy, unless the proxy is revoked prior to its
exercise. Any shareholder may revoke a proxy either by executing a subsequently
dated proxy or notice of revocation, provided that the subsequent proxy or
notice is delivered to the Company prior to the taking of a vote, or by voting
in person at the meeting.
Under the New York Business Corporation Law ("BCL") and the Company's
By-laws, the presence, in person or by proxy, of one-third of the outstanding
common stock is necessary to constitute a quorum of the shareholders to take
action at the annual meeting. The shares that are present at the meeting, or
represented by a proxy, will be counted for quorum purposes regardless of
whether or not a broker with discretionary authority exercises its discretionary
voting authority with respect to any particular matter. Once a quorum is
established, under the BCL and the Company's By-laws, the directors standing for
election may be elected by a plurality of the votes cast. For voting purposes,
all votes cast "for," "against," "abstain," or "withhold authority" will be
counted in accordance with such instructions as to each item. Broker non-votes
will not be counted for any item.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes serving
staggered three-year terms. Directors for each class are elected at the annual
meeting of shareholders held in the year in which the term for their class
expires. The terms for two Class II directors will expire at the 2005 annual
meeting. Directors elected to Class II at the 2005 annual meeting will hold
office for a three-year term expiring at the annual meeting of shareholders in
2008 and until their successors are elected and qualified. The BCL requires that
all classes shall be as nearly equal in number as possible. The Board has
decided to place Thomas E. Baker in Class II. Mr. Baker joined the Board in
August of 2004 and filled the vacancy that existed at that time. The Board also
decided to move Mr. Beitzel into Class III. If elected, Mr. Beitzel will hold
office for a one-year term expiring at the annual meeting of shareholders in
2006 and until his successor is elected and qualified. The shares represented by
properly executed proxies will be voted, in the absence of contrary
instructions, in favor of the election of the following nominees:
- Class II directors -- James R. Boldt and Thomas E. Baker
- Class III director -- George B. Beitzel
All nominees have consented to serve as directors, if elected. However, if
at the time of the meeting any nominee is unable to stand for election, the
persons who are designated as nominees intend to vote, in their discretion, for
such other persons, if any, as may be designated by the Board.
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NOMINEES FOR CLASS II DIRECTORS WHOSE TERMS EXPIRE IN 2005
James R. Boldt Mr. Boldt, 53, has been the Chairman, President
and Chief Executive Officer of the Company
since May of 2002. From July of 2001 to May of
2002, he was the President and Chief Executive
Officer. From February of 2001 to June 2001,
Mr. Boldt was the Executive Vice President and
Chief Financial Officer. From 1996 until 2001,
Mr. Boldt was Vice President and Chief
Financial Officer of the Company. From 1976
until 1996, Mr. Boldt held various positions
with Pratt & Lambert United Inc. most recently
that of Vice President and Chief Financial
Officer. Mr. Boldt is Chairman of the Board of
Directors of Child & Family Services. Mr. Boldt
has been a Director of CTG since 2001.
Thomas E. Baker Mr. Baker, 61, has been the President and
Director of The John R. Oishei Foundation since
2004. From 1998 to 2004, Mr. Baker was the
Executive Director, Secretary and Director of
the Foundation. Mr. Baker joined Price
Waterhouse in 1965 where he held various
positions and was appointed the Buffalo, New
York Office Managing Partner in 1992. After 20
years as an audit partner, Mr. Baker retired
from Price Waterhouse in 1998. Mr. Baker
accepted the appointment as the chairman of the
Buffalo Fiscal Stability Authority in July 2003
and served through January 2005. Mr. Baker is
on the Board of Directors and the Executive
Committee of the Buffalo Niagara Partnership.
Mr. Baker has been a Director of CTG since
2004.
NOMINEE FOR CLASS III DIRECTOR WHOSE TERM EXPIRES IN 2006
George B. Beitzel Mr. Beitzel, 76, has been a director of various
corporate boards since his retirement from
International Business Machines Corporation in
1987. Mr. Beitzel served at IBM for 32 years,
the last 14 as a member of IBM's Board of
Directors and Corporate Officer. He is
currently a Director of Deutsche Bank Trust
Company Americas, Gevity HR, a professional
employer organization, Bitstream, Inc., a
developer of computer software for the creation
and printing of electronic documents and
Actuate Corporation, a provider of web-based
business information software. Mr. Beitzel is
Chairman Emeritus of Amherst College and the
Colonial Williamsburg Foundation. He is a
graduate of the Harvard Business School and
served twelve years on the board of directors
of the Associates at Harvard Business School.
Mr. Beitzel has been a Director of CTG since
1994.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
NOMINEES FOR CLASS II AND CLASS III DIRECTORS
CLASS III DIRECTORS WHOSE TERMS EXPIRE IN 2006
John M. Palms Dr. Palms, Ph.D., 69, is currently
Distinguished University Professor and
Distinguished President Emeritus at the
University of South Carolina. From 1991 until
2002, he was also the President of the
University of South Carolina. From 1989 to
1991, Dr. Palms was the President and Professor
of Physics at Georgia State University. Dr.
Palms is a Director and Chairman of the Audit
Committee of
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Exelon Corporation, an electrical utility
company, Director of SIMCOM International
Holdings, Inc. which plans and manages needed
testing of devices for electrical safety and
compatibility, and Chairman of the Board of
Directors of Assurant, Inc., a financial
services insurance company. Dr. Palms is the
Chairman of the Board of Trustees of the
Institute for Defense Analyses. Dr. Palms has
been a Director of CTG since 2002.
Daniel J. Sullivan Mr. Sullivan, 58, has been the President and
Chief Executive Officer of FedEx Ground, an
operating unit of FedEx Corporation, since
1998. From 1996 to 1998, he served as Chairman,
President and Chief Executive Officer of
Caliber System. Prior to that, he held the same
positions with Roadway Services in 1995. Mr.
Sullivan is a Director of the Pennsylvania
Council of Boy Scouts and a Board member of the
Allegheny Conference on Community Development,
an organization consisting of leading CEO's in
the Pittsburgh, Pennsylvania region. Since
1992, he has also been a Director of G.D.S.
Express in Akron, Ohio. In 2004, Mr. Sullivan
was selected as a member of the Flight 93
National Memorial Federal Advisory Commission.
Mr. Sullivan has been a director since 2002.
CLASS I DIRECTORS WHOSE TERM WILL EXPIRE IN 2007
Randolph A. Marks Mr. Marks, 69, is co-founder of the Company and
is an independent business consultant. From
1985 to September 1990, Mr. Marks served as
Chairman of the Board of American Brass
Company. Mr. Marks was engaged by the Company
as a consultant from March, 1984, until his
retirement from the Company in December, 1985.
Prior to March, 1984, Mr. Marks served as
Chairman of the Board and Chief Executive
Officer of the Company commencing in June,
1979, and prior thereto as Chairman of the
Board and President of the Company from the
time of its organization in 1966. Mr. Marks has
been a Director of CTG since 1966.
Randall L. Clark Mr. Clark, 61, has been the Chairman of the
Board of Directors of Dunn Tire Corporation
since 1996. From 1992 to 1996, Mr. Clark was
the Executive Vice President and Chief
Operating Officer of Pratt & Lambert United
Inc. From 1985 to 1991 Mr. Clark served as the
Chairman and Chief Executive Officer of Dunlop
Tire Corporation. Mr. Clark is a Director of
Taylor Devices, HSBC Bank -- Western Region,
The Lifetime HealthCare Companies, Merchants
Mutual Insurance Company and a Director of the
Amherst Industrial Development Agency. Mr.
Clark is also on the Council for the State
University of New York at Buffalo, Chairman of
the Buffalo Niagara Enterprise, a founding
Director and past President of the Western New
York International Trade Council, a Director of
the Buffalo Niagara Partnership and past
Chairman and a director of AAA Western and
Central New York. Mr. Clark has been a Director
of CTG since 2002.
3
SECURITY OWNERSHIP OF THE COMPANY'S COMMON SHARES
BY CERTAIN BENEFICIAL OWNERS AND BY MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of March 25, 2005, the following persons were beneficial owners of more
than five percent of the Company's common stock. The following table shows the
nature and amount of their beneficial ownership.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF OWNERSHIP(1) OF CLASS
-------------- ------------------- ----------------- --------
Common Stock...................... Thomas R. Beecher, Trustee 3,997,482 19.15%
CTG Stock Employee Compensation
Trust
200 Theater Place
Buffalo, NY 14202
Common Stock...................... Bank of America Corporation 2,192,641(2) 10.51%
Bank of America Corporate Center
100 N. Tryon Street
Charlotte, NC 28255
Common Stock...................... Royce & Associates 2,053,000(3) 9.84%
1414 Avenue of the Americas
New York, NY 10019
Common Stock...................... Dimensional Fund Advisors Inc. 1,069,150(4) 5.12%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
---------------
(1) The beneficial ownership information presented is based upon information
furnished by each person or contained in filings made with the Securities
and Exchange Commission. Except as otherwise indicated, each holder has sole
voting and investment power with respect to the shares indicated.
(2) Bank of America Corporation, a holding company, has shared voting power with
respect to 2,149,841 shares and shared dispositive power with respect to
2,192,641 shares.
(3) Royce & Associates, LLC has sole power to vote or to direct the vote of the
shares and sole power to dispose or to direct the disposition of the shares.
(4) Dimensional Fund Advisors Inc. is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. It furnishes investment
advice to four investment companies registered under the Investment Company
Act of 1940 and serves as investment manager to certain other commingled
group trusts and separate accounts. In its role as investment advisor or
manager, Dimensional possesses voting and/or investment power over the
securities of the Company that are owned by the funds and may be deemed to
be the beneficial owner of the shares of the Company held by the funds. All
securities reported herein are owned by the funds. Dimensional disclaims
beneficial ownership of such securities.
4
Security Ownership by Management
As of March 25, 2005 the directors and nominees for director individually,
the executive officers named in the compensation table, and all directors and
executive officers of the Company as a group, respectively, owned beneficially
the following amounts of the Company's common stock.
AMOUNT AND NATURE
NAME OF INDIVIDUAL OF BENEFICIAL PERCENT
OF NUMBER IN GROUP OWNERSHIP(1) OF CLASS
------------------ ----------------- --------
James R. Boldt.............................................. 494,325(2) 2.4%
Thomas E. Baker............................................. 40,000(3) *
George B. Beitzel........................................... 301,141(4) 1.4%
Randall L. Clark............................................ 90,000(5) *
Randolph A. Marks........................................... 453,530(6)(7) 2.2%
John M. Palms............................................... 101,800(8) *
Daniel J. Sullivan.......................................... 90,000(9) *
Arthur W. Crumlish.......................................... 58,825(10) *
Gregory M. Dearlove......................................... 85,246(11) *
Filip J.L. Gyde............................................. 55,250(12) *
Thomas J. Niehaus........................................... 120,708(13) *
All directors and executive officers as a group (15
persons).................................................. 1,974,007(14) 9.5%
---------------
* Less than 1 percent of outstanding shares.
(1) The beneficial ownership information presented is based upon information
furnished by each person or contained in filings made with the Securities
and Exchange Commission. Except as otherwise indicated, each holder has
sole voting and investment power with respect to the shares indicated.
(2) Amount indicated represents 50,123 shares held by Mr. Boldt in his own
name, 20,202 shares which are held by Mr. Boldt as custodian for members of
his immediate family and options to purchase 424,000 shares that were
exercisable on or within 60 days after March 25, 2005.
(3) Amount indicated includes options to purchase 40,000 shares that were
exercisable on or within 60 days after March 25, 2005.
(4) Amount indicated represents 114,141 shares held by Mr. Beitzel in his own
name, 13,000 shares held by Mr. Beitzel's wife, and options to purchase
174,000 shares that were exercisable on or within 60 days after March 25,
2005.
(5) Amount indicated represents 10,000 shares held by the Mr. Clark's wife and
options to purchase 80,000 shares that were exercisable on or within 60
days after March 25, 2005.
(6) Under an agreement entered into in February 1981, upon the death of Mr.
Marks, the Company will have the option to purchase up to as many shares of
common stock owned by him as may be purchased with the proceeds of the
insurance on the life of Mr. Marks maintained by the Company (currently
$300,000 in the aggregate). The purchase price for the shares will be 90
percent of the market price of such shares on the Friday immediately
preceding the date of death.
(7) Amount indicated represents 227,530 shares held by Mr. Marks in his own
name, 6,000 shares held by Mr. Marks' wife, and options to purchase 220,000
shares that were exercisable on or within 60 days after March 25, 2005.
(8) Amount indicated represents 21,800 shares held by Mr. Palms in his own name
and options to purchase 80,000 shares that were exercisable on or within 60
days after March 25, 2005.
(9) Amount indicated represents 10,000 shares held by Mr. Sullivan in his own
name and options to purchase 80,000 shares that were exercisable on or
within 60 days after March 25, 2005.
(10) Amount indicated represents 2,325 shares held by Mr. Crumlish in his own
name and options to purchase 56,500 shares that were exercisable on or
within 60 days after March 25, 2005.
5
(11) Amount indicated represents 18,996 shares held by Mr. Dearlove in his own
name, and options to purchase 66,250 shares that were exercisable on or
within 60 days after March 25, 2005.
(12) Amount indicated includes options to purchase 55,250 shares that were
exercisable on or within 60 days after March 25, 2005.
(13) Amount indicated represents 33,708 shares held by Mr. Niehaus in his own
name and options to purchase 87,000 shares that were exercisable on or
within 60 days after March 25, 2005.
(14) Amount indicated includes options to purchase 1,441,750 shares that were
exercisable on or within 60 days after March 25, 2005.
6
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors is divided into three classes serving staggered
three-year terms. The Board has seven directors and the following four
committees: (i) Audit, (ii) Compensation, (iii) Governance and Nominating, and
(iv) Executive. During 2004, the Board held a total of five meetings. Each
director attended at least 75% of the total number of Board meetings and the
total number of Board committee meetings the respective director was eligible to
attend during 2004.
DIRECTOR INDEPENDENCE AND EXECUTIVE SESSIONS
The Board of Directors has affirmatively determined in January 2005 that
each of the six non-management directors, Thomas E. Baker, George B. Beitzel,
Randall L. Clark, Randolph A. Marks, John M. Palms and Daniel J. Sullivan is an
independent director in accordance with our corporate governance policies and
the standards of the New York Stock Exchange and, therefore, that a majority of
our Company's seven-person Board of Directors is currently independent as so
defined. The Board of Directors has determined that there are no relationships
between the Company and the Directors classified as independent other than
service on our Company's Board of Directors and compensation paid to directors.
The foregoing independence determination of the Board of Directors also
included the conclusions of the Board of Directors that:
- each of the members of the Audit Committee, Governance and Nominating
Committee, and Compensation Committee described in this proxy statement
is respectively independent under the standards listed above for purposes
of membership on each of these committees; and
- each of the members of the Audit Committee also meets the additional
independence requirements under SEC Rule 10A-3(b).
Mr. Marks is currently serving as the "lead" independent director for
purposes of scheduling and setting the agenda for the executive sessions of the
independent directors. It is presently contemplated that these executive
sessions will occur at least once during the fiscal year ending December 31,
2005, in conjunction with a regularly scheduled Board meeting, in addition to
the separate meetings of the standing committees of the Board of Directors.
The Board of Directors has also adopted a statement of corporate governance
principles that is available on the Company's website as described under
"Corporate Governance and Website Information."
Audit Committee
The Audit Committee is composed of three directors: George B. Beiztel,
Chairman, Thomas E. Baker and Daniel J. Sullivan and operates under a written
charter adopted by the Board of Directors. The charter of the Audit Committee is
available on our Company's website as described below under "Corporate
Governance and Website Information." The Audit Committee met six times during
2004.
The primary purposes of the Audit Committee are to oversee on behalf of the
Company's Board of Directors: (1) the accounting and financial reporting
processes of the Company and integrity of the Company's financial statements,
(2) the audits of the Company's financial statements and appointment,
compensation, qualifications, independence and performance of the Company's
independent registered public accounting firm, (3) the Company's compliance with
legal and regulatory requirements, (4) the Company's internal audit function,
and (5) preparation of the audit committee report that SEC rules require to be
included in the annual proxy statement. The Committee's job is one of oversight.
Management is responsible for the Company's financial reporting process
including its system of internal control, and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. The Company's independent registered public accounting
firm is responsible for auditing those financial statements. It is the
Committee's responsibility to monitor and review these processes. It is not the
Committee's duty or responsibility to conduct auditing or accounting reviews.
Therefore, the Committee has relied on management's representation that the
financial statements have been prepared with integrity and objectivity and in
conformity with accounting principles
7
generally accepted in the United States of America and on the representations of
the independent registered public accounting firm included in their report on
the Company's financial statements.
The Board of Directors has determined that the members of this Committee
are independent as described above under "Director Independence and Executive
Sessions." During 2004 the Board of Directors has also determined that all of
the members of the Audit Committee meet the requirement of the New York Stock
Exchange ("NYSE") listing standards that each member be financially literate.
Additionally, the Board of Directors has determined that Thomas E. Baker meets
the requirement of the NYSE listing standards that at least one member of the
committee has accounting or related financial management expertise and that Mr.
Baker is an "audit committee financial expert" as defined in SEC Regulation S-K
Item 401(h). Under the rules of the SEC, the designation or identification of a
person as an audit committee financial expert does not impose on such person any
duties, obligations or liability that are greater than the duties, obligations
and liability imposed on such person as a member of the Audit Committee and
Board of Directors in the absence of such designation or identification.
Moreover, the designation of a person as an audit committee financial expert
does not affect the duties, obligations or liability of any other member of the
Audit Committee or Board of Directors.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements with management and has discussed with the independent registered
public accounting firm the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended. In
addition, the Audit Committee has received the written disclosures and the
letter from the independent registered public accounting firm required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and has discussed with such accountants their independence.
Based on the review and discussions referred to above, the Audit Committee
has 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 last fiscal year
for filing with the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE
George B. Beitzel, Chairman
Thomas E. Baker
Daniel J. Sullivan
Compensation Committee
The Compensation Committee is composed of Randall L. Clark, Chairman,
George B. Beitzel and John M. Palms. During 2004, this Committee held a total of
two meetings. The Board of Directors has determined that the members of this
Committee are independent as described above under "Director Independence and
Executive Sessions."
This Committee has a charter that is available on our Company's website as
described below under "Corporate Governance and Website Information." The
primary purposes of the Committee are to (1) determine and otherwise discharge
the responsibilities of the Board of Directors relating to the compensation of
the Company's executive officers, (2) evaluate the performance of the company's
executive officers and assess management succession planning, (3) recommend to
the Board of Directors the cash and non-cash compensation policies for the
non-employee directors, and (4) exercise the authority of the Board of Directors
with respect to the administration of the company's stock-based and other
incentive compensation plans.
Executive Committee
The Executive Committee is composed of James R. Boldt, Chairman, George B.
Beitzel, Randall L. Clark and Randolph A. Marks. The Committee did not meet
during 2004. The Executive Committee is empowered to
8
act for the Board of Directors in intervals between Board meetings, with the
exception of certain matters that by law cannot be delegated. The Committee
meets as necessary.
Nominating and Corporate Governance Committee and Director Nomination Process
The Nominating and Corporate Governance Committee is composed of Randolph
A. Marks, Chairman, John M. Palms, Daniel J. Sullivan and Thomas E. Baker.
During 2004, this Committee held a total of three meetings.
This Committee has a charter that is available on our Company's website as
described below under "Corporate Governance and Website Information." The
primary purposes of the Committee are to (a) recommend to the Board of Directors
the individuals qualified to serve on the Company's Board of Directors for
election by shareholders at each annual meeting of shareholders and to fill
vacancies on the Board of Directors, (b) implement the Board's criteria for
selecting new directors, (c) develop, recommend to the Board, and assess
corporate governance policies for the Company, and (d) oversee the evaluation of
the Board.
The Board of Directors has determined that the members of this committee
are independent as described above under "Director Independence and Executive
Sessions."
Director Nominations Made by Shareholders. The Committee will consider
nominations timely made by shareholders pursuant to the requirements of our
Company's Bylaws referred to in the "Stockholder Proposals" section near the end
of past proxy statements and this Proxy Statement. This Committee has not
formally adopted any specific elements of this policy, such as minimum specific
qualifications or specific qualities or skills that must be possessed by
qualified nominees, beyond the Committee's willingness to consider candidates
proposed by shareholders.
Procedure for Stockholders to Nominate Directors. Any shareholder who
intends to present a director nomination proposal for consideration at the 2006
Annual Meeting and intends to have that proposal included in the proxy statement
and related materials for the 2006 Annual Meeting, must deliver a written copy
of the proposal to the Company's principal executive offices no later than the
deadline, and in accordance with the notice procedures, specified under
"Shareholder Proposals" in this Proxy Statement and in accordance with the
applicable requirements of SEC Rule 14a-8.
If a shareholder does not comply with the foregoing Rule 14a-8 procedures,
the shareholder may use the procedures set forth in the Company's Bylaws,
although the Company would in the latter case not be required to include the
nomination proposal as a proposal in the proxy statement and proxy card mailed
to shareholders in connection with the next annual meeting of shareholders. For
shareholder nominations of directors to be properly brought before an annual
meeting by a shareholder pursuant to the Bylaws, the shareholder must have given
timely notice thereof in writing to the Secretary of the Company. To be timely,
any shareholder entitled to vote for the election of directors at a meeting may
nominate persons for election as directors only if written notice of such
shareholder's intent to make such nomination is given, either by personal
delivery or by United States mail, postage prepaid, to and received by the
Secretary of the Company not later than 60 days in advance of the originally
scheduled date of the annual meeting of shareholders.
The shareholder's notice referred to above must set forth (1) the name and
address of the shareholder who intends to make the nomination and of the person
or persons to be nominated; (2) a representation that the shareholder is a
holder of record of stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (3) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (4) such other information
regarding each nominee proposed by such shareholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the SEC
had each nominee been nominated, or intended to be nominated by the Board of
Directors; and (5) the consent of each nominee to serve as a director of the
Company if so elected. The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
Process for Identifying Director Candidates. The Committee's current
process for identifying and evaluating nominees for director consists of general
periodic evaluations of the size and composition of the Board
9
of Directors with a goal of maintaining continuity of appropriate industry
expertise and knowledge of the Company. Since neither the Board nor this
Committee has received any shareholder nominations in the past, the Committee
has not considered whether there would be any differences in the manner in which
the Committee evaluates nominees for director based on whether the nominee is
recommended by a shareholder.
Source of Recommendation for Current Nominees. The nominees for director
included in this Proxy Statement have been formally recommended by the incumbent
independent directors who serve on the Nominating and Governance Committee (the
members of which include one of the nominees). The Company did not pay a fee to
any third party to identify or evaluate or assist in identifying or evaluating
potential nominees.
Past Nominations from More Than 5% Stockholders. Under the recently
adopted SEC rules referred to above (and assuming consent to disclosure is given
by the proponents and nominee), the Company must disclose any nominations for
director made by any person or group beneficially owning more than 5% of the
Company's outstanding common stock by the date that was 120 calendar days before
the anniversary of the date on which its proxy statement was sent to its
shareholders in connection with the previous year's annual meeting. The Company
did not receive any such nominations.
STOCKHOLDER COMMUNICATIONS TO THE BOARD OF DIRECTORS
Any record or beneficial owner of the Company's common stock who has
concerns about accounting, internal accounting controls, or auditing matters
relating to the Company may contact the Audit Committee directly. Any record or
beneficial owner of the Company's common stock who wishes to communicate with
the Board of Directors on any other matters should also contact the Audit
Committee. The Audit Committee has undertaken on behalf of the Board of
Directors to be the recipient of communications from shareholders relating to
the Company. If particular communications are directed to the full Board,
independent directors as a group, or individual directors, the Audit Committee
will route these communications to the appropriate directors or committees so
long as the intended recipients are clearly stated. Alternatively, any
interested parties may communicate with the presiding independent member of our
Board of Directors by writing to Randolph A. Marks, c/o Computer Task Group,
Incorporated, 800 Delaware Avenue, Buffalo, New York 14209.
Communications intended to be anonymous may be made by calling the
Company's Whistleblower Hotline Service at 800-854-5313 and identifying yourself
as an interested party intending to communicate with the Audit Committee (this
third party service undertakes to forward the communications to Audit Committee
if so requested, assuming the intended recipient is clearly stated). You may
also send communications intended to be anonymous by mail, without indicating
your name or address, to Computer Task Group, Incorporated, 800 Delaware Avenue,
Buffalo, New York 14209, Attention: Chairman of the Audit Committee.
Communications not intended to be made anonymously may be made by calling the
hotline number or by mail to that address, including whatever identifying or
other information you wish to communicate.
Shareholder proposals intended to be presented at a meeting of shareholders
by inclusion in the Company's proxy statement under SEC Rule 14a-8 or intended
to be brought before a shareholders' meeting in compliance with the Company's
Bylaws are subject to specific notice and other requirements referred to under
"Shareholder Proposals" and in applicable SEC rules and the Company's Bylaws.
The communications process for shareholders described above does not modify or
relieve any requirements for shareholder proposals intended to be presented at a
meeting of shareholders. If you wish to make a shareholder proposal to be
presented at a meeting of shareholders, you may not communicate such proposals
anonymously and may not use the hotline number or Audit Committee communication
process described above in lieu of following the notice and other requirements
that apply to shareholder proposals intended to be presented at a meeting of
shareholders.
The Company encourages its directors to attend its annual meetings but has
not adopted a formal policy requiring this attendance. At our annual meeting on
May 5, 2004, the following directors attended the meeting: James R. Boldt,
George B. Beitzel, Randall L. Clark, John M. Palms and Daniel J. Sullivan.
10
CORPORATE GOVERNANCE AND WEBSITE INFORMATION
The NYSE listing standards generally require that our company implement the
revised corporate governance requirements by the date of the Annual Meeting. Our
Company believes that it will be in compliance with the corporate governance
requirements of the NYSE listing standards as of the date of the Annual Meeting,
assuming the Nominees for director are elected and the absence of circumstances
beyond our control that would adversely affect such compliance. The principal
elements of these governance requirements as implemented by our Company are:
- affirmative determination by the Board of Directors that a majority of
the directors is independent;
- regularly scheduled executive sessions of independent directors;
- Audit Committee, Nominating and Corporate Governance Committee, and
Compensation Committee comprised of independent directors and having the
purposes and charters described above under the separate committee
headings;
- internal audit function;
- corporate governance principles of our Board of Directors;
- specific Audit Committee authority and procedures outlined in the charter
of the Audit Committee; and
- a code of business conduct and ethics applicable to directors, officers
and employees of our company. This code also contains a sub-section that
constitutes a code of ethics specifically applicable to the Chief
Executive Officer, Chief Financial Officer and other members of the our
company's finance department based on their special role in promoting
fair and timely public reporting of financial and business information
about our company.
The charters of the three committees described above, the corporate governance
principles of the Board of Directors, and the code of conduct are available
without charge on the Company's website at www.ctg.com, by clicking on
"Investors," and then "Corporate Governance." We will also send these documents
without charge and in print to any stockholder who requests them.
Director Compensation
Each non-employee director receives a $15,000 annual retainer, a $1,500 per
meeting fee for attending Board meetings, a $1,500 per day fee for each day a
committee meeting is held, and $5,000 annual fee for each chairman of a
committee. Directors are also reimbursed for expenses they incur while attending
board and committee meetings. Directors who are employees of the Company do not
receive additional compensation for their services as directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the Company's
common stock, to file with the Securities and Exchange Commission and the New
York Stock Exchange reports of ownership and changes in ownership of common
stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
The Company believes that all Section 16(a) filing requirements applicable
to its officers, directors and beneficial owners of more than 10% of its
outstanding common stock were complied with for 2004. This belief is based
solely on the Company's review of copies of the reports furnished to it and
written representations that no other reports were required.
Appointment of Auditors for Fiscal 2004 and Fees
The Audit Committee of the Company's Board of Directors reappointed KPMG
LLP ("KPMG") as the independent registered public accounting firm to audit the
Company's financial statements for fiscal 2004.
11
A representative of KPMG will be present at the annual meeting of
shareholders of the Company. The representative will be given the opportunity to
make a statement if the representative desires to do so, and will be available
to respond to appropriate questions. To the best of the Company's knowledge, no
member of that firm has any past or present interest, financial or otherwise,
direct or indirect, in the Company or any of its subsidiaries. Matters involving
auditing and related functions are considered and acted upon by the Audit
Committee. The Audit Committee has determined that the provision of services
described under "All Other Fees," below is compatible with maintaining the
independent registered public accounting firms independence.
Audit Fees -- The aggregate fees billed for professional services rendered
by KPMG for the audit of the Company's annual financial statements for the last
two fiscal years, including the Company's foreign subsidiaries, the reviews of
the financial statements included in the Company's Form 10-Q's, and services
rendered in connection with the Company's obligations under Section 404 of the
Sarbanes-Oxley Act of 2002 and related regulations was approximately $855,600
and $208,881 in 2004 and 2003, respectively. Included in the 2004 balance was
approximately $508,000 related to services rendered in connection with Section
404 of the Sarbanes-Oxley Act.
Audit-Related Fees -- The aggregate fees billed for assurance and related
services rendered by KPMG for the last two fiscal years that are reasonably
related to the performance of the audit or review of the Company's financial
statements was $0 in both 2004 and 2003.
Tax Fees -- The aggregate fees billed in each of the last two fiscal years
for professional services rendered by KPMG for tax compliance work were $7,150
and $0 in 2004 and 2003, respectively.
All Other Fees -- Other than the fees described above, the Company did not
pay any other fees in either 2004 or 2003 to KPMG.
Previous Change in Independent Registered Public Accounting Firm
On September 23, 2003, the Company engaged KPMG as the independent
registered public accounting firm to audit the Company's financial statements
for the fiscal year ending December 31, 2003 and dismissed Deloitte & Touche LLP
("Deloitte"). During the two most recent fiscal years and any interim period
prior to their engagement, the Company did not consult with KPMG on any matter.
The decision to change accountants was made by the Audit Committee.
Deloitte had been the independent registered public accounting firm
auditing the financial statements of the Company since July 7, 1998. Deloitte's
report on the financial statements of the Company as of December 31, 2002 and
2001 and for the years then ended, did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles.
During the Company's two most recent fiscal years and any subsequent
interim period preceding the dismissal, there were no disagreements between the
Company and Deloitte on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of Deloitte would have caused Deloitte to make
reference to the subject matter of the disagreement in connection with its
report. Also, during the aforementioned period, there occurred no "reportable
event" within the meaning of Item 304(a) (1) (v) of Regulation S-K.
Audit Committee Pre-Approval Policies and Procedures. The Audit Committee
pre-approves 100% of all audit and permissible non-audit services provided by
the independent registered public accounting firm. These services may include
audit services, audit-related services, tax services and other services. The
Committee pre-approves each particular service on a case-by-case basis.
Incorporation by Reference. The Compensation Committee Report, the Audit
Committee Report, references to the independence of directors, and the Stock
Performance Graph are not deemed to be "soliciting material" or "filed" with the
Securities and Exchange Commission, are not subject to the liabilities of
Section 18 of the Securities Exchange Act of 1934, as amended and shall not be
deemed incorporated by reference into any of the filings previously made or made
in the future by the Company under the Exchange Act or the Securities
12
Exchange Act of 1933, as amended, except to the extent the Company specifically
incorporates any such information into a document that is filed.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows the annual and long-term compensation paid to the
Chairman, President and Chief Executive Officer and to the four other most
highly compensated executive officers for services rendered in 2004, 2003, and
2002.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- --------------------- -------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SAR'S PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($) (1)
------------------ ---- -------- -------- ------------ ---------- -------- ------- ------------
James R. Boldt.............. 2004 $400,000 $208,234 $ 0 $0 40,000 $0 $ 6,150
Chairman, President and 2003 $400,000 $164,400 $ 0 $0 75,000 $0 $ 6,000
Chief Executive Officer 2002 $400,000 $ 0 $ 0 $0 0 $0 $ 5,500
Gregory M. Dearlove......... 2004 $285,000 $ 74,183 $ 0 $0 15,000 $0 $ 6,150
Senior Vice President and 2003 $285,000 $ 63,020 $ 0 $0 20,000 $0 $ 5,919
Chief Financial Officer 2002 $285,000 $ 0 $ 0 $0 0 $0 $ 4,125
Filip J.L. Gyde(2).......... 2004 $232,797 $ 78,422 $71,284 $0 10,000 $0 $23,280
Senior Vice President and 2003 $207,468 $ 15,892 $62,063 $0 10,000 $0 $20,747
General Manager, 2002 $259,373 $ 0 $66,968 $0 0 $0 $25,260
CTG Europe
Thomas J. Niehaus........... 2004 $215,000 $132,170 $ 0 $0 15,000 $0 $ 6,150
Senior Vice President 2003 $215,000 $ 36,990 $ 0 $0 25,000 $0 $ 6,000
and General Manager, 2002 $215,000 $ 0 $ 0 $0 15,000 $0 $ 5,500
CTG HealthCare Solutions
Arthur W. Crumlish.......... 2004 $185,000 $ 49,219 $ 0 $0 20,000 $0 $ 6,150
Senior Vice President, 2003 $185,000 $ 32,592 $ 0 $0 15,000 $0 $ 5,550
Strategic Staffing
Services 2002 $185,000 $ 0 $ 0 $0 0 $0 $ 5,500
---------------
(1) Consists of Company contributions under retirement plans.
(2) Other annual compensation for Mr. Gyde consists of vacation and other
premiums, including the cost of providing for a company automobile.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of Randall
L. Clark (Chairman), George B. Beitzel, and John M. Palms, each of whom are
"non-employee directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934. The Committee is responsible for overseeing the
administration of the Company's employee stock and benefit plans, establishing
policies relating to the compensation of employees and setting the terms and
conditions of employment for executive officers. This Committee report describes
the various components of the Company's executive officer compensation program
and the basis on which 2004 compensation was paid to such executive officers,
including the executive officers named in the compensation table set forth
above.
Compensation Policy -- The Committee's compensation policies are designed
to maintain a direct relationship among executive pay, financial performance of
the Company and the creation of shareholder value. Such policies seek to:
- Provide compensation opportunities that enable the Company to attract and
retain qualified executives;
- Provide compensation that is directly related to the performance of both
the Company and the individual;
- Integrate the compensation programs with the Company's annual and
long-term financial and operating objectives; and
13
- Align the interests of executive officers with the long-term interests of
the Company's stockholders through stock-based award opportunities that
can result in ownership of the Company's common stock.
The Company's executive compensation program attempts to achieve the
foregoing objectives by integrating annual base salary with annual cash and
stock-based incentives based on both Company and individual performance.
Measurement of Company performance is based on operating and financial
objectives set at the beginning of each year. As a result, executive
compensation tends to be higher in years in which the performance goals are
achieved or exceeded. In addition, as an executive's level of responsibility
increases, a substantial portion of his or her annual compensation is based on
performance incentives. Accordingly, there will be greater variability in an
executive's total compensation from year to year based on both the individual's
and the Company's actual performance.
Components of Executive Compensation -- The compensation paid to the
Company's executive officers, as reflected in the tables set forth in this Proxy
Statement, consisted of annual base salary, annual cash incentive compensation,
long-term stock-based incentive compensation and deferred compensation.
Annual Base Salary -- With respect to determining the base salary of
executive officers, the Committee takes into consideration a variety of factors
including the executive's level of responsibility, individual performance and
the salaries of similar positions in the Company and in comparable companies
both within and outside our industry who compete for executive talent. The
Committee also engages a compensation consultant to advise it with respect to
such matters.
Annual Cash Incentive Compensation -- Each executive officer's total annual
compensation consists in part of annual cash incentive compensation. Awards of
cash incentive compensation are based on the attainment of one or more specified
targeted levels of (i) gross profit, (ii) operating income, (iii) specific
assigned objectives, (iv) earnings per share, and (v) individual objectives. The
Committee, in awarding cash incentive compensation, considers the recipient's
individual contribution toward Company operating profitability, cost
containment, leadership, teamwork and the successful implementation of business
strategy. The objective of this form of annual compensation is to provide an
incentive to certain executives to achieve operating and financial objectives
that the Committee believes are primary determinants of shareholder value over
time.
Long-Term Stock-Based Incentive Compensation -- The third component of
executive compensation consisted of grants of stock options under the Company's
2000 Equity Award Plan. In making grants of stock options, the Committee
considered an executive's contribution toward past and the expected contribution
toward future Company performance. Any value that might be received from an
option grant depends upon increases in the price of the Company's common stock.
Accordingly, the amount of compensation to be received by an executive is
directly aligned with increases in shareholder value. Grants of stock options
are made to key employees of the Company who, in the opinion of the Committee,
have had and are expected to continue to have a significant impact on the
long-term performance of the Company. The awards are also intended to reward
individuals who remain with the Company and to further align their interests
with those of the Company's shareholders. The Committee strongly believes that
stock ownership by management and stock-based performance compensation are
beneficial in aligning management's and shareholders' interests in the
enhancement of shareholder value.
Stock Options Granted During 2004 -- The Committee granted stock options to
various executive officers named in the following table (see Options/SAR Grants
in 2004). In general, recipients of the stock options receive the right to
purchase shares of common stock of the Company in the future at a price equal to
their fair market value determined on the date of grant. The Committee
determines the dates and terms upon which option may be exercised, as well as
whether the options will be incentive stock options or nonqualified stock
options. In determining whether to grant an individual stock options, the
Committee considers an executive's contribution toward Company performance,
expected future contribution and the number of options and shares of common
stock presently held by the executive.
Deferred Compensation -- The fourth component of executive compensation may
consist of the Company's contribution under the CTG Non-Qualified Key Employee
Deferred Compensation Plan for those executives chosen to participate in the
Plan. Executives chosen to participate in the Plan are eligible to elect to
defer a
14
percentage of their annual cash compensation. In addition, executives are also
eligible to receive a Company contribution under the Plan in an amount equal to
a specified percentage of the sum of the executive's 2004 base salary and bonus
compensation. The Company's contribution percentage and criteria used to
determine performance targets are based on the recommendations of the Chairman,
President and CEO, subject to the approval of the Committee. The contribution is
made in cash or CTG common stock, as determined by the Committee. No
contributions were made in 2004 under this Plan.
Chief Executive Officer Compensation -- The Committee, in setting the
compensation for the position of Chief Executive Officer, sought to provide a
compensation package which depended in part upon the attainment of both annual
and long-term objectives, thereby linking the annual compensation of the CEO to
individual performance and the Company's performance. Compensation for the
position of CEO consisted of the following: (i) annual base compensation
established by the Committee, (ii) cash incentive compensation measured by
Company financial performance and the CEO's attainment of specific strategic and
organizational objectives, together with an assessment by the Committee and the
Board of Directors of the effectiveness of the CEO, (iii) long-term stock-based
incentive compensation, and (iv) a contribution under the CTG Non-Qualified Key
Employee Deferred Compensation Plan. Mr. Boldt's 2004 compensation consisted of
base compensation of $400,000, a bonus of $208,234 and a grant of 40,000 stock
options at $4.90 per share.
Section 162(m) of the Internal Revenue Code -- Section 162(m) of the Code
generally disallows a tax deduction for compensation in excess of $1 million
paid to any "covered employee" in any taxable year. The term "covered employee"
is defined as the Chief Executive Officer and the four other highest paid
executive officers of the corporation. Certain compensation is specifically
exempt from the deduction limit to the extent that it does not exceed $1 million
during any fiscal year or is "performance based" as defined in Section 162(m).
The 2000 Equity Award Plan has been designed to meet the requirements for
deductibility.
SUBMITTED BY THE COMPENSATION COMMITTEE
Randall L. Clark, Chairman
George B. Beitzel
John M. Palms
15
COMPANY PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder returns for the Company's common stock, the S&P 500 Index, and a
Peer Group, assuming a base index of $100 at the end of 1999. The cumulative
total return for each annual period within the five years presented is measured
by dividing (1) the sum of (A) the cumulative amount of dividends for the
period, assuming dividend reinvestment, and (B) the difference between the
Company's share price at the end and the beginning of the period by (2) the
share price at the beginning of the period. The calculations exclude trading
commissions and taxes.
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------------------------
Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04
--------------------------------------------------------------------------------------------
Computer Task Group Inc 100 26.77 26.78 23.73 26.44 38.07
--------------------------------------------------------------------------------------------
S&P 500 Index 100 90.90 80.09 62.39 80.29 89.03
--------------------------------------------------------------------------------------------
Peer Group 100 22.80 37.72 17.77 24.33 25.62
--------------------------------------------------------------------------------------------
The Peer Group comprises the following companies which are in the business
of providing software and information technology (IT) services: Alternative
Resources Corporation(1); American Management Systems, Incorporated(1); Analysts
International Corporation; Ciber, Inc.; Computer Horizons Corp.; Compuware
Corporation; Keane, Inc.; and Technology Solutions Company.
---------------
(1) Included through 2003 as these companies were acquired during 2004.
16
Option/SAR Grants, Exercises and Holdings
The following tables set forth certain information concerning stock options
granted and exercised during 2004, and unexercised options held as of the end of
2004, by the named executives:
OPTIONS/SAR GRANTS IN 2004
POTENTIAL POTENTIAL
REALIZABLE VALUE AT REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL ASSUMED ANNUAL
SECURITIES PERCENT OF TOTAL RATES OF STOCK RATES OF STOCK
UNDERLYING OPTIONS/SARS EXERCISE OR PRICE APPRECIATION PRICE APPRECIATION
OPTIONS/SARS GRANTED TO BASE PRICE EXPIRATION FOR OPTION TERM(1) FOR OPTION TERM(1)
NAME GRANTED IN 2004 EMPLOYEES 2004 PER SHARE DATE 5% ($) 10% ($)
---- --------------- ---------------- ----------- ---------- ------------------- -------------------
James R. Boldt....... 13,522 1.43% $4.90 3/3/2019 $71,487 $210,517
26,478 2.80% $4.90 3/3/2014 $72,349 $179,083
Gregory M. Dearlove.. 15,000 1.59% $4.90 3/3/2014 $37,940 $ 92,683
Filip J.L. Gyde...... 10,000 1.06% $4.90 3/3/2014 $30,816 $ 78,093
Thomas J. Niehaus.... 15,000 1.59% $4.90 3/3/2014 $37,940 $ 92,683
Arthur W. Crumlish... 20,000 2.12% $4.90 3/3/2014 $50,587 $123,578
---------------
(1) The dollar amounts under these columns use the five (5%) percent and ten
(10%) percent annual rates of stock price appreciation prescribed by the
SEC. This presentation is not intended to forecast future appreciation of
the Company's stock.
AGGREGATE OPTION/SAR EXERCISES IN 2004 AND 2004 YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES FISCAL YEAR END AT FISCAL YEAR END
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
James R. Boldt................ 0 $0 406,500 387,500 $423,375 $794,125
Gregory M. Dearlove........... 0 $0 57,500 77,500 $203,200 $219,700
Filip J.L. Gyde............... 0 $0 53,000 42,000 $ 27,250 $ 31,200
Thomas J. Niehaus............. 0 $0 65,750 68,750 $ 29,250 $ 65,250
Arthur W. Crumlish............ 0 $0 47,750 55,000 $108,613 $118,412
Executive Supplemental Benefit Plan
The Company maintains an Executive Supplemental Benefit Plan (Supplemental
Plan) which provides one current and certain former executives with deferred
compensation benefits. The Supplemental Plan was amended as of December 1, 1994
in order to freeze the then current benefits, provide no additional benefit
accruals for participants and to admit no new participants. As a result of this
action, the Company reduced its annual Supplemental Plan expense from
approximately $1.1 million in 1994 to approximately $0.6 million in 2004.
Generally, the Supplemental Plan provides for retirement benefits of up to 50%
of a participating employee's base compensation at termination or as of December
1, 1994, which ever is earlier, and pre-retirement death benefits calculated
using the same formula that is used to calculate normal and early retirement
benefits. Benefits are based on service credits earned each year of employment
prior to and subsequent to admission to the Supplemental Plan through December
1, 1994. Retirement benefits and pre-retirement death benefits are paid during
the 180 months following retirement or death, respectively, while disability
benefits are paid until normal
17
retirement age. Normal retirement is age 60. For any participant who is a member
of a successor plan, the normal retirement age is increased to 65.
On November 30, 1994, the Supplemental Plan was also amended to provide
that in the event of a change of control, participants employed at that time
shall be entitled to receive a lump sum benefit equivalent to the present value
of 50% of their base compensation as of the date of the change of control. A
change of control will occur if (1) any person (other than the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as the ownership of stock
of the Company) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of combined voting power of
the Company's then outstanding voting securities; (2) during any period of 24
consecutive months, individuals who at the beginning of the period constitute
the Board and any new director whose election by the Board, or whose nomination
for election by the Company's stockholders, was approved by a vote of at least
two-thirds of the directors (other than in connection with the contested
election), before the beginning of the period cease, for any reason, to
constitute at least a majority thereof; or (3) the stockholders of the Company
approve a plan of complete liquidation of the Company or the sale or disposition
by the Company of all or substantially all of the Company's assets unless the
acquirer of the assets or its directors shall meet the conditions for a merger
or consolidation described in the Supplemental Plan.
Plan participants may request the Committee to begin the payment of
retirement benefits beginning at age 55. It is within the discretion of the
Compensation Committee as to whether or not a participant will be permitted to
receive early retirement benefits.
Mr. Boldt did not participate in the Supplemental Plan. One current
director and one current employee and 19 former employees are covered by the
Supplemental Plan.
Non-Competition and Employment Agreements
On July 16, 2001, the Company entered into an employment agreement with Mr.
Boldt. The agreement will continue in effect until either party provides 60 days
prior written notice to the other that it does not wish to continue Mr. Boldt's
employment. The agreement provides for an annual base salary of $400,000. In the
event the Company terminates Mr. Boldt's employment for other than cause (as
defined in the agreement) or Mr. Boldt terminates his employment for good reason
(as defined in the agreement) or he dies or becomes disabled, the Company will
pay as severance to Mr. Boldt an amount equal to the average annual total
compensation paid to Mr. Boldt during the three prior years (which includes the
current year). The severance is payable in 26 consecutive bi-weekly
installments. The Company will also continue certain medical benefits during
such period. If at the end of the twelve-month period, Mr. Boldt is not
employed, he will continue to receive such compensation and benefits for up to
an additional six months. The agreement also prohibits Mr. Boldt from competing
with the Company for a period of one-year following the termination of
employment.
Change in Control Agreements
On July 16, 2001, the Company entered into a change in control agreement
with Mr. Boldt. The agreement provides that upon the occurrence of a change in
control, Mr. Boldt will become fully vested in and entitled to exercise
immediately all stock related awards he has been granted under any plans or
agreements of the Company. The Agreement goes on to provide that upon the
termination of Mr. Boldt's employment (a) without cause by the Company or by
himself with good reason within 24 months following a change in control or (b)
by himself for any reason within 6 months after a change in control, Mr. Boldt
will receive three times his full salary and bonus as well as a lump sum to
cover fringe benefits. A change in control will occur if (1) the Company's
stockholders approve (a) the dissolution or liquidation of the Company, (b) the
merger or consolidation or other reorganization of the Company with any other
entity other than a subsidiary of the Company, or (c) the sale of all or
substantially all of the Company's business or assets or (2) any person other
than the Company or its subsidiaries or employee benefit plans becomes the
beneficial owner of more than 20% of the combined voting power of the Company's
then outstanding securities or (3) during any period not longer than two
consecutive years, individuals who at the beginning of such period constituted
the Board cease to constitute at least a majority
18
thereof, unless the election of each new Board member was approved by a vote of
at least three-quarters of the Board members then still in office who were Board
members at the beginning of such period.
Each of the named executives in the cash compensation table has entered
into a change of control agreement with the Company. These agreements contain
provisions that are generally similar to that of Mr. Boldt except that in the
event their employment is terminated by the Company without cause by themselves
with good reason within 24 months after a change in control, such executives
would receive two times their salary and bonus.
Non-Qualified Key Employee Deferred Compensation Plan
On February 2, 1995 the Compensation Committee approved the creation of a
Non-Qualified Key Employee Deferred Compensation Plan. The Deferred Compensation
Plan is intended as a successor plan to the Supplemental Plan. Participants in
the Deferred Compensation Plan are eligible to (1) elect to defer a percentage
of their annual cash compensation and (2) receive a Company contribution of a
percentage of their base compensation and annual bonus if the Company attains
annual defined performance objectives.
The Chief Executive Officer, subject to the approval of the Compensation
Committee, recommends (1) those key employees who will be eligible to
participate and (2) the percentage of a participant's base and bonus
compensation which will be contributed each year to the Deferred Plan if the
Company attains annual defined performance objectives. All amounts credited to
the participant are invested, as determined by the Compensation Committee, and
the participant is credited with actual earnings of the investments. Company
contributions, including investment earnings, may be cash or the stock of the
Company.
Plan participants have a 100% nonforfeitable right to the value of their
corporation contribution account after the fifth anniversary of the employment
with the Company. If a participant terminates employment due to death,
disability, retirement at age 65, or in the event a change of control (as
defined in the CTG Executive Supplemental Benefit Plan previously recited)
occurs, the participant or his or her estate will be entitled to receive the
benefits accrued for the participant as of the date of such event. Company
contributions will be forfeited in the event a participant incurs a separation
from service for cause. Participants are 100% vested in their own contributions.
All amounts in the Deferred Plan, including elective deferrals, are held as
general assets of the Company and are subject to the claims of creditors of the
Company. In 2004, as the Company did not attain defined operating income
objectives, no award for eligible participants was made to the plan.
Directors' and Officers' Liability Insurance
The Company indemnifies its directors and officers to the extent permitted
by law in connection with civil and criminal proceedings against them by reason
of their service as a director or officer. As permitted by Section 726 of the
New York Business Corporation Law, the Company has purchased directors' and
officers' liability insurance to provide indemnification for the Company and all
its directors and officers. The current liability insurance policy, with a
policy period effective April 1, 2004, was issued by The Chubb Group of
Insurance Companies at an annual premium of approximately $416,000.
Certain Relationships and Related Transactions
During 2004 Mr. Marks, a director of the Company, received an annual sum of
$90,000 payable monthly under the terms of the Supplemental Plan. Under the
terms of a non-competition agreement that covered the period from March 1984
through October 1995, Mr. Marks also receives the same medical benefits as those
provided to officers of the Company. The Company also paid the premiums on a
life insurance policy for Mr. Marks with a face value of $300,000.
OTHER INFORMATION
A shareholder giving a proxy may revoke it at any time before it is
exercised. The cost of soliciting proxies in the accompanying form will be borne
by the Company. In addition to solicitations by mail, employees of the Company
(who will not be specifically compensated for such services) may solicit proxies
in person or by telephone. Arrangements will be made with brokers, custodians,
nominees and fiduciaries to forward proxies and
19
proxy soliciting material to the beneficial owners of the Company's shares, and
the Company may reimburse brokers, custodians, nominees or fiduciaries for their
expenses in so doing.
SHAREHOLDER PROPOSALS
Proposals of shareholders which are intended to be included in the
Company's Proxy Statement relating to its May 2006 annual meeting of
shareholders must be received at the Company's principal executive offices not
later than December 9, 2005. A shareholder who wishes to present a proposal for
consideration at the 2006 annual meeting without inclusion of such proposal in
the Company's proxy materials must give written notice of the proposal to the
Secretary of the Company not later than sixty days in advance of the date of
such meeting.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other business that will be presented for consideration at
the 2005 annual meeting of shareholders. However, if any other matters properly
come before the meeting or any adjournment thereof, it is intended that the
shares represented by proxies will be voted on those matters in accordance with
the judgment of the holders of the proxies.
April 8, 2005
By Order of the Board of Directors
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0554-PS-05
ZCTG82
DETACH HERE
PROXY
COMPUTER TASK GROUP, INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter P. Radetich and Randall L. Clark and
each of them, as proxy or proxies, with power of substitution to vote all of the
shares of Common Stock of Computer Task Group, Incorporated (the "Company")
which the undersigned may be entitled to vote, as specified on the reverse side
of this card, and, if applicable, hereby directs the trustee of the Company's
401 (K) Profit Sharing Retirement Plan (the "Plan") to vote the shares allocated
to the account of the undersigned or otherwise which the undersigned is entitled
to vote pursuant to the Plan, as specified on the reverse side of this card, at
the Annual Meeting of Shareholders of the Company to be held at the Company's
Headquarters, 800 Delaware Avenue, Buffalo, New York on Wednesday, May 11, 2005
at 10:00 a.m. or at any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES ON
ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
[SEE REVERSE SIDE] [SEE REVERSE SIDE]
MARK, SIGN AND DATE ON REVERSE SIDE
COMPUTER TASK GROUP, INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
ZCTG81
DETACH HERE
[X] PLEASE MARK | | 0554
VOTES AS IN |
THIS EXAMPLE. |
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1. Election of Directors 2. Said proxies are given discretionary authority to vote and act upon
such other matters as may properly come before the meeting or any
CLASS II NOMINEES: (01) James R. Boldt adjournment thereof.
(02) Thomas E. Baker
CLASS III NOMINEES: (03) George B. Beitzel
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]
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For all nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please date and sign exactly as name appears hereon. Each joint tenant
must sign. When signing as attorney, executor, trustee, etc., give
full title. If signer is a corporation, sign in full corporate name by
authorized officer. If a partnership, sign in partnership name by an
authorized person.
Please sign, date and return this proxy today. No postage is required.
A business reply envelope is enclosed for your convenience.
Signature: Date: Signature: Date:
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